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The fair value of the reinsurance contracts elected for the fair value option in other assets were ¥5,214 million and ¥4,676 million as of March 31, 2022 and 2023, respectively. For the effect of changes in the fair value of those reinsurance contracts on earnings for fiscal 2021, 2022 and 2023, see Note 23 “Life Insurance Operations.”Decreases resulting from the receipts of reimbursements for benefits, and decreases resulting from insurance payouts to variable annuity and variable life policyholders due to death, surrender and maturity of the investment period are included.“Included in earnings” in the above table is recorded in “Life insurance costs” and includes changes in the fair value of policy liabilities and policy account balances resulting from gains or losses on the underlying investment assets managed on behalf of variable annuity and variable life policyholders, and the changes in the minimum guarantee risks relating to variable annuity and variable life insurance contracts as well as insurance costs recognized for insurance and annuity payouts as a result of insured events.Principally, gains and losses from available-for-sale debt securities are included in “Gains on investment securities and dividends”, “Write-downs of securities” or “Life insurance premiums and related investment income”; equity securities are included in “Gains on investment securities and dividends” and “Life insurance premiums and related investment income” and derivative assets and liabilities (net) are included in “Other (income) and expense” respectively. Additionally, for available-for-sale debt securities, amortization of interest recognized in finance revenues is included in these columns. Unrealized gains and losses from available-for-sale debt securities are included in “Net change of unrealized gains (losses) on investment in securities” and “Net change of foreign currency translation adjustments”, unrealized gains and losses from equity securities and derivative assets and liabilities (net) are included mainly in “Net change of foreign currency translation adjustments”, unrealized gains and losses from policy liabilities and policy account balances are included in “Net change of debt valuation adjustments.”“Included in earnings” in the above table includes changes in the fair value of reinsurance contracts recorded in “Life insurance costs” and reinsurance premiums, net of reinsurance benefits received, recorded in “Life insurance premiums and related investment income.”Certain subsidiaries elected the fair value option for the entire variable annuity and variable life insurance contracts held. The fair value of the variable annuity and variable life insurance contracts elected for the fair value option in policy liabilities and policy account balances were ¥198,905 million and ¥163,734 million as of March 31, 2022 and 2023, respectively. For the effect of changes in the fair value of the variable annuity and variable life insurance contracts on earnings for fiscal 2021, 2022 and 2023, see Note 23 “Life Insurance Operations.”Increases resulting from an acquisition of a subsidiary and insurance contracts ceded to reinsurance companies are included.Other revenues are not in the scope of revenue from contracts with customers.Purchased loans represent loans with evidence of deterioration of credit quality since origination and for which it is probable at acquisition that collection of all contractually required payments from the debtors is unlikely. The amount of assets under management of variable annuity and variable life insurance contracts included in equity securities were ¥185,115 million and ¥151,445 million as of March 31, 2022 and 2023, respectively. The amount of investment funds that are accounted for under the equity method included in equity securities were ¥90,650 million and ¥ 90,993 million as of March 31, 2022 and 2023, respectively. The amount of investment funds and others elected the fair value option included in equity securities were ¥11,709 million and ¥16,032 million as of March 31, 2022 and 2023, respectively.The assets of most VIEs are used only to repay the liabilities of the VIEs, and the creditors of the liabilities of most VIEs have no recourse to other assets of the Company and its subsidiaries.The assets are pledged as collateral by VIE for financing of the VIE.This item represents remaining balance of commitments that could require the Company and its subsidiaries to provide investments or loans to the VIE.The amount of shares include ¥2,511 million in amounts invested in investees which is measured at fair value by electing the fair value option as of March 31, 2023.Other includes foreign currency translation adjustments, decreases due to sale of ownership interest in subsidiaries and certain other reclassifications. Others include derivative instruments held for hedging change in the fair value of equity securities, and short-term instruments.Life insurance company general accounts are accounts with guaranteed capital and minimum interest rate, in which life insurance companies manage funds on several contracts.These funds invest in listed shares.These funds invest approximately 90% in foreign government bonds and approximately 10% in foreign corporate bonds.These funds invest approximately 70% in Japanese government bonds, and approximately 30% in Japanese corporate bonds. These funds include corporate bonds of ORIX Corporation in the amounts of ¥35 million at March 31, 2023.These funds invest in listed shares including shares of ORIX Corporation in the amounts of ¥22 million at March 31, 2023.These funds invest approximately 70% in Japanese government bonds, and approximately 30% in Japanese corporate bonds. These funds include corporate bonds of ORIX Corporation in the amounts of ¥37 million at March 31, 2022.These funds invest in listed shares including shares of ORIX Corporation in the amounts of ¥22 million at March 31, 2022.The balances related to enforceable master netting agreements or similar agreements which were not offset in the consolidated balance sheets.The notional amounts of futures and foreign exchange contracts in the above table include futures contracts of ¥14,758 million and foreign exchange contracts of ¥5,554 million to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts at March 31, 2023, respectively. Derivative assets in the above table include fair value of the futures and foreign exchange contracts before offsetting of ¥52 million and ¥12 million and derivative liabilities include fair value of the futures and foreign exchange contracts before offsetting of ¥200 million and ¥179 million at March 31, 2023, respectively.For the “Others”, the numbers of properties are omitted. Write-downs of long-lived assets for fiscal 2021 include write-downs of ¥1,099 million of hotels. Write-downs of long-lived assets for fiscal 2022 include write-downs of ¥31,205 million of property under facility operations and others held by subsidiaries, of which ¥19,564 million related to write-downs of two coal-biomass co-fired power plants, and ¥2,331 million of two aircraft.The notional amounts of futures and foreign exchange contracts in the above table include futures contracts of ¥15,088 million and foreign exchange contracts of ¥7,415 million to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts at March 31, 2022, respectively. Derivative assets in the above table include fair value of the futures and foreign exchange contracts before offsetting of ¥79 million and ¥57 million and derivative liabilities include fair value of the futures and foreign exchange contracts before offsetting of ¥1,325 million and ¥378 million at March 31, 2022, respectively.Gains from the disposition of real estate under operating leases included in operating lease revenues were ¥15,459 million, ¥17,912 million and ¥25,699 million, and gains from the disposition of operating lease assets other than real estate included in operating lease revenues were ¥10,899 million, ¥22,236 million and ¥31,233 million for fiscal 2021, 2022 and 2023, respectively. Some lease contracts are subject to government assistance for the customers’ acquisition of leased assets, mainly for the purpose of environmental measures. This government assistance is accounted for as a reduction of lease receivables of lease contracts when the Company and its subsidiaries confirm receipt of cash. The amount of a reduction of lease receivables is 28,532 million yen as of March 31, 2023. Benefits of the government assistance are attributed to the customers by the reduced lease payments. Furthermore, remaining term of government assistance contracts ranges up to 11 years. And when receiving the government assistance, restrictions mainly on disposal of property and duty of keeping documents occur for a certain period of time.Other in loans to consumer borrowers includes claims receivable arising from payments on guarantee of consumer loans. For further information, see Note 30 “Commitments, Guarantees and Contingent Liabilities.”A certain subsidiary elected the fair value option on certain loans held for sale. These loans are multi-family and seniors housing loans and are sold to Federal National Mortgage Association (“Fannie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”) and institutional investors. Included in “Other (income) and expense” in the consolidated statements of income were losses of ¥3,260 million, ¥2,982 million and ¥2,429 million from the change in the fair value of the loans for fiscal 2021, 2022 and 2023, respectively. No gains or losses were recognized in earnings during fiscal 2021, 2022 and 2023 attributable to changes in instrument-specific credit risk. The amounts of aggregate unpaid principal balance and aggregate fair value of the loans held for sale as of March 31, 2022, were ¥151,672 million and ¥151,601 million, respectively, and the amount of the aggregate fair value was less than the amount of aggregate unpaid principal balance by ¥71 million. The amounts of aggregate unpaid principal balance and aggregate fair value of the loans held for sale as of March 31, 2023, were ¥199,674 million and ¥197,041 million, respectively, and the amount of the aggregate fair value was less than the amount of aggregate unpaid principal balance by ¥2,633 million. As of March 31, 2022 and 2023, there were no loans that are 90 days or more past due or, in non-accrual status.A certain subsidiary elected the fair value option for investments in foreign government bond securities included in available-for-sale debt securities. Included in “Gains on investment securities and dividends” in the consolidated statements of income were a loss of ¥28 million, a gain of ¥51 million and a loss of ¥11 million from the change in the fair value of those investments for fiscal 2021, 2022 and 2023, respectively. There were no such investments elected the fair value option as of March 31, 2022.The amount of aggregate fair value elected the fair value option was ¥237 million as of March 31, 2023.A certain subsidiary elected the fair value option for investments in foreign corporate debt securities included in available-for-sale debt securities. Included in “Gains on investment securities and dividends” in the consolidated statements of income were a gain of ¥1,080 million and losses of ¥365 million and ¥516 million from the change in the fair value of those investments for fiscal 2021, 2022 and 2023, respectively. The amounts of aggregate fair value elected the fair value option were ¥7,644 million and ¥6,605 million as of March 31, 2022 and 2023, respectively.Certain subsidiaries elected the fair value option for certain investments in investment funds, and others included in equity securities. Included in “Gains on investment securities and dividends” and “Life insurance premiums and related investment income” in the consolidated statements of income were gains of ¥3,187 million, ¥1,199 million and ¥1,066 million from the change in the fair value of those investments for fiscal 2021, 2022 and 2023, respectively. The amounts of aggregate fair value elected the fair value option were ¥11,709 million and ¥16,032 million as of March 31, 2022 and 2023, respectively.The amounts of investment funds measured at net asset value per share which are not included in the above tables were ¥25,999 million and ¥51,263 million as of March 31, 2022 and 2023, respectively.The allowance for off-balance sheet credit exposure were ¥26,094 million, ¥22,120 million and ¥17,843 million as of March 31, 2021, 2022 and 2023, respectively, and the amounts are recorded in “Other liabilities” on the consolidated balance sheets. For further information, see Note 30 “Commitments, Guarantees and Contingent Liabilities.” The allowance for available-for-sale debt securities were ¥120 million, ¥153 million and ¥144 million as of March 31, 2021, 2022 and 2023, respectively, and the amounts are recorded as a reduction in “Investments in securities” on the consolidated balance sheets. For further information, see Note 9 “Investment in Securities.” The provision for credit losses on loans to affiliates were provisions of ¥255 million, ¥1,449 million and ¥361 million during fiscal 2021, 2022 and 2023, respectively, and the amounts are recorded in “Equity in net income (loss) of affiliates” in the consolidated statements of income. The allowance for credit losses on loans to affiliates were ¥1,050 million, ¥1,957 million and ¥649 million as of March 31, 2021, 2022 and 2023, respectively, and the amounts are recorded as a reduction in “Investments in affiliates” on the consolidated balance sheets. Futures, foreign exchange contracts and options held/written and other in the above table include gains (losses) arising from futures, foreign exchange contracts and options held to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts for fiscal 2021 (see Note 23 “Life Insurance Operations”).Futures and foreign exchange contracts in the above table include gains (losses) arising from futures and foreign exchange contracts held to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts for fiscal 2023 (see Note 23 “Life Insurance Operations”).The amount for fiscal 2021 reflects the tax effect of the adoption of Accounting Standards Update 2016-13 (“Measurement of Credit Losses on Financial Instruments”—ASC 326 (“Financial Instruments—Credit Losses”)). The amount for fiscal 2022 reflects the tax effect of the adoption of Accounting Standards Update 2019-12 (“Simplifying the Accounting for Income Taxes”—ASC 740 (“Income Taxes”)). For further information about Income Taxes, see Note 1 “Significant Accounting and Reporting Policies (aa) New accounting pronouncements.”Futures and foreign exchange contracts in the above table include gains (losses) arising from futures and foreign exchange contracts held to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts for fiscal 2022 (see Note 23 “Life Insurance Operations”).Life insurance related investment income in fiscal 2021, 2022 and 2023 include net unrealized holding gains of ¥61,351 million and ¥8,004 million and ¥851 million on equity securities held as of March 31, 2021, 2022 and 2023, respectively.A certain subsidiary elected the fair value option for certain investment in affiliates. No gains or losses were recognized in earnings from the change in the fair value of those investments for fiscal 2021, 2022 and 2023. There were no such investments elected the fair value option as of March 31, 2022. 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Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F
ORM
20-F
(Mark One)

| ☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2023

OR

| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

|  | For the transition period from to

OR

| ☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

|  | Date of event requiring this shell company report:

Commission file number:
001-14856
ORIX KABUSHIKI KAISHA
(Exact name of Registrant as specified in its charter)
ORIX CORPORATION
(Translation of Registrant’s name into English)
Japan
(Jurisdiction of incorporation or organization)
World Trade Center Building,
SOUTH TOWER, 2-4-1 Hamamatsu-cho
,
Minato-ku
Tokyo
105-5135,
Japan
(Address of principal executive offices)
Akira Igarashi
World Trade Center Building,
SOUTH TOWER, 2-4-1 Hamamatsu-cho
,
Minato-ku
Tokyo
105-5135,
Japan
Telephone:
+81-3-6777-3380
Facsimile:
+81-3-6777-4104
(Name, telephone,
e-mail
and/or facsimile number and address of company contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:

|  | Title of each class |  | Trading Symbols(s) |  | Name of each exchange on which registered
(1) |  | American depository shares (the “ADSs”), each of which represents five shares |  | IX |  | New York Stock Exchange
(2) |  | Common stock without par value (the “Shares”)* |  |  |  |

Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
As of March 31, 2023, 1,234,849,342 Shares were outstanding,
including Shares that were represented by 4,396,107 ADSs.
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☒ Yes
☐ No
If this report is an annual or transition report, indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐ Yes
☒
No
Note—Checking the box above will not relieve any Registrant required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 from their obligations under those sections.
Indicate by check mark whether the Registrant
:
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ Yes
☐ No
Indicate by check mark whether the Registrant submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
☒ Yes
☐ No
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, or an emerging growth company. See definition of “large accelerated filer” , “accelerated filer”, and “emerging growth company” in Rule
12b-2
of the Exchange Act.
☒ Large accelerated filer
☐ Accelerated filer ☐ Non-accelerated filer
☐ Emerging growth company
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements
. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b)
. ☐
Indicate by check mark which basis of accounting the Registrant has used to prepare the financial statements included in this filing.
☒ U.S. GAAP
☐ International
Financial Reporting Standards as issued by the International Accounting Standards Board
☐ Other
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow.
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).
☐ Yes
☒ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
☐ Yes ☐ No
* Not for trading,
but only for technical purposes in connection with the registration of the ADSs.

Table of Contents

|  | Page |
Certain Defined Terms, Conventions and Presentation of Financial Information |  |  | ii |
Forward-Looking Statements |  |  | ii |
PART I |  |  | 1 |
Item 1. |  | Identity of Directors, Senior Management and Advisers |  |  | 1 |
Item 2. |  | Offer Statistics and Expected Timetable |  |  | 1 |
Item 3. |  | Key Information |  |  | 1 |
Item 4. |  | Information on the Company |  |  | 14 |
Item 4A. |  | Unresolved Staff Comments |  |  | 33 |
Item 5. |  | Operating and Financial Review and Prospects |  |  | 34 |
Item 6. |  | Directors, Senior Management and Employees |  |  | 124 |
Item 7. |  | Major Shareholders and Related Party Transactions |  |  | 153 |
Item 8. |  | Financial Information |  |  | 155 |
Item 9. |  | The Offer and Listing |  |  | 156 |
Item 10. |  | Additional Information |  |  | 156 |
Item 11. |  | Quantitative and Qualitative Disclosures about Market Risk |  |  | 171 |
Item 12. |  | Description of Securities Other than Equity Securities |  |  | 174 |
PART II |  |  | 175 |
Item 13. |  | Defaults, Dividend Arrearages and Delinquencies |  |  | 175 |
Item 14. |  | Material Modifications to the Rights of Security Holders and Use of Proceeds |  |  | 175 |
Item 15. |  | Controls and Procedures |  |  | 175 |
Item 16A. |  | Audit Committee Financial Expert |  |  | 176 |
Item 16B. |  | Code of Ethics |  |  | 176 |
Item 16C. |  | Principal Accountant Fees and Services |  |  | 176 |
Item 16D. |  | Exemptions from the Listing Standards for Audit Committees |  |  | 177 |
Item 16E. |  | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |  |  | 177 |
Item 16F. |  | Change in Registrant’s Certifying Accountant |  |  | 178 |
Item 16G. |  | Corporate Governance |  |  | 178 |
Item 16H. |  | Mine Safety Disclosure |  |  | 179 |
Item 16I. |  | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |  |  | 179 |
PART III |  |  | 180 |
Item 17. |  | Financial Statements |  |  | 180 |
Item 18. |  | Financial Statements |  |  | 180 |
Item 19. |  | Exhibits |  |  | 181 |
SIGNATURES |  |  | 182 |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS |  |  | F-1 |

i

Table of Contents
CERTAIN DEFINED TERMS, CONVENTIONS AND
PRESENTATION OF FINANCIAL INFORMATION
As used in this annual report, unless the context otherwise requires, the “Company” and “ORIX” refer to ORIX Corporation, and “ORIX Group,” “Group,” “we,” “us,” “our” and similar terms refer to ORIX Corporation and its subsidiaries.
In this annual report, “subsidiary” and “subsidiaries” refer to consolidated subsidiaries of ORIX, generally companies in which ORIX owns more than 50% of the outstanding voting stock and exercises effective control over the companies’ operations; and “affiliate” and “affiliates” refer to all of our affiliates accounted for by the equity method, generally companies in which ORIX has the ability to exercise significant influence over their operations by way of
20-50%
ownership of the outstanding voting stock or other means.
The consolidated financial statements of ORIX have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). For certain entities where we hold majority voting interests but noncontrolling shareholders have substantive participating rights to decisions that occur as part of the ordinary course of the business, the equity method is applied. In addition, the consolidated financial statements also include variable interest entities (“VIEs”) of which the Company and its subsidiaries are primary beneficiaries. Unless otherwise stated or the context otherwise requires, all amounts in such financial statements are expressed in Japanese yen.
References in this annual report to “¥” or “yen” are to Japanese yen and references to “US$,” “$” or “dollars” are to United States dollars.
Certain monetary amounts and percentage data included in this annual report have been subject to rounding adjustments for the convenience of the reader. Accordingly, figures shown as totals in tables may not be equal to the arithmetic sums of the figures that precede them.
The Company’s fiscal year ends on March 31. The fiscal year ended March 31, 2023 is referred to throughout this annual report as “fiscal 2023,” and other fiscal years are referred to in a corresponding manner. References to years not specified as being fiscal years are to calendar years.
FORWARD-LOOKING STATEMENTS
This annual report contains statements that constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). When included in this annual report, the words “will,” “should,” “expects,” “intends,” “anticipates,” “estimates” and similar expressions, among others, identify forward looking statements. Such statements, which include, but are not limited to, statements contained in “Item 3. Key Information—Risk Factors,” “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk,” inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those set forth in such statements. These forward-looking statements are made only as of the filing date of this annual report. The Company expressly disclaims any obligation or undertaking to release any update or revision to any forward-looking statement contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.
ii

Table of Contents
PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
SELECTED FINANCIAL DATA
The following selected consolidated financial information has been derived from our consolidated financial statements as of each of the dates and for each of the periods indicated below except for “Number of employees.” This information should be read in conjunction with and is qualified in its entirety by reference to our consolidated financial statements, including the notes thereto, included in this annual report in Item 18, which have been audited by KPMG AZSA LLC.

|  | Year ended March 31, |
|  | 2019 |  |  | 2020 |  |  | 2021 |  |  | 2022 |  |  | 2023 |
|  | (Millions of yen) |
Income statement data* 1 : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total revenues* 2 |  | ¥ | 2,434,864 |  |  | ¥ | 2,280,329 |  |  | ¥ | 2,292,708 |  |  | ¥ | 2,520,365 |  |  | ¥ | 2,666,373 |
Total expenses |  |  | 2,105,426 |  |  |  | 2,010,648 |  |  |  | 2,033,894 |  |  |  | 2,218,282 |  |  |  | 2,352,385 |
Operating income |  |  | 329,438 |  |  |  | 269,681 |  |  |  | 258,814 |  |  |  | 302,083 |  |  |  | 313,988 |
Equity in Net Income (Loss) of Affiliates |  |  | 32,978 |  |  |  | 67,924 |  |  |  | 481 |  |  |  | 15,006 |  |  |  | 25,091 |
Gains on sales of subsidiaries and affiliates and liquidation losses, net |  |  | 33,314 |  |  |  | 74,001 |  |  |  | 23,300 |  |  |  | 187,787 |  |  |  | 26,915 |
Bargain purchase gain |  |  | 0 |  |  |  | 955 |  |  |  | 4,966 |  |  |  | 0 |  |  |  | 1,174 |
Income before income taxes |  |  | 395,730 |  |  |  | 412,561 |  |  |  | 287,561 |  |  |  | 504,876 |  |  |  | 367,168 |
Net Income |  |  | 327,039 |  |  |  | 306,724 |  |  |  | 196,814 |  |  |  | 317,612 |  |  |  | 279,668 |
Net income attributable to the noncontrolling interests |  |  | 2,890 |  |  |  | 3,640 |  |  |  | 4,453 |  |  |  | 5,477 |  |  |  | 6,561 |
Net income (loss) attributable to the redeemable noncontrolling interests |  |  | 404 |  |  |  | 384 |  |  |  | (23 | ) |  |  | 0 |  |  |  | 32 |
Net income attributable to ORIX Corporation shareholders |  |  | 323,745 |  |  |  | 302,700 |  |  |  | 192,384 |  |  |  | 312,135 |  |  |  | 273,075 |

1

Table of Contents

|  | As of March 31, |
|  | 2019 |  |  | 2020 |  |  | 2021 |  |  | 2022 |  |  | 2023 |
|  | (Millions of yen, except number of shares) |
Balance sheet data* 1 : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment in Direct Financing Leases* 3 |  | ¥ | 1,155,632 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 0 |
Net Investment in Leases* 3 |  |  | 0 |  |  |  | 1,080,964 |  |  |  | 1,029,518 |  |  |  | 1,057,973 |  |  |  | 1,087,563 |
Installment Loans* 3 |  |  | 3,277,670 |  |  |  | 3,740,486 |  |  |  | 3,670,784 |  |  |  | 3,862,604 |  |  |  | 3,877,602 |
Allowance for Doubtful Receivables on Finance Leases and Probable Loan Losses* 4 |  |  | (58,011 | ) |  |  | (56,836 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Allowance for Credit Losses* 4 |  |  | 0 |  |  |  | 0 |  |  |  | (78,945 | ) |  |  | (69,459 | ) |  |  | (64,723 | )
Investment in Operating Leases |  |  | 1,335,959 |  |  |  | 1,400,001 |  |  |  | 1,408,189 |  |  |  | 1,463,202 |  |  |  | 1,537,178 |
Investment in Securities |  |  | 1,928,916 |  |  |  | 2,245,323 |  |  |  | 2,660,443 |  |  |  | 2,852,349 |  |  |  | 2,940,858 |
Property under Facility Operations |  |  | 441,632 |  |  |  | 562,485 |  |  |  | 491,855 |  |  |  | 561,846 |  |  |  | 620,994 |
Others |  |  | 4,093,119 |  |  |  | 4,095,105 |  |  |  | 4,381,238 |  |  |  | 4,542,157 |  |  |  | 5,266,719 |
Total Assets |  | ¥ | 12,174,917 |  |  | ¥ | 13,067,528 |  |  | ¥ | 13,563,082 |  |  | ¥ | 14,270,672 |  |  | ¥ | 15,266,191 |
Short-term Debt, Long-term Debt and Deposits |  | ¥ | 6,423,512 |  |  | ¥ | 6,847,889 |  |  | ¥ | 7,041,887 |  |  | ¥ | 7,142,843 |  |  | ¥ | 7,964,864 |
Policy Liabilities and Policy Account Balances |  |  | 1,521,355 |  |  |  | 1,591,475 |  |  |  | 1,822,422 |  |  |  | 1,963,623 |  |  |  | 2,065,366 |
Common Stock |  |  | 221,111 |  |  |  | 221,111 |  |  |  | 221,111 |  |  |  | 221,111 |  |  |  | 221,111 |
Additional Paid-in Capital |  |  | 257,625 |  |  |  | 257,638 |  |  |  | 259,361 |  |  |  | 260,479 |  |  |  | 233,169 |
ORIX Corporation Shareholders’ Equity |  |  | 2,897,074 |  |  |  | 2,993,608 |  |  |  | 3,028,456 |  |  |  | 3,261,419 |  |  |  | 3,356,585 |
Number of Issued Shares |  |  | 1,324,629,128 |  |  |  | 1,324,629,128 |  |  |  | 1,285,724,480 |  |  |  | 1,258,277,087 |  |  |  | 1,234,849,342 |
Number of Outstanding Shares* 5 |  |  | 1,279,961,352 |  |  |  | 1,254,471,656 |  |  |  | 1,217,338,316 |  |  |  | 1,193,399,778 |  |  |  | 1,170,305,869 |

|  | As of and for the Year Ended March 31, |
|  | 2019 |  |  | 2020 |  |  | 2021 |  |  | 2022 |  |  | 2023 |
|  | (Yen and dollars, except ratios and number of employees) |
Key ratios (%)* 6 : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Return on ORIX Corporation shareholders’ equity (“ROE”) |  |  | 11.6 |  |  |  | 10.3 |  |  |  | 6.4 |  |  |  | 9.9 |  |  |  | 8.3 |
Return on assets (“ROA”) |  |  | 2.74 |  |  |  | 2.40 |  |  |  | 1.44 |  |  |  | 2.24 |  |  |  | 1.85 |
ORIX Corporation shareholders’ equity ratio |  |  | 23.8 |  |  |  | 22.9 |  |  |  | 22.3 |  |  |  | 22.9 |  |  |  | 22.0 |
Allowance/investment in direct financing leases and installment loans |  |  | 1.3 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Allowance/net investment in leases and installment loans |  |  | 0 |  |  |  | 1.2 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Allowance for credit losses/net investment in leases and installment loans |  |  | 0 |  |  |  | 0 |  |  |  | 1.7 |  |  |  | 1.4 |  |  |  | 1.3 |
Per share data and employees: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ORIX Corporation shareholders’ equity per share* 7 |  | ¥ | 2,263.41 |  |  | ¥ | 2,386.35 |  |  | ¥ | 2,487.77 |  |  | ¥ | 2,732.88 |  |  | ¥ | 2,868.13 |
Basic earnings per share for net income attributable to ORIX Corporation shareholders |  |  | 252.92 |  |  |  | 237.38 |  |  |  | 155.54 |  |  |  | 259.37 |  |  |  | 231.35 |
Diluted earnings per share for net income attributable to ORIX Corporation shareholders |  |  | 252.70 |  |  |  | 237.17 |  |  |  | 155.39 |  |  |  | 259.07 |  |  |  | 231.04 |
Dividends applicable to fiscal year per share |  |  | 76.00 |  |  |  | 76.00 |  |  |  | 78.00 |  |  |  | 85.60 |  |  |  | 85.60 |
Dividends applicable to fiscal year per share* 8 |  | $ | 0.69 |  |  | $ | 0.71 |  |  | $ | 0.73 |  |  | $ | 0.70 |  |  | $ | 0.62 |
Number of employees |  |  | 32,411 |  |  |  | 31,233 |  |  |  | 33,153 |  |  |  | 32,235 |  |  |  | 34,737 |

* 1 | Accounting Standards Update 2016-02 (ASC 842 (“Leases”)) was adopted on April 1, 2019.

* 2 | Consumption tax is excluded from the stated amount of total revenues.

* 3 | The sum of assets considered 90 days or more past due and loans individually evaluated for impairment amounted to ¥86,046 million and ¥111,430 million as of March 31, 2019 and 2020, respectively. These sums included: (i) investment in direct financing leases considered 90 days or more past due of ¥14,807 million as of March 31, 2019, respectively, and net investment in leases considered 90 days or more

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| past due of ¥15,346 million as of March 31, 2020, (ii) installment loans (excluding loans individually evaluated for impairment) considered 90 days or more past due of ¥12,412 million and ¥10,264 million as of March 31, 2019 and 2020, respectively, and (iii) installment loans individually evaluated for impairment of ¥58,827 million and ¥85,820 million as of March 31, 2019 and 2020, respectively. The sum of net investment in leases and installment loans considered non-performing amounted to ¥106,863 million, ¥104,539 million and ¥98,185 million as of March 31, 2021, 2022 and 2023, respectively. These sums included: (i) net investment in leases considered non-performing of ¥18,925 million, ¥19,224 million and ¥16,841 million as of March 31, 2021, 2022 and 2023, respectively, (ii) non-performing installment loans not individually assessed for credit losses of ¥28,181 million, ¥34,479 million and ¥33,706 million as of March 31, 2021, 2022 and 2023, respectively, and (iii) non-performing installment loans individually assessed for credit losses of ¥59,757 million, ¥50,836 million and ¥47,638 million as of March 31, 2021, 2022 and 2023, respectively. See “Item 5. Operating and Financial Review and Prospects—Results of Operations—Year Ended March 31, 2023 Compared to Year Ended March 31, 2022—Details of Operating Results—Revenues, New Business Volumes and Investments—Asset quality.”

* 4 | Accounting Standards Update 2016-13 (“Measurement of Credit Losses on Financial Instruments”—ASC 326 (“Financial Instruments—Credit Losses”)) has been adopted since April 1, 2020, and the amounts of allowance for doubtful receivables on finance leases and probable loan losses have been reclassified to allowance for credit losses. For further information, see Note 1 of “Item 18. Financial Statements.”

* 5 | The Company’s shares held through the Board Incentive Plan Trust, which was established in July 2014 to provide shares at the time of retirement as compensation, are included in the number of treasury stock and excluded from the number of outstanding shares. The Board Incentive Plan Trust held 1,823,993 shares, 1,476,828 shares, 2,154,248 shares, 1,963,282 shares and 2,800,866 shares as of March 31, 2019, 2020, 2021, 2022 and 2023, respectively.

* 6 | Return on ORIX Corporation shareholders’ equity is the ratio of net income attributable to ORIX Corporation shareholders for the period to average ORIX Corporation shareholders’ equity based on fiscal year beginning and ending balances for the period. Return on assets is the ratio of net income attributable to ORIX Corporation shareholders for the period to average total assets based on fiscal year beginning and ending balances for the period. ORIX Corporation shareholders’ equity ratio is the ratio as of the period end of ORIX Corporation shareholders’ equity to total assets. Allowance/investment in direct financing leases and installment loans is the ratio as of the period end of the allowance for doubtful receivables on direct financing leases and probable loan losses to the sum of investment in direct financing leases and installment loans. Allowance/net investment in leases and installment loans is the ratio as of the period end of the allowance for doubtful receivables on finance leases and probable loan losses to the sum of net investment in leases and installment loans.

* 7 | ORIX Corporation shareholders’ equity per share is the amount derived by dividing ORIX Corporation shareholders’ equity by the number of outstanding shares.

* 8 | The U.S. dollar amounts represent translations of the Japanese yen amounts using noon buying rates for Japanese yen per $1.00 in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York in effect on the respective dividend payment dates.

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RISK FACTORS
Investing in our securities involves risks. You should carefully consider the risks described below as well as all the other information in this annual report, including, but not limited to, our consolidated financial statements and related notes and “Item 11. Quantitative and Qualitative Disclosures about Market Risk.” Our business activities, financial condition and results of operations and the trading prices of our securities could be adversely affected by any of the factors discussed below or other factors. Even if we do not incur direct financial loss as a result of these risks, our reputation may be adversely affected. This annual report also contains forward-looking statements that involve uncertainties. Our actual results could differ from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, the risks faced by us described below and elsewhere in this annual report. See “Forward-Looking Statements.” Forward-looking statements in this section are made only as of the filing date of this annual report.
For information about our management of the principal risks we face, see “Item 5. Operating and Financial Review and Prospects—Risk Management—Management of Principal Risks.”
1. Risks Related to our External Environment
(1) Global economic weakness and instability or political turmoil could adversely affect our business activities, financial condition and results of operations.
We conduct business operations in Japan and other areas of Asia, as well as in the Americas, Europe, Oceania and the Middle East. Our business is affected by general geopolitical, economic and financial conditions in these countries and regions. These conditions are affected by changes in various factors including, for example, wars and riots, changes in fiscal and monetary policies and trade and technology frictions among major trading partners, including the United States and China. Fluctuations or shifts in commodity market prices and consumer demand, trade disputes, political, social or economic instability in these countries and regions could also adversely affect our business activities, financial condition and results of operations. As for the Russia-Ukraine crisis, our direct exposure to Russia and Ukraine is limited and we do not expect a significant impact on our financial performance at this stage; though its resolution is uncertain and its long-term and indirect impact is difficult to predict.
Despite our attempts to minimize the adverse effects of such factors through, for example, improving our risk management procedures, global economic weakness and instability, or political turmoil could adversely affect our business activities, financial condition and results of operations.
(2) Competition could affect our business
We compete on the basis of pricing, transaction structure, service quality and other terms. It is possible that our competitors may seek to compete aggressively on the basis of pricing and other terms through their low funding costs or without regard to their profitability. In addition, technological advances and innovation may result in the emergence of new competitors and as a result, we may be forced to adapt our business to compete more effectively. As a result of such aggressive competition by our competitors, our market share or our profitability may decline.
(3) Negative publicity could affect our business activities, financial condition, results of operations and share price
Our business is built upon the confidence of our customers and market participants. Whether based on facts or not, negative publicity about our activities, our industries or the parties with whom we do business could harm our reputation and diminish confidence in our business. In such an event, we may lose customers or business opportunities, which could adversely affect our business activities, financial condition and results of operations, as well as our share price.
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(4) Climate change could impact our business
The physical risks and transition risks associated with climate change are subject to increasing political, societal and regulatory focus in Japan and globally, and could have a negative impact on the earnings, business activities, financial condition and results of operation of ORIX Group.
Major physical risks of climate change may arise from a number of factors and relate to specific weather events or the gradual deterioration of environmental conditions. Consequences may include the possibility of a halt to, or reduction in, business operations owing to damage at our facilities and offices, an increase in operating or construction costs caused by rising temperatures. In addition, climate change could impact the value of our assets pledged as collateral, resulting in an increase in our credit costs.
Major transition risks may arise due to changes in climate change policies, tightening of environmental regulations or technological innovation, and, as a result, the financial condition and results of operation of our businesses and partners in sectors that are deemed to contribute to climate change may be adversely affected. For example, strengthened decarbonization policies may impact our coal-biomass
co-fired
power plants, or increase costs in certain businesses owing to carbon taxes.
ORIX announced its support for the Task Force on Climate-related Financial Disclosures (“TCFD”) in October 2020, with the aim of enhancing corporate value through the assessment and disclosure of the risks and opportunities posed by climate change. ORIX is working to expand its information disclosure in line with the TCFD framework’s four themes involving governance, strategy, risk management, and metrics and goals. With regards to its
ESG-related
material issues and focus areas and key goals, ORIX has announced that it will actively promote its renewable energy business, reduce GHG (CO2) emissions, and reduce our investment and credit balance in GHG (CO2) emitting industries. While ORIX Group intends to maintain its commitment to
ESG-related
material issues and focus areas, developments in political, economic, technological, social and market environments or other factors, much of which are outside of its control and subject to significant uncertainties, may affect its strategies or capability to achieve its
ESG-related
goals as planned, and there is no assurance that ORIX will achieve its key goals in the specified time frames or otherwise. Moreover, these risks or a failure to achieve these goals, could adversely affect ORIX’s business and operating results and significantly impact ORIX’s
mid-
and long-term initiatives.
For further information, see “Item 4. Information on the Company—Sustainability at ORIX and Our Initiatives.”
(5) Risk related to natural disasters and other calamities could impact our business
Unpredictable events such as earthquakes, storms, floods, tsunamis and other natural phenomena, extreme weather conditions, fires, pandemics, etc. may, among other things, cause unexpectedly large market changes or unanticipated deterioration of economic conditions in a country or a region, or cause major injuries to our personnel or damages to our facilities, equipment and other property. As a result of such events, our business activities, financial condition and results of operations could be adversely affected.
In addition, the global
COVID-19
pandemic has had a serious impact on domestic and international economies since the beginning of 2020. In the event the pandemic reoccurs in the future or the world experiences another pandemic similar to or worse than the
COVID-19
pandemic, our business activities, financial condition and results of operations could be adversely affected in a manner that we cannot currently anticipate.
2. Credit Risk
We maintain an allowance mainly for credit losses on finance leases and probable loan losses. However, we cannot be sure that the allowance will be adequate to cover future credit losses. This allowance may be
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inadequate due to unexpected adverse changes in the Japanese and overseas economies in which we operate, or deterioration of specific industries, markets or customers’ business performance. While we constantly strive to diversify risk through portfolio management, we may be required to make additional provisions in the future depending on economic trends and other factors.
Furthermore, if adverse economic or market conditions affect the value of underlying collateral, secondhand equipment, or other collateral measures, our credit-related costs other than the allowance might increase. If any such event occurs, our business activities, financial condition and results of operations could be adversely affected.
3. Business Risk
(1) We are exposed to risks from expansion of our businesses, acquisitions of companies and assets, entry into joint ventures and alliances with other companies and similar activities with uncertain outcomes
We are engaged in a broad range of businesses in Japan and overseas and continue to expand such range, including through acquisitions of companies and businesses. The breadth of our business and continued expansion may expose us to new and complex risks that we may be unable to fully control or foresee, and, as a result, we may incur unexpected and potentially substantial costs or losses. Such unexpected costs and losses, which may result from regulatory, technological or other factors, may be particularly acute when we expand our business through acquisitions. In addition, we may not achieve targeted results if our business or business opportunities do not develop as expected or if competitive pressures undermine profitability. Furthermore, when we acquire companies or businesses to expand our business, we could be required to make large write-downs of goodwill or other assets if the results of operations of an acquired company or business are lower than what we expected at the time we made such acquisition, or if they encounter other financial or operational difficulties.
We have a wide range of investments in business operations, including operations that are very different from our financial services business. If we fail to manage our investee companies effectively, we may experience financial losses as well as losses of future business opportunities. In addition, we may not be able to sell or otherwise dispose of investments at the times or prices we initially expected or at all. We may also need to provide financial support, including credit support or equity investments, to some investee companies if their financial condition deteriorates.
From time to time we also enter into joint ventures and other alliances, and the success of these alliances is often dependent upon the operational capabilities, the financial stability and the legal environment of our counterparties. If an alliance suffers a decline in its financial condition or is subject to operational instability because of a change in applicable laws or regulations, we may be required to pay in additional capital, reduce our investment at a loss, or terminate the alliance.
If any such events occur, our business activities, financial condition results of operations and reputation may be adversely affected.
(2) We are exposed to risks related to asset value volatility
In the management of our businesses, we hold various classes of assets and investments, including real estate, aircraft, ships and other assets in Japan and overseas, which we may hold for our own use or lease to our customers. The market values of these assets and investments may be volatile and may decline substantially in the future.
Asset valuation losses are recorded based on the fair market values at the time when revaluation is conducted in accordance with applicable accounting principles. However, losses from the sale of these assets, including as a result of a sudden need for liquidity or to mitigate an adverse credit event at one of our customers, may exceed the amount of recorded valuation losses.
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We estimate the residual value for certain operating leases at the time of contract. Our estimates of the residual value of equipment are based on current market values of used equipment and assumptions about when and to what extent the equipment will become obsolete; however, we may need to recognize additional valuation losses if our estimates differ from actual trends in equipment valuation and the secondhand market, and we may incur losses if we are unable to collect such estimated residual amounts.
In addition, due to our operation of asset management businesses, if there are changes in the market value of asset such as shares and other securities, it could affect the results of our asset management services, which could lead to reductions in our assets under management and related fees and negatively impact our revenue.
If any event described above occurs, our business activities, financial condition and results of operations may be adversely affected.
(3) Risks related to our other businesses
We operate a wide range of businesses in Japan and overseas, including financial services businesses.
Entry into new businesses, and the results of operations following such entry, are accompanied by various uncertainties, and if any unanticipated risk does occur, it may adversely affect our business activities, financial condition and results of operations.
4. Market Risk
(1) Changes in market interest rates and currency exchange rates could adversely affect our assets and our business activities, financial condition and results of operations
Our business activities are subject to risks relating to changes in market interest rates and currency exchange rates in Japan and overseas. Although we conduct asset-liability management (“ALM”), changes in the yield curve and currency exchange rates could adversely affect our results of operations.
When funding costs increase due to actual or perceived increases in market interest rates, financing lease terms and loan interest rates for new transactions may diverge from the trend in market interest rates.
Changes in market interest rates could have an adverse effect on the credit quality of our assets and our asset structure. For example, with respect to floating-rate loan assets, if market interest rates increase, the repayment burdens of our customers may also increase, which could adversely affect the financial condition of such customers and their ability to repay their obligations to us. Alternatively, a decline in interest rates could result in an increase in early repayment of loans and a corresponding decrease in our assets, which could adversely impact our revenue generation capabilities.
Although we enter into derivative investments to hedge our market interest and currency risks, we may not be able to perfectly hedge against all risks arising from our business operations in foreign currencies and overseas investments. As a result, a significant change in interest rates or currency exchange rates could have an adverse impact on our business activities, financial condition and results of operations.
(2) Our risk management strategy of using derivatives for hedging purposes may not be effective
We may use derivative instruments to reduce fluctuations in the value of our investments and to hedge against interest rate and currency risks. However, it is possible that this risk management strategy may not be fully effective in all circumstances due to our failure to appraise the value of assets being hedged or execute such derivative instruments properly or at all, or our failure to achieve the intended results of such hedging due to the unavailability of offsetting or roll-over transactions in the event of sudden turbulence in the market or otherwise. Furthermore, our derivatives counterparties could fail to honor the terms of their contracts with us. Our existing derivative contracts and new derivative transactions may also be adversely affected if our credit ratings are downgraded.
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In such instances, our business activities, financial condition and results of operations could be adversely affected.
(3) Fluctuations in market prices of stocks and bonds may adversely affect our business activities, financial condition and results of operations
We hold investments in shares of private and public company stock, including shares of our equity method affiliates, and corporate and government bonds in Japan and overseas. The market values of our investment assets are volatile and may fluctuate substantially in the future. A significant decline in the value of our investment assets could adversely affect our business activities, financial condition and results of operations.
(4) The transition away from and discontinuation of LIBOR and other interest rate benchmarks could have a negative impact on our results of operations.
The UK Financial Conduct Authority (“FCA”), which regulates LIBOR, has announced that it will no longer persuade or compel banks to present rates for the calculation of the LIBOR benchmark after 2021. The administrator of LIBOR, ICE Benchmark Administration Limited, ceased the publication of various LIBOR settings, including Japanese yen and Euro LIBOR settings, from December 31, 2021, and has announced that it will cease the publication of
one-,
three-,
six-
and twelve-month U.S. dollar LIBOR after June 30, 2023. We are in the process of transitioning certain assets and liabilities linked to U.S. dollar LIBOR with an extended cessation period for publication and other interest rate benchmarks across our businesses that require such transition; however, during the process of the transition away from and discontinuation of U.S. dollar LIBOR and other interest rate benchmarks, uncertainty as to the availability and/or suitability of alternative reference rates, and differences between U.S. dollar LIBOR and other interest rate benchmarks and alternative reference rates may affect financial markets and market participants, including us. In addition, we remain subject to the risks that our actions to address the transition may be delayed or may not be successful, which could adversely affect our financial condition and results of our operations.
5. Liquidity Risk
Our primary sources of financing include: borrowings from banks and other institutional lenders, funding from capital markets (such as through issuances of bonds, medium-term notes or commercial paper (“CP”), loans receivables and other assets) and deposits. Such sources include a significant amount of short-term debt, such as CP and other short-term borrowings from various institutional lenders and the portion of our long-term debt maturing in the current fiscal year. Some of our committed credit lines require us to comply with financial covenants.
For the ORIX Group, an increase in liquidity risk means an increase in the likelihood that it will be difficult to raise new funds and renew existing funding, and/or that funding costs will increase. If our access to liquidity is restricted, or if we are unable to obtain our required funding at acceptable costs, our business activities, financial condition and results of operations may be significantly and adversely affected.
We obtain credit ratings from ratings agencies. Downgrades of our credit ratings due to reasons such as market turmoil or the worsening of our financial condition could result in increases in our interest expenses and could have an adverse effect on our fund-raising ability by increasing costs of issuing CP and corporate debt securities and borrowing from banks and other financial institutions, reducing the amount of bank credit available to us or decreasing the attractiveness of our equity securities to investors. As a result, our business activities, financial condition and results of operations may be significantly and adversely affected.
6. Compliance Risk
Our efforts to implement and maintain thorough internal controls for appropriate compliance and legal risk management, as well as compliance education programs for our directors, officers and other employees across
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the ORIX Group, in order to prevent violations of applicable laws, regulations and internal rules may not be fully effective in preventing all violations. In addition, we engage in a wide range of businesses, and our expansion into new businesses through acquisitions may cause our current internal controls to not be fully effective. If we are unable to implement and maintain robust internal controls to prevent any such violations and adjust such controls in response to expansion of our business, we may be subject to sanctions, which could also apply to our officers or employees. Such events could adversely affect our business activities, financial condition, results of operations and reputation.
In addition, we are also indirectly exposed to compliance risk through our joint venture and alliance partners, investee companies and other business partners or counterparties, whom we may not be able to control. If any of those parties engage in violations of applicable laws or regulations, our business activities, financial condition, results of operations and reputation may be adversely affected.
7. Legal Risk
(1) We are subject to various laws and regulations in Japan and overseas that may affect our business
Our businesses and employees are subject to domestic and international laws, as well as regulatory oversight by government authorities who implement those laws, relating to the various sectors in which we operate and to our business operations generally. These include laws and regulations applicable to specific businesses and industries, such as moneylending, financial instruments exchange, construction, real estate transactions, hotels, insurance, banking and trust services, as well as laws applicable more generally, such as laws and regulations on antitrust, personal data protection, anti-money laundering and anti-bribery and those applicable due to our public listing in Japan and the United States.
Regardless of whether we have violated any laws, if we become the subject of a governmental investigation, litigation or other proceeding in connection with our businesses, our business activities, financial condition and results of operations may be adversely affected.
For information on the regulations that apply to our businesses, see “Item 4. Information on the Company—Business Regulation.”
(2) Enactment of, or changes in, laws, regulations and accounting standards may affect our business activities, financial condition and results of operations
Enactment of, or changes in, laws and regulations may adversely affect the way that we conduct our business and the products or services that we may offer, as well as limit our investing and funding activities. Such enactment or changes may increase our compliance costs. In recent years, foreign laws and regulations on subject matters such as personal data protection, anti-money laundering, anti-bribery and antitrust have been enacted and strengthened such that they may directly apply to the activities of our businesses, even if conducted outside the relevant jurisdiction. If such pattern continues and it becomes necessary for us to comply with different countries’ regulations, in addition to significantly increasing the number of laws and regulations that we need to comply with, it may also significantly increase our compliance costs.
If accounting standards are changed, even if such changes do not directly affect our profitability or financial soundness, industries related to our businesses, our clients or the financial market may be negatively affected. As a result of such enactments or changes, our business activities, financial condition and results of operations could be adversely affected.
(3) Contractual deficiencies may affect our business and other initiatives
When engaging in business and other transactions, deficiencies, including our failure to execute legally required or binding agreements or our execution of agreements that do not reflect our intentions regarding
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parties’ contractual obligations, may lead to adverse events such as our being the target of infringement, breach of contract and other legal claims by contractual counterparties and third parties or disruption of our ability to obtain rights we expected as part of such transactions. Such events may adversely affect our business activities, financial condition and results of operations.
8. Information Systems / Cybersecurity Risk
(1) Risks relating to loss, theft, damage or leakage of information
We maintain various information such as customer information including information on individuals, accounting information and personnel information. We have implemented internal rules and training programs to properly manage such information. We also provide technical support to prevent vulnerabilities in our information systems that store this information and control access to these information systems. However, in spite of such efforts, our measures may not always be effective and it is possible that such information may be lost, stolen, damaged or leaked.
In such event, we could be subject to governmental investigation, litigation or other proceedings in connection with potential violations of applicable data protection laws and regulations, such as the Act on the Protection of Personal Information of Japan and the General Data Protection Regulation adopted in the EU, and may be sued for damages.
(2) The impact of cybersecurity attacks or breaches on our information systems and our business generally
We utilize information systems for managing customer information and financial transactions and for business operations, and in using these diverse information systems, the Company is connected via external networks to organizations within the Group, as well as employees working remotely from home and subcontractors. Cyber or ransom attacks by computer viruses, unauthorized access, hacking or other cyber-terrorism against these information systems and information networks could have adverse effects on our operations, by causing, for example, the suspension of certain products or services we provide to our customers or other interruptions of our business activities. In addition to direct impacts of an attack on a given information system, an attack may also result in widespread impacts throughout the network, which could have a negative impact on the ORIX Group’s business activities and reputation.
Cybersecurity risks and the frequency and sophistication of cyberattacks have significantly increased in recent years. In particular, geopolitical tensions, including those resulting from the Russia-Ukraine crisis, may also increase the risk of cyberattacks, including cyberattacks by state actors or others in retaliation against the sanctions imposed by the international community, as well as cyberattacks by other actors seeking to take advantage of the ongoing crisis. In addition, we also face indirect cybersecurity risks relating to our customers and other third parties, including counterparties in the financial services industry. For example, vulnerabilities in third-party technology systems may increase the risk that our information systems are exposed to cyberattacks. This may result in significant costs to restore business operations, or regulatory sanctions for violations of relevant laws and regulations, or the potential for damages judgments, which may have a negative impact on our reputation.
As a result of the above, our business activities and reputation may be adversely affected.
(3) Impact of system failures
System shutdowns, malfunctions or failures, the mishandling of data or fraudulent acts by employees, vendors or other third parties, could have adverse effects on our operations, by causing, for example, delays in the receipt and payment of funds, disruptions to our financial transactions, the generation of errors in information used by our management for business decision-making and risk management evaluation and planning, the suspension of certain products or services we provide to our customers or other interruptions of our business activities. In such event, our liquidity could be adversely affected.
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We may also incur substantial costs to recover our business functionality and our business activities, financial condition, results of operations and reputation may be adversely affected.
9. Operational Risk
(1) If our internal control over financial reporting is identified as being insufficient, our share price, reputation and business activities may be adversely affected
We have established and assessed our internal control over financial reporting in a manner intended to ensure compliance with the requirements of various laws and regulations. However, in future periods our management or independent registered public accounting firm may identify material weaknesses or deficiencies through the respective evaluations and audits of our internal control over financial reporting, that they conduct and such finding may cause us and our accountants to disclose that our internal control over financial reporting is ineffective, which could cause a loss of investor confidence in the reliability of our financial statements and cause our share price to fall. As a result, our business activities, financial condition, results of operations and reputation may be adversely affected.
(2) Our risk management may not be effective
We continuously seek to improve our risk management function. However, due to the rapid expansion of our business or significant changes in the business environment, our risk management may not always be effective. As a result, our business activities, financial condition and results of operations may be adversely affected. For a detailed discussion of our risk management system, see “Item 5. Operating and Financial Review and Prospects—Risk Management.”
(3) We may not be able to hire or retain qualified personnel
Our businesses require a considerable investment in human resources and the retention of qualified personnel in order to successfully compete in markets in Japan and overseas. If we cannot develop, hire or retain the necessary qualified personnel, we may incur additional costs to hire specialists or the quality of our products and services may decline, which could prevent us from continuing our business operation in a stable manner and adversely affect our business activities, financial condition and results of operations.
(4) Other operational risks
Our business entails many types of operational risks. Examples include inappropriate sales practices; inadequate handling of client and customer complaints; inadequate internal communication of necessary information; misconduct of officers, employees, agents, franchisees, trading associates, vendors or other third parties; errors in the settlement of accounts and conflicts with employees concerning labor and workplace management.
When we offer new products or services, we must ensure that we have the capacity to properly undertake and perform such operations. If we lack such capacity or fail to perform such operations successfully, we may lose the confidence of the market and our customers, which may cause us to suffer decreased profitability or force us to withdraw from such operations.
Our management attempts to manage operational risk and maintain it at a level that we believe is appropriate. However, operational risk is part of the business environment in which we operate, and despite our control measures, our business activities, financial condition results of operations and reputation may be adversely affected at any time due to this risk.
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10. Risks Related to Holding or Trading our Shares and ADRs
(1) Rights of shareholders under Japanese law may be different from those under the laws of other jurisdictions
Our Articles of Incorporation, the regulations of our board of directors and the Companies Act govern our corporate affairs. Legal principles relating to matters such as the validity of corporate procedures, directors’ and officers’ fiduciary duties and shareholders’ rights are different from those that would apply if we were incorporated elsewhere. Shareholders’ rights under Japanese law are different in some respects from shareholders’ rights under the laws of jurisdictions within the United States and other countries. You may have more difficulty in asserting your rights as a shareholder than you would as a shareholder of a corporation organized in a jurisdiction outside Japan. For a detailed discussion of the relevant provisions of the Companies Act and our Articles of Incorporation, see “Item 10. Additional Information—Memorandum and Articles of Incorporation.”
(2) It may not be possible for investors to effect service of process within the United States upon ORIX or ORIX’s directors or executive officers, or to enforce against ORIX or those persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States
ORIX is a joint stock corporation formed in Japan. Almost all of ORIX’s directors and executive officers are residents of countries other than the United States. Although some of ORIX’s subsidiaries have substantial assets in the United States, substantially all of ORIX’s assets and the assets of ORIX’s directors and executive officers are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon ORIX or ORIX’s directors and executive officers or to enforce against ORIX or those persons, in U.S. courts, judgments of U.S. courts predicated upon the civil liability provisions of U.S. securities laws. ORIX has been advised by its Japanese counsel that there is doubt, in original actions or in actions to enforce judgments of U.S. courts, as to the enforceability in Japan of civil liabilities based solely on U.S. securities laws. A Japanese court may refuse to allow an original action based on U.S. securities laws.
The United States and Japan do not currently have a treaty providing for reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil or commercial matters. Therefore, if you obtain a civil judgment by a U.S. court, you will not necessarily be able to enforce such judgment directly in Japan.
(3) We may be a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. investors
We believe that we may have been a passive foreign investment company (a “PFIC”) under the U.S. Internal Revenue Code of 1986, as amended, for the year to which this report relates because of the composition of our assets and the nature of our income. In addition, we may be a PFIC in the foreseeable future. Assuming this is the case, U.S. investors in our Shares or ADSs will be subject to special rules of taxation in respect of certain dividends or gains on such Shares or ADSs, including the treatment of gains realized on the disposition of, and certain dividends received on, the Shares or ADSs as ordinary income earned pro rata over a U.S. investor’s holding period for such Shares or ADSs, taxed at the maximum rate applicable during the years in which such income is treated as earned, with the resulting tax liability subject to interest charges for a deemed deferral benefit. In addition, in the case of any dividends that are not subject to the foregoing rule, the favorable rates of tax applicable to certain dividends received by certain
non-corporate
U.S. investors would not be available. See “Item 10. Additional Information—Taxation—United States Taxation.” Investors are urged to consult their own tax advisors regarding all aspects of the income tax consequences of investing in our Shares or ADSs.
(4) If you hold fewer than 100 Shares, you will not have all the rights of shareholders with 100 or more Shares
One “unit” of our Shares is comprised of one hundred Shares. Each unit of the Shares has one vote. A holder who owns Shares other than in multiples of one hundred will own less than a whole unit (i.e., for the
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portion constituting of fewer than one hundred Shares.) The Companies Act imposes significant restrictions on the rights of holders of shares constituting less than a whole unit, which include restrictions on the right to vote. Under the unit share system, a holder of Shares constituting less than a unit has the right to require ORIX to purchase its Shares and the right to require ORIX to sell it additional Shares to create a whole unit. However, a holder of ADRs is not permitted to withdraw underlying Shares representing less than one unit, which is equivalent to 20 ADSs, and, as a practical matter, is unable to require ORIX to purchase those underlying Shares. The unit share system, however, does not affect the transferability of ADSs, which may be transferred in lots of any number of whole ADSs.
(5) Foreign exchange fluctuations may affect the value of our securities and dividends
Market prices for our ADSs may decline if the value of the yen declines against the dollar. In addition, the dollar amount of cash dividends or other cash payments made to holders of ADSs will decline if the value of the yen declines against the dollar.
(6) A holder of ADRs has fewer rights than a shareholder and must act through the depositary to exercise those rights
The rights of shareholders under Japanese law to take various actions, including voting shares, receiving dividends and distributions, bringing derivative actions, examining a company’s accounting books and records and exercising dissenters’ rights, are available only to holders of record on a company’s register of shareholders. The Shares represented by our ADSs are registered in the name of a nominee of the depositary, through its custodian agent. Only the depositary is able to exercise those rights in connection with the deposited Shares. The depositary will make efforts to vote the Shares represented by our ADSs as instructed by the holders of the ADRs representing such ADSs and will pay to those holders the dividends and distributions collected from us. However, a holder of ADRs will not be able to directly bring a derivative action, examine our accounting books and exercise dissenters’ rights through the depositary unless the depositary specifically undertakes to exercise those rights and is indemnified to its satisfaction by the holder for doing so.
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Item 4. Information on the Company
GENERAL
ORIX is a joint stock corporation
(kabushiki kaisha)
formed under Japanese law. Our principal place of business is at World Trade Center Building, SOUTH TOWER,
2-4-1
Hamamatsu-cho,
Minato-ku,
Tokyo
105-5135,
Japan, and our phone number is: +81 3 3435 3000. Our general contact URL is
https://www.orix.co.jp/grp/en/contact/inquiry-eng.html
and our corporate website URL is: https://www.orix.co.jp/grp/en. The information on our website is not incorporated by reference into this annual report. ORIX Corporation USA is ORIX’s agent in the United States, and its principal place of business is at 2001 Ross Avenue, Suite 1900, Dallas, Texas 75201, USA.
CORPORATE HISTORY
ORIX was established in April, 1964 in Osaka, Japan as Orient Leasing Co., Ltd. by three trading companies and five banks that included Nichimen Corporation, Nissho Corporation and Iwai Corporation (presently Sojitz Corporation), the Sanwa Bank (presently The Bank of Mitsubishi UFJ, Ltd.), Toyo Trust & Banking (presently Mitsubishi UFJ Trust and Banking Corporation), the Industrial Bank of Japan and Nippon Kangyo Bank (presently Mizuho Bank, Ltd.), and the Bank of Kobe (presently Sumitomo Mitsui Banking Corporation).
Our initial development occurred during the period of sustained economic growth in Japan during the 1960s and the early 1970s. We capitalized on the growing demand in this period by expanding our portfolio of leasing assets.
During this time, our marketing strategy shifted from a focus on using the established networks of the trading companies and other initial shareholders to one that concentrated on independent marketing as the number of our branches expanded. In April 1970, we listed our Shares on the second section of the Osaka Securities Exchange. Since February 1973, our Shares had been listed on the first sections of the Tokyo Stock Exchange and the Osaka Securities Exchange (which was integrated into the Tokyo Stock Exchange in 2013). Since April 2022, we have transitioned from the First Section to the Prime Market under the restructure of the Tokyo Stock Exchange’s market segments. ORIX was also listed on the first section of the Nagoya Stock Exchange from February 1973 to October 2004.
ORIX set up a number of specialized leasing companies to tap new market potential, starting with the establishment of Orient Auto Leasing Corporation (presently ORIX Auto Corporation) in 1973 and Orient Instrument Rentals Corporation (presently ORIX Rentec Corporation), Japan’s first electric measuring equipment rental company, in 1976. With the establishment of the credit company Family Consumer Credit Corporation (presently ORIX Credit Corporation, concentrating on card loans) in 1979, ORIX began to move into the retail market by offering financing services to individuals.
It was also during this time that ORIX began expanding overseas, commencing with the establishment of its first overseas office in Hong Kong in 1971, followed by Singapore (1972), Malaysia (1973), Indonesia (1975), the Philippines (1977) and Thailand (1978).
In the 1980s and early 1990s, ORIX established offices in the United States (1981), Australia (1986), Pakistan (1986) and Taiwan (1991). The Japanese company Budget
Rent-a-Car
(presently ORIX Auto Corporation) was also established in 1985.
In 1989, we introduced a corporate identity program and changed our name to ORIX Corporation from Orient Leasing Co., Ltd. to reflect our increasingly international profile and diversification into financial services other than leasing.
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In 1991, ORIX established ORIX Aviation Systems Limited in Ireland. In the same year, ORIX established ORIX Omaha Life Insurance Corporation (presently ORIX Life Insurance Corporation (“ORIX Life Insurance”)) and entered the life insurance business. In 1998, ORIX purchased Yamaichi Trust & Bank, Ltd. (presently ORIX Bank Corporation (“ORIX Bank”)). In 1998, ORIX listed on the New York Stock Exchange (Ticker Symbol: IX) and, through registration with the U.S. Securities and Exchange Commission (“SEC”), has worked to further strengthen its corporate governance regulations. ORIX Real Estate Corporation was established in 1999 to concentrate on condominium development that was first begun in 1993 as well as develop office buildings in pursuit of improved real estate expertise. In 1999, we established ORIX Asset Management and Loan Services Corporation.
Since 2000, we have actively expanded our automobile-related operations by acquiring companies and assets. We combined seven automobile-related companies into ORIX Auto Corporation in 2005.
We have also continued our overseas expansion. In China, we established a rental company in Tianjin in 2004 and in 2005 established a leasing company in Shanghai. In 2009, we established a Chinese Headquarters in Dalian. We also set up local subsidiaries in Saudi Arabia (2001), and the United Arab Emirates (2002).
In 2006, we entered the investment banking field in the United States with the acquisition of Houlihan Lokey, Inc. (All shares sold through a wholly-owned subsidiary ORIX USA in July 2019). In 2010, we acquired RED Capital Group (presently ORIX Real Estate Capital Holdings, LLC), a U.S.-based company that provides financing for multi-family, senior living and healthcare-related real estate development projects in the United States. In 2010, we also acquired Mariner Investment Group LLC, a leading independent
SEC-registered
hedge fund manager (All shares sold through a wholly-owned subsidiary ORIX USA in July 2020).
We managed ORIX Credit Corporation (“ORIX Credit”) over a continuous three-year period jointly with Sumitomo Mitsui Banking Corporation pursuant to an alliance established in July 2009. In June 2012, ORIX purchased all the shares of ORIX Credit, making ORIX Credit a wholly-owned subsidiary of ORIX.
In July 2013, ORIX acquired Robeco Groep N.V. (presently ORIX Corporation Europe N.V. (“OCE”)), a holding company of global asset management companies based in the Netherlands, to pursue a new business model by combining finance with related services. In October 2016, ORIX purchased the remaining shares of Robeco, making Robeco a wholly-owned subsidiary of ORIX.
In July 2014, we acquired Hartford Life Insurance K.K. (presently ORIX Life Insurance). In December 2014, we acquired Yayoi Co., Ltd. (“Yayoi”), a software service provider targeting small businesses, which we sold in March 2022.
In December 2015, ORIX and VINCI Airports S.A.S., an airport concession holder and operator based in France, established Kansai Airports to operate and manage Kansai International Airport and Osaka International Airport.
In November 2018, ORIX acquired 30% of the shares of Avolon Holdings Limited (“Avolon”), a leading global aircraft leasing company located in Ireland.
In January 2019, ORIX made DAIKYO INCORPORATED (“DAIKYO”) a wholly-owned subsidiary due to the acquisition of common shares of DAIKYO through a tender offer.
In July 2021, ORIX acquired 80% of the shares of Elawan Energy S.L.(“Elawan”), a renewable energy company located in Spain. In February 2023, ORIX purchased the remaining shares of Elawan, making Elawan a wholly-owned subsidiary of ORIX.
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STRATEGY
Operating Environment
During fiscal 2023, the world experienced economic recovery from the
COVID-19
pandemic. However, due to the increase of geopolitical risk stemming from the Russia-Ukraine crisis and uncertainty in the operating environment stemming from a shortage of semiconductors, volatility in crude oil prices, interest rates and inflation, ORIX Group exercised extreme caution in managing its various business segments. In fiscal 2023, although the business environment recovered compared to the previous fiscal year in the Real Estate segment and the Aircraft and Ships segment, ORIX Group profits declined due primarily to the expanding impact of the
COVID-19
pandemic on the Insurance segment and due to the deterioration of the economic environment in the ORIX USA segment and the ORIX Europe segment.
In the future, we expect recovery in demand as the global economy resumes growing, but there are increasing concerns about a recession due to the protracted Russia-Ukraine crisis, worsening geopolitical risks between the United States and China, and prolonged interest rate hikes. In particular, the recent collapse of some U.S. banks has resulted in increased uncertainty about the U.S.
mid-cap
banking sector and financial markets, including commercial real estate. In light of these circumstances, ORIX Group is mindful of credit and risk management across our segments, and in particular the ORIX USA segment, which consists of corporate finance, real estate finance, and other businesses.
Target Performance Indicators
In its pursuit of sustainable growth, ORIX Group uses the following performance indicators: Net income attributable to ORIX Corporation shareholders to indicate profitability and ROE to indicate capital efficiency. As medium-term targets, ORIX Group aims to accomplish net income attributable to ORIX Corporation shareholders of ¥400 billion and ROE of 11 %. We believe that it is important to achieve this medium-term ROE target in order to improve ORIX’s price book-value ratio. ORIX Group also strives to maintain financial soundness with an awareness of its credit rating.
Three- year trends in performance indicators are as follows.

|  |  |  |  | As of March 31, |
|  |  |  |  | 2021 |  |  | 2022 |  |  | 2023 |
Net income attributable to ORIX Corporation shareholders |  |  | (Millions of yen | ) |  |  | 192,384 |  |  |  | 312,135 |  |  |  | 273,075 |
ROE (1) |  |  | (%) |  |  |  | 6.4 |  |  |  | 9.9 |  |  |  | 8.3 |

(1) | ROE is the ratio of Net income attributable to ORIX Corporation shareholders for the period to average ORIX Corporation shareholders’ equity based on fiscal year beginning and ending balances.

Major Corporate Agenda
ORIX Group believes that providing new value to society and being a company that is needed by society is what enables a company to achieve sustainable growth. To this end, ORIX Group believes that it must strengthen its management base through the following initiatives.
Promote Sustainability: In November 2021, ORIX’s Board of Directors set out
ESG-related
material issues, focus areas and the seven key goals for ORIX Group. As part of our effort to respond to the various challenges and opportunities posed by climate change and other societal changes, we have taken steps such as conducting climate change-related scenario analysis according to the TCFD framework and disclosing the results, estimating our Scope 3 emissions, and strengthening our sustainable investing and lending framework. To help resolve social issues through our business activities, each business unit at ORIX Group is moving forward with plans to promote sustainability depending on its respective characteristics.
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Enhance risk management: We are formulating risk management policies and standards necessary for ORIX Group to achieve its management strategy and are creating mechanisms to continuously improve the effectiveness of structures and internal control systems for that purpose. In addition, we are making ongoing efforts to develop and enhance the operation of the system that can appropriately identify, evaluate, control, and manage risks.
Strengthen information security and promote digital transformation: We are promoting the digitalization of operations and strengthening the security of digitized management information. In the next step, we are considering effective uses for the massive transactional data accumulated over the years, leveraging information technology to expand existing businesses and launch new ones.
Sustainability at ORIX and Our Initiatives
Overview
Since our founding, contributing to society by creating new value through our business activities has been fundamental to ORIX. Contributing to society and being a company that is valued by society are ORIX’s motivation for sustainable growth.
In addition, operating with an awareness of sustainability has become fundamental to the survival of companies amid constantly shifting economic, societal and global environmental conditions. Based on these principles, ORIX strives to accurately assess and identify the opportunities and risks arising from economic, societal and environmental changes in order to work with its stakeholders and community to contribute to the economic development and sustainable growth of the larger global community, and to incorporate those opportunities and risks into its corporate management.
1. Governance
ORIX has diverse businesses, and each business has a wide range of sustainability issues that either affect society or are affected by society. For this reason, we divide our sustainability efforts into two categories: the corporate (Group-wide) level and the business unit level.
The Sustainability Committee is responsible for sustainability at the corporate level. The Sustainability Committee implements
ESG-related
material issues and key goals Group-wide. It formulates strategic approaches, KPIs, and action protocols, and the results of its deliberations are reported to and approved by the Board of Directors. The Group CEO serves as chairperson for the committee. Committee members include those in charge of business segments directly related to ESG, and the committee is configured flexibly so other stakeholders can participate as necessary depending on the topic/agenda. Roles of the Sustainability Committee include

| (a) | Discussion of specific measures to achieve ESG-related key goals,

| (b) | Discussion of any conflicts arising between short-term earnings and long-term growth,

| (c) | Discussion of measures to reduce climate change risk following the TCFD (Task Force on Climate-related Financial Disclosures) framework,

| (d) | Sharing of information on corporate sustainability developments both in Japan and overseas and

| (e) | Discussion of matters to report to the Board of Directors.

The heads of the business units are responsible for sustainability at the business unit level. At Business Unit Strategy Meetings attended by internal directors and heads of business units, including top management, discussions are held as appropriate regarding the promotion of sustainability in each business unit, and these are also reported to the Sustainability Committee on a regular basis. Matters reported to the Sustainability Committee are also reported to the Board of Directors.
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As the Compensation Policy for Executive Officers (including those who concurrently serve as directors), status of ESG initiatives has been added to the qualitative evaluation items in the division performance indicator for annual bonuses from the fiscal year ended March 2022. The objective is to have directors, executive officers and Group executives set an example of considering the impact of the efforts of each division on the environment, economy, and society in conducting corporate initiatives from a
mid-
to long-term perspective.
The Investment and Credit Committee (“ICC”) deliberates on individual investing and lending transactions. The chairperson is the Group CEO, and the members are Executive Officers and Group Executive Officers appointed by the Group CEO. ORIX formulated its ORIX Sustainable Investing and Lending Policy with the mission of implementing sustainable investing and lending. Based on this policy, potential investing and lending transactions submitted to the ICC go through screening from an ESG perspective using the Sustainable Investing and Lending Checklist. The ICC decides whether to approve the project after consideration of the potential environmental and social effects of each individual transaction. The ICC considers the content and importance of the matters deliberated, and reports to the Board of Directors as necessary.
2. Strategy
In order to realize a sustainable society and achieve sustainable growth for ORIX, in November 2021 we set forth issues that we perceive as material in the fields of environment, society, and governance. We have positioned these important issues as our
mid-
to long-term mission and are working on them at the corporate and business unit levels.

(a) | Material issues and focus areas to reduce climate-change related risks.

| i. | Set GHG emissions reduction goals.

| ii. | Continue to contribute to the development of renewable energy investment and production.

| iii. | Quantify and reduce our climate change-related risks and continue to implement TCFD recommendations.

| iv. | Continue to promote a circular economy and reduce and appropriately manage waste.

| v. | Formulate an exit strategy for existing exposure to high environmental risk business areas and create bright-line exclusion criteria in any new investing or lending.

| vi. | Work with our stakeholders to promote a healthier environment through goods and services that help mitigate adverse environmental impacts.

(b) | Material issues and focus areas to reduce social risks, including human rights risk.

| i. | Continue to strengthen our Sustainable Investing and Lending Policy, Code of Conduct, and risk management system to adequately cover new and emerging social risk areas.

| ii. | Share a common and agreed respect for fundamental human rights with all of our stakeholders such as support for the UN Universal Declaration of Human Rights, worker health and safety, diversity, inclusion and non-discrimination.

| iii. | Continue to improve employee satisfaction by respecting the diversity of our employees and creating an inclusive working environment that promotes flexible working styles and provides career development support, fair performance review and compensation schemes, and employee health support systems.

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(c) | Material issues and focus areas to strengthen governance based on transparency, compliance, and integrity.

| i. | Continue to strengthen the independence of the Board of Directors so that the Board may provide appropriate and effective oversight over the management’s business execution from an independent and objective perspective.

| ii. | The Group CEO will be responsible for all execution matters including responding to these material issues under the oversight of the Board of Directors.

| iii. | Emphasis on client satisfaction and developing and offering sustainable products and services.

| iv. | Endeavour to gain and keep the trust of our clients in all of our business areas.

| v. | Promote a strong culture of compliance with all applicable laws and regulations, including paying our fair share of taxes.

3. Risk Management
ORIX collects a wide range of information, including information on changes in the external environment and information obtained through dialogue with stakeholders such as shareholders/investors, local communities, customers, employees, suppliers, and business partners. The Sustainability Committee monitors and evaluates the achievement status of key issues, and considers revising key issues as necessary. The content of discussions at the Sustainability Committee is regularly reported to the Board of Directors for approval.
Business divisions collect information related to the characteristics of each business and continuously analyze sustainability risks and opportunities. Each business division establishes a sustainability promotion policy and KPIs to implement it, monitors and evaluates the progress of the policy at Business Unit Strategy Meetings, and considers revising the business plan as necessary.
ORIX Sustainable Investing and Lending Policy stipulates prohibited transactions, and excludes transactions with companies with human rights concerns and transactions related to specific sectors and business activities. For individual investment and loan projects, ORIX evaluates the project from an ESG perspective using the Sustainable Investing and Lending Checklist, a proprietary ORIX checklist based on international sustainability guidelines. We continue to monitor important ESG risks even after project execution.
Regarding human rights, we have established a human rights policy as a guideline for promoting efforts to respect human rights. In addition, as disclosed in our UK Modern Slavery Act Statement, we review the risk profile of the different sectors and geographies in which we operate, maintain reporting mechanisms to encourage reporting of misconduct, and train our employees.
Regarding compliance and information security, we have established systems and internal regulations that cover the entire company, and we also conduct regular training for employees.
For employees, we regularly conduct employee morale surveys. Results are used to identify trends in morale at ORIX. They are also utilized as a reference for deciding human resources measures for the ORIX Group or for verifying the effectiveness of current measures.
4. Metrics and Goals
In November 2021, we established certain key sustainability goals relating specifically to ratio of outside directors, ratio of female directors, ratio of female management positions, reduction of GHG (CO2) emissions, reduction of investment and credit balance in GHG (CO2) emitting industries*, in order to link material issues to concrete actions.
* Refers to fossil fuel mining, palm oil plantations, and forestry financed by ORIX Group overseas subsidiaries.
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Addressing Climate Change
ORIX is actively promoting initiatives to reduce risks to the company and society due to climate change and transition to a decarbonized society. Responses to climate change are being addressed both at the corporate level (Group-wide) and at the business unit level.
1. Governance
The Sustainability Committee is responsible for responding to climate change at the corporate level (Group-wide). At the Sustainability Committee, we discuss the results of scenario analysis based on the TCFD recommendations, the progress of efforts to reduce GHG emissions, global discussions on climate change, the expected trend of tightening regulations in the future, and the opinions received from business partners. The Sustainability Committee also reports the content of discussions to the Board of Directors and receives instructions as appropriate.
In business units, the heads of business units are responsible for responding to climate change risks. Specifically, for businesses with GHG emissions above a certain scale, we will plan and implement reduction measures. In addition, if the implementation of scenario analysis reveals the possibility that climate change risks will have a financial impact on the company above a certain scale, we will consider countermeasures. We will consider various methods that match the characteristics of each business, not limited to initiatives through our own businesses, such as reaching out to investees and borrowers, other business partners, and supply chains. The initiatives of business units are decided after discussions with internal directors, including top management, at Business Unit Strategy Meetings, and the details are reported to the Sustainability Committee and the Board of Directors.
2. Strategy
We conduct scenario analysis* for business units that are highly relevant to climate change. We then analyze the expected impact and reflect it in our Group-wide strategies and strategies for each business unit. The expected impact of the risks and opportunities is as follows.

(a) | Physical Risks and Opportunities

ORIX is exposed to physical risks including higher costs due to business suspension and preventive measures or repairs for damage to operating facilities and offices, higher operating and construction expenses resulting from changing temperatures, higher credit costs from damage to customers, and loss of asset value from damage to investees.

(b) | Transition Risks and Opportunities

ORIX is exposed to transition risks including business suspension, loss of asset value, stranded assets due to more stringent regulations, higher costs associated with carbon emissions, higher credit costs due to deterioration in customer performance, and decreased corporate value of high
GHG-emission
investees. Associated opportunities include increasing demand for renewable energy.
*Scenario analysis predicts how the business environment will change due to climate change and long-term policy trends to respond to it, and how such changes will affect the company’s management strategy. ORIX has two scenarios: a 4°C scenario (average global temperature at the end of the 21st century is about 4°C higher than preindustrial levels) and a 1.5°C scenario (average global temperature increase at the end of this century can be kept at 1.5°C compared to
pre-industrial
levels). The former is called physical risks/opportunities, and the latter is called transition risks/opportunities.
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3. Risk Management
The Sustainability Committee widely collects information on changes in the external environment and information obtained through dialogue with stakeholders, then reviews risks and opportunities, and assumptions for scenario analysis. We regularly analyze the impact on ORIX to confirm the adequacy of our strategies. The content of discussions at the Sustainability Committee is reported to the Board of Directors for approval.
4 Metrics and Goals
ORIX’s GHG (CO
2
) emissions in the fiscal year ended March 31, 2022 were 1,197 thousand tons. Compared to the baseline emissions in the fiscal years ended March 31, 2020, this was a decrease of 69 thousand tons (decrease of about 5%). Emissions from the two coal biomass
co-fired
power plants amounted to 844 thousand tons, accounting for 70.5% of the total. Currently, we are working to reduce CO
2
emissions compared to coal-fired power plants of the same class by using approximately 35% biomass fuel for
co-firing.
Addressing Human Capital
1. Strategy
People are ORIX’s most important asset. The concept
Keep Mixed
—the idea that diverse talent creates synergy—is the foundation on which our pool of talent is based. It is our belief that hiring talent of varying nationalities, ages, genders, and work experience is the key to blending diverse values and skills in addition to creating new value, which is the backbone of ORIX’s growth. ORIX’s human resources strategy centers around building a rewarding work environment where diverse talent can maximize their individual knowledge and expertise.
ORIX has been entering new business fields since its establishment as a leasing company in 1964, and has established a differentiated position within the market, both internationally and domestically. The business domain that began with leasing now extends into a wide range of businesses, providing a wide array of products and services to corporate and individual customers, communities, and to social infrastructure.
At ORIX, these diverse businesses are supported by diverse human resources. As we take on the challenge of new business domains and grow existing business domains, we have been working to create a pool of talent so that it can flexibly realign its human resources portfolio. In addition, with the expansion of its business, ORIX has added specialized human resources in various fields, both in Japan and overseas, and the fusion of knowledge that organically connects them has become ORIX’s strength.
Looking ahead to medium- and long-term business development, we will continue working to develop human resources which can use familiarity with existing areas to go the extra step in adding value, and to acquire human resources which can immediately put its expertise to work in new areas. By combining and synergizing these two groups, we aim to achieve sustainable growth.
Promoting Diversity, Equity
& Inclusion
For ORIX to continue providing new value, it is important to support not only typical diversity in terms of nationality, age, gender, and work history, but also diversity in perspectives and ways of thinking. We believe this requires more than just diversity in terms of fostering a culture that accepts various kinds of knowledge and values, and inclusion in terms of taking advantage of that diversity to create an environment that encourages friendly competition. It also requires greater promotion of the concept of equity based on the implementation of measures for our human resources that support content tailored to each employee’s strengths and background status, so that all employees can continue to play an active role. By respecting the diversity of our employees and promoting flexible working styles, we create comfortable, fulfilling, and valuable workplaces where diverse human resources can play an active role. We also support the independent career design of each employee so that they can draw a clear career path for themselves. We thus connect employee growth through self-realization to growth of the company all together.
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Ensuring Diversity
Obtaining talent that can accommodate ORIX’s ever-changing enterprise, maintain and grow its diverse businesses, and adapt to shifts in the overall business environment is crucial to ORIX. ORIX also focuses on recruiting
mid-career
employees and conducting overseas hiring for new graduates outside of Japan.
Women’s success in the workplace
Taking the lead in women’s active participation in the workplace from a very early stage, ORIX began recruiting female university graduates for comprehensive work positions in 1982 before the enforcement of Japan’s Equal Employment Opportunity Law in 1986. We actively expand systems that provide support to help our female employees navigate various life events after they join the Group and have been enhancing career support so women can maximize their capabilities, expand their roles, and advance their careers. ORIX is supporting the enhancement of work environments to enable employees to work in ways that accommodate life events while maximizing their abilities and expertise, thereby encouraging a balance between work and personal life.
In particular, we focus on consistent measures before and after life events, during maternity and childcare leave, and after returning to work. Particularly, in the training after returning to work, direct supervisors also participate in part of the training, share ideas and values about work, and support career development by assigning appropriate tasks according to the motivation and ability of the employee. In addition, as part of our efforts to promote the advancement of women, we offer work-life balance seminars in which couples can participate and the promote childcare leave for men, and we also provide mentoring with general managers for management-level employees so that they can learn from their more senior perspective.
Human resource development and autonomous career development support
ORIX places great importance on knowledge and growth gained through business activities, considering them to be pillars of development. As a foundation to support these efforts, in addition to various training systems and self-development support systems, we have established a fair performance review and compensation scheme to increase employee motivation. By working to develop employee growth with responsibility and enhancing communication with employees, we invest in the future of our employees.
At the same time, ORIX supports the growth of employees by providing them with opportunities and an environment that enables them to make their own career choices by supplying practical information to help chart their
mid-
to long-term careers as well as opportunities to acquire skills in new fields. Specifically, through systems such as the internal intern system—where employees can work in a different department of their choice for a designated period of time—and the career challenge system which allows employees to make a direct appeal to a department to which they wish to be transferred, ORIX allows employees to encounter and experience various work environments and jobs while remaining within the company and leads to increased employee motivation, active challenges and autonomous career development. In addition, the “Self-application system,” which allows employees to directly state to the human resources department where they wish to transfer, is available for all employees once a year, and is used as a great opportunity to think about their own careers.
Creating a work environment where employees can work healthily and with peace of mind
ORIX promotes the creation of workplaces where employees with diverse backgrounds can work healthily and with peace of mind by respecting each other’s values and recognizing diverse and flexible working styles.
With a policy of developing a wide range of options so that each employee can combine and utilize personnel systems according to their situation, we are promoting flexible working styles by shortening regular working hours, making it possible to choose flexible working styles such as a super flextime system (flextime system without core working hours) as well as an hourly annual paid leave system, and by providing satellite offices and mobile environments of good quality.
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2 Metrics and Goals
We have set a key goal to improve employee satisfaction by creating an inclusive working environment that promotes flexible working styles and provides career development support, fair performance review and compensation schemes, as well as employee health support systems.
By implementing the above strategy, we pursue initiatives to increase the ratio of female managers, which is one of our key goals of promoting active participation by employees. It is also an important benchmark for degree of participation in decision making and equal leadership opportunities of employees from diverse backgrounds.
As of the end of March 2023, the ratio of female managers in the ORIX Group was 29.8% for ORIX on a
non-consolidated
basis and 25.7% for 10 Group companies in Japan.
* The 10 Group Companies in Japan (ORIX Corporation, ORIX Auto Corporation, ORIX Rentec Corporation, ORIX Asset Management & Loan Services Corporation, ORIX Real Estate Corporation, ORIX Environmental Resources Management Corporation, ORIX Life Insurance Corporation, ORIX Bank Corporation, ORIX Credit Corporation and ORIX Computer Systems Corporation) jointly operate as part of the ORIX Group’s personnel strategy and personnel systems.
PROFILE OF BUSINESS BY SEGMENT
For a discussion of the basis for the breakdown of segments, see Note 31 of “Item 18. Financial Statements.” The following table shows a breakdown of profits by segment for fiscal 2021, 2022 and 2023. Since April 1, 2022, a portion of interest expenses and a portion of selling, general and administrative expenses, which were initially included in the difference between segment total profits and consolidated amounts, have been charged directly to their respective segments. As a result of these changes, segment data for fiscal 2021 and 2022 have been retrospectively restated.

|  | Years ended March 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | (Millions of yen) |
Corporate Financial Services and Maintenance Leasing |  | ¥ | 58,662 |  |  | ¥ | 239,802 |  |  | ¥ | 73,176 |
Real Estate |  |  | 24,353 |  |  |  | 31,990 |  |  |  | 51,523 |
PE Investment and Concession |  |  | 3,431 |  |  |  | (11,682 | ) |  |  | 2,686 |
Environment and Energy |  |  | 26,946 |  |  |  | 3,048 |  |  |  | 35,682 |
Insurance |  |  | 54,615 |  |  |  | 53,290 |  |  |  | 37,980 |
Banking and Credit |  |  | 47,685 |  |  |  | 41,498 |  |  |  | 37,610 |
Aircraft and Ships |  |  | 4,924 |  |  |  | (2,319 | ) |  |  | 18,583 |
ORIX USA |  |  | 39,419 |  |  |  | 75,235 |  |  |  | 49,021 |
ORIX Europe |  |  | 39,063 |  |  |  | 49,334 |  |  |  | 40,675 |
Asia and Australia |  |  | 12,179 |  |  |  | 51,165 |  |  |  | 34,319 |
Total segment profits |  |  | 311,277 |  |  |  | 531,361 |  |  |  | 381,255 |
Difference between segment total and consolidated amounts |  |  | (23,716 | ) |  |  | (26,485 | ) |  |  | (14,087 | )
Total Consolidated Amounts |  | ¥ | 287,561 |  |  | ¥ | 504,876 |  |  | ¥ | 367,168 |

Each of our segments is briefly described below.
BUSINESS SEGMENTS
ORIX Group organizes its businesses into ten segments to facilitate strategy formulation, resource allocation and portfolio balancing at the segment level. These ten business segments are: Corporate Financial Services and
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Maintenance Leasing, Real Estate, PE Investment and Concession, Environment and Energy, Insurance, Banking and Credit, Aircraft and Ships, ORIX USA, ORIX Europe, Asia and Australia. Management believes that organizing our business into large, strategic units allows us to maximize our corporate value by identifying and cultivating strategic advantages
vis-à-vis
anticipated competitors in each area and by helping ORIX Group achieve competitive advantage overall.
An overview of operations, operating environment and operating strategy for each of the ten segments follows. However, the operating strategy of each business may change in the future due to macroeconomic and other developments, for example those relating to the Russia/Ukraine war, supply chain issues and inflation, and the impact of market volatility and potential economic or geopolitical instability around the world.
Corporate Financial Services and Maintenance Leasing
This segment is involved in finance and fee business; leasing and rental of automobiles, electronic measuring instruments, and
ICT-related
equipment.
In corporate financial services, we are engaged in financial businesses with a focus on profitability, and fee businesses by providing life insurance and environment and energy-related products and services to domestic small and
medium-sized
enterprise customers, as well as business succession support and M&A broking. In the automobile-related businesses, we aim to increase market share in small and
medium-sized
enterprises and individual customers, as well as large corporate customers by enhancing our competitive advantages stemming from our industry-leading number of fleets under management and
one-stop
automobile-related services. In the rental business operated by ORIX Rentec Corporation, we provide electronic measuring instruments and
ICT-related
equipment lending, and are also developing new services relating to robots, drones, etc.
Real Estate
This segment consists of real estate development, rental and management, facility operation, and real estate asset management.
In our real estate business, we aim to promote portfolio rebalancing by selling rental properties in favorable market conditions while investing in real estate development projects that can generate added value. We are also expanding our asset management business, which is less affected by volatility in the real estate market, and our housing-related business with a focus on residential condominiums. Our real estate business also operates hotels and Japanese inns, and we aim to improve profitability by attracting customers in response to diversifying customer needs. In the future, we will promote the innovation and the efficiency of our business through digital transformation, and develop businesses that take advantage of our strengths in a diverse value chain that includes real estate development and rental, asset management, facility operations, residential condominiums management, office building management, construction contracting, and real estate brokerage.
PE Investment and Concession
This segment consists of private equity investment, and concession.
In the private equity business, we aim to enhance the corporate value of investees and earn sustainable gains on sales through rebalancing our portfolio. We aim to expand investment in focused industries and increase value through rollups and alliances with existing investees as a starting point. At the same time, we seek business opportunities created by changes in the industrial structure and explore diversified investment methods. In the concession business, we aim to strengthen our operations in the three airports in Kansai (Kansai International Airport, Osaka International Airport and Kobe Airport), and proactively engage in the operation of public infrastructures other than airports.
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Environment and Energy
This segment consists of domestic and overseas renewable energy, electric power retailing, ESCO services, sales of solar panels and battery energy storage system, and recycling and waste management.
In the environment and energy business, we aim to increase services revenue as a comprehensive energy service provider by promoting our renewable energy business and electric power retailing business. In our solar power generation business, we have owned and operated one of the largest solar power capacities in total in Japan. In the recycling and waste management business, we are making new investments in facilities with the aim of further expansion of business. We intend to accelerate our renewable energy business overseas by utilizing the expertise we have gained in the domestic market.
Insurance
This segment consists of life insurance.
In the life insurance business, we sell life insurance through agents, banks and other financial institutions,
face-to-face
sales through our own consulting services, and online sales. With
“simple-to-understand”
and “providing reasonable guarantee at reasonable price” as the concepts of product development, we aim to expand the number of new life insurance contracts and increase life insurance premium income by constantly incorporating our customer needs while expanding the product lineup.
Banking and Credit
This segment consists of banking and consumer finance.
In the banking business, we aim to increase finance revenues mainly by origination of real estate investment loans, which is the core of our banking business. In the consumer finance business, we aim to increase finance revenues by providing loans directly to our customers with our expertise in credit screening. We also aim to increase guarantee fees income by expanding guarantees against loans disbursed by other financial institutions. In the mortgage bank business, we aim to expand our market share by expanding our agency network and strengthening our product lineup.
Aircraft and Ships
This segment consists of aircraft investment and management, and ship-related finance and investment.
In the aircraft-related business, we are focusing on a wide range of profit opportunities, including operating leases of owned aircraft, sale of aircraft to investors, and asset management services for aircraft owned by domestic and overseas investors. We aim for medium- and long-term growth by further enhancing our presence in the global aircraft-leasing market including through mutually complementary relationships with Avolon Holdings Limited. In the ship-related business, we flexibly replace assets while closely monitoring the market environment, and aim to achieve goals such as an increase of commission income by arranging investment in ships for domestic corporate investors. In the future, we aim to expand our business by collaborating with excellent partners based on our expertise in finance and investment.
ORIX USA
This segment consists of finance, investment, and asset management in the Americas.
ORIX Corporation USA provides various types of finance services such as corporate finance, real estate finance, private equity investment, and investment in bonds to our clients in response to their needs. We are also
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engaged in expanding the function of our asset management and servicing platform to increase stable fee revenues. With controlling the amount of assets and the expansion of assets under management, we aim for the growth of profits along with improvement of capital efficiency.
ORIX Europe
This segment consists of asset management of global equity and fixed income.
Under ORIX Corporation Europe N.V. (hereinafter, “OCE”) as the holding company, Robeco Institutional Asset Management B.V. (hereinafter, “Robeco”) and Transtrend B.V. headquartered in the Netherlands, Boston Partners Global Investors, Inc. and Harbor Capital Advisors, Inc. headquartered in the United States are engaged in the asset management business through investments in stocks, bonds, etc. In addition to the focus on expanding the existing businesses by leveraging the expertise of Robeco, a pioneer in sustainable investment, we aim to increase assets under management with expanding products and investment strategies through M&A activities. ORIX Europe is also engaged in capturing a wide range of business opportunities as the strategic business location of ORIX Group in Europe.
Asia and Australia
This segment consists of finance and investment businesses in Asia and Australia.
Our overseas subsidiaries are well-versed in business practices and laws and regulations that vary from region to region, and are primarily engaged in financial services such as leasing and lending. Our overseas subsidiaries also invest in private equity in Asian countries, particularly in China. We will further enhance the functions of our overseas subsidiaries and further invest in targeted markets in order to expand our business with an emphasis on profitability.
DIVISIONS, MAJOR SUBSIDIARIES AND AFFILIATES
A list of major subsidiaries and affiliates can be found in Exhibit 8.1.
CAPITAL PRINCIPAL EXPENDITURES AND DIVESTITURES
We are a financial services company with significant leasing, lending, real estate development and other operations based on investment in tangible assets. As such, we are continually acquiring and developing such assets as part of our business. A detailed discussion of these activities is presented elsewhere in this annual report, including in other parts of “Item 4. Information on the Company” and in “Item 5. Operating and Financial Review and Prospects.”
In general, we seek to expand and deepen our product and service offerings and enhance our financial performance through acquisitions of businesses or assets. We continually review acquisition opportunities, and selectively pursue such opportunities. We have in the past deployed a significant amount of capital for acquisition activities and expect to continue to make investments, on a selective basis. For a discussion of certain of our past acquisitions, see “Item 4. Information on the Company—Corporate History.”
PROPERTY, PLANT AND EQUIPMENT
As our primary business is to provide various financial services to our clients, we do not own any material factories or facilities that manufacture products. We have no plans to build any factories that manufacture products.
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The following table shows the book values of the primary facilities we own, which include three office buildings, two coal-biomass
co-fired
power plants, three solar power stations and two hotels.

|  | As of March 31, 2023 |
|  | Book Value (1) |  |  | Land Space (2) |
|  | (Millions of yen) |  |  | (Thousands of m²) |
Office building (Tachikawa, Tokyo) |  | ¥ | 11,110 |  |  |  | 2 |
Office building (Shiba, Minato-ku, Tokyo) |  |  | 31,017 |  |  |  | 2 |
Office building (Osaka, Osaka) |  |  | 9,292 |  |  |  | 2 |
Coal-biomass co-fired power plants (Kitakyushu, Fukuoka) |  |  | 15,394 |  |  |  | 37 |
Coal-biomass co-fired power plants (Soma, Fukushima) |  |  | 20,537 |  |  |  | 63 |
Solar power station (Tsu, Mie) |  |  | 11,525 |  |  |  | 1,193 |
Solar power station (Niigata, Niigata) |  |  | 11,330 |  |  |  | 251 |
Solar power station (Tomakomai, Hokkaido) |  |  | 9,685 |  |  |  | — |
Hotel (Beppu, Oita) (3) |  |  | 40,828 |  |  |  | 166 |
Hotel (Kanazawa, Ishikawa) |  |  | 9,888 |  |  |  | 2 |

(1) | Right-of-use assets (hereinafter, “ROU assets”) are included in the book value.

(2) | Land space is provided only for those facilities where we own the land.

(3) | Book value of hotel (Beppu, Oita) includes advances for property under facility operations of ¥2,582 million.

We plan to make capital expenditures totaling approximately ¥905,753 million to support the growth and development of our operating lease business and power generation business during fiscal 2024. The following table shows a breakdown of planned capital expenditures and includes the estimated investment amounts and expected methods of financing the expenditures.

|  | Fiscal 2024
|  | Estimated investment amounts |  |  | Expected methods of financing
|  | (Millions of yen) |  |  |
Operating lease equipment and property |  | ¥ | 821,700 |  |  | Funds on hand, bank borrowings, etc.
Power generation equipment |  |  | 84,053 |  |  | Funds on hand, bank borrowings, etc.
Total |  | ¥ | 905,753 |  |  |

Our operations are generally conducted in leased office space in cities throughout Japan and in other countries in which we operate. We believe our leased office space is suitable and adequate for our needs. We utilize, or expect to utilize in the near future, substantially all of our leased office space.
We own office buildings, apartment buildings and recreational facilities for our employees and others with an aggregate book value of ¥253,649 million as of March 31, 2023.
As of March 31, 2023, the acquisition cost of equipment we held for operating leases amounted to ¥2,263,163 million, consisting of ¥1,521,865 million of transportation equipment, ¥342,591 million of measuring and information-related equipment, ¥319,074 million of real estate and ¥79,633 million of others, before accumulated depreciation. Accumulated depreciation on equipment held for operating leases was ¥865,942 million. We also recognized ¥98,417 million of ROU assets of operating leases, ¥45,123 million of accrued rental receivables and ¥(3,583) million of allowance for doubtful receivables on operating leases as of the same date.
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SEASONALITY
Our business is not materially affected by seasonality.
RAW MATERIALS
Our business does not materially depend on the supply of raw materials.
PATENTS, LICENSES AND CONTRACTS
Our business and profitability are not materially dependent on any patents or licenses, industrial, commercial or financial contracts, or new manufacturing processes.
BUSINESS REGULATION
ORIX and its group companies in Japan are incorporated under, and our corporate activities are primarily governed by, the Companies Act and other Japanese laws. However, because certain of ORIX’s group companies are organized in jurisdictions other than Japan, and ORIX and its group companies are involved in diverse businesses, joint ventures and acquisitions in overseas jurisdictions, including in the United States, Europe, Asia and Oceania, we are therefore subject to various laws and regulations in each jurisdiction in which they are organized or operate, including, but not limited to, regulations relating to corporate governance, business and investment approvals, competition, anti-corruption, anti-money laundering and terrorism financing, consumer and business taxation, foreign exchange controls, intellectual property and personal information protection. In recent years, there has been an increasing number of laws and regulations on competition, anti-corruption, anti-money laundering and terrorism financing, and personal data protection that can apply directly to business activities taking place outside of the jurisdiction that enacted such law or regulation (extraterritorial application). Given the need for ORIX and its group companies to deal with the laws and regulations of multiple countries on each legal topic, there has been a tendency for costs to increase as a result of the increasing number of laws and regulations that need to be assessed. In addition, there is an increasing number of cases where significant fines and penalties have been imposed for violations of such laws and regulations. For example, fines for violations of the European Union’s General Data Protection Regulation can be up to 4% of total global turnover and fines for violations of the U.S. Foreign Corrupt Practices Act can be up to twice the benefit sought, in addition to penalties such as disgorgement of profits and prejudgment interest.
The next section describes the main laws and regulations applicable to each of our business segments.
1. Corporate Financial Services and Maintenance Leasing
ORIX and certain of our group companies are engaged in the moneylending business in Japan. The Moneylending Business Act requires that all companies engaged in moneylending business register with the Prime Minister or the relevant prefectural governors. Moneylenders permitted to register are regulated by the Financial Services Agency (“FSA”), and are required to file various notifications and provide documents such as their annual business reports. Further, moneylenders are required to comply with applicable laws and to establish an internal management system to ensure the appropriate management of money lending operations. These obligations are supervised by the FSA. Accordingly, pursuant to the Moneylending Business Act, ORIX and certain of our group companies have registered with the Prime Minister or various prefectural governors, established the necessary internal systems, and provide the necessary reporting and notification to the FSA. The FSA has the power to issue business improvement orders, suspend all or part of a money lender’s activities, or to revoke the registration of a moneylender that has violated the law, depending on the severity of the violation.
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Certain businesses conducted by ORIX and our group companies are governed by the Financial Instruments and Exchange Act. The act was established to regulate activities such as the issuance, sale and purchase of stocks and other securities in order to protect investors and facilitate finance, and requires that any person conducting such activities register with the Prime Minister as a “financial instruments traders.” Financial instruments traders are divided among four classifications depending on the type of business: (1) First Class Financial Instruments Exchange Business, (2) Second Class Financial Instruments Exchange Business, (3) Investment Management Business, and (4) Investment Advisory and Agency Business, and companies in the Corporate Financial Services and Maintenance Leasing segment conducting such activities are registered with the Prime Minister as Second Class Financial Instruments Exchange Businesses. Registered financial instruments traders are obligated to establish an internal management system to ensure compliance with relevant laws and regulations and appropriate management of its business, as well as to provide and deliver material information and explain risks to their customers. The relevant supervisory authority, the FSA, monitors registered financial instruments traders and has the power to order improvement of a business, or suspension of a part or the whole of a business, or to revoke the registration of such a trader that has violated the law, depending on the severity of the violation:
While the ORIX Group includes a life insurance company engaged in the insurance business, ORIX and certain of our group companies are also separately registered with the Prime Minister as insurance agencies for life insurance and/or
non-life
insurance and are subject to Insurance Business Act. As insurance agencies, the companies are obligated to establish certain systems and provide and deliver material information and explain risks to their customers. In the event an insurance agency violates such obligations, the FSA has the power to order improvement of a business, or suspension of a part or the whole of a business, or to revoke the registration of the insurance agency that has violated the law, depending on the severity of the violation. For information on regulations applicable to our insurance business other than our insurance agencies, see “—
5.
Insurance
” below.
Leasing and rental businesses generally do not require registration or licenses. However, the renting of automobiles (operation of a car rental business) and
car-sharing
business is subject to licensing by the Minister of the Ministry of Land, Infrastructure and Transport (“MoLIT”). In addition, the leasing or renting of some types of goods may require compliance with regulations that specify reporting or notification obligations based on certain characteristics of the goods.
2. Real Estate
While it is unnecessary for a company to obtain a license to become a real estate developer, there are various regulations that apply to real estate activities. Certain of our group companies have obtained Construction Business Licenses from MoLIT for constructing buildings and conducting interior finishing work. Furthermore, ORIX and certain of our group companies, including ORIX Real Estate Corporation and DAIKYO, are required to be licensed by MoLIT or relevant prefectural governors under the Building Lots and Buildings Transaction Business Act to engage in activities such as the buying and selling land and buildings in Japan, and their operations are regulated by such laws, including the maintenance of registered real estate transaction managers on staff and the duty to provide and deliver material information to counterparties.
In addition, lodging facilities, such as Japanese inns and hotels, operated by ORIX Hotel Management Corporation have licenses from relevant prefectural governors under the Inns and Hotels Act, etc.
ORIX’s wholly owned subsidiaries ORIX Asset Management Corporation (“OAM”) and ORIX Real Estate Investment Advisors Corporation (“ORIA”) are each registered with the Prime Minister under the Financial Instruments and Exchange Act as an investment manager. Under the Financial Instruments and Exchange Act, any entity possessing voting rights in an investment manager at or above a specified threshold is considered a major shareholder and must report its shareholding to the Prime Minister. ORIX has filed such report as a major shareholder of OAM and ORIA.
ORIA is registered with the Prime Minister under the Financial Instruments and Exchange Act to engage in the investment advisory and agency business and regulated by the FSA.
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3. PE Investment and Concession
ORIX conducts investment activities in a broad range of fields without regard for the specific industry. Due to this, we are subject to a wide variety of regulations, including those that are applicable to our investment activities and those that apply due to the type of business conducted by our investees. ORIX is generally less directly involved in the management of its investees in comparison to group companies in other segments, but it is necessary for us to pay attention to regulations that apply to our investees so that we can monitor their management.
4. Environment and Energy
The businesses that comprise our renewable energy business, such as our solar power generation business, are subject to and must comply with various requirements and regulations in the jurisdictions where they operate, including the Electricity Business Act, Environmental Impact Assessment Act and Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities in Japan and similar laws and regulations in other jurisdictions, when setting up a power generation facility, including business notification requirements, regulations relating to the facility location, and other various regulations, such as those designed to protect the environment and visual landscape and ensure safety from the perspective of disaster prevention.
5. Insurance
In order to engage in the life insurance business, ORIX Life Insurance has obtained and maintains a license from the Prime Minister under the Insurance Business Act. The relevant supervisory authority, the FSA, has the power to conduct broad supervision and guidance of the life insurance industry and to issue business improvement orders, suspend all or part of an insurance company’s activities, or to revoke the license of an insurance company that has violated the law or that has been determined to have an insufficient internal management system, depending on the severity of the violation or insufficiency. It is also generally necessary to receive FSA approval for the sale of new products and to revise pricing terms for existing products.
Any entity attempting to acquire voting rights in an insurance company at or above a specified threshold must receive permission from the Prime Minister in accordance with the Insurance Business Act. ORIX has received such permission as a major shareholder of ORIX Life Insurance.
6. Banking and Credit
ORIX Bank is licensed by the Prime Minister to engage in the banking and trust business and is regulated under the Banking Act and the Act on Engagement in Trust Business by Financial Institutions. The Banking Act governs the general banking business and the Act on Engagement in Trust Business by Financial Institutions and the Trust Business Act govern the trust business. A bank must establish a system for the protection of customers’ interests, which is supervised by the FSA.
In addition, any entity that attempts to obtain voting rights in a bank at or above a specified threshold must receive permission from the Prime Minister in accordance with the Banking Act. ORIX has received such permission as a major shareholder of ORIX Bank.
ORIX Credit is engaged in the business of providing moneylending services to consumers and licensed as a moneylender. For information on regulations applicable to moneylenders, see “—
1.
Corporate Financial Services and Maintenance Leasing
” above.
7. Aircraft and Ships
The business of leasing aircraft and ships generally does not require a license, however it is necessary to register the ownership of aircraft and ships. In most jurisdictions, the lessee under an aircraft lease is responsible
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for registering the aircraft, while the lessor under a ship lease registers the ship with the appropriate flag state. In the case of ship leases, there are certain regulations that we must comply with because they apply directly not just to the lessee but also the lessor, such as environmental regulations.
8. ORIX USA
Certain of our businesses in our ORIX USA segment are subject to extensive regulation in the United States and Brazil. Certain subsidiaries of ORIX Corporation USA manage private investments, collateralized loan obligations and separately managed accounts and are registered as investment advisers with the SEC under the U.S. Investment Advisers Act of 1940, as amended (“Advisers Act”) and are subject to the requirements and regulations of the Advisers Act. Such requirements relate to, among other things, fiduciary duties to advisory clients, maintaining an effective compliance program and code of ethics, operational and marketing requirements, recordkeeping and reporting requirements, disclosure obligations and general anti-fraud prohibitions.
Lument Securities, a wholly owned subsidiary of ORIX Corporation USA, through which we conduct an investment banking, private placement and municipal securities business, is registered as a broker-dealer with the SEC and the Financial Industry Regulatory Authority (“FINRA”). Lument Securities is a municipal securities dealer registered with the SEC and the Municipal Securities Rulemaking Board (“MSRB”), and hence is subject to regulation and oversight by the SEC, FINRA, and the MSRB. Lument Securities is registered as a broker-dealer in 53 states/U.S. jurisdictions, and as a result is a member of and is subject to regulation by FINRA, a self-regulatory organization subject to oversight by the SEC that adopts and enforces rules governing the conduct, and examines the activities, of its member firms. State securities regulators also have regulatory oversight authority over Lument Securities. Broker-dealers are subject to regulations that cover all aspects of the securities business, including, among others, the implementation of a supervisory control system over the securities business, advertising and sales practices, conduct of and compensation in connection with public securities offerings, maintenance of adequate net capital, record keeping and the conduct and qualifications of employees.
By virtue of their involvement in the multifamily and seniors housing mortgage lending business, Lument and its mortgage company subsidiaries must comply with rules and regulations administered by the Government National Mortgage Association, the Federal National Mortgage Association, the Department of Housing and Urban Development/Federal Housing Administration, the United States Department of Agriculture, and the Federal Home Loan Mortgage Corporation.
Certain of ORIX Corporation USA’s subsidiaries are licensed California Finance Lenders.
Boston Financial Investment Management, LP (“Boston Financial”), a subsidiary of ORIX Corporation USA, is a provider of syndication services as well as asset and portfolio management in the U.S. Low Income Housing Tax Credit (“LIHTC”) industry in connection with financing for the construction and rehabilitation of affordable housing. As the beneficiary of tax credits and often other subsidy and loan programs, a LIHTC property is typically regulated at the U.S. federal, state, and local levels. Further,
day-to-day
responsibility of the property resides with a third party property level general partner, who in addition to directing the agent that manages the property, has responsibility for compliance with applicable laws and regulations. As the general partner of the investment fund which invests as a limited partner in the property level partnership, Boston Financial monitors such compliance on behalf of the fund. In addition to LIHTC, certain Boston Financial sponsored investment funds invest in affordable housing with social sustainability focus. These investments share a similar structure to the LIHTC investments, but do not involve tax credits.
American Community Capital, LLC, a wholly owned subsidiary of Boston Financial, is certified as a Community Development Financial Institution (“CDFI”) eligible to serve a national
low-income
targeted population by the U.S. Department of the Treasury’s Community Development Financial Institutions Fund and is required to submit annual filings with the U.S. Department of Treasury to maintain its CDFI designation.
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RB Capital S.A. (“RB Capital”), a majority-owned subsidiary of ORIX Corporation USA headquartered in Sao Paulo, is a Brazilian capital markets and asset management platform. RB Capital and its subsidiaries’ financial and investment activities are regulated by the Central Bank of Brazil and the Securities and Exchange Commission of Brazil and RB Capital is a member of the Brazilian Financial and Capital Markets Association.
9. ORIX Europe
Certain of our businesses in our ORIX Europe segment, which includes entities and businesses that are organized in or operating in jurisdictions outside of Europe, are subject to extensive regulation in various jurisdictions across Europe, the United States and Asia.
Dutch subsidiaries of OCE are subject to European financial supervisory regulation, including, amongst others and as the case may be, the Alternative Investment Fund Managers Directive, the Undertakings for Collective Investment in Transferable Securities (“UCITS”) Directive, the Markets in Financial Instruments Directive, the European Market Infrastructure Regulation, the Market Abuse Regulation, the 5th Anti-Money Laundering Directive, the Benchmark Regulation, the Securities Financing Transactions Regulation and the Shareholder Rights Directive II. A Swiss regulated subsidiary of OCE is subject to the Swiss equivalent of these financial supervisory regulations (such as the Federal Act on Collective Investment Schemes, the Federal Ordinance on Collective Investment Schemes, the FINMA Collective Investment Schemes Ordinance, the Financial Services Act, the Financial Institutions Act, the Anti-Money Laundering Act, the Anti-Money Laundering Ordinance, the FINMA Anti-Money Laundering Ordinance).
UK-regulated
subsidiaries of OCE are subject to the UK FCA Conduct of Business Sourcebook. U.S. subsidiaries of OCE are subject to regulation, primarily at the federal level, by, as the case may be, the SEC, Department of Labor, Federal Reserve, Office of the Comptroller of the Currency, FINRA, National Futures Association (“NFA”), Department of Justice, Commodity Futures Trading Commission (“CFTC”) and New Hampshire Banking Department (“NHBD”), as well as being subject to the Advisers Act.
Robeco Institutional Asset Management B.V. (“RIAM”), a subsidiary of OCE and part of the Robeco group, is registered as an alternative investment fund manager (“AIFM”) and fund manager of UCITS in the Netherlands and regulated by the Dutch Authority for the Financial Markets (“AFM”) and the Dutch Central Bank (“DNB”). RIAM has branches and representative offices worldwide, including in Dubai, Germany, Spain, Italy and the United Kingdom, each of which either benefits from RIAM’s European passport or is subject to local regulatory supervision.
Certain other subsidiaries of OCE located across Europe, the United States and Asia that are affiliated with the Robeco group are registered, licensed or approved, as the case may be, by regulators in the jurisdictions in which they operate and subject to local regulations regarding their businesses. Such regulators include the Swiss Financial Market Supervisory Authority (“FINMA”), AFM, SEC, Securities & Futures Commission of Hong Kong, Financial Services Commission of Korea (“FSC”), Australian Securities and Investments Commission, Asset Management Association of China and Monetary Authority of Singapore.
Transtrend B.V., a wholly owned subsidiary of OCE that offers asset management and commodity trading advisory services, is registered as an AIFM in the Netherlands and regulated by the AFM and DNB. Transtrend is also registered with the NFA and regulated by the CFTC.
Boston Partners Global Investors, Inc. (“Boston Partners”) is a subsidiary of OCE and registered with the SEC as an investment adviser. Boston Partners is also a member of the NFA and is registered as a commodity pool operator and as a commodity trading adviser with the CFTC. Furthermore, Boston Partners is registered with the FSC. Certain subsidiaries of Boston Partners located in the United States and the United Kingdom are also registered with the SEC, New Hampshire Banking Department (“NHBD”), FINRA and the FCA.
Harbor Capital Advisors, Inc. (“Harbor”) is a subsidiary of OCE and is registered with the SEC as an investment adviser. Harbor is also a member of the NFA and is registered as a commodity pool operator with the CFTC. Certain subsidiaries of Harbor are registered with the SEC, NHBD and a member of FINRA.
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Gravis Capital Management Limited (“Gravis”) is a UK asset manager and is authorized as a full-scope UK AIFM by the FCA.
10. Asia and Australia
Our group companies in our Asia and Australia segment are subject to the laws and regulations of the various jurisdictions across Asia and Oceania in which they operate. Many of the businesses are also subject to oversight by regulatory authorities in those jurisdictions due to the industries in which they operate, particularly those businesses that offer of financial services, such as leasing, lending and banking. Regulatory authorities in these jurisdictions have authority with respect to financial services and can grant, suspend or cancel licenses or registrations that are necessary for our businesses to conduct certain of their operations.
Among group companies in the segment, ORIX Asia Limited is registered with the Hong Kong Monetary Authority as a restricted license bank. A wholly owned subsidiary of ORIX Leasing Malaysia Berhad has a money lending license from the Malaysia Ministry of Housing and Local Government, and is registered with Bank Negara Malaysia. PT. ORIX Indonesia Finance has a financial institution business license and is regulated by the Indonesia Financial Services Authority. ORIX Australia Corporation Limited is registered with the Australian Prudential Regulation Authority as a registered finance corporation. ORIX Capital Korea Corporation is registered with the Korea Financial Supervisory Service as a specialized credit finance business company. ORIX Asia Asset Management Co., Limited is registered with the Hong Kong Securities and Futures Commission as a licensed entity to carry on Type 1, 4 and 9 regulated activities.
Item 4A. Unresolved Staff Comments
None.
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Item 5. Operating and Financial Review and Prospects
Table of Contents for Item 5

|  | Page
Overview |  | 34
Results of Operations |  | 35
Liquidity and Capital Resources |  | 93
Cash Flows |  | 98
Commitments for Capital Expenditures |  | 99
Research and Development, Patents and Licenses, Etc. |  | 99
Trend Information |  | 100
Critical Accounting Policies and Estimates |  | 100
Fair Value of Investment and Rental Property |  | 111
Recent Developments |  | 112
Risk Management |  | 114

OVERVIEW
The following discussion provides management’s explanation of factors and events that have significantly affected our financial condition and results of operations. Also included is management’s assessment of factors and trends which are anticipated to have a material effect on our financial condition and results of operations in the future. However, please be advised that our financial condition and results of operations in the future may also be affected by factors other than those discussed here. This discussion should be read in conjunction with “Item 3. Key Information—Risk Factors” and “Item 18. Financial Statements” included in this annual report.
Basic approach to financial and capital strategy
Regarding funding activities, we strive to maintain a high ratio of long-term funds procured and staggered repayment periods, keeping in mind the diversification and balance of fund procurement methods and sources. We strive to ensure that liquidity on hand is at an appropriate level through stress testing and other means. With regard to shareholders’ equity, we measure risk in all assets using our own method, and strive to monitor the ratio of use of shareholders’ equity at an appropriate level while considering the balance between flexibility and financial soundness for new investments.
ORIX is working to measure and evaluate its capital adequacy, financing conditions, and asset quality internally, and regularly confirm evaluations from credit rating agencies.
The issuer ratings (or counterparty ratings) that the ORIX Group has obtained from rating agencies as of the filing date of this annual report are
“A-”
for S&P Global Ratings Japan, “A3” for Moody’s Investors Service,
“A-”
for Fitch Ratings Japan,
“AA-”
for Rating and Investment Information, Inc. (R&I), and “AA” for Japan Credit Rating Agency, Ltd. (JCR).
Major Use of funding
The ORIX Group’s major uses of funding include purchases of leased assets, such as office equipment, automobiles, ICT equipment, measuring equipment, real estate, and aircraft, loans to customers, investments in affiliates, acquisition of subsidiaries, purchases of investment securities, and purchases of business assets.
Results Overview
In fiscal 2023, net income attributable to ORIX corporation shareholders decreased 13% to ¥273.1 billion compared to fiscal 2022. For fiscal 2023, ROE was 8.3%.
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The segment profit in fiscal 2023 decreased 28% to ¥381.3 billion to compared to fiscal 2022 due to a decrease in segment profit in Corporate Financial Services and Maintenance Leasing, Insurance, Banking and Credit, ORIX USA, ORIX Europe, and Asia and Australia, despite an increase in segment profit in Real Estate, PE Investment and Concession, Environment and Energy, and Aircraft and Ships. The summary of the main factors behind the consolidated business results for fiscal 2023 is included in “Item 5. Operating and Financial Review and Prospects—The Fiscal Year vs Last Fiscal Year” in this annual report.
RESULTS OF OPERATIONS
GUIDE TO OUR CONSOLIDATED STATEMENT OF INCOME
The following discussion and analysis provide information that management believes to be relevant to an understanding of our consolidated financial condition and results of operations. This discussion should be read in conjunction with our consolidated financial statements, including the notes thereto, included in this annual report. See “Item 18. Financial Statements.”
Our consolidated results of operations are presented in the accompanying financial statements with
sub-categorization
of revenues and expenses designed to enable the reader to better understand the diversified operating activities contributing to our overall operating performance.
As further described in “Item 4. Information on the Company,” after developing the Japanese leasing market in 1964, we extended the scope of our operations into various types of businesses which have become significant contributors to our consolidated operating results. Our initial leasing business has expanded into the provision of broader financial services, including direct lending to our lessees and other customers. Initial direct lending broadened into diversified finance such as real estate loans for consumers, loans secured by real estate, unsecured loans and
non-recourse
loans. Through our lending experience, we developed a loan servicing business and a loan securitization business. Through experience gained by our focusing on real estate as collateral for loans, we also developed our real estate leasing, development and management operations.
Furthermore, we also expanded our business by adding securities-related operations, to generate capital gains. Thereafter, we established and acquired a number of subsidiaries and affiliates in Japan and overseas to expand our operations into businesses such as banking, life insurance, real estate and asset management. Investment and Operation Headquarters selectively invests in companies and actively seeks to fulfill the needs of companies involved in or considering M&A activity, including, among other things, management buyouts, privatization or carve-outs of subsidiaries or business units and business succession.
The diversified nature of our operations is reflected in our presentation of operating results through the categorization of our revenues and expenses to align with operating activities. We categorize our revenues into finance revenues, gains on investment securities and dividends, operating leases, life insurance premiums and related investment income, sales of goods and real estate and services income, and these revenues are summarized into a subtotal of “Total revenues” consisting of our “Operating Income” on our consolidated statements of income.
The following provides supplemental explanation of certain account captions on our consolidated statements of income:
Finance revenues include primarily finance leases, interest on loans and interest on investment securities because we believe that capital we deploy is fungible and, whether used to provide financing in the form of loans and leases or through investment in debt securities, the decision to deploy the capital is a banking-type operation that shares the common objective of managing earning assets to generate a positive spread over our cost of borrowings. In addition, revenues from guarantees, which are from commission income by guarantees against loans disbursed by other financial institutions, are also included in finance revenues.
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Securities investment activities originated by the Company were extended to certain group companies, including our subsidiaries operating in the Americas.
Sales of goods and real estate consists of revenues from sales of real estate and various types of goods, including precious metals and jewels.
Services income consists of revenues derived from various operations that are considered a part of our recurring operating activities, such as asset management and servicing, automobile related services, facilities operation, environment and energy services, real estate management, brokerage and contract work, maintenance services of software, measurement equipment and other, and fee business.
Similar to our revenues, we categorize our expenses based on our diversified operating activities. “Total expenses” includes mainly interest expense, costs of operating leases, life insurance costs, costs of goods and real estate sold, services expense and selling, general and administrative expenses.
Services expense is directly associated with the sales and revenues separately reported within services income. Interest expense is based on monies borrowed mainly to fund revenue-generating assets, including to purchase equipment for leases, extend loans and invest in securities and real estate operations. We also consider the principal part of selling, general and administrative expenses to be directly related to the generation of revenues. Therefore, they have been included within “Total expenses” deducted to derive “Operating Income.” We similarly view the provision for doubtful receivables and probable loan losses and provision for credit losses to be directly related to our finance activities and accordingly have included it within “Total expenses.” As our principal operations consist of providing financial products and/or finance-related services to our customers, these expenses are directly related to the potential risks and changes in these products and services. See “Year Ended March 31, 2023 Compared to Year Ended March 31, 2022” and “Year Ended March 31, 2022 Compared to Year Ended March 31, 2021.”
We have historically reflected write-downs of long-lived assets under “Operating Income” as related assets, primarily real estate assets, representing significant operating assets under management or development. Accordingly, the write-downs were considered to represent an appropriate component of “Operating Income” derived from the related real estate investment activities. Similarly, as we have identified investment in securities to represent an operating component of our financing activities, write-downs of securities are presented under “Operating Income.”
We believe that our financial statement presentation, as explained above, with the expanded presentation of revenues and expenses, aids in the comprehension of our diversified operating activities in Japan and overseas and supports the fair presentation of our consolidated statements of income.
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YEAR ENDED MARCH 31, 2023 COMPARED TO YEAR ENDED MARCH 31, 2022
Performance Summary
Financial Results

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except ratios, per Share data and percentages) |
Total revenues |  | ¥ | 2,520,365 |  |  | ¥ | 2,666,373 |  |  | ¥ | 146,008 |  |  |  | 6 |
Total expenses |  |  | 2,218,282 |  |  |  | 2,352,385 |  |  |  | 134,103 |  |  |  | 6 |
Income before Income Taxes |  |  | 504,876 |  |  |  | 367,168 |  |  |  | (137,708 | ) |  |  | (27 | )
Net Income Attributable to ORIX Corporation Shareholders |  |  | 312,135 |  |  |  | 273,075 |  |  |  | (39,060 | ) |  |  | (13 | )
Earnings per Share (Basic) |  |  | 259.37 |  |  |  | 231.35 |  |  |  | (28.02 | ) |  |  | (11 | )
(Diluted) |  |  | 259.07 |  |  |  | 231.04 |  |  |  | (28.03 | ) |  |  | (11 | )
ROE*1 |  |  | 9.9 |  |  |  | 8.3 |  |  |  | (1.6 | ) |  |  | — |
ROA*2 |  |  | 2.24 |  |  |  | 1.85 |  |  |  | (0.39 | ) |  |  | — |

*1 | ROE is the ratio of Net Income Attributable to ORIX Corporation Shareholders for the period to average ORIX Corporation Shareholders’ Equity based on fiscal year beginning and ending balances.

*2 | ROA is the ratio of Net Income Attributable to ORIX Corporation Shareholders for the period to average Total Assets based on fiscal year beginning and ending balances.

Total revenues for fiscal 2023 increased 6% to ¥2,666,373 million compared to fiscal 2022 due to increases in services income, financial revenues, and operating lease revenues despite decreases in sales of goods and real estate and gains on investment securities and dividends.
Total expenses for fiscal 2023 increased 6% to ¥2,352,385 million compared to fiscal 2022 due to increases in services expense, interest expense and selling, general and administrative expenses despite decreases in costs of goods and real estate sold and write-downs of long-lived assets.
Equity in net income of affiliates for fiscal 2023 increased by ¥10,085 million to ¥25,091 million compared to fiscal 2022 and gains on sales of subsidiaries and affiliates and liquidation losses, net for fiscal 2023 decreased by ¥160,872 million to ¥26,915 million compared to fiscal 2022.
Due to the above results, income before income taxes for fiscal 2023 decreased 27% to ¥367,168 million compared to fiscal 2022 and net income attributable to ORIX Corporation shareholders decreased 13% to ¥273,075 million compared to fiscal 2022.
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Balance Sheet data

|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen except ratios, per share and percentages) |
Total Assets |  | ¥ | 14,270,672 |  |  | ¥ | 15,266,191 |  |  | ¥ | 995,519 |  |  |  | 7 |
(Segment assets) |  |  | 11,999,584 |  |  |  | 12,595,338 |  |  |  | 595,754 |  |  |  | 5 |
Total Liabilities |  |  | 10,899,271 |  |  |  | 11,837,946 |  |  |  | 938,675 |  |  |  | 9 |
(Short-term and Long-term debt) |  |  | 4,866,685 |  |  |  | 5,718,519 |  |  |  | 851,834 |  |  |  | 18 |
(Deposits) |  |  | 2,276,158 |  |  |  | 2,246,345 |  |  |  | (29,813 | ) |  |  | (1 | )
ORIX Corporation Shareholders’ Equity |  |  | 3,261,419 |  |  |  | 3,356,585 |  |  |  | 95,166 |  |  |  | 3 |
ORIX Corporation Shareholders’ Equity per share |  |  | 2,732.88 |  |  |  | 2,868.13 |  |  |  | 135.25 |  |  |  | 5 |
ORIX Corporation Shareholders’ Equity ratio * |  |  | 22.9 | % |  |  | 22.0 | % |  |  | (0.9 | )% |  |  | — |
D/E ratio (Debt-to-equity ratio) (Short-term and Long-term debt (excluding deposits) / ORIX Corporation Shareholders’ Equity) |  |  | 1.5 | x |  |  | 1.7 | x |  |  | 0.2 | x |  |  | — |

* | ORIX Corporation Shareholders’ Equity ratio is the ratio as of the period end of ORIX Corporation Shareholder’s Equity to total assets.

Total assets increased 7% to ¥15,266,191 million compared to the balance as of March 31, 2022 due to increases in cash and cash equivalents, investment in securities and other assets. In addition, segment assets increased 5% to ¥12,595,338 million compared to the balance as of March 31, 2022.
Total liabilities increased 9% to ¥11,837,946 million compared to the balance as of March 31, 2022 due to increases in long-term debt and policy liabilities and policy account balances despite decreases in deposits and current and deferred income taxes.
Shareholders’ equity increased 3% to ¥3,356,585 million compared to the balance as of March 31, 2022.
Details of Operating Results
The following is a discussion of certain items in the consolidated statements of income, operating assets in the consolidated balance sheets and other selected financial information, including on a segment by segment basis.
Segment Information
Our operating segments used by the chief operating decision maker to make decisions about resource allocations and assess performance are organized into ten segments based on our business management organization which is classified by the nature of major products and services, customer base, regulations, and business areas. The ten segments are Corporate Financial Services and Maintenance Leasing, Real Estate, PE Investment and Concession, Environment and Energy, Insurance, Banking and Credit, Aircraft and Ships, ORIX USA, ORIX Europe, and Asia and Australia.
Financial information about the operating segments reported below is that which is available by segment and regularly reviewed by the chief operating decision maker to make decisions about resource allocations and assess performance. The chief operating decision maker evaluates the performance of the segments based on income before income taxes, net income attributable to noncontrolling interests and net income attributable to redeemable noncontrolling interests before applicable tax effect. Tax expenses are excluded from the segment profits.
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Since April 1, 2022, a portion of interest expenses and a portion of selling, general and administrative expenses, which were initially included in the difference between segment total profits and consolidated amounts, have been charged directly to their respective segments. As a result of these changes, segment data for fiscal 2022 has been retrospectively restated.
For a description of the business activities of our segments, see “Item 4. Information on the Company—Business Segments.” See Note 31 of “Item 18. Financial Statements” for additional segment information, a discussion of how we prepare our segment information and the reconciliation of segment totals to consolidated financial statement amounts.

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Segment Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate Financial Services and Maintenance Leasing |  | ¥ | 445,338 |  |  | ¥ | 429,907 |  |  | ¥ | (15,431 | ) |  |  | (3 | )
Real Estate |  |  | 390,688 |  |  |  | 418,736 |  |  |  | 28,048 |  |  |  | 7 |
PE Investment and Concession |  |  | 385,739 |  |  |  | 376,405 |  |  |  | (9,334 | ) |  |  | (2 | )
Environment and Energy |  |  | 160,232 |  |  |  | 215,770 |  |  |  | 55,538 |  |  |  | 35 |
Insurance |  |  | 486,704 |  |  |  | 499,487 |  |  |  | 12,783 |  |  |  | 3 |
Banking and Credit |  |  | 84,821 |  |  |  | 84,286 |  |  |  | (535 | ) |  |  | (1 | )
Aircraft and Ships |  |  | 38,639 |  |  |  | 54,009 |  |  |  | 15,370 |  |  |  | 40 |
ORIX USA |  |  | 161,344 |  |  |  | 189,045 |  |  |  | 27,701 |  |  |  | 17 |
ORIX Europe |  |  | 221,112 |  |  |  | 206,486 |  |  |  | (14,626 | ) |  |  | (7 | )
Asia and Australia |  |  | 148,055 |  |  |  | 189,744 |  |  |  | 41,689 |  |  |  | 28 |
Segment Total |  |  | 2,522,672 |  |  |  | 2,663,875 |  |  |  | 141,203 |  |  |  | 6 |
Difference between Segment Total and Consolidated Amounts |  |  | (2,307 | ) |  |  | 2,498 |  |  |  | 4,805 |  |  |  | — |
Consolidated Amounts |  | ¥ | 2,520,365 |  |  | ¥ | 2,666,373 |  |  | ¥ | 146,008 |  |  |  | 6 |

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Segment Profits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate Financial Services and Maintenance Leasing |  | ¥ | 239,802 |  |  | ¥ | 73,176 |  |  | ¥ | (166,626 | ) |  |  | (69 | )
Real Estate |  |  | 31,990 |  |  |  | 51,523 |  |  |  | 19,533 |  |  |  | 61 |
PE Investment and Concession |  |  | (11,682 | ) |  |  | 2,686 |  |  |  | 14,368 |  |  |  | — |
Environment and Energy |  |  | 3,048 |  |  |  | 35,682 |  |  |  | 32,634 |  |  |  | — |
Insurance |  |  | 53,290 |  |  |  | 37,980 |  |  |  | (15,310 | ) |  |  | (29 | )
Banking and Credit |  |  | 41,498 |  |  |  | 37,610 |  |  |  | (3,888 | ) |  |  | (9 | )
Aircraft and Ships |  |  | (2,319 | ) |  |  | 18,583 |  |  |  | 20,902 |  |  |  | — |
ORIX USA |  |  | 75,235 |  |  |  | 49,021 |  |  |  | (26,214 | ) |  |  | (35 | )
ORIX Europe |  |  | 49,334 |  |  |  | 40,675 |  |  |  | (8,659 | ) |  |  | (18 | )
Asia and Australia |  |  | 51,165 |  |  |  | 34,319 |  |  |  | (16,846 | ) |  |  | (33 | )
Segment Total |  |  | 531,361 |  |  |  | 381,255 |  |  |  | (150,106 | ) |  |  | (28 | )
Difference between Segment Total and Consolidated Amounts |  |  | (26,485 | ) |  |  | (14,087 | ) |  |  | 12,398 |  |  |  | — |
Consolidated Amounts |  | ¥ | 504,876 |  |  | ¥ | 367,168 |  |  | ¥ | (137,708 | ) |  |  | (27 | )

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|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Segment Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate Financial Services and Maintenance Leasing |  | ¥ | 1,516,795 |  |  | ¥ | 1,514,070 |  |  | ¥ | (2,725 | ) |  |  | (0 | )
Real Estate |  |  | 910,101 |  |  |  | 935,027 |  |  |  | 24,926 |  |  |  | 3 |
PE Investment and Concession |  |  | 353,581 |  |  |  | 605,471 |  |  |  | 251,890 |  |  |  | 71 |
Environment and Energy |  |  | 703,608 |  |  |  | 773,617 |  |  |  | 70,009 |  |  |  | 10 |
Insurance |  |  | 2,072,145 |  |  |  | 2,050,412 |  |  |  | (21,733 | ) |  |  | (1 | )
Banking and Credit |  |  | 2,687,156 |  |  |  | 2,698,747 |  |  |  | 11,591 |  |  |  | 0 |
Aircraft and Ships |  |  | 684,098 |  |  |  | 742,890 |  |  |  | 58,792 |  |  |  | 9 |
ORIX USA |  |  | 1,364,142 |  |  |  | 1,462,067 |  |  |  | 97,925 |  |  |  | 7 |
ORIX Europe |  |  | 401,869 |  |  |  | 417,941 |  |  |  | 16,072 |  |  |  | 4 |
Asia and Australia |  |  | 1,306,089 |  |  |  | 1,395,096 |  |  |  | 89,007 |  |  |  | 7 |
Segment Total |  |  | 11,999,584 |  |  |  | 12,595,338 |  |  |  | 595,754 |  |  |  | 5 |
Difference between Segment Total and Consolidated Amounts |  |  | 2,271,088 |  |  |  | 2,670,853 |  |  |  | 399,765 |  |  |  | 18 |
Consolidated Amounts |  | ¥ | 14,270,672 |  |  | ¥ | 15,266,191 |  |  | ¥ | 995,519 |  |  |  | 7 |

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Corporate Financial Services and Maintenance Leasing
Segment profits decreased 69% to ¥73,176 million compared to fiscal 2022 due to the absence of gains on sales of subsidiaries and affiliates recorded in fiscal 2022 from the sale of the business of Yayoi.
Segment assets totaled ¥1,514,070 million, remaining relatively unchanged compared to the end of fiscal 2022.

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 57,580 |  |  | ¥ | 60,066 |  |  | ¥ | 2,486 |  |  |  | 4 |
Gains on investment securities and dividends |  |  | 4,417 |  |  |  | (442 | ) |  |  | (4,859 | ) |  |  | — |
Operating leases |  |  | 254,956 |  |  |  | 258,385 |  |  |  | 3,429 |  |  |  | 1 |
Sales of goods and real estate |  |  | 9,741 |  |  |  | 5,356 |  |  |  | (4,385 | ) |  |  | (45 | )
Services income |  |  | 118,644 |  |  |  | 106,542 |  |  |  | (12,102 | ) |  |  | (10 | )
Total Segment Revenues |  |  | 445,338 |  |  |  | 429,907 |  |  |  | (15,431 | ) |  |  | (3 | )
Interest expense |  |  | 5,783 |  |  |  | 6,375 |  |  |  | 592 |  |  |  | 10 |
Costs of operating leases |  |  | 191,291 |  |  |  | 186,989 |  |  |  | (4,302 | ) |  |  | (2 | )
Costs of goods and real estate sold |  |  | 6,516 |  |  |  | 3,988 |  |  |  | (2,528 | ) |  |  | (39 | )
Services expense |  |  | 58,148 |  |  |  | 58,103 |  |  |  | (45 | ) |  |  | (0 | )
Selling, general and administrative expenses |  |  | 87,753 |  |  |  | 83,811 |  |  |  | (3,942 | ) |  |  | (4 | )
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 2,388 |  |  |  | 1,107 |  |  |  | (1,281 | ) |  |  | (54 | )
Other |  |  | 17,175 |  |  |  | 17,275 |  |  |  | 100 |  |  |  | 1 |
Total Segment Expenses |  |  | 369,054 |  |  |  | 357,648 |  |  |  | (11,406 | ) |  |  | (3 | )
Segment Operating Income |  |  | 76,284 |  |  |  | 72,259 |  |  |  | (4,025 | ) |  |  | (5 | )
Equity in Net income (Loss) of Affiliates and others |  |  | 163,518 |  |  |  | 917 |  |  |  | (162,601 | ) |  |  | (99 | )
Segment Profits |  | ¥ | 239,802 |  |  | ¥ | 73,176 |  |  | ¥ | (166,626 | ) |  |  | (69 | )
|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases |  | ¥ | 580,161 |  |  | ¥ | 566,010 |  |  | ¥ | (14,151 | ) |  |  | (2 | )
Installment loans |  |  | 325,482 |  |  |  | 333,922 |  |  |  | 8,440 |  |  |  | 3 |
Investment in operating leases |  |  | 517,233 |  |  |  | 511,184 |  |  |  | (6,049 | ) |  |  | (1 | )
Investment in securities |  |  | 34,987 |  |  |  | 35,164 |  |  |  | 177 |  |  |  | 1 |
Property under facility operations |  |  | 17,199 |  |  |  | 18,908 |  |  |  | 1,709 |  |  |  | 10 |
Inventories |  |  | 594 |  |  |  | 1,104 |  |  |  | 510 |  |  |  | 86 |
Advances for finance lease and operating lease |  |  | 1,800 |  |  |  | 1,566 |  |  |  | (234 | ) |  |  | (13 | )
Investment in affiliates |  |  | 16,929 |  |  |  | 16,961 |  |  |  | 32 |  |  |  | 0 |
Goodwill, intangible assets acquired in business combinations |  |  | 22,410 |  |  |  | 29,251 |  |  |  | 6,841 |  |  |  | 31 |
Total Segment Assets |  | ¥ | 1,516,795 |  |  | ¥ | 1,514,070 |  |  | ¥ | (2,725 | ) |  |  | (0 | )

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Real Estate
Segment profits increased 61% to ¥51,523 million compared to fiscal 2022. This increase was due to an increase in services income from operating facilities, an increase in equity in net income (loss) of affiliates resulting from the recording of a large gain on the sale of a real estate joint venture, and an increase in operating leases revenues resulting from sales of real estate under operating leases.
Segment assets increased 3% to ¥935,027 million compared to the end of fiscal 2022 due to an increase in property under facility operations and inventories.

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 5,602 |  |  | ¥ | 5,562 |  |  | ¥ | (40 | ) |  |  | (1 | )
Operating leases |  |  | 48,091 |  |  |  | 55,544 |  |  |  | 7,453 |  |  |  | 15 |
Sales of goods and real estate |  |  | 97,138 |  |  |  | 96,030 |  |  |  | (1,108 | ) |  |  | (1 | )
Services income |  |  | 235,746 |  |  |  | 261,843 |  |  |  | 26,097 |  |  |  | 11 |
Other |  |  | 4,111 |  |  |  | (243 | ) |  |  | (4,354 | ) |  |  | — |
Total Segment Revenues |  |  | 390,688 |  |  |  | 418,736 |  |  |  | 28,048 |  |  |  | 7 |
Interest expense |  |  | 2,873 |  |  |  | 3,367 |  |  |  | 494 |  |  |  | 17 |
Costs of operating leases |  |  | 25,006 |  |  |  | 24,895 |  |  |  | (111 | ) |  |  | (0 | )
Costs of goods and real estate sold |  |  | 79,612 |  |  |  | 80,586 |  |  |  | 974 |  |  |  | 1 |
Services expense |  |  | 218,985 |  |  |  | 230,136 |  |  |  | 11,151 |  |  |  | 5 |
Selling, general and administrative expenses |  |  | 34,677 |  |  |  | 36,643 |  |  |  | 1,966 |  |  |  | 6 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 262 |  |  |  | 1,785 |  |  |  | 1,523 |  |  |  | 581 |
Other |  |  | (1,150 | ) |  |  | (627 | ) |  |  | 523 |  |  |  | — |
Total Segment Expenses |  |  | 360,265 |  |  |  | 376,785 |  |  |  | 16,520 |  |  |  | 5 |
Segment Operating Income |  |  | 30,423 |  |  |  | 41,951 |  |  |  | 11,528 |  |  |  | 38 |
Equity in Net income (Loss) of Affiliates and others |  |  | 1,567 |  |  |  | 9,572 |  |  |  | 8,005 |  |  |  | 511 |
Segment Profits |  | ¥ | 31,990 |  |  | ¥ | 51,523 |  |  | ¥ | 19,533 |  |  |  | 61 |
|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases |  | ¥ | 62,498 |  |  | ¥ | 57,587 |  |  | ¥ | (4,911 | ) |  |  | (8 | )
Investment in operating leases |  |  | 300,460 |  |  |  | 302,698 |  |  |  | 2,238 |  |  |  | 1 |
Investment in securities |  |  | 4,289 |  |  |  | 3,894 |  |  |  | (395 | ) |  |  | (9 | )
Property under facility operations |  |  | 155,750 |  |  |  | 170,425 |  |  |  | 14,675 |  |  |  | 9 |
Inventories |  |  | 97,667 |  |  |  | 108,789 |  |  |  | 11,122 |  |  |  | 11 |
Advances for finance lease and operating lease |  |  | 112,309 |  |  |  | 112,973 |  |  |  | 664 |  |  |  | 1 |
Investment in affiliates |  |  | 113,178 |  |  |  | 117,040 |  |  |  | 3,862 |  |  |  | 3 |
Advances for property under facility operations |  |  | 6,857 |  |  |  | 6,625 |  |  |  | (232 | ) |  |  | (3 | )
Goodwill, intangible assets acquired in business combinations |  |  | 57,093 |  |  |  | 54,996 |  |  |  | (2,097 | ) |  |  | (4 | )
Total Segment Assets |  | ¥ | 910,101 |  |  | ¥ | 935,027 |  |  | ¥ | 24,926 |  |  |  | 3 |

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PE Investment and Concession
Segment profits increased by ¥14,368 million to ¥2,686 million compared to fiscal 2022 due to the absence of write-downs of long-lived assets at an investee recorded in the previous fiscal 2022.
Segment assets increased 71% to ¥605,471 million compared to the end of fiscal 2022 due to an increase in goodwill, intangible assets acquired in business combinations resulting from the acquisition of investees.

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 237 |  |  | ¥ | 159 |  |  | ¥ | (78 | ) |  |  | (33 | )
Gains on investment securities and dividends |  |  | 2,555 |  |  |  | 1,298 |  |  |  | (1,257 | ) |  |  | (49 | )
Operating leases |  |  | 33,870 |  |  |  | 38,653 |  |  |  | 4,783 |  |  |  | 14 |
Sales of goods and real estate |  |  | 320,104 |  |  |  | 280,361 |  |  |  | (39,743 | ) |  |  | (12 | )
Services income |  |  | 28,973 |  |  |  | 55,934 |  |  |  | 26,961 |  |  |  | 93 |
Total Segment Revenues |  |  | 385,739 |  |  |  | 376,405 |  |  |  | (9,334 | ) |  |  | (2 | )
Interest expense |  |  | 2,547 |  |  |  | 2,376 |  |  |  | (171 | ) |  |  | (7 | )
Costs of operating leases |  |  | 23,643 |  |  |  | 24,900 |  |  |  | 1,257 |  |  |  | 5 |
Costs of goods and real estate sold |  |  | 289,522 |  |  |  | 240,942 |  |  |  | (48,580 | ) |  |  | (17 | )
Services expense |  |  | 19,150 |  |  |  | 40,900 |  |  |  | 21,750 |  |  |  | 114 |
Selling, general and administrative expenses |  |  | 52,742 |  |  |  | 56,449 |  |  |  | 3,707 |  |  |  | 7 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 12,599 |  |  |  | 195 |  |  |  | (12,404 | ) |  |  | (98 | )
Other |  |  | (11,844 | ) |  |  | 2,193 |  |  |  | 14,037 |  |  |  | — |
Total Segment Expenses |  |  | 388,359 |  |  |  | 367,955 |  |  |  | (20,404 | ) |  |  | (5 | )
Segment Operating Income |  |  | (2,620 | ) |  |  | 8,450 |  |  |  | 11,070 |  |  |  | — |
Equity in Net income (Loss) of Affiliates and others |  |  | (9,062 | ) |  |  | (5,764 | ) |  |  | 3,298 |  |  |  | — |
Segment Profits |  | ¥ | (11,682 | ) |  | ¥ | 2,686 |  |  | ¥ | 14,368 |  |  |  | — |
|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases |  | ¥ | 1,689 |  |  | ¥ | 1,616 |  |  | ¥ | (73 | ) |  |  | (4 | )
Investment in operating leases |  |  | 43,686 |  |  |  | 52,976 |  |  |  | 9,290 |  |  |  | 21 |
Investment in securities |  |  | 12,129 |  |  |  | 42,401 |  |  |  | 30,272 |  |  |  | 250 |
Property under facility operations |  |  | 40,725 |  |  |  | 51,978 |  |  |  | 11,253 |  |  |  | 28 |
Inventories |  |  | 39,554 |  |  |  | 48,716 |  |  |  | 9,162 |  |  |  | 23 |
Advances for finance lease and operating lease |  |  | 0 |  |  |  | 4 |  |  |  | 4 |  |  |  | — |
Investment in affiliates |  |  | 43,498 |  |  |  | 36,678 |  |  |  | (6,820 | ) |  |  | (16 | )
Advances for property under facility operations |  |  | 1,323 |  |  |  | 2,354 |  |  |  | 1,031 |  |  |  | 78 |
Goodwill, intangible assets acquired in business combinations |  |  | 170,977 |  |  |  | 368,748 |  |  |  | 197,771 |  |  |  | 116 |
Total Segment Assets |  | ¥ | 353,581 |  |  | ¥ | 605,471 |  |  | ¥ | 251,890 |  |  |  | 71 |

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Environment and Energy
Segment profits increased by ¥32,634 million to ¥35,682 million compared to fiscal 2022 due to the absence of write-downs of long-lived assets recorded in fiscal 2022, and due to gains on the sale of shares of subsidiaries and affiliates due to the partial sale of an investee.
Segment assets increased 10% to ¥773,617 million compared to the end of fiscal 2022 primarily due to foreign exchange effects.

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 1,001 |  |  | ¥ | 1,230 |  |  | ¥ | 229 |  |  |  | 23 |
Services income |  |  | 155,303 |  |  |  | 210,240 |  |  |  | 54,937 |  |  |  | 35 |
Other |  |  | 3,928 |  |  |  | 4,300 |  |  |  | 372 |  |  |  | 9 |
Total Segment Revenues |  |  | 160,232 |  |  |  | 215,770 |  |  |  | 55,538 |  |  |  | 35 |
Interest expense |  |  | 5,365 |  |  |  | 12,276 |  |  |  | 6,911 |  |  |  | 129 |
Services expense |  |  | 123,981 |  |  |  | 167,733 |  |  |  | 43,752 |  |  |  | 35 |
Selling, general and administrative expenses |  |  | 12,814 |  |  |  | 16,276 |  |  |  | 3,462 |  |  |  | 27 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 19,564 |  |  |  | 50 |  |  |  | (19,514 | ) |  |  | (100 | )
Other |  |  | 1,518 |  |  |  | 2,452 |  |  |  | 934 |  |  |  | 62 |
Total Segment Expenses |  |  | 163,242 |  |  |  | 198,787 |  |  |  | 35,545 |  |  |  | 22 |
Segment Operating Income |  |  | (3,010 | ) |  |  | 16,983 |  |  |  | 19,993 |  |  |  | — |
Equity in Net income (Loss) of Affiliates and others |  |  | 6,058 |  |  |  | 18,699 |  |  |  | 12,641 |  |  |  | 209 |
Segment Profits |  | ¥ | 3,048 |  |  | ¥ | 35,682 |  |  | ¥ | 32,634 |  |  |  | — |
|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases |  | ¥ | 7,910 |  |  | ¥ | 6,723 |  |  | ¥ | (1,187 | ) |  |  | (15 | )
Installment loans |  |  | 711 |  |  |  | 190 |  |  |  | (521 | ) |  |  | (73 | )
Investment in operating leases |  |  | 279 |  |  |  | 264 |  |  |  | (15 | ) |  |  | (5 | )
Investment in securities |  |  | 961 |  |  |  | 1,580 |  |  |  | 619 |  |  |  | 64 |
Property under facility operations |  |  | 330,598 |  |  |  | 362,043 |  |  |  | 31,445 |  |  |  | 10 |
Inventories |  |  | 356 |  |  |  | 9,825 |  |  |  | 9,469 |  |  |  | — |
Advances for finance lease and operating lease |  |  | 6 |  |  |  | 1 |  |  |  | (5 | ) |  |  | (83 | )
Investment in affiliates |  |  | 204,260 |  |  |  | 190,384 |  |  |  | (13,876 | ) |  |  | (7 | )
Advances for property under facility operations |  |  | 57,520 |  |  |  | 88,493 |  |  |  | 30,973 |  |  |  | 54 |
Goodwill, intangible assets acquired in business combinations |  |  | 101,007 |  |  |  | 114,114 |  |  |  | 13,107 |  |  |  | 13 |
Total Segment Assets |  | ¥ | 703,608 |  |  | ¥ | 773,617 |  |  | ¥ | 70,009 |  |  |  | 10 |

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Insurance
Segment profits decreased 29% to ¥37,980 million compared to fiscal 2022 due to an increase in life insurance costs as a result of increased payouts to policy holders, despite an increase in life insurance premiums and related investment income resulting from an increase in insurance contracts.
Segment assets decreased 1% to ¥2,050,412 million compared to the end of fiscal 2022 due to a decrease in investment in securities.

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 265 |  |  | ¥ | 300 |  |  | ¥ | 35 |  |  |  | 13 |
Life insurance premiums and related investment income |  |  | 484,377 |  |  |  | 496,561 |  |  |  | 12,184 |  |  |  | 3 |
Other |  |  | 2,062 |  |  |  | 2,626 |  |  |  | 564 |  |  |  | 27 |
Total Segment Revenues |  |  | 486,704 |  |  |  | 499,487 |  |  |  | 12,783 |  |  |  | 3 |
Interest expense |  |  | 551 |  |  |  | 365 |  |  |  | (186 | ) |  |  | (34 | )
Life insurance costs |  |  | 368,926 |  |  |  | 400,336 |  |  |  | 31,410 |  |  |  | 9 |
Selling, general and administrative expenses |  |  | 63,731 |  |  |  | 60,815 |  |  |  | (2,916 | ) |  |  | (5 | )
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | (0 | ) |  |  | (1 | ) |  |  | (1 | ) |  |  | — |
Other |  |  | 288 |  |  |  | (3 | ) |  |  | (291 | ) |  |  | — |
Total Segment Expenses |  |  | 433,496 |  |  |  | 461,512 |  |  |  | 28,016 |  |  |  | 6 |
Segment Operating Income |  |  | 53,208 |  |  |  | 37,975 |  |  |  | (15,233 | ) |  |  | (29 | )
Equity in Net income (Loss) of Affiliates and others |  |  | 82 |  |  |  | 5 |  |  |  | (77 | ) |  |  | (94 | )
Segment Profits |  | ¥ | 53,290 |  |  | ¥ | 37,980 |  |  | ¥ | (15,310 | ) |  |  | (29 | )
|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Installment loans |  | ¥ | 17,983 |  |  | ¥ | 18,109 |  |  | ¥ | 126 |  |  |  | 1 |
Investment in operating leases |  |  | 28,296 |  |  |  | 27,467 |  |  |  | (829 | ) |  |  | (3 | )
Investment in securities |  |  | 2,021,134 |  |  |  | 2,000,150 |  |  |  | (20,984 | ) |  |  | (1 | )
Goodwill, intangible assets acquired in business combinations |  |  | 4,732 |  |  |  | 4,686 |  |  |  | (46 | ) |  |  | (1 | )
Total Segment Assets |  | ¥ | 2,072,145 |  |  | ¥ | 2,050,412 |  |  | ¥ | (21,733 | ) |  |  | (1 | )

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Banking and Credit
Segment profits decreased 9% to ¥37,610 million compared to fiscal 2022 due to the absence of gains on investment securities and dividends at ORIX Bank Corporation recorded in fiscal 2022, and an increase in advertising expenses at ORIX Credit Corporation.
Segment assets totaled ¥2,698,747 million, remaining relatively unchanged compared to the end of fiscal 2022.

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 76,190 |  |  | ¥ | 78,066 |  |  | ¥ | 1,876 |  |  |  | 2 |
Gains on investment securities and dividends |  |  | 2,204 |  |  |  | (839 | ) |  |  | (3,043 | ) |  |  | — |
Services income |  |  | 6,427 |  |  |  | 7,059 |  |  |  | 632 |  |  |  | 10 |
Total Segment Revenues |  |  | 84,821 |  |  |  | 84,286 |  |  |  | (535 | ) |  |  | (1 | )
Interest expense |  |  | 5,259 |  |  |  | 5,698 |  |  |  | 439 |  |  |  | 8 |
Services expense |  |  | 6,726 |  |  |  | 7,229 |  |  |  | 503 |  |  |  | 7 |
Selling, general and administrative expenses |  |  | 29,112 |  |  |  | 33,351 |  |  |  | 4,239 |  |  |  | 15 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 2,395 |  |  |  | 716 |  |  |  | (1,679 | ) |  |  | (70 | )
Other |  |  | (168 | ) |  |  | (318 | ) |  |  | (150 | ) |  |  | — |
Total Segment Expenses |  |  | 43,324 |  |  |  | 46,676 |  |  |  | 3,352 |  |  |  | 8 |
Segment Operating Income |  |  | 41,497 |  |  |  | 37,610 |  |  |  | (3,887 | ) |  |  | (9 | )
Equity in Net income (Loss) of Affiliates and others |  |  | 1 |  |  |  | 0 |  |  |  | (1 | ) |  |  | — |
Segment Profits |  | ¥ | 41,498 |  |  | ¥ | 37,610 |  |  | ¥ | (3,888 | ) |  |  | (9 | )
|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Installment loans |  | ¥ | 2,397,532 |  |  | ¥ | 2,395,340 |  |  | ¥ | (2,192 | ) |  |  | (0 | )
Investment in securities |  |  | 277,786 |  |  |  | 291,627 |  |  |  | 13,841 |  |  |  | 5 |
Inventories |  |  | 0 |  |  |  | 9 |  |  |  | 9 |  |  |  | — |
Investment in affiliates |  |  | 67 |  |  |  | 0 |  |  |  | (67 | ) |  |  | — |
Goodwill, intangible assets acquired in business combinations |  |  | 11,771 |  |  |  | 11,771 |  |  |  | 0 |  |  |  | — |
Total Segment Assets |  | ¥ | 2,687,156 |  |  | ¥ | 2,698,747 |  |  | ¥ | 11,591 |  |  |  | 0 |

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Aircraft and Ships
Segment profits increased by ¥20,902 million to ¥18,583 million compared to fiscal 2022 due to an increase in equity in net income (loss) of affiliates at Avolon and an increase in operating leases revenues in our ship-related business and aircraft-related business.
Segment assets increased 9% to ¥742,890 million compared to the end of fiscal 2022 due to an increase in investment in affiliates and an increase in investment in operating leases primarily resulting from foreign exchange effects.

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 2,580 |  |  | ¥ | 6,660 |  |  | ¥ | 4,080 |  |  |  | 158 |
Operating leases |  |  | 28,620 |  |  |  | 37,208 |  |  |  | 8,588 |  |  |  | 30 |
Services income |  |  | 7,439 |  |  |  | 10,871 |  |  |  | 3,432 |  |  |  | 46 |
Other |  |  | 0 |  |  |  | (730 | ) |  |  | (730 | ) |  |  | — |
Total Segment Revenues |  |  | 38,639 |  |  |  | 54,009 |  |  |  | 15,370 |  |  |  | 40 |
Interest expense |  |  | 11,400 |  |  |  | 18,877 |  |  |  | 7,477 |  |  |  | 66 |
Costs of operating leases |  |  | 17,965 |  |  |  | 16,898 |  |  |  | (1,067 | ) |  |  | (6 | )
Services expense |  |  | 865 |  |  |  | 2,103 |  |  |  | 1,238 |  |  |  | 143 |
Selling, general and administrative expenses |  |  | 7,325 |  |  |  | 10,369 |  |  |  | 3,044 |  |  |  | 42 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 2,331 |  |  |  | 1 |  |  |  | (2,330 | ) |  |  | (100 | )
Other |  |  | (4,932 | ) |  |  | (3,377 | ) |  |  | 1,555 |  |  |  | — |
Total Segment Expenses |  |  | 34,954 |  |  |  | 44,871 |  |  |  | 9,917 |  |  |  | 28 |
Segment Operating Income |  |  | 3,685 |  |  |  | 9,138 |  |  |  | 5,453 |  |  |  | 148 |
Equity in Net income (Loss) of Affiliates and others |  |  | (6,004 | ) |  |  | 9,445 |  |  |  | 15,449 |  |  |  | — |
Segment Profits |  | ¥ | (2,319 | ) |  | ¥ | 18,583 |  |  | ¥ | 20,902 |  |  |  | — |
|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Installment loans |  |  | 81,695 |  |  |  | 74,151 |  |  |  | (7,544 | ) |  |  | (9 | )
Investment in operating leases |  |  | 271,910 |  |  |  | 295,858 |  |  |  | 23,948 |  |  |  | 9 |
Investment in securities |  |  | 0 |  |  |  | 5,800 |  |  |  | 5,800 |  |  |  | — |
Inventories |  |  | 113 |  |  |  | 37 |  |  |  | (76 | ) |  |  | (67 | )
Investment in affiliates |  |  | 320,058 |  |  |  | 348,583 |  |  |  | 28,525 |  |  |  | 9 |
Goodwill, intangible assets acquired in business combinations |  |  | 10,322 |  |  |  | 18,461 |  |  |  | 8,139 |  |  |  | 79 |
Total Segment Assets |  | ¥ | 684,098 |  |  | ¥ | 742,890 |  |  | ¥ | 58,792 |  |  |  | 9 |

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ORIX USA
Segment profits decreased 35% to ¥49,021 million compared to fiscal 2022 due primarily to the absence of gains on sales of subsidiaries and affiliates recorded in the fiscal 2022, despite an increase in services income.
Segment assets increased 7% to ¥1,462,067 million compared to the end of fiscal 2022 due primarily to foreign exchange effects.

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 90,708 |  |  | ¥ | 106,599 |  |  | ¥ | 15,891 |  |  |  | 18 |
Gains on investment securities and dividends |  |  | 37,802 |  |  |  | 32,641 |  |  |  | (5,161 | ) |  |  | (14 | )
Services income |  |  | 29,699 |  |  |  | 47,345 |  |  |  | 17,646 |  |  |  | 59 |
Other |  |  | 3,135 |  |  |  | 2,460 |  |  |  | (675 | ) |  |  | (22 | )
Total Segment Revenues |  |  | 161,344 |  |  |  | 189,045 |  |  |  | 27,701 |  |  |  | 17 |
Interest expense |  |  | 17,140 |  |  |  | 43,643 |  |  |  | 26,503 |  |  |  | 155 |
Services expense |  |  | 4,149 |  |  |  | 4,871 |  |  |  | 722 |  |  |  | 17 |
Selling, general and administrative expenses |  |  | 79,404 |  |  |  | 85,515 |  |  |  | 6,111 |  |  |  | 8 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | (88 | ) |  |  | 4,380 |  |  |  | 4,468 |  |  |  | — |
Other |  |  | 1,989 |  |  |  | 3,824 |  |  |  | 1,835 |  |  |  | 92 |
Total Segment Expenses |  |  | 102,594 |  |  |  | 142,233 |  |  |  | 39,639 |  |  |  | 39 |
Segment Operating Income |  |  | 58,750 |  |  |  | 46,812 |  |  |  | (11,938 | ) |  |  | (20 | )
Equity in Net income (Loss) of Affiliates and others |  |  | 16,485 |  |  |  | 2,209 |  |  |  | (14,276 | ) |  |  | (87 | )
Segment Profits |  | ¥ | 75,235 |  |  | ¥ | 49,021 |  |  | ¥ | (26,214 | ) |  |  | (35 | )
|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases |  | ¥ | 475 |  |  | ¥ | 483 |  |  | ¥ | 8 |  |  |  | 2 |
Installment loans |  |  | 717,183 |  |  |  | 743,091 |  |  |  | 25,908 |  |  |  | 4 |
Investment in operating leases |  |  | 4,653 |  |  |  | 3,612 |  |  |  | (1,041 | ) |  |  | (22 | )
Investment in securities |  |  | 367,190 |  |  |  | 423,229 |  |  |  | 56,039 |  |  |  | 15 |
Property under facility operations and servicing assets |  |  | 79,000 |  |  |  | 81,291 |  |  |  | 2,291 |  |  |  | 3 |
Inventories |  |  | 685 |  |  |  | 142 |  |  |  | (543 | ) |  |  | (79 | )
Advances for finance lease and operating lease |  |  | 945 |  |  |  | 0 |  |  |  | (945 | ) |  |  | — |
Investment in affiliates |  |  | 45,337 |  |  |  | 52,408 |  |  |  | 7,071 |  |  |  | 16 |
Goodwill, intangible assets acquired in business combinations |  |  | 148,674 |  |  |  | 157,811 |  |  |  | 9,137 |  |  |  | 6 |
Total Segment Assets |  | ¥ | 1,364,142 |  |  | ¥ | 1,462,067 |  |  | ¥ | 97,925 |  |  |  | 7 |

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ORIX Europe
Segment profits decreased 18% to ¥40,675 million compared to fiscal 2022 due to an increase in selling, general and administrative expenses, and a decrease in services income due to a decrease in the average amount of assets under management resulting from weaker market conditions, despite the absence of the write-down of intangible assets recorded in the fiscal 2022.
Segment assets increased 4% to ¥417,941 million compared to the end of fiscal 2022 due primarily to foreign exchange effects.

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 56 |  |  | ¥ | 812 |  |  | ¥ | 756 |  |  |  | — |
Gains on investment securities and dividends |  |  | 1,849 |  |  |  | (2,155 | ) |  |  | (4,004 | ) |  |  | — |
Services income |  |  | 219,207 |  |  |  | 207,829 |  |  |  | (11,378 | ) |  |  | (5 | )
Total Segment Revenues |  |  | 221,112 |  |  |  | 206,486 |  |  |  | (14,626 | ) |  |  | (7 | )
Interest expense |  |  | (647 | ) |  |  | 4,317 |  |  |  | 4,964 |  |  |  | — |
Services expense |  |  | 53,199 |  |  |  | 48,921 |  |  |  | (4,278 | ) |  |  | (8 | )
Selling, general and administrative expenses |  |  | 95,620 |  |  |  | 112,129 |  |  |  | 16,509 |  |  |  | 17 |
Other |  |  | 23,115 |  |  |  | 609 |  |  |  | (22,506 | ) |  |  | (97 | )
Total Segment Expenses |  |  | 171,287 |  |  |  | 165,976 |  |  |  | (5,311 | ) |  |  | (3 | )
Segment Operating Income |  |  | 49,825 |  |  |  | 40,510 |  |  |  | (9,315 | ) |  |  | (19 | )
Equity in Net income (Loss) of Affiliates and others |  |  | (491 | ) |  |  | 165 |  |  |  | 656 |  |  |  | — |
Segment Profits |  | ¥ | 49,334 |  |  | ¥ | 40,675 |  |  | ¥ | (8,659 | ) |  |  | (18 | )
|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Investment in securities |  | ¥ | 82,770 |  |  | ¥ | 84,147 |  |  | ¥ | 1,377 |  |  |  | 2 |
Investment in affiliates |  |  | 2,221 |  |  |  | 2,714 |  |  |  | 493 |  |  |  | 22 |
Goodwill, intangible assets acquired in business combinations |  |  | 316,878 |  |  |  | 331,080 |  |  |  | 14,202 |  |  |  | 4 |
Total Segment Assets |  | ¥ | 401,869 |  |  | ¥ | 417,941 |  |  | ¥ | 16,072 |  |  |  | 4 |

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Asia and Australia
Segment profits decreased 33% to ¥34,319 million compared to fiscal 2022 due to a decrease in equity in net income (loss) of affiliates and an impairment loss at affiliates in Greater China, despite an increase in operating leases revenues primarily in South Korea and Australia.
Segment assets increased 7% to ¥1,395,096 million compared to the end of fiscal 2022 due to an increase in net investment in leases and an increase in investment in operating leases primarily in South Korea, despite a decrease in installment loans in Greater China.

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 47,166 |  |  | ¥ | 59,933 |  |  | ¥ | 12,767 |  |  |  | 27 |
Gains on investment securities and dividends |  |  | 3,673 |  |  |  | 2,886 |  |  |  | (787 | ) |  |  | (21 | )
Operating leases |  |  | 82,004 |  |  |  | 104,614 |  |  |  | 22,610 |  |  |  | 28 |
Services income |  |  | 14,635 |  |  |  | 20,613 |  |  |  | 5,978 |  |  |  | 41 |
Other |  |  | 577 |  |  |  | 1,698 |  |  |  | 1,121 |  |  |  | 194 |
Total Segment Revenues |  |  | 148,055 |  |  |  | 189,744 |  |  |  | 41,689 |  |  |  | 28 |
Interest expense |  |  | 20,548 |  |  |  | 31,992 |  |  |  | 11,444 |  |  |  | 56 |
Costs of operating leases |  |  | 61,595 |  |  |  | 78,950 |  |  |  | 17,355 |  |  |  | 28 |
Services expense |  |  | 9,672 |  |  |  | 12,214 |  |  |  | 2,542 |  |  |  | 26 |
Selling, general and administrative expenses |  |  | 29,711 |  |  |  | 37,844 |  |  |  | 8,133 |  |  |  | 27 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 891 |  |  |  | 2,601 |  |  |  | 1,710 |  |  |  | 192 |
Other |  |  | (888 | ) |  |  | 1,820 |  |  |  | 2,708 |  |  |  | — |
Total Segment Expenses |  |  | 121,529 |  |  |  | 165,421 |  |  |  | 43,892 |  |  |  | 36 |
Segment Operating Income |  |  | 26,526 |  |  |  | 24,323 |  |  |  | (2,203 | ) |  |  | (8 | )
Equity in Net income (Loss) of Affiliates and others |  |  | 24,639 |  |  |  | 9,996 |  |  |  | (14,643 | ) |  |  | (59 | )
Segment Profits |  | ¥ | 51,165 |  |  | ¥ | 34,319 |  |  | ¥ | (16,846 | ) |  |  | (33 | )
|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases |  | ¥ | 405,043 |  |  | ¥ | 454,961 |  |  | ¥ | 49,918 |  |  |  | 12 |
Installment loans |  |  | 321,994 |  |  |  | 312,788 |  |  |  | (9,206 | ) |  |  | (3 | )
Investment in operating leases |  |  | 286,214 |  |  |  | 329,549 |  |  |  | 43,335 |  |  |  | 15 |
Investment in securities |  |  | 48,052 |  |  |  | 50,360 |  |  |  | 2,308 |  |  |  | 5 |
Property under facility operations |  |  | 1,084 |  |  |  | 1,184 |  |  |  | 100 |  |  |  | 9 |
Inventories |  |  | 483 |  |  |  | 202 |  |  |  | (281 | ) |  |  | (58 | )
Advances for finance lease and operating lease |  |  | 3,919 |  |  |  | 3,720 |  |  |  | (199 | ) |  |  | (5 | )
Investment in affiliates |  |  | 232,471 |  |  |  | 235,586 |  |  |  | 3,115 |  |  |  | 1 |
Goodwill, intangible assets acquired in business combinations |  |  | 6,829 |  |  |  | 6,746 |  |  |  | (83 | ) |  |  | (1 | )
Total Segment Assets |  | ¥ | 1,306,089 |  |  | ¥ | 1,395,096 |  |  | ¥ | 89,007 |  |  |  | 7 |

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Revenues, New Business Volumes and Investments
Finance revenues

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance revenues |  | ¥ | 279,589 |  |  | ¥ | 317,612 |  |  | ¥ | 38,023 |  |  |  | 14 |

Finance revenues increased 14% to ¥317,612 million for fiscal 2023 compared to fiscal 2022 due primarily to an increase in interest rates in the Americas and changes in foreign currency exchange rates.
Net investment in leases

|  | As of and for the year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
New equipment acquisitions |  | ¥ | 464,150 |  |  | ¥ | 512,684 |  |  | ¥ | 48,534 |  |  |  | 10 |
Japan |  |  | 210,773 |  |  |  | 205,011 |  |  |  | (5,762 | ) |  |  | (3 | )
Overseas |  |  | 253,377 |  |  |  | 307,673 |  |  |  | 54,296 |  |  |  | 21 |
Net investment in leases |  |  | 1,057,973 |  |  |  | 1,087,563 |  |  |  | 29,590 |  |  |  | 3 |

New equipment acquisitions related to net investment in leases increased 10% to ¥512,684 million compared to fiscal 2022. In Japan, new equipment acquisitions decreased 3% in fiscal 2023 compared to fiscal 2022. In overseas, new equipment acquisitions increased 21% in fiscal 2023 compared to fiscal 2022 due to increases in Asia.
Net investment in leases as of March 31, 2023 increased 3% to ¥1,087,563 million compared to March 31, 2022 due mainly to increases in assets in Overseas.
As of March 31, 2023, no single lessee represented more than 1% of the balance of net investment in leases. As of March 31, 2023, 58% of our net investment in leases were to lessees in Japan, while 42% were to overseas lessees. 12% of our net investment in leases were to lessees in China, and 6% of our net investment in leases were to lessees in South Korea and Malaysia, respectively. No other overseas country represented more than 5% of our total portfolio of net investment in leases.

|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases by category: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transportation equipment |  | ¥ | 434,944 |  |  | ¥ | 451,936 |  |  | ¥ | 16,992 |  |  |  | 4 |
Industrial equipment |  |  | 247,398 |  |  |  | 251,577 |  |  |  | 4,179 |  |  |  | 2 |
Electronics |  |  | 112,871 |  |  |  | 107,428 |  |  |  | (5,443 | ) |  |  | (5 | )
Information-related and office equipment |  |  | 94,292 |  |  |  | 104,236 |  |  |  | 9,944 |  |  |  | 11 |
Commercial services equipment |  |  | 46,941 |  |  |  | 47,243 |  |  |  | 302 |  |  |  | 1 |
Other |  |  | 121,527 |  |  |  | 125,143 |  |  |  | 3,616 |  |  |  | 3 |
Total |  | ¥ | 1,057,973 |  |  | ¥ | 1,087,563 |  |  | ¥ | 29,590 |  |  |  | 3 |

For further information, see Note 6 of “Item 18. Financial Statements.”
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Installment loans

|  | As of and for the year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Installment loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
New loans added |  | ¥ | 1,202,677 |  |  | ¥ | 1,268,865 |  |  | ¥ | 66,188 |  |  |  | 6 |
Japan |  |  | 766,453 |  |  |  | 884,050 |  |  |  | 117,597 |  |  |  | 15 |
Overseas |  |  | 436,224 |  |  |  | 384,815 |  |  |  | (51,409 | ) |  |  | (12 | )
Installment loans |  |  | 3,862,604 |  |  |  | 3,877,602 |  |  |  | 14,998 |  |  |  | 0 |

Note: | The balance of installment loans related to our life insurance operations is included in installment loans in our consolidated balance sheets; however, income and losses on these loans are recorded in life insurance premiums and related investment income in our consolidated statements of income.

New loans added increased 6% to ¥1,268,865 million compared to fiscal 2022. In Japan, new loans added increased 15% to ¥884,050 million compared to fiscal 2022. In overseas, new loans added decreased 12% to ¥384,815 million compared to fiscal 2022 due mainly to decreased lending activity in the Americas and ship-related finance.
The balance of installment loans as of March 31, 2023 remained flat at ¥3,877,602 million compared to March 31, 2022, due mainly to foreign exchange effects despite decreases in the new loans added in the Americas and ship-related finance, as well as the collection amount exceeding the new loans added in Asia.

|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Installment loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer borrowers in Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans |  | ¥ | 2,007,570 |  |  | ¥ | 1,949,865 |  |  | ¥ | (57,705 | ) |  |  | (3 | )
Card loans |  |  | 173,687 |  |  |  | 171,635 |  |  |  | (2,052 | ) |  |  | (1 | )
Other |  |  | 27,770 |  |  |  | 29,688 |  |  |  | 1,918 |  |  |  | 7 |
Subtotal |  |  | 2,209,027 |  |  |  | 2,151,188 |  |  |  | (57,839 | ) |  |  | (3 | )
Corporate borrowers in Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate companies |  |  | 278,607 |  |  |  | 296,228 |  |  |  | 17,621 |  |  |  | 6 |
Non-recourse loans |  |  | 74,085 |  |  |  | 124,499 |  |  |  | 50,414 |  |  |  | 68 |
Commercial, industrial and other companies |  |  | 168,607 |  |  |  | 165,951 |  |  |  | (2,656 | ) |  |  | (2 | )
Subtotal |  |  | 521,299 |  |  |  | 586,678 |  |  |  | 65,379 |  |  |  | 13 |
Consumer borrowers in overseas |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans |  |  | 105,860 |  |  |  | 107,094 |  |  |  | 1,234 |  |  |  | 1 |
Other |  |  | 30,136 |  |  |  | 43,054 |  |  |  | 12,918 |  |  |  | 43 |
Subtotal |  |  | 135,996 |  |  |  | 150,148 |  |  |  | 14,152 |  |  |  | 10 |
Corporate borrowers in overseas |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate companies |  |  | 273,789 |  |  |  | 277,839 |  |  |  | 4,050 |  |  |  | 1 |
Non-recourse loans |  |  | 80,918 |  |  |  | 38,654 |  |  |  | (42,264 | ) |  |  | (52 | )
Commercial, industrial and other companies |  |  | 627,828 |  |  |  | 660,840 |  |  |  | 33,012 |  |  |  | 5 |
Subtotal |  |  | 982,535 |  |  |  | 977,333 |  |  |  | (5,202 | ) |  |  | (1 | )
Purchased loans * |  |  | 13,747 |  |  |  | 12,255 |  |  |  | (1,492 | ) |  |  | (11 | )
Total |  | ¥ | 3,862,604 |  |  | ¥ | 3,877,602 |  |  | ¥ | 14,998 |  |  |  | 0 |

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

As of March 31, 2023, ¥18,109 million, or 0.7%, of our portfolio of installment loans to consumer and corporate borrowers in Japan related to our life insurance operations. We reflect income from these loans as life insurance premiums and related investment income in our consolidated statements of income.
As of March 31, 2023, ¥574,067 million, or 15%, of the balance of installment loans were to real estate companies in Japan and overseas.
The balance of installment loans to consumer borrowers in Japan as of March 31, 2023 decreased 3% to ¥2,151,188 million compared to the balance as of March 31, 2022, due primarily to a decrease in the balance of real estate loans for consumer. The balance of installment loans to corporate borrowers in Japan as of March 31, 2023 increased 13% to ¥586,678 million compared to the balance as of March 31, 2022, due mainly to an increase in the balance of
non-recourse
loans. The balance of installment loans to consumer borrowers in overseas as of March 31, 2023 increased 10% to ¥150,148 million compared to the balance as of March 31, 2022, due primarily to an increase in Asia, as well as foreign exchange effects. The balance of installment loans to corporate borrowers in overseas as of March 31, 2023 decreased 1% to ¥977,333 million compared to the balance as of March 31, 2022, in line with the aforementioned decrease in the Americas, ship-related finance and Asia despite foreign exchange effects.
For further information, see Note 7 of “Item 18. Financial Statements.”
Asset quality
Net investment in leases

|  | As of March 31, |
|  | 2022 |  |  | 2023 |
|  | (Millions of yen, except percentage data) |
Non-performing net investment in leases and allowance for credit losses on net investment in leases: |  |  |  |  |  |  |  |
Non-performing net investment in leases |  | ¥ | 19,224 |  |  | ¥ | 16,841 |
Non-performing net investment in leases as a percentage of the balance of net investment in leases |  |  | 1.82 | % |  |  | 1.55 | %
Provision for credit losses as a percentage of the average balance of net investment in leases* |  |  | 0.15 | % |  |  | 0.16 | %
Allowance for credit losses on net investment in leases |  | ¥ | 16,303 |  |  | ¥ | 15,719 |
Allowance for credit losses on net investment in leases as a percentage of the balance of net investment in leases |  |  | 1.54 | % |  |  | 1.45 | %
The ratio of charge-offs as a percentage of the average balance of net investment in leases* |  |  | 0.27 | % |  |  | 0.24 | %

* | Average balances are calculated on the basis of fiscal year’s beginning balance and fiscal quarter-end balances.

The balance of
non-performing
net investment in leases decreased ¥2,383 million to ¥16,841 million as of March 31, 2023 compared to March 31, 2022. As a result, the
non-performing
net investment in leases as a percentage of net investment in leases as of March 31, 2023 decreased 0.27% to 1.55% from March 31, 2022.
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We believe that the ratio of allowance for credit losses to the balance of investment in net investment in leases provides a reasonable indication that our allowance for credit losses was appropriate as of March 31, 2023 for the following reasons:

| • |  | lease receivables are generally diversified and the amount of realized loss on any particular contract is likely to be relatively small; and

| • |  | all lease contracts are secured by collateral consisting of the underlying leased assets, and we can expect to recover at least a portion of the outstanding lease receivables by selling the collateral.

Loans not individually assessed for credit losses

|  | As of March 31, |
|  | 2022 |  |  | 2023 |
|  | (Millions of yen, except percentage data) |
Non-performing loans not individually assessed for credit losses and allowance for credit losses on installment loans not individually assessed for credit losses: |  |  |  |  |  |  |  |
Non-performing loans not individually assessed for credit losses |  | ¥ | 34,479 |  |  | ¥ | 33,706 |
Non-performing loans not individually assessed for credit losses as a percentage of the balance of installment loans not individually assessed for credit losses |  |  | 0.90 | % |  |  | 0.88 | %
Provision for credit losses as a percentage of the average balance of installment loans not individually assessed for credit losses* |  |  | 0.06 | % |  |  | 0.14 | %
Allowance for credit losses on installment loans not individually assessed for credit losses |  | ¥ | 36,618 |  |  | ¥ | 39,179 |
Allowance for credit losses on installment loans not individually assessed for credit losses as a percentage of the balance of installment loans not individually assessed for credit losses |  |  | 0.96 | % |  |  | 1.02 | %
The ratio of charge-offs as a percentage of the average balance of loans not individually assessed for credit losses* |  |  | 0.33 | % |  |  | 0.10 | %

* | Average balances are calculated on the basis of fiscal year’s beginning balance and fiscal quarter-end balances.

The provision as a percentage of the average balance of installment loans not individually assessed for credit losses increased 0.08% compared to fiscal 2022, due mainly to the decline of forecasted future economic indicators such as GDP growth rates and unemployment rates in the Americas.
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The balance of
non-performing
loans not individually assessed that are estimated for credit losses by using installment loans with similar risk characteristics as one pool decreased ¥773 million to ¥33,706 million as of March 31, 2023 compared to March 31, 2022.

|  | As of March 31, |
|  | 2022 |  |  | 2023 |
|  | (Millions of yen) |
Non-performing loans not individually assessed for credit losses: |  |  |  |  |  |  |  |
Consumer borrowers in Japan |  |  |  |  |  |  |  |
Real estate loans |  | ¥ | 1,361 |  |  | ¥ | 1,302 |
Card loans |  |  | 671 |  |  |  | 1,588 |
Other |  |  | 3,179 |  |  |  | 6,312 |
Subtotal |  |  | 5,211 |  |  |  | 9,202 |
Corporate borrowers in Japan |  |  |  |  |  |  |  |
Real estate companies |  |  | 101 |  |  |  | 53 |
Commercial, industrial and other companies |  |  | 529 |  |  |  | 191 |
Subtotal |  |  | 630 |  |  |  | 244 |
Consumer borrowers in overseas |  |  |  |  |  |  |  |
Real estate loans |  |  | 345 |  |  |  | 316 |
Other |  |  | 235 |  |  |  | 331 |
Subtotal |  |  | 580 |  |  |  | 647 |
Corporate borrowers in overseas |  |  |  |  |  |  |  |
Real estate companies |  |  | 20,879 |  |  |  | 13,617 |
Non-recourse loans |  |  | 2,187 |  |  |  | 2,314 |
Commercial, industrial and other companies |  |  | 4,992 |  |  |  | 7,682 |
Subtotal |  |  | 28,058 |  |  |  | 23,613 |
Total |  | ¥ | 34,479 |  |  | ¥ | 33,706 |

We recognize allowances for real estate loans, card loans and other loans to individual borrowers after careful evaluation of the value of collateral underlying the loans, past loss experience and any economic conditions that we believe may affect the default rate. We determine the allowance for our other items on the basis of past loss experience, the forecasted future economic indicators correlated with the prior
charge-off
experience and the current portfolio composition.
Loans individually assessed for credit losses

|  | As of March 31, |
|  | 2022 |  |  | 2023 |
|  | (Millions of yen) |
Non-performing loans individually assessed for credit losses and allowance for credit losses on installment loans individually assessed for credit losses: |  |  |  |  |  |  |  |
Non-performing installment loans individually assessed for credit losses |  | ¥ | 50,836 |  |  | ¥ | 47,638 |
Allowance for credit losses on installment loans individually assessed for credit losses* |  |  | 11,213 |  |  |  | 8,992 |

* | The allowance is individually evaluated based on the present value of expected future cash flows, the loan’s observable market price or the fair value of the collateral securing the loans if the loans are collateral dependent.

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The provision for credit losses on installment loans individually assessed for credit losses was ¥3,355 million and ¥5,066 million, respectively, in fiscal 2022 and fiscal 2023. The
charge-off
of installment loans individually assessed for credit losses was ¥5,502 million and ¥7,764 million, respectively, in fiscal 2022 and fiscal 2023. The provision for credit losses on installment loans individually assessed for credit losses increased ¥1,711 million compared to fiscal 2022. The
charge-off
of installment loans individually assessed for credit losses increased ¥2,262 million compared to fiscal 2022.
The table below sets forth the outstanding balance of
non-performing
loans individually assessed for credit losses by region and type of borrower as of the dates indicated. Consumer loans in Japan primarily consist of restructured smaller-balance homogeneous loans individually assessed for credit losses.

|  | As of March 31, |
|  | 2022 |  |  | 2023 |
|  | (Millions of yen) |
Non-performing loans individually assessed for credit losses: |  |  |  |  |  |  |  |
Consumer borrowers in Japan |  |  |  |  |  |  |  |
Real estate loans |  | ¥ | 10,850 |  |  | ¥ | 11,161 |
Card loans |  |  | 3,415 |  |  |  | 3,655 |
Other |  |  | 15,317 |  |  |  | 14,527 |
Subtotal |  |  | 29,582 |  |  |  | 29,343 |
Corporate borrowers in Japan |  |  |  |  |  |  |  |
Real estate companies |  |  | 2,203 |  |  |  | 2,022 |
Commercial, industrial and other companies |  |  | 2,765 |  |  |  | 1,239 |
Subtotal |  |  | 4,968 |  |  |  | 3,261 |
Consumer borrowers in overseas |  |  |  |  |  |  |  |
Real estate loans |  |  | 129 |  |  |  | 231 |
Other |  |  | 286 |  |  |  | 774 |
Subtotal |  |  | 415 |  |  |  | 1,005 |
Corporate borrowers in overseas |  |  |  |  |  |  |  |
Non-recourse loans |  |  | 856 |  |  |  | 933 |
Commercial, industrial and other companies |  |  | 13,531 |  |  |  | 12,075 |
Subtotal |  |  | 14,387 |  |  |  | 13,008 |
Purchased loans |  |  | 1,484 |  |  |  | 1,021 |
Total |  | ¥ | 50,836 |  |  | ¥ | 47,638 |

Troubled debt restructuring
A troubled debt restructuring is defined as a restructuring of a financing receivable in which the creditor grants a concession to the debtor for economic or other reasons related to the debtor’s financial difficulties. The balance of
pre-modification
outstanding recorded investment of troubled debt restructurings for financing receivables occurred during fiscal 2022 and 2023 were ¥14,242 million and ¥18,487 million, respectively. And the balance of post-modification outstanding recorded investment were ¥11,471 million and ¥16,678 million for fiscal 2022 and 2023, respectively.
While there were certain other payment deferral requests for financing receivables which we accepted, due to the spread of the
COVID-19,
those receivables are not included in the troubled debt restructuring as we determined those deferrals did not meet the definition of troubled debt restructuring.
For further information, see Note 8 of “Item 18. Financial Statements.”
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Allowance for credit losses
We recognize allowances for credit losses on net investment in leases and installment loans.

|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  |  | 73,990 |  |  |  | 64,134 |  |  |  | (9,856 | ) |  |  | (13 | )
Net investment in leases |  |  | 16,522 |  |  |  | 16,303 |  |  |  | (219 | ) |  |  | (1 | )
Loans not individually assessed for credit losses |  |  | 44,064 |  |  |  | 36,618 |  |  |  | (7,446 | ) |  |  | (17 | )
Loans individually assessed for credit losses |  |  | 13,404 |  |  |  | 11,213 |  |  |  | (2,191 | ) |  |  | (16 | )
Provision (Reversal) *1 |  |  | 7,154 |  |  |  | 12,125 |  |  |  | 4,971 |  |  |  | 69 |
Net investment in leases |  |  | 1,577 |  |  |  | 1,678 |  |  |  | 101 |  |  |  | 6 |
Loans not individually assessed for credit losses |  |  | 2,222 |  |  |  | 5,381 |  |  |  | 3,159 |  |  |  | 142 |
Loans individually assessed for credit losses |  |  | 3,355 |  |  |  | 5,066 |  |  |  | 1,711 |  |  |  | 51 |
Charge-offs (net) |  |  | (20,597 | ) |  |  | (14,345 | ) |  |  | 6,252 |  |  |  | (30 | )
Net investment in leases |  |  | (2,781 | ) |  |  | (2,610 | ) |  |  | 171 |  |  |  | (6 | )
Loans not individually assessed for credit losses |  |  | (12,314 | ) |  |  | (3,971 | ) |  |  | 8,343 |  |  |  | (68 | )
Loans individually assessed for credit losses |  |  | (5,502 | ) |  |  | (7,764 | ) |  |  | (2,262 | ) |  |  | 41 |
Other *2 |  |  | 3,587 |  |  |  | 1,976 |  |  |  | (1,611 | ) |  |  | (45 | )
Net investment in leases |  |  | 985 |  |  |  | 348 |  |  |  | (637 | ) |  |  | (65 | )
Loans not individually assessed for credit losses |  |  | 2,646 |  |  |  | 1,151 |  |  |  | (1,495 | ) |  |  | (57 | )
Loans individually assessed for credit losses |  |  | (44 | ) |  |  | 477 |  |  |  | 521 |  |  |  | — |
Ending balance |  |  | 64,134 |  |  |  | 63,890 |  |  |  | (244 | ) |  |  | (0 | )
Net investment in leases |  |  | 16,303 |  |  |  | 15,719 |  |  |  | (584 | ) |  |  | (4 | )
Loans not individually assessed for credit losses |  |  | 36,618 |  |  |  | 39,179 |  |  |  | 2,561 |  |  |  | 7 |
Loans individually assessed for credit losses |  |  | 11,213 |  |  |  | 8,992 |  |  |  | (2,221 | ) |  |  | (20 | )

*1 | “Provision for credit losses” in the consolidated statements of income amounted to ¥3,939 million and ¥7,756 million for fiscal 2022 and 2023, respectively, and the amounts include provision for credit losses on other than net investment in leases and installment loans.

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

|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Provision for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net investment in leases |  | ¥ | 1,577 |  |  | ¥ | 1,678 |  |  | ¥ | 101 |  |  |  | 6 |
Loans not individually assessed for credit losses |  |  | 2,222 |  |  |  | 5,381 |  |  |  | 3,159 |  |  |  | 142 |
Loans individually assessed for credit losses |  |  | 3,355 |  |  |  | 5,066 |  |  |  | 1,711 |  |  |  | 51 |
Subtotal |  |  | 7,154 |  |  |  | 12,125 |  |  |  | 4,971 |  |  |  | 69 |
Off-balance sheet credit exposures |  |  | (4,449 | ) |  |  | (4,542 | ) |  |  | (93 | ) |  |  | 2 |
Available-for-sale debt securities |  |  | 21 |  |  |  | (21 | ) |  |  | (42 | ) |  |  | — |
Accounts receivable |  |  | 1,213 |  |  |  | 194 |  |  |  | (1,019 | ) |  |  | (84 | )
Total |  | ¥ | 3,939 |  |  | ¥ | 7,756 |  |  | ¥ | 3,817 |  |  |  | 97 |

The provision on installment loans not individually assessed for credit losses were ¥2,222 million and ¥5,381 million in fiscal 2022 and 2023, respectively. The provision for credit losses on loans not individually assessed in fiscal 2023 increased compared to fiscal 2022 due mainly to the decline of forecasted future economic indicators such as GDP growth rates and unemployment rates in the Americas.
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The provision on installment loans individually assessed for credit losses were ¥3,355 million and ¥5,066 million in fiscal 2022 and 2023, respectively. The provision for credit losses on loans individually assessed increased mainly in the Americas.
The provision for credit losses on
off-balance
sheet credit exposures in fiscal 2022 was a reversal of ¥4,449 million, which was mainly caused by improved macroeconomic forecast in the Americas. The provision for credit losses on
off-balance
sheet credit exposures in fiscal 2023 was a reversal of ¥4,542 million, which was mainly caused by economic recovery from the
COVID-19
in the Americas.
For further information, see Note 8 of “Item 18. Financial Statements.” In addition, for further information about allowance for
off-balance
sheet credit exposures and allowance for credit losses on
available-for-sale
debt securities, see Note 30 and 9 of “Item 18. Financial Statements.”
Investment in Securities

|  | As of and for the year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Investment in securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
New securities added |  | ¥ | 620,660 |  |  | ¥ | 583,399 |  |  | ¥ | (37,261 | ) |  |  | (6 | )
Japan |  |  | 509,164 |  |  |  | 489,222 |  |  |  | (19,942 | ) |  |  | (4 | )
Overseas |  |  | 111,496 |  |  |  | 94,177 |  |  |  | (17,319 | ) |  |  | (16 | )
Investment in securities |  |  | 2,852,349 |  |  |  | 2,940,858 |  |  |  | 88,509 |  |  |  | 3 |

Note: | The balance of investment in securities related to our life insurance operations is included in investment in securities in our consolidated balance sheets; however, income and losses on these investment in securities are recorded in life insurance premiums and related investment income in our consolidated statements of income.

New securities added decreased to ¥583,399 million in fiscal 2023 compared to fiscal 2022. New securities added in Japan decreased 4% in fiscal 2023 compared to fiscal 2022 due primarily to a decrease in investments in corporate debt securities and municipal bond securities. New securities added overseas decreased 16% in fiscal 2023 compared to fiscal 2022 due primarily to decreases in fund investments and investments in
available-for-sale
debt securities.
The balance of our investment in securities as of March 31, 2023 increased 3% to ¥2,940,858 million compared to March 31, 2022.

|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Investment in securities by security type: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  | ¥ | 560,643 |  |  | ¥ | 589,312 |  |  | ¥ | 28,669 |  |  |  | 5 |
Trading debt securities |  |  | 2,503 |  |  |  | 2,179 |  |  |  | (324 | ) |  |  | (13 | )
Available-for-sale debt securities |  |  | 2,174,891 |  |  |  | 2,234,608 |  |  |  | 59,717 |  |  |  | 3 |
Held-to-maturity debt securities |  |  | 114,312 |  |  |  | 114,759 |  |  |  | 447 |  |  |  | 0 |
Total |  | ¥ | 2,852,349 |  |  | ¥ | 2,940,858 |  |  | ¥ | 88,509 |  |  |  | 3 |

Investments in equity securities as of March 31, 2023 increased 5% to ¥589,312 million compared to March 31, 2022 due primarily to an increase in investment in equity securities with readily determinable fair value in Europe and a fund investment in Japan. Investments in trading debt securities as of March 31, 2023
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decreased 13% to ¥2,179 million compared to March 31, 2022. Investments in
available-for-sale
debt securities as of March 31, 2023 increased 3% to ¥2,234,608 million compared to March 31, 2022 due primarily to an increase in investments in municipal bond securities and
available-for-sale
debt securities in Japan, and municipal bond securities and CMBS/RMBS in the Americas.
Held-to-maturity
debt securities consists of our life insurance business’s investment in Japanese government bonds.
For further information, see Note 9 of “Item 18. Financial Statements.”
Gains on investment securities and dividends

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Gains on investment securities and dividends: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net gains on investment securities |  | ¥ | 54,585 |  |  | ¥ | 30,284 |  |  | ¥ | (24,301 | ) |  |  | (45 | )
Dividends income |  |  | 1,925 |  |  |  | 2,146 |  |  |  | 221 |  |  |  | 11 |
Total |  | ¥ | 56,510 |  |  | ¥ | 32,430 |  |  | ¥ | (24,080 | ) |  |  | (43 | )

Notes: |  | 1. |  | Income and losses on investment in securities related to our life insurance operations are recorded in life insurance premiums and related investment income in our consolidated statements of income.
|  | 2. |  | Unrealized changes in fair value of investments in equity securities have been included in “Net gains on investment securities”.

Net gains on investment securities decreased 45% to ¥30,284 million in fiscal 2023 compared to fiscal 2022 due to decreases in gains on sales of shares and net unrealized holding gains on investment funds. Dividends income increased 11% to ¥2,146 million in fiscal 2023 compared to fiscal 2022. Due to the above results, gains on investment securities and dividends decreased 43% to ¥32,430 million in fiscal 2023 compared to fiscal 2022.
As of March 31, 2023, gross unrealized gains on
available-for-sale
debt securities, including those held in connection with our life insurance operations, were ¥16,076 million, compared to ¥23,242 million as of March 31, 2022. As of March 31, 2023, gross unrealized losses on
available-for-sale
debt securities, including those held in connection with our life insurance operations, were ¥270,182 million, compared to ¥124,623 million as of March 31, 2022.
Operating leases

|  | As of and for the year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Operating leases: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating lease revenues |  | ¥ | 450,454 |  |  | ¥ | 499,541 |  |  | ¥ | 49,087 |  |  |  | 11 |
Costs of operating leases |  |  | 322,070 |  |  |  | 336,987 |  |  |  | 14,917 |  |  |  | 5 |
New equipment acquisitions |  |  | 388,403 |  |  |  | 446,850 |  |  |  | 58,447 |  |  |  | 15 |
Japan |  |  | 232,059 |  |  |  | 228,999 |  |  |  | (3,060 | ) |  |  | (1 | )
Overseas |  |  | 156,344 |  |  |  | 217,851 |  |  |  | 61,507 |  |  |  | 39 |
Investment in operating leases |  |  | 1,463,202 |  |  |  | 1,537,178 |  |  |  | 73,976 |  |  |  | 5 |

Revenues from operating leases in fiscal 2023 increased 11% to ¥499,541 million compared to fiscal 2022 due primarily to an increase in revenues from leases in the leasing business in Asia and Australia and in the Aircraft leasing business in Europe, and an increase in sales of real estate under operating leases. In fiscal 2022 and 2023, gains from the disposition of operating lease assets were ¥40,148 million and ¥56,932 million, respectively.
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Costs of operating leases increased 5% to ¥336,987 million in fiscal 2023 compared to fiscal 2022 due primarily to an increase in investments in the leasing business in Asia and Australia and investments in the Aircraft leasing business in Europe.
New equipment acquisitions related to operating leases increased 15% to ¥446,850 million in fiscal 2023 compared to fiscal 2022 due primarily to an increase in investments in the leasing business in Asia and Australia and an increase in investments in the Aircraft leasing business in Europe.
Investment in operating leases as of March 31, 2023 increased 5% to ¥1,537,178 million compared to March 31, 2022.

|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Investment in operating leases by category: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transportation equipment |  | ¥ | 898,602 |  |  | ¥ | 947,507 |  |  | ¥ | 48,905 |  |  |  | 5 |
Measuring and information-related equipment |  |  | 120,067 |  |  |  | 130,836 |  |  |  | 10,769 |  |  |  | 9 |
Real estate |  |  | 260,284 |  |  |  | 270,939 |  |  |  | 10,655 |  |  |  | 4 |
Other |  |  | 45,782 |  |  |  | 47,939 |  |  |  | 2,157 |  |  |  | 5 |
Right-of-use assets |  |  | 107,742 |  |  |  | 98,417 |  |  |  | (9,325 | ) |  |  | (9 | )
Accrued rental receivables |  |  | 31,639 |  |  |  | 45,123 |  |  |  | 13,484 |  |  |  | 43 |
Allowance for doubtful receivables on operating leases |  |  | (914 | ) |  |  | (3,583 | ) |  |  | (2,669 | ) |  |  | — |
Total |  | ¥ | 1,463,202 |  |  | ¥ | 1,537,178 |  |  | ¥ | 73,976 |  |  |  | 5 |

Investment in transportation equipment operating leases as of March 31, 2023 increased 5% to ¥947,507 million compared to March 31, 2022 due primarily to an increase in investments in the Aircraft leasing business in Europe. Investment in measuring and information-related equipment operating leases as of March 31, 2023 increased 9% to ¥130,836 million compared to March 31, 2022 due primarily to an increase in investments in the rental business. Investment in real estate operating leases as of March 31, 2023 increased 4% to ¥270,939 million compared to March 31, 2022 due primarily to an increase in investments in real estate under operating leases in Japan. Investment in other operating leases as of March 31, 2023 increased 5% to ¥47,939 million compared to March 31, 2022 due primarily to an increase in investments in the rental business.
For further information, see Note 6 of “Item 18. Financial Statements.”
Life insurance
We reflect all income and losses (other than provision for credit losses) that we recognize on securities, installment loans, real estate under operating leases and other investments held in connection with our life insurance operations as life insurance premiums and related investment income in our consolidated statements of income.

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Life insurance premiums and related investment income and life insurance costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Life insurance premiums |  | ¥ | 431,289 |  |  | ¥ | 451,404 |  |  | ¥ | 20,115 |  |  |  | 5 |
Life insurance-related investment income |  |  | 50,521 |  |  |  | 42,666 |  |  |  | (7,855 | ) |  |  | (16 | )
Total |  | ¥ | 481,810 |  |  | ¥ | 494,070 |  |  | ¥ | 12,260 |  |  |  | 3 |
Life insurance costs |  | ¥ | 368,140 |  |  | ¥ | 398,916 |  |  | ¥ | 30,776 |  |  |  | 8 |

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|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Breakdown of life insurance-related investment income (loss): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income on investment securities |  | ¥ | 43,323 |  |  | ¥ | 35,350 |  |  | ¥ | (7,973 | ) |  |  | (18 | )
Losses recognized in income on derivative |  |  | 6,276 |  |  |  | 4,820 |  |  |  | (1,456 | ) |  |  | (23 | )
Interest on loans, income on real estate under operating leases, and others |  |  | 922 |  |  |  | 2,496 |  |  |  | 1,574 |  |  |  | 171 |
Total |  | ¥ | 50,521 |  |  | ¥ | 42,666 |  |  | ¥ | (7,855 | ) |  |  | (16 | )

Life insurance premiums and related investment income increased 3% to ¥494,070 million in fiscal 2023 compared to fiscal 2022.
Life insurance premiums increased 5% to ¥451,404 million in fiscal 2023 compared to fiscal 2022 due to an increase in the number of policies in force.
Life insurance-related investment income decreased 16% to ¥42,666 million in fiscal 2023 compared to fiscal 2022. Net income on investment securities decreased mainly in investment income from assets under variable annuity and variable life insurance contracts.
Life insurance costs increased 8% to ¥398,916 million in fiscal 2023 compared to fiscal 2022 due mainly to an increase in payouts to policy holders.

|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Investments by life insurance operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  | ¥ | 232,413 |  |  | ¥ | 241,588 |  |  | ¥ | 9,175 |  |  |  | 4 |
Available-for-sale debt securities |  |  | 1,674,409 |  |  |  | 1,643,803 |  |  |  | (30,606 | ) |  |  | (2 | )
Held-to-maturity debt securities |  |  | 114,312 |  |  |  | 114,759 |  |  |  | 447 |  |  |  | 0 |
Total investment in securities |  |  | 2,021,134 |  |  |  | 2,000,150 |  |  |  | (20,984 | ) |  |  | (1 | )
Installment loans, real estate under operating leases and other investments |  |  | 46,279 |  |  |  | 45,576 |  |  |  | (703 | ) |  |  | (2 | )
Total |  | ¥ | 2,067,413 |  |  | ¥ | 2,045,726 |  |  | ¥ | (21,687 | ) |  |  | (1 | )

Investment in securities as of March 31, 2023 decreased 1% to ¥2,000,150 million compared to March 31, 2022 resulting from a decrease in
available-for-sale
debt securities due to a decrease in assets under variable annuity and variable life insurance contracts and an increase in unrealized losses despite an increase in equity securities due to fund investment.
For further information, see Note 23 of “Item 18. Financial Statements.”
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Sales of goods and real estate, Inventories

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Sales of goods and real estate, Inventories: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales of goods and real estate |  | ¥ | 435,398 |  |  | ¥ | 392,569 |  |  | ¥ | (42,829 | ) |  |  | (10 | )
Costs of goods and real estate sold |  |  | 381,119 |  |  |  | 333,009 |  |  |  | (48,110 | ) |  |  | (13 | )
New real estate added |  |  | 76,334 |  |  |  | 82,786 |  |  |  | 6,452 |  |  |  | 8 |
Inventories |  |  | 139,563 |  |  |  | 169,021 |  |  |  | 29,458 |  |  |  | 21 |

Sales of goods and real estate decreased 10% to ¥392,569 million compared to fiscal 2022 due mainly to the sale of a subsidiary in fiscal 2023 and a decrease in sales of goods of investees.
Costs of goods and real estate sold decreased 13% to ¥333,009 million compared to fiscal 2022 due mainly to the sale of a subsidiary in fiscal 2023 and a decrease in costs of goods, similar to the aforementioned decrease in sales of goods and real estate. We recognized ¥10,492 million and ¥1,205 million of write-downs for fiscal 2022 and 2023, respectively, which were included in costs of goods and real estate sold. Costs of goods and real estate sold include the upfront costs associated with advertising and creating model rooms.
New real estate added increased 8% to ¥82,786 million in fiscal 2023 compared to fiscal 2022.
Inventories as of March 31, 2023 increased 21% to ¥169,021 million compared to March 31, 2022, mainly due to the acquisition of a subsidiary in fiscal 2023.
For further information, see Note 4 of “Item 18. Financial Statements.”
Services, Property under Facility Operations

|  | As of and for the year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Services, Property under Facility Operations |  |  |  |
Services income |  | ¥ | 816,604 |  |  | ¥ | 930,151 |  |  | ¥ | 113,547 |  |  |  | 14 |
Services expense |  |  | 495,110 |  |  |  | 571,127 |  |  |  | 76,017 |  |  |  | 15 |
New assets added |  |  | 80,415 |  |  |  | 51,331 |  |  |  | (29,084 | ) |  |  | (36 | )
Japan |  |  | 28,600 |  |  |  | 33,425 |  |  |  | 4,825 |  |  |  | 17 |
Overseas |  |  | 51,815 |  |  |  | 17,906 |  |  |  | (33,909 | ) |  |  | (65 | )
Property under Facility Operations |  |  | 561,846 |  |  |  | 620,994 |  |  |  | 59,148 |  |  |  | 11 |

Services income increased 14% to ¥930,151 million in fiscal 2023 compared to fiscal 2022 due mainly to an increase in income related to the environment and energy business.
Services expense increased 15% to ¥571,127 million in fiscal 2023 compared to fiscal 2022 due mainly to an increase in expenses related to the environment and energy business, similar to the aforementioned increase in services income.
New assets added for property under facility operations decreased 36% to ¥51,331 million in fiscal 2023 compared to fiscal 2022 due mainly to the decrease in investments in electric power facilities overseas.
Property under facility operations as of March 31, 2023 increased 11% to ¥620,994 million compared to March 31, 2022 due mainly to investments in electric power facilities overseas and completion of domestic property under facility operations.
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For further information, see Note 4 of “Item 18. Financial Statements.”
Expenses
Interest expense
Interest expense increased 87% to ¥127,618 million in fiscal 2023 compared to ¥68,232 million in fiscal 2022. Our total outstanding short-term debt, long-term debt and deposits as of March 31, 2023 increased 12% to ¥7,964,864 million compared to ¥7,142,843 million as of March 31, 2022.
The average interest rate on our short-term debt, long-term debt and deposits in domestic currency, calculated on the basis of average monthly balances, remained flat in fiscal 2023 at 0.3% compared to 0.3% in fiscal 2022. The average interest rate on our short-term debt, long-term debt and deposits in foreign currency, calculated on the basis of average monthly balances, increased 1.6% to 3.6% in fiscal 2023 compared to 2.0% in fiscal 2022. For more information regarding our interest rate risk, see “Item 3. Key Information—Risk Factors.” For more information regarding our outstanding debt, see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Short-term and long-term debt and deposits.”
Other (income) and expense
Other (income) and expense included a net expense of ¥20,494 million during fiscal 2022 and a net expense of ¥14,445 million during fiscal 2023. Foreign currency transaction losses (gains) included in other (income) and expense included losses of ¥1,956 million during fiscal 2023 compared to losses of ¥3,349 million during fiscal 2022. We recognized impairment losses on goodwill and other intangible assets included in other (income) and expense in the amount of ¥515 million during fiscal 2023 compared to the amount of ¥22,561 million on goodwill and other intangible assets during fiscal 2022. For further information on our goodwill and other intangible assets, see Note 13 of “Item 18. Financial Statements.”
Selling, general and administrative expenses

|  | Year ended March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Selling, general and administrative expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Personnel expenses |  | ¥ | 300,590 |  |  | ¥ | 321,328 |  |  | ¥ | 20,738 |  |  |  | 7 |
Selling expenses |  |  | 76,678 |  |  |  | 87,199 |  |  |  | 10,521 |  |  |  | 14 |
Administrative expenses |  |  | 136,431 |  |  |  | 142,506 |  |  |  | 6,075 |  |  |  | 4 |
Depreciation of office facilities |  |  | 9,083 |  |  |  | 8,373 |  |  |  | (710 | ) |  |  | (8 | )
Total |  | ¥ | 522,782 |  |  | ¥ | 559,406 |  |  | ¥ | 36,624 |  |  |  | 7 |

Employee salaries and other personnel expenses accounted for 57% of selling, general and administrative expenses in fiscal 2023, and the remaining portion consists of other expenses, such as rent for office space, communication expenses and travel expenses. Selling, general and administrative expenses in fiscal 2023 increased 7% year on year.
Write-downs of long-lived assets
As a result of impairment reviews we performed in fiscal 2023 for long-lived assets in Japan and overseas, such as office buildings, commercial facilities other than office buildings, condominiums, hotels, and land undeveloped or under construction, write-downs of long-lived assets decreased by ¥33,369 million to ¥2,297 million in fiscal 2023 compared to ¥35,666 million in fiscal 2022. These write-downs, which are reflected
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as write-downs of long-lived assets, consisted of impairment losses of ¥1,535 million on 2 office buildings, ¥51 million on 2 commercial facilities other than office buildings, ¥17 million on 20 condominiums and ¥694 million on other long-lived assets, because the assets were classified as held for sale or the carrying amount exceeded the estimated undiscounted future cash flows. In addition, write-downs of other long-lived assets in fiscal 2023 include write-downs of ¥186 million on office facilities. For further information, see Note 24 of “Item 18. Financial Statements.”
Write-downs of securities
Write-downs of securities in fiscal 2023 were mainly in connection with foreign
available-for-sale
debt securities and
non-marketable
equity securities. Write-downs of securities increased to ¥824 million in fiscal 2023 compared to ¥730 million in fiscal 2022. For further information, see Note 9 of “Item 18. Financial Statements.”
Equity in net income (loss) of affiliates
Equity in net income (loss) of affiliates increased in fiscal 2023 to ¥25,091 million compared to ¥15,006 million in fiscal 2022 due to increases in equity in net income (loss) of affiliates from investees relating to real estate and Avolon, partially offset by decreases in equity in net income (loss) of affiliates from investees in the Americas, and equity in net income (loss) of investees in Asia which recorded losses primarily resulting from impairment losses. For further information, see Note 12 of “Item 18. Financial Statements.”
Gains on sales of subsidiaries and affiliates and liquidation losses, net
Gains on sales of subsidiaries and affiliates and liquidation losses, net decreased to ¥26,915 million in fiscal 2023 compared to ¥187,787 million in fiscal 2022, due to the favorable profit from sales in Japan and the Americas including the sale of the business of Yayoi in fiscal 2022. For further information, see Note 3 of “Item 18. Financial Statements.”
Bargain Purchase Gain
In fiscal 2023, we recognized bargain purchase gains of ¥1,174 million associated with four of the acquisitions executed in fiscal 2023 compared to no bargain purchase gain in fiscal 2022. For further information, see Note 3 of “Item 18. Financial Statements.”
Provision for income taxes
Provision for income taxes decreased to ¥87,500 million in fiscal 2023 compared to ¥187,264 million in fiscal 2022 due primarily to a decrease in income before income taxes. For further information, see Note 16 of “Item 18. Financial Statements.”
Net income attributable to the noncontrolling interests
Net income attributable to the noncontrolling interests was recorded as a result of the noncontrolling interests in earnings of certain of our subsidiaries. Net income attributable to the noncontrolling interests in fiscal 2023 was ¥6,561 million, compared to ¥5,477 million in fiscal 2022.
Net income attributable to the redeemable noncontrolling interests
Net income attributable to the redeemable noncontrolling interests was recorded as a result of the noncontrolling interests in the earnings of our subsidiaries that issued redeemable interests. There was no net income or loss attributable to the redeemable noncontrolling interests in fiscal 2022. Net income attributable to the redeemable noncontrolling interests in fiscal 2023 was ¥32 million. For further information, see Note 18 of “Item 18. Financial Statements.”
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YEAR ENDED MARCH 31, 2022 COMPARED TO YEAR ENDED MARCH 31, 2021
Performance Summary
Financial Results

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except ratios, per Share data and percentages) |
Total revenues |  | ¥ | 2,292,708 |  |  | ¥ | 2,520,365 |  |  | ¥ | 227,657 |  |  |  | 10 |
Total expenses |  |  | 2,033,894 |  |  |  | 2,218,282 |  |  |  | 184,388 |  |  |  | 9 |
Income before Income Taxes |  |  | 287,561 |  |  |  | 504,876 |  |  |  | 217,315 |  |  |  | 76 |
Net Income Attributable to ORIX Corporation Shareholders |  |  | 192,384 |  |  |  | 312,135 |  |  |  | 119,751 |  |  |  | 62 |
Earnings per Share (Basic) |  |  | 155.54 |  |  |  | 259.37 |  |  |  | 103.83 |  |  |  | 67 |
(Diluted) |  |  | 155.39 |  |  |  | 259.07 |  |  |  | 103.68 |  |  |  | 67 |
ROE *1 |  |  | 6.4 |  |  |  | 9.9 |  |  |  | 3.5 |  |  |  | — |
ROA *2 |  |  | 1.44 |  |  |  | 2.24 |  |  |  | 0.80 |  |  |  | — |

* 1 | ROE is the ratio of Net Income Attributable to ORIX Corporation Shareholders for the period to average ORIX Corporation Shareholders’ Equity based on fiscal year beginning and ending balances.

* 2 | ROA is the ratio of Net Income Attributable to ORIX Corporation Shareholders for the period to average Total Assets based on fiscal year beginning and ending balances.

Total revenues for fiscal 2022 increased 10% to ¥2,520,365 million compared to fiscal 2021 due to increases in services income, operating leases revenues, sales of goods and real estate, gains on investment securities and dividends.
Total expenses for fiscal 2022 increased 9% to ¥2,218,282 million compared to fiscal 2021 due to increases in services expense, costs of operating leases, costs of goods and real estate sold, selling, general and administrative expenses, and write-downs of long-lived assets.
Equity in net income (loss) of affiliates for fiscal 2022 increased by ¥14,525 million to ¥15,006 million compared to fiscal 2021 and gains on sales of subsidiaries and affiliates and liquidation losses, net for fiscal 2022 increased by ¥164,487 million to ¥187,787 million compared to fiscal 2021.
Due to the above results, income before income taxes for fiscal 2022 increased 76% to ¥504,876 million compared to fiscal 2021 and net income attributable to ORIX Corporation shareholders increased 62% to ¥312,135 million compared to fiscal 2021.
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Balance Sheet data

|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen except ratios, per share and percentages) |
Total Assets |  | ¥ | 13,563,082 |  |  | ¥ | 14,270,672 |  |  | ¥ | 707,590 |  |  |  | 5 |
(Segment assets) |  |  | 11,341,789 |  |  |  | 11,999,584 |  |  |  | 657,795 |  |  |  | 6 |
Total Liabilities |  |  | 10,459,938 |  |  |  | 10,899,271 |  |  |  | 439,333 |  |  |  | 4 |
(Short-term and Long-term debt) |  |  | 4,724,102 |  |  |  | 4,866,685 |  |  |  | 142,583 |  |  |  | 3 |
(Deposits) |  |  | 2,317,785 |  |  |  | 2,276,158 |  |  |  | (41,627 | ) |  |  | (2 | )
ORIX Corporation Shareholders’ Equity |  |  | 3,028,456 |  |  |  | 3,261,419 |  |  |  | 232,963 |  |  |  | 8 |
ORIX Corporation Shareholders’ Equity per share |  |  | 2,487.77 |  |  |  | 2,732.88 |  |  |  | 245.11 |  |  |  | 10 |
ORIX Corporation Shareholders’ Equity ratio * |  |  | 22.3 | % |  |  | 22.9 | % |  |  | 0.6 | % |  |  | — |
D/E ratio (Debt-to-equity ratio) (Short-term and Long-term debt (excluding deposits) / ORIX Corporation Shareholders’ Equity) |  |  | 1.6 | x |  |  | 1.5 | x |  |  | (0.1 | )x |  |  | — |

* | ORIX Corporation Shareholders’ Equity ratio is the ratio as of the period end of ORIX Corporation Shareholder’s Equity to total assets.

Total assets increased 5% to ¥14,270,672 million compared to the balance as of March 31, 2021 due to increases in installment loans, investment in securities, investment in affiliates and other assets. In addition, segment assets increased 6% to ¥11,999,584 million compared to the balance as of March 31, 2021.
Total liabilities increased 4% to ¥10,899,271 million compared to the balance as of March 31, 2021 due to increases in short-term debt, policy liabilities and policy account balances and other liabilities being offset by a decrease in deposits.
Shareholders’ equity increased 8% to ¥3,261,419 million compared to the balance as of March 31, 2021.
Details of Operating Results
The following is a discussion of certain items in the consolidated statements of income, operating assets in the consolidated balance sheets and other selected financial information, including on a segment by segment basis.
Segment Information
Our operating segments used by the chief operating decision maker to make decisions about resource allocations and assess performance are organized into ten segments based on our business management organization which is classified by the nature of major products and services, customer base, regulations, and business areas. The ten segments are Corporate Financial Services and Maintenance Leasing, Real Estate, PE Investment and Concession, Environment and Energy, Insurance, Banking and Credit, Aircraft and Ships, ORIX USA, ORIX Europe, and Asia and Australia.
Financial information about the operating segments reported below is that which is available by segment and regularly reviewed by the chief operating decision maker to make decisions about resource allocations and assess performance. The chief operating decision maker evaluates the performance of the segments based on income before income taxes, net income attributable to noncontrolling interests and net income attributable to redeemable noncontrolling interests before applicable tax effect. Tax expenses are excluded from the segment profits.
Since April 1, 2021, a portion of interest expenses, which were initially included in the difference between segment total profits and consolidated amounts, have been charged directly to its respective segments. In
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addition, a portion of selling, general and administrative expenses, which was initially recorded in each respective segment, has been included in the difference between segment total profits and consolidated amounts. Furthermore, a portion of the leasing business in the Environment and Energy segment was transferred to the Corporate Financial Services and Maintenance Leasing segment. As a result of these changes, segment data for fiscal 2021 has been retrospectively restated.
For a description of the business activities of our segments, see “Item 4. Information on the Company—Business Segments.” See Note 31 of “Item 18. Financial Statements” for additional segment information, a discussion of how we prepare our segment information and the reconciliation of segment totals to consolidated financial statement amounts.

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Segment Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate Financial Services and Maintenance Leasing |  | ¥ | 431,015 |  |  | ¥ | 445,338 |  |  | ¥ | 14,323 |  |  |  | 3 |
Real Estate |  |  | 359,798 |  |  |  | 390,688 |  |  |  | 30,890 |  |  |  | 9 |
PE Investment and Concession |  |  | 331,222 |  |  |  | 385,739 |  |  |  | 54,517 |  |  |  | 16 |
Environment and Energy |  |  | 141,971 |  |  |  | 160,232 |  |  |  | 18,261 |  |  |  | 13 |
Insurance |  |  | 491,894 |  |  |  | 486,704 |  |  |  | (5,190 | ) |  |  | (1 | )
Banking and Credit |  |  | 83,724 |  |  |  | 84,821 |  |  |  | 1,097 |  |  |  | 1 |
Aircraft and Ships |  |  | 31,617 |  |  |  | 38,639 |  |  |  | 7,022 |  |  |  | 22 |
ORIX USA |  |  | 138,017 |  |  |  | 161,344 |  |  |  | 23,327 |  |  |  | 17 |
ORIX Europe |  |  | 160,798 |  |  |  | 221,112 |  |  |  | 60,314 |  |  |  | 38 |
Asia and Australia |  |  | 128,309 |  |  |  | 148,055 |  |  |  | 19,746 |  |  |  | 15 |
Segment Total |  |  | 2,298,365 |  |  |  | 2,522,672 |  |  |  | 224,307 |  |  |  | 10 |
Difference between Segment Total and Consolidated Amounts |  |  | (5,657 | ) |  |  | (2,307 | ) |  |  | 3,350 |  |  |  | — |
Consolidated Amounts |  | ¥ | 2,292,708 |  |  | ¥ | 2,520,365 |  |  | ¥ | 227,657 |  |  |  | 10 |

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Segment Profits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate Financial Services and Maintenance Leasing |  | ¥ | 58,662 |  |  | ¥ | 239,802 |  |  | ¥ | 181,140 |  |  |  | 309 |
Real Estate |  |  | 24,353 |  |  |  | 31,990 |  |  |  | 7,637 |  |  |  | 31 |
PE Investment and Concession |  |  | 3,431 |  |  |  | (11,682 | ) |  |  | (15,113 | ) |  |  | — |
Environment and Energy |  |  | 26,946 |  |  |  | 3,048 |  |  |  | (23,898 | ) |  |  | (89 | )
Insurance |  |  | 54,615 |  |  |  | 53,290 |  |  |  | (1,325 | ) |  |  | (2 | )
Banking and Credit |  |  | 47,685 |  |  |  | 41,498 |  |  |  | (6,187 | ) |  |  | (13 | )
Aircraft and Ships |  |  | 4,924 |  |  |  | (2,319 | ) |  |  | (7,243 | ) |  |  | — |
ORIX USA |  |  | 39,419 |  |  |  | 75,235 |  |  |  | 35,816 |  |  |  | 91 |
ORIX Europe |  |  | 39,063 |  |  |  | 49,334 |  |  |  | 10,271 |  |  |  | 26 |
Asia and Australia |  |  | 12,179 |  |  |  | 51,165 |  |  |  | 38,986 |  |  |  | 320 |
Segment Total |  |  | 311,277 |  |  |  | 531,361 |  |  |  | 220,084 |  |  |  | 71 |
Difference between Segment Total and Consolidated Amounts |  |  | (23,716 | ) |  |  | (26,485 | ) |  |  | (2,769 | ) |  |  | — |
Consolidated Amounts |  | ¥ | 287,561 |  |  | ¥ | 504,876 |  |  | ¥ | 217,315 |  |  |  | 76 |

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|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Segment Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate Financial Services and Maintenance Leasing |  | ¥ | 1,676,063 |  |  | ¥ | 1,516,795 |  |  | ¥ | (159,268 | ) |  |  | (10 | )
Real Estate |  |  | 872,095 |  |  |  | 910,101 |  |  |  | 38,006 |  |  |  | 4 |
PE Investment and Concession |  |  | 378,698 |  |  |  | 353,581 |  |  |  | (25,117 | ) |  |  | (7 | )
Environment and Energy |  |  | 489,174 |  |  |  | 703,608 |  |  |  | 214,434 |  |  |  | 44 |
Insurance |  |  | 1,959,521 |  |  |  | 2,072,145 |  |  |  | 112,624 |  |  |  | 6 |
Banking and Credit |  |  | 2,690,627 |  |  |  | 2,687,156 |  |  |  | (3,471 | ) |  |  | (0 | )
Aircraft and Ships |  |  | 601,762 |  |  |  | 684,098 |  |  |  | 82,336 |  |  |  | 14 |
ORIX USA |  |  | 1,220,081 |  |  |  | 1,364,142 |  |  |  | 144,061 |  |  |  | 12 |
ORIX Europe |  |  | 369,546 |  |  |  | 401,869 |  |  |  | 32,323 |  |  |  | 9 |
Asia and Australia |  |  | 1,084,222 |  |  |  | 1,306,089 |  |  |  | 221,867 |  |  |  | 20 |
Segment Total |  |  | 11,341,789 |  |  |  | 11,999,584 |  |  |  | 657,795 |  |  |  | 6 |
Difference between Segment Total and Consolidated Amounts |  |  | 2,221,293 |  |  |  | 2,271,088 |  |  |  | 49,795 |  |  |  | 2 |
Consolidated Amounts |  | ¥ | 13,563,082 |  |  | ¥ | 14,270,672 |  |  | ¥ | 707,590 |  |  |  | 5 |

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Corporate Financial Services and Maintenance Leasing
Segment profits increased 309% to ¥239,802 million compared to fiscal 2021. This increase was due primarily to an increase in gains on sales of subsidiaries and affiliates resulting from the sale of the business of Yayoi, but also due to an increase in operating leases revenues resulting from an increase in gains on sales of used cars in our automobile-related businesses and an increase in gains on investment securities and dividends resulting from the IPO of an investee.
Segment assets decreased 10% to ¥1,516,795 million compared to the end of fiscal 2021. This decrease was due to decreases in net investment in leases, investment in operating leases, and goodwill, intangible assets acquired in business combinations.

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 58,996 |  |  | ¥ | 57,580 |  |  | ¥ | (1,416 | ) |  |  | (2 | )
Gains on investment securities and dividends |  |  | 1,616 |  |  |  | 4,417 |  |  |  | 2,801 |  |  |  | 173 |
Operating leases |  |  | 247,190 |  |  |  | 254,956 |  |  |  | 7,766 |  |  |  | 3 |
Sales of goods and real estate |  |  | 10,348 |  |  |  | 9,741 |  |  |  | (607 | ) |  |  | (6 | )
Services income |  |  | 112,865 |  |  |  | 118,644 |  |  |  | 5,779 |  |  |  | 5 |
Total Segment Revenues |  |  | 431,015 |  |  |  | 445,338 |  |  |  | 14,323 |  |  |  | 3 |
Interest expense |  |  | 6,252 |  |  |  | 5,783 |  |  |  | (469 | ) |  |  | (8 | )
Costs of operating leases |  |  | 199,774 |  |  |  | 191,291 |  |  |  | (8,483 | ) |  |  | (4 | )
Costs of goods and real estate sold |  |  | 6,832 |  |  |  | 6,516 |  |  |  | (316 | ) |  |  | (5 | )
Services expense |  |  | 56,447 |  |  |  | 58,148 |  |  |  | 1,701 |  |  |  | 3 |
Selling, general and administrative expenses |  |  | 86,308 |  |  |  | 87,753 |  |  |  | 1,445 |  |  |  | 2 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 1,405 |  |  |  | 2,388 |  |  |  | 983 |  |  |  | 70 |
Other |  |  | 16,528 |  |  |  | 17,175 |  |  |  | 647 |  |  |  | 4 |
Total Segment Expenses |  |  | 373,546 |  |  |  | 369,054 |  |  |  | (4,492 | ) |  |  | (1 | )
Segment Operating Income |  |  | 57,469 |  |  |  | 76,284 |  |  |  | 18,815 |  |  |  | 33 |
Equity in Net income (Loss) of Affiliates and others |  |  | 1,193 |  |  |  | 163,518 |  |  |  | 162,325 |  |  |  | — |
Segment Profits |  | ¥ | 58,662 |  |  | ¥ | 239,802 |  |  | ¥ | 181,140 |  |  |  | 309 |
|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases |  | ¥ | 610,366 |  |  | ¥ | 580,161 |  |  | ¥ | (30,205 | ) |  |  | (5 | )
Installment loans |  |  | 330,917 |  |  |  | 325,482 |  |  |  | (5,435 | ) |  |  | (2 | )
Investment in operating leases |  |  | 548,677 |  |  |  | 517,233 |  |  |  | (31,444 | ) |  |  | (6 | )
Investment in securities |  |  | 30,318 |  |  |  | 34,987 |  |  |  | 4,669 |  |  |  | 15 |
Property under facility operations |  |  | 18,726 |  |  |  | 17,199 |  |  |  | (1,527 | ) |  |  | (8 | )
Inventories |  |  | 630 |  |  |  | 594 |  |  |  | (36 | ) |  |  | (6 | )
Advances for finance lease and operating lease |  |  | 500 |  |  |  | 1,800 |  |  |  | 1,300 |  |  |  | 260 |
Investment in affiliates |  |  | 18,049 |  |  |  | 16,929 |  |  |  | (1,120 | ) |  |  | (6 | )
Goodwill, intangible assets acquired in business combinations |  |  | 117,880 |  |  |  | 22,410 |  |  |  | (95,470 | ) |  |  | (81 | )
Total Segment Assets |  | ¥ | 1,676,063 |  |  | ¥ | 1,516,795 |  |  | ¥ | (159,268 | ) |  |  | (10 | )

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Real Estate
Segment profits increased 31% to ¥31,990 million compared to fiscal 2021. This increase was due to an increase in services income from operating facilities, an increase in operating leases revenues resulting from sales of real estate under operating leases, and an increase in gains on investment securities and dividends resulting from the sale of an investee.
Segment assets increased 4% to ¥910,101 million compared to the end of fiscal 2021. This increase was due to an increase in investment in affiliates and advances for finance lease and operating lease.

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 6,206 |  |  | ¥ | 5,602 |  |  | ¥ | (604 | ) |  |  | (10 | )
Operating leases |  |  | 46,022 |  |  |  | 48,091 |  |  |  | 2,069 |  |  |  | 4 |
Sales of goods and real estate |  |  | 91,348 |  |  |  | 97,138 |  |  |  | 5,790 |  |  |  | 6 |
Services income |  |  | 215,805 |  |  |  | 235,746 |  |  |  | 19,941 |  |  |  | 9 |
Other |  |  | 417 |  |  |  | 4,111 |  |  |  | 3,694 |  |  |  | 886 |
Total Segment Revenues |  |  | 359,798 |  |  |  | 390,688 |  |  |  | 30,890 |  |  |  | 9 |
Interest expense |  |  | 2,493 |  |  |  | 2,873 |  |  |  | 380 |  |  |  | 15 |
Costs of operating leases |  |  | 24,929 |  |  |  | 25,006 |  |  |  | 77 |  |  |  | 0 |
Costs of goods and real estate sold |  |  | 76,071 |  |  |  | 79,612 |  |  |  | 3,541 |  |  |  | 5 |
Services expense |  |  | 202,269 |  |  |  | 218,985 |  |  |  | 16,716 |  |  |  | 8 |
Selling, general and administrative expenses |  |  | 35,980 |  |  |  | 34,677 |  |  |  | (1,303 | ) |  |  | (4 | )
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 1,994 |  |  |  | 262 |  |  |  | (1,732 | ) |  |  | (87 | )
Other |  |  | (2,170 | ) |  |  | (1,150 | ) |  |  | 1,020 |  |  |  | — |
Total Segment Expenses |  |  | 341,566 |  |  |  | 360,265 |  |  |  | 18,699 |  |  |  | 5 |
Segment Operating Income |  |  | 18,232 |  |  |  | 30,423 |  |  |  | 12,191 |  |  |  | 67 |
Equity in Net income (Loss) of Affiliates and others |  |  | 6,121 |  |  |  | 1,567 |  |  |  | (4,554 | ) |  |  | (74 | )
Segment Profits |  | ¥ | 24,353 |  |  | ¥ | 31,990 |  |  | ¥ | 7,637 |  |  |  | 31 |
|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases |  | ¥ | 66,371 |  |  | ¥ | 62,498 |  |  | ¥ | (3,873 | ) |  |  | (6 | )
Investment in operating leases |  |  | 291,877 |  |  |  | 300,460 |  |  |  | 8,583 |  |  |  | 3 |
Investment in securities |  |  | 8,543 |  |  |  | 4,289 |  |  |  | (4,254 | ) |  |  | (50 | )
Property under facility operations |  |  | 149,479 |  |  |  | 155,750 |  |  |  | 6,271 |  |  |  | 4 |
Inventories |  |  | 94,429 |  |  |  | 97,667 |  |  |  | 3,238 |  |  |  | 3 |
Advances for finance lease and operating lease |  |  | 98,820 |  |  |  | 112,309 |  |  |  | 13,489 |  |  |  | 14 |
Investment in affiliates |  |  | 99,105 |  |  |  | 113,178 |  |  |  | 14,073 |  |  |  | 14 |
Advances for property under facility operations |  |  | 4,089 |  |  |  | 6,857 |  |  |  | 2,768 |  |  |  | 68 |
Goodwill, intangible assets acquired in business combinations |  |  | 59,382 |  |  |  | 57,093 |  |  |  | (2,289 | ) |  |  | (4 | )
Total Segment Assets |  | ¥ | 872,095 |  |  | ¥ | 910,101 |  |  | ¥ | 38,006 |  |  |  | 4 |

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PE Investment and Concession
Segment profits decreased by ¥15,113 million to losses of ¥11,682 million as compared to segment profits of ¥3,431 million in fiscal 2021. This decrease was due to the write-down of assets to be transferred in connection with the conclusion of asset transfer agreements at a certain investee, as well as the write-down of inventories at a certain investee. In addition, there was a decrease in equity in net income (loss) of affiliates at our three airports in Kansai in our concession business.
Segment assets decreased 7% to ¥353,581 million compared to the end of fiscal 2021. This decrease was due to a decrease in inventories and property under facility operations at a certain investee and a decrease in the book value of investment in affiliates resulting from the inclusion of equity in net loss of our three airports in Kansai.

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 152 |  |  | ¥ | 237 |  |  | ¥ | 85 |  |  |  | 56 |
Gains on investment securities and dividends |  |  | 846 |  |  |  | 2,555 |  |  |  | 1,709 |  |  |  | 202 |
Operating leases |  |  | 6,462 |  |  |  | 33,870 |  |  |  | 27,408 |  |  |  | 424 |
Sales of goods and real estate |  |  | 301,732 |  |  |  | 320,104 |  |  |  | 18,372 |  |  |  | 6 |
Services income |  |  | 22,030 |  |  |  | 28,973 |  |  |  | 6,943 |  |  |  | 32 |
Total Segment Revenues |  |  | 331,222 |  |  |  | 385,739 |  |  |  | 54,517 |  |  |  | 16 |
Interest expense |  |  | 1,719 |  |  |  | 2,547 |  |  |  | 828 |  |  |  | 48 |
Costs of operating leases |  |  | 3,099 |  |  |  | 23,643 |  |  |  | 20,544 |  |  |  | 663 |
Costs of goods and real estate sold |  |  | 259,740 |  |  |  | 289,522 |  |  |  | 29,782 |  |  |  | 11 |
Services expense |  |  | 15,947 |  |  |  | 19,150 |  |  |  | 3,203 |  |  |  | 20 |
Selling, general and administrative expenses |  |  | 35,471 |  |  |  | 52,742 |  |  |  | 17,271 |  |  |  | 49 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 3,622 |  |  |  | 12,599 |  |  |  | 8,977 |  |  |  | 248 |
Other |  |  | 266 |  |  |  | (11,844 | ) |  |  | (12,110 | ) |  |  | — |
Total Segment Expenses |  |  | 319,864 |  |  |  | 388,359 |  |  |  | 68,495 |  |  |  | 21 |
Segment Operating Income |  |  | 11,358 |  |  |  | (2,620 | ) |  |  | (13,978 | ) |  |  | — |
Equity in Net income (Loss) of Affiliates and others |  |  | (7,927 | ) |  |  | (9,062 | ) |  |  | (1,135 | ) |  |  | — |
Segment Profits |  | ¥ | 3,431 |  |  | ¥ | (11,682 | ) |  | ¥ | (15,113 | ) |  |  | — |
|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases |  | ¥ | 1,541 |  |  | ¥ | 1,689 |  |  | ¥ | 148 |  |  |  | 10 |
Investment in operating leases |  |  | 23,455 |  |  |  | 43,686 |  |  |  | 20,231 |  |  |  | 86 |
Investment in securities |  |  | 12,918 |  |  |  | 12,129 |  |  |  | (789 | ) |  |  | (6 | )
Property under facility operations |  |  | 43,972 |  |  |  | 40,725 |  |  |  | (3,247 | ) |  |  | (7 | )
Inventories |  |  | 45,597 |  |  |  | 39,554 |  |  |  | (6,043 | ) |  |  | (13 | )
Investment in affiliates |  |  | 55,421 |  |  |  | 43,498 |  |  |  | (11,923 | ) |  |  | (22 | )
Advances for property under facility operations |  |  | 6,732 |  |  |  | 1,323 |  |  |  | (5,409 | ) |  |  | (80 | )
Goodwill, intangible assets acquired in business combinations |  |  | 189,062 |  |  |  | 170,977 |  |  |  | (18,085 | ) |  |  | (10 | )
Total Segment Assets |  | ¥ | 378,698 |  |  | ¥ | 353,581 |  |  | ¥ | (25,117 | ) |  |  | (7 | )

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Environment and Energy
Segment profits decreased 89% to ¥3,048 million compared to fiscal 2021. This decrease was due to the write-down of our two coal-biomass
co-fired
power plants, which considered changes in the environment surrounding the power generation business and our business strategy for those plants in fiscal 2022, in addition, the absence of bargain purchase gains and gains on sales of subsidiaries and affiliates recorded in fiscal 2021 resulting from the conversion of an investee involved in wind power generation business in India into a wholly-owned subsidiary. However these decreases were partially offset by an increase in equity in net income (loss) of affiliates at an investee.
Segment assets increased 44% to ¥703,608 million compared to the end of fiscal 2021. This increase was due to the acquisition of a subsidiary that resulted in the recording of property under facility operations and goodwill, intangible assets acquired in business combinations.

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 1,315 |  |  | ¥ | 1,001 |  |  | ¥ | (314 | ) |  |  | (24 | )
Services income |  |  | 136,360 |  |  |  | 155,303 |  |  |  | 18,943 |  |  |  | 14 |
Other |  |  | 4,296 |  |  |  | 3,928 |  |  |  | (368 | ) |  |  | (9 | )
Total Segment Revenues |  |  | 141,971 |  |  |  | 160,232 |  |  |  | 18,261 |  |  |  | 13 |
Interest expense |  |  | 10,821 |  |  |  | 5,365 |  |  |  | (5,456 | ) |  |  | (50 | )
Services expense |  |  | 106,577 |  |  |  | 123,981 |  |  |  | 17,404 |  |  |  | 16 |
Selling, general and administrative expenses |  |  | 12,055 |  |  |  | 12,814 |  |  |  | 759 |  |  |  | 6 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 567 |  |  |  | 19,564 |  |  |  | 18,997 |  |  |  | — |
Other |  |  | 608 |  |  |  | 1,518 |  |  |  | 910 |  |  |  | 150 |
Total Segment Expenses |  |  | 130,628 |  |  |  | 163,242 |  |  |  | 32,614 |  |  |  | 25 |
Segment Operating Income |  |  | 11,343 |  |  |  | (3,010 | ) |  |  | (14,353 | ) |  |  | — |
Equity in Net income (Loss) of Affiliates and others |  |  | 15,603 |  |  |  | 6,058 |  |  |  | (9,545 | ) |  |  | (61 | )
Segment Profits |  | ¥ | 26,946 |  |  | ¥ | 3,048 |  |  | ¥ | (23,898 | ) |  |  | (89 | )
|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases |  | ¥ | 8,978 |  |  | ¥ | 7,910 |  |  | ¥ | (1,068 | ) |  |  | (12 | )
Installment loans |  |  | 0 |  |  |  | 711 |  |  |  | 711 |  |  |  | — |
Investment in operating leases |  |  | 2,051 |  |  |  | 279 |  |  |  | (1,772 | ) |  |  | (86 | )
Investment in securities |  |  | 814 |  |  |  | 961 |  |  |  | 147 |  |  |  | 18 |
Property under facility operations |  |  | 262,016 |  |  |  | 330,598 |  |  |  | 68,582 |  |  |  | 26 |
Inventories |  |  | 396 |  |  |  | 356 |  |  |  | (40 | ) |  |  | (10 | )
Advances for finance lease and operating lease |  |  | 1,392 |  |  |  | 6 |  |  |  | (1,386 | ) |  |  | (100 | )
Investment in affiliates |  |  | 180,492 |  |  |  | 204,260 |  |  |  | 23,768 |  |  |  | 13 |
Advances for property under facility operations |  |  | 19,963 |  |  |  | 57,520 |  |  |  | 37,557 |  |  |  | 188 |
Goodwill, intangible assets acquired in business combinations |  |  | 13,072 |  |  |  | 101,007 |  |  |  | 87,935 |  |  |  | 673 |
Total Segment Assets |  | ¥ | 489,174 |  |  | ¥ | 703,608 |  |  | ¥ | 214,434 |  |  |  | 44 |

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Insurance
Despite an increase in life insurance premiums and related investment income at ORIX Life Insurance in line with an increase in insurance contracts, segment profits decreased 2% to ¥53,290 million compared to fiscal 2021. This decrease was due to the absence of reversal of policy liability reserve related to variable life insurance contracts at the former Hartford Life Insurance recorded in fiscal 2021.
Segment assets increased 6% to ¥2,072,145 million compared to the end of fiscal 2021. This increase was due to an increase in investment in securities.

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 242 |  |  | ¥ | 265 |  |  | ¥ | 23 |  |  |  | 10 |
Life insurance premiums and related investment income |  |  | 489,985 |  |  |  | 484,377 |  |  |  | (5,608 | ) |  |  | (1 | )
Other |  |  | 1,667 |  |  |  | 2,062 |  |  |  | 395 |  |  |  | 24 |
Total Segment Revenues |  |  | 491,894 |  |  |  | 486,704 |  |  |  | (5,190 | ) |  |  | (1 | )
Interest expense |  |  | 500 |  |  |  | 551 |  |  |  | 51 |  |  |  | 10 |
Life insurance costs |  |  | 374,394 |  |  |  | 368,926 |  |  |  | (5,468 | ) |  |  | (1 | )
Selling, general and administrative expenses |  |  | 62,203 |  |  |  | 63,731 |  |  |  | 1,528 |  |  |  | 2 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 7 |  |  |  | (0 | ) |  |  | (7 | ) |  |  | — |
Other |  |  | 184 |  |  |  | 288 |  |  |  | 104 |  |  |  | 57 |
Total Segment Expenses |  |  | 437,288 |  |  |  | 433,496 |  |  |  | (3,792 | ) |  |  | (1 | )
Segment Operating Income |  |  | 54,606 |  |  |  | 53,208 |  |  |  | (1,398 | ) |  |  | (3 | )
Equity in Net income (Loss) of Affiliates and others |  |  | 9 |  |  |  | 82 |  |  |  | 73 |  |  |  | 811 |
Segment Profits |  | ¥ | 54,615 |  |  | ¥ | 53,290 |  |  | ¥ | (1,325 | ) |  |  | (2 | )
|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Installment loans |  | ¥ | 17,315 |  |  | ¥ | 17,983 |  |  | ¥ | 668 |  |  |  | 4 |
Investment in operating leases |  |  | 28,909 |  |  |  | 28,296 |  |  |  | (613 | ) |  |  | (2 | )
Investment in securities |  |  | 1,908,148 |  |  |  | 2,021,134 |  |  |  | 112,986 |  |  |  | 6 |
Goodwill, intangible assets acquired in business combinations |  |  | 5,149 |  |  |  | 4,732 |  |  |  | (417 | ) |  |  | (8 | )
Total Segment Assets |  | ¥ | 1,959,521 |  |  | ¥ | 2,072,145 |  |  | ¥ | 112,624 |  |  |  | 6 |

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Banking and Credit
Segment profits decreased 13% to ¥41,498 million compared to fiscal 2021. This decrease was primarily at ORIX Credit, due to the absence of the reversal of provision for credit losses recorded in fiscal 2021 resulting from reduced demand for funds owing to the
COVID-19
pandemic, and an increase in advertising expenses in fiscal 2022.
Segment assets totaled ¥2,687,156 million, remaining relatively unchanged compared to the end of fiscal 2021.

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 78,071 |  |  | ¥ | 76,190 |  |  | ¥ | (1,881 | ) |  |  | (2 | )
Gains on investment securities and dividends |  |  | 675 |  |  |  | 2,204 |  |  |  | 1,529 |  |  |  | 227 |
Services income |  |  | 4,978 |  |  |  | 6,427 |  |  |  | 1,449 |  |  |  | 29 |
Total Segment Revenues |  |  | 83,724 |  |  |  | 84,821 |  |  |  | 1,097 |  |  |  | 1 |
Interest expense |  |  | 5,207 |  |  |  | 5,259 |  |  |  | 52 |  |  |  | 1 |
Services expense |  |  | 5,791 |  |  |  | 6,726 |  |  |  | 935 |  |  |  | 16 |
Selling, general and administrative expenses |  |  | 24,573 |  |  |  | 29,112 |  |  |  | 4,539 |  |  |  | 18 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 508 |  |  |  | 2,395 |  |  |  | 1,887 |  |  |  | 371 |
Other |  |  | (37 | ) |  |  | (168 | ) |  |  | (131 | ) |  |  | — |
Total Segment Expenses |  |  | 36,042 |  |  |  | 43,324 |  |  |  | 7,282 |  |  |  | 20 |
Segment Operating Income |  |  | 47,682 |  |  |  | 41,497 |  |  |  | (6,185 | ) |  |  | (13 | )
Equity in Net income (Loss) of Affiliates and others |  |  | 3 |  |  |  | 1 |  |  |  | (2 | ) |  |  | (67 | )
Segment Profits |  | ¥ | 47,685 |  |  | ¥ | 41,498 |  |  | ¥ | (6,187 | ) |  |  | (13 | )
|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Installment loans |  | ¥ | 2,402,916 |  |  | ¥ | 2,397,532 |  |  | ¥ | (5,384 | ) |  |  | (0 | )
Investment in securities |  |  | 275,740 |  |  |  | 277,786 |  |  |  | 2,046 |  |  |  | 1 |
Investment in affiliates |  |  | 200 |  |  |  | 67 |  |  |  | (133 | ) |  |  | (67 | )
Goodwill, intangible assets acquired in business combinations |  |  | 11,771 |  |  |  | 11,771 |  |  |  | 0 |  |  |  | — |
Total Segment Assets |  | ¥ | 2,690,627 |  |  | ¥ | 2,687,156 |  |  | ¥ | (3,471 | ) |  |  | (0 | )

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Aircraft and Ships
Segment profits decreased by ¥7,243 million to losses of ¥2,319 million as compared to ¥4,924 million of segment profits in fiscal 2021. This decrease was due primarily to impairment losses and other factors of ¥7,855 million (reduced to reflect the Group’s ownership share) on Avolon’s aircraft placed within the Russian territories, despite increases in services income and operating leases revenues in our ship-related businesses.
Segment assets increased 14% to ¥684,098 million compared to the end of fiscal 2021. This increase was due to an increase in installment loans in our ship-related businesses.

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 1,172 |  |  | ¥ | 2,580 |  |  | ¥ | 1,408 |  |  |  | 120 |
Operating leases |  |  | 27,105 |  |  |  | 28,620 |  |  |  | 1,515 |  |  |  | 6 |
Services income |  |  | 3,340 |  |  |  | 7,439 |  |  |  | 4,099 |  |  |  | 123 |
Total Segment Revenues |  |  | 31,617 |  |  |  | 38,639 |  |  |  | 7,022 |  |  |  | 22 |
Interest expense |  |  | 13,103 |  |  |  | 11,400 |  |  |  | (1,703 | ) |  |  | (13 | )
Costs of operating leases |  |  | 14,188 |  |  |  | 17,965 |  |  |  | 3,777 |  |  |  | 27 |
Services expense |  |  | 655 |  |  |  | 865 |  |  |  | 210 |  |  |  | 32 |
Selling, general and administrative expenses |  |  | 6,883 |  |  |  | 7,325 |  |  |  | 442 |  |  |  | 6 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | (159 | ) |  |  | 2,331 |  |  |  | 2,490 |  |  |  | — |
Other |  |  | 372 |  |  |  | (4,932 | ) |  |  | (5,304 | ) |  |  | — |
Total Segment Expenses |  |  | 35,042 |  |  |  | 34,954 |  |  |  | (88 | ) |  |  | (0 | )
Segment Operating Income |  |  | (3,425 | ) |  |  | 3,685 |  |  |  | 7,110 |  |  |  | — |
Equity in Net income (Loss) of Affiliates and others |  |  | 8,349 |  |  |  | (6,004 | ) |  |  | (14,353 | ) |  |  | — |
Segment Profits |  | ¥ | 4,924 |  |  | ¥ | (2,319 | ) |  | ¥ | (7,243 | ) |  |  | — |
|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases |  | ¥ | 2,994 |  |  | ¥ | 0 |  |  | ¥ | (2,994 | ) |  |  | — |
Installment loans |  |  | 30,757 |  |  |  | 81,695 |  |  |  | 50,938 |  |  |  | 166 |
Investment in operating leases |  |  | 262,482 |  |  |  | 271,910 |  |  |  | 9,428 |  |  |  | 4 |
Investment in securities |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | — |
Inventories |  |  | 0 |  |  |  | 113 |  |  |  | 113 |  |  |  | — |
Advances for finance lease and operating lease |  |  | 578 |  |  |  | 0 |  |  |  | (578 | ) |  |  | — |
Investment in affiliates |  |  | 293,469 |  |  |  | 320,058 |  |  |  | 26,589 |  |  |  | 9 |
Goodwill, intangible assets acquired in business combinations |  |  | 11,482 |  |  |  | 10,322 |  |  |  | (1,160 | ) |  |  | (10 | )
Total Segment Assets |  | ¥ | 601,762 |  |  | ¥ | 684,098 |  |  | ¥ | 82,336 |  |  |  | 14 |

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ORIX USA
Segment profits increased 91% to ¥75,235 million compared to fiscal 2021. This increase was due to increases in gains on investment securities and dividends and gains on sales of subsidiaries and affiliates resulting from the sales of investees. In addition, there was a decrease in provision for credit losses as compared to fiscal 2021.
Segment assets increased 12% to ¥1,364,142 million compared to the end of fiscal 2021. This increase was primarily due to foreign exchange effects.

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 87,172 |  |  | ¥ | 90,708 |  |  | ¥ | 3,536 |  |  |  | 4 |
Gains on investment securities and dividends |  |  | 24,510 |  |  |  | 37,802 |  |  |  | 13,292 |  |  |  | 54 |
Services income |  |  | 22,546 |  |  |  | 29,699 |  |  |  | 7,153 |  |  |  | 32 |
Other |  |  | 3,789 |  |  |  | 3,135 |  |  |  | (654 | ) |  |  | (17 | )
Total Segment Revenues |  |  | 138,017 |  |  |  | 161,344 |  |  |  | 23,327 |  |  |  | 17 |
Interest expense |  |  | 20,471 |  |  |  | 17,140 |  |  |  | (3,331 | ) |  |  | (16 | )
Services expense |  |  | 2,765 |  |  |  | 4,149 |  |  |  | 1,384 |  |  |  | 50 |
Selling, general and administrative expenses |  |  | 68,085 |  |  |  | 79,404 |  |  |  | 11,319 |  |  |  | 17 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 13,480 |  |  |  | (88 | ) |  |  | (13,568 | ) |  |  | — |
Other |  |  | 1,496 |  |  |  | 1,989 |  |  |  | 493 |  |  |  | 33 |
Total Segment Expenses |  |  | 106,297 |  |  |  | 102,594 |  |  |  | (3,703 | ) |  |  | (3 | )
Segment Operating Income |  |  | 31,720 |  |  |  | 58,750 |  |  |  | 27,030 |  |  |  | 85 |
Equity in Net income (Loss) of Affiliates and others |  |  | 7,699 |  |  |  | 16,485 |  |  |  | 8,786 |  |  |  | 114 |
Segment Profits |  | ¥ | 39,419 |  |  | ¥ | 75,235 |  |  | ¥ | 35,816 |  |  |  | 91 |
|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases |  | ¥ | 458 |  |  | ¥ | 475 |  |  | ¥ | 17 |  |  |  | 4 |
Installment loans |  |  | 617,822 |  |  |  | 717,183 |  |  |  | 99,361 |  |  |  | 16 |
Investment in operating leases |  |  | 5,317 |  |  |  | 4,653 |  |  |  | (664 | ) |  |  | (12 | )
Investment in securities |  |  | 342,631 |  |  |  | 367,190 |  |  |  | 24,559 |  |  |  | 7 |
Property under facility operations and servicing assets |  |  | 72,094 |  |  |  | 79,000 |  |  |  | 6,906 |  |  |  | 10 |
Inventories |  |  | 603 |  |  |  | 685 |  |  |  | 82 |  |  |  | 14 |
Advances for finance lease and operating lease |  |  | 378 |  |  |  | 945 |  |  |  | 567 |  |  |  | 150 |
Investment in affiliates |  |  | 43,816 |  |  |  | 45,337 |  |  |  | 1,521 |  |  |  | 3 |
Goodwill, intangible assets acquired in business combinations |  |  | 136,962 |  |  |  | 148,674 |  |  |  | 11,712 |  |  |  | 9 |
Total Segment Assets |  | ¥ | 1,220,081 |  |  | ¥ | 1,364,142 |  |  | ¥ | 144,061 |  |  |  | 12 |

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ORIX Europe
Segment profits increased 26% to ¥49,334 million compared to fiscal 2021. This increase was due to an increase in services income resulting from an increase in the average amount of assets under management, partially offset by a write-down of intangible assets.
Segment assets increased 9% to ¥401,869 million compared to the end of fiscal 2021. This increase was due to an increase in investment in securities.

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 171 |  |  | ¥ | 56 |  |  | ¥ | (115 | ) |  |  | (67 | )
Gains on investment securities and dividends |  |  | 10,239 |  |  |  | 1,849 |  |  |  | (8,390 | ) |  |  | (82 | )
Services income |  |  | 150,388 |  |  |  | 219,207 |  |  |  | 68,819 |  |  |  | 46 |
Total Segment Revenues |  |  | 160,798 |  |  |  | 221,112 |  |  |  | 60,314 |  |  |  | 38 |
Interest expense |  |  | (75 | ) |  |  | (647 | ) |  |  | (572 | ) |  |  | — |
Services expense |  |  | 39,877 |  |  |  | 53,199 |  |  |  | 13,322 |  |  |  | 33 |
Selling, general and administrative expenses |  |  | 73,549 |  |  |  | 95,620 |  |  |  | 22,071 |  |  |  | 30 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 34 |  |  |  | 0 |  |  |  | (34 | ) |  |  | — |
Other |  |  | 6,836 |  |  |  | 23,115 |  |  |  | 16,279 |  |  |  | 238 |
Total Segment Expenses |  |  | 120,221 |  |  |  | 171,287 |  |  |  | 51,066 |  |  |  | 42 |
Segment Operating Income |  |  | 40,577 |  |  |  | 49,825 |  |  |  | 9,248 |  |  |  | 23 |
Equity in Net income (Loss) of Affiliates and others |  |  | (1,514 | ) |  |  | (491 | ) |  |  | 1,023 |  |  |  | — |
Segment Profits |  | ¥ | 39,063 |  |  | ¥ | 49,334 |  |  | ¥ | 10,271 |  |  |  | 26 |
|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Investment in securities |  | ¥ | 45,540 |  |  | ¥ | 82,770 |  |  | ¥ | 37,230 |  |  |  | 82 |
Investment in affiliates |  |  | 1,770 |  |  |  | 2,221 |  |  |  | 451 |  |  |  | 25 |
Goodwill, intangible assets acquired in business combinations |  |  | 322,236 |  |  |  | 316,878 |  |  |  | (5,358 | ) |  |  | (2 | )
Total Segment Assets |  | ¥ | 369,546 |  |  | ¥ | 401,869 |  |  | ¥ | 32,323 |  |  |  | 9 |

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Asia and Australia
Segment profits increased 320% to ¥51,165 million compared to fiscal 2021. This increase was due to the absence of the recording of impairment loss on investments in affiliates recorded in fiscal 2021 and an increase in equity in net income (loss) of affiliates at an investee. In addition, there were increases in finance revenues in China and operating leases revenues in South Korea and Australia.
Segment assets increased 20% to ¥1,306,089 million compared to the end of fiscal 2021. This increase was due to increases in net investment in leases, installment loans, and investment in operating leases in China, South Korea, and Australia. In addition, there was an increase in investment in affiliates in China.

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues |  | ¥ | 39,931 |  |  | ¥ | 47,166 |  |  | ¥ | 7,235 |  |  |  | 18 |
Gains on investment securities and dividends |  |  | 7,578 |  |  |  | 3,673 |  |  |  | (3,905 | ) |  |  | (52 | )
Operating leases |  |  | 68,104 |  |  |  | 82,004 |  |  |  | 13,900 |  |  |  | 20 |
Services income |  |  | 12,631 |  |  |  | 14,635 |  |  |  | 2,004 |  |  |  | 16 |
Other |  |  | 65 |  |  |  | 577 |  |  |  | 512 |  |  |  | 788 |
Total Segment Revenues |  |  | 128,309 |  |  |  | 148,055 |  |  |  | 19,746 |  |  |  | 15 |
Interest expense |  |  | 20,439 |  |  |  | 20,548 |  |  |  | 109 |  |  |  | 1 |
Costs of operating leases |  |  | 50,954 |  |  |  | 61,595 |  |  |  | 10,641 |  |  |  | 21 |
Services expense |  |  | 8,881 |  |  |  | 9,672 |  |  |  | 791 |  |  |  | 9 |
Selling, general and administrative expenses |  |  | 25,939 |  |  |  | 29,711 |  |  |  | 3,772 |  |  |  | 15 |
Provision for credit losses, and write-downs of long-lived assets and securities |  |  | 3,514 |  |  |  | 891 |  |  |  | (2,623 | ) |  |  | (75 | )
Other |  |  | 1,003 |  |  |  | (888 | ) |  |  | (1,891 | ) |  |  | — |
Total Segment Expenses |  |  | 110,730 |  |  |  | 121,529 |  |  |  | 10,799 |  |  |  | 10 |
Segment Operating Income |  |  | 17,579 |  |  |  | 26,526 |  |  |  | 8,947 |  |  |  | 51 |
Equity in Net income (Loss) of Affiliates and others |  |  | (5,400 | ) |  |  | 24,639 |  |  |  | 30,039 |  |  |  | — |
Segment Profits |  | ¥ | 12,179 |  |  | ¥ | 51,165 |  |  | ¥ | 38,986 |  |  |  | 320 |
|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases |  | ¥ | 338,603 |  |  | ¥ | 405,043 |  |  | ¥ | 66,440 |  |  |  | 20 |
Installment loans |  |  | 271,038 |  |  |  | 321,994 |  |  |  | 50,956 |  |  |  | 19 |
Investment in operating leases |  |  | 235,182 |  |  |  | 286,214 |  |  |  | 51,032 |  |  |  | 22 |
Investment in securities |  |  | 32,804 |  |  |  | 48,052 |  |  |  | 15,248 |  |  |  | 46 |
Property under facility operations |  |  | 1,284 |  |  |  | 1,084 |  |  |  | (200 | ) |  |  | (16 | )
Inventories |  |  | 377 |  |  |  | 483 |  |  |  | 106 |  |  |  | 28 |
Advances for finance lease and operating lease |  |  | 3,064 |  |  |  | 3,919 |  |  |  | 855 |  |  |  | 28 |
Investment in affiliates |  |  | 195,413 |  |  |  | 232,471 |  |  |  | 37,058 |  |  |  | 19 |
Goodwill, intangible assets acquired in business combinations |  |  | 6,457 |  |  |  | 6,829 |  |  |  | 372 |  |  |  | 6 |
Total Segment Assets |  | ¥ | 1,084,222 |  |  | ¥ | 1,306,089 |  |  | ¥ | 221,867 |  |  |  | 20 |

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Revenues, New Business Volumes and Investments
Finance revenues

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Finance revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance revenues |  | ¥ | 271,194 |  |  | ¥ | 279,589 |  |  | ¥ | 8,395 |  |  |  | 3 |

Finance revenues increased 3% to ¥279,589 million for fiscal 2022 compared to fiscal 2021 due primarily to an increase in the average balance of installment loans and net investment in leases.
Net investment in leases

|  | As of and for the year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
New equipment acquisitions |  | ¥ | 353,256 |  |  | ¥ | 464,150 |  |  | ¥ | 110,894 |  |  |  | 31 |
Japan |  |  | 192,708 |  |  |  | 210,773 |  |  |  | 18,065 |  |  |  | 9 |
Overseas |  |  | 160,548 |  |  |  | 253,377 |  |  |  | 92,829 |  |  |  | 58 |
Net investment in leases |  |  | 1,029,518 |  |  |  | 1,057,973 |  |  |  | 28,455 |  |  |  | 3 |

New equipment acquisitions related to net investment in leases increased 31% to ¥464,150 million compared to fiscal 2021. In Japan, new equipment acquisitions increased 9% in fiscal 2022 compared to fiscal 2021. In overseas, new equipment acquisitions increased 58% in fiscal 2022 compared to fiscal 2021 due to increases in Asia.
Net investment in leases as of March 31, 2022 increased 3% to ¥1,057,973 million compared to March 31, 2021 due mainly to increases in assets in Overseas.
As of March 31, 2022, no single lessee represented more than 1% of the balance of net investment in leases. As of March 31, 2022, 62% of our net investment in leases were to lessees in Japan, while 38% were to overseas lessees. 12% and 5% of our net investment in leases were to lessees in China and Malaysia, respectively. No other overseas country represented more than 5% of our total portfolio of net investment in leases

|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Net investment in leases by category: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transportation equipment |  | ¥ | 437,759 |  |  | ¥ | 434,944 |  |  | ¥ | (2,815 | ) |  |  | (1 | )
Industrial equipment |  |  | 212,655 |  |  |  | 247,398 |  |  |  | 34,743 |  |  |  | 16 |
Electronics |  |  | 121,021 |  |  |  | 112,871 |  |  |  | (8,150 | ) |  |  | (7 | )
Information-related and office equipment |  |  | 95,708 |  |  |  | 94,292 |  |  |  | (1,416 | ) |  |  | (1 | )
Commercial services equipment |  |  | 42,339 |  |  |  | 46,941 |  |  |  | 4,602 |  |  |  | 11 |
Other |  |  | 120,036 |  |  |  | 121,527 |  |  |  | 1,491 |  |  |  | 1 |
Total |  | ¥ | 1,029,518 |  |  | ¥ | 1,057,973 |  |  | ¥ | 28,455 |  |  |  | 3 |

For further information, see Note 6 of “Item 18. Financial Statements.”
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Installment loans

|  | As of and for the year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Installment loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
New loans added |  | ¥ | 1,198,028 |  |  | ¥ | 1,202,677 |  |  | ¥ | 4,649 |  |  |  | 0 |
Japan |  |  | 862,930 |  |  |  | 766,453 |  |  |  | (96,477 | ) |  |  | (11 | )
Overseas |  |  | 335,098 |  |  |  | 436,224 |  |  |  | 101,126 |  |  |  | 30 |
Installment loans |  |  | 3,670,784 |  |  |  | 3,862,604 |  |  |  | 191,820 |  |  |  | 5 |

Note: | The balance of installment loans related to our life insurance operations is included in installment loans in our consolidated balance sheets; however, income and losses on these loans are recorded in life insurance premiums and related investment income in our consolidated statements of income.

New loans added remained flat at ¥1,202,677 million compared to fiscal 2021. In Japan, new loans added decreased 11% to ¥766,453 million in fiscal 2022 compared to fiscal 2021. In overseas, new loans added increased 30% to ¥436,224 million compared to fiscal 2021 due mainly to increased lending activity in the Americas and ship-related finance.
The balance of installment loans as of March 31, 2022 increased 5% to ¥3,862,604 million compared to March 31, 2021, due mainly to increases in the new loans added in the Americas and ship-related finance, as well as the effect of changes in foreign exchange rates.

|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Installment loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer borrowers in Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans |  | ¥ | 1,995,031 |  |  | ¥ | 2,007,570 |  |  | ¥ | 12,539 |  |  |  | 1 |
Card loans |  |  | 188,547 |  |  |  | 173,687 |  |  |  | (14,860 | ) |  |  | (8 | )
Other |  |  | 27,698 |  |  |  | 27,770 |  |  |  | 72 |  |  |  | 0 |
Subtotal |  |  | 2,211,276 |  |  |  | 2,209,027 |  |  |  | (2,249 | ) |  |  | (0 | )
Corporate borrowers in Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate companies |  |  | 279,046 |  |  |  | 278,607 |  |  |  | (439 | ) |  |  | (0 | )
Non-recourse loans |  |  | 47,956 |  |  |  | 74,085 |  |  |  | 26,129 |  |  |  | 54 |
Commercial, industrial and other companies |  |  | 203,890 |  |  |  | 168,607 |  |  |  | (35,283 | ) |  |  | (17 | )
Subtotal |  |  | 530,892 |  |  |  | 521,299 |  |  |  | (9,593 | ) |  |  | (2 | )
Consumer borrowers in overseas |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans |  |  | 75,890 |  |  |  | 105,860 |  |  |  | 29,970 |  |  |  | 39 |
Other |  |  | 26,192 |  |  |  | 30,136 |  |  |  | 3,944 |  |  |  | 15 |
Subtotal |  |  | 102,082 |  |  |  | 135,996 |  |  |  | 33,914 |  |  |  | 33 |
Corporate borrowers in overseas |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate companies |  |  | 197,074 |  |  |  | 273,789 |  |  |  | 76,715 |  |  |  | 39 |
Non-recourse loans |  |  | 113,129 |  |  |  | 80,918 |  |  |  | (32,211 | ) |  |  | (28 | )
Commercial, industrial companies and other |  |  | 503,980 |  |  |  | 627,828 |  |  |  | 123,848 |  |  |  | 25 |
Subtotal |  |  | 814,183 |  |  |  | 982,535 |  |  |  | 168,352 |  |  |  | 21 |
Purchased loans * |  |  | 12,351 |  |  |  | 13,747 |  |  |  | 1,396 |  |  |  | 11 |
Total |  | ¥ | 3,670,784 |  |  | ¥ | 3,862,604 |  |  | ¥ | 191,820 |  |  |  | 5 |

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

As of March 31, 2022, ¥17,983 million, or 0.7%, of our portfolio of installment loans to consumer and corporate borrowers in Japan related to our life insurance operations. We reflect income from these loans as life insurance premiums and related investment income in our consolidated statements of income.
As of March 31, 2022, ¥552,396 million, or 14%, of the balance of installment loans were to real estate companies in Japan and overseas.
The balance of installment loans to consumer borrowers in Japan as of March 31, 2022 remained flat at ¥2,209,027 million compared to the balance as of March 31, 2021, due primarily to a decrease in the balance of card loans despite an increase in the balance of real estate loans for consumer. The balance of installment loans to corporate borrowers in Japan as of March 31, 2022 decreased 2% to ¥521,299 million compared to the balance as of March 31, 2021, due mainly to the collection amount exceeded the new loans added. The balance of installment loans to consumer borrowers in overseas as of March 31, 2022 increased 33% to ¥135,996 million compared to the balance as of March 31, 2021, due primarily to an increase in the balance of real estate loans for consumer and foreign exchange effects. The balance of installment loans to corporate borrowers in overseas as of March 31, 2022 increased 21% to ¥982,535 million compared to the balance as of March 31, 2021 in line with the aforementioned increase in the Americas and ship-related finance, as well as foreign exchange effects.
For further information, see Note 7 of “Item 18. Financial Statements.”
Asset quality
Net investment in leases

|  | As of March 31, |
|  | 2021 |  |  | 2022 |
|  | (Millions of yen, except percentage data) |
Non-performing net investment in leases and allowance for credit losses on net investment in leases: |  |  |  |  |  |  |  |
Non-performing net investment in leases |  | ¥ | 18,925 |  |  | ¥ | 19,224 |
Non-performing net investment in leases as a percentage of the balance of net investment in leases |  |  | 1.84 | % |  |  | 1.82 | %
Provision for credit losses as a percentage of the average balance of net investment in leases* |  |  | 0.31 | % |  |  | 0.15 | %
Allowance for credit losses on net investment in leases |  | ¥ | 16,522 |  |  | ¥ | 16,303 |
Allowance for credit losses on net investment in leases as a percentage of the balance of net investment in leases |  |  | 1.60 | % |  |  | 1.54 | %
The ratio of charge-offs as a percentage of the average balance of net investment in leases* |  |  | 0.25 | % |  |  | 0.27 | %

* | Average balances are calculated on the basis of fiscal year’s beginning balance and fiscal quarter-end balances.

The balance of
non-performing
net investment in leases increased ¥299 million to ¥19,224 million as of March 31, 2022 compared to March 31, 2021. As a result, the
non-performing
net investment in leases as a percentage of net investment in leases as of March 31, 2022 decreased 0.02% to 1.82% from March 31, 2021.
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We believe that the ratio of allowance for credit losses to the balance of investment in net investment in leases provides a reasonable indication that our allowance for credit losses was appropriate as of March 31, 2022 for the following reasons:

| • |  | lease receivables are generally diversified and the amount of realized loss on any particular contract is likely to be relatively small; and

| • |  | all lease contracts are secured by collateral consisting of the underlying leased assets, and we can expect to recover at least a portion of the outstanding lease receivables by selling the collateral.

Loans not individually assessed for credit losses

|  | As of March 31, |
|  | 2021 |  |  | 2022 |
|  | (Millions of yen, except percentage data) |
Non-performing loans not individually assessed for credit losses and allowance for credit losses on installment loans not individually assessed for credit losses: |  |  |  |  |  |  |  |
Non-performing loans not individually assessed for credit losses |  | ¥ | 28,181 |  |  | ¥ | 34,479 |
Non-performing loans not individually assessed for credit losses as a percentage of the balance of installment loans not individually assessed for credit losses |  |  | 0.78 | % |  |  | 0.90 | %
Provision for credit losses as a percentage of the average balance of installment loans not individually assessed for credit losses* |  |  | 0.02 | % |  |  | 0.06 | %
Allowance for credit losses on installment loans not individually assessed for credit losses |  | ¥ | 44,064 |  |  | ¥ | 36,618 |
Allowance for credit losses on installment loans not individually assessed for credit losses as a percentage of the balance of installment loans not individually assessed for credit losses |  |  | 1.22 | % |  |  | 0.96 | %
The ratio of charge-offs as a percentage of the average balance of loans not individually assessed for credit losses* |  |  | 0.37 | % |  |  | 0.33 | %

* | Average balances are calculated on the basis of fiscal year’s beginning balance and fiscal quarter-end balances.

The provision as a percentage of the average balance of installment loans not individually assessed for credit losses increased 0.04% compared to fiscal 2021 due mainly to a decrease in a reversal in the Americas. The reversal in fiscal 2021 resulted from the improvement of forecasted future economic indicators such as GDP growth rates and unemployment rates in the Americas.
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The balance of
non-performing
loans not individually assessed that are estimated for credit losses by using installment loans with similar risk characteristics as one pool increased ¥6,298 million to ¥34,479 million as of March 31, 2022 compared to March 31, 2021.

|  | As of March 31, |
|  | 2021 |  |  | 2022 |
|  | (Millions of yen) |
Non-performing loans not individually assessed for credit losses: |  |  |  |  |  |  |  |
Consumer borrowers in Japan |  |  |  |  |  |  |  |
Real estate loans |  | ¥ | 1,267 |  |  | ¥ | 1,361 |
Card loans |  |  | 1,132 |  |  |  | 671 |
Other |  |  | 6,503 |  |  |  | 3,179 |
Subtotal |  |  | 8,902 |  |  |  | 5,211 |
Corporate borrowers in Japan |  |  |  |  |  |  |  |
Real estate companies |  |  | 31 |  |  |  | 101 |
Commercial, industrial and other companies |  |  | 0 |  |  |  | 529 |
Subtotal |  |  | 31 |  |  |  | 630 |
Consumer borrowers in overseas |  |  |  |  |  |  |  |
Real estate loans |  |  | 366 |  |  |  | 345 |
Other |  |  | 320 |  |  |  | 235 |
Subtotal |  |  | 686 |  |  |  | 580 |
Corporate borrowers in overseas |  |  |  |  |  |  |  |
Real estate companies |  |  | 14,505 |  |  |  | 20,879 |
Non-recourse loans |  |  | 542 |  |  |  | 2,187 |
Commercial, industrial and other companies |  |  | 3,515 |  |  |  | 4,992 |
Subtotal |  |  | 18,562 |  |  |  | 28,058 |
Total |  | ¥ | 28,181 |  |  | ¥ | 34,479 |

We recognize allowances for real estate loans, card loans and other loans to individual borrowers after careful evaluation of the value of collateral underlying the loans, past loss experience and any economic conditions that we believe may affect the default rate. We determine the allowance for our other items on the basis of past loss experience, the forecasted future economic indicators correlated with the prior
charge-off
experience and the current portfolio composition.
Loans individually assessed for credit losses

|  | As of March 31, |
|  | 2021 |  |  | 2022 |
|  | (Millions of yen) |
Non-performing loans individually assessed for credit losses and allowance for credit losses on installment loans individually assessed for credit losses: |  |  |  |  |  |  |  |
Non-performing installment loans individually assessed for credit losses |  | ¥ | 59,757 |  |  | ¥ | 50,836 |
Allowance for credit losses on installment loans individually assessed for credit losses* |  |  | 13,404 |  |  |  | 11,213 |

* | The allowance is individually evaluated based on the present value of expected future cash flows, the loan’s observable market price or the fair value of the collateral securing the loans if the loans are collateral dependent.

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The provision for credit losses on installment loans individually assessed for credit losses was ¥15,248 million and ¥3,355 million, respectively, in fiscal 2021 and fiscal 2022. The
charge-off
of installment loans individually assessed for credit losses was ¥16,356 million and ¥5,502 million, in fiscal 2021 and fiscal 2022, respectively. The provision for credit losses on installment loans individually assessed for credit losses decreased ¥11,893 million compared to fiscal 2021. The
charge-off
of installment loans individually assessed for credit losses decreased ¥10,854 million compared to fiscal 2021.
The table below sets forth the outstanding balance of
non-performing
loans individually assessed for credit losses by region and type of borrower as of the dates indicated. Consumer loans in Japan primarily consist of restructured smaller-balance homogeneous loans individually assessed for credit losses. The balance of individually assessed
non-performing
loans of commercial, industrial and other companies in overseas decreased due mainly to a decrease in the Americas.

|  | As of March 31, |
|  | 2021 |  |  | 2022 |
|  | (Millions of yen) |
Non-performing loans individually assessed for credit losses: |  |  |  |  |  |  |  |
Consumer borrowers in Japan |  |  |  |  |  |  |  |
Real estate loans |  | ¥ | 7,738 |  |  | ¥ | 10,850 |
Card loans |  |  | 3,693 |  |  |  | 3,415 |
Other |  |  | 16,573 |  |  |  | 15,317 |
Subtotal |  |  | 28,004 |  |  |  | 29,582 |
Corporate borrowers in Japan |  |  |  |  |  |  |  |
Real estate companies |  |  | 1,711 |  |  |  | 2,203 |
Commercial, industrial and other companies |  |  | 7,263 |  |  |  | 2,765 |
Subtotal |  |  | 8,974 |  |  |  | 4,968 |
Consumer borrowers in overseas |  |  |  |  |  |  |  |
Real estate loans |  |  | 268 |  |  |  | 129 |
Other |  |  | 390 |  |  |  | 286 |
Subtotal |  |  | 658 |  |  |  | 415 |
Corporate borrowers in overseas |  |  |  |  |  |  |  |
Non-recourse loans |  |  | 774 |  |  |  | 856 |
Commercial, industrial and other companies |  |  | 19,524 |  |  |  | 13,531 |
Subtotal |  |  | 20,298 |  |  |  | 14,387 |
Purchased loans |  |  | 1,823 |  |  |  | 1,484 |
Total |  | ¥ | 59,757 |  |  | ¥ | 50,836 |

Troubled debt restructuring
A troubled debt restructuring is defined as a restructuring of a financing receivable in which the creditor grants a concession to the debtor for economic or other reasons related to the debtor’s financial difficulties. The balance of
pre-modification
outstanding recorded investment of troubled debt restructurings for financing receivables occurred during fiscal 2021 and fiscal 2022 were ¥24,002 million and ¥14,242 million, respectively. And the balance of post-modification outstanding recorded investment were ¥19,776 million and ¥11,471 million for fiscal 2021 and fiscal 2022, respectively.
While there were certain other payment deferral requests for financing receivables which we accepted, due to the spread of the
COVID-19,
those receivables are not included in the troubled debt restructuring as we determined those deferrals did not meet the definition of troubled debt restructuring.
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For further information, see Note 8 of “Item 18. Financial Statements.”
Allowance for credit losses
We recognize allowances for credit losses on net investment in leases and installment loans.

|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | ¥ | 55,687 |  |  | ¥ | 73,990 |  |  | ¥ | 18,303 |  |  |  | 33 |
Cumulative Effect of Adopting Accounting Standards Update 2016-13 |  |  | 30,376 |  |  |  | 0 |  |  |  | (30,376 | ) |  |  | — |
(Adjusted) Beginning balance |  |  | 86,063 |  |  |  | 73,990 |  |  |  | (12,073 | ) |  |  | (14 | )
Net investment in leases |  |  | 15,242 |  |  |  | 16,522 |  |  |  | 1,280 |  |  |  | 8 |
Loans not individually assessed for credit losses |  |  | 57,685 |  |  |  | 44,064 |  |  |  | (13,621 | ) |  |  | (24 | )
Loans individually assessed for credit losses |  |  | 13,136 |  |  |  | 13,404 |  |  |  | 268 |  |  |  | 2 |
Provision (Reversal)* 1 |  |  | 19,113 |  |  |  | 7,154 |  |  |  | (11,959 | ) |  |  | (63 | )
Net investment in leases |  |  | 3,285 |  |  |  | 1,577 |  |  |  | (1,708 | ) |  |  | (52 | )
Loans not individually assessed for credit losses |  |  | 580 |  |  |  | 2,222 |  |  |  | 1,642 |  |  |  | 283 |
Loans individually assessed for credit losses |  |  | 15,248 |  |  |  | 3,355 |  |  |  | (11,893 | ) |  |  | (78 | )
Charge-offs (net) |  |  | (32,395 | ) |  |  | (20,597 | ) |  |  | 11,798 |  |  |  | (36 | )
Net investment in leases |  |  | (2,658 | ) |  |  | (2,781 | ) |  |  | (123 | ) |  |  | 5 |
Loans not individually assessed for credit losses |  |  | (13,381 | ) |  |  | (12,314 | ) |  |  | 1,067 |  |  |  | (8 | )
Loans individually assessed for credit losses |  |  | (16,356 | ) |  |  | (5,502 | ) |  |  | 10,854 |  |  |  | (66 | )
Other* 2 |  |  | 1,209 |  |  |  | 3,587 |  |  |  | 2,378 |  |  |  | 197 |
Net investment in leases |  |  | 653 |  |  |  | 985 |  |  |  | 332 |  |  |  | 51 |
Loans not individually assessed for credit losses |  |  | (820 | ) |  |  | 2,646 |  |  |  | 3,466 |  |  |  | — |
Loans individually assessed for credit losses |  |  | 1,376 |  |  |  | (44 | ) |  |  | (1,420 | ) |  |  | — |
Ending balance |  |  | 73,990 |  |  |  | 64,134 |  |  |  | (9,856 | ) |  |  | (13 | )
Net investment in leases |  |  | 16,522 |  |  |  | 16,303 |  |  |  | (219 | ) |  |  | (1 | )
Loans not individually assessed for credit losses |  |  | 44,064 |  |  |  | 36,618 |  |  |  | (7,446 | ) |  |  | (17 | )
Loans individually assessed for credit losses |  |  | 13,404 |  |  |  | 11,213 |  |  |  | (2,191 | ) |  |  | (16 | )

*1 | “Provision for credit losses” in the consolidated statements of income amounted to ¥16,021 million and ¥3,939 million for fiscal 2021 and fiscal 2022, respectively, and the amounts include provision for credit losses on other than net investment in leases and installment loans.

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

|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Provision for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net investment in leases |  | ¥ | 3,285 |  |  | ¥ | 1,577 |  |  | ¥ | (1,708 | ) |  |  | (52 | )
Loans not individually assessed for credit losses |  |  | 580 |  |  |  | 2,222 |  |  |  | 1,642 |  |  |  | 283 |
Loans individually assessed for credit losses |  |  | 15,248 |  |  |  | 3,355 |  |  |  | (11,893 | ) |  |  | (78 | )
Subtotal |  |  | 19,113 |  |  |  | 7,154 |  |  |  | (11,959 | ) |  |  | (63 | )
Off-balance sheet credit exposures |  |  | (7,437 | ) |  |  | (4,449 | ) |  |  | 2,988 |  |  |  | (40 | )
Available-for-sale debt securities |  |  | 117 |  |  |  | 21 |  |  |  | (96 | ) |  |  | (82 | )
Accounts receivable |  |  | 4,228 |  |  |  | 1,213 |  |  |  | (3,015 | ) |  |  | (71 | )
Total |  | ¥ | 16,021 |  |  | ¥ | 3,939 |  |  | ¥ | (12,082 | ) |  |  | (75 | )

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Credit Losses standard has been adopted since April 1, 2020, and the allowance for credit losses is estimated for all credit losses expected to occur in future over the remaining life of net investment in leases and installment loans, and is recognized adequately based on management judgement. We adopted Credit Losses standard through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption.
The provision on installment loans not individually assessed for credit losses were ¥580 million and ¥2,222 million in fiscal 2021 and fiscal 2022, respectively. The provision for credit losses on loans not individually assessed in fiscal 2022 increased compared to fiscal 2021 due mainly to a decrease in a reversal in the Americas. The reversal in fiscal 2021 resulted from the improvement of forecasted future economic indicators such as GDP growth rates and unemployment rates in the Americas.
The provision on installment loans individually assessed for credit losses were ¥15,248 million and ¥3,355 million in fiscal 2021 and fiscal 2022, respectively. The provision for credit losses on loans individually assessed decreased mainly in the Americas.
The provision for credit losses on
off-balance
sheet credit exposures in fiscal 2021 was a reversal of ¥7,437 million, which was mainly caused by a decrease in outstanding financial guarantees of card loans and other credit facilities extended by Japanese financial institutions as a result of restrained customer demand for funds and an increase in repayments reflecting changes in consumer behavior due to
COVID-19.
The provision for credit losses on
off-balance
sheet credit exposures in fiscal 2022 was a reversal of ¥4,449 million, which was caused mainly by improved macroeconomic forecast in the Americas.
For further information, see Note 8 of “Item 18. Financial Statements.” In addition, for further information about allowance for
off-balance
sheet credit exposures and allowance for credit losses on
available-for-sale
debt securities, see Note 30 and 9 of “Item 18. Financial Statements.”
Investment in Securities

|  | As of and for the year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Investment in securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
New securities added |  | ¥ | 765,663 |  |  | ¥ | 620,660 |  |  | ¥ | (145,003 | ) |  |  | (19 | )
Japan |  |  | 698,555 |  |  |  | 509,164 |  |  |  | (189,391 | ) |  |  | (27 | )
Overseas |  |  | 67,108 |  |  |  | 111,496 |  |  |  | 44,388 |  |  |  | 66 |
Investment in securities |  |  | 2,660,443 |  |  |  | 2,852,349 |  |  |  | 191,906 |  |  |  | 7 |

Note: | The balance of investment in securities related to our life insurance operations is included in investment in securities in our consolidated balance sheets; however, income and losses on these investment in securities are recorded in life insurance premiums and related investment income in our consolidated statements of income.

New securities added decreased to ¥620,660 million in fiscal 2022 compared to fiscal 2021. New securities added in Japan decreased 27% in fiscal 2022 compared to fiscal 2021 due primarily to a decrease in investments in government bond securities and corporate debt securities. New securities added overseas increased 66% in fiscal 2022 compared to fiscal 2021 due primarily to an increase in investments in equity securities and
available-for-sale
debt securities.
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The balance of our investment in securities as of March 31, 2022 increased 7% to ¥2,852,349 million compared to March 31, 2021.

|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Investment in securities by security type: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  | ¥ | 540,082 |  |  | ¥ | 560,643 |  |  | ¥ | 20,561 |  |  |  | 4 |
Trading debt securities |  |  | 2,654 |  |  |  | 2,503 |  |  |  | (151 | ) |  |  | (6 | )
Available-for-sale debt securities |  |  | 2,003,917 |  |  |  | 2,174,891 |  |  |  | 170,974 |  |  |  | 9 |
Held-to-maturity debt securities |  |  | 113,790 |  |  |  | 114,312 |  |  |  | 522 |  |  |  | 0 |
Total |  | ¥ | 2,660,443 |  |  | ¥ | 2,852,349 |  |  | ¥ | 191,906 |  |  |  | 7 |

Investments in equity securities as of March 31, 2022 increased 4% to ¥560,643 million compared to March 31, 2021 due primarily to an increase in investment in equity securities with readily determinable fair value in Europe and fund investment in Asia. Investments in trading debt securities as of March 31, 2022 decreased 6% to ¥2,503 million compared to March 31, 2021. Investments in
available-for-sale
debt securities as of March 31, 2022 increased 9% to ¥2,174,891 million compared to March 31, 2021 due primarily to an increase in investments in government bond securities, municipal bond securities and corporate debt securities in Japan.
Held-to-maturity
debt securities mainly consist of our life insurance business’s investment in Japanese government bonds.
For further information, see Note 9 of “Item 18. Financial Statements.”
Gains on investment securities and dividends

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Gains on investment securities and dividends: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net gains on investment securities |  | ¥ | 44,622 |  |  | ¥ | 54,585 |  |  | ¥ | 9,963 |  |  |  | 22 |
Dividends income |  |  | 1,475 |  |  |  | 1,925 |  |  |  | 450 |  |  |  | 31 |
Total |  | ¥ | 46,097 |  |  | ¥ | 56,510 |  |  | ¥ | 10,413 |  |  |  | 23 |

Notes: |  | 1. |  | Income and losses on investment in securities related to our life insurance operations are recorded in life insurance premiums and related investment income in our consolidated statements of income.
|  | 2. |  | Unrealized changes in fair value of investments in equity securities have been included in “Net gains on investment securities”.

Net gains on investment securities increased 22% to ¥54,585 million in fiscal 2022 compared to fiscal 2021 due to increases in gains on sales of shares and net unrealized holding gains on investment funds. Dividends income increased 31% to ¥1,925 million in fiscal 2022 compared to fiscal 2021. Due to the above results, gains on investment securities and dividends increased 23% to ¥56,510 million in fiscal 2022 compared to fiscal 2021.
As of March 31, 2022, gross unrealized gains on
available-for-sale
debt securities, including those held in connection with our life insurance operations, were ¥23,242 million, compared to ¥25,291 million as of March 31, 2021. As of March 31, 2022, gross unrealized losses on
available-for-sale
debt securities, including those held in connection with our life insurance operations, were ¥124,623 million, compared to ¥48,021 million as of March 31, 2021.
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Operating leases

|  | As of and for the year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Operating leases: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating lease revenues |  | ¥ | 397,065 |  |  | ¥ | 450,454 |  |  | ¥ | 53,389 |  |  |  | 13 |
Costs of operating leases |  |  | 295,628 |  |  |  | 322,070 |  |  |  | 26,442 |  |  |  | 9 |
New equipment acquisitions |  |  | 302,835 |  |  |  | 388,403 |  |  |  | 85,568 |  |  |  | 28 |
Japan |  |  | 174,116 |  |  |  | 232,059 |  |  |  | 57,943 |  |  |  | 33 |
Overseas |  |  | 128,719 |  |  |  | 156,344 |  |  |  | 27,625 |  |  |  | 21 |
Investment in operating leases |  |  | 1,408,189 |  |  |  | 1,463,202 |  |  |  | 55,013 |  |  |  | 4 |

Revenues from operating leases in fiscal 2022 increased 13 % to ¥450,454 million compared to fiscal 2021 primarily due to an increase resulting from the acquisition of a subsidiary and an increase in gains on sales of vehicles under operating leases. In fiscal 2021 and 2022, gains from the disposition of operating lease assets were ¥26,358 million and ¥40,148 million, respectively.
Costs of operating leases increased 9% to ¥322,070 million in fiscal 2022 compared to fiscal 2021 primarily due to an increase resulting from the acquisition of a subsidiary.
New equipment acquisitions related to operating leases increased 28% to ¥388,403 million in fiscal 2022 compared to fiscal 2021 due primarily to an increase in investments in real estate under operating leases in Japan, and an increase in new equipment acquisitions in the automobile leasing business in Asia and Australia.
Investment in operating leases as of March 31, 2022 increased 4% to ¥1,463,202 million compared to March 31, 2021.

|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Investment in operating leases by category: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transportation equipment |  | ¥ | 873,697 |  |  | ¥ | 898,602 |  |  | ¥ | 24,905 |  |  |  | 3 |
Measuring and information-related equipment |  |  | 118,758 |  |  |  | 120,067 |  |  |  | 1,309 |  |  |  | 1 |
Real estate |  |  | 249,225 |  |  |  | 260,284 |  |  |  | 11,059 |  |  |  | 4 |
Other |  |  | 24,291 |  |  |  | 45,782 |  |  |  | 21,491 |  |  |  | 88 |
Right-of-use assets |  |  | 114,268 |  |  |  | 107,742 |  |  |  | (6,526 | ) |  |  | (6 | )
Accrued rental receivables |  |  | 28,259 |  |  |  | 31,639 |  |  |  | 3,380 |  |  |  | 12 |
Allowance for doubtful receivables on operating leases |  |  | (309 | ) |  |  | (914 | ) |  |  | (605 | ) |  |  | — |
Total |  | ¥ | 1,408,189 |  |  | ¥ | 1,463,202 |  |  | ¥ | 55,013 |  |  |  | 4 |

Investment in transportation equipment operating leases as of March 31, 2022 increased 3% to ¥898,602 million compared to March 31, 2021 due primarily to an increase in new equipment acquisitions in the automobile leasing business in Asia and Australia. Investment in measuring and information-related equipment operating leases as of March 31, 2022 increased 1% to ¥120,067 million compared to March 31, 2021 due primarily to an increase in investment in the rental business. Investment in real estate operating leases as of March 31, 2022 increased 4% to ¥260,284 million compared to March 31, 2021 due primarily to an increase in investments in real estate under operating leases in Japan. Investment in other operating leases as of March 31, 2022 increased 88% to ¥45,782 million compared to March 31, 2021 due primarily to an increase resulting from the acquisition of a subsidiary.
For further information, see Note 6 of “Item 18. Financial Statements.”
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Life insurance
We reflect all income and losses (other than provision for doubtful receivables and probable loan losses and provision for credit losses) that we recognize on securities, installment loans, real estate under operating leases and other investments held in connection with our life insurance operations as life insurance premiums and related investment income in our consolidated statements of income.

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Life insurance premiums and related investment income and life insurance costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Life insurance premiums |  | ¥ | 403,799 |  |  | ¥ | 431,289 |  |  | ¥ | 27,490 |  |  |  | 7 |
Life insurance-related investment income |  |  | 83,751 |  |  |  | 50,521 |  |  |  | (33,230 | ) |  |  | (40 | )
Total |  | ¥ | 487,550 |  |  | ¥ | 481,810 |  |  | ¥ | (5,740 | ) |  |  | (1 | )
Life insurance costs |  | ¥ | 374,348 |  |  | ¥ | 368,140 |  |  | ¥ | (6,208 | ) |  |  | (2 | )

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Breakdown of life insurance-related investment income (loss): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income on investment securities |  | ¥ | 94,029 |  |  | ¥ | 43,323 |  |  | ¥ | (50,706 | ) |  |  | (54 | )
Losses recognized in income on derivative |  |  | (10,680 | ) |  |  | 6,276 |  |  |  | 16,956 |  |  |  | — |
Interest on loans, income on real estate under operating leases, and others |  |  | 402 |  |  |  | 922 |  |  |  | 520 |  |  |  | 129 |
Total |  | ¥ | 83,751 |  |  | ¥ | 50,521 |  |  | ¥ | (33,230 | ) |  |  | (40 | )

Life insurance premiums and related investment income decreased 1% to ¥481,810 million in fiscal 2022 compared to fiscal 2021.
Life insurance premiums increased 7% to ¥431,289 million in fiscal 2022 compared to fiscal 2021 due to an increase in the number of policies in force.
Life insurance-related investment income decreased 40% to ¥50,521 million in fiscal 2022 compared to fiscal 2021. Net income on investment securities decreased mainly in investment income from assets under variable annuity and variable life insurance contracts.
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Life insurance costs decreased 2% to ¥368,140 million in fiscal 2022 compared to fiscal 2021 due mainly to a decrease in a provision of liability reserve in line with the aforementioned decrease in investment income from variable annuity and variable life insurance contracts.

|  | As of March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Investments by life insurance operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  | ¥ | 269,167 |  |  | ¥ | 232,413 |  |  | ¥ | (36,754 | ) |  |  | (14 | )
Available-for-sale debt securities |  |  | 1,525,191 |  |  |  | 1,674,409 |  |  |  | 149,218 |  |  |  | 10 |
Held-to-maturity debt securities |  |  | 113,790 |  |  |  | 114,312 |  |  |  | 522 |  |  |  | 0 |
Total investment in securities |  |  | 1,908,148 |  |  |  | 2,021,134 |  |  |  | 112,986 |  |  |  | 6 |
Installment loans, real estate under operating leases and other investments |  |  | 46,224 |  |  |  | 46,279 |  |  |  | 55 |  |  |  | 0 |
Total |  | ¥ | 1,954,372 |  |  | ¥ | 2,067,413 |  |  | ¥ | 113,041 |  |  |  | 6 |

Investment in securities as of March 31, 2022 increased 6% to ¥2,021,134 million compared to March 31, 2021 due to an increase in
available-for-sale
debt securities as a result of an increase in investments in government bond securities and corporate debt securities despite a decrease in equity securities due to a decrease in assets under variable annuity and variable life insurance contracts.
For further information, see Note 23 of “Item 18. Financial Statements.”
Sales of goods and real estate, Inventories

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Sales of goods and real estate, Inventories: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales of goods and real estate |  | ¥ | 410,953 |  |  | ¥ | 435,398 |  |  | ¥ | 24,445 |  |  |  | 6 |
Costs of goods and real estate sold |  |  | 347,721 |  |  |  | 381,119 |  |  |  | 33,398 |  |  |  | 10 |
New real estate added |  |  | 81,854 |  |  |  | 76,334 |  |  |  | (5,520 | ) |  |  | (7 | )
Inventories |  |  | 142,156 |  |  |  | 139,563 |  |  |  | (2,593 | ) |  |  | (2 | )

Sales of goods and real estate increased 6% to ¥435,398 million compared to fiscal 2021 due mainly to an increase in sales of goods of investees.
Costs of goods and real estate sold increased 10% to ¥381,119 million compared to fiscal 2021 due mainly to an increase in costs of goods. We recognized ¥2,510 million and ¥10,492 million of write-downs for fiscal 2021 and 2022, respectively, which were included in costs of goods and real estate sold. Costs of goods and real estate sold include the upfront costs associated with advertising and creating model rooms.
New real estate added decreased 7% to ¥76,334 million in fiscal 2022 compared to fiscal 2021.
Inventories as of March 31, 2022 decreased 2% to ¥139,563 million compared to March 31, 2021.
For further information, see Note 4 of “Item 18. Financial Statements.”
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Services, Property under Facility Operations

|  | As of and for the year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Services, Property under Facility Operations |  |  |  |
Services income |  | ¥ | 679,849 |  |  | ¥ | 816,604 |  |  | ¥ | 136,755 |  |  |  | 20 |
Services expense |  |  | 439,233 |  |  |  | 495,110 |  |  |  | 55,877 |  |  |  | 13 |
New assets added |  |  | 30,143 |  |  |  | 80,415 |  |  |  | 50,272 |  |  |  | 167 |
Japan |  |  | 30,053 |  |  |  | 28,600 |  |  |  | (1,453 | ) |  |  | (5 | )
Overseas |  |  | 90 |  |  |  | 51,815 |  |  |  | 51,725 |  |  |  | — |
Property under Facility Operations |  |  | 491,855 |  |  |  | 561,846 |  |  |  | 69,991 |  |  |  | 14 |

Services income increased 20% to ¥816,604 million in fiscal 2022 compared to fiscal 2021 due mainly to an increase in the average balance of assets under management in the asset management business in fiscal 2021.
Services expense increased 13% to ¥495,110 million in fiscal 2022 compared to fiscal 2021 due mainly to an increase in the average balance of assets under management in the asset management business in fiscal 2021, similar to the aforementioned decrease in services income.
New assets added for property under facility operations increased to ¥80,415 million in fiscal 2022 compared to fiscal 2021 due to the increase in investments in electric power facilities overseas.
Property under facility operations as of March 31, 2022 increased 14% to ¥561,846 million compared to March 31, 2021 due mainly to the acquisition of a power generation business overseas.
For further information, see Note 4 of “Item 18. Financial Statements.”
Expenses
Interest expense
Interest expense decreased 13% to ¥68,232 million in fiscal 2022 compared to ¥78,068 million in fiscal 2021. Our total outstanding short-term debt, long-term debt and deposits as of March 31, 2022 increased 1% to ¥7,142,843 million compared to ¥7,041,887 million as of March 31, 2021.
The average interest rate on our short-term debt, long-term debt and deposits in domestic currency, calculated on the basis of average monthly balances, decreased 0.1% to 0.3% in fiscal 2022 compared to 0.4% in fiscal 2021. The average interest rate on our short-term debt, long-term debt and deposits in foreign currency, calculated on the basis of average monthly balances, decreased 0.5% to 2.0% in fiscal 2022 compared to 2.5% in fiscal 2021. For more information regarding our interest rate risk, see “Item 3. Key Information—Risk Factors.” For more information regarding our outstanding debt, see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Short-term and long-term debt and deposits.”
Other (income) and expense
Other (income) and expense included a net expense of ¥17,125 million during fiscal 2021 and a net expense of ¥20,494 million during fiscal 2022. Foreign currency transaction losses (gains) included in other (income) and expense included losses of ¥3,349 million during fiscal 2022 compared to gains of ¥1,805 million during fiscal 2021. We recognized impairment losses on goodwill and other intangible assets included in other (income) and expense in the amount of ¥22,561 million during fiscal 2022 compared to the amount of ¥2,652 million on goodwill and other intangible assets during fiscal 2021. For further information on our goodwill and other intangible assets, see Note 13 of “Item 18. Financial Statements.”
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Selling, general and administrative expenses

|  | Year ended March 31, |  |  | Change |
|  | 2021 |  |  | 2022 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Selling, general and administrative expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Personnel expenses |  | ¥ | 263,026 |  |  | ¥ | 300,590 |  |  | ¥ | 37,564 |  |  |  | 14 |
Selling expenses |  |  | 64,749 |  |  |  | 76,678 |  |  |  | 11,929 |  |  |  | 18 |
Administrative expenses |  |  | 120,751 |  |  |  | 136,431 |  |  |  | 15,680 |  |  |  | 13 |
Depreciation of office facilities |  |  | 8,269 |  |  |  | 9,083 |  |  |  | 814 |  |  |  | 10 |
Total |  | ¥ | 456,795 |  |  | ¥ | 522,782 |  |  | ¥ | 65,987 |  |  |  | 14 |

Employee salaries and other personnel expenses accounted for 58% of selling, general and administrative expenses in fiscal 2022, and the remaining portion consists of other expenses, such as rent for office space, communication expenses and travel expenses. Selling, general and administrative expenses in fiscal 2022 increased 14% year on year.
Write-downs of long-lived assets
As a result of impairment reviews we performed in fiscal 2022 for long-lived assets in Japan and overseas, such as office buildings, commercial facilities other than office buildings, condominiums, hotels, and land undeveloped or under construction, write-downs of long-lived assets increased by ¥32,646 million to ¥35,666 million in fiscal 2022 compared to ¥3,020 million in fiscal 2021. These write-downs, which are reflected as write-downs of long-lived assets, consisted of impairment losses of ¥869 million on 4 commercial facilities other than office buildings, ¥96 million on 51 condominiums and ¥34,701 million on other long-lived assets, because the assets were classified as held for sale or the carrying amount exceeded the estimated undiscounted future cash flows. In addition, write-downs of other long-lived assets in fiscal 2022 include write-downs of ¥31,205 million of property under facility operations and others held by subsidiaries and ¥2,331 million of two aircraft. For further information, see Note 24 of “Item 18. Financial Statements.”
Write-downs of securities
Write-downs of securities in fiscal 2022 were mainly in connection with foreign
available-for-sale
debt securities and
non-marketable
equity securities. Write-downs of securities decreased to ¥730 million in fiscal 2022 compared to ¥5,935 million in fiscal 2021. For further information, see Note 9 of “Item 18. Financial Statements.”
Equity in net income (loss) of affiliates
Equity in net income (loss) of affiliates increased in fiscal 2022 to ¥15,006 million compared to ¥481 million in fiscal 2021 due to increases in equity in net income (loss) of affiliates from an investee relating to overseas renewable energy and investees in Asia despite decreases in equity in net income (loss) of affiliates from our three airports in Kansai, and equity in net income (loss) of Avolon which recorded losses primarily resulting from an impairment loss on aircraft located in Russia. For further information, see Note 12 of “Item 18. Financial Statements.”
Gains on sales of subsidiaries and affiliates and liquidation losses, net
Gains on sales of subsidiaries and affiliates and liquidation losses, net increased to ¥187,787 million in fiscal 2022 compared to ¥23,300 million in fiscal 2021, due to the favorable profit from sales in Japan and the Americas including the sale of the business of Yayoi in fiscal 2022. For further information, see Note 3 of “Item 18. Financial Statements.”
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Bargain Purchase Gain
In fiscal 2022, we recognized no bargain purchase gain compared to bargain purchase gains of ¥4,966 million in fiscal 2021. For further information, see Note 3 of “Item 18. Financial Statements.”
Provision for income taxes
Provision for income taxes increased to ¥187,264 million in fiscal 2022 compared to ¥90,747 million in fiscal 2021 due primarily to an increase in income before income taxes. For further information, see Note 16 of “Item 18. Financial Statements.”
Net income attributable to the noncontrolling interests
Net income attributable to the noncontrolling interests was recorded as a result of the noncontrolling interests in earnings of certain of our subsidiaries. Net income attributable to the noncontrolling interests in fiscal 2022 was ¥5,477 million, compared to ¥4,453 million in fiscal 2021.
Net income attributable to the redeemable noncontrolling interests
Net income attributable to the redeemable noncontrolling interests was recorded as a result of the noncontrolling interests in the earnings of our subsidiaries that issued redeemable interests. Net loss attributable to the redeemable noncontrolling interests in fiscal 2021 was ¥23 million. There was no net income or loss attributable to the redeemable noncontrolling interests in fiscal 2022. For further information, see Note 18 of “Item 18. Financial Statements.”
LIQUIDITY AND CAPITAL RESOURCES
Funding Activities
ORIX Group formulates funding policies that are designed to maintain and improve procurement stability and reduce liquidity risk. As a concrete measure to maintain and improve procurement stability while engaging in activities such as borrowing, capital market procurement and securitization of assets, we are diversifying our procurement methods and our country and investor base. To reduce liquidity risk, we are prolonging our borrowings from financial institutions and issuing long-term corporate bonds domestically and internationally with dispersed redemption periods. We are also holding cash and entering into committed credit facilities agreements. In order to maintain an appropriate level of liquidity at hand, we conduct stress tests from the perspective of both procurement stability and financial efficiency and review the necessary levels accordingly. Also, ORIX Group considers reducing procurement costs to be an important issue. For this reason, we place great importance on ratings by rating agencies and strive to maintain a certain level of rating. Furthermore, we believe that maintaining our ratings are effective not only in terms of minimizing procurement costs, but also facilitating capital market procurement when in unstable financial market conditions.
Uncertainties caused by geopolitical instability remain, including due to the Russia-Ukraine crisis, as well as increased rates of inflation and supply chain issues around the world, central bank monetary policy, and credit concerns among U.S. and European financial institutions. Depending on future developments, we expect an increase in liquidity risk, including higher procurement costs. Specifically, we may be unable to borrow new funds or roll-over existing funds; we may be unable to issue bonds, MTNs and CP in the capital markets; and we expect there will be an increase in the amount of interest we need to pay if we are able to access such funding. Notwithstanding the current environment, the ORIX Group is working to maintain stable procurement and reduce liquidity risk in accordance with the above policy. In addition, with respect to rising costs, we are working to maintain a high rating from rating agencies and to maintain good communication with the market so that we can raise funds at reasonable interest rates when refinancing our existing funding.
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ORIX Bank and ORIX Life Insurance are regulated by Japanese financial authorities. They are our main regulated subsidiaries in terms of liquidity controls, although several other subsidiaries also operate under liquidity control related regulations.
For more information regarding our liquidity risk management, see “Risk Management” under this Item 5.
Group Liquidity Management
ORIX is primarily responsible for accessing liquidity for ORIX Group and for managing the allocation of liquidity to domestic and overseas subsidiaries. In managing our capital resources and controlling liquidity risk, we employ various measures, including a cash management system for supplying funds to, and receiving funds from, our major domestic subsidiaries, other than regulated subsidiaries like ORIX Bank and ORIX Life Insurance. Our overseas subsidiaries rely primarily on local funding sources such as borrowings from local financial institutions and issuing bonds in local capital markets, but they may also obtain loans from ORIX. We also support liquidity levels of overseas subsidiaries by establishing local commitment lines and maintaining multi-currency commitment lines available to ORIX and certain of its overseas subsidiaries.
ORIX Bank obtains most of the funds it needs to operate its business through deposit taking. Although ORIX Bank provides loans to several companies in the ordinary course of its business, such loans are subject to a maximum limit set by the Japanese Banking Act. Under such regulations, ORIX Bank is restricted from making loans to other members of ORIX Group in an aggregate amount exceeding a regulatory limit. ORIX Life Insurance underwrites insurance, receives insurance premiums from policyholders, and conducts financing and investment activities, including lending. However, lending from ORIX Life Insurance to other members of ORIX Group is subject to regulation, including under the Japanese Insurance Business Act. For these reasons, ORIX Group manages its liquidity separately from ORIX Bank and ORIX Life Insurance.
Sources of Liquidity
Borrowings from Financial Institutions
ORIX Group borrows from a variety of sources, including major banks, regional banks, foreign banks, life insurance companies, casualty insurance companies and financial institutions associated with agricultural cooperatives. As of March 31, 2023, the number of our lenders was about 200. We have promoted regular
face-to-face
communications and established positive working relationships with financial institutions in Japan and overseas. The majority of our loan balances consists of borrowings from Japanese financial institutions. As of March 31, 2022 and 2023, short-term debt from Japanese and foreign financial institutions were ¥399,589 million and ¥464,287 million, respectively, while long-term debt from financial institutions were ¥3,240,763 million and ¥3,734,530 million, respectively.
In fiscal 2023, we procured ¥34,000 million in financing by entering into a subordinated syndicated loan (hybrid loan). We intend to continue to strengthen our financial condition, while maintaining appropriately diverse funding.
Committed Credit Facilities
We regularly enter into committed credit facilities agreements, including syndicated agreements, with financial institutions to secure liquidity. The maturity dates of these committed credit facilities are staggered to prevent an overlap of contract renewal periods. The total amount of our committed credit facilities as of March 31, 2022 and 2023 were ¥651,379 million and ¥698,560 million, respectively. Of these figures, the unused amount as of March 31, 2022 and 2023 were ¥507,181 million and ¥518,585 million, respectively. A portion of these facilities is arranged to be drawn down in foreign currencies by ORIX and certain of our overseas subsidiaries. The decision to enter into a committed credit facility is made based on factors including our balance of cash and cash equivalents and repayment schedules of short-term debt such as CP.
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Debt from the Capital Markets
Our debt from capital markets is mainly composed of bonds, MTNs, CP, and securitization of loans receivables and other assets.
Bonds and MTNs
We plan to continue to issue bonds and MTNs in a balanced manner to institutional and individual investors both inside and outside Japan in line with our strategy of maintaining and improving procurement stability and reducing liquidity risk.
We issue straight bonds, MTNs and unsecured subordinated bonds with interest payment deferrable clauses and optional early redemption conditions (hybrid bonds) domestically and internationally, each to diversify our funding sources and maintain longer liability maturities.
The total balance of bonds and MTNs issued as of March 31, 2022 and 2023 was ¥1,029,933 million and ¥1,324,622 million, respectively, of which bonds and MTNs amounting to ¥63,053 million and ¥48,189 million, respectively, were issued by overseas subsidiaries.
As of March 31, 2022 and 2023, the balance of bonds issued by ORIX for domestic institutional investors was ¥418,735 million and ¥468,864 million, respectively, while the balance of bonds issued by ORIX for individual investors were ¥149,780 million and ¥154,640 million, respectively. The balances of bonds and MTNs issued outside Japan were ¥388,195 million and ¥636,770 million as of March 31, 2022 and 2023, respectively.
CP
We offer CP as a direct financing source, and have successfully obtained a diverse range of investors such as financial institutions and investment trusts, as well as private corporations. We consider our liquidity levels and stagger the dates of issuance and maturity over time so as to avoid significant overlap. The balance of outstanding CP as of March 31, 2022 and 2023 was ¥40,050 million and ¥44,509 million, respectively.
Securitization
We securitize loan receivables and other assets. We recognize liabilities consolidated with such investments as our liabilities when required under applicable accounting standards. The total amounts of payables under securitized loan receivables and other assets as of March 31, 2022 and 2023 were ¥156,350 million and ¥150,571 million, respectively.
Deposits
ORIX Bank and ORIX Asia Limited each accept deposits from customers. These deposits taking subsidiaries are regulated institutions, and loans from these subsidiaries to ORIX Group entities are subject to maximum regulatory limits.
The majority of deposits are attributable to ORIX Bank, which mainly attracts retail deposits, and which deposit balances remain stable. Deposit balances of ORIX Bank as of March 31, 2022 and 2023 were ¥2,267,323 million and ¥2,238,651 million, respectively.
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Short-term and long-term debt and deposits
Short-term Debt

|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Short-term debt : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Borrowings from financial institutions |  | ¥ | 399,589 |  |  | ¥ | 464,287 |  |  | ¥ | 64,698 |  |  |  | 16 |
Commercial paper |  |  | 40,050 |  |  |  | 44,509 |  |  |  | 4,459 |  |  |  | 11 |
Total short-term debt |  | ¥ | 439,639 |  |  | ¥ | 508,796 |  |  | ¥ | 69,157 |  |  |  | 16 |

Note: | The total amount includes liabilities of consolidated VIEs, for which creditors (or beneficial interest holders) do not have recourse to the general credit of the Company and subsidiaries. There were no such liabilities recorded as of March 31, 2022 and 2023.

Short-term debt as of March 31, 2023 was ¥508,796 million. The ratio was 9% and 9% of total debt (excluding deposits) as of March 31, 2022 and 2023. As of March 31, 2023, 91% of short-term debt was borrowings from financial institutions.
Long-term debt

|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Long-term debt : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Borrowings from financial institutions |  | ¥ | 3,240,763 |  |  | ¥ | 3,734,530 |  |  | ¥ | 493,767 |  |  |  | 15 |
Bonds |  |  | 997,654 |  |  |  | 1,175,087 |  |  |  | 177,433 |  |  |  | 18 |
Medium-term notes |  |  | 32,279 |  |  |  | 149,535 |  |  |  | 117,256 |  |  |  | 363 |
Payable under securitized loan receivables and other assets |  |  | 156,350 |  |  |  | 150,571 |  |  |  | (5,779 | ) |  |  | (4 | )
Total long-term debt |  | ¥ | 4,427,046 |  |  | ¥ | 5,209,723 |  |  | ¥ | 782,677 |  |  |  | 18 |

Note: | The total amount includes liabilities of consolidated VIEs, for which creditors (or beneficial interest holders) do not have recourse to the general credit of the Company and subsidiaries. Such liabilities as of March 31, 2022 and 2023 were ¥431,312 million and ¥349,528 million, respectively.

Long-term debt as of March 31, 2023 was ¥5,209,723 million. The ratio was 91% and 91% of total debt (excluding deposits) as of March 31, 2022 and 2023. Borrowings from financial institutions comprised 72% of the long-term debt as of March 31, 2023.
44% of interest paid on long-term debt in fiscal 2023 was fixed rate interest, with the remainder being floating rate interest.
For information regarding the repayment schedule of our long-term debt and interest rates for short-term and long-term debt, see Note 14 of “Item 18. Financial Statements.”
We have entered into interest rate swaps and other derivative contracts to manage risk associated with fluctuations in interest rates. For information with respect to derivative financial instruments and hedging, see Note 26 of “Item 18. Financial Statements.”
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Deposits

|  | As of March 31, |  |  | Change |
|  | 2022 |  |  | 2023 |  |  | Amount |  |  | Percent (%) |
|  | (Millions of yen, except percentage data) |
Deposits |  | ¥ | 2,276,158 |  |  | ¥ | 2,246,345 |  |  | ¥ | (29,813 | ) |  |  | (1) |

Note: | VIEs did not have any deposits as of March 31, 2022 and 2023.

For further information with respect to deposits, see Note 15 of “Item 18. Financial Statements.”
Off-Balance Sheet Arrangements
Use of Special Purpose Entities
We periodically securitize various financial assets such as lease receivables and loan receivables. These securitizations allow us to access the capital markets, provide us with alternative sources of funding and diversify our investor base and help us to mitigate, to some extent, credit risk associated with our customers and risk associated with fluctuations in interest rates.
In the securitization process, the assets for securitization are sold to special purpose entities (hereinafter, “SPEs”), which issue asset-backed securities to investors.
We expect to continue to utilize SPEs structures for securitization of assets. For further information on our transfer of financial assets, see Note 10 of “Item 18. Financial Statements.”
Investment Products
We provide investment products to our customers that employ a contractual mechanism known in Japan as a
kumiai
, which is in effect a type of SPEs. We arrange and market
kumiai
products to investors as a means to finance the purchase of aircraft, ships or other large-ticket items to be leased to third parties. A portion of the funds necessary to purchase the item is contributed by such investors, while the remainder is borrowed by the
kumiai
from one or more financial institutions in the form of a
non-recourse
loan. The
kumiai
investors (and any lenders to the
kumiai
) retain all of the economic risks and rewards in connection with the purchase and leasing activities of the
kumiai
, and all related gains or losses are recorded on the financial statements of investors in the
kumiai
. We are responsible for the arrangement and marketing of these products, and may act as servicer or administrator in
kumiai
transactions. Fee income for arranging and administering these transactions is recognized in our consolidated financial statements. In most
kumiai
transactions, excluding some
kumiai
and SPEs, we do not guarantee or otherwise have any financial commitments or exposure with respect to the
kumiai
or its related SPEs and, accordingly, their assets are not reflected on our consolidated balance sheet.
Other Financial Transactions
We occasionally enter into loans, equity or other investments in SPEs in connection with finance transactions related to aircraft, ships and real estate, as well as transactions involving investment funds, in addition to real estate purchases and development projects. All transactions involving use of SPEs structures are evaluated to determine whether we hold a variable interest that would result in our being defined as the primary beneficiary of the SPEs. When we are considered to own the primary beneficial interest in the SPEs, the SPEs are fully consolidated into our consolidated financial statements. In all other circumstances our loan, equity or other investments are recorded on our consolidated balance sheets as appropriate.
See Note 11 of “Item 18. Financial Statements” for further information concerning our SPEs.
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Contractual Obligations
The table below sets forth the maturities of contractual cash obligations as of March 31, 2023.

|  | Payments due by period |
|  | Total |  |  | Within 1 year |  |  | 1-3 years |  |  | 3-5 years |  |  | After 5 years |
|  | (Millions of yen) |
Contractual cash obligations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | ¥ | 2,246,345 |  |  | ¥ | 1,211,339 |  |  | ¥ | 806,950 |  |  | ¥ | 147,049 |  |  | ¥ | 81,007 |
Long-term debt |  |  | 5,209,723 |  |  |  | 877,260 |  |  |  | 1,269,463 |  |  |  | 1,219,961 |  |  |  | 1,843,039 |
Unconditional purchase obligations of lease equipment |  |  | 4,066 |  |  |  | 0 |  |  |  | 4,066 |  |  |  | 0 |  |  |  | 0 |
Lease liabilities related to lessee leases |  |  | 307,345 |  |  |  | 54,004 |  |  |  | 77,211 |  |  |  | 53,215 |  |  |  | 122,915 |
Unconditional noncancelable contracts for computer systems |  |  | 14,199 |  |  |  | 5,846 |  |  |  | 5,926 |  |  |  | 2,426 |  |  |  | 1 |
Interest rate swaps: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Notional amount (floating to fixed) |  |  | 569,282 |  |  |  | 76,916 |  |  |  | 151,352 |  |  |  | 114,632 |  |  |  | 226,382 |
Notional amount (fixed to floating) |  |  | 46 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 46 |
Total contractual cash obligations |  | ¥ | 8,351,006 |  |  | ¥ | 2,225,365 |  |  | ¥ | 2,314,968 |  |  | ¥ | 1,537,283 |  |  | ¥ | 2,273,390 |

Items excluded from the above table include short-term debt of ¥508,796 million, trade notes, accounts and other payable of ¥366,851 million and policy liabilities and policy account balances of ¥2,065,366 million as of March 31, 2023.
For information on pension plans and derivatives, see Notes 17 and 26 of “Item 18. Financial Statements.” We expect to fund commitments and contractual obligations from one, some or all of our diversified funding sources depending on the amount to be funded, the time to maturity and other characteristics of the commitments and contractual obligations.
For a discussion of debt and deposit-related obligations, see Notes 14 and 15 of “Item 18. Financial Statements.”
For information on lease liabilities, see Note 6 of “Item 18. Financial Statements.”
We secure liquidity by holding cash and entering into committed credit facilities agreements in consideration of known contractual obligations.
CASH FLOWS
Our cash flows are primarily generated from the followings:

| • |  | cash outflows and inflows which are generated primarily from principal payments received under net investment in lease, life insurance related income and costs, costs of inventories and sales of inventories, and services income and services expense classified as cash flows from operating activities;

| • |  | cash outflows and inflows which are generated primarily from purchases of lease equipment and proceeds from sales of lease equipment, purchases of securities and proceeds from sales of securities, and execution of installment loans to customers and principal payments received under installment loans classified as cash flows from investing activities; and

| • |  | cash outflows and inflows which are generated primarily from proceeds from short-term and long-term debt, repayment of short-term and long-term debt, and deposits due to customers classified as cash flows from financing activities.

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The use of cash is heavily dependent on the volume of operating assets for new business. As new business volumes for assets such as leases and loans increase, we require more cash to meet the needs, while a decrease in new business volumes results in a less use of cash and an increase in debt repayment.
For cash flow information regarding interest and income tax payments, see Note 5 of “Item 18. Financial Statements.”
Year Ended March 31, 2023 Compared to Year Ended March 31, 2022
Cash, cash equivalents and restricted cash increased by ¥275,096 million to ¥1,366,908 million compared to March 31, 2022.
Cash flows provided by operating activities were ¥913,088 million during fiscal 2023, down from ¥1,103,370 million during fiscal 2022. This change resulted primarily from a decrease in an increase in policy liabilities and policy account balances, and an increase in payment of income taxes resulting from the sale of the business of Yayoi in the three months ended March 31, 2022.
Cash flows used in investing activities were ¥1,098,478 million during fiscal 2023, up from ¥808,846 million during fiscal 2022. This change resulted primarily from an increase in purchases of lease equipment and acquisitions of subsidiaries, and a decrease in sales of subsidiaries, partially offset by an increase in principal collected on installment loans and proceeds from sales of operating lease assets.
Cash flows provided by financing activities were ¥438,308 million during fiscal 2023 compared to the outflow of ¥306,618 million during fiscal 2022. This change resulted primarily from an increase in proceeds from debt with maturities longer than three months.
Year Ended March 31, 2022 Compared to Year Ended March 31, 2021
Cash, cash equivalents and restricted cash increased by ¥12,237 million to ¥1,091,812 million compared to March 31, 2021.
Cash flows provided by operating activities were ¥1,103,370 million during fiscal 2022, up from ¥1,102,414 million during fiscal 2021. This change resulted primarily from a change from a decrease to an increase in income taxes payable, partially offset by a decrease in an increase in policy liabilities and policy account balances.
Cash flows used in investing activities were ¥808,846 million during fiscal 2022, down from ¥1,209,990 million during fiscal 2021. This change resulted primarily from a decrease in purchases of
available-for-sale
debt securities and sales of subsidiaries, partially offset by an increase in purchases of lease equipment.
Cash flows used in financing activities were ¥306,618 million during fiscal 2022 compared to the inflow of ¥39,884 million during fiscal 2021. This change resulted primarily from a decrease in proceeds from and an increase in repayment of debt with maturities longer than three months.
COMMITMENTS FOR CAPITAL EXPENDITURES
As of March 31, 2023, we had commitments for the purchase of equipment to be leased in the amount of ¥4,066 million. For information on commitments, guarantees and contingent liabilities, see Note 30 of “Item 18. Financial Statements.”
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
Not applicable.
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TREND INFORMATION
See the discussion under “—Results of Operations” and “—Liquidity and Capital Resources.”
COMMITMENTS
The table below sets forth the maturities of guarantees and other commitments as of March 31, 2023.

|  | Amount of commitment expiration per period |
|  | Total |  |  | Within 1 year |  |  | 1-3 years |  |  | 3-5 years |  |  | After 5 years |
|  | (Millions of yen) |
Commitments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Guarantees |  | ¥ | 921,864 |  |  | ¥ | 91,435 |  |  | ¥ | 204,080 |  |  | ¥ | 243,659 |  |  | ¥ | 382,690 |
Committed credit lines and other |  |  | 605,939 |  |  |  | 196,911 |  |  |  | 108,309 |  |  |  | 42,042 |  |  |  | 258,677 |
Total commercial commitments |  | ¥ | 1,527,803 |  |  | ¥ | 288,346 |  |  | ¥ | 312,389 |  |  | ¥ | 285,701 |  |  | ¥ | 641,367 |

A subsidiary in the United States is authorized to underwrite, originate, fund and service multi-family and senior housing loans without prior approval from Federal National Mortgage Association (“Fannie Mae”) under the Delegated Underwriting and Servicing program and Federal Home Loan Mortgage Corporation (“Freddie Mac”) under the Delegated Underwriting Initiative program. As part of these programs, Fannie Mae and Freddie Mac provide a commitment to purchase the loans.
Under these programs, the subsidiary guarantees the performance of the loans transferred to Fannie Mae and Freddie Mac and has the payment or performance risks of the guarantees to absorb some of the losses when losses arise from the transferred loans. The amount attributable to the guarantee included in the table above is ¥436,069 million as of March 31, 2023.
The subsidiary makes certain representations and warranties in connection with the sale of loans through Fannie Mae and Freddie Mac, including among others, that: the mortgage meets Fannie Mae and Freddie Mac requirements; there is a valid lien on the property; the relevant transaction documents are valid and enforceable; and title insurance is maintained on the property. If it is determined that a representation and warranty has been breached, the subsidiary may be required to repurchase the related loans or indemnify Fannie Mae and Freddie Mac for any related losses incurred. The subsidiary had no such repurchase claims during fiscal 2023.
For a discussion of commitments, guarantees and contingent liabilities, see Note 30 of “Item 18. Financial Statements.”
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Accounting estimates are an integral part of the financial statements prepared by management and are based upon management’s current judgments. Note 1 of “Item 18. Financial Statements” includes a summary of the significant accounting policies used in the preparation of our consolidated financial statements. Certain accounting estimates are particularly sensitive because of their significance to the consolidated financial statements and the possibility that future events affecting the estimates may differ significantly from management’s current judgments. We consider the accounting estimates discussed in this section to be critical for us for two reasons. First, the estimates require us to make assumptions about matters that are highly uncertain at the time the accounting estimates are made. Second, different estimates that we reasonably could have used in the relevant period, or changes in the accounting estimates that are reasonably likely to occur from period to period, could have a material impact on our financial condition or results of operations. We believe the following represent our critical accounting policies and estimates.
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In addition, we carefully considered the future outlook regarding the spread of
COVID-19
etc. As of March 31, 2023, there was no significant impact on our accounting estimates. However, projections of unexpected events such as future outbreaks of infectious diseases, as well as sudden global economic changes due to such events are uncertain and may change rapidly. Therefore, our accounting assumptions and estimates may change over time.
FAIR VALUE MEASUREMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, a number of significant judgments, assumptions and estimates may be required. If observable market prices are not available, we use internally-developed valuation techniques, such as discounted cash flow methodologies, to measure fair value. These valuation techniques involve determination of assumptions that market participants would use in pricing the asset or liability. This determination involves significant judgment, and the use of different assumptions and/or valuation techniques could have a material impact on our financial condition or results of operations. Significant assumptions used in measuring fair values have a pervasive effect on various estimates, such as estimates of the allowance for credit losses on real estate collateral-dependent loans, measurement of impairment of investments in securities, measurement of impairment of goodwill and other intangible assets, measurement of impairment of long-lived assets and recurring measurements of loans held for sale, investments in securities and derivative instruments.
The Company and its subsidiaries classify and prioritize inputs used in valuation techniques to measure fair value into the following three levels:

| • |  | Level 1—Inputs of quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

| • |  | Level 2—Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly.

| • |  | Level 3—Unobservable inputs for the assets or liabilities.

The Company and its subsidiaries differentiate between those assets and liabilities required to be carried at fair value at every reporting period (recurring) and those assets and liabilities that are only required to be adjusted to fair value under certain circumstances (nonrecurring). We mainly measure certain loans held for sale, trading debt securities,
available-for-sale
debt securities, certain equity securities, derivatives, certain reinsurance recoverables in other assets and variable annuity and variable life insurance contracts in policy liabilities and policy account balances at fair value on a recurring basis. Certain subsidiaries measure certain loans held for sale, certain foreign government bond securities and foreign corporate debt securities included in
available-for-sale
debt securities, certain investment funds included in equity securities, certain investment in affiliates, certain reinsurance contracts, and variable annuity and variable life insurance contracts at fair value on a recurring basis as they elected the fair value option.
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The following table presents recorded amounts of major financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2023:

|  | March 31, 2023 |
|  | Total Carrying Value in Consolidated Balance Sheets |  |  | Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
|  | (Millions of yen) |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans held for sale |  | ¥ | 197,041 |  |  | ¥ | 0 |  |  | ¥ | 23,192 |  |  | ¥ | 173,849 |
Trading debt securities |  |  | 2,179 |  |  |  | 0 |  |  |  | 2,179 |  |  |  | 0 |
Available-for-sale debt securities |  |  | 2,234,608 |  |  |  | 4,334 |  |  |  | 1,986,672 |  |  |  | 243,602 |
Equity securities |  |  | 379,236 |  |  |  | 105,646 |  |  |  | 133,027 |  |  |  | 140,563 |
Certain investment in affiliates |  |  | 2,511 |  |  |  | 0 |  |  |  | 0 |  |  |  | 2,511 |
Derivative assets |  |  | 72,398 |  |  |  | 203 |  |  |  | 65,377 |  |  |  | 6,818 |
Other assets |  |  | 4,676 |  |  |  | 0 |  |  |  | 0 |  |  |  | 4,676 |
Total |  | ¥ | 2,892,649 |  |  | ¥ | 110,183 |  |  | ¥ | 2,210,447 |  |  | ¥ | 572,019 |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative liabilities |  | ¥ | 71,366 |  |  | ¥ | 1,484 |  |  | ¥ | 55,240 |  |  | ¥ | 14,642 |
Policy Liabilities and Policy Account Balances |  |  | 163,734 |  |  |  | 0 |  |  |  | 0 |  |  |  | 163,734 |
Total |  | ¥ | 235,100 |  |  | ¥ | 1,484 |  |  | ¥ | 55,240 |  |  | ¥ | 178,376 |

Compared to financial assets classified as Level 1 and Level 2, measurements of financial assets classified as Level 3 are particularly sensitive because of their significance to the financial statements and the possibility that future events affecting the fair value measurements may differ significantly from management’s current measurements.
As of March 31, 2023, financial assets measured at fair value on a recurring basis and classified as Level 3 and the percentages of total assets are as follows:

|  | March 31, 2023 |
|  | Significant Unobservable Inputs (Level 3) |  |  | Percentage of Total Assets (%) |
|  | (Millions of yen, except percentage data) |
Level 3 Assets: |  |  |  |  |  |  |  |
Loans held for sale |  | ¥ | 173,849 |  |  |  | 1 |
Available-for-sale debt securities |  |  | 243,602 |  |  |  | 2 |
Japanese prefectural and foreign municipal bond securities |  |  | 3,331 |  |  |  | 0 |
Corporate debt securities |  |  | 4,737 |  |  |  | 0 |
Other asset-backed securities and debt securities |  |  | 235,534 |  |  |  | 2 |
Equity securities |  |  | 140,563 |  |  |  | 1 |
Investment funds |  |  | 140,563 |  |  |  | 1 |
Certain investment in affiliates |  |  | 2,511 |  |  |  | 0 |
Derivative assets |  |  | 6,818 |  |  |  | 0 |
Options held/written and other |  |  | 6,818 |  |  |  | 0 |
Other assets |  |  | 4,676 |  |  |  | 0 |
Reinsurance recoverables |  |  | 4,676 |  |  |  | 0 |
Total Level 3 financial assets |  | ¥ | 572,019 |  |  |  | 4 |
Total assets |  | ¥ | 15,266,191 |  |  |  | 100 |

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As of March 31, 2023, the amount of financial assets classified as Level 3 was ¥572,019 million, among financial assets that we measured at fair value on a recurring basis. Level 3 assets represent 4% of our total assets.
Other asset-backed securities and debt securities, and Loans held for sale classified as Level 3 were ¥235,534 million and ¥173,849 million respectively, as of March 31, 2023, which are 41% and 30% of total Level 3 financial assets, respectively.
With respect to the other asset-backed securities, we determined that due to the lack of observable trades for older vintage and below investment grade securities, we continue to limit the reliance on independent pricing service vendors and brokers. As a result, we established internally developed pricing models using valuation techniques such as discounted cash flow methodologies using Level 3 inputs in order to estimate fair value of these debt securities and classified them as Level 3. Under the models, we use anticipated cash flows of the security discounted at a risk-adjusted discount rate that incorporates our estimate of credit risk and liquidity risk that a market participant would consider. The cash flows are estimated based on a number of assumptions such as default rate and prepayment speed, as well as seniority of the security. An increase (decrease) in the discount rate or default rate would result in a decrease (increase) in the fair value of other asset-backed securities.
Certain loans, which the Company and its subsidiaries have the intent and ability to sell to outside parties in the foreseeable future, are considered
held-for-sale.
The loans held for sale in the Americas are classified as Level 3, if the Company and its subsidiaries measure their fair value based on discounted cash flow methodologies using inputs that are unobservable in the market.
In determining whether the inputs are observable or unobservable, we evaluate various factors such as the lack of recent transactions, price quotations that are not based on current information or vary substantially over time or among market makers, a significant increase in implied risk premium, a wide
bid-ask
spread, significant decline in new issuances, little or no public information (e.g., a
principal-to-principal
market) and other factors.
For more discussion, see Note 2 of “Item 18. Financial Statements.”
ALLOWANCE FOR CREDIT LOSSES
We estimate all credit losses expected to occur in future over the remaining life of financial assets, and allowance for credit losses is recognized. This evaluation process is subject to management’s estimates and judgments. The estimate made in determining the allowance for credit losses is a critical accounting estimate for all of our segments.
In developing the allowance for credit losses, we consider, among other things, the following factors:

| • |  | business characteristics and financial conditions of obligors;

| • |  | prior charge-off experience;

| • |  | current delinquencies and delinquency trends;

| • |  | value of underlying collateral and guarantees; and

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

There are two methods for estimating the allowance for credit losses; collective evaluation and individual evaluation. We also recognize allowances for
off-balance
sheet credit exposures.
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Collective evaluation
When certain financial assets have similar risk characteristics to other financial assets, we collectively evaluate these financial assets as a pool. The forecasted future economic indicators correlated with the prior
charge-off
experience are reflected to the estimate of the allowance for credit losses. Economic indicators correlated with prior
charge-off
experience are determined over the reasonable and supportable forecasted period. Economic indicators include GDP growth rates, consumer price indices, unemployment rates, and government bond interest rates. We also consider forward-looking scenarios of how the selected economic indicators will change in the future. We use the latest economic forecasts available from the economic reports published by governments and central banks, as well as from third-party information providers as economic indicators.
Individual evaluation
When financial assets do not have similar risk characteristics to other financial assets, we evaluate individually the financial assets. In the individual assessment the allowance for credit losses is estimated individually based on the present value of expected future cash flows, the observable market price or the fair value of the collateral if the financial assets are collateral-dependent.
For
non-recourse
loans and purchased loans, in principle, the estimated collectible amount is determined based on the fair value of the real estate collateral securing the loans as they are real estate collateral-dependent. Further for certain
non-recourse
loans and purchased loans the estimated collectible amount is determined based on the present value of expected future cash flows.
The fair value of the real estate collateral securing the loans is determined using appraisals prepared by independent third-party appraisers or our own staff of qualified appraisers based on recent transactions involving sales of similar assets or other valuation techniques such as discounted cash flows methodologies using future cash flows estimated to be generated from operation of the existing assets or completion of development projects, as appropriate. We generally obtain a new appraisal once a fiscal year. In addition, we periodically monitor circumstances of the real estate collateral and then obtain a new appraisal in situations involving a significant change in economic and/or physical conditions which may materially affect its fair value.
We charge off doubtful receivables when the likelihood of any future collection is believed to be minimal considering debtor’s creditworthiness and the liquidation status of collateral.
Allowance for
off-balance
sheet credit exposures
If the entity has a present contractual obligation to extend the credit and the obligation is not unconditionally cancelable by the entity, credit losses related the loan commitments of card loans and installment loans and financial guarantees are in the scope of the allowance for credit losses.
For loan commitments of card loans and installment loans, credit losses are recognized on the loan commitments for the portion expected to be drawn.
For financial guarantees, the allowance is recognized for the contingent obligation which generates credit risk exposures.
These allowance for
off-balance
sheet credit exposures is measured using the same measurement methodologies as the allowance for loans and net investment leases, considering quantitative and qualitative factors including historical loss experience, current economic and business conditions and reasonable and supportable forecasts.
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The allowance for these
off-balance
sheet credit exposures is recorded in other liabilities on the consolidated balance sheets.
While management considers the allowance is adequate based on the currently available information, additional provisions may be required due to future uncertain events and factors.
IMPAIRMENT OF INVESTMENT IN SECURITIES
We make decisions about impairment of investment in debt securities other than trading and investment in equity securities elected for the measurement alternative as follows.
As for impairment of
available-for-sale
debt securities, if the fair value is less than the amortized cost, the debt securities are impaired. We identify per each impaired security whether the decline of fair value is due to credit losses component or
non-credit
losses component. Impairment related to credit losses is recognized in earnings through an allowance for credit losses. Impairment related to other factors than credit losses is recognized in other comprehensive income (loss), net of applicable income taxes. In estimating an allowance for credit losses, we consider that credit losses exist when the present value of estimated cash flows is less than the amortized cost basis. When we intend to sell the debt securities for which an allowance for credit losses is previously established or it is more likely than not that we will be required to sell the debt securities before recovery of the amortized cost basis, the allowance for credit losses is fully written off and the amortized cost is reduced to the fair value after recognizing additional impairment in earnings. In addition, we recognize in earnings the full difference between the amortized cost and the fair value of the debt securities by direct write-down, without any allowance for credit losses, if the debt securities are expected to be sold and the fair value is less than the amortized cost.
In assessing whether
available-for-sale
debt securities are impaired, we consider all available information relevant to the collectability of the debt security, including but not limited to the following factors:

| • |  | the extent to which the fair value is less than the amortized cost basis;

| • |  | continuing analysis of the underlying collateral, age of the collateral, business climate, economic conditions and geographical considerations;

| • |  | trends in delinquencies and charge-offs;

| • |  | payment structure and subordination levels of the debt security; and

| • |  | changes to the rating of the security by a rating agency.

Held-to-maturity
debt securities are in the scope of Credit Losses standard, see Note 1 “Significant Accounting and Reporting Policies (g) Allowance for credit losses” of “Item 18. Financial Statements.”
For equity securities elected for the measurement alternative, we determine that the investment shall be written down to its fair value with losses included in income if a qualitative assessment indicates that the investment is impaired and the fair value of the investment is less than its carrying value.
In assessing whether equity securities elected for the measurement alternative are impaired, we make a qualitative assessment considering impairment indicators, including but not limited to the following factors:

| • |  | a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee;

| • |  | a significant adverse change in the regulatory, economic, or technological environment of the investee;

| • |  | a significant adverse change in the general market condition of either the geographical area or the industry in which the investee operates;

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| • |  | a bona fide offer to purchase, an offer by the investee to sell, or a completed auction process for the same or similar investment for an amount less than the carrying amount of that investment; and

| • |  | factors that raise significant concerns about the investee’s ability to continue as a going concern, such as negative cash flows from operations, working capital deficiencies, or noncompliance with statutory capital requirements or debt covenants.

Determinations of whether investments in securities are impaired often involve estimating the outcome of future events that are highly uncertain at the time the estimates are made. Management judges whether there are any facts that an impairment loss should be recognized, based primarily on objective factors.
If the financial condition of an investee deteriorates, its forecasted performance is not met or actual market conditions are less favorable than those projected by management, we may charge against income additional losses on investment in securities.
The accounting estimates relating to impairment of investment in securities could affect all segments.
IMPAIRMENT OF GOODWILL AND OTHER INTANGIBLE ASSETS
We perform an impairment test for goodwill and any indefinite-lived intangible assets at least annually. Additionally, if events or changes in circumstances indicate that the asset might be impaired, we test for impairment whenever such events or changes occur.
We have the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before we perform a quantitative goodwill impairment test. We perform the qualitative assessment for some goodwill but bypass the qualitative assessment and proceed directly to the quantitative goodwill impairment test for other goodwill. For the goodwill for which the qualitative assessment is performed, if, after assessing the totality of events or circumstances, we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then we do not perform the quantitative goodwill impairment test. However, if we conclude otherwise or determine to bypass the qualitative assessment, we proceed to perform the quantitative goodwill impairment test. The quantitative goodwill impairment test calculates the fair value of the reporting unit and compares the fair value with the carrying amount of the reporting unit. If the fair value of the reporting unit falls below its carrying amount, an impairment loss is recognized in an amount equal to the difference. We test the goodwill at the reporting unit which is either the same level as an operating segment or one level below an operating segment.
We have the option to perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired before we perform a quantitative impairment test. We perform the qualitative assessment for some indefinite-lived intangible assets but bypass the qualitative assessment and perform the quantitative impairment test for other indefinite-lived intangible assets. For those indefinite-lived intangible assets for which the qualitative assessment is performed, if, after assessing the totality of events and circumstances, we conclude that it is not more likely than not that the indefinite-lived intangible asset is impaired, then we do not perform the quantitative impairment test. However, if we conclude otherwise or determine to bypass the qualitative assessment, we calculate the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test. We compare the fair value with the carrying amount of the indefinite-lived intangible asset. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
Intangible assets with finite lives are amortized over their useful lives and tested for impairment. The Company and its subsidiaries perform a recoverability test for the intangible assets whenever events or changes in circumstances indicate that the assets might be impaired. The intangible assets are considered not recoverable when the undiscounted future cash flows estimated to be generated by those assets are less than the carrying
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amount of those assets, and the net carrying amount of assets not recoverable is reduced to fair value if lower than the carrying amount and an impairment loss is recognized in an amount equal to the difference.
The fair value of a reporting unit under the quantitative goodwill impairment test is determined by estimating the outcome of future events and assumptions made by management. Similarly, estimates and assumptions are used in determining the fair value of any intangible assets. When necessary, we refer to an evaluation by a third party in determining the fair value of a reporting unit; however, such determinations are often made by using discounted cash flows analyses performed by us. This approach uses numerous estimates and assumptions, including projected future cash flows of a reporting unit, discount rates reflecting the inherent risk, and growth rates. For example, determining the fair value of an asset management contract included in intangible assets involves the estimated balances of assets under management, including the amounts of inflows and outflows related to the underlying investment funds that provide the asset management service, and estimates and assumptions regarding the WACC. Management believes that the assumptions used in estimating fair value used to determine impairment are reasonable, but we may charge additional losses to income if actual cash flows or any items which affect a fair value are less favorable than those projected by management due to economic conditions or our own risk in the reporting unit.
The accounting estimates relating to impairment of goodwill and any intangible assets could affect all segments.
IMPAIRMENT OF LONG-LIVED ASSETS
We periodically perform an impairment review for long-lived assets held and used in operations, including tangible assets, intangible assets being depreciated or amortized, and real estate development projects, consisting primarily of office buildings, condominiums, aircraft, ships, mega solar facilities and other properties under facility operations. The assets are tested for recoverability whenever events or changes in circumstances indicate that those assets might be impaired, including, but not limited to, the following:

| • |  | significant decline in the market value of an asset;

| • |  | significant deterioration in the usage range and method, or physical condition, of an asset;

| • |  | significant deterioration of legal regulatory or business environments, including an adverse action or assessment by a relevant regulator;

| • |  | acquisition and construction costs substantially exceeding estimates;

| • |  | continued operating loss or actual or potential loss of cash flows; or

| • |  | potential loss on a planned sale.

When we determine that assets might be impaired based upon the existence of one or more of the above factors or other factors, we estimate the future cash flows expected to be generated by those assets. For example, we estimate the future cash flows expected to be generated by aircraft mainly based on the underlying operating lease contracts and the appraisals obtained from independent third-party appraisers. Our estimates of the future cash flows are based upon historical trends adjusted to reflect our best estimate of future market and operating conditions. Our estimates also include the expected future periods in which future cash flows are expected. As a result of the recoverability test, when the sum of the estimated future undiscounted cash flows expected to be generated by those assets is less than its carrying amount, and when its fair value is less than its carrying amount, we determine the amount of impairment based on the fair value of those assets.
If the asset is considered impaired, an impairment charge is recorded for the amount by which the carrying amount of the asset exceeds fair value. We determine the fair value using appraisals prepared by independent third-party appraisers or our own staff of qualified appraisers, and others based on recent transactions involving sales of similar assets or other valuation techniques, as appropriate. Although management believes that the
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expected future cash flows and the calculations of fair value used to determine impairment are reasonable, if actual market and operating conditions under which assets are operated are less favorable than those projected by management, resulting in lower expected future cash flows or shorter expected future periods to generate such cash flows, additional impairment charges may be required. In addition, changes in estimates resulting in lower fair values due to unanticipated changes in business or operating assumptions could adversely affect the valuations of long-lived assets.
The accounting estimates relating to impairment of long-lived assets could affect all segments.
UNGUARANTEED RESIDUAL VALUE FOR FINANCE LEASES AND OPERATING LEASES
We estimate unguaranteed residual values of leased equipment (such as automobiles, office equipment, etc.) when we calculate unearned lease income to be recognized as income over the lease term for finance leases and when we calculate depreciation amounts for operating leases that carry inherently higher obsolescence and resale risks. Our estimates are based upon current market values of used equipment and estimates of when and how much equipment will become obsolete, and actual recovery being experienced for similar used equipment. If actual demand for
re-lease
or actual market conditions of used equipment is less favorable than that projected by management, write-downs of unguaranteed residual value may be required.
The accounting estimates relating to unguaranteed residual value for finance leases and operating leases affect mainly Corporate Financial Services and Maintenance Leasing segment, and Asia and Australia segment.
INSURANCE POLICY LIABILITIES AND DEFERRED POLICY ACQUISITION COSTS
A certain subsidiary writes life insurance policies to customers. Policy liabilities and policy account balances for future policy benefits are measured using the net level premium method, based on actuarial estimates of the amount of future policyholder benefits. The policies are characterized as long-duration policies and mainly consist of whole life, term life, endowments, medical insurance and individual annuity insurance contracts. For policies other than individual annuity insurance contracts, computation of policy liabilities necessarily includes assumptions about mortality, morbidity, lapse rates, future yields on related investments and other factors applicable at the time the policies are written. The subsidiary continually evaluates the potential for changes in the estimates and assumptions applied in determining policy liabilities, both positive and negative, and uses the results of these evaluations to adjust recorded liabilities as well as underwriting criteria and product offerings. If actual assumption data, such as mortality, morbidity, lapse rates, investment returns and other factors, do not properly reflect future policyholder benefits, we may establish a premium deficiency reserve.
A certain subsidiary elected the fair value option for the entire variable annuity and variable life insurance contracts with changes in the fair value recognized in earnings. The changes in fair value of the variable annuity and variable life insurance contracts are linked to the fair value of the investment in securities managed on behalf of variable annuity and variable life policyholders. Additionally, the subsidiary provides minimum guarantees to variable annuity and variable life policyholders under which it is exposed to the risk of compensating losses incurred by the policyholders to the extent contractually required. Therefore, the subsidiary adjusts the fair value of the underlying investments by incorporating changes in fair value of the minimum guarantee risk in the evaluation of the fair value of the entire variable annuity and variable life insurance contracts. The fair value of the minimum guarantee risk is measured using discounted cash flow methodologies based on discount rates, mortality, lapse rates, annuitization rates and other factors.
Certain subsidiaries ceded a portion of their minimum guarantee risk related to variable annuity and variable life insurance contracts to reinsurance companies in order to mitigate the risk and elected the fair value option for the reinsurance contracts. In addition, we economically hedge risks that are not covered by reinsurance. The reinsurance contracts do not relieve the subsidiary from the obligation as the primary obligor to compensate certain losses incurred by the policyholders, and the default of the reinsurance companies may impose additional losses on the subsidiary.
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Policy liabilities and policy account balances for fixed annuity insurance contracts are measured based on the single-premiums plus interest based on expected rate and fair value adjustments relating to the acquisition of a subsidiary, less withdrawals, expenses and other charges.
Certain costs related directly to the successful acquisition of new or renewal insurance contracts, or deferred policy acquisition costs, are deferred and amortized over the respective policy periods in proportion to anticipated premium revenue. These deferred policy acquisition costs consist primarily of first-year commissions, except for recurring policy maintenance costs and certain variable costs and expenses for underwriting policies. Periodically, deferred policy acquisition costs are reviewed to determine whether relevant insurance and investment income are expected to recover the unamortized balance of the deferred acquisition costs. When such costs are expected to be unrecoverable, they are charged to income in that period. If the historical data, such as lapse rates, investment returns, mortality, morbidity and expense margins, which we use to calculate these assumptions, do not properly reflect future profitability, additional amortization may be required.
The accounting estimates relating to insurance policy liabilities and deferred policy acquisition costs affect Insurance segment.
ASSESSING HEDGE EFFECTIVENESS
We use foreign currency swap agreements, interest rate swap agreements and foreign exchange contracts for hedging purposes and apply fair value hedge, cash flow hedge or net investment hedge accounting to measure and account for subsequent changes in their fair value.
To qualify for hedge accounting, details of the hedging relationship are formally documented at the inception of the arrangement, including the risk management objective, hedging strategy, hedged item, specific risks that are to be hedged, the derivative instrument and how effectiveness is being assessed. Derivatives for hedging purposes must be highly effective in offsetting either changes in fair value or cash flows, as appropriate, for the risk being hedged and effectiveness needs to be assessed at the inception of the relationship.
Hedge effectiveness is assessed quarterly on a retrospective and prospective basis. If specified criteria for the assumption of effectiveness are not met at hedge inception or upon quarterly testing, then hedge accounting is discontinued. To assess effectiveness, we use techniques including regression analysis and the cumulative dollar offset method.
The accounting estimates used to assess hedge effectiveness could affect mainly Insurance segment and Asia and Australia segment.
PENSION PLANS
The determination of our projected benefit obligation and expense for our employee pension benefits is mainly dependent on the size of the employee population, actuarial assumptions, expected long-term rate of return on plan assets and the discount rate used in the accounting.
Pension expense is directly related to the number of employees covered by the plans. Increased employment through internal growth or acquisition would result in increased pension expense.
In estimating the projected benefit obligation, actuaries make assumptions regarding mortality rates, turnover rates, retirement rates and rates of compensation increase. Actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, affect expense in future periods.
We determine the expected long-term rate of return on plan assets annually based on the composition of the pension asset portfolios and the expected long-term rate of return on these portfolios. The expected long-term
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rate of return is designed to approximate the long-term rate of return actually earned on the plans’ assets over time to ensure that funds are available to meet the pension obligations that result from the services provided by employees. We use a number of factors to determine the reasonableness of the expected rate of return, including actual historical returns on the asset classes of the plans’ portfolios and independent projections of returns of the various asset classes.
We use March 31 as a measurement date for our pension assets and projected benefit obligation balances under all of our material plans. If we were to assume a 1% increase or decrease in the expected long-term rate of return, holding the discount rate and other actuarial assumptions constant, pension expense for fiscal 2023 would decrease or increase, respectively, by approximately ¥2,590 million.
Discount rates are used to determine the present value of our future pension obligations. The discount rates are reflective of rates available on long-term, high-quality fixed-income debt instruments with maturities that closely correspond to the timing of defined benefit payments. Discount rates are determined annually on the measurement date.
If we were to assume a 1% increase in the discount rate, and keep the expected long-term rate of return and other actuarial assumptions constant, pension expense for fiscal 2023 would decrease by approximately ¥1,247 million. If we were to assume a 1% decrease in the discount rate, and keep other assumptions constant, pension expense for fiscal 2023 would increase by approximately ¥2,083 million.
While we believe the estimates and assumptions used in our pension accounting are appropriate, differences in actual results or changes in these assumptions or estimates could adversely affect our pension obligations and future expenses.
INCOME TAXES
In preparing the consolidated financial statements, we make estimates relating to income taxes of the Company and its subsidiaries in each of the jurisdictions in which we operate. The process involves estimating our actual current income tax position together with assessing temporary differences resulting from different treatment of items for income tax reporting and financial reporting purposes. Such differences result in deferred tax assets and liabilities, which are included within the consolidated balance sheets. We must then assess the likelihood of whether our deferred tax assets will be recovered from future taxable income, and, to the extent we believe that realizability is not more likely than not, we must establish a valuation allowance. When we establish a valuation allowance or increase this allowance during a period, we must include an expense within the provision for income taxes in the consolidated statements of income.
Significant management judgments are required in determining our provision for income taxes, current income taxes, deferred tax assets and liabilities and any valuation allowance recorded against our deferred tax assets. We file tax returns in Japan and certain foreign tax jurisdictions and recognize the financial statement effects of a tax position taken or expected to be taken in a tax return when it is more likely than not, based on the technical merits, that the position will be sustained upon tax examination, including resolution of any related appeals or litigation processes, and measure tax positions that meet the recognition threshold at the largest amount of tax benefit that is greater than 50 percent likely to be realized upon settlement with the taxing authority. Management judgments, including the interpretations about the application of the complex tax laws of Japan and certain foreign tax jurisdictions, are required in the process of evaluating tax positions; therefore, these judgments may differ from the actual results. We have recorded a valuation allowance due to uncertainties about our ability to utilize certain deferred tax assets, primarily certain tax loss carryforwards, before they expire. The valuation allowance is primarily recognized for deferred tax assets of consolidated subsidiaries with tax loss carryforwards. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those
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temporary differences become deductible and tax loss carryforwards are utilizable. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and
tax-planning
strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that all of the deferred tax assets, net of the valuation allowance, will be realized. The valuation allowance is based on our estimates of taxable income by jurisdiction in which we operate and the period over which our deferred tax assets will be recoverable. If actual results differ from these estimates or if we adjust these estimates in future periods, we may need to establish additional valuation allowances, which could materially impact the consolidated financial position and results of operations.
DISCUSSION WITH AND REVIEW BY THE AUDIT COMMITTEE
Our management discussed the development and selection of important accounting policies, including accounting estimate of particular importance with our Audit Committee.
FAIR VALUE OF INVESTMENT AND RENTAL PROPERTY
We own real estate such as rental office buildings, rental logistics centers, rental commercial facilities other than office buildings, rental condominiums and land which is utilized for development as operating leases. A large portion of our real estate held for investment and rental is located around major cities in Japan such as Tokyo. The following table sets forth the carrying amount of investment and rental property as of the beginning and end of fiscal 2023, as well as the fair value as of the end of fiscal 2023.

Year ended March 31, 2023
Carrying amount * 1 |  |
Balance at April 1, 2022 |  | Change amount |  | Balance at March 31, 2023 |  | Fair value at March 31, 2023 * 2
|  | (Millions of yen) |  |
¥373,093 |  | ¥10,719 |  | ¥383,812 |  | ¥451,728

* 1 | Carrying amounts are stated as cost less accumulated depreciation and accumulated impairment loss.

* 2 | Fair value is either obtained from appraisal reports by external qualified appraisers, calculated by internal appraisal department in accordance with “Real estate appraisal standards,” or calculated by other reasonable internal calculation utilizing similar methods.

Investment and rental property revenue and expense for fiscal 2023 were as follows:

Year Ended March 31, 2023 |
Revenue* 1 |  | Expense* 2 |  |  | Net |
|  | (Millions of yen) |  |  |  |
¥64,793 |  | ¥ | 31,364 |  |  | ¥ | 33,429 |

* 1 | Revenue consists of revenue from leases and gains on sales of real estate under operating leases. Revenue from leases is composed of real estate-related revenues from “Operating leases” and “Life insurance premiums and related investment income.”

* 2 | Expense consists of costs related to the above revenue such as rental payment, depreciation expense, repair cost, insurance cost, tax and duty which are included in “Costs of operating leases,” and “Write-downs of long-lived assets.”

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RECENT DEVELOPMENTS
NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In August 2018, Accounting Standards Update
2018-12
(“Targeted Improvements to the Accounting for Long-Duration Contracts”—ASC 944 (“Financial Services—Insurance”)) was issued, and the original effective date was deferred by two years by related amendments which were issued thereafter. These updates change the recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. These updates require an insurance entity to review and, if there is a change, update cash flow assumptions at least annually and to update discount rate used for liability for future policy benefits at each reporting date for nonparticipating traditional long-duration and limited-payment contracts. The effect of updating the discount rate is recognized in other comprehensive income (loss). These updates also require market risk benefits to be measured at fair value, and simplify amortization of deferred acquisition costs. Furthermore, these updates require additional disclosures for long-duration contracts. These updates are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early application is permitted. For the liability for future policy benefits and deferred acquisition costs, these updates are applied to contracts in force as of beginning of the earliest period presented (hereinafter, “the transition date” of these updates) on a modified retrospective basis, and an insurance entity may elect to apply retrospectively. For the market risk benefits, these updates are applied retrospectively at the transition date, and the difference between fair value and carrying value requires an adjustment to retained earnings at the transition date. The cumulative effect of changes in the instrument-specific credit risk between contract inception date and the transition date should be recognized in accumulated other comprehensive income at the transition date. The Company and its subsidiaries will adopt these updates on April 1, 2023, with the transition date of April 1, 2021, on a modified retrospective basis. The adoption of these updates will change the measurement of the liability for future policy benefits, etc. In addition, the effect on the Company and its subsidiaries’ results of operations and financial position will be an increase of approximately ¥29,000 million in policy liabilities and policy account balances, a decrease of approximately ¥25,000 million in impact of changes in policy liability discount rate (accumulated other comprehensive income (loss)) in the consolidated balance sheet as of the transition date. These are due to changes in the applicable discount rate resulting from fluctuation in interest rate (mainly a decline in Japanese yen interest rates). In addition, the effect of the adoption of these updates on the Company and its subsidiaries’ results of operations and financial position will be an increase of approximately ¥10,000 million in deferred policy acquisition costs (other assets), a decrease of approximately ¥51,000 million in policy liabilities and policy account balances, an increase of approximately ¥38,000 million in impact of changes in policy liability discount rate (accumulated other comprehensive income (loss)), and an increase of approximately ¥6,000 million in retained earnings in the consolidated balance sheet, and a decrease of approximately ¥5,000 million in life insurance costs in the consolidated statement of income as of March 31, 2022. These are due mainly to changes in the applicable discount rate resulting from fluctuation in interest rate (mainly an increase in US dollar interest rates), and a change in the amortization period of deferred policy acquisition costs. Furthermore, the effect of the adoption of these updates on the Company and its subsidiaries’ results of operations and financial position will be an increase of approximately ¥24,000 million in deferred policy acquisition costs (other assets), a decrease of approximately ¥234,000 million in policy liabilities and policy account balances, an increase of approximately ¥165,000 million in impact of changes in policy liability discount rate (accumulated other comprehensive income (loss)), and an increase of approximately ¥23,000 million in retained earnings in the consolidated balance sheet, and a decrease of approximately ¥25,000 million in life insurance costs in the consolidated statement of income as of March 31, 2023. These are due mainly to changes in the applicable discount rate resulting from fluctuation in interest rate (mainly an increase in US dollar interest rates), reversals of policy liability and policy account balance with updating net insurance premium rates due to discrepancies between actual benefits paid and forecasts, and change in the amortization period of deferred policy acquisition costs. The Company and its subsidiaries will expand their disclosures that are required by these updates, regarding long-duration contracts.
In March 2022, Accounting Standards Update
2022-02
(“Troubled Debt Restructurings and Vintage Disclosures”—ASC 326 (“Financial Instruments—Credit Losses”)) was issued. This update eliminates the
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recognition and measurement guidance on troubled debt restructuring (hereinafter, “TDR”) and, instead, requires that an entity evaluate whether certain modifications on contractual terms made to borrowers experiencing financial difficulty should be accounted for as a new loan or a continuation of an existing loan. Additionally, enhanced disclosures for certain modifications made to borrowers experiencing financial difficulty are newly required. In addition, this update also requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic
326-20
(“Financial Instruments—Credit Losses—Measured at Amortized Cost”) in the existing vintage disclosure, where an entity discloses the amortized cost basis by credit quality indicator and class of financing receivable by year of origination. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022 and early adoption is permitted. This update should be applied prospectively from the beginning of the fiscal year of adoption, including interim periods, except for the optional transition method related to the recognition and measurement of TDRs for which an entity may elect to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company and its subsidiaries will adopt this update on April 1, 2023. The Company and its subsidiaries expect that the adoption of this update will have no material impact on the Company and its subsidiaries’ results of operations or financial position. The Company and its subsidiaries will expand their disclosures that are required by this update.
In June 2022, Accounting Standards Update
2022-03
(“Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”—ASC 820 (“Fair Value Measurement”)) was issued. This update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value of an equity security. This update also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. This update also requires new disclosures for equity securities subject to contractual sale restrictions. The new disclosure shall include; (1) the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet, (2) the nature and remaining duration of the restrictions, and (3) the circumstances that could cause a lapse in the restrictions. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. This update should be applied prospectively for fair value measurement and disclosures from the adoption of the amendments. The Company and its subsidiaries will adopt this update on April 1, 2024. The Company and its subsidiaries are currently evaluating the effect that the adoption of this update will have on the Company and its subsidiaries’ results of operations or financial position, as well as changes in disclosures required by this update.
In September 2022, Accounting Standards Update
2022-04
(“Disclosure of Supplier Finance Program Obligations”—ASC
405-50
(“Liabilities—Supplier Finance Programs”)) was issued. This update requires that a buyer in a supplier finance program disclose sufficient information about the program in mainly annual disclosure, to allow a user of financial statements to understand the program’s nature, activities during the period, changes from period to period, and potential magnitude. The disclosure shall include (1) the key terms of the program and (2) the obligations that the buyer has confirmed as valid to the finance provider or intermediary. This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company and its subsidiaries will adopt this update on April 1, 2023. Since this update relates to disclosure requirements, the adoption will not have an effect on the Company and its subsidiaries’ results of operations or financial position.
In March 2023, Accounting Standards Update
2023-01
(“Common Control Arrangements”) was issued as the amendments to ASC 842 (“Leases”). This update requires that leasehold improvements associated with common control leases are amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term), as long as the lessee controls the use of the underlying asset (the leased asset) through a lease. And this update provides a practical expedient for private companies to determine whether a related party arrangement between entities under common control is a lease, or to determine the classification of and accounting for that lease when the arrangement is a lease. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is
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permitted. The Company and its subsidiaries will adopt this update on April 1, 2024. The Company and its subsidiaries are currently evaluating the effect that the adoption of this update will have on the Company and its subsidiaries’ results of operations or financial position.
In March 2023, Accounting Standards Update
2023-02
(“Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method”) was issued as the amendments to ASC 323 (“Investments—Equity Method and Joint Ventures”). This update expands the investments eligible to elect to apply the proportional amortization method to tax equity investments in similar tax credit programs other than the
low-income
housing tax credit (LIHTC). Disclosures are required on an interim and annual basis for tax equity investments in tax credit programs for which the proportional amortization method (including investments within that elected program that do not meet the conditions to apply the proportional amortization method) is elected. This update is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company and its subsidiaries will adopt this update on April 1, 2024. The Company and its subsidiaries are currently evaluating the effect that the adoption of this update will have on the Company and its subsidiaries’ results of operations or financial position, as well as changes in disclosures required by this update.
RISK MANAGEMENT
Group-Wide Risk Management System
Risk Management System
The allocation of management resources within ORIX Group is conducted taking into consideration group-wide risk preferences determined by management and the business strategies of individual business units. We have established our risk management system to appropriately recognize risks relating to Group businesses on a global scale to realize allocations of management resources that are appropriate for the risks we face and report such risks to the board of directors, the Audit Committee of the board of directors, the Executive Committee, and other internal committees as the situation warrants. The board of directors and executive bodies comprehensively evaluate the performance of business units and the characteristics of the risks they face and implement necessary measures in response thereto. Through this process, we are able to control our balance sheet, allocate additional management resources to business units with strong potential for growth, and work together with internal control-related functions to analyze and manage risks.
The risk management system has been adopted by the board of directors as a part of our internal control system. The status of the operation of such internal control system is examined and reported to the board of directors annually. For descriptions of our board of directors, Audit Committee, Executive Committee and other internal committees, see “Item 6. Directors, Senior Management and Employees—Corporate Governance System.”
Management of Principal Risks
We recognize the following risks as principal risks: credit risk, business risk, market risk, liquidity risk (risk relating to funding), compliance risk, legal risk, information systems/ cybersecurity risk, operational risk and external environment-related risk. Each of these risks is managed according to its characteristics.
Credit Risk Management
We define credit risk as uncertainty regarding recovery of credit caused by a debtor’s default or deterioration in their credit standing.
Our fundamental approach in analyzing credit risk is to evaluate factors such as the adequacy of collateral and guarantees, and the diversification of our customers’ industries and businesses. A comprehensive customer
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credit evaluation is typically conducted based on the customer’s financial position, cash flows, underlying security interests, profitability and other factors pertaining to individual credit transactions.
By conducting portfolio analysis and implementing measures to establish appropriate credit limits, we control our exposure in potentially higher risk markets.
We recognize that certain assets require extra monitoring of debtors, credit extended to debtors who have petitioned for bankruptcy, civil rehabilitation or other insolvency proceedings, debtors whose bank transactions have been suspended, bills have been dishonored, or debts that have not been collected for three months or more. The relevant business units, in cooperation with the credit department, take measures to secure collateral or other guarantees and to begin the collection process. All information and knowledge gathered from the collection process, starting from the initial demand to the foreclosure of the collateral, is consolidated by the credit department and reflected in our evaluation criteria used for individual credit transactions and portfolio analysis.
Business Risk Management
We define business risk as uncertainty regarding recovery of investments caused by negative performance of our businesses or investees, variability in market prices for the types of products or services we offer or the potential degradation or obsolescence of the products or services we offer or a decline in their quality.
With regards to new businesses and investments, scenario analyses and stress tests are conducted at the initial stage of investment. Business plans and operations are continuously monitored thereafter and we periodically evaluate and verify the cost of withdrawal from a business, business area or investment.
For our products and services offerings, in addition to continuous monitoring, we regularly review the contents of our products and services offerings in response to changes in the business environment and evolving customer needs and strive to maintain or improve their quality.
A principal risk relating to operating leases is fluctuations in the residual value of leased properties. To mitigate this risk, we monitor our leased properties inventory, the relevant market environments and the overall business environment. We limit our operating leases to leased properties and other assets with high versatility, and evaluate the sale of such properties and other assets depending on changes in market conditions.
We aim to minimize the risk related to fluctuations in market prices for real estate by appropriately considering trends in market prices based on knowledge accumulated thus far, including our experiences during the financial crises.
Market Risk Management
We define market risk as the risk of changes in the fair value of assets and liabilities caused by changes in market variables, such as interest rates, exchange rates and stock prices.
We strive to comprehensively verify and understand the market risks that we face. We have established and maintain Group-wide ALM rules to address these risks.
Interest rate risk is comprehensively evaluated based on factors such as the expected impact of interest rate changes on periodic profit and loss and/or the balance sheet, the assets and liabilities positions and the funding environment. The analysis methods we use are modified, as required, depending on the situation.
We generally manage exchange rate risk by using means such as foreign currency-denominated loans, foreign exchange contracts and currency swaps to hedge exchange rate volatility in our business transactions in foreign currencies and overseas investments. We monitor and manage exchange rate risk relating to unhedged foreign currency-denominated assets and retained earnings of foreign subsidiaries using indicators such as VaR (value at risk) and adjusting hedge positions as needed based on changes in the market environment at any given time.
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We manage counterparty credit risk and other risks involved in hedging derivative transactions in accordance with internal rules on derivative transaction management.
With respect to the transition away from and discontinuation of LIBOR and other interest rate benchmarks, we have completed our transition except for those in certain contracts denominated in U.S. dollars for which the official cessation is extended to the end of June 2023. The transition of U.S. dollar LIBOR which will cease to be published in June 2023, we continue to take necessary steps to proactively address the remaining transition, negotiate successor reference rates with relevant counterparties, plan for circumstances where the transition results in a mismatch with the fallback reference rates used (particularly in the case of derivatives contracts used for hedging purposes), and evaluate the potential impact on our financial results and condition.
For quantitative and qualitative analysis information on market risk, please see “Item 11. Quantitative and Qualitative Disclosures about Market Risk.”
Liquidity Risk Management
We define liquidity risk as the risk that we will be unable to obtain required funds or that we will be forced to procure funds at an unusually high rate of interest due to market turmoil, a sharp deterioration in the financial condition of ORIX Group or other reasons.
To reduce liquidity risk, we diversify fund procurement methods and sources and constantly monitor liquidity on hand. To manage liquidity on hand, we project future cash flows and analyze liquidity risk using hypothetical stress scenarios. We take necessary measures so that our businesses may withstand adverse market changes.
The effect on the business of each subsidiary is monitored by ascertaining liquidity risk in each subsidiary and in every country in which ORIX operates. We take appropriate measures to mitigate liquidity risk, including through such action as
parent-to-subsidiary
lending.
ORIX Bank and ORIX Life Insurance are regulated by Japanese financial authorities and are required to manage liquidity risk independently from other ORIX Group companies based on their internal regulations formulated according to the relevant regulations.
ORIX Bank categorizes the degree of cash-flow tightness into several stages, and has established measures to strengthen its liquidity risk management system according to each stage. In addition, ORIX Bank has established limits on the required amount of liquid assets and the amount of market-based funding, and the department in charge of risk management monitors compliance with these limits.
ORIX Life Insurance strives to maintain appropriate liquidity by setting standards for its holdings of cash and highly liquid governmental and corporate bonds. In addition to assessing current and future funding needs, ORIX Life Insurance has set categories corresponding to the urgency of such funding needs and established standards and contingency plans so that it can swiftly and appropriately respond to situations that take place within each category in times of stress.
Compliance Risk Management
We define compliance risk as the risk of financial loss, regulatory sanction, disadvantage or reputational damage resulting from a failure by ORIX Group to comply with laws and regulations applicable to ORIX Group’s business or company management and/or a failure to comply with ORIX Group’s corporate philosophy, internal rules and generally accepted standards of business conduct.
ORIX Group views compliance as one of the top priorities of management. The ORIX Group strives to build a robust and comprehensive compliance program and promote a culture of compliance, with an emphasis
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on high standards of ethical behavior at all levels of the organization, and to conduct its business activities in a sincere, fair and transparent manner.
The compliance department requires companies in ORIX Group to formulate a compliance plan and monitors compliance risks within ORIX Group to avoid, mitigate or prevent the realization of such risks. By implementing programs that sustain a culture of compliance, the compliance department seeks to prevent or mitigate compliance risk, and thereby contribute to the sound business and management of ORIX Group.
In addition, ORIX Group strives to raise awareness for compliance matters among its executives and employees by establishing and disseminating various regulations in accordance with the ORIX Group Principles of Conduct, which sets forth ORIX Group’s principles of compliance. Progress in sustaining a culture of compliance through internal training and other activities is regularly reported to our Audit Committee.
As part of our internal control system, we have established internal whistleblower systems for use by executives and employees in the ORIX Group and external whistleblower systems for use by business partners outside the ORIX Group, and developed internal and external systems designed to mitigate compliance risk. We have also established a system whereby material matters that are reported through the internal and external whistleblower systems and those that relate to legal or other violations are promptly reported to the representative executive officer and appropriate actions are taken in response to instructions received from the representative executive officer. The statuses of responses to material matters are reported to our Audit Committee and information is appropriately shared.
Furthermore, from the perspective of compliance with applicable tax laws, we are committed to paying taxes in conformance with tax laws of relevant jurisdictions, tax treaties and guidelines, and internal rules, to managing our tax affairs in good faith and in compliance with applicable tax systems and to achieving tax transparency on a group-wide basis.
Legal Risk Management
We define legal risk as limitations or other negative effects on our businesses or company management that could result from the enactment of or change in relevant laws and regulations or from deficiencies in contracts.
In addition to establishing internal rules necessary for ensuring compliance with laws and regulations, in order to comply appropriately with revisions in laws and regulations, we have also taken measures to understand the applicability of such laws and regulations to each business in ORIX Group and provide instructions to business units to which such laws and regulations apply.
To avoid, reduce and prevent transactional legal risk, we generally require that the legal department, the compliance department and the credit department each be involved in evaluating and/or executing transactions.
For transactional agreements relating to business transactions, we have established a contract review and approval process involving the legal department in accordance with our prescribed internal rules.
To ensure that proper legal procedures are followed in connection with actual or potential disputes and litigation, we require that the legal department, the compliance department and the credit department each be involved in the management of such disputes and litigation, including lawsuits that have been, or are expected to be, brought against us and lawsuits that we bring, or expect to bring, against third parties. In addition, we have in place systems to prevent disputes and litigation such as a system for monitoring for trademark applications that could infringe on trademarks held by ORIX Group.
The legal department manages intellectual property rights and takes necessary protective measures immediately if an actual or potential infringement of ORIX Group’s intellectual property rights is discovered.
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Information Systems / Cybersecurity Risk Management
We define information systems/cybersecurity risk as the risk of loss, theft, damage or leakage of information, cyberattacks or the failure of our information systems.
ORIX Group has established internal rules governing appropriate handling of information and the use of information systems by executives and employees, as well as governing structure, basic policies, and management standards for information security, education, and audits.
The information security control department implements vulnerabilities management including vulnerability tests of information systems and technical measures for network defense to reduce risk of loss due to external threats such as cyberattacks. Also, internal rules have been established to collect and manage security logs so that external perimeters as well as information leakage by internal frauds are addressed.
The information security control department is responsible for reducing the risk of security breaches, such as system failures including cyberattacks and information security by establishing a security incident response process. In the event of an information security incident, the information security control department, legal department and compliance department work together to minimize damage and prevent additional damages, and significant information is reported to the CEO as required and appropriate actions are taken under the CEO’s direction. The status of the incident response is appropriately reported to the Audit Committee so that appropriate information sharing takes place. A reporting system is being implemented for timely disclosure of significant cybersecurity incidents and regular disclosures of management status, risk management, strategy and governance in response to incidents.
ORIX Group’s technology management department provides rules and guidelines such as information system development and operational governance bylaws, engages in reviews of system investments (with system investments above a certain size being deliberated by the Information Technology Management Committee) and the governance of systems quality and development projects from the development stage to the system’s final launch to reduce the risk of system failures. In addition, there are ongoing efforts to strengthen the management of IT services to ensure stability in the system operations for systems that are currently in operation and the evaluation of the appropriateness of measures to prevent the recurrence of major failures in systems managed by Group companies. For more information regarding our Information Technology Management Committee, see “Item 6. Directors, Senior Management and Employees—Corporate Governance System—Executive Officers—Information Technology Management Committee.”
Operational Risk Management
We define operational risk as the risk of loss resulting from damages, losses, adverse effects or damage to our reputation caused by inadequate or failed internal processes for business execution, failure to secure necessary human resources or prevention of human error or by a failure in operations due to external events such as natural disasters.
We have established internal regulations and are regularly conducting training to increase awareness of such regulations to clarify internal processes used in business operations. In addition, we are focusing on developing and evaluating our internal controls for compliance purposes.
In order to reliably secure and retain a diverse workforce, we continuously strive to promote diversity, equity and inclusion, where every employee can fully utilize their individual skills and expertise and create a rewarding and valuable workplace for employees.
On top of structuring our human resources systems to flexibly respond to factors such as national and regional labor markets, market practices, compensation standards, laws and regulations, job descriptions and business characteristics, we are continuously creating a work environment that respects human rights and ensures that employees can engage in meaningful work in a lively manner within a healthy and safe environment.
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Additionally, we have established a system for teams to contact risk management departments promptly in cases where an incident, customer claim or similar matter has arisen so that we can respond quickly and carefully and take measures to prevent reoccurrences.
The internal audit department conducts monitoring activities based on an annual internal audit plan that includes monitoring of material operational risks. The department aims to prevent the occurrence of events that could negatively affect Group management and seeks to strengthen the risk management function through monitoring activities.
External Environment-related Risk Management
Among the external environment-related risks that we face such as those relating to the business environment, we are particularly focused on developing our systems to address and manage risks related to natural disasters and other unexpected risks. We have established internal rules to manage risks associated with disasters, and implemented a framework for organizational implementation of basic principles to manage risks arising from events such as natural disasters, terrorism and infectious diseases, as well as related activities.
For example, we have established systems to confirm the safety and status of all employees in the event our offices are closed due to events such as a disaster or the spread of an infectious disease. To prepare for situations where it is impossible or inadvisable for employees to work from our offices, we have also introduced systems to allow employees to work remotely so that our business operations will not be disrupted.
ORIX Group is prepared for the occurrence of unexpected events, by diversifying its profit structure through a diversified business portfolio and ensuring sufficient liquidity, which allow it to maintain sound financial health.
Individual Business Risk Management
We engage in a broad spectrum of businesses, including financial service operations. We seek to perform complete and transparent monitoring and risk management according to the characteristics of each business segment.
Corporate Financial Services and Maintenance Leasing
Legal risk and credit risk are the main risks of the corporate financial services business.
Due to the offering of various products and services by business units in our corporate financial services business, the enactment of or revisions or changes to related laws, regulations, taxation systems, and accounting standards may adversely affect the products and services we offer and lead to a decline in fee income. In order to reduce such risk, business units conduct information gathering and coordinate with the legal department with regard to information on changes in relevant laws and regulation, as well as reassessing their business strategies as necessary.
With regard to credit transactions, the corporate financial services business regularly monitors the performance, related collateral, and collection status of customers whose balances exceed specified levels. The credit department regularly evaluates customers with large credit balances.
Within the corporate financial services business, we analyze current conditions and the outlook for specific business types and industries, examine the potential impact on customers, and consider the views of each business unit and specialized department to make decisions about future transactions in that specific business type or industry.
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For assets requiring extra monitoring, particularly in transactions secured by real estate, we take various measures such as capitalizing on our network of real estate-related departments to sell properties or introduce tenants.
Business risk and credit risk are the main risks of the maintenance leasing business.
To manage the risk of changes in the market value of property under operating leases, we continuously monitor market conditions and fluctuations in the value of leased property and reassess residual value estimates of leased property in new investment transactions accordingly.
Cost fluctuation is a risk that may occur when providing various services associated with operating leases. In response to this, we analyze initial cost planning and performance, monitor future forecasts and control costs at an appropriate level.
In addition, our services might fall short of customer expectations due to changes in the operating environment or changes in and diversification of client needs. We monitor our service quality quantitatively and qualitatively and continuously strive to provide services at a level that meets our clients’ expectations and to improve our services in line with the operating environment.
Furthermore, we not only conduct credit examinations of individual transactions to manage credit risk, but also conduct comprehensive assessments that consider changes in, and our expectations regarding, the business environment.
Real Estate
Business risk and market risk are the main risks of the Real Estate segment.
With respect to our real estate investments, before making an investment decision we evaluate the actual cash flow performance of the target as against the initial plan and forecasts, and monitor investment strategies and schedules after execution. Upon a major divergence from the initial forecast, we reevaluate our strategy.
Furthermore, when we invest in large scale or long-term projects, we consider diversifying risk by making joint investments with our partners.
In our development and leasing business, we monitor development and retention schedules and net operating income yield. We capitalize on the Group’s network to improve occupancy rates and promote sales.
In our facility operation business, we monitor performance indicators such as occupancy and utilization rates and profitability. We conduct market analysis and take initiatives to improve the desirability of our facilities, such as through renovations. To improve the quality of our services and facilities, we take into consideration customers’ feedback and also implement training programs for our employees.
In our condominium business (new and used), we monitor sales figures and profitability of individual businesses while keeping in mind the market environment, construction costs, relevant interest rates and real estate-related taxation systems. Additionally, in our construction business, we seek to control construction costs and construction periods, while also focusing on health and safety management.
PE Investment and Concession
Business risk, market risk and operational risk are the main risks of PE Investment and Concession segment.
When making investment decisions with regard to potential investees in the private equity business, we conduct a credit evaluation, analyzing the investee’s financial condition and assessing its cash flow, as is done
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for credit examinations. We also perform a multi-faceted evaluation of the characteristics of the business operation and investment scheme, in which administrative departments such as accounting and legal are also involved. In addition, after the initial investment, individual transactions are monitored for divergence from the initial scenario.
We emphasize monitoring financial condition of a company when increasing the corporate value of a company since cash flow is a key factor during such period. We also monitor market risk as the time for collection nears, measuring corporate value by referencing the corporate value of similar business types. The frequency of monitoring may increase based on changes in the business environment, and we simultaneously verify the adequacy of investment scenarios and take any necessary action. Furthermore, for investments that have a significant impact on the profitability of ORIX Group, we work to strengthen management through measures such as seconding of management personnel.
We conduct our concession business in public facilities such as airports, together with business partners.
The long-term nature of this business adds uncertainty and, therefore, we conduct stress tests in advance to evaluate the effect of disaster recovery or business withdrawal costs on operating revenue and cash flow based on demand forecasts and monitor business plans and operations on a regular basis and as the situation warrants. We also strive to train staff with expertise on the management of public facilities and reduce operational risk by establishing a management system with business partners and strengthening governance.
Environment and Energy
Business risk, legal risk and operational risk are the main risks of the Environment and Energy segment.
In the environment and energy business, we conduct various businesses in the renewable energy, energy conservation, electricity retail, resource recycling and waste processing operations sectors both in and outside of Japan. They are easily impacted by factors such as the external environment, and changes in social trends and systems and legal regulations, a spike in natural resource prices in recent years, a steep rise in electricity prices and an increase in their volatility, and disruption in supply chains can be ongoing threats. Due to these potential factors, while there are cases when it becomes necessary to change the revenue structure of individual businesses, we are able to quickly identify trend changes in the external environment and seek new revenue generation opportunities through business model shifts, new business developments, and business portfolio shuffles.
In each business, we operate a wide variety of facilities related to electricity generation, resource recycling and waste processing operations, and proactively seek out investment opportunities in various M&As and strategic alliances to further expand our businesses, but we also continue to strengthen internal governance by reassuring internal controls set in place. We also make efforts to optimize our operations mainly together with specialist groups with technical expertise in order to develop business continuity plan structures that ensure safety and appropriateness of each facility and develop readiness for situations such as natural disasters, accidents, and epidemics.
Insurance
Business risk and market risk are the main risks in the Insurance segment.
In insurance underwriting, we risk sustaining losses due to changes in the economic environment or insurance accident rates over time such that they differ significantly from the assumptions made when the insurance premiums were set. Through monitoring of these factors that could cause losses, we
re-evaluate
underwriting standards, develop new products, update or discontinue existing products. Furthermore, we employ reinsurance as one means of ensuring payments of insurance claims and the stability of our business management. When utilizing reinsurance, we determine standards for reinsurance according to the characteristic
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of the transferred risk and effect of reinsurance. When choosing a reinsurance company, we focus on ensuring that there is a high probability we can recover the fees reinsurance claims by taking into account underwriting capacity and financial health.
With respect to market risk, to prepare for changes in the value of our assets and liabilities, we establish monitoring items and assess the risks for general account assets. Furthermore, from an asset liability management perspective we strive to limit interest rate risk through the purchase of super long-term bonds to match their duration with liabilities.
Banking and Credit
Credit risk is the main risk of the Banking and Credit segment.
Regarding each real estate investment loan we extend for the purchase of condominiums and apartments for investment purposes, we conduct screenings through individual interviews, which consist of a comprehensive evaluation including not only the client’s real estate investment appetite, supporting documentation, and ability to repay but also the cash flows that can be derived from the property and its collateral value. Throughout this process, we utilize the real estate market information and industry
know-how
we have built over many years.
Decision making for corporate loans is based on an investigation of the client’s performance, business plan, intended use of proceeds, expected source of repayment and industry trends. We also reduce risk by avoiding overconcentration in any particular business type and product in our portfolio.
The consumer finance business uses a proprietary scoring system incorporating a credit model. We set interest rates and credit limits in line with each customer’s credit risk profile, after evaluating their creditworthiness based on an analysis of certain customer attributes or payment history, as well as other factors that might affect their ability to repay. Also, we undertake subsequent credit evaluations at regular intervals to monitor changes in the customer’s financial condition.
Aircraft and Ships
In the aircraft business, we operate in the operating lease business and aircraft asset management business, where the main risks the businesses face are business risk, credit risk, market risk and operational risk. We generally limit the aircraft to those with high versatility that are comparatively easy to
re-lease
and evaluate sales depending on changes in market conditions. In addition, we conduct comprehensive assessments of the customers’ performance and related collateral at the time of financing. With regard to our affiliate, Avolon, we continuously monitor its business plan and operations. In addition, we support the sound management of Avolon by contributing to its management through the exercise of our rights as a shareholder and our members of its board of directors.
In the ships business, we operate in the financing business, including operating leases, where the main risks the businesses face are credit risk, business risk, market risk and operational risk. Credit risk is managed at the time of financing through comprehensive assessments of the borrower’s performance and related collateral. After conducting the financing, we continue to monitor borrowers and, for borrowers that require caution, our policy requires management to consider the collectability of the financing and to determine the necessity of an allowance for credit losses or an impairment. We generally limit our financing to small and
medium-sized
ships with high versatility that are comparatively easy to
re-lease
and evaluate sales depending on changes in market conditions. Operational risk primarily arises from the risk of managing ships that we own, but we are able to substantially mitigate the possibility of unforeseen events by limiting the outsourcing of ship management to experienced and stable partners and conducting regular assessments.
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ORIX USA
Credit risk and market risk related to lending and investment are the main risks facing the lending investment business and finance business in the ORIX USA segment.
Regarding credit risk, at the time an investment or loan is made, we assign an internal risk rating to such investment or loan taking into consideration various standard credit metrics, collateral value, and enterprise value. The loan or investment is continuously monitored and the risk rating is periodically reviewed and updated if necessary. For any investments and/or loans for which the rating of the customer has reached or exceeded the cautionary level, our policy requires management to determine the necessity of an allowance for credit losses or an impairment. Regarding market risk, we monitor market values while referring to credit risk information and manage risk by pursuing early sales as appropriate to secure profits or minimize losses.
Operational risk is the main risk for the agency lending business in the United States. We make and sell loans and mortgage backed securities and provide servicing and asset management services with regard to those loans and mortgage backed securities. The majority of those loans and mortgage backed securities are insured by the Federal Housing Administration or guaranteed by a government-sponsored financial institution such as Fannie Mae and Freddie Mac. We conduct our agency lending business in accordance with the designated procedures set forth by these government agencies and government-sponsored institutions; and monitor and manage loan servicing and asset management quality through internal auditing for compliance with the designated procedures and periodic reviews by these agencies and institutions.
Operational risk is the main risk for the asset management business.
We promote the standardization of business processes, regulations and manuals and seek to prevent omissions and mistakes in conducting business operations and to improve efficiency generally. In addition, we ensure proper risk management by clarifying operating procedures and the authority and the responsibilities of administrators and supervisors in business operations.
In addition to monitoring to maintain and ensure satisfactory levels of credit, market, and operational risk, we review our products and services to constantly maintain and improve performance and quality in response to changes in the business environment and evolving customer needs.
ORIX Europe
In the ORIX Europe segment, we mainly operate in the asset management industry, where the main risks they face are operational risk and compliance risk.
To mitigate operational and compliance risks in the asset management business, particularly risks related to acting as a fiduciary manager for customer and client property, we promote a transparent risk culture and the standardization of business processes, internal regulations and procedures. Some operational risk in the asset management business stems from changes in the highly regulated environment of jurisdictions in which the companies operate so OCE group companies actively monitor regulatory developments at an early stage to address these risks, both directly and through representative associations. OCE group companies further ensure proper risk management by implementing risk management policies and frameworks in compliance with applicable regulations, client demand, and sound risk management practices. OCE’s role within the OCE group is to oversee and monitor the risk management and internal control frameworks of each OCE group company.
Asia and Australia
Our local subsidiaries in the Asia, and Australia segment primarily operate leasing, loan, automobile leasing and investment businesses. The main risks those businesses face are credit risk, business risk and market risk.
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In the leasing and loan businesses, comprehensive assessments of customers’ business performance and collateral are conducted. Regular monitoring is conducted for purposes such as tracking unpaid amounts and preventing deviations in portfolios at the local subsidiary level and corrective action is taken when necessary. In the automobile leasing business, risk management is conducted by considering factors that vary from country to country like lease taxation systems and characteristics of the used automobile market.
In the investment business, investments are conducted in a manner similar to domestic investments, with an assessment of the transaction conducted initially and regular monitoring conducted after the transaction takes place. In cases where we have rights as a shareholder as a result of the transaction or have dispatched a director, we support sound management of the investee through our involvement in its board of directors.
Item 6. Directors, Senior Management and Employees
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
CORPORATE GOVERNANCE SYSTEM
We believe that a robust corporate governance system is a vital element of effective and enhanced management and have established sound and transparent corporate governance to carry out appropriate business activities in line with Management’s Basic Policy and to ensure objective management.
ORIX’s corporate governance system is characterized by:

| • |  | separation of execution and supervision through a “Company with Nominating Committee, etc.” board model;

| • |  | Nominating, Audit and Compensation Committees composed entirely of outside directors;

| • |  | all outside directors satisfying “Requirements for Independent Directors”; and

| • |  | all outside directors being highly qualified in their respective fields.

Rationale behind adopting ORIX’s Corporate Governance System and history of the system
We believe that swift execution of operations is vital to effectively respond to changes in the business environment. Furthermore, we believe that ORIX promotes improved management transparency through a corporate governance system in which outside directors, who have expert knowledge in their respective fields, monitor and advise on the lawful and appropriate execution of operations with an independent view.
Based on these principles, our Board of Directors possesses an oversight function and, under the “Company with Nominating Committee, etc.” board model delegates certain responsibilities to the three board committees to carry out the role of effective governance.
All members of the three committees (Nominating, Audit and Compensation) are outside directors to separate the oversight function of the Board of Directors from the execution of operations and avoid conflicts of interest with our shareholders.
In addition, all outside directors meet objective and specific “Requirements for Independent Directors” stipulated by the Nominating Committee (described below under “Nominating Committee”).
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Below is a summary of the history of ORIX’s corporate governance system:

June 1997 |  | Established Advisory Board
June 1998 |  | Introduced Corporate Executive Officer System
June 1999 |  | Introduced Outside Director System
June 2003 |  | Adopted the “Company with Committees” board model
May 2006 |  | Adopted the new “Company with Committees” board model in line with the enactment of the Companies Act of Japan
May 2015 |  | Adopted the new “Company with Nominating Committee, etc.” board model in line with the amendment of the Companies Act of Japan

The “Company with Nominating Committee, etc.” board model, as stipulated under the Companies Act of Japan, requires the establishment of three board of director committees: the Nominating, Audit and Compensation Committees. Each committee is required to consist of three or more directors, a majority of whom must be outside directors. Directors may serve on more than one committee. The term of office of committee members is not stipulated under the Companies Act of Japan. However, as a committee member must be a director of the Company, the term expires at the close of the first annual general meeting of shareholders after his or her election. Under the Companies Act of Japan, an outside director is defined as a director who does not have a role in executing the Company’s business, meaning an individual who has not assumed in the past ten years the position of a representative director or a director with the role of executing the business, executive officer (
shikkou-yaku
), manager or any other employee of the Company or any of its subsidiaries, and who does not currently assume such position of the Company or any of its subsidiaries. (See Item 16G “Corporate Governance”.)
Board of Directors
The Board of Directors has ultimate decision-making authority for our important affairs. It also monitors the performance of the directors and executive officers and receives performance reports from the executive officers and others. Our Articles of Incorporation provide for no fewer than three directors. Directors are elected at general meetings of shareholders. The term of office for any director, as stipulated under the Companies Act of Japan, for companies that adopt a “Company with Nominating Committee, etc.” board model, expires at the close of the first annual general meeting of shareholders after his or her election or
re-election
as the case may be.
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The Board of Directors carries out decisions related to items that, either as a matter of law or pursuant to our Articles of Incorporation, cannot be delegated to executive officers, such as management policies and basic policy on the internal control system, and other important items as determined by the regulations of the Board of Directors. The Board of Directors monitors the execution of duties by the directors and executive officers using management and internal control policies, which are reviewed and updated on a regular basis.
The Board of Directors sometimes delegates certain decision-making authority regarding operational execution to the representative executive officer to promote decision-making efficiency and operational execution. For example, the board may delegate to the representative executive officer the authority to approve issuances of shares of capital stock and bonds. In addition, the Companies Act of Japan permits an individual to simultaneously be a director and a representative executive officer of the Company.
Furthermore, the Board of Directors receives reports from executive officers and the three committees regarding execution status of their respective duties. Accordingly, the Board of Directors collects information and monitors the appropriateness of operational execution based on such information.
From April 1, 2022 through March 31, 2023, the Board of Directors met eight times. The attendance rate of directors for these meetings was 100%. The attendance status of each director is as follows.

Name |  | Status of attendance at the Board of Directors Meetings held in Fiscal 2023
Makoto Inoue |  | Attended eight of eight meetings of the Board of Directors
Shuji Irie |  | Attended eight of eight meetings of the Board of Directors
Satoru Matsuzaki |  | Attended eight of eight meetings of the Board of Directors
Yoshiteru Suzuki |  | Attended eight of eight meetings of the Board of Directors
Stan Koyanagi |  | Attended eight of eight meetings of the Board of Directors
Michael Cusumano |  | Attended eight of eight meetings of the Board of Directors
Sakie Akiyama |  | Attended eight of eight meetings of the Board of Directors
Hiroshi Watanabe |  | Attended eight of eight meetings of the Board of Directors
Aiko Sekine |  | Attended eight of eight meetings of the Board of Directors
Chikatomo Hodo |  | Attended eight of eight meetings of the Board of Directors
Noriyuki Yanagawa |  | Attended six of six meetings of the Board of Directors during his term as a member of the Board of Directors
Heizo Takenaka |  | Attended two of two meetings of the Board of Directors during his term as a member of the Board of Directors

During fiscal 2023, the Board of Directors determined the content of proposals to be submitted to the general meeting of shareholders and basic management policy, elected executive officers, delegated decisions on the execution of operations to the representative executive officer, evaluated the effectiveness of the Board of Directors and monitored the execution of duties by executive officers based on the reports from executive officers and the three committees.
Composition and size of Board of Directors
The Board of Directors is composed of directors, including outside directors who possess broad knowledge and experience. The number of directors on the board is also maintained at the level we consider to be appropriate for effective and efficient board discussion.
The Board of Directors as of June 26, 2023 included 11 members, six of whom are outside directors.
Structure and Activities of the Three Committees
As of June 26, 2023, all three committees (Nominating, Audit and Compensation Committees) are composed entirely of outside directors. The members of each committee along with the number of committee meetings and attendance rates are shown below.
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|  | Nominating Committee |  | Audit Committee |  | Compensation Committee
Members as of June 26, 2023 |  | 3 Members (Outside Directors: 3) Sakie Akiyama (Chairperson) Hiroshi Watanabe Aiko Sekine |  | 3 Members (Outside Directors: 3) Aiko Sekine (Chairperson) Chikatomo Hodo Noriyuki Yanagawa |  | 3 Members (Outside Directors: 3) Hiroshi Watanabe (Chairperson) Michael Cusumano Chikatomo Hodo
Number of meetings held during fiscal 2023 (Attendance rate) |  | Six (6) meetings (100%) |  | Fourteen (14) meetings (98%) |  | Four (4) meetings (100%)

Nominating Committee
The Nominating Committee is authorized to propose the slate of director appointments or dismissals to be submitted to the general meeting of shareholders. Directors are appointed and dismissed by a resolution of the general meeting of shareholders. In addition, the Nominating Committee deliberates on the agenda concerning the appointment or dismissal of our executive officers to be resolved at the Board of Directors meeting, although this is not required under the Companies Act of Japan. The attendance status of each committee member in fiscal 2023 is as follows.

Name |  | Status of attendance at Nominating Committee Meetings held in Fiscal 2023
Sakie Akiyama |  | Attended six of six meetings of the Nominating Committee
Hiroshi Watanabe |  | Attended six of six meetings of the Nominating Committee
Aiko Sekine |  | Attended six of six meetings of the Nominating Committee

During fiscal 2023, the Nominating Committee determined the content of proposals to be submitted to the general meeting of shareholders regarding the appointment of directors, deliberated on the selection of directors who would form each committee, appointed executive officers and group executives and deliberated on changes to the division of duties and the succession plan.
Furthermore, the Nominating Committee ensures that the Board of Directors possesses the appropriate levels of and diversity in knowledge, experience, and expertise, through an established decision-making process for directors’ appointments. The Nominating Committee stipulates the “Requirements for Independent Directors” in accordance with the nomination criteria for director candidates described below. The Nominating Committee also nominates executive officer candidates to the Board of Directors following an assessment of candidates’ past experience, knowledge, and suitability for the position to execute business decisions in the Company’s existing and new businesses.
Nomination criteria for director candidates:
(Internal Director)

| • |  | An individual with a high degree of expertise in ORIX Group’s business and excellent business judgment and business administration skills

(Outside Director)

| • |  | An individual with a wealth of experience as a business administrator

| • |  | An individual with professional knowledge in fields such as economics, business administration, law and accounting, as such relate to corporate management

| • |  | An individual with extensive knowledge in areas such as politics, society, culture and academics, as such relate to corporate management

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The Nominating Committee determines whether the conditions for director independence have been met in accordance with the independence-related nomination criteria for outside directors, which are:

| (1) | No individual may be a principal trading partner*, or an executive officer (including operating officer, hereinafter the same) or employee of a principal trading partner of ORIX Group. If such circumstances existed in the past, one year must have passed since that person’s departure from such office or employment.

* A “principal trading partner” refers to an entity with a business connection to ORIX Group with a transaction amount equivalent to more than the greater of 2% of such entity’s consolidated total sales (or consolidated total revenues) or one million U.S. dollars in any fiscal year during the preceding four fiscal years.

| (2) | No individual may receive directly a large amount of compensation (10 million yen or higher in a fiscal year), excluding compensation as a director from ORIX Group in any fiscal year during the preceding four fiscal years. Further, any corporation or other entity in which such individual serves as a consultant, account specialist or legal expert may not receive a large amount of compensation (equivalent to more than the greater of 2% of such entity’s consolidated total sales (or consolidated total revenues of ORIX Group) or one million U.S. dollars) from ORIX Group. If such circumstances existed in the past, at least one year must have passed since that corporation or other entity received such compensation.

| (3) | No individual may be a major shareholder of ORIX (10% or higher of issued shares) or a representative of the interests of a major shareholder.

| (4) | No individual may have served as an executive officer of a company having a relationship of concurrent directorship* with ORIX in any fiscal year of the preceding four fiscal years.

* “Concurrent directorship” refers to a relationship in which an executive officer of ORIX or its subsidiaries also serves as a director of a company in which the individual has been an executive officer and an outside director of ORIX.

| (5) | No individual may be a member of the executive board (limited to those who execute business) or be a person executing the business (including an officer, corporate member or employee who executes business of the organization) of any organization (including public interest incorporated associations, public interest incorporated foundations and non-profit corporations) that have received a large amount of donation or financial assistance (annual average of 10 million yen or higher over the past three fiscal years) from ORIX Group.

| (6) | No individual may have served as an accounting auditor or an accounting advisor ( kaikei san-yo ), a certified public accountant (or a tax accountant) or a corporate member, a partner or an employee of an audit firm (or a tax accounting firm) who personally performed the audit work (excluding engagement as a supporting role) for ORIX Group in any fiscal year during the preceding four fiscal years.

| (7) | None of an individual’s family members* may fall under any of the following:

| i) | A person who was an executive officer or an important employee of ORIX Group during the past three years.

| ii) | A person who falls under one of the criteria specified in (1) through (3), (5) and (6) above; provided, however, that criterion (1) is limited to an executive officer, criterion (2) is limited to a corporate member or a partner of the corporation or other entity and criterion (6) is limited to an executive officer or an employee who performs the audit on ORIX Group in person.

* Family members include a spouse, those related within the second degree by consanguinity or affinity, or other kin living with the outside director.

| (8) | There must be no material conflict of interest or any possible conflict of interest that might influence the individual’s judgment in performing their duties as an outside director.

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Audit Committee
The Audit Committee monitors the execution of duties of the directors and executive officers and prepares audit reports. In addition, the Audit Committee decides the content of proposals to appoint, dismiss or refuse the reappointment of the Company’s Independent Auditor, which are submitted to the general meeting of shareholders. (See “—Policies on Auditing and Auditing System—
Audit Committee
” for discussion of the main considerations of the Audit Committee and the attendance status of each committee member in fiscal 2023.)
Under the “Company with Nominating Committee, etc.” board model, the directors who compose the Audit Committee are not permitted to be executive officers, executive directors of the Company or its subsidiaries, or managers, employees or accounting advisors (
kaikei
san-yo
) of the Company’s subsidiaries. Under the “Company with Nominating Committee, etc.” board model, the Audit Committee generally has powers and duties to monitor the performance of the directors and executive officers in the performance of their responsibilities, as well as the right to propose the appointment or dismissal of, or to pass resolutions for refusing reappointment of the Company’s independent certified public accountants at the annual general meeting of shareholders. Any proposal for appointment or dismissal of a certified public accountant needs to be submitted to a general meeting of shareholders for approval. In furtherance of its responsibilities, the Audit Committee also has the power to request a report of business operations from any director, executive officer, manager or other employee at any time, and to inspect for itself the details of the Company’s business operations and financial condition.
Compensation Committee
The Compensation Committee has the authority to set the policy for determining compensation for directors and executive officers in accordance with the Companies Act of Japan and to set the specific compensation for each individual director and executive officer. Director and executive officer compensation information is disclosed in accordance with the Companies Act and the Financial Instruments and Exchange Act. The attendance status of each committee member in fiscal 2023 is as follows.

Name |  | Status of attendance at Compensation Committee Meetings held in Fiscal 2023
Hiroshi Watanabe |  | Attended three of three meetings of the Compensation Committee during his term as a member of the Compensation Committee
Michael Cusumano |  | Attended four of four meetings of the Compensation Committee
Chikatomo Hodo |  | Attended four of four meetings of the Compensation Committee
Heizo Takenaka |  | Attended one of one meeting of the Compensation Committee during his term as a member of the Compensation Committee

During fiscal 2023, the Compensation Committee determined performance evaluations and individual payment amounts related to performance-linked compensation (annual bonus) for fiscal 2022, examined and determined the compensation system for directors and executive officers for fiscal 2023 and examined compensation levels for directors and executive officers based on the outcome of an investigation by a third-party compensation research agency.
Executive Officers
Under the “Company with Nominating Committee, etc.” board model, and within the scope of laws and ordinances, corporate decisions made at the Board of Directors are delegated to the representative executive officer (CEO) to accelerate and achieve efficiency in business operations. The representative executive officer makes important business execution decisions after deliberations by the Executive Committee (“EXCO”) or other appropriate committees in accordance with the Company’s internal policies. The business execution duties of executive officers are decided by the Board of Directors and the representative executive officer and these duties are carried out based upon the Company’s internal policies. Group executives are appointed by the Board of Directors from among directors and executive officers of Group companies.
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Important decision-making related to business execution, monitoring, discussions, and information sharing is carried out by the following bodies:
Executive Committee
The EXCO, which consists of the CEO and executive officers and group executives appointed by the CEO, deliberates on important matters related to the management of the Company. Matters considered crucial to our operations are reported to the Board of Directors as appropriate.
Sustainability Committee
The Sustainability Committee, which consists of the CEO and executive officers and group executives appointed by the CEO, deliberates on important matters related to promoting and implementing sustainability. Additionally, certain matters are reported to the Board of Directors depending on their content and level of importance.
*External experts may potentially be invited.
Investment and Credit Committee
The Investment and Credit Committee, which consists of the CEO and executive officers and group executives appointed by the CEO, deliberates on investments and credit transactions that exceed certain specified investment or credit amounts. Matters considered crucial to our operations are reported to the Board of Directors as appropriate after being deliberated on by the EXCO.
Information Technology Management Committee
The Information Technology Management Committee, which consists of the CEO, the officer in charge of the Technology Department and executive officers appointed by the CEO, deliberates on important matters related to establishing fundamental policies for IT operations and IT strategy and implementing and maintaining IT systems.
Disclosure Committee
To ensure timely and appropriate disclosure of information material to ORIX Group, the Disclosure Committee, which consists of the executive officers in charge of the group management departments related to the disclosure of information material to ORIX Group, receives reports on material
non-public
information from persons in charge of each unit, and takes steps necessary to determine whether or not timely disclosure of such information is necessary, and the appropriate means of disclosing such information.
Group Executive Officer Committee
The Group Executive Officer Committee, in which all executive officers and group executives participate, discusses important matters relating to the business execution of ORIX Group.
Business Unit Strategy Meeting
The Business Unit Strategy Meeting, in which the CEO and executive officers appointed by the CEO participate, discusses matters such as the strategy of each business unit and changes in the business environment.
Policies on Auditing and Auditing System
The Audit Committee has established the following four items as its fundamental policies:

| • |  | The Committee shall monitor and verify the formulation and status of operations of the Group’s internal control systems. In particular, it shall consider the validity and effectiveness of compliance systems, systems to ensure the credibility of financial reporting, and risk management systems.

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| • |  | The Committee shall monitor and verify whether directors, executive officers, and employees under the supervision of executive officers are complying with laws, ordinances, and the provisions of the Articles of Incorporation in fulfilling their obligations of loyalty and due diligence, as well as any other legal obligations to the Group.

| • |  | The Committee shall monitor and verify whether executive officers are determining the execution of their duties and carrying out said duties appropriately and efficiently in accordance with basic management policies, medium-term management plans, and other plans and policies established by the Board of Directors.

| • |  | To ensure the fairness and credibility of audits, the Committee shall monitor and verify whether the independent certified public accountants are maintaining their independent position and conducting appropriate audits as a professional expert.

Based on these fundamental policies, the Audit Committee verifies the status of the performance of duties and the formulation and status of operations of internal control systems with the representative executive officer and the heads of internal control-related and accounting departments, and shares information with the executive officers responsible for the Group Internal Audit Department, the independent certified public accountants, and others as necessary. The Audit Committee also has access to external experts necessary to carry out its duties.
The Auditing functions of the Company are as follows.
Audit Committee
The Audit Committee which consists of three outside directors evaluates the Group’s internal control systems from an independent standpoint and may appoint outside experts to conduct its duties if necessary. Aiko Sekine, chairperson of the Audit Committee, is qualified as a certified public accountant and has extensive knowledge in finance and accounting as a professional accountant. The number of meetings of the Audit Committee held and the attendance of each member in Fiscal 2023 are as follows. Each meeting took approximately two hours.

Name |  | Status of attendance at Audit Committee Meetings held in Fiscal 2023
Aiko Sekine |  | Attended fourteen of fourteen meetings of the Audit Committee
Chikatomo Hodo |  | Attended thirteen of fourteen meetings of the Audit Committee
Noriyuki Yanagawa |  | Attended eleven of eleven meetings of the Audit Committee during his term as a member of the Audit Committee
Hiroshi Watanabe |  | Attended three of three meetings of the Audit Committee during his term as a member of the Audit Committee

In fiscal 2023, the main items executed by the Audit Committee were the exchange of opinions with the CEO, the receipt of regular activity reports on the status of business execution from executive officers, the receipt of activity reports from internal control-related departments, the approval of the audit plan of the Group Internal Audit Department, the evaluation of the independent certified public accountants, the agreement on audit fees and cooperation with the independent certified public accountants. To enhance discussion in the Audit Committee and to strengthen cooperation among Audit Committee members, opportunities to reflect on the audit plan and audit activities were provided at regular intervals. In addition, the members of the Audit Committee collected information useful for audit activities, including the current status of each business of the ORIX Group, business strategies, and project progress, through activities such as briefing sessions with executive officers and site visits.
Audit Committee Secretariat
The Audit Committee Secretariat which includes four staff members, supports the work of the Audit Committee under the Audit Committee’s instructions. The appointment and evaluation of, changes to, and
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disciplinary action toward the staff of the Audit Committee Secretariat are carried out by the executive officer responsible for the Group Internal Audit Department with the approval of the Audit Committee.
Operating Officer Responsible for Group Internal Audit Department
The Operating Officer Responsible for the Group Internal Audit Department supports the Audit Committee in collecting information. Such person is entrusted by the Audit Committee with attending important meetings within the ORIX Group and accurately reporting information essential to auditing activities to the Audit Committee in a timely manner.
Reporting System to the Audit Committee
The following reporting system is in place to ensure that the information required by the Audit Committee is reported in a timely and accurate manner.

| • |  | The directors, executive officers and employees of ORIX Group shall report information requested by the Appointed Audit Member to the Audit Committee of the Company (i.e. the member responsible for the collection of information regarding the performance of duties and investigation of operating assets, hereinafter the “Appointed Audit Member”) periodically or as appropriate.

| • |  | The directors, executive officers and employees of ORIX Group shall report to the Audit Committee upon knowledge of any business activity by a group company that may constitute a serious breach of laws or regulations or a serious breach of the Articles of Incorporation of the relevant group company or serious misconduct, or any fact that could cause significant damage to such group company (hereinafter referred to as an incident of “corruption or scandal”).

| • |  | Upon becoming aware that an incident of corruption or scandal is occurring, the directors, executive officers or employees of ORIX Group shall report to, consult with and provide the basis for such knowledge or suspicion to, the internal or external whistleblower channels. If the head of whistleblower channels judges that such report or consultation is serious in nature, he / she shall report such information to the Audit Committee of the Company. In addition, the directors, executive officers and employees of ORIX may report concerns regarding accounting, internal controls or auditing matters as well as concerns related to directors, executive officers, and group executives to the Audit Committee or the Appointed Audit Member within the Audit Committee.

| • |  | ORIX internal rules stipulate that any director, executive officer or employee of ORIX Group who has reported to or consulted with the whistleblower channels and/or the Audit Committee shall not be treated adversely by reason of said report or consultation. ORIX has established and maintains a system in which persons who have so reported or consulted will not be subject to adverse treatment as a result of their reporting or consulting, including internal rules that stipulate that any person who engages in adverse treatment of an individual who so reports or consults shall be disciplined pursuant to the internal rules.

Group Internal Audit Department and Group Corporate Auditors
The Group Internal Audit Department, which includes 66 staff (as of the end of May 2023), performs internal audits in accordance with the Institute of Internal Auditors (IIA) standards*. An external quality assessment confirmed our practices as “Generally Conforms” to IIA standards. The scope of our internal auditing focuses on the effectiveness of internal control systems, the efficiency and effectiveness of operations, compliance, and other factors pertaining to the management of the ORIX Group through a risk-based approach. The Group Internal Audit Department also jointly identifies and monitors critical risk through cooperation with corporate auditors and internal audit functions at group companies and works to maintain and enhance the ORIX Group’s internal auditing system.
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*IIA standards : “The International Professional Practices Framework” and “Code of Ethics” set by The IIA. The IIA was founded in 1941 in the United States, and provides leadership for the global profession of internal auditing.
Interactions among the Audit Committee, the Independent Certified Public Accountants and others
In order to ensure the effectiveness of audits, the Audit Committee, the Audit Committee Secretariat, the internal audit department and the internal control-related functions, and the independent certified public accountants work together through the following procedures.

| • |  | The Audit Committee reviews and approves the annual audit plan prepared by the internal audit department. In addition, the Audit Committee confirms the audit plan of the independent certified public accountants.

| • |  | The Audit Committee receives reports on the results of internal audit department audits and the improvement status of the issues pointed out, and confirms problems in business execution.

| • |  | The internal audit department always cooperates with the Audit Committee and fully cooperates with the Audit Committee’s request for investigation.

| • |  | The Audit Committee receives and discusses the status of internal control evaluation related to financial reporting by the internal audit department and reports on the evaluation results.

| • |  | The Audit Committee hears and examines the audit opinion and recommendations of the independent certified public accountants for quarterly and year-end closing.

| • |  | The Audit Committee receives and discusses important information on accounting audits and internal control audits conducted by the independent certified public accountants.

| • |  | The Audit Committee exchanges views with the independent certified public accountants as necessary on important audit matters.

| • |  | The internal audit department exchanges views with the independent certified public accountants on risk recognition regarding financial reporting as necessary, and works to strengthen collaboration in order to enhance the effectiveness and efficiency of the supervisory function.

| • |  | The internal control-related functions regularly reports on the status of operation of the internal control system to the Audit Committee.

Activities to ensure the effectiveness of audits

| • |  | The internal audit department has a functional reporting relationship with the Audit Committee and an administrative reporting relationship with CEO. The Chief Audit Executive (“CAE”) has the right of unlimited access, direct reporting and direct communication with the Audit Committee and CEO.

| • |  | The internal audit department establishes the annual audit plan with approval of the Audit Committee and the CEO.

| • |  | The internal audit department reports on the results of its internal audits to the Audit Committee and the CEO.

| • |  | The internal audit department establishes the internal audit rules with approval of the Audit Committee.

Interactions among outside directors’ monitoring, internal audit, audit conducted by the Audit Committee and external audit, and with the internal control-related functions

| • |  | Outside directors, as members of the Board of Directors, determine the company’s direction and strategy, establish basic policy on the internal control system and determine execution of important business affairs. They also demonstrate highly effective oversight functions through reporting about the

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| status of the performance of duties by the Audit Committee and executive officers and reporting as to the status of operation of internal control systems within the internal control-related functions etc., separating from the execution of operations.

| • |  | The Audit Committee is composed entirely of outside directors. The Audit Committee conducts an audit regarding the status of the performance of directors’ and executive officers’ duties and an oversight of the Company’s independent certified public accountants in terms of its solid independent position.

| • |  | The Audit Committee Secretariat provides an opportunity for an interview between members of the Audit Committee and executive officers of ORIX Group in order that members consisting of solely outside directors obtain further understanding of ORIX Group’s business.

| • |  | After the closing of the Board of Directors meetings, debriefing sessions are held to report the current status of each business, business strategy, progress of projects, etc. and to share information necessary to enable appropriate oversight by the outside directors.

AUDITOR INDEPENDENCE
Presently, our independent certified public accountants are KPMG AZSA LLC. The independence of KPMG AZSA LLC has been evaluated by our Audit Committee. KPMG AZSA LLC has continuously audited ORIX Group since 1985.
ORIX Group prepares consolidated financial statements in accordance with U.S. GAAP. U.S. GAAP consolidated financial information is used by management for evaluating our performance and forms the basis for presentation of financial information to our shareholders. The consolidated financial statements prepared in accordance with U.S. GAAP that are included in this annual report filed with the SEC have been audited by KPMG AZSA LLC, which is registered with the PCAOB in the United States.
We select the independent certified public accountants to conduct the Company’s audit or determine the reappointment thereof based on the external auditor basic appointment policy (“basic appointment policy”) defined by the Audit Committee, which takes into consideration their independence from the Company, as well as their expert knowledge, comprehensive ability to conduct audits, audit quality and the number of continuous audit years in the Company.
With regard to the independent certified public accountants, based on the basic appointment policy described above, if we deem that the independent certified public accountants do not demonstrate adequate expert knowledge, comprehensive ability to conduct audits, audit quality, or if they are in violation of laws or regulations, including the Companies Act and the Certified Public Accountants Act, if they are offensive to public order and morals, or if there are other suitable reasons, the Company’s Audit Committee shall submit a proposal to the General Meeting of Shareholders concerning the dismissal or
non-reappointment
of the independent certified public accountants.
In addition, if the Company’s Audit Committee deems that the independent certified public accountants’ circumstances qualify as a reason for dismissal provided for in Article 340, Paragraph (1) of the Companies Act, the Audit Committee shall dismiss the independent certified public accountants.
The independent certified public accountants are to be evaluated each year based on the basic appointment policy, and in the fiscal year under review, we performed a comprehensive evaluation based on audit performance, audit quality, and audit fees.
In the opinion of management, the provision of
non-audit
services did not impair the independence of KPMG AZSA LLC.
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DIRECTORS
The Member of the Board of Directors of ORIX as of June 26, 2023 are as follows:

Name (Date of birth) |  | Current positions and principal outside positions (1) |  | Business experience |  | Number of shares held (of which number of shares scheduled to be issued by share-based compensation plans) in the Company as of June 26, 2023
Makoto Inoue (Oct. 2, 1952) |  | Member of the Board of Directors, Representative Executive Officer, President and Chief Executive Officer, Responsible for Group Strategy Business Unit |  | Apr. 1975 |  | Joined the Company |  | 101,072 (682,948)
| Mar. 2001 |  | General Manager of Investment Banking Headquarters
| Jan. 2003 |  | Deputy Head of Investment Banking Headquarters |  |
| Feb. 2005 |  | Assumed office of Executive Officer, the Company |  |
|  |  | Head of Alternative Investment & Development Headquarters |  |
| Jan. 2006 |  | Assumed office of Managing Executive Officer, the Company |  |
| Dec. 2006 |  | Head of Alternative Investment & Development Headquarters, |  |
|  |  | Responsible for IT Planning Office |  |
|  |  |  | Jun. 2008 |  | Head of International Administrative Headquarters, |  |
|  |  |  |  |  | Head of Alternative Investment & Development Headquarters, |  |
|  |  |  |  |  | Responsible for IT Planning Office |  |
|  |  |  | Jun. 2009 |  | Assumed office of Senior Managing Executive Officer, the Company |  |
|  |  |  | Jun. 2010 |  | Assumed office of Member of the Board of Directors, Deputy President, the Company |  |
|  |  |  | Jan. 2011 |  | Assumed office of Member of the Board of Directors, Representative Executive Officer, President, the Company Chief Operating Officer |  |
|  |  |  | Jan. 2014 |  | Co-Chief Executive Officer |  |
|  |  |  | Jun. 2014 |  | Chief Executive Officer |  |
|  |  |  | Jan. 2017 |  | Responsible for Group IoT Business Department, |  |

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Name (Date of birth) |  | Current positions and principal outside positions (1) |  | Business experience |  | Number of shares held (of which number of shares scheduled to be issued by share-based compensation plans) in the Company as of June 26, 2023
|  |  |  |  |  | Responsible for New Business Development Department I and II |  |
|  |  |  | Apr. 2017 |  | Responsible for Group IoT Business Department, |  |
|  |  |  |  |  | Responsible for New Business Development Department |  |
|  |  |  | May 2017 |  | Responsible for Open Innovation Business Department, |  |
|  |  |  |  |  | Responsible for Group IoT Business Department, |  |
|  |  |  |  |  | Responsible for New Business Development Department |  |
|  |  |  | Jan. 2018 |  | Responsible for Group Strategy Business Unit |  |
Shuji Irie (Mar. 14, 1963) |  | Member of the Board of Directors, Senior Managing Executive Officer, Head of Investment and Operation Headquarters |  | May 2001 |  | Joined Mizuho Securities CO., Ltd. (retired in Apr. 2011) |  | 4,200 (156,490)
| Apr. 2011 |  | Joined the Company
| Sep. 2011 |  | Deputy Head of Investment and Operation Headquarters |  |
| Jan. 2013 |  | Assumed office of Executive Officer, the Company |  |
| Jan. 2014 |  | Head of Investment and Operation Headquarters |  |
| Jan. 2016 |  | Assumed office of Managing Executive Officer, the Company |  |
|  |  | Responsible for Concession Business Development |  |
| Jun. 2018 |  | Assumed office of Member of the Board of Directors, Managing Executive Officer, the Company |  |
|  |  |  | Jan. 2020 |  | Assumed office of Member of the Board of Directors, Senior Managing Executive Officer, the Company |  |

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Name (Date of birth) |  | Current positions and principal outside positions (1) |  | Business experience |  | Number of shares held (of which number of shares scheduled to be issued by share-based compensation plans) in the Company as of June 26, 2023
Satoru Matsuzaki (Apr. 12, 1966) |  | Member of the Board of Directors, Senior Managing Executive Officer, Head of Corporate Business Headquarters Chairman, ORIX Auto Corporation Chairman, ORIX Rentec Corporation |  | Apr. 1989 |  | Joined Crown Leasing Corporation (retired in Apr. 1997) |  | 9,800 (151,420)
| Aug. 1997 |  | Joined the Company
| Oct. 2005 |  | General Manager of Strategic Planning Group, Investment Banking Headquarters
| Apr. 2006 |  | General Manager of Investment and Operation Group, Investment Banking Headquarters
| Feb. 2010 |  | Head of Office of the President
| Jun. 2010 |  | General Manager of Corporate Planning Department
|  |  |  | Jan. 2012 |  | General Manager of Corporate Planning Department, |  |
|  |  |  |  |  | General Manager of Corporate Communications Department |  |
|  |  |  | May 2012 |  | General Manager of Corporate Planning Department, |  |
|  |  |  |  |  | Special Advisor to Responsible for Corporate Communications Department |  |
|  |  |  | Jan. 2013 |  | Assumed office of Executive Officer, the Company |  |
|  |  |  |  |  | Responsible for Corporate Planning Department, |  |
|  |  |  |  |  | Responsible for Corporate Communications Department |  |
|  |  |  | Jan. 2014 |  | Domestic Sales Administrative Headquarters: Head of New Business Development and Head of Tokyo Sales |  |
|  |  |  | Jun. 2015 |  | Responsible for New Business Development Department I and II, Head of Tokyo Sales Headquarters |  |
|  |  |  | Jan. 2017 |  | Head of Eastern Japan Sales Headquarters |  |

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Name (Date of birth) |  | Current positions and principal outside positions (1) |  | Business experience |  | Number of shares held (of which number of shares scheduled to be issued by share-based compensation plans) in the Company as of June 26, 2023
|  |  |  | Jan. 2018 |  | Assumed office of Managing Executive Officer, the Company Head of Domestic Sales Administrative Headquarters, Head of Eastern Japan Sales Headquarters |  |
|  |  |  | Jan. 2019 |  | Head of Corporate Business Headquarters |  |
|  |  |  | Jun. 2019 |  | Assumed office of Member of the Board of Directors, Managing Executive Office, the Company |  |
|  |  |  | Jan. 2020 |  | Assumed office of Member of the Board of Directors, Senior Managing Executive Officer, the Company |  |
|  |  |  |  |  | Chairman, ORIX Auto Corporation, |  |
|  |  |  |  |  | Chairman, ORIX Rentec Corporation |  |
Stan Koyanagi (Dec. 25, 1960) |  | Member of the Board of Directors, Senior Managing Executive Officer, Global General Counsel Responsible for Legal Function Unit |  | Oct. 1985 |  | Joined SHEPPARD, MULLIN, RICHTER & HAMPTON LLP (retired in May 1988) |  | 5,000 (0)
| Jan. 1993 |  | Partner, GRAHAM & JAMES LLP (currently Squire Patton Boggs LLP) (retired in Feb. 1997)
| Mar. 1997 |  | Vice President, ORIX USA Corporation (currently ORIX Corporation USA) |  |
| Mar. 1999 |  | General Counsel, Vice President and Manager, ORIX USA Corporation (currently ORIX Corporation USA) (retired in Dec. 2003) |  |
|  |  |  | Jan. 2004 |  | Vice President and Associate General Counsel, KB HOME (retired in Jun. 2013) |  |
|  |  |  | Jul. 2013 |  | Joined the Company |  |
|  |  |  |  |  | Global General Counsel of Global Business Headquarters |  |

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Name (Date of birth) |  | Current positions and principal outside positions (1) |  | Business experience |  | Number of shares held (of which number of shares scheduled to be issued by share-based compensation plans) in the Company as of June 26, 2023
|  |  |  | Jun. 2017 |  | Assumed office of Member of the Board of Directors, Managing Executive Officer, the Company |  |
|  |  |  |  |  | Responsible for Enterprise Risk Management, Global General Counsel |  |
|  |  |  | Jun. 2018 |  | Head of Enterprise Risk Management Headquarters |  |
|  |  |  | Jan. 2019 |  | Responsible for Enterprise Risk Management Headquarters |  |
|  |  |  | Jan. 2022 |  | Responsible for Legal and Compliance Headquarters |  |
|  |  |  | Jan. 2023 |  | Assumed office of Member of the Board of Directors, Senior Managing Executive Officer, the Company |  |
|  |  |  |  |  | Responsible for Legal Function Unit |  |
Yasuaki Mikami (Jan. 29, 1968) |  | Member of the Board of Directors, Senior Managing Executive Officer, Responsible for Corporate Function Unit Responsible for Work Style Reform Project |  | Apr. 1990 |  | Joined the Company |  | 2,267 (90,388)
| Mar. 2006 |  | Senior Vice President of Principal Investment Group, Investment Banking Headquarters
| Mar. 2007 |  | Senior Vice President and Treasurer, ORIX USA Corporation (currently ORIX Corporation USA)
| Oct. 2010 |  | Head of Secretarial Office
| Jan. 2014 |  | General Manager of Secretarial Office
| Jul. 2015 |  | General Manager of Human Resources Department
|  |  |  | Jan. 2016 |  | Deputy Head of Human Resources and Corporate Administration Headquarters, |  |
|  |  |  |  |  | General Manager of Human Resources Department |  |
|  |  |  | Jan. 2017 |  | Assumed office of Executive Officer, the Company |  |
|  |  |  |  |  | Head of Group Human Resources and Corporate Administration Headquarters, |  |
|  |  |  |  |  | Responsible for Secretarial Office |  |

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Name (Date of birth) |  | Current positions and principal outside positions (1) |  | Business experience |  | Number of shares held (of which number of shares scheduled to be issued by share-based compensation plans) in the Company as of June 26, 2023
|  |  |  | Jun. 2017 |  | Head of Group Human Resources and Corporate Administration Headquarters, |  |
|  |  |  |  |  | Responsible for Work Style Reform Project |  |
|  |  |  | Jan. 2018 |  | Head of Group Human Resources and Corporate Administration Headquarters, |  |
|  |  |  |  |  | Responsible for Secretariat of The Board of Directors |  |
|  |  |  | Jan. 2020 |  | Assumed office of Managing Executive Officer, the Company |  |
|  |  |  | Jan. 2023 |  | Assumed office of Senior Managing Executive Officer, the Company |  |
|  |  |  |  |  | Responsible for Corporate Function Unit |  |
|  |  |  | Jun. 2023 |  | Assumed office of Member of the Board of Directors, Senior Managing Executive Officer, the Company |  |
Michael Cusumano (Sep. 5, 1954) |  | Member of the Board of Directors (Outside Director) Deputy Dean and Professor, Faculty of Management, Sloan School of Management at Massachusetts Institute of Technology Member of the Board of Directors (Outside Director), Multitude SE |  | Jul. 1986 |  | Assistant Professor, Sloan School of Management at Massachusetts Institute of Technology |  | 0 (6,500)
| Jul. 1996 |  | Professor, Faculty of Management, Sloan School of Management at Massachusetts Institute of Technology
| Jul. 2007 |  | Professor, Faculty of Engineering Systems, School of Engineering at Massachusetts Institute of Technology (retired in Mar. 2016)
| Apr. 2016 |  | Special Vice President and Dean, Tokyo University of Science (retired in May 2017)
| Apr. 2019 |  | Assumed office of Member of the Board of Directors (Outside Director), Ferratum Plc (currently Multitude SE)

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Name (Date of birth) |  | Current positions and principal outside positions (1) |  | Business experience |  | Number of shares held (of which number of shares scheduled to be issued by share-based compensation plans) in the Company as of June 26, 2023
|  |  |  | Jun. 2019 |  | Assumed office of Member of the Board of Directors (Outside Director), the Company |  |
|  |  |  | Apr. 2020 |  | Senior Specially Appointed Professor, Tokyo University of Science (retired in Mar. 2022) |  |
|  |  |  | Jul. 2020 |  | Deputy Dean, Faculty of Management, Sloan School of Management at Massachusetts Institute of Technology |  |
Sakie Akiyama (Dec. 1, 1962) |  | Member of the Board of Directors (Outside Director) Founder, Saki Corporation Member of the Board of Directors (Outside Director), Sony Group Corporation Member of the Board of Directors (Outside Director), JAPAN POST HOLDINGS Co., Ltd. Member of the Board of Directors (Outside Director), Mitsubishi Corporation |  | Apr. 1987 |  | Joined Arthur Andersen & Co. (retired in Apr. 1991) |  | 0 (6,500)
| Apr. 1994 |  | Founded Saki Corporation Assumed office of Representative Director and Chief Executive Officer, Saki Corporation (retired in Sep. 2018)
| Oct. 2018 |  | Assumed office of Founder, Saki Corporation
| Jun. 2019 |  | Assumed office of Member of the Board of Directors (Outside Director), the Company
|  |  | Assumed office of Member of the Board of Directors (Outside Director), Sony Corporation (currently Sony Group Corporation)
|  |  | Assumed office of Member of the Board of Directors (Outside Director), JAPAN POST HOLDINGS Co., Ltd.
|  |  |  | Jun. 2020 |  | Assumed office of Member of the Board of Directors (Outside Director), Mitsubishi Corporation |  |

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Name (Date of birth) |  | Current positions and principal outside positions (1) |  | Business experience |  | Number of shares held (of which number of shares scheduled to be issued by share-based compensation plans) in the Company as of June 26, 2023
Hiroshi Watanabe (Jun. 26, 1949) |  | Member of the Board of Directors (Outside Director) President, Institute for International Monetary Affairs Member of the Board of Directors (Outside Director), Mitsubishi Materials Corporation |  | Apr. 1972 |  | Joined the Ministry of Finance |  | 0 (5,000)
| Jan. 2003 |  | Director-General, International Bureau, Ministry of Finance
| Jul. 2004 |  | Vice Minister of Finance for International Affairs, Ministry of Finance (retired in Jul. 2007)
|  | Oct. 2007 |  | Special Advisor, Japan Center for International Finance (retired in Sep. 2008) |  |
|  | Apr. 2008 |  | Professor, Graduate School of Commerce and Management at Hitotsubashi University (currently Graduate School of Business Administration at Hitotsubashi University) (retired in Sep. 2008) |  |
|  |  |  | Oct. 2008 |  | Assumed office of Deputy Governor, Japan Finance Corporation (retired in Mar. 2012) |  |
|  |  |  | Apr. 2012 |  | Assumed office of Deputy Governor, Japan Bank for International Cooperation |  |
|  |  |  | Dec. 2013 |  | Assumed office of Governor, Japan Bank for International Cooperation (retired in Jun. 2016) |  |
|  |  |  | Oct. 2016 |  | Assumed office of President, Institute for International Monetary Affairs |  |
|  |  |  | Jun. 2017 |  | Assumed office of Member of the Board of Directors (Outside Director), Mitsubishi Materials Corporation |  |
|  |  |  | Jun. 2020 |  | Assumed office of Member of the Board of Directors (Outside Director), the Company |  |

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Name (Date of birth) |  | Current positions and principal outside positions (1) |  | Business experience |  | Number of shares held (of which number of shares scheduled to be issued by share-based compensation plans) in the Company as of June 26, 2023
Aiko Sekine (May 13, 1958) |  | Member of the Board of Directors (Outside Director) Professor, Faculty of Commerce at Waseda University Trustee, International Valuation Standards Council Advisor, Japanese Institute of Certified Public Accountants Audit & Supervisory Board Member (Outside), Sumitomo Riko Company Limited Audit & Supervisory Board Member (Outside), IHI Corporation |  | Apr. 1981 |  | Joined Citibank, N.A., Tokyo Branch (retired in Jan. 1984) |  | 0 (5,000)
| Oct. 1985 |  | Joined Aoyama Audit Corporation
| Mar. 1989 |  | Certified as Public Accountant, Japan
| Jul. 2001 |  | Partner of Chuo Aoyama Audit Corporation (retired in Aug. 2006)
| Sep. 2006 |  | Partner of Aarata Audit Corporation (currently PricewaterhouseCoopers Aarata LLC) (retired in Jul. 2016)
| Jul. 2007 |  | Executive Board Member of Japanese Institute of Certified Public Accountants
| Jan. 2008 |  | Board Member of International Ethics Standards Board for Accountants, International Federation of Accountants (retired in Dec. 2010)
| Jul. 2010 |  | Assumed office of Deputy President of Japanese Institute of Certified Public Accountants
|  |  |  | Jul. 2016 |  | Assumed office of Chairman and President of Japanese Institute of Certified Public Accountants (retired in Jul. 2019) |  |
|  |  |  | Jan. 2019 |  | Member of the Nominating Committee, International Federation of Accountants (retired in Dec. 2022) |  |
|  |  |  | Jul. 2019 |  | Advisor, Japanese Institute of Certified Public Accountants |  |
|  |  |  | Jun. 2020 |  | Assumed office of Member of the Board of Directors (Outside Director), the Company |  |
|  |  |  |  |  | Assumed office of Audit & Supervisory Board Member (Outside), Sumitomo Riko Company Limited |  |

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Name (Date of birth) |  | Current positions and principal outside positions (1) |  | Business experience |  | Number of shares held (of which number of shares scheduled to be issued by share-based compensation plans) in the Company as of June 26, 2023
|  |  |  |  |  | Assumed office of Audit & Supervisory Board Member (Outside), IHI Corporation |  |
|  |  |  | Sep. 2020 |  | Professor, Faculty of Commerce at Waseda University |  |
|  |  |  | Oct. 2020 |  | Trustee, International Valuation Standards Council |  |
Chikatomo Hodo (Jul. 31, 1960) |  | Member of the Board of Directors (Outside Director) Member of the Board of Directors (Outside Director), Konica Minolta Inc. Member of the Board of Directors (Outside Director), Mitsubishi Chemical Group Corporation |  | Sep. 1982 |  | Joined Accenture Japan Ltd. |  | 0 (3,500)
| Sep. 2005 |  | Assumed office of Representative Director, Accenture Japan Ltd.
| Apr. 2006 |  | Assumed office of Representative Director and President, Accenture Japan Ltd.
| Sep. 2015 |  | Assumed office of Director and Chairman, Accenture Japan Ltd. (retired in Aug. 2017)
| Sep. 2017 |  | Assumed office of Director and Senior Corporate Advisor, Accenture Japan Ltd. (retired as a Director on Jun. 2018)
| Jun. 2018 |  | Assumed office of Member of the Board of Directors (Outside Director), Konica Minolta Inc.
| Jul. 2018 |  | Senior Corporate Advisor, Accenture Japan Ltd. (retired in Aug. 2021)
| Jun. 2019 |  | Assumed office of Member of the Board of Directors (Outside Director), Mitsubishi Chemical Holdings Corporation (currently Mitsubishi Chemical Group Corporation)
|  |  |  | Jun. 2021 |  | Assumed office of Member of the Board of Directors (Outside Director), the Company |  |
|  |  |  | Jun. 2023 |  | Assumed office of Member of the Board of Directors (Outside Director), Sumitomo Mitsui Banking Corporation (scheduled) |  |

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Name (Date of birth) |  | Current positions and principal outside positions (1) |  | Business experience |  | Number of shares held (of which number of shares scheduled to be issued by share-based compensation plans) in the Company as of June 26, 2023
Noriyuki Yanagawa (Apr. 23, 1963) |  | Member of the Board of Directors (Outside Director) Professor, Faculty of Economics of Graduate School of Economics at the University of Tokyo |  | Apr. 1993 |  | Assistant Professor, Faculty of Economics of Keio University |  | 0 (2,000)
| Apr. 1996 |  | Assistant Professor, Faculty of Economics of Graduate School of Economics at the University of Tokyo |  |
| Apr. 2007 |  | Associate Professor, Faculty of Economics of Graduate School of Economics at the University of Tokyo |  |
| Dec. 2011 |  | Professor, Faculty of Economics of Graduate School of Economics at the University of Tokyo |  |
| Jun. 2022 |  | Assumed office of Member of the Board of Directors (Outside Director), the Company |  |

Notes: |  | 1.  All ORIX Members of the Board of Directors are engaged full-time except Michael Cusumano, Sakie Akiyama, Hiroshi Watanabe, Aiko Sekine, Chikatomo Hodo and Noriyuki Yanagawa.
|  | 2.  Name on the family register of Aiko Sekine is Aiko Sano.

EXECUTIVE OFFICERS
The executive officers of the ORIX Group as of June 26, 2023, excluding those who are also directors as listed above are as follows:

Name |  | Title |  | Areas of duties |  | Number of shares held (of which number of shares scheduled to be issued by share-based compensation plans) in the Company as of June 26, 2023 |
Yoshiteru Suzuki |  | Senior Managing Executive Officer |  | President and Chief Executive Officer, ORIX Corporation USA |  |  | 0 (102,295 | )
Hidetake Takahashi |  | Managing Executive Officer |  | Energy and Eco Services Headquarters Member of the Board of Directors, Ubiteq, INC. |  |  | 7,100 (52,125 | )
Hitomaro Yano |  | Executive Officer |  | Corporate Function Unit Treasury, Accounting, Corporate Planning, Investor Relations and Sustainability |  |  | 5,100 (65,013 | )

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Name |  | Title |  | Areas of duties |  | Number of shares held (of which number of shares scheduled to be issued by share-based compensation plans) in the Company as of June 26, 2023 |
Toyonori Takahashi |  | Executive Officer |  | Group Kansai Representative MICE-IR Office Real Estate Sales Department Senior Managing Executive Officer, ORIX Real Estate Corporation |  |  | 7,684 (73,830 | )
Michio Minato |  | Executive Officer |  | Group Strategy Business Unit President, ORIX Baseball Club Co., Ltd. |  |  | 400 (54,750 | )
Tetsuya Kotera |  | Executive Officer |  | Corporate Business Headquarters |  |  | 1,976 (30,750 | )
Eiji Arita |  | Executive Officer |  | Corporate Business Headquarters Member of the Board of Directors (Outside Director), Kanamoto Co., Ltd. |  |  | 1,600 (30,750 | )
Seiichi Miyake |  | Executive Officer |  | Investment and Operation Headquarters |  |  | 3,776 (30,750 | )
Tomoko Kageura |  | Executive Officer |  | Corporate Function Unit Corporate legal affairs |  |  | 5,588 (32,833 | )
Nobuki Watanabe |  | Executive Officer |  | Group Strategy Business Unit CEO’s Office and New Business |  |  | 513 (45,750 | )
Hiroyuki Ido |  | Executive Officer |  | Group Internal Audit Department |  |  | 0 (19,833 | )
Kiyoshi Habiro |  | Executive Officer |  | ORIX Corporation Europe and Robeco Group Chief Executive Officer, ORIX Corporation Europe N.V. |  |  | 1,300 (19,833 | )
Ryujiro Tokuma |  | Executive Officer |  | Global Transportation Services Headquarters |  |  | 3,753 (19,833 | )
Hao Li |  | Executive Officer |  | Greater China Group |  |  | 0 (19,833 | )
Ikuo Nakamura |  | Executive Officer |  | Group Strategy Business Unit Credit and Investment Management |  |  | 82 (5,833 | )
Tomohiko Ishihara |  | Executive Officer |  | Corporate Function Unit Human Resources, Corporate Administration and Corporate Communications Secretariat of The Board of Directors |  |  | 49 (5,833 | )
Takashi Otsuka |  | Executive Officer |  | Group Strategy Business Unit Enterprise Risk Management |  |  | 1,800 (3,750 | )
Toshinari Fukaya |  | Group Managing Executive |  | President, ORIX Real Estate Corporation President, DAIKYO INCORPORATED |  |  | 4,300 (88,580 | )
Hiroko Yamashina |  | Group Executive |  | Chairman, ORIX Credit Corporation |  |  | 32,700 (99,930 | )
Yuji Kamiyauchi |  | Group Executive |  | President, ORIX Auto Corporation Member of the Board of Directors, Ubiteq, INC. |  |  | 5,207 (54,750 | )

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Name |  | Title |  | Areas of duties |  | Number of shares held (of which number of shares scheduled to be issued by share-based compensation plans) in the Company as of June 26, 2023 |
Takaaki Nitanai |  | Group Executive |  | Senior Managing Executive Officer, ORIX Real Estate Corporation |  |  | 1,083 (54,750 | )
Nobuhisa Hosokawa |  | Group Executive |  | President, ORIX Rentec Corporation |  |  | 2,800 (45,750 | )

Notes: |  | 1.  Name on the family register of Tomoko Kageura is Tomoko Kanda.
|  | 2.  Name on the family register of Hiroko Yamashina is Hiroko Arai.

EMPLOYEES
As of March 31, 2023, we had 34,737 full-time employees, compared to 32,235 as of March 31, 2022 and 33,153 as of March 31, 2021. We employ 5,393 staff in Corporate Financial Services and Maintenance Leasing, 8,181 staff in Real Estate, 6,913 staff in PE Investment and Concession, 815 staff in Environment and Energy, 2,417 staff in Insurance, 1,253 staff in Banking and Credit, 147 staff in Aircraft and Ships, 1,342 staff in ORIX USA, 1,546 staff in ORIX Europe, 4,681 staff in Asia and Australia, 2,049 staff as part of our headquarters function as of March 31, 2023. As of March 31, 2023, we had 21,022 temporary employees. Some of our employees are represented by a union. We consider our labor relations to be excellent.
The mandatory retirement age for our employees is 65, but for our subsidiaries and affiliates the retirement age varies. ORIX and major domestic subsidiaries introduced a system for retirement at age 65 from April 2014. By implementing the system alongside the current
re-employment
system at retirement age, the system will allow employees to choose how they will work from age 60 according to their lifestyles. In April 2010, ORIX introduced an early voluntary retirement program that is available to ORIX employees who are at least 45 years old. Employees who take advantage of this program receive their accrued retirement package plus an incentive premium.
ORIX and some of its subsidiaries have established contributory and noncontributory funded pension plans covering substantially all of their employees. The contributory funded pension plans include defined benefit pension plans and defined contribution pension plans. Under the plans, employees are entitled to lump sum payments at the time of termination of their employment or, if enrollment period requirements have been met, to pension payments. Defined benefit pension plans consist of a cash balance plan and a plan in which the amount of the payments are determined on the basis of length of service and remuneration at the time of termination. Our funding policy in respect of these plans is to contribute annually the amounts actuarially determined to be required. Assets of the plans are invested primarily in interest-bearing securities and marketable equity securities. In July 2004, ORIX introduced a defined contribution pension program. In November 2004, we received permission from the Japanese Ministry of Health, Labor and Welfare to transfer the substitutional portion of benefit obligation from our employer pension fund to the government and these assets were transferred back to the government in March 2005. Total costs (termination or pension plans for both employees and directors and corporate auditors) charged to income for all benefit plans (including defined benefit plans) were ¥11,018 million, ¥12,369 million and ¥10,093 million in fiscal 2021, 2022 and 2023, respectively.
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Indicators related to diversity (as of March 31, 2023)

Filing Company and Consolidated Subsidiaries |  | Percentage of female managers |  |  | Percentage of male employees taking childcare leave, etc. |  |  | Pay gap between men and women |
| All employees |  |  | Of full-time employees |  |  | Of fixed-term employees and part-time employees |
ORIX Corporation |  |  | 29.8 | % |  |  | 91.0 | % |  |  | 62.2 | % |  |  | 61.8 | % |  |  | 65.3 | %
ORIX Auto Corporation |  |  | 16.2 | % |  |  | 69.2 | % |  |  | 65.9 | % |  |  | 65.8 | % |  |  | 99.2 | %
ORIX Rentec Corporation |  |  | 35.9 | % |  |  | 135.7 | % |  |  | 68.0 | % |  |  | 72.2 | % |  |  | 55.9 | %
ORIX Asset Management & Loan Services Corporation |  |  | 25.5 | % |  |  | — |  |  |  | 62.9 | % |  |  | 62.2 | % |  |  | — |
ORIX Real Estate Corporation |  |  | 36.3 | % |  |  | — |  |  |  | 71.2 | % |  |  | 71.2 | % |  |  | 166.1 | %
ORIX Environmental Resources Management Corporation |  |  | 10.0 | % |  |  | 50.0 | % |  |  | 60.1 | % |  |  | 66.0 | % |  |  | 64.2 | %
ORIX Life Insurance Corporation |  |  | 17.1 | % |  |  | 74.1 | % |  |  | 60.4 | % |  |  | 59.7 | % |  |  | 60.7 | %
ORIX Bank Corporation |  |  | 25.0 | % |  |  | 77.7 | % |  |  | 65.4 | % |  |  | 70.8 | % |  |  | 40.6 | %
ORIX Credit Corporation |  |  | 27.3 | % |  |  | 66.6 | % |  |  | 59.7 | % |  |  | 60.6 | % |  |  | 71.7 | %
ORIX Computer Systems Corporation |  |  | 18.1 | % |  |  | 145.4 | % |  |  | 73.6 | % |  |  | 74.3 | % |  |  | 119.2 | %
10 Group companies in Japan |  |  | 25.7 | % |  |  | 87.4 | % |  |  | 62.8 | % |  |  | 63.6 | % |  |  | 57.4 | %

Notes: |  | 1. |  | The percentage of female managers is calculated based on the provisions of the Act on Promotion of Women’s Participation and Advancement in the Workplace (Act No. 64, 2015). Regarding the percentage of female managers, seconded employees are counted as employees of the home company.
|  | 2. |  | The percentage of male employees taking childcare leave, etc. is calculated based on the provisions of the Act on the Welfare of Workers Engaged in Childcare or Family Care such as Childcare Leave and Family Care Leave (Act No. 76, 1991), the ratio of childcare leave, etc. taken under Article 71-4, Item 2 of the Enforcement Regulations of the Act on the Welfare of Workers Engaged in Childcare or Family Care such as Childcare Leave and Family Care Leave (Ministry of Labor Ordinance No. 25, 1991). Regarding the percentage of male employees taking childcare leave, etc., it includes those who are taking parental leave, and seconded employees are counted as employees of the home company. Employees whose spouses gave birth in prior years may take childcare leave, etc. in the current year, so the take-up rate may exceed 100%. “—” indicates that there are no eligible employees.
|  | 3. |  | The pay gap between men and women shows the ratio of the annual average pay of female employees to the annual average pay of male employees. Regarding the pay gap between men and women, seconded employees are counted as employees of the home company. “—” indicates that there are no eligible employees.
|  | 4. |  | The 10 Group Companies in Japan (ORIX Corporation, ORIX Auto Corporation, ORIX Rentec Corporation, ORIX Asset Management & Loan Services Corporation, ORIX Real Estate Corporation, ORIX Environmental Resources Management Corporation, ORIX Life Insurance Corporation, ORIX Bank Corporation, ORIX Credit Corporation and ORIX Computer Systems Corporation) jointly operate as part of the ORIX Group’s personnel strategy and personnel systems.

ORIX offers a variety of work styles and occupations to help employees of diverse backgrounds maximize their performance, and by providing opportunities for them, ORIX supports the realization of the career they desire.
In addition, ORIX implements an evaluation and remuneration system that seeks to provide fair pay based on an employee’s seniority, role and duties, with adjustments for personnel evaluations. As of March 31, 2023, the pay gap between men and women in general manager positions was 95.8%. The ORIX Group has set an overall increase in the ratio of female managers as an important
ESG-related
target and is focusing on the promotion of women.
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SHARE OWNERSHIP
As of June 26, 2023, the directors, executive officers and group executives of the Company directly held an aggregate of 209,150 Shares, representing 0.01% of the total Shares issued as of such date.
COMPENSATION
To promote greater management transparency in our governance, we had established the Executive Nomination and Compensation Committee in June 1999. Its functions included recommending executive remuneration. In June 2003, we adopted a “Company with Committees” board model and replaced the Executive Nominating and Compensation Committee with separate Nominating and Compensation Committees. For discussion of these committees, see “Item 6.—Directors, Senior Management and Employees—Nominating Committee” and “—Compensation Committee.”
Compensation for directors, executive officers and group executives in fiscal 2023 was as follows (in millions of yen);

|  | Fixed compensation (Number of people) |  |  | Performance- linked compensation (Number of people) |  |  | Share-based compensation (Number of people) |  |  | Total compensation |
Non-Executive Director and Outside Director |  | ¥ | 106 (7 | ) |  |  | — — |  |  | ¥ | 20 (7 | ) |  | ¥ | 126 (7 | )
Executive Officer and Group Executive |  | ¥ | 697 (28 | ) |  | ¥ | 623 (28 | ) |  | ¥ | 758 (28 | ) |  | ¥ | 2,080 (28 | )
Total |  | ¥ | 804 (35 | ) |  | ¥ | 623 (28 | ) |  | ¥ | 778 (35 | ) |  | ¥ | 2,207 (35 | )

The above list is the amount paid in accordance with the policies for the compensation of directors and Executive Officers resolved by the Compensation Committee held on June 24, 2022.
The amount paid listed in the table above with regard to the share-based compensation is calculated by multiplying the number of points confirmed to be provided as the portion for the fiscal year ended in March 2023 by the stock market price paid by the trust when ORIX’s shares were acquired (¥1,740.27 per share).
The targets and results with regard to the KPIs of the performance-linked compensation listed in the table above are as follows:

| - |  | Company-wide performance indicator

We targeted the milestone rate with regard to the consolidated net income growth set by the compensation committee towards the achievement of the Company’s
mid-term
strategic directions, and achieved 87%.

| - |  | Division performance indicator

We set the performance target for each division based on the company-wide performance target, and achieved 0% to 150% (median:100 %) by 22 Executive Officers and 5 group executives (based on the total evaluation including qualitative assessment).
Compensation for Makoto Inoue, Member of the Board of Directors, Representative Executive Officer, President and Chief Executive Officer of ORIX, for fiscal 2023 was ¥126 million in fixed compensation, ¥109 million in performance-linked compensation and ¥137 million in share-based compensation.
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Compensation for Shuji Irie, Member of the Board of Directors, Senior Managing Executive Officer of ORIX, for fiscal 2023 was ¥39 million in fixed compensation, ¥36 million in performance-linked compensation and ¥43 million in share-based compensation.
Compensation for Satoru Matsuzaki, Member of the Board of Directors, Senior Managing Executive Officer of ORIX, for fiscal 2023 was ¥39 million in fixed compensation, ¥40 million in performance-linked compensation and ¥43 million in share-based compensation.
Compensation for Yoshiteru Suzuki, Member of the Board of Directors, Senior Managing Executive Officer of ORIX, for fiscal 2023 was ¥46 million (¥46 million from ORIX Corporation USA) in fixed compensation and ¥17 million in performance-linked compensation and ¥43 million in share-based compensation.
Compensation for Stan Koyanagi, Member of the Board of Directors, Managing Executive Officer of ORIX, for fiscal 2023 was ¥93 million (¥12 million from the Company and ¥81 million from ORIX Corporation USA) in fixed compensation and ¥120 million (¥120 million from ORIX Corporation USA) in performance-linked compensation.
The actual total amount of the share-based compensation paid in fiscal 2023 was ¥103 million paid to one director and one executive officer (including those serving concurrently as directors and Executive Officers) who retired during fiscal 2023
The Compensation Committee sets the following “Policy of Determining Compensation of Directors and Executive Officers.”
Policy of Determining Compensation of Directors and Executive Officers
ORIX’s business objective is to increase shareholder value over the medium- to long-term. ORIX believes in the importance of each director and Executive Officer responsibly performing his or her duties, and cooperation among different business units in order to achieve continued growth of the ORIX Group. The Compensation Committee believes that in order to accomplish such business objectives, directors and Executive Officers should place emphasis not only on performance during the current fiscal year, but also on medium- to long-term results. Accordingly, under the basic policy that compensation should provide effective incentives, ORIX takes such factors into account when making decisions regarding the compensation system and compensation levels for directors and Executive Officers. Taking this basic policy into consideration, we have established separate policies for the compensation of directors and Executive Officers in accordance with their respective roles based on a decision of the compensation committee held on June 22, 2023.
Compensation Policy for Directors
The compensation policy for directors who are not also Executive Officers aims for compensation composed in a way that is effective in maintaining the supervisory and oversight functions of Executive Officers’ performance in business operations, which is the main duty of directors. Specifically, ORIX’s compensation structure for directors consists of fixed compensation and share-based compensation *. In addition, the Company strives to maintain a competitive level of compensation with director compensation according to the role fulfilled, and receives third-party research reports on director compensation for this purpose.
Fixed compensation is, in principal, a certain amount that is added to the compensation of the chairperson and member of each committee. For share-based compensation reflecting medium- to long-term performance, directors are granted a fixed amount of points on an annual basis for their period of service, and they are paid in ORIX shares corresponding to the amount of points they have accumulated at the time of retirement.
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Compensation Policy for Executive Officers
The compensation policy for executive officers, including those who are also directors, aims for a level of compensation that is effective in maintaining business operation functions, while also incorporating a component that is linked to current period business performance. Specifically, ORIX’s compensation structure for executive officers consists of fixed compensation, performance-linked compensation, and share-based compensation **. In principle, the compensation mix for executive officers is to set the ratio fixed compensation, performance-linked compensation, and share-based compensation to 1:1:1. In addition, based on the outcome of a third-party compensation research agency investigation, the Company strives to maintain a competitive level of compensation with executive officer compensation functioning as an effective incentive.
Fixed compensation is decided for each individual based on a standard amount for each position. Compensation linked to business performance for the fiscal year ended March 2023 uses the level of achievement of the consolidated net income growth target as a company-wide performance indicator, adjusting 50% of the position-based standard amount within the range of 0% to 200% while, at the same time, using the level of achievement of the target of the division for which the relevant executive officer was responsible *** as a division performance indicator, adjusting 50% of the position-based standard amount within the range of 0% to 300%. In the case of Representative Executive Officers, the consolidated net income growth target is used as a sole performance indicator, adjusting the standard amount within the range of 0% to 200%. These performance indicators are selected based on the Company’s
mid-term
strategic directions. In addition to the above, annual bonuses for the President, Senior Managing Executive Officers, and Managing Executive Officers will be increased or decreased an amount ranging from 0% to 30% of the base amount for each position using progress toward the
ESG-related
Key Goals as an indicator. If progress towards
ESG-related
Key Goals is proceeding as planned, the payment will not be adjusted. For share-based compensation reflecting medium- to long-term performance, executive officers are granted a fixed amount of points based on their position, and they are paid in ORIX shares corresponding to the amount of points they have accumulated at the time of retirement.

* | Share-based compensation is the Board Incentive Plan Trust in which directors and Executive Officers are granted a fixed amount of points on an annual basis for their period of service, and at the time of retirement, ORIX’s shares are delivered through a trust to them in accordance with the number of points they have accumulated. The amount of points to be granted is determined in accordance with the guidelines adopted by the compensation committee. The compensation committee does not set a minimum ownership period for the shares delivered under the plan. The compensation committee can forfeit the share-based compensation from a recipient director or executive officer, if it finds he/she engaged in serious misconduct that could cause damage to the Company during his/her period of service.

** | Compensation for executive officers based on foreign branches or executive officers with special expertise is determined based on individual deliberation about foreign local compensation practices/levels or their special expertise, as the case may be.

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*** | The level of achievement of each division performance with regard to the performance-based compensation is measured based on a total evaluation focusing on the annual growth rate of each division and taking into account qualitative factors (such as target levels, details of achievement, future growth potential, effort status to ESG, etc.)

For the authority, discretion and activity of Compensation Committee, refer to “Item 6. Directors, Senior Management and Employees—Structure and Activities of the Three Committees—
Compensation Committee
.”
The Compensation Committee conducts a comprehensive review, including confirming whether the specific compensation, etc. for individual Directors and Executive Directors is consistent with the compensation policies based on the resolution at the Compensation Committee meeting held on June 24, 2022, determines the compensation after verifying that the level of compensation is appropriate based on third-party research reports on Director compensation and other information, and judges whether the compensation is in line with the compensation policies.
In, addition, to further strengthen the sharing of profits with our shareholders and stakeholders, we have established shareholding guidelines to the Directors, Executive Officers and Group Executives to hold certain numbers of our shares in June 2005.
In June 2005, we introduced the share-based compensation, which is a program in which points are annually allocated to directors and executive officers based upon prescribed standards while in office, and the actual number of ORIX’s shares calculated based on the number of accumulated points is provided at the time of retirement. In July 2014, we started to provide these shares through a trust established by the Board Incentive Plan Trust. The Company entrusts money to the “Board Incentive Plan Trust”, which acquires ORIX’s shares from the stock market for directors and executive officers at the end of his or her tenure using money contributed in advance. The total number of points of the share-based compensation granted to directors, executive officers and group executives for fiscal 2023 is equivalent to 467,124 points. Under this system, ¥103 million, which is equivalent to 59,416 points accumulated up to the end of tenure, was paid to executive officers who left their positions during fiscal 2023. As a result, the balance to directors, executive officers and group executives as of March 31, 2023 was 2,273,956 points.
There are no service contracts between any of our directors, executive officers or group executives and the Company or any of its subsidiaries providing for benefits upon termination of employment.
No stock options were granted in any year since 2009. Each unit of the Shares has one vote. We have not issued any preferred shares.
STOCK OPTION PLAN
We have adopted various incentive plans including a stock option plan. The purpose of our stock option plan is to enhance the link between management, corporate performance and stock price, and, in this way, improve our business results. These plans are administered by ORIX’s Human Resources Department. For further discussion of stock-based compensation, see Note 19 of “Item 18. Financial Statements.”
At the annual general meetings of shareholders in the years from 1997 to 2000 inclusive, our shareholders approved stock option plans under which ORIX purchased shares from the open market and held them for transfer to ORIX’s directors and executive officers and some employees upon the exercise of their options. Shareholders also approved a stock subscription rights plan in 2001 and stock acquisition rights plans from 2002 to 2005. From 2006 to 2008, the Compensation Committee approved stock acquisition rights plans for our directors and executive officers, and shareholders approved similar plans for certain ORIX employees, as well as directors, executive officers and certain employees of our subsidiaries and affiliates. From 2009 to 2023, no stock option plans were adopted for our directors, executive officers, employees, or those of our subsidiaries and affiliates.
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DISCLOSURE OF A REGISTRANT`S ACTION TO RECOVER ERRONEOUSLY AWARDED COMPENSATION
Not applicable.
Item 7. Major Shareholders and Related Party Transactions
MAJOR SHAREHOLDERS
The following table shows our major shareholders registered on our Register of Shareholders as of March 31, 2023.
Each unit of Shares (1 unit = 100 Shares) has one vote, and none of our major shareholders have different voting rights. We do not issue preferred shares.

Name |  | Number of Shares held |  |  | Percentage of Issued shares |
|  | (Thousands) |  |  | (%) |
The Master Trust Bank of Japan, Ltd. (Trust Account) |  |  | 255,019 |  |  |  | 21.73 |
Custody Bank of Japan, Ltd. (Trust Account) |  |  | 96,043 |  |  |  | 8.18 |
SSBTC CLIENT OMNIBUS ACCOUNT |  |  | 22,360 |  |  |  | 1.90 |
CITIBANK, N.A. -N.Y , AS DEPOSITARY BANK FOR DEPOSITARY SHARE HOLDERS |  |  | 21,989 |  |  |  | 1.87 |
STATE STREET BANK WEST CLIENT-TREATY 505234 |  |  | 20,885 |  |  |  | 1.78 |
JPMorgan Securities Japan Co., Ltd. |  |  | 16,201 |  |  |  | 1.38 |
SMBC Nikko Securities Inc. |  |  | 16,044 |  |  |  | 1.36 |
JP MORGAN CHASE BANK 385781 |  |  | 15,547 |  |  |  | 1.32 |
BNYM AS AGT/CLTS NON TREATY JASDEC |  |  | 14,477 |  |  |  | 1.23 |
STATE STREET BANK AND TRUST COMPANY 505223 |  |  | 11,031 |  |  |  | 0.94 |

ORIX is not directly or indirectly owned or controlled by any corporations, by any foreign government or by any natural or legal persons severally or jointly. As of March 31, 2023, the percentage of issued Shares held by overseas corporations and individuals was 39.26%. As of March 31, 2023, approximately 4,396,107 ADSs were outstanding (equivalent to 21,980,535 or approximately 1.78% of ORIX’s issued Shares as of that date). As of March 31, 2023, all our ADSs were held by one record holder in the United States.
On May 1, 2023, Mitsubishi UFJ Financial Group, Inc. submitted a filing to the Kanto Local Finance Bureau indicating that Mitsubishi UFJ Financial Group, Inc. held 49,098,840 Shares, representing 3.98% of ORIX’s outstanding Shares, as part of Mitsubishi UFJ Financial Group, Inc.’s assets under management.
On February 3, 2023, Sumitomo Mitsui Trust Bank, Limited submitted a filing to the Securities and Exchange Commission indicating that Sumitomo Mitsui Trust Holdings, Inc. held 75,068,800 Shares, representing 6.00% of ORIX’s outstanding Shares, as part of Sumitomo Mitsui Trust Bank, Limited’s assets under management.
On February 1, 2023, BlackRock Group submitted a filing to the Securities and Exchange Commission indicating that BlackRock Inc., primarily through BlackRock Japan Co., Ltd, held 81,867,112 Shares, representing 6.50% of ORIX’s outstanding Shares, as part of BlackRock Group’s assets under management.
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RELATED PARTY TRANSACTIONS
To our knowledge, no individual beneficially owns 10% or more of any class of the Shares that might give that individual significant influence over us. In addition, we are not directly or indirectly owned or controlled by, or under common control with, any enterprise.
We may enter into transactions with shareholders or potential large investors in the ordinary course of our business. We may also enter into transactions in the ordinary course of our business with certain key management personnel or with certain companies over which we, or our key management personnel, may have a significant influence. Our business relationships with these companies and individuals cover many of the financial services we provide our clients generally. We believe that we conduct our business with these companies and individuals in the normal course and on terms equivalent to those that would exist if they did not have equity holdings in us, if they were not our key management personnel, or if we or our key management personnel did not have significant influence over them, as the case may be. None of these transactions is or was material to us or, to our knowledge, to the other party.
Other than as outlined below, since the beginning of our last full fiscal year, there have been no transactions or outstanding loans, including guarantees of any kind, and there are none currently proposed, that are material to us, or to our knowledge, to the other party, between us and any (i) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, us; (ii) associates; (iii) individuals owning, directly or indirectly, an interest in the voting power of us that gives them significant influence over us, and close members of any such individual’s family; (iv) key management personnel, including directors and senior management of companies and close members of such individuals’ families; or (v) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (iii) or (iv) or over which such a person is able to exercise significant influence.
Since the beginning of our last full fiscal year, no loans to any of the persons listed in clause (iv) above were made other than those that were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectability or present other unfavorable features.
There are no outstanding loans (including guarantees of any kind) made by us or any of our subsidiaries to or for the benefit of any of the persons listed in clauses (i) through (v) above other than those listed in the table below. Certain of our affiliates may fall within the meaning of a related party under clauses (i) or (ii) above. The amount of outstanding loans (including guarantees of any kind) made by us to or for the benefit of all our affiliates, including those which may fall within the meaning of a related party, totaled ¥27,514 million as of March 31, 2023 and did not exceed ¥37,000 million at any time during fiscal 2023.
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Each of these loans was made in the ordinary course of business. The following table describes, for each related party borrower, the applicable interest rate (or range of interest rates), the largest aggregate amount outstanding during fiscal 2023 and the aggregate amount outstanding as of March 31, 2023.

Related Party |  | The largest aggregate amount outstanding during fiscal 2023 |  |  | Aggregate amount outstanding as of March 31, 2023 |  |  | Interest rate |
|  | (Millions of yen) |  |  | (%) |
Kansai Airports |  | ¥ | 12,795 |  |  | ¥ | 12,795 |  |  |  | 6.5 |
IOS II, LLC |  |  | 3,515 |  |  |  | 2,905 |  |  |  | 6.3 |
DIC |  |  | 2,000 |  |  |  | 1,890 |  |  |  | 1.2 |
Meritix Airlease Limited |  |  | 2,337 |  |  |  | 1,763 |  |  |  | 6.0 – 9.5 |
NIDC |  |  | 1,590 |  |  |  | 1,590 |  |  |  | 4.0 |
Shinko Medical Support Corporation |  |  | 1,540 |  |  |  | 1,430 |  |  |  | 5.0 |
Timber Parent, LLC |  |  | 1,019 |  |  |  | 932 |  |  |  | 14.0 |
First Resort Co.,Ltd. |  |  | 845 |  |  |  | 838 |  |  |  | 3.5 |
HIDROELECTRICA DE TACOTAN SA DE CV |  |  | 702 |  |  |  | 702 |  |  |  | 9.3 – 13.4 |
HIDROELECTRICA DE TRIGOMIL SA DE CV |  |  | 565 |  |  |  | 565 |  |  |  | 9.3 – 13.4 |
Beyçelik Gestamp Yenilenebilir Enerji Uretim, A.S. |  |  | 562 |  |  |  | 562 |  |  |  | 3.0 |
FLUORESCENT SUPPLY CO INC—Class AA |  |  | 473 |  |  |  | 368 |  |  |  | 12.0 |
Pacific League Marketing Corporation |  |  | 335 |  |  |  | 335 |  |  |  | 1.6 |
Crestone |  |  | 298 |  |  |  | 298 |  |  |  | 12.0 |
Junseikai Medical Corporation |  |  | 230 |  |  |  | 230 |  |  |  | 0.6 |
Innovative Ergonomic Solutions, LLC |  |  | 201 |  |  |  | 189 |  |  |  | 10.0 |
Beyçelik Elawan Yenileneb |  |  | 119 |  |  |  | 119 |  |  |  | 3.0 |
Kadanaen Corporation |  |  | 2 |  |  |  | 2 |  |  |  | 3.0 |
TACOTAN TRIGOMIL SERVICIOS, S.A. |  |  | 1 |  |  |  | 1 |  |  |  | 3.3 |
SORA Airlease Designated Activity Company |  |  | 8,226 |  |  |  | 0 |  |  |  | 6.0 – 9.5 |
California Proton Therapy Center, LLC |  |  | 1,921 |  |  |  | 0 |  |  |  | 7.5 – 10.0 |
Tsubaki Marine S.A. |  |  | 1,490 |  |  |  | 0 |  |  |  | 1.0 |
ERGE LEVANTE, S.L. |  |  | 103 |  |  |  | 0 |  |  |  | 3.0 |
TAURUSKY SHIPPING SS311 LIMITED |  |  | 97 |  |  |  | 0 |  |  |  | 1.8 – 2.8 |
YM Lease Co., Ltd. |  |  | 67 |  |  |  | 0 |  |  |  | 0.9 |
ERGE ARAGON, S.L. |  |  | 0 |  |  |  | 0 |  |  |  | 2.1 |

Item 8. Financial Information
All relevant financial statements are attached hereto. See “Item 18. Financial Statements.”
LEGAL PROCEEDINGS
We are a plaintiff or a defendant in various lawsuits arising in the ordinary course of our business. We aggressively manage our pending litigation and assess appropriate responses to lawsuits in light of a number of factors, including the potential impact of the actions on the conduct of our operations. In the opinion of management, none of the pending legal matters is expected to have a material adverse effect on our financial condition or results of operations. However, there can be no assurance that an adverse decision in one or more of these lawsuits will not have a material adverse effect.
DIVIDEND POLICY AND DIVIDENDS
See “Item 10. Additional Information—Dividend Policy and Dividends.”
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SIGNIFICANT CHANGES
None.
Item 9. The Offer and Listing
TOKYO STOCK EXCHANGE
The primary market for the Shares is the Tokyo Stock Exchange. The Shares had been traded on the First Section of the Tokyo Stock Exchange since 1973. Since April 2022, we have transitioned from the First Section to the Prime Market under the restructure of the Tokyo Stock Exchange’s market segments.
NEW YORK STOCK EXCHANGE
The ADS are listed on the New York Stock Exchange under the symbol “IX.”
One ADSs represents five Shares. On March 31, 2023, approximately 4,396,107 ADSs were outstanding. This is equivalent to 21,980,535 or approximately 1.78% of the total number of Shares outstanding on that date. On that date, all our ADSs were held by one record holder in the United States.
Item 10. Additional Information
MEMORANDUM AND ARTICLES OF INCORPORATION
Purposes
Our corporate purposes, as provided in Article 2 of our Articles of Incorporation, are to engage in the following businesses: (i) lease, purchase and sale (including purchase and sale on an installment basis), maintenance and management of movable property of all types; (ii) moneylending business, purchase and sale of claims of all types, payment on behalf of third parties, guarantee and assumption of obligations, agent for collection of money and other financial business; (iii) holding, investment in, management, purchase and sale of financial instruments such as securities and other investment business; (iv) advice, brokerage and agency relating to the merger, capital participation, business alliance and business succession and reorganization, etc.; (v) financial instruments and exchange business, financial instruments broker business, banking, trust and insurance business, advisory service business relating to investment in commodities, trust agreement agency business and credit management and collection business;
(vi) non-life
insurance agency business, insurance agency business under the Automobile Accident Compensation Security Law, and service related to soliciting life insurance; (vii) lease, purchase and sale, ground preparation, development, maintenance and management of real property and warehousing; (viii) contracting for construction, civil engineering, building utility and interior and exterior furnishing, and design and supervision thereof; (ix) management of various facilities for sports, lodging, restaurant, medical treatment, welfare and training and education, and conducting sports, etc.; (x) facility planning, development, maintenance, management and operation of airports, roads, other public facilities and similar kinds of aforementioned facilities and the assumption or undertaking of public works; (xi) production, processing, sale, purchase, research and development of agricultural products, food products and agriculture-related products and facilities; (xii) waste-disposal business; (xiii) trading of emission rights for greenhouse gases and other various subjects; (xiv) power generation business; (xv) supply of various energy resources and the products in relation thereto; (xvi) planning, developing, contracting for, lease and sale of, intangible property rights; (xvii) information processing and providing services, telecommunications business; (xviii) business of dispatching workers to enterprise and employment agency business; (xix) purchase and sale of antiques; (xx) transport business; (xxi) mining of various minerals, and the manufacture and sale of the products
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in relation thereto; (xxii) business support and consulting; (xxiii) brokerage, agency, investigation, manufacturing, processing, research and development for business relating to any of the preceding items, and other business; (xxiv) as a result of holding shares in a subsidiary company engaged in those activities, engaging in business relating to any of the preceding items and managing such company’s business activities; and (xxv) any and all businesses incidental or related to any of the preceding items.
Directors and Board of Directors, and Committees
There shall be no less than three directors of the Company (Article 16). The term of office of a director is for one (1) year and expires upon conclusion of the annual General Meeting of Shareholders relating to the last fiscal year ending within one year after election of director (Article 18). Resolutions of the Board of Directors are adopted by a majority vote of the directors present at a meeting attended by a majority of the directors who may participate in making resolutions (Article 21).
There is no provision in our Articles of Incorporation as to a director’s power to vote on a proposal or arrangement in which the director is materially interested, but, under the Companies Act or Regulations of the board of directors, the director must refrain from voting on such matters at meetings of the board of directors. Under the Companies Act, the board of directors may, by resolution, delegate to the executive officers its authority to make decisions with regard to certain important matters, including the incurrence by ORIX of a significant amount of loan, prescribed by law.
We are required to maintain a Nominating Committee, an Audit Committee and a Compensation Committee (Article 10). The Compensation Committee sets the specific compensation for each individual director and executive officer based on the policy for determining compensation for directors and executive officers (see Item 6). No member of the Compensation Committee may vote on a resolution with respect to his or her own compensation as a director.
Neither the Companies Act nor our Articles of Incorporation includes special provisions as to the retirement age of directors, or a requirement to hold any shares of capital stock of ORIX to qualify him or her as a director of ORIX.
Stock
Our authorized share capital is 2,590,000,000 shares. Currently our Articles of Incorporation provide only for the issuance of shares of common stock. All shares of capital stock of us have no par value. All issued shares are fully-paid and
non-assessable.
Unless shareholders’ approval is required as described in “Voting Rights,” the shares will be issued under a resolution approved by the board of directors and a decision made by the executive officer under delegation by the board of directors.
For changes in the number of shares issued for the past three fiscal years, see Note 21 of “Item 18. Financial Statements.”
Under the Act on Book-Entry Transfer of Corporate Bonds, Shares, Etc. of Japan and regulations thereunder, or the Book-Entry Law, in Japan, every share which is listed on any of the stock exchanges in Japan shall be transferred and settled only by the central clearing system provided by Japan Securities Depository Center, Inc. (“JASDEC”) and all Japanese companies listed on any Japanese stock exchange no longer issue share certificates. Shareholders of listed shares must have accounts at account management institutions to hold their shares unless such shareholder has an account at JASDEC, and any transfer of shares is effected through book entry, and title to the shares passes to the transferee at the time when the transferred number of the shares is recorded in the transferee’s account at an account managing institution under the Book-Entry Law. The holder of
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an account at an account managing institution is presumed to be the legal owner of the shares recorded in such account. Under the Companies Act and the Book-Entry Law, in order to assert shareholders’ rights against us, the transferee must have his or her name and address registered on our Register of Shareholders, except in limited circumstances. Foreign shareholders may file specimen signatures in lieu of seals. Nonresident shareholders are required to appoint a standing proxy in Japan or designate a mailing address in Japan. The registration of transfer and the application for reduced withholding tax on dividends can usually be handled by a standing proxy. See “Taxation—Japanese Taxation.” Japanese securities companies and commercial banks customarily will act as standing proxies and provide related services for standard fees.
Our transfer agent is Mitsubishi UFJ Trust and Banking Corporation, located at
4-5,
Marunouchi
1-chome,
Chiyoda-ku,
Tokyo
100-8212,
Japan.
In general, there are no limitations on the right to own shares of our common stock, including the rights of nonresidents or foreign shareholders to hold or exercise voting rights on the securities imposed under Japanese law or by our Articles of Incorporation.
Settlement of transactions for shares listed on any of the stock exchanges in Japan will normally be effected on the third trading day from and including the transaction date. Settlement in Japan shall be made through JASDEC as described above.
Distributions of Surplus
Ordinary Dividends and Interim Dividends may be distributed by us in cash to shareholders or pledgees of record as of March 31 (in the case of Ordinary Dividends) or September 30 (in the case of Interim Dividends) of each year in proportion to the number of shares held by each shareholder or registered pledgee, as the case may be.
We may make distributions of surplus to the shareholders any number of times per fiscal year, subject to certain limitations as described below. Under our Articles of Incorporation, distributions of cash dividends need to be declared by a resolution of the board of directors. Distributions of surplus may be made in cash or in kind in proportion to the number of shares held by respective shareholders. A resolution of the board of directors authorizing a distribution of surplus must specify the kind and aggregate book value of the assets to be distributed, the manner of allocation of such assets to shareholders, and the effective date of the distribution. If a distribution of surplus is to be made in kind, we may, pursuant to a resolution of a general meeting of shareholders or the board of directors, as the case may be, grant a right to the shareholders to require us to make such distribution in cash instead of in kind. If no such right is granted to shareholders, the relevant distribution of surplus must be approved by a special resolution of a general meeting of shareholders.
Under our Articles of Incorporation, if Ordinary Dividends are distributed for common shares, we treat the shareholders or share pledgees registered or recorded on the Register of Shareholders as of March 31 of each year as the people having rights to receive such dividends. In case of the distribution of Interim Dividends, we distribute these to the shareholders or share pledgees registered or recorded on the Register of Shareholders as of September 30 each year. Dividends or other distributable assets shall not incur interest thereon. If the relevant distributed assets are not received within a full three years from the date on which the distribution of relevant distributed assets became effective, we may be released from its obligation to distribute such assets.
Under the Companies Act, when we make distributions of surplus, if the sum of our capital reserve (
shihonjunbikin
) and earned surplus reserve (
riekijunbikin
) is less than
one-quarter
of our stated capital, we must, until such sum reaches
one-quarter
of the stated capital, set aside in our capital reserve and/or earned surplus reserve an amount equal to
one-tenth
of the amount of surplus so distributed as required by ordinances of the Ministry of Justice.
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The amount of surplus at any given time must be calculated in accordance with the following formula:
A + B + C + D – (E + F + G)
In the above formula:

| “A” = | the total amount of other capital surplus and other earnings surplus, each such amount being that appearing on our nonconsolidated balance sheet as of the end of the last fiscal year;

| “B” = | (if we have disposed of our treasury stock after the end of the last fiscal year) the amount of the consideration for such treasury stock received by us less the book value thereof;

| “C” = | (if we have reduced our stated capital after the end of the last fiscal year) the amount of such reduction less the portion thereof that has been transferred to capital reserve or earned surplus reserve (if any);

| “D” = | (if we have reduced our capital reserve or earned surplus reserve after the end of the last fiscal year) the amount of such reduction less the portion thereof that has been transferred to stated capital (if any);

| “E” = | (if we have cancelled our treasury stock after the end of the last fiscal year) the book value of such treasury stock;

| “F” = | (if we have distributed surplus to our shareholders after the end of the last fiscal year) the amount of the assets distributed to shareholders by way of such distribution of surplus;

| “G” = | certain other amounts set forth in an ordinance of the Ministry of Justice, including (if we have reduced surplus and increased stated capital, capital reserve or earned surplus reserve after the end of the last fiscal year) the amount of such reduction and (if we have distributed surplus to our shareholders after the end of the last fiscal year) the amount set aside in capital reserve or earned surplus reserve (if any) as required by ordinances of the Ministry of Justice.

Under the Companies Act, the aggregate book value of surplus distributed by us may not exceed a prescribed distributable amount, as calculated on the effective date of such distribution. Our distributable amount at any given time shall be the amount of surplus less the aggregate of: (a) the book value of our treasury stock; (b) the amount of consideration for any of our treasury stock disposed of by us after the end of the last fiscal year; and (c) certain other amounts set forth in an ordinance of the Ministry of Justice, including (if the total of the
one-half
of goodwill and the deferred assets exceeds the total of stated capital, capital reserve and earned surplus reserve, each such amount being that appearing on our nonconsolidated balance sheet as of the end of the last fiscal year) all or certain part of such exceeding amount as calculated in accordance with the ordinances of the Ministry of Justice. If we have opted to become a company that applies the restriction on distributable amounts on a consolidated basis (
renketsu haito kisei tekiyo kaisha
), we will further deduct from the amount of surplus a certain amount which is calculated based on our nonconsolidated and consolidated balance sheets as of the end of the last fiscal year as provided in ordinances of the Ministry of Justice.
If we have prepared interim financial statements as described below after the end of the last fiscal year, and if such interim financial statements have been approved by our board of directors or (if so required) by a general meeting of our shareholders, then the distributable amount must be adjusted to take into account the amount of profit or loss as set forth in ordinances of the Ministry of Justice, and the amount of consideration for any of our treasury stock disposed of by us, during the period in respect of which such interim financial statements have been prepared. Under the Companies Act, we are permitted to prepare nonconsolidated interim financial statements consisting of a balance sheet as of any date subsequent to the end of the last fiscal year and an income statement for the period from the first day of the current fiscal year to the date of such balance sheet. Interim financial statements prepared by us must be reviewed by our accounting auditor, as required by an ordinance of the Ministry of Justice.
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In Japan, the
ex-dividend
date and the record date for dividends precede the date of determination of the amount of the dividend to be paid. The price of the shares generally goes
ex-dividend
on the second business day prior to the record date.
Capital and Reserves
When we issue new shares, the amount of the cash or assets paid or contributed by subscribers for the new shares (with some exceptions) is required to be accounted for as stated capital, although we may account for an amount not exceeding
one-half
of the cash or assets as capital reserve by resolutions of the board of directors.
We may at any time transfer the whole or any part of our additional
paid-in
capital and legal reserve to stated capital by a resolution of a general meeting of shareholders. The whole or any part of surplus which may be distributed as Ordinary Dividends or Interim Dividends may also be transferred to stated capital by a resolution of a general meeting of shareholders. We may, by a resolution of a general meeting of shareholders (in the case of the reduction of stated capital, a special resolution of a general meeting of shareholders, see “Voting Rights”) reduce stated capital, additional
paid-in
capital and/or legal reserve.
Stock Splits
We may at any time split the shares into a greater number of shares by resolution of the board of directors. When the board of directors resolves on the split of shares, it may also amend the Articles of Incorporation to increase the number of authorized shares to be issued in proportion to the relevant stock split. We must give public notice of the stock split, specifying the record date therefore, not less than two weeks prior to such record date.
On October 26, 2012, the board of directors adopted a resolution on a
ten-for-one
stock split, effective as of April 1, 2013. The record date for the stock was one day prior to the effective date of the stock split. Our Articles of Incorporation were amended to increase the authorized share capital to cover the number of shares increased by the stock split, which amendment became effective simultaneously with the effectiveness of the stock split.
Unit Share System
Our Articles of Incorporation provides that one hundred shares constitute one “unit” of shares. The number of shares constituting a unit may be altered by amending our Articles of Incorporation. The number of shares constituting a unit is not permitted to exceed 1,000 shares.
A shareholder may not exercise shareholders’ rights in relation to any shares that it holds that are less than one unit other than the rights set forth below under the Companies Act and the Articles of Incorporation.

| (i) | The right to receive the distribution of money, etc., when the Company distributes the money, etc. in exchange for acquiring one class of shares subject to terms under which the Company shall acquire all of such class shares;

| (ii) | The right to receive the distribution of money, etc., in exchange for acquisition of shares subject to terms under which the Company shall acquire such shares;

| (iii) | The right to receive allocation of shares when the Company allocates its shares without having a shareholder make new payment;

| (iv) | The right to demand that the Company purchase shares that are less than one Unit held by the shareholder;

| (v) | The right to receive distribution of remaining assets;

| (vi) | The right to demand review of the Articles of Incorporation and the Register of Shareholders and delivery of their copies or a document describing registered matters, etc.;

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| (vii) | The right to demand registration or recordation of matters to be registered or recorded on the Register of Shareholders when the shareholder acquired the shares;

| (viii) | The right to receive the distribution of money, etc. pursuant to reverse stock split, stock split, allocation of stock acquisition right for free (which means that the Company allocates its stock acquisition right without having a shareholder make new payment), distribution of dividends from retained earnings or change of corporate organization;

| (ix) | The right to receive the distribution of money, etc. to be distributed pursuant to merger, share exchange or share-transfer effected by the Company;

| (x) | The right to subscribe to Offering Shares and Offering Stock Acquisition Rights on a pro rata basis based upon the number of shares held by the shareholder; and

| (xi) | The right to demand that the Company sell to the shareholder the number of additional shares necessary to make the number of shares of less than one Unit held by the shareholder, equal to one Unit.

Under the book-entry transfer system operated by JASDEC, shares constituting less than one unit are generally transferable. Under the rules of the Japanese stock exchanges, however, shares constituting less than one unit do not comprise a trading unit, except in limited circumstances, and accordingly may not be sold on the Japanese stock exchanges.
A holder of shares constituting less than one unit may require us to purchase such shares at their market value in accordance with the provisions of our Share Handling Regulations. In addition, our Articles of Incorporation provide that a holder of shares constituting less than one unit may request us to sell to such holder such amount of shares which will, when added together with the shares constituting less than one unit held by such holder, constitute one unit of shares, in accordance with the provisions of the Share Handling Regulations.
General Meetings of Shareholders
The ordinary general meeting of our shareholders is usually held in Tokyo in June of each year. In addition, we may hold an extraordinary general meeting of shareholders whenever necessary. Notice of a general meeting of shareholders must be dispatched to each shareholder (or, in the case of a nonresident shareholder, to its resident proxy or mailing address in Japan) having voting rights at least two weeks prior to the date of such meeting. The notice of a general meeting of shareholders states that the Company will provide information constituting reference documents for the general meeting of shareholders in electronic format and notes the URL of the website used to provide such information, as well as the place, time and purpose thereof. Reference documents for a general meeting of shareholders must be posted on the website from the earlier of the date three weeks prior to the date set for the meeting or the date on which the notice of the meeting is dispatched, until the date on which three months have elapsed from the meeting. Shareholders are generally entitled to request the delivery of paper-based documents by the record date of voting rights. The record date for an ordinary general meeting of shareholders is March 31 of each year. General meetings of shareholders can be called by a director pursuant to a resolution of the board of directors.
Any shareholder or group of shareholders with at least 3.0% of the total number of voting rights for a period of six months or longer may require the convocation of a general meeting of shareholders for a particular purpose by showing such a purpose and reason for convocation to one of our directors. Unless such shareholders’ meeting is convened promptly or a convocation notice of a meeting which is to be held not later than eight weeks from the day of such demand is dispatched, the requiring shareholder may, upon obtaining a court approval, convene such shareholders’ meeting.
Any shareholder or group of shareholders holding at least 300 voting rights or 1.0% of the total number of voting rights for six months or longer may propose a matter to be considered at a general meeting of shareholders by submitting a written request to one of our directors at least eight weeks prior to the date of such meeting.
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Under the Companies Act, any of minimum percentages, time periods and number of voting rights necessary for exercising the minority shareholder rights described above may be decreased or shortened if the articles of incorporation of a joint stock corporation so provide.
Voting Rights
A holder of shares constituting one or more units is entitled to one vote for each unit. However, we do not have voting rights with respect to our own shares and if we directly or indirectly own 25% or more of voting rights of a corporate or other entity which is a shareholder, such corporate shareholder cannot exercise its voting rights. Except as otherwise provided by law or in our Articles of Incorporation, a resolution can be adopted at a general meeting of shareholders by a majority of the number of voting rights represented at the meeting. The quorum for election of directors is
one-third
of the total number of voting rights. Our shareholders are not entitled to cumulative voting in the election of directors. Our shareholders may exercise their voting rights through proxies, provided that the proxies are also shareholders having voting rights.
Under the Companies Act and our Articles of Incorporation, any amendment to our Articles of Incorporation (except for certain amendments, see “Stock Splits”) and certain other instances require approval by a “special resolution” of shareholders, where the quorum is
one-third
of the total number of voting rights and the approval by at least
two-thirds
of the number of voting rights represented at the meeting is required. Other instances requiring such a “special resolution” include (i) the reduction of its stated capital, (ii) the removal of a director, (iii) the dissolution, liquidation, merger or consolidation, merger and corporate split or (iv) the formation of a parent company by way of share exchange or share transfer, (v) the transfer of the whole or a substantial part of its business, (vi) the acquisition of the whole business of another company, (vii) the issue to persons other than the shareholders of new shares at a “specially favorable” price or the issue or transfer to persons other than the shareholders of stock acquisition rights (including those incorporated in bonds with stock acquisition rights) under “specially favorable” conditions, (vii) consolidation of shares and (ix) acquisition of its own shares from a specific party other than its subsidiaries.
Subscription Right
Holders of the shares have no
pre-emptive
rights. The board of directors may, however, determine that shareholders be given subscription rights to new shares, in which case such rights must be given on uniform terms to all shareholders as of a record date of which not less than two weeks’ prior public notice must be given. The issue price of such new shares must be paid in full.
Stock Acquisition Rights
We may issue stock acquisition rights (
shinkabu yoyakuken
) and bonds with stock acquisition rights (
shinkabu yoyakuken-tsuki shasai
). Except where the issue would be on “specially favorable” conditions, the issue of stock acquisition rights or bonds with stock acquisition rights may be authorized by a resolution of the board of directors. Upon exercise of the stock acquisition rights, the holder of such rights may acquire shares by way of payment of the applicable exercise price or, if so determined by a resolution of the board of directors, by way of substitute payments in lieu of redemption of the bonds. If our Articles of Incorporation prohibit us from delivering shares, it will pay a cash payment equal to the market value of the shares.
Liquidation Rights
In the event of our liquidation, the assets remaining after payment of all debts, liquidation expenses and taxes will be distributed among shareholders in proportion to the respective number of shares which they hold.
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Reports to Shareholders
We currently furnish to our shareholders notices of shareholders’ meetings, annual business reports, including financial statements, and notices of resolutions adopted at the shareholders’ meetings, all of which are in Japanese. Public notice shall be electronic public notice, provided, however, that if the Company is unable to give an electronic public notice due to an accident or any other unavoidable reason, public notices of the Company shall be given in the “Nihon Keizai Shinbun.”
Record Date of Register of Shareholders
As stated above, March 31 is the record date for the payment of Ordinary Dividends and the determination of shareholders entitled to vote at the ordinary general meeting of shareholders. In addition, we may set a record date for determining the shareholders entitled to other rights and for other purposes by giving at least two weeks’ prior public notice. Under the Book-Entry Law, JASDEC is required to give us a notice of the names and addresses of the shareholders, the number of shares held by them and other relevant information as of each such record date, and the register of our shareholders shall be updated accordingly.
Repurchase of Own Shares
We may acquire our shares, including shares of our common stock: (i) by way of purchase on any Japanese stock exchange or by way of tender offer (pursuant to a resolution of the board of directors); (ii) from a specific shareholder other than any of our subsidiaries (pursuant to a special resolution of a general meeting of shareholders); or (iii) from any of our subsidiaries (pursuant to a resolution of the board of directors).
In the case of (ii) above, any other shareholder of such class may make a request to a director, at least five days prior to the relevant shareholders’ meeting, to include such shareholder as a seller in the proposed purchase. However, no such right will be available if the relevant class of shares is listed on any Japanese stock exchange and the purchase price or any other consideration to be received by the relevant specific shareholder does not exceed the then market price of the shares calculated in a manner set forth in ordinances of the Ministry of Justice.
Any such acquisition of our shares must satisfy certain requirements that the total amount of the purchase price may not exceed the distributable amount, as described in “—Distributions of Surplus.” We may hold our shares acquired in compliance with the provisions of the Companies Act, and may generally cancel such shares by a resolution of the board of directors, although the disposal of such shares is subject to the same proceedings for the issuance of new shares, in general.
Stock Options
Under the Companies Act, a stock option plan is available by issuing stock acquisition rights.
Generally, a stock option plan may be adopted by a resolution of the board directors. However, if the conditions of such stock acquisition rights are “specially favorable,” a special resolution at a general meeting of shareholders is required. The special resolution must set forth the class and number of shares to be issued or transferred on exercise of the options, the exercise price, the exercise period and other terms of the options.
MATERIAL CONTRACTS
Not applicable.
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FOREIGN EXCHANGE AND OTHER REGULATIONS
Foreign Exchange
The Foreign Exchange and Foreign Trade Law of Japan, as amended, and the cabinet orders and ministerial ordinances thereunder (the “Foreign Exchange Regulations”) govern the acquisition and holding of shares of capital stock of ORIX by “exchange nonresidents” and by “foreign investors” (as defined below). The Foreign Exchange Regulations currently in effect do not, however, regulate transactions between exchange nonresidents who purchase or sell shares outside Japan for
non-Japanese
currencies.
“Exchange nonresidents” are defined as individuals who are not resident in Japan and corporations whose principal offices are located outside Japan. Generally, the branch and other offices of nonresident corporations located within Japan are regarded as residents of Japan and branch and other offices of Japanese corporations located outside Japan are regarded as exchange nonresidents. “Foreign investors” are defined to be (i) individuals who are exchange nonresidents, (ii) corporations or other organizations that are established under the laws of foreign countries or whose principal offices are located outside Japan, (iii) corporations of which 50% or more of their voting rights are held, directly or indirectly, by (i) and/or (ii) above, (iv) partnerships or similar organizations of which 50% or more of total capital contributions are attributable to nonresident, or a majority of general partners are exchange nonresidents, and (v) corporations or other organizations of which a majority of the officers (or officers having the power of representation) are nonresident individuals.
In general, the acquisition of a Japanese company’s stock shares (such as the shares of capital stock of ORIX) by an exchange nonresident from a resident of Japan is not subject to any prior filing requirements. In certain limited circumstances, however, prior notification or report to the Minister of Finance and any other competent Ministers for an acquisition of this type may be required. In the case where a resident of Japan transfers shares of a Japanese company (such as the shares of capital stock of ORIX) for consideration exceeding ¥100 million to an exchange nonresident, the resident of Japan who transfers the shares is required to report the transfer to the Minister of Finance within 20 days from the date of the transfer, unless the transfer was made through a bank, securities company or financial future trader licensed under the Japanese laws.
If a foreign investor acquires shares of a Japanese company listed on a Japanese stock exchange (such as the shares of capital stock of ORIX) or that are traded on an
over-the-counter
market in Japan and as a result of the acquisition the foreign investor in combination with any existing holdings directly or indirectly holds 1% or more of the issued shares or voting rights of the relevant company, holds a certain percentage or more of the shares of such a company and consents to matters that could have a significant effect on the management of the business of the company, or acquires or succeeds to the business of a Japanese corporation by a business transfer, corporate split, or merger, the foreign investor is, in general, required to report such acquisition to the Minister of Finance and any other competent Ministers within 45 days following the date of such acquisition. In the case of certain designated types of business affecting Japan’s national security, etc., prior notification is required with respect to such an acquisition or other relevant actions. However, in certain cases it may be possible for a foreign investor to be exempted from the prior notification obligation for an acquisition.
The acquisition of shares by exchange nonresidents by way of stock split is not subject to the foregoing notification requirements.
Under the Foreign Exchange Regulations, dividends paid on, and the proceeds of sales in Japan of, shares held by nonresidents of Japan may in general be converted into any foreign currency and repatriated abroad.
Large Shareholdings Report
The Financial Instruments and Exchange Act requires any person who has become, beneficially and solely or jointly, a holder of more than 5% of the total issued shares of capital stock of a company listed on any Japanese financial instruments exchange (such as the shares of capital stock of ORIX) or whose shares are traded
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on the
over-the-counter
markets in Japan, to file with the Prime Minister within five business days a report concerning such shareholdings. An alteration report must also be made in respect of any subsequent change of 1% or more in any such holding or any change in material matters set out in reports previously filed, with certain exceptions. For this purpose, shares issuable to such person upon exchange of exchangeable securities or exercise of stock acquisition rights are taken into account in determining both the size of such person’s holding and the issuer’s total issued share capital.
Filing of Share Acquisition Plan
The Act on Prohibition of Private Monopolization and Maintenance of Fair Trade requires any company (including a foreign company) which crosses certain domestic sales thresholds and newly acquires a holder of more than 20% or 50% of the total issued voting shares of capital stock (such as the shares of capital stock of ORIX) or the shares of a company (including a foreign company) which meets certain conditions, to file a share acquisition plan concerning such shares with the Fair Trade Commission at least 30 days prior to the closing or the acquisition.
DIVIDEND POLICY AND DIVIDENDS
The following table shows the amount of dividends applicable to fiscal year per share for each of the fiscal years indicated, which amounts are translated into dollars per ADS at the noon buying rate for Japanese yen in New York City for cable transfers in foreign currencies on the relevant dividend payment date as published by the Federal Reserve Bank.

Year ended |  | Dividends applicable to fiscal year per Share |  |  | Translated into dollar per ADS |
March 31, 2019 |  |  | 76.00 |  |  |  | 3.45 |
March 31, 2020 |  |  | 76.00 |  |  |  | 3.53 |
March 31, 2021 |  |  | 78.00 |  |  |  | 3.65 |
March 31, 2022 |  |  | 85.60 |  |  |  | 3.50 |
March 31, 2023 |  |  | 85.60 |  |  |  | 3.10 |

ORIX aims to increase shareholder value by utilizing profits earned from business activities to strengthen its business foundation and make investments for future growth. At the same time, ORIX strives to make stable and sustainable distribution of dividends at a level in line with its business performance. In addition, with regards to the decision of whether to buy back shares, ORIX aims to act with flexibility and swiftness while considering various factors such as the soundness of its financial condition and external factors such as the business environment, share price and its trend and target performance indicators.
Based on this fundamental policy, the annual dividend for fiscal 2023 has been decided at 85.60 yen per share (the interim dividend paid was 42.80 yen per share and the
year-end
dividend has been decided at 42.80 yen per share). The payout ratio for the fiscal year ended March 31, 2023 was 37.0%.
For next fiscal 2024, the annual dividend is forecasted at the higher of either payout ratio of 33.0% or 85.60 yen per share as well as in fiscal 2023.
Pursuant to the amendment to the Act on Special Measures Concerning Taxation, dividends paid to U.S. Holders of Shares or ADSs are generally subject to a Japanese withholding tax. The tax rate can be found in “Item 10. TAXATION—JAPANESE TAXATION—Shares.”
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TAXATION
JAPANESE TAXATION
The following is a summary of the principal Japanese tax consequences for owners of the Shares or ADSs who are nonresident individuals of Japan or
non-Japanese
corporations without a permanent establishment in Japan (“nonresident Holders”). The statements regarding Japanese tax laws set forth below are based on the laws in force and as interpreted by the Japanese taxation authorities as of the date hereof and are subject to changes in the applicable Japanese laws or conventions for the avoidance of double taxation occurring after that date. This summary is not exhaustive of all possible tax considerations that may apply to a particular investor and potential investors are advised to consult with their own tax advisors to satisfy themselves as to:

| • |  | the overall tax consequences of the acquisition, ownership and disposition of Shares or ADSs, including specifically the tax consequences under Japanese law;

| • |  | the laws of the jurisdiction of which they are resident; and

| • |  | any tax treaty between Japan and their country of residence.

Shares
Generally, a nonresident Holder is subject to Japanese withholding tax on dividends on Shares or ADSs paid by us. Stock splits are not subject to Japanese income or corporation tax.
Pursuant to the Act on Special Measures Concerning Taxation and the Act on Special Measures Concerning the Securing of Financial Resources for Reconstruction Measures Involving the Great East Japan Earthquake, the Japanese withholding tax rate applicable to dividends on Shares or ADSs paid to nonresident Holders by us is 15.315%. However, where an individual nonresident Holder holds 3% or more of the total number of shares issued by us, the withholding tax rate applicable will be 20.42% for dividends. Japan has entered into income tax treaties, conventions and agreements where this withholding tax rate is, in some cases, reduced to a lower percentage for portfolio investors. Nonresident Holders who are entitled under an applicable treaty, convention, or agreement to this reduced Japanese withholding tax rate are required to submit an Application Form for the Income Tax Convention regarding Relief from Japanese Income Tax on Dividends in advance through us to the relevant Japanese tax authority before the payment of dividends. A standing proxy for a nonresident Holder may provide such application service. Nonresident Holders who do not submit an application in advance will be entitled to claim the refund from the relevant Japanese tax authority of those withholding taxes withheld in excess of the rate of an applicable tax treaty.
The Convention between the United States and Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the “Tax Convention”) provides for a maximum rate of Japanese withholding tax which may be imposed on dividends paid to an eligible United States resident not having a permanent establishment in Japan. Under the Tax Convention, the maximum withholding rate is generally limited to 10% of the relevant dividends.
Gains derived from the sale outside Japan of Shares or ADSs by a nonresident Holder, are, in general, not subject to Japanese income or corporation taxes.
Japanese inheritance and gift taxes, at progressive rates, may be payable by an individual who has acquired Shares or ADSs as a legatee, heir or done.
UNITED STATES TAXATION
The following discussion describes the material U.S. federal income tax consequences of ownership and disposition of Shares or ADSs held as capital assets by U.S. Holders (as defined below).
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This discussion does not describe all of the tax consequences that may be relevant to a U.S. Holder in light of the U.S. Holder’s particular circumstances (including the application of the provisions of the Code (as described below) known as the Medicare contribution tax) or to U.S. Holders subject to special rules, such as:

| • |  | certain financial institutions;

| • |  | insurance companies;

| • |  | dealers and traders in securities who use a mark-to-market method of tax accounting;

| • |  | persons holding Shares or ADSs as part of a hedging transaction, straddle, wash sale, conversion transaction or other integrated transaction or persons entering into a constructive sale with respect to the Shares or ADSs ;

| • |  | persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;

| • |  | entities classified as partnerships for U.S. federal income tax purposes;

| • |  | persons subject to the alternative minimum tax;

| • |  | tax-exempt entities, including “individual retirement accounts” and “Roth IRAs”;

| • |  | regulated investment companies;

| • |  | persons that own or are deemed to own 10% or more of the stock of the Company, by vote or value;

| • |  | persons holding the shares or ADSs in connection with a trade or business carried on outside the United States; or

| • |  | persons who acquired Shares or ADSs pursuant to the exercise of any employee stock option or otherwise as compensation.

If an entity that is classified as a partnership for U.S. federal income tax purposes holds Shares or ADSs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding Shares or ADSs and partners in such partnerships should consult their tax advisors as to the particular U.S. federal income tax consequences of holding and disposing of Shares or ADSs.
This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), administrative pronouncements, judicial decisions, final, temporary and proposed Treasury regulations, and the Tax Convention, changes to any of which subsequent to the date of this annual report may affect the tax consequences described herein. It is also based in part on representations by the depositary and assumes that each obligation under the deposit agreement and any related agreement will be performed in accordance with its terms.
As used herein, the term “U.S. Holder” means a beneficial owner of Shares or ADSs that is eligible for Tax Convention benefits and that is, for U.S. federal income tax purposes:

| • |  | a citizen or individual resident of the United States;

| • |  | a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or of any political subdivision thereof; or

| • |  | an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.

Treasury regulations that apply to taxable years beginning on or after December 28, 2021 may in some circumstances prohibit a U.S. person from claiming a foreign tax credit with respect to certain
non-U.S.
taxes that are not creditable under applicable income tax treaties. Accordingly, U.S. investors that are not eligible for Tax Convention benefits should consult their tax advisers regarding the creditability or deductibility of any Japanese taxes imposed on dividends on, or dispositions of, the Shares or ADSs. This discussion does not apply to investors in this special situation.
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We believe we may have been a PFIC for the year to which this annual report relates. However, because of uncertainties in the application of the PFIC rules, including uncertainties as to the valuation and proper characterization of certain of our assets as passive or active, our PFIC status is uncertain. In addition, we may be a PFIC in the foreseeable future.
Persons considering the purchase of Shares or ADSs should consult their tax advisors with regard to the PFIC rules described below as well as the application of other U.S. federal income tax laws relevant to their particular situations and any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.
In general, a U.S. Holder of ADSs will be treated as the owner of the underlying shares represented by those ADSs for U.S. federal income tax purposes. Accordingly, no gain or loss will be recognized if the U.S. Holder exchanges ADSs for the underlying shares represented by those ADSs.
Taxation of Distributions
Subject to the PFIC rules described below, distributions paid on Shares or ADSs, other than certain pro rata distributions of common shares, will generally be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Assuming that we are a PFIC, dividends paid by us will not be eligible for the preferential dividend tax rate otherwise available to certain
non-corporate
U.S. Holders. The amount of a dividend will include any amounts withheld by us or our paying agent in respect of Japanese taxes, as discussed above under “Taxation—Japanese Taxation—Shares” The amount of the dividend will be treated as foreign source dividend income to U.S. Holders and will not be eligible for the dividends received deduction generally allowed to U.S. corporations under the Code.
Dividends paid in yen will be included in the income of a U.S. Holder in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of the U.S. Holder’s (or, in the case of ADSs, the depositary’s) receipt of the dividend, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder generally should not be required to recognize a foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have a foreign currency gain or loss if such holder does not convert the amount of such dividend into U.S. dollars on the date of its receipt. Any foreign currency gain or loss resulting from the conversion of the yen will generally be treated as U.S. source ordinary income or loss.
Subject to the PFIC rules described below and to applicable limitations that may vary depending upon the U.S. Holder’s circumstances, Japanese taxes withheld from dividends on Shares or ADSs at a rate not exceeding the applicable rate provided for by the Tax Convention will be creditable against the U.S. Holder’s U.S. federal income tax liability. The maximum rate of withholding tax on dividends paid to a U.S. Holder pursuant to the Tax Convention is 10%. As discussed under “Taxation—Japanese Taxation—Shares” above, under current Japanese law, the statutory rate is higher than the maximum Tax Convention rate. Japanese taxes withheld in excess of the rate applicable under the Tax Convention will not be eligible for credit against a U.S. Holder’s federal income tax liability. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. The rules governing foreign tax credits are complex and, therefore, U.S. Holders should consult their own tax advisors regarding the availability of foreign tax credits in their particular circumstances. Instead of claiming a credit, U.S. Holders may, upon election, deduct such otherwise creditable Japanese taxes in computing taxable income, subject to generally applicable limitations under U.S. law.
Sale or Other Taxable Disposition of Shares or ADSs
Subject to the PFIC rules described below, for U.S. federal income tax purposes, gain or loss realized on the sale or other disposition of Shares or ADSs will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder held the Shares or ADSs for more than one year. The amount of the gain or loss will equal the
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difference between the U.S. Holder’s tax basis in the Shares or ADSs disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars. This gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes.
Passive Foreign Investment Company Rules
If we are a PFIC for any year during a U.S. Holder’s holding period of the Shares or ADSs, and the U.S. Holder has not made a
mark-to-market
election for the Shares or ADSs, as described below, the holder will be subject to special rules generally intended to eliminate any benefits from the deferral of U.S. federal income tax that a holder could derive from investing in a foreign corporation that does not distribute all of its earnings on a current basis. Upon a disposition of Shares or ADSs (including under certain circumstances, a pledge, and under proposed Treasury regulations, a disposition pursuant to certain otherwise
tax-free
reorganizations) gain recognized by a U.S. Holder would be allocated ratably over its holding period for the Shares or ADSs. The amounts allocated to the taxable year of the sale or other exchange and to any year before the Company became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations for such year, as appropriate, and an interest charge would be imposed on the resulting tax liability. Similar rules would apply to any distribution in respect of Shares or ADSs to the extent it exceeds 125 percent of the average of the annual distributions on Shares or ADSs received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter (any such distribution, an “excess distribution”). Any loss realized on a disposition of Shares or ADSs will be capital loss, and will be long-term capital loss if the U.S. Holder held the Shares or ADSs for more than one year. The amount of the loss will equal the difference between the U.S. Holder’s tax basis in the Shares or ADSs disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars. Such loss will generally be U.S.-source loss for foreign tax credit purposes.
If we are a PFIC for any year during which a U.S. Holder holds Shares or ADSs, we generally will continue to be treated as a PFIC with respect to the U.S. Holder for all succeeding years during which the U.S. Holder holds Shares or ADSs, even if we cease to meet the threshold requirements for PFIC status. U.S. Holders should consult their tax advisers regarding the potential availability of a “deemed sale” election that would allow them to eliminate this continuing PFIC status.
If we are a PFIC, U.S. Holders will be deemed to own their proportionate shares of our subsidiaries that are PFICs and will be subject to U.S. federal income tax according to the rules described above on (i) certain distributions by subsidiary PFICs and (ii) a disposition of shares of a subsidiary PFIC, even though holders have not received the proceeds of those distributions or dispositions directly.
If the Shares or ADSs are “regularly traded” on a “qualified exchange,” a U.S. Holder of Shares or ADSs would be eligible to make a
mark-to-market
election that would result in tax treatment different from the general tax treatment for PFICs described above. The Shares or ADSs will be treated as “regularly traded” in any calendar year in which more than a de minimis quantity of the Shares or ADSs are traded on a qualified exchange for at least 15 days during each calendar quarter. A “qualified exchange” includes the NYSE, on which our ADSs are traded, and a foreign exchange that is regulated by a governmental authority in which the exchange is located and with respect to which certain other requirements are met. The Internal Revenue Service (“IRS”) has not yet identified specific foreign exchanges that are “qualified” for this purpose. Under current law, the
mark-to-market
election may be available to holders of ADSs because the ADSs will be listed on the NYSE, although there can be no assurance that the ADSs will be “regularly traded” for purposes of the
mark-to-market
election. However, even if a U.S. Holder makes a
mark-to-market
election with respect to our Shares or ADSs, a U.S. Holder will not be able to make a
mark-to-market
election with respect to any of our subsidiaries that are PFICs. U.S. Holders should consult their tax advisers regarding the availability and advisability of making a
mark-to-market
election in their particular circumstances. In particular, U.S. Holders should consider carefully the impact of a
mark-to-market
election with respect to their ADSs given that we may have subsidiary PFICs for which a
mark-to-market
election may not be available.
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If a U.S. Holder is eligible and makes the
mark-to-market
election, the U.S. Holder will include each year, as ordinary income, the excess, if any, of the fair market value of the Shares or ADSs at the end of the taxable year over their adjusted basis, and will be permitted an ordinary loss in respect of the excess, if any, of the adjusted basis of the Shares or ADSs over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously included income as a result of the
mark-to-market
election). If a U.S. Holder validly makes the election, the holder’s basis in the Shares or ADSs will be adjusted to reflect any such income or loss amounts. Any gain recognized on the sale or other disposition of Shares or ADSs in a year when the Company is a PFIC will be treated as ordinary income and any loss will be treated as an ordinary loss (but only to the extent of the net amount of income previously included as a result of the
mark-to-market
election).
We do not intend to comply with the requirements necessary for a U.S. Holder to make a “qualified electing fund” election, which is sometimes available to shareholders of a PFIC.
Special rules apply to determine the foreign tax credit with respect to withholding taxes imposed on excess distributions on shares of a PFIC. These rules could limit the amount of the foreign tax credit that would otherwise have been available.
If a U.S. Holder owns Shares or ADSs during any year in which we are a PFIC, the U.S. Holder will generally be required to file IRS Form 8621 with its federal income tax return with respect to us and with respect to each of our subsidiaries that is a PFIC, subject to certain exceptions.
We urge U.S. Holders to consult their tax advisors concerning our status as a PFIC and the tax considerations relevant to an investment in a PFIC, including the availability and consequences of making the
mark-to-market
election discussed above.
Backup Withholding and Information Reporting
Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is an exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding.
The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against such holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.
Certain U.S. Holders who are individuals (and certain entities closely held by individuals) may be required to report information relating to their ownership of an interest in certain foreign financial assets, including stock of a
non-U.S.
person, generally on Form 8938, subject to exceptions (including an exception for financial assets held through a U.S. financial institution). U.S. Holders should consult their tax advisers regarding their reporting obligations with respect to the Shares or ADSs.
DOCUMENTS ON DISPLAY
We are subject to the reporting requirements of the Exchange Act. In accordance with these requirements, we file annual reports on Form
20-F
and furnish periodic reports on Form
6-K
with the Commission.
The Commission maintains a website at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the Commission via EDGAR.
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We are currently exempt from the rules under the Exchange Act that prescribe the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. We are not required under the Exchange Act to publish financial statements as frequently or as promptly as are U.S. companies subject to the Exchange Act. We will, however, continue to furnish our shareholders with annual reports containing audited financial statements and will issue press releases containing unaudited interim financial information as well as such other reports as may from time to time be authorized by our board of directors or as may be otherwise required.
SUBSIDIARY INFORMATION
Not applicable.
ANNUAL REPORT TO SECURITY HOLDERS
Not applicable.
Item 11. Quantitative and Qualitative Disclosures about Market Risk
MARKET RISKS
Our primary market risk exposures are interest rate risk, exchange rate risk and risk of market prices in stocks. We enter into derivative transactions to hedge interest rate risk and exchange rate risk. Our risk management for market risk exposure and derivative transactions is described under “Item 5. Operating and Financial Review and Prospects—Risk Management.”
The following quantitative information about the market risk of our financial instruments does not include information about financial instruments to which the requirements under ASC 825 (“Financial Instruments”) do not apply, such as net investment in leases, investment in operating leases, and insurance contracts. As a result, the following information does not present all the risks of our financial instruments. We omitted the disclosure of financial instruments for trading purposes because the amount is immaterial.
Interest Rate Risk
Many of our assets and liabilities are composed of floating and fixed rate assets and liabilities. Our floating rate assets and liabilities utilize various rates to determine interest amounts receivable and payable thereunder, including TIBOR, prime rates and U.S. dollar LIBOR, SOFR, etc. Movements in market interest rates affect gains and losses in those assets and liabilities. Accordingly, we endeavor to reduce interest rate risk through techniques such as funding interest rate bearing assets through liabilities with similar interest rate characteristics, e.g., financing floating-rate assets with floating-rate liabilities and financing fixed-rate assets with fixed-rate liabilities.
In order to manage assets and liabilities in an appropriate risk position, we conduct various type of analysis for interest rate sensitivity including gains and losses impact analysis and fair value analysis of assets and liabilities.
The table below of interest rate sensitivity for financial instruments summarizes installment loans, investment in securities (floating and fixed rate) and short-term and long-term debt. These instruments are further classified under fixed or floating rates. For such items, the principal collection and repayment schedules and the
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weighted average interest rates for collected and repaid portions are disclosed. Concerning interest rate swaps, under derivative instruments, the estimated notional principal amount for each contract period and the weighted average of swap rates are disclosed. The average interest rates of financial instruments as of March 31, 2023 were 4.1% for installment loans, 2.0% for investment in securities (floating and fixed rate), 2.5% for short-term and long-term debt and 0.2% for deposits. As of March 31, 2023, the average payment rate of interest rate swaps was 1.5% and the average receipt rate was 3.1%. The average interest rates of financial instruments as of March 31, 2022 were: 3.4% for installment loans, 1.6% for investment in securities (floating and fixed rate), 1.3% for short-term and long-term debt and 0.2% for deposits. As of March 31, 2022, the average payment rate of interest rate swaps was 1.7% and the average receipt rate was 1.0%. As of March 31, 2023, there was no material change in the balance or in the average interest rate of financial instruments from March 31, 2022. The table below shows our interest rate risk exposure and the results of our interest rate sensitivity analysis.
INTEREST RATE SENSITIVITY
NONTRADING FINANCIAL INSTRUMENTS

|  | Expected Maturity Date |  |  | Total |  |  | March 31, 2023 Estimated Fair Value |
|  | Years ending March 31, |
|  | 2024 |  |  | 2025 |  |  | 2026 |  |  | 2027 |  |  | 2028 |  |  | Thereafter |
|  | (Millions of yen) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Installment loans (fixed rate) |  | ¥ | 224,715 |  |  | ¥ | 133,027 |  |  | ¥ | 105,483 |  |  | ¥ | 71,710 |  |  | ¥ | 59,170 |  |  | ¥ | 432,401 |  |  | ¥ | 1,026,506 |  |  | ¥ | 1,007,499 |
Average interest rate |  |  | 5.0 | % |  |  | 7.7 | % |  |  | 8.7 | % |  |  | 8.1 | % |  |  | 4.9 | % |  |  | 3.8 | % |  |  | 5.4 | % |  |  | — |
Installment loans (floating rate) |  | ¥ | 297,386 |  |  | ¥ | 296,080 |  |  | ¥ | 306,304 |  |  | ¥ | 198,828 |  |  | ¥ | 165,264 |  |  | ¥ | 1,574,979 |  |  | ¥ | 2,838,841 |  |  | ¥ | 2,789,381 |
Average interest rate |  |  | 5.0 | % |  |  | 5.6 | % |  |  | 5.8 | % |  |  | 5.1 | % |  |  | 5.7 | % |  |  | 2.3 | % |  |  | 3.7 | % |  |  | — |
Investment in securities (fixed rate) |  | ¥ | 73,293 |  |  | ¥ | 77,303 |  |  | ¥ | 47,433 |  |  | ¥ | 94,998 |  |  | ¥ | 75,063 |  |  | ¥ | 1,997,253 |  |  | ¥ | 2,365,343 |  |  | ¥ | 2,132,332 |
Average interest rate |  |  | 1.4 | % |  |  | 1.1 | % |  |  | 2.0 | % |  |  | 1.2 | % |  |  | 1.8 | % |  |  | 1.5 | % |  |  | 1.5 | % |  |  | — |
Investment in securities (floating rate) |  | ¥ | 1,810 |  |  | ¥ | 7,522 |  |  | ¥ | 933 |  |  | ¥ | 1,327 |  |  | ¥ | 826 |  |  | ¥ | 225,856 |  |  | ¥ | 238,274 |  |  | ¥ | 231,954 |
Average interest rate |  |  | 3.2 | % |  |  | 3.4 | % |  |  | 2.7 | % |  |  | 4.4 | % |  |  | (0.5 | %) |  |  | 6.8 | % |  |  | 6.6 | % |  |  | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short-term debt |  | ¥ | 508,796 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 508,796 |  |  | ¥ | 508,796 |
Average interest rate |  |  | 3.4 | % |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3.4 | % |  |  | — |
Deposits |  | ¥ | 1,211,339 |  |  | ¥ | 437,779 |  |  | ¥ | 369,171 |  |  | ¥ | 94,453 |  |  | ¥ | 52,596 |  |  | ¥ | 81,007 |  |  | ¥ | 2,246,345 |  |  | ¥ | 2,247,040 |
Average interest rate |  |  | 0.2 | % |  |  | 0.3 | % |  |  | 0.3 | % |  |  | 0.2 | % |  |  | 0.3 | % |  |  | 0.3 | % |  |  | 0.2 | % |  |  | — |
Long-term debt (fixed rate) |  | ¥ | 390,219 |  |  | ¥ | 371,483 |  |  | ¥ | 199,212 |  |  | ¥ | 220,142 |  |  | ¥ | 321,768 |  |  | ¥ | 810,146 |  |  | ¥ | 2,312,970 |  |  | ¥ | 2,271,142 |
Average interest rate |  |  | 1.8 | % |  |  | 1.8 | % |  |  | 1.2 | % |  |  | 1.3 | % |  |  | 2.1 | % |  |  | 1.9 | % |  |  | 1.8 | % |  |  | — |
Long-term debt (floating rate) |  | ¥ | 487,041 |  |  | ¥ | 324,989 |  |  | ¥ | 373,779 |  |  | ¥ | 381,292 |  |  | ¥ | 296,759 |  |  | ¥ | 1,032,893 |  |  | ¥ | 2,896,753 |  |  | ¥ | 2,892,970 |
Average interest rate |  |  | 3.4 | % |  |  | 3.3 | % |  |  | 3.2 | % |  |  | 3.0 | % |  |  | 2.2 | % |  |  | 2.6 | % |  |  | 2.9 | % |  |  | — |

NONTRADING DERIVATIVE FINANCIAL INSTRUMENTS

|  | Expected Maturity Date |  |  | Total |  |  | March 31, 2023 Estimated Fair Value |
|  | Years ending March 31, |
|  | 2024 |  |  | 2025 |  |  | 2026 |  |  | 2027 |  |  | 2028 |  |  | Thereafter |
|  | (Millions of yen) |
Interest rate swaps: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Notional amount (floating to fixed) |  | ¥ | 76,916 |  |  | ¥ | 73,837 |  |  | ¥ | 77,515 |  |  | ¥ | 90,390 |  |  | ¥ | 24,242 |  |  | ¥ | 226,382 |  |  | ¥ | 569,282 |  |  | ¥ | 19,480 |
Average pay rate |  |  | 1.2 | % |  |  | 2.0 | % |  |  | 1.4 | % |  |  | 2.2 | % |  |  | 1.2 | % |  |  | 1.2 | % |  |  | 1.5 | % |  |  | — |
Average receive rate |  |  | 4.9 | % |  |  | 4.8 | % |  |  | 4.7 | % |  |  | 3.8 | % |  |  | 1.2 | % |  |  | 1.4 | % |  |  | 3.1 | % |  |  | — |
Notional amount (fixed to floating) |  | ¥ | — |  |  | ¥ | — |  |  | ¥ | — |  |  | ¥ | — |  |  | ¥ | — |  |  | ¥ | 46 |  |  | ¥ | 46 |  |  | ¥ | (1 | )
Average pay rate |  |  | — | % |  |  | — | % |  |  | — | % |  |  | — | % |  |  | — | % |  |  | 4.1 | % |  |  | 4.1 | % |  |  | — |
Average receive rate |  |  | — | % |  |  | — | % |  |  | — | % |  |  | — | % |  |  | — | % |  |  | 2.9 | % |  |  | 2.9 | % |  |  | — |

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The above table excludes purchased loans, which are exposed to interest rate risk, because it is difficult to estimate the timing and extent of collection of such loans. Purchased loans are deteriorated credit loans which we acquire at a discount and for which full collection of all contractually required payments from the debtors is unlikely. The total book value of our purchased loans as of March 31, 2023 was ¥12,255 million.
Long-term debt (fixed rate) in the table above includes the amount of ¥44,000 million of subordinated syndicated loan (hybrid loan). Out of this amount, ¥10,000 million was executed in fiscal 2022, and will mature in fiscal 2082 and may be redeemed after 5 years from the execution. ¥34,000 million was executed in fiscal 2023, and will mature in fiscal 2083 and may be redeemed after 5 years from the execution.
In addition, long-term debt (fixed rate) in the table above includes the amount of ¥150,000 million of unsecured subordinated bonds with interest payment deferrable clauses and optional early redemption conditions (hybrid bonds). Out of this amount, ¥100,000 million was executed in fiscal 2020, and will mature in fiscal 2080, of which ¥60,000 million and ¥40,000 million may be redeemed after 5 years, and 10 years from the execution, respectively. ¥50,000 million was executed in fiscal 2021, and will mature in fiscal 2081, of which ¥29,000 million and ¥21,000 million may be redeemed after 5 years, and 10 years from the execution, respectively.
Long-term debt (floating rate) in the table above includes the amount of ¥34,000 million of subordinated syndicated loan (hybrid loan) that was executed in fiscal 2017, will mature in fiscal 2077 and may be redeemed after 7 years from the execution.
We are also exposed to interest rate risks in our life insurance businesses because revenues from life insurance related investment income fluctuate based on changes in market interest rates, while life insurance premiums and costs do not.
Exchange Rate Risk
We hold foreign currency-denominated assets and liabilities and deal in foreign currencies. It is our policy to match balances of foreign currency-denominated assets and liabilities as a means of hedging exchange rate risk. There are, however, cases where a certain part of our foreign currency-denominated investments are not hedged for such risk.
We have identified all positions that are subject to exchange rate risk, including retained earnings accumulated in foreign currencies in our overseas subsidiaries, which is translated to Japanese yen upon consolidation. ORIX shareholders’ equity is subject to exchange rate risk arising from such translations. Other positions, such as potential losses in future earnings, are calculated using several hypothetical scenarios based on 10% changes in the relevant currencies. Based on these scenarios, exchange losses in future earnings were estimated to be ¥17 million and ¥37 million as of March 31, 2022 and 2023, respectively. The largest of such losses were estimated in scenarios where the U.S. dollar appreciated 10% against the Japanese yen from the rate in effect on March 31, 2022 and 2023.
Risk of Market Prices in Stocks
We have marketable stocks that are subject to price risk arising from changes in their market prices. Our shareholders’ equity and net income bear risks due to changes in the market prices of these securities. To manage these risks of market price fluctuations, we assume a scenario of a 10% uniform downward movement in stock prices compared with stock prices as of March 31, 2022 and 2023, respectively, and under such circumstances estimate ¥8,718 million and ¥8,723 million decrease in the fair value of our equity securities as of March 31, 2022 and 2023.
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Item 12. Description of Securities Other than Equity Securities
FEES AND PAYMENTS RELATING TO OUR AMERICAN DEPOSITARY SHARES
SCHEDULE OF FEES AND CHARGES
Citibank N.A., or the Depositary, serves as the depositary for our ADSs. As an ADS holder, you will be required to pay the following service fees to the Depositary:

Service |  | Fee
Issuance of ADSs upon deposit of Shares |  | Up to 5¢ per ADS issued
Cancellation of ADSs and delivery of deposited securities |  | Up to 5¢ per ADS canceled
Exercise of rights to purchase additional ADSs |  | Up to 5¢ per ADS issued
Distribution of cash proceeds upon sale of rights and other entitlements |  | Up to 2¢ per ADS held

As an ADS holder you will also be responsible to pay various fees and expenses incurred by the Depositary and various taxes and governmental charges such as:

| • |  | Taxes, including applicable interest and penalties, and other governmental charges;

| • |  | Fees for the transfer and registration of Shares charged by the registrar and transfer agent for the Shares in Japan (i.e., upon deposit and withdrawal of Shares);

| • |  | Expenses incurred for converting foreign currency into U.S. dollars;

| • |  | Expenses for cable, telex and fax transmissions and for delivery of securities;

| • |  | Fees and expenses of the Depositary incurred in connection with compliance with exchange control regulations and regulatory requirements applicable to the Shares or ADSs; and

| • |  | Fees and expenses of the Depositary in delivering deposited securities.

We have agreed to pay some other charges and expenses of the depositary bank. Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the depositary bank. You will receive prior notice of these changes.
PAYMENTS TO ORIX FROM THE DEPOSITARY
The Depositary has agreed to reimburse us for certain expenses we incur in connection with our ADR program. These reimbursable expenses include investor relations expenses, and proxy voting and related expenses. In fiscal 2023, this amount was $80,000.
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PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
None.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
In order to improve the convenience and liquidity of our securities on exchanges where our shares are listed, in accordance with “Action Plan for Consolidating Trading Units” issued in November 2007 by the securities exchanges in Japan, the Company implemented a
10-for-1
stock split of shares of its common stock on March 31, 2013, pursuant to which one hundred shares constitutes one unit as of April 1, 2013. The change resulted in no substantive change in trading unit price levels. As a result of the stock split, the ratio of ADSs to underlying shares changed from 0.5 underlying shares per one ADS to five underlying shares per one ADS. The change has not affected ADS unit price levels or other material ADS terms.
Item 15. Controls and Procedures
As of March 31, 2023, the ORIX Group, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the principal financial officer, performed an evaluation of the effectiveness of the ORIX Group’s disclosure controls and procedures (as defined in Rule
13a-15(e)
under the Securities Exchange Act of 1934, as amended). The Company’s management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which by their nature can provide only reasonable assurance regarding the achievement of management’s control objectives. Based on this evaluation, the Company’s Chief Executive Officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level for gathering, analyzing and disclosing the information the Company is required to disclose in the reports it files under the Act, within the time periods specified in the SEC’s rules and forms. There has been no change in the ORIX Group’s internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s report on internal control over financial reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule
13a-15(f)
under the Securities Exchange Act of 1934, as amended). The internal control over financial reporting process of the ORIX Group was designed by, or under the supervision of, the Company’s Chief Executive Officer and principal financial officer and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance to the Company’s management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States and includes those policies and procedures that:

| • |  | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the ORIX Group;

| • |  | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States, and that receipts and expenditures of the ORIX Group are being made only in accordance with authorizations of management and directors of the Company; and

| • |  | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the ORIX Group’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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The Company’s management assessed the effectiveness of our internal control over financial reporting as of March 31, 2023 by using the criteria set forth in “Internal Control-Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, the Company’s management concluded that our internal control over financial reporting was effective as of March 31, 2023.
The Company acquired DHC Corporation on January 31, 2023. The Company’s management excluded DHC Corporation from its assessment of the effectiveness of internal control over financial reporting as of March 31, 2023, because the acquisition was consummated close to the end of this fiscal year. The total assets of 363,687 million yen associated with DHC Corporation were included in the consolidated balance sheet of the Company as of March 31, 2023. There were no total revenues and net income of DHC Corporation after acquisition included in the Company’s consolidated statement of income for the year ended March 31, 2023.
The effectiveness of our internal control over financial reporting has been audited by KPMG AZSA LLC, an independent registered public accounting firm, who also audited our consolidated financial statements as of and for each of the years in the three-year period ended March 31, 2023, as stated in their attestation report which is included in Item 18.
Item 16A. Audit Committee Financial Expert
Our board of directors has determined that Aiko Sekine is an “audit committee financial expert,” within the meaning of the current rules of the U.S. Securities and Exchange Commission. Aiko Sekine is “independent” as required by Section 303A.06 of the New York Stock Exchange Listed Company Manual.
Name on the family register of Aiko Sekine is Aiko Sano.
Item 16B. Code of Ethics
We have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Pursuant to our Code of Ethics, last amended in April 2014, officers of ORIX covered by ORIX’s Code of Ethics are required to promptly bring to the attention of the Company’s Executive Officer of the Group Compliance Department any information concerning any violations of the Code of Ethics.
Item 16C. Principal Accountant Fees and Services
FEES PAID TO PRINCIPAL ACCOUNTANT
AUDIT FEES
In fiscal 2022 and 2023, KPMG (including Japanese and overseas affiliates of KPMG AZSA LLC) billed us ¥3,221 million and ¥3,843 million, respectively, for direct audit fees.
AUDIT-RELATED FEES
In fiscal 2022 and 2023, KPMG billed us ¥144 million and ¥138 million, respectively, for audit-related services, including attestation, assurance and related services that are not reported under audit fees.
TAX FEES
In fiscal 2022 and 2023, KPMG billed us ¥111 million and ¥143 million, respectively, for
tax-related
services.
ALL OTHER FEES
In fiscal 2022 and 2023, KPMG billed us ¥1 million and ¥9 million, respectively, for other products and services and for sustainability related assurance services.
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AUDIT COMMITTEE’S
PRE-APPROVAL
POLICIES AND PROCEDURES
The Audit Committee has established standards for
pre-approval
of engagements of the independent registered public accounting firm for both audit services and
non-audit
services.
When ORIX Group engages the independent registered public accounting firm for audit services,
pre-approval
of the Audit Committee must be obtained prior to execution of the contract for such audit services, in accordance with
pre-approval
policies and procedures. In terms of audit services, every year the independent registered public accounting firm draws up its annual audit plan and annual budget, which is evaluated by ORIX’s Accounting Department. Subsequently,
pre-approval
is obtained from the Audit Committee.
Non-audit
services are generally not obtained from the independent registered public accounting firm or its affiliates. If it is necessary for ORIX Group to engage the independent registered public accounting firm for
non-audit
services,
pre-approval
of the Audit Committee must be obtained on a
case-by-case
basis prior to execution of the relevant contract, in accordance with
pre-approval
policies and procedures.
The Audit Committee may delegate the authority to
pre-approve
services to individual members of the Audit Committee. Audit Committee members to whom such
pre-approval
authority has been delegated report to the Audit Committee in a timely manner regarding any services that they have approved pursuant to such authority.
In accordance with internal rules on
pre-approval,
the Audit Committee may set a maximum fee amount for
pre-approved
non-audit
services that are received over a reasonable period of one year or less. If the Audit Committee has set a maximum fee amount for
pre-approved
non-audit
services, engagements for
pre-approved
non-audit
services that do not exceed the maximum fee amount do not require specific
pre-approval
procedures. However, in such cases, engagements for such services must be reported to the Audit Committee in a timely manner.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Year ended March 31, 2023 |  | (a) Total number of Shares Purchased |  |  | (b) Average Price Paid per Share |  |  | (c) Total number of Shares Purchased as Part of Publicly Announced Plans or Programs *1,2 |  |  | (d) Maximum number (or Approximate Yen Value) of Shares that May Yet be Purchased Under the Plans or Programs *1,2 |
April 2022 |  |  | 0 |  |  | ¥ | 0 |  |  |  | 0 |  |  | ¥ | 0 |
May 2022 |  |  | 1,288,600 |  |  |  | 2,346 |  |  |  | 1,288,600 |  |  |  | 46,976,763,700 |
June 2022 |  |  | 3,054,165 |  |  |  | 2,397 |  |  |  | 3,054,100 |  |  |  | 39,657,431,450 |
July 2022 |  |  | 2,734,150 |  |  |  | 2,280 |  |  |  | 2,734,100 |  |  |  | 33,424,421,950 |
August 2022 |  |  | 3,604,750 |  |  |  | 2,276 |  |  |  | 3,604,700 |  |  |  | 25,220,594,450 |
September 2022 |  |  | 2,772,820 |  |  |  | 2,273 |  |  |  | 2,772,800 |  |  |  | 18,919,130,250 |
October 2022 |  |  | 3,282,920 |  |  |  | 2,116 |  |  |  | 3,282,900 |  |  |  | 11,972,120,300 |
November 2022 |  |  | 3,283,780 |  |  |  | 2,150 |  |  |  | 3,283,700 |  |  |  | 4,912,779,600 |
December 2022 |  |  | 2,235,120 |  |  |  | 2,198 |  |  |  | 2,235,000 |  |  |  | 18,350 |
January 2023 |  |  | 20 |  |  |  | 2,214 |  |  |  | 0 |  |  |  | 0 |
February 2023 |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
March 2023 |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total |  |  | 22,256,325 |  |  | ¥ | 2,247 |  |  |  | 22,255,900 |  |  | ¥ | 0 |

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*1 | The Company resolved the share repurchase as follows at a meeting of the Board of Directors held on May 11, 2022.

•  Class of shares to be repurchased |  | Common shares
•  Total number of shares to be repurchased |  | Up to 40,000,000 shares
|  | (approx.3.3% of the total outstanding shares (excluding treasury shares))
•  Total purchase price of shares to be repurchased |  | Up to 50 billion yen
•  Repurchase period |  | May 18, 2022 to March 31, 2023
•  Method of share repurchase |  | Market purchases based on the discretionary dealing contract regarding repurchase of own shares

*2 | The share repurchase based on the above resolution at the Board of Directors meeting was completed. The details of share repurchase are as follows.

•  Class of shares repurchased |  | Common shares
•  Total number of shares repurchased |  | 22,255,900 shares
•  Total purchase price of shares repurchased |  | 49,999,981,650 yen
•  Repurchase period |  | From May 18, 2022 to December 15, 2022
•  Method of share repurchase |  | Market purchases based on the discretionary dealing contract regarding repurchase of own shares

*3 | The Company resolved the share repurchase as follows at a meeting of the Board of Directors held on May 10, 2023.

•  Class of shares to be repurchased |  | Common shares
•  Total number of shares to be repurchased |  | Up to 40,000,000 shares
|  | (approx.3.4% of the total outstanding shares (excluding treasury shares))
•  Total purchase price of shares to be repurchased |  | Up to 50 billion yen
•  Repurchase period |  | May 17, 2023 to March 31, 2024
•  Method of share repurchase |  | Market purchases based on the discretionary dealing contract regarding repurchase of own shares

Item 16F. Change in Registrant’s Certifying Accountant.
Not applicable.
Item 16G. Corporate Governance
Our ADSs have been listed on the New York Stock Exchange, or NYSE, since 1998. As an NYSE-listed company, we are required to comply with certain corporate governance standards under Section 303A of the NYSE Listed Company Manual. However, as a foreign private issuer, we are permitted to follow home country practice in lieu of certain provisions of Section 303A.
Our corporate governance practices differ in certain significant respects from those that U.S. companies must adopt in order to maintain a NYSE listing and, in accordance with Section 303A.11 of the NYSE’s Listed Company Manual, we provide a brief, general summary of such differences.
The composition of our board of directors and its committees differs significantly in terms of independence from the composition requirements for boards and committees that U.S. companies must satisfy in order to maintain a NYSE listing. We are not required to meet the NYSE’s independence requirements for individuals on
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our board of directors or our Nominating, Audit, and Compensation Committees. Under Japanese law, a majority of the membership on the committees must be “outside directors”—a Japanese law concept that shares similarities with the U.S. concept of “independent director” where the company is a “Company with Nominating Committee, etc.” However, we are not required to include on our board of directors a majority of outside directors, nor are we required to compose our committees exclusively from outside directors. Six out of our 11 directors are outside directors. Under the Companies Act, the directors who compose the Audit Committee are not permitted to be executive officers or executive directors of the Company or its subsidiaries, or managers, employees or accounting advisors of the Company’s subsidiaries. Our Audit Committee members meet this requirement. We have adopted a written charter for our Compensation Committee that addresses committee member appointment and removal, committee structure and operations, and reporting to the board. However, our Compensation Committee has not retained, or obtained the advice of, a compensation consultant, independent legal counsel or other advisor.
Under the Companies Act, an outside director is a director (i) who is not an executive director, executive officer
(shikko-yaku)
, manager or any other kind of employee (an “Executive Director, etc.”) of the Company or its subsidiaries and who has not been an Executive Director, etc. of the Company or its subsidiaries in the past 10 years; (ii) who has not been an Executive Director, etc. of the Company or its subsidiaries for the past 10 years from the assumptions of any of the position of director, accounting advisor, or auditor; (iii) who is not a person with a controlling stake in the management of the Company, such as a holder of more than 50 percent of the Company’s shares, etc., or has not been an Executive Director, etc. of the parent company of the Company; (iv) who has not been an Executive Director, etc. of any other company with same parent company; and (v) who has not been the spouse or the kin (within the second degree) of any director, manager or any other kind of important employee of the Company, or a person with a controlling stake in the management of the Company, such as a holder of more than 50 percent of the Company’s shares etc.
In addition to differences in composition requirements for our board of directors and its committees, we are not required to:

| • |  | make publicly available one or more documents that summarize all aspects of our corporate governance guidelines or prepare a written code that states the objectives, responsibilities, and performance evaluation of our Nominating, Audit and Compensation Committees in a manner that satisfies the NYSE’s requirements;

| • |  | adopt a code of business conduct and ethics for our directors, officers, and employees that addresses fully the topics necessary to satisfy the NYSE’s requirements;

| • |  | hold regularly scheduled executive sessions for our outside directors;

| • |  | obtain shareholder approval for all equity compensation plans for employees, directors or executive officers of ORIX or for material revisions to any such plans;

| • |  | provide the compensation committee with authority to obtain or retain the advice of a compensation advisor only after taking into consideration all factors relevant to determining the advisor’s independence from management.

Item 16H. Mine Safety Disclosure
Not applicable
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 17. Financial Statements
ORIX has elected to provide financial statements and related information pursuant to Item 18.
Item 18. Financial Statements
See pages
F-1
through
F-154.
The following consolidated financial statements of ORIX listed below and the report thereon by its independent registered public accounting firm are filed as part of this Form
20-F:

| (a) | Consolidated Balance Sheets as of March 31, 2022 and 2023 (page F-6 to F-7);

| (b) | Consolidated Statements of Income for the years ended March 31, 2021, 2022 and 2023 (page F-8 to F-9);

| (c) | Consolidated Statements of Comprehensive Income for the years ended March 31, 2021, 2022 and 2023 (page F-10);

| (d) | Consolidated Statements of Changes in Equity for the years ended March 31, 2021, 2022 and 2023 (page F-11 to F-12);

| (e) | Consolidated Statements of Cash Flows for the years ended March 31, 2021, 2022 and 2023 (page F-13);

| (f) | Notes to Consolidated Financial Statements (page F-14 to F-153);

| (g) | Schedule II.—Valuation and Qualifying Accounts and Reserves (page F-154).

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Item 19. Exhibits
We have filed the following documents as exhibits to this document.

Exhibit Number |  | Description
Exhibit 1.1 |  | Articles of Incorporation of ORIX Corporation, as amended on June 24, 2022, and effective on September 1, 2022 (Incorporated by reference from the annual report on Form 20-F filed on June 29, 2022, commission file number 001-14856).
Exhibit 1.2 |  | Regulations of the Board of Directors of ORIX Corporation, as amended on July 21, 2017 (Incorporated by reference from the annual report on Form 20-F filed on June 28, 2018, commission file number 001-14856).
Exhibit 1.3 |  | Share Handling Regulations of ORIX Corporation, as amended on November 1, 2022.
Exhibit 2.1 |  | Description of American Depositary Shares of ORIX Corporation, (Incorporated by reference from the registration statement on Form F-3 ASR filed on July 2, 2009, commission file number 333-160410).
Exhibit 2.2 |  | Deposit Agreement, dated September 14, 1998, by and among ORIX Corporation, Citibank, N.A., as Depositary, and the Holders and Beneficial Owners of American Depositary Shares Evidenced by American Depositary Receipts (Incorporated by reference from the registration statement on Form F-3 ASR filed on July 2, 2009, commission file number 333-160410).
Exhibit 8.1 |  | List of subsidiaries and affiliates.
Exhibit 11.1 |  | Code of Ethics, as amended on April 18, 2014 (Incorporated by reference from the annual report on Form 20-F filed on June 25, 2019, commission file number 001-14856).
Exhibit 12.1 |  | Certifications required by Rule 13a-14 (a) (17 CFR 240.13a-14 (a)) or Rule 15d-14 (a) (17 CFR 240.15d 14(a)).
Exhibit 13.1 |  | Certifications required by Rule 13a-14 (b) (17 CFR 240.13a-14 (b)) or Rule 15d-14 (b) (17 CFR 240.15d 14 (b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
Exhibit 15.1 |  | Consent of independent registered public accounting firm.
Exhibit 101 |  | Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101 |  | Inline XBRL Schema Document.
Exhibit 101 |  | Inline XBRL Calculation Linkbase Document.
Exhibit 101 |  | Inline XBRL Definition Linkbase Document.
Exhibit 101 |  | Inline XBRL Labels Linkbase Document.
Exhibit 101 |  | Inline XBRL Presentation Linkbase Document.
Exhibit 104 |  | The cover page for the Company’s Annual Report on Form 20-F for the year ended March 31, 2023, has been formatted as Inline XBRL and contained in Exhibit 101

We have not included as exhibits certain instruments with relation to our long-term debt or the long-term debt of our subsidiaries. The total amount of securities of us or our subsidiaries authorized under any such instrument does not exceed 10% of our consolidated total assets. We hereby agree to furnish to the SEC, upon its request, a copy of any and all such instruments.
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SIGNATURES
The company hereby certifies that it meets all of the requirements for filing on Form
20-F
and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

ORIX KABUSHIKI KAISHA
By: |  | /s/ YASUAKI MIKAMI
Name: |  | Yasuaki Mikami
Title: |  | Senior Managing Executive Officer

Date: June 26, 2023
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|  | Page |
Reports of Independent Registered Public Accounting Firm (KPMG AZSA LLC, Tokyo, Japan, Auditor Firm ID: 1009) |  |  | F-2 |
Consolidated Balance Sheets as of March 31, 2022 and 2023 |  |  | F-6 |
Consolidated Statements of Income For the Years Ended March 31, 2021, 2022 and 2023 |  |  | F-8 |
Consolidated Statements of Comprehensive Income For the Years Ended March 31, 2021, 2022 and 2023 |  |  | F-10 |
Consolidated Statements of Changes in Equity For the Years Ended March 31, 2021, 2022 and 2023 |  |  | F-11 |
Consolidated Statements of Cash Flows For the Years Ended March 31, 2021, 2022 and 2023 |  |  | F-13 |
Notes to Consolidated Financial Statements |  |  | F-14 |
Schedule II.—Valuation and Qualifying Accounts and Reserves |  |  | F-15 4 |

F-1

Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors
ORIX Corporation
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of ORIX Corporation (a Japanese corporation) and its subsidiaries (the Group) as of March 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the years in the three-year period ended March 31, 2023, and the related notes and financial statement schedule II (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of March 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended March 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Group’s internal control over financial reporting as of March 31, 2023, based on criteria established in
Internal Control—Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated June 26, 2023 expressed an unqualified opinion on the effectiveness of the Group’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Assessment of the fair value measurement of the investment funds categorized as Level 3 financial instruments in the fair value hierarchy
As discussed in Notes 1 and 2 to the consolidated financial statements, the Group’s financial assets measured at fair value on a recurring basis under Level 3 of the fair value hierarchy as of March 31, 2023
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amounted to ¥572,019 million, which included ¥140,563 million of investment funds, and others. Certain overseas subsidiaries are determined as investment companies under ASC 946 (“Financial Services—Investment Companies”) and hold investment funds measured at fair value with changes in fair value recognized in earnings on a recurring basis. These investment funds are classified as Level 3 in the fair value hierarchy, because the Group measures their fair value using valuation techniques with key inputs that are unobservable. The fair value of the Level 3 investment funds held by a certain investment company in the ORIX USA segment is estimated based on the valuation methodology of the underlying equity investments by weighting the income approach technique using discounted cash flows and the market approach technique utilizing market multiples. Key inputs and assumptions used for the valuation include earnings before interest, taxes, depreciation and amortization (EBITDA) multiples, cash flow forecasts, weighted average cost of capital (WACC) and weighting of the techniques.
We identified the assessment of the fair value measurement of the Level 3 investment funds held by the certain investment company in the ORIX USA segment as a critical audit matter. Due to the significant measurement uncertainty associated with the fair value of such investment funds, a high degree of subjectivity was used in determining the methodology and the key inputs and assumptions, including EBITDA multiples, cash flow forecasts, WACC and weighting of the techniques. Minor changes in these key inputs and assumptions used for the valuation could have a significant effect on the Group’s net income. Therefore, a high degree of auditor judgment was required. Additionally, the audit effort associated with this estimate required specialized skills and knowledge.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Group’s fair value measurement process for the Level 3 investment funds, including controls over (1) the development of the methodology and (2) the determination of the key inputs and assumptions used for the valuation. We evaluated the development of the cash flow forecasts by analyzing the actual results compared to those forecasted in the prior year as well as trends in year-over-year forecasts. We involved valuation professionals with specialized skills and knowledge, who assisted in:

| • |  | evaluating appropriateness of the Group’s fair value measurement methodology in accordance with U.S. generally accepted accounting principles,

| • |  | evaluating the reasonableness of the selected EBITDA multiples through the comparison to independently developed EBITDA multiples,

| • |  | evaluating the reasonableness of the WACC used by management, by comparing it against a WACC range that was developed using publicly available market data and independently developed assumptions, and

| • |  | evaluating the reasonableness of the weighting of the techniques applied to arrive at the fair value.

KPMG AZSA LLC
We have served as the Group’s auditor since 1985.
Tokyo, Japan
June 26, 2023
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Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors
ORIX Corporation
Opinion on Internal Control Over Financial Reporting
We have audited ORIX Corporation (a Japanese corporation) and subsidiaries’ (the Group) internal control over financial reporting as of March 31, 2023, based on criteria established in
Internal Control—Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Group maintained, in all material respects, effective internal control over financial reporting as of March 31, 2023, based on criteria established in
Internal Control—Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Group as of March 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the years in the three-year period ended March 31, 2023, and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated June 26, 2023 expressed an unqualified opinion on those consolidated financial statements.
ORIX Corporation acquired DHC Corporation on January 31, 2023, and management excluded from its assessment of the effectiveness of ORIX Corporation’s internal control over financial reporting as of March 31, 2023, DHC Corporation’s internal control over financial reporting associated with total assets of 363,687 million yen included in the consolidated balance sheet of ORIX Corporation as of March 31, 2023. There were no total revenues and net income of DHC Corporation after acquisition included in the consolidated statement of income of ORIX Corporation for the year ended March 31, 2023. Our audit of internal control over financial reporting of ORIX Corporation also excluded an evaluation of the internal control over financial reporting of DHC Corporation.
Basis for Opinion
The Group’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Groups internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting
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includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
KPMG AZSA LLC
Tokyo, Japan
June 26, 2023
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CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2022 AND 2023
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | 2022 |  |  | 2023 |
ASSETS |  |  |  |  |  |  |  |
Cash and Cash Equivalents |  | ¥ | 954,827 |  |  | ¥ | 1,231,860 |
Restricted Cash |  |  | 136,985 |  |  |  | 135,048 |
Net investment in Leases |  |  | 1,057,973 |  |  |  | 1,087,563 |
Installment Loans |  |  | 3,862,604 |  |  |  | 3,877,602 |
The amounts which are measured at fair value by electing the fair value option are as follows: |
March 31, 2022 |  | ¥151,601 million |  |  |  |  |  |  |  |
March 31, 2023 |  | ¥197,041 million |  |  |  |  |  |  |  |
Allowance for Credit Losses |  |  | (69,459 | ) |  |  | (64,723 | )
Investment in Operating Leases |  |  | 1,463,202 |  |  |  | 1,537,178 |
Investment in Securities |  |  | 2,852,349 |  |  |  | 2,940,858 |
The amounts which are measured at fair value by electing the fair value option are as follows: |
March 31, 2022 |  | ¥19,353 million |  |  |  |  |  |  |  |
March 31, 2023 |  | ¥22,874 million |  |  |  |  |  |  |  |
The amounts which are associated to available-for-sale debt securities are as follows: |
As of March 31, 2022 |
Amortized Cost |  | ¥2,276,425 million |  |  |  |  |  |  |  |
Allowance for Credit Losses |  | ¥(153) million |  |  |  |  |  |  |  |
As of March 31, 2023 |
Amortized Cost |  | ¥2,488,858 million |  |  |  |  |  |  |  |
Allowance for Credit Losses |  | ¥(144) million |  |  |  |  |  |  |  |
Property under Facility Operations |  |  | 561,846 |  |  |  | 620,994 |
Investment in Affiliates |  |  | 978,033 |  |  |  | 1,000,704 |
The amounts which are measured at fair value by electing the fair value option are as follows: |
March 31, 2022 |  | ¥0 million |  |  |  |  |  |  |  |
March 31, 2023 |  | ¥2,511 million |  |  |  |  |  |  |  |
Trade Notes, Accounts and Other Receivable |  |  | 359,949 |  |  |  | 441,803 |
Inventories |  |  | 139,563 |  |  |  | 169,021 |
Office Facilities |  |  | 240,421 |  |  |  | 253,649 |
Other Assets |  |  | 1,732,379 |  |  |  | 2,034,634 |
The amounts which are measured at fair value by electing the fair value option are as follows: |
March 31, 2022 |  | ¥5,214 million |  |  |  |  |  |  |  |
March 31, 2023 |  | ¥4,676 million |  |  |  |  |  |  |  |
Total Assets |  | ¥ | 14,270,672 |  |  | ¥ | 15,266,191 |

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

|  | Millions of yen |
|  | 2022 |  |  | 2023 |
Cash and Cash Equivalents |  | ¥ | 3,899 |  |  | ¥ | 3,544 |
Installment Loans (Net of Allowance for Credit Losses) |  |  | 212,371 |  |  |  | 214,118 |
Investment in Operating Leases |  |  | 101,881 |  |  |  | 65,314 |
Property under Facility Operations |  |  | 210,307 |  |  |  | 159,991 |
Investment in Affiliates |  |  | 51,877 |  |  |  | 50,406 |
Other |  |  | 95,613 |  |  |  | 73,093 |
|  | ¥ | 675,948 |  |  | ¥ | 566,466 |

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CONSOLIDATED BALANCE SHEETS—(Continued)
AS OF MARCH 31, 2022 AND 2023
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | 2022 |  |  | 2023 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |
Short-term Debt |  | ¥ | 439,639 |  |  | ¥ | 508,796 |
Deposits |  |  | 2,276,158 |  |  |  | 2,246,345 |
Trade Notes, Accounts and Other Payable |  |  | 291,422 |  |  |  | 366,851 |
Policy Liabilities and Policy Account Balances |  |  | 1,963,623 |  |  |  | 2,065,366 |
The amounts which are measured at fair value by electing the fair value option are as follows: |  |  |  |  |
March 31, 2022 |  | ¥198,905 million |  |  |  |  |  |  |  |
March 31, 2023 |  | ¥163,734 million |  |  |  |  |  |  |  |
Income Taxes: |  |  |  |  |  |  |  |
Current |  |  | 115,340 |  |  |  | 25,199 |
Deferred |  |  | 345,841 |  |  |  | 359,582 |
Long-term Debt |  |  | 4,427,046 |  |  |  | 5,209,723 |
Other Liabilities |  |  | 1,040,202 |  |  |  | 1,056,084 |
Total Liabilities |  |  | 10,899,271 |  |  |  | 11,837,946 |
Redeemable Noncontrolling Interests |  |  | — |  |  |  | 945 |
Commitments and Contingent Liabilities |  |  |  |  |  |  |  |
Equity: |  |  |  |  |  |  |  |
Common stock: |  |  | 221,111 |  |  |  | 221,111 |
Authorized: |  | 2,590,000,000 shares |  |  |  |  |  |  |  |
Issued: |  |  |  |  |  |  |  |
March 31, 2022 |  | 1,258,277,087 shares |  |  |  |  |  |  |  |
March 31, 2023 |  | 1,234,849,342 shares |  |  |  |  |  |  |  |
Additional Paid-in Capital |  |  | 260,479 |  |  |  | 233,169 |
Retained Earnings |  |  | 2,909,317 |  |  |  | 3,031,942 |
Accumulated Other Comprehensive Income (Loss) |  |  | (16,041 | ) |  |  | (8,381 | )
Treasury Stock, at Cost: |  |  | (113,447 | ) |  |  | (121,256 | )
March 31, 2022 |  | 64,877,309 shares |  |  |  |  |  |  |  |
March 31, 2023 |  | 64,543,473 shares |  |  |  |  |  |  |  |
ORIX Corporation Shareholders’ Equity |  |  | 3,261,419 |  |  |  | 3,356,585 |
Noncontrolling Interests |  |  | 109,982 |  |  |  | 70,715 |
Total Equity |  |  | 3,371,401 |  |  |  | 3,427,300 |
Total Liabilities and Equity |  | ¥ | 14,270,672 |  |  | ¥ | 15,266,191 |

Notes |  | 1.  The Company’s shares held through the Board Incentive Plan Trust (1,963,282 shares as of March 31, 2022 and 2,800,866 sha res as of March 31, 2023) are included in the number of treasury stock as of March 31, 2022 and 2023.
|  | 2.  The liabilities of consolidated VIEs for which creditors (or beneficial interest holders) do not have recourse to the general credit of the Company and its subsidiaries are as follows:

|  | Millions of yen |
|  | 2022 |  |  | 2023 |
Trade Notes, Accounts and Other Payable |  | ¥ | 2,251 |  |  | ¥ | 1,436 |
Long-Term Debt |  |  | 431,312 |  |  |  | 349,528 |
Other |  |  | 38,891 |  |  |  | 26,971 |
|  | ¥ | 472,454 |  |  | ¥ | 377,935 |

The accompanying notes to consolidated financial statements are an integral part of these statements.
F-7

Table of Contents
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED MARCH 31, 2021, 2022 AND 2023
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |
Finance revenues |  | ¥ | 271,194 |  |  | ¥ | 279,589 |  |  | ¥ | 317,612 |
Gains on investment securities and dividends |  |  | 46,097 |  |  |  | 56,510 |  |  |  | 32,430 |
Operating leases |  |  | 397,065 |  |  |  | 450,454 |  |  |  | 499,541 |
Life insurance premiums and related investment income |  |  | 487,550 |  |  |  | 481,810 |  |  |  | 494,070 |
Sales of goods and real estate |  |  | 410,953 |  |  |  | 435,398 |  |  |  | 392,569 |
Services income |  |  | 679,849 |  |  |  | 816,604 |  |  |  | 930,151 |
Total revenues |  |  | 2,292,708 |  |  |  | 2,520,365 |  |  |  | 2,666,373 |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | 78,068 |  |  |  | 68,232 |  |  |  | 127,618 |
Costs of operating leases |  |  | 295,628 |  |  |  | 322,070 |  |  |  | 336,987 |
Life insurance costs |  |  | 374,348 |  |  |  | 368,140 |  |  |  | 398,916 |
Costs of goods and real estate sold |  |  | 347,721 |  |  |  | 381,119 |  |  |  | 333,009 |
Services expense |  |  | 439,233 |  |  |  | 495,110 |  |  |  | 571,127 |
Other (income) and expense |  |  | 17,125 |  |  |  | 20,494 |  |  |  | 14,445 |
Selling, general and administrative expenses |  |  | 456,795 |  |  |  | 522,782 |  |  |  | 559,406 |
Provision for credit losses |  |  | 16,021 |  |  |  | 3,939 |  |  |  | 7,756 |
Write-downs of long-lived assets |  |  | 3,020 |  |  |  | 35,666 |  |  |  | 2,297 |
Write-downs of securities |  |  | 5,935 |  |  |  | 730 |  |  |  | 824 |
Total expenses |  |  | 2,033,894 |  |  |  | 2,218,282 |  |  |  | 2,352,385 |
Operating Income |  |  | 258,814 |  |  |  | 302,083 |  |  |  | 313,988 |
Equity in Net Income of Affiliates |  |  | 481 |  |  |  | 15,006 |  |  |  | 25,091 |
Gains on Sales of Subsidiaries and Affiliates and Liquidation Losses, net |  |  | 23,300 |  |  |  | 187,787 |  |  |  | 26,915 |
Bargain Purchase Gain |  |  | 4,966 |  |  |  | 0 |  |  |  | 1,174 |
Income before Income Taxes |  |  | 287,561 |  |  |  | 504,876 |  |  |  | 367,168 |
Provision for Income Taxes |  |  | 90,747 |  |  |  | 187,264 |  |  |  | 87,500 |
Net Income |  |  | 196,814 |  |  |  | 317,612 |  |  |  | 279,668 |
Net Income Attributable to the Noncontrolling Interests |  |  | 4,453 |  |  |  | 5,477 |  |  |  | 6,561 |
Net Income (Loss) Attributable to the Redeemable Noncontrolling Interests |  |  | (23 | ) |  |  | 0 |  |  |  | 32 |
Net Income Attributable to ORIX Corporation Shareholders |  | ¥ | 192,384 |  |  | ¥ | 312,135 |  |  | ¥ | 273,075 |

Note: |  | Provision for credit losses of loans to affiliates are recorded in equity in net income (loss) of affiliates since the second quarter of fiscal 2021.

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Table of Contents
CONSOLIDATED STATEMENTS OF INCOME—(Continued)
FOR THE YEARS ENDED MARCH 31, 2021, 2022 AND 2023
ORIX Corporation and Subsidiaries

|  | Yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Amounts per Share of Common Stock for Income Attributable to ORIX Corporation Shareholders: |  |  |  |  |  |  |  |  |  |  |  |
Basic: |  |  |  |  |  |  |  |  |  |  |  |
Net Income Attributable to ORIX Corporation Shareholders |  | ¥ | 155.54 |  |  | ¥ | 259.37 |  |  | ¥ | 231.35 |
Diluted: |  |  |  |  |  |  |  |  |  |  |  |
Net Income Attributable to ORIX Corporation Shareholders |  | ¥ | 155.39 |  |  | ¥ | 259.07 |  |  | ¥ | 231.04 |
Cash Dividends |  |  | 76.00 |  |  |  | 82.00 |  |  |  | 89.40 |

The accompanying notes to consolidated financial statements are an integral part of these statements.
F-9

Table of Contents
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED MARCH 31, 2021, 2022 AND 2023
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Net Income |  | ¥ | 196,814 |  |  | ¥ | 317,612 |  |  | ¥ | 279,668 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |  |  |  |  |
Net change of unrealized gains (losses) on investment in securities |  |  | (11,182 | ) |  |  | (56,684 | ) |  |  | (110,166 | )
Net change of debt valuation adjustments |  |  | (899 | ) |  |  | (337 | ) |  |  | 54 |
Net change of defined benefit pension plans |  |  | 5,330 |  |  |  | 13,002 |  |  |  | 4,448 |
Net change of foreign currency translation adjustments |  |  | 36,246 |  |  |  | 105,693 |  |  |  | 94,707 |
Net change of unrealized gains on derivative instruments |  |  | 4,782 |  |  |  | 15,070 |  |  |  | 19,670 |
Total other comprehensive income |  |  | 34,277 |  |  |  | 76,744 |  |  |  | 8,713 |
Comprehensive Income |  |  | 231,091 |  |  |  | 394,356 |  |  |  | 288,381 |
Comprehensive Income Attributable to the Noncontrolling Interests |  |  | 5,128 |  |  |  | 12,137 |  |  |  | 12,059 |
Comprehensive Income (loss) Attributable to the Redeemable Noncontrolling Interests |  |  | (303 | ) |  |  | 0 |  |  |  | (17 | )
Comprehensive Income Attributable to ORIX Corporation Shareholders |  | ¥ | 226,266 |  |  | ¥ | 382,219 |  |  | ¥ | 276,339 |

The accompanying notes to consolidated financial statements are an integral part of these statements.
F-10

Table of Contents
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED MARCH 31, 2021, 2022 AND 2023
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | ORIX Corporation Shareholders’ Equity |  |  | Total ORIX Corporation Shareholders’ Equity |  |  | Noncontrolling Interests |  |  | Total Equity |
|  | Common Stock |  |  | Additional Paid-in Capital |  |  | Retained Earnings |  |  | Accumulated Other Comprehensive Income (Loss) |  |  | Treasury Stock |
Balance at March 31, 2020 |  | ¥ | 221,111 |  |  | ¥ | 257,638 |  |  | ¥ | 2,754,461 |  |  | ¥ | (118,532 | ) |  | ¥ | (121,070 | ) |  | ¥ | 2,993,608 |  |  | ¥ | 72,227 |  |  | ¥ | 3,065,835 |
Cumulative effect of adopting Accounting Standards Update 2016-13 |  |  |  |  |  |  |  |  |  |  | (42,855 | ) |  |  |  |  |  |  |  |  |  |  | (42,855 | ) |  |  | (71 | ) |  |  | (42,926 | )
Balance at April 1, 2020 |  | ¥ | 221,111 |  |  | ¥ | 257,638 |  |  | ¥ | 2,711,606 |  |  | ¥ | (118,532 | ) |  | ¥ | (121,070 | ) |  | ¥ | 2,950,753 |  |  | ¥ | 72,156 |  |  | ¥ | 3,022,909 |
Contribution to subsidiaries |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 0 |  |  |  | 18,225 |  |  |  | 18,225 |
Transaction with noncontrolling interests |  |  |  |  |  |  | 1,700 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,700 |  |  |  | (8,688 | ) |  |  | (6,988 | )
Comprehensive income, net of tax: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income |  |  |  |  |  |  |  |  |  |  | 192,384 |  |  |  |  |  |  |  |  |  |  |  | 192,384 |  |  |  | 4,453 |  |  |  | 196,837 |
Other comprehensive income (loss) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net change of unrealized gains (losses) on investment in securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (11,207 | ) |  |  |  |  |  |  | (11,207 | ) |  |  | 25 |  |  |  | (11,182 | )
Net change of debt valuation adjustments |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (899 | ) |  |  |  |  |  |  | (899 | ) |  |  | 0 |  |  |  | (899 | )
Net change of defined benefit pension plans |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 5,302 |  |  |  |  |  |  |  | 5,302 |  |  |  | 28 |  |  |  | 5,330 |
Net change of foreign currency translation adjustments |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 36,015 |  |  |  |  |  |  |  | 36,015 |  |  |  | 511 |  |  |  | 36,526 |
Net change of unrealized gains on derivative instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 4,671 |  |  |  |  |  |  |  | 4,671 |  |  |  | 111 |  |  |  | 4,782 |
Total other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 33,882 |  |  |  | 675 |  |  |  | 34,557 |
Total comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 226,266 |  |  |  | 5,128 |  |  |  | 231,394 |
Cash dividends |  |  |  |  |  |  |  |  |  |  | (95,164 | ) |  |  |  |  |  |  |  |  |  |  | (95,164 | ) |  |  | (12,133 | ) |  |  | (107,297 | )
Acquisition of treasury stock |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (55,443 | ) |  |  | (55,443 | ) |  |  | 0 |  |  |  | (55,443 | )
Disposal of treasury stock |  |  |  |  |  |  | (227 | ) |  |  | (0 | ) |  |  |  |  |  |  | 322 |  |  |  | 95 |  |  |  | 0 |  |  |  | 95 |
Cancellation of treasury stock |  |  |  |  |  |  |  |  |  |  | (64,237 | ) |  |  |  |  |  |  | 64,237 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other, net |  |  |  |  |  |  | 250 |  |  |  | (1 | ) |  |  |  |  |  |  |  |  |  |  | 249 |  |  |  | 0 |  |  |  | 249 |
Balance at March 31, 2021 |  | ¥ | 221,111 |  |  | ¥ | 259,361 |  |  | ¥ | 2,744,588 |  |  | ¥ | (84,650 | ) |  | ¥ | (111,954 | ) |  | ¥ | 3,028,456 |  |  | ¥ | 74,688 |  |  | ¥ | 3,103,144 |
Cumulative effect of adopting Accounting Standards Update 2019-12 |  |  |  |  |  |  |  |  |  |  | 215 |  |  |  |  |  |  |  |  |  |  |  | 215 |  |  |  | 0 |  |  |  | 215 |
Balance at April 1, 2021 |  | ¥ | 221,111 |  |  | ¥ | 259,361 |  |  | ¥ | 2,744,803 |  |  | ¥ | (84,650 | ) |  | ¥ | (111,954 | ) |  | ¥ | 3,028,671 |  |  | ¥ | 74,688 |  |  | ¥ | 3,103,359 |
Contribution to subsidiaries |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 0 |  |  |  | 40,514 |  |  |  | 40,514 |
Transaction with noncontrolling interests |  |  |  |  |  |  | 1,593 |  |  |  |  |  |  |  | (1,475 | ) |  |  |  |  |  |  | 118 |  |  |  | (1,127 | ) |  |  | (1,009 | )
Comprehensive income, net of tax: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income |  |  |  |  |  |  |  |  |  |  | 312,135 |  |  |  |  |  |  |  |  |  |  |  | 312,135 |  |  |  | 5,477 |  |  |  | 317,612 |
Other comprehensive income (loss) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net change of unrealized gains (losses) on investment in securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (56,684 | ) |  |  |  |  |  |  | (56,684 | ) |  |  | 0 |  |  |  | (56,684 | )
Net change of debt valuation adjustments |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (337 | ) |  |  |  |  |  |  | (337 | ) |  |  | 0 |  |  |  | (337 | )
Net change of defined benefit pension plans |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 13,001 |  |  |  |  |  |  |  | 13,001 |  |  |  | 1 |  |  |  | 13,002 |
Net change of foreign currency translation adjustments |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 99,842 |  |  |  |  |  |  |  | 99,842 |  |  |  | 5,851 |  |  |  | 105,693 |
Net change of unrealized gains on derivative instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 14,262 |  |  |  |  |  |  |  | 14,262 |  |  |  | 808 |  |  |  | 15,070 |
Total other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 70,084 |  |  |  | 6,660 |  |  |  | 76,744 |
Total comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 382,219 |  |  |  | 12,137 |  |  |  | 394,356 |
Cash dividends |  |  |  |  |  |  |  |  |  |  | (99,395 | ) |  |  |  |  |  |  |  |  |  |  | (99,395 | ) |  |  | (16,230 | ) |  |  | (115,625 | )
Acquisition of treasury stock |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (50,001 | ) |  |  | (50,001 | ) |  |  | 0 |  |  |  | (50,001 | )
Disposal of treasury stock |  |  |  |  |  |  | (168 | ) |  |  |  |  |  |  |  |  |  |  | 283 |  |  |  | 115 |  |  |  | 0 |  |  |  | 115 |
Cancellation of treasury stock |  |  |  |  |  |  |  |  |  |  | (48,226 | ) |  |  |  |  |  |  | 48,226 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other, net |  |  |  |  |  |  | (307 | ) |  |  |  |  |  |  |  |  |  |  | (1 | ) |  |  | (308 | ) |  |  | 0 |  |  |  | (308 | )
Balance at March 31, 2022 |  | ¥ | 221,111 |  |  | ¥ | 260,479 |  |  | ¥ | 2,909,317 |  |  | ¥ | (16,041 | ) |  | ¥ | (113,447 | ) |  | ¥ | 3,261,419 |  |  | ¥ | 109,982 |  |  | ¥ | 3,371,401 |

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Table of Contents
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)
FOR THE YEARS ENDED MARCH 31, 2021, 2022 AND 2023
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | ORIX Corporation Shareholders’ Equity |  |  | Total ORIX Corporation Shareholders’ Equity |  |  | Noncontrolling Interests |  |  | Total Equity |
|  | Common Stock |  |  | Additional Paid-in Capital |  |  | Retained Earnings |  |  | Accumulated Other Comprehensive Income (Loss) |  |  | Treasury Stock |
Balance at March 31, 2022 |  | ¥ | 221,111 |  |  | ¥ | 260,479 |  |  | ¥ | 2,909,317 |  |  | ¥ | (16,041 | ) |  | ¥ | (113,447 | ) |  | ¥ | 3,261,419 |  |  | ¥ | 109,982 |  |  | ¥ | 3,371,401 |
Contribution to subsidiaries |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 0 |  |  |  | 3,451 |  |  |  | 3,451 |
Transaction with noncontrolling interests |  |  |  |  |  |  | (28,048 | ) |  |  |  |  |  |  | 4,396 |  |  |  |  |  |  |  | (23,652 | ) |  |  | (36,758 | ) |  |  | (60,410 | )
Comprehensive income, net of tax: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income |  |  |  |  |  |  |  |  |  |  | 273,075 |  |  |  |  |  |  |  |  |  |  |  | 273,075 |  |  |  | 6,561 |  |  |  | 279,636 |
Other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net change of unrealized gains (losses) on investment in securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (110,142 | ) |  |  |  |  |  |  | (110,142 | ) |  |  | 0 |  |  |  | (110,142 | )
Net change of debt valuation adjustments |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 54 |  |  |  |  |  |  |  | 54 |  |  |  | 0 |  |  |  | 54 |
Net change of defined benefit pension plans |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 4,455 |  |  |  |  |  |  |  | 4,455 |  |  |  | (7 | ) |  |  | 4,448 |
Net change of foreign currency translation adjustments |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 91,095 |  |  |  |  |  |  |  | 91,095 |  |  |  | 3,637 |  |  |  | 94,732 |
Net change of unrealized gains on derivative instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 17,802 |  |  |  |  |  |  |  | 17,802 |  |  |  | 1,868 |  |  |  | 19,670 |
Total other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,264 |  |  |  | 5,498 |  |  |  | 8,762 |
Total comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 276,339 |  |  |  | 12,059 |  |  |  | 288,398 |
Cash dividends |  |  |  |  |  |  |  |  |  |  | (106,290 | ) |  |  |  |  |  |  |  |  |  |  | (106,290 | ) |  |  | (18,019 | ) |  |  | (124,309 | )
Acquisition of treasury stock |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (52,071 | ) |  |  | (52,071 | ) |  |  | 0 |  |  |  | (52,071 | )
Disposal of treasury stock |  |  |  |  |  |  | (85 | ) |  |  |  |  |  |  |  |  |  |  | 102 |  |  |  | 17 |  |  |  | 0 |  |  |  | 17 |
Cancellation of treasury stock |  |  |  |  |  |  |  |  |  |  | (44,160 | ) |  |  |  |  |  |  | 44,160 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other, net |  |  |  |  |  |  | 823 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 823 |  |  |  | 0 |  |  |  | 823 |
Balance at March 31, 2023 |  | ¥ | 221,111 |  |  | ¥ | 233,169 |  |  | ¥ | 3,031,942 |  |  | ¥ | (8,381 | ) |  | ¥ | (121,256 | ) |  | ¥ | 3,356,585 |  |  | ¥ | 70,715 |  |  | ¥ | 3,427,300 |

Note: |  | Changes in the redeemable noncontrolling interests are not included in this table. For further information, see Note 18 “Redeemable Noncontrolling Interests.”

The accompanying notes to consolidated financial statements are an integral part of these statements.
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Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 2021, 2022 AND 2023
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Cash Flows from Operating Activities: |  |  |  |  |  |  |  |  |  |  |  |
Net income |  | ¥ | 196,814 |  |  | ¥ | 317,612 |  |  | ¥ | 279,668 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 315,955 |  |  |  | 330,351 |  |  |  | 353,434 |
Principal payments received under net investment in leases |  |  | 426,645 |  |  |  | 462,475 |  |  |  | 489,428 |
Provision for credit losses |  |  | 16,021 |  |  |  | 3,939 |  |  |  | 7,756 |
Equity in net (income) loss of affiliates (excluding interest on loans) |  |  | 837 |  |  |  | (13,753 | ) |  |  | (24,022 | )
Gains on sales of subsidiaries and affiliates and liquidation losses, net |  |  | (23,300 | ) |  |  | (187,787 | ) |  |  | (26,915 | )
Bargain purchase gain |  |  | (4,966 | ) |  |  | 0 |  |  |  | (1,174 | )
Gains on sales of securities other than trading |  |  | (15,228 | ) |  |  | (22,322 | ) |  |  | (8,742 | )
Gains on sales of operating lease assets |  |  | (26,358 | ) |  |  | (40,148 | ) |  |  | (56,932 | )
Write-downs of long-lived assets |  |  | 3,020 |  |  |  | 35,666 |  |  |  | 2,297 |
Write-downs of securities |  |  | 5,935 |  |  |  | 730 |  |  |  | 824 |
Deferred tax provision |  |  | 25,518 |  |  |  | 12,208 |  |  |  | 29,202 |
Decrease in trading securities |  |  | 12,103 |  |  |  | 68,422 |  |  |  | 31,855 |
Increase in inventories |  |  | (12,061 | ) |  |  | (7,053 | ) |  |  | (17,527 | )
(Increase) Decrease in trade notes, accounts and other receivable |  |  | (12,657 | ) |  |  | 3,562 |  |  |  | 12,953 |
Increase (Decrease) in trade notes, accounts and other payable |  |  | (1,947 | ) |  |  | 14,943 |  |  |  | (12,173 | )
Increase in policy liabilities and policy account balances |  |  | 230,947 |  |  |  | 141,201 |  |  |  | 101,743 |
Increase (Decrease) in income taxes payable |  |  | (11,045 | ) |  |  | 92,026 |  |  |  | (128,948 | )
Other, net |  |  | (23,819 | ) |  |  | (108,702 | ) |  |  | (119,639 | )
Net cash provided by operating activities |  |  | 1,102,414 |  |  |  | 1,103,370 |  |  |  | 913,088 |
Cash Flows from Investing Activities: |  |  |  |  |  |  |  |  |  |  |  |
Purchases of lease equipment |  |  | (716,737 | ) |  |  | (872,994 | ) |  |  | (976,502 | )
Installment loans made to customers |  |  | (1,198,978 | ) |  |  | (1,202,198 | ) |  |  | (1,267,070 | )
Principal collected on installment loans |  |  | 1,139,608 |  |  |  | 1,182,261 |  |  |  | 1,318,244 |
Proceeds from sales of operating lease assets |  |  | 138,912 |  |  |  | 147,104 |  |  |  | 233,452 |
Investment in affiliates, net |  |  | (112,922 | ) |  |  | (34,804 | ) |  |  | (47,611 | )
Proceeds from sales of investment in affiliates |  |  | 41,730 |  |  |  | 47,677 |  |  |  | 96,620 |
Purchases of available-for-sale debt securities |  |  | (709,349 | ) |  |  | (526,478 | ) |  |  | (515,865 | )
Proceeds from sales of available-for-sale debt securities |  |  | 285,836 |  |  |  | 239,250 |  |  |  | 323,773 |
Proceeds from redemption of available-for-sale debt securities |  |  | 31,859 |  |  |  | 90,478 |  |  |  | 44,496 |
Purchases of equity securities other than trading |  |  | (56,314 | ) |  |  | (94,182 | ) |  |  | (67,534 | )
Proceeds from sales of equity securities other than trading |  |  | 30,532 |  |  |  | 71,883 |  |  |  | 44,211 |
Purchases of property under facility operations |  |  | (43,954 | ) |  |  | (44,302 | ) |  |  | (103,572 | )
Acquisitions of subsidiaries, net of cash acquired |  |  | (82,163 | ) |  |  | (87,582 | ) |  |  | (206,830 | )
Sales of subsidiaries, net of cash disposed |  |  | 57,722 |  |  |  | 252,921 |  |  |  | 19,987 |
Other, net |  |  | (15,772 | ) |  |  | 22,120 |  |  |  | 5,723 |
Net cash used in investing activities |  |  | (1,209,990 | ) |  |  | (808,846 | ) |  |  | (1,098,478 | )
Cash Flows from Financing Activities: |  |  |  |  |  |  |  |  |  |  |  |
Net increase (decrease) in debt with maturities of three months or less |  |  | (42,136 | ) |  |  | 96,383 |  |  |  | 20,408 |
Proceeds from debt with maturities longer than three months |  |  | 1,171,350 |  |  |  | 950,244 |  |  |  | 1,820,633 |
Repayment of debt with maturities longer than three months |  |  | (1,013,937 | ) |  |  | (1,160,613 | ) |  |  | (1,158,517 | )
Net increase (decrease) in deposits due to customers |  |  | 85,737 |  |  |  | (42,591 | ) |  |  | (30,638 | )
Cash dividends paid to ORIX Corporation shareholders |  |  | (95,164 | ) |  |  | (99,395 | ) |  |  | (106,290 | )
Acquisition of treasury stock |  |  | (55,443 | ) |  |  | (50,001 | ) |  |  | (52,071 | )
Contribution from noncontrolling interests |  |  | 24,487 |  |  |  | 25,942 |  |  |  | 3,926 |
Purchases of shares of subsidiaries from noncontrolling interests |  |  | (4,791 | ) |  |  | (2,086 | ) |  |  | (46,319 | )
Net increase (decrease) in call money |  |  | (17,500 | ) |  |  | (7,500 | ) |  |  | 5,000 |
Other, net |  |  | (12,719 | ) |  |  | (17,001 | ) |  |  | (17,824 | )
Net cash provided by (used in) financing activities |  |  | 39,884 |  |  |  | (306,618 | ) |  |  | 438,308 |
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash |  |  | 11,983 |  |  |  | 24,331 |  |  |  | 22,178 |
Net increase (decrease) in Cash, Cash Equivalents and Restricted Cash |  |  | (55,709 | ) |  |  | 12,237 |  |  |  | 275,096 |
Cash, Cash Equivalents and Restricted Cash at Beginning of Year |  |  | 1,135,284 |  |  |  | 1,079,575 |  |  |  | 1,091,812 |
Cash, Cash Equivalents and Restricted Cash at End of Year |  | ¥ | 1,079,575 |  |  | ¥ | 1,091,812 |  |  | ¥ | 1,366,908 |

The accompanying notes to consolidated financial statements are an integral part of these statements.
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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ORIX Corporation and Subsidiaries
1. Significant Accounting and Reporting Policies
In preparing the accompanying consolidated financial statements, ORIX Corporation (the “Company”) and its subsidiaries have complied with generally accepted accounting principles in the United States (“U.S. GAAP”). Significant accounting and reporting policies are summarized as follows:
(a) Basis of presenting financial statements
The Company and its subsidiaries in Japan maintain their books in conformity with Japanese accounting practices, which differ in certain respects from U.S. GAAP.
The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP and, therefore, reflect certain adjustments to the books and records of the Company and its subsidiaries. The principal adjustments relate to initial direct costs to originate leases and loans, accounting for allowance for credit losses, use of a straight-line basis of depreciation for operating lease assets, deferral of life insurance policy acquisition costs, calculation of insurance policy liabilities, accounting for goodwill and other intangible assets in business combinations, accounting for pension plans, accounting for sales of the parent’s ownership interest in subsidiaries, classification in the statements of cash flows, accounting for transfer of financial assets, accounting for investment in securities, accounting for fair value option, accounting for lessee’s lease and reflection of the income tax effect on such adjustments.
(b) Principles of consolidation
The consolidated financial statements include the accounts of the Company and all of its subsidiaries. VIEs, for which the Company and its subsidiaries are the primary beneficiaries, are also included in the consolidated financial statements.
In a transaction that results in the loss of control, the gain or loss recognized in income includes the realized gain or loss related to the portion of ownership interest sold and the gain or loss on the remeasurement to fair value of the interest retained. On the other hand, additional acquisition of the parent’s ownership interest in subsidiaries and partial sale of such interest where the parent continues to retain control of the subsidiary are accounted for as equity transactions.
Investments in affiliates, of which the Company has 20% – 50% ownership or has the ability to exercise significant influence, are accounted for by using the equity method except for those for which the fair value option has been elected. When the Company holds majority voting interests of an entity but noncontrolling shareholders hold substantive participating rights to make decisions on activities that occur over the ordinary course of the business, an affiliate is recognized. Investments in affiliates are recorded at cost plus/minus the Company and its subsidiaries’ portion of equity in undistributed earnings. If the value of an investment has declined and is judged to be other-than-temporary, the investment is written down to its fair value.
When an affiliate issues stocks, which price per share is more or less than the Company and its subsidiaries’ average carrying amount per share, to unrelated third parties, the Company and its subsidiaries adjust the carrying amount of its investment in the affiliate and recognize the gain or loss in the consolidated statements of income in the year in which the change in ownership interest occurs.
A certain overseas subsidiary consolidates subsidiaries determined as investment companies under ASC 946 (“Financial Services—Investment Companies”). Investments held by the investment company subsidiaries are carried at fair value with changes in fair value recognized in earnings.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
A lag period of up to three months is used on a consistent basis for recognizing the results of certain subsidiaries and affiliates.
All significant intercompany accounts and transactions have been eliminated in consolidation.
(c) Use of estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company has identified ten areas where it believes estimates are particularly critical to the financial statements. The Company makes estimates and assumptions to the selection of valuation techniques and determination of assumptions used in fair value measurements, the determination and periodic reassessment of the unguaranteed residual value for finance leases and operating leases, the determination and reassessment of insurance policy liabilities and deferred policy acquisition costs, the determination of the allowance for credit losses (including the allowance for
off-balance
sheet credit exposures), the recognition and measurement of impairment of long-lived assets, the recognition and measurement of impairment of investment in securities, the determination of the valuation allowance for deferred tax assets and the evaluation of tax positions, the assessment and measurement of effectiveness in hedging relationship using derivative financial instruments, the determination of benefit obligation and net periodic pension cost and the recognition and measurement of impairment of goodwill and other intangible assets.
In addition, we carefully considered the future outlook regarding the spread of the
COVID-19
etc. As of March 31, 2023, there was no significant impact on our accounting estimates. However, projections of unexpected events such as future outbreaks of infectious diseases, as well as sudden global economic changes due to such events are uncertain and may change rapidly. Therefore, our accounting assumptions and estimates may change over time.
(d) Foreign currencies translation
The Company and its subsidiaries maintain their accounting records in their functional currency. Transactions in foreign currencies are recorded in the entity’s functional currency based on the prevailing exchange rates on the transaction date. Monetary assets and liabilities in foreign currencies are recorded in the entity’s functional currency based on the prevailing exchange rates at the end of each fiscal year.
The financial statements of overseas subsidiaries and affiliates are translated into Japanese yen by applying the exchange rates in effect at the end of each fiscal year to all assets and liabilities. Income and expenses are translated at the average rates of exchange prevailing during the fiscal year. The currencies in which the operations of the overseas subsidiaries and affiliates are conducted are regarded as the functional currencies of these companies. Foreign currency translation adjustments reflected in other comprehensive income (loss), net of applicable income taxes, arise from the translation of foreign currency financial statements into Japanese yen.
(e) Revenue recognition
The Company and its subsidiaries recognize revenues from only contracts with customers, such as sales of goods and real estate, and services income, revenues are recognized to depict the transfer of promised goods or services to customers in the amounts that reflect the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenues are recognized net of discount, incentives and estimated sales
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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
returns. In case that the Company and its subsidiaries receive payment from customers before satisfying performance obligations, the amounts are recognized as contract liabilities. In transactions that involve third parties, if the Company and its subsidiaries control the goods or services before they are transferred to the customers, revenue is recognized on gross amount as the principal.
Excluding the aforementioned policy, the policies as specifically described hereinafter are applied for each of revenue items.
Finance Revenues
—Finance revenues mainly include revenues from finance leases, installment loans, and financial guarantees.
(1) Revenues from finance leases
Lessor leases consist of leases for various equipment types, including office equipment, industrial machinery, transportation equipment and real estates. Net investment in leases includes sales-type leases and direct financing leases which are full-payout leases. Leases not qualifying as sales-type leases or direct financing leases are accounted for as operating leases. Interest income on net investment in leases is recognized over the life of each respective lease using the interest method. When lease payment is variable, it is accounted for as income in profit or loss in the period when the changes in facts and circumstances on which the variable payment is based occur. When providing leasing services, the Company and its subsidiaries simultaneously conduct supplementary businesses, such as handling taxes and paying insurance on leased assets on behalf of lessees. The repayment of lessor costs received from lessees are recognized in revenues from finance leases and those costs are recognized in other (income) and expense. The estimated unguaranteed residual value represents estimated proceeds from the disposition of equipment at the time the lease is terminated. Estimates of residual values are determined based on market values of used equipment, estimates of when and the extent to which equipment will become obsolete and actual recovery being experienced for similar used equipment. Initial direct costs of sales-type leases and direct financing leases are being deferred and amortized as a yield adjustment over the life of the related lease by using interest method. The unamortized balance of initial direct costs of sales-type leases and direct financing leases is reflected as a component of net investment in leases.
(2) Revenues from installment loans
Interest income on installment loans is recognized on an accrual basis. Certain direct loan origination costs, net of origination fees, are being deferred and amortized over the contractual term of the loan as an adjustment of the related loan’s yield using the interest method. Interest payments received on loans other than purchased loans are recorded as interest income unless the collection of the remaining investment is doubtful at which time payments received are recorded as reductions of principal. For purchased loans, although the acquired assets may remain loans in legal form, collections on these loans often do not reflect the normal historical experience of collecting delinquent accounts, and the need to tailor individual collateral-realization strategies often makes it difficult to reliably estimate the amount, timing, or nature of collections. Accordingly, the Company and its subsidiaries use the cost recovery method of income recognition for such purchased loans.
(3) Revenues from financial guarantees
At the inception of a guarantee, fair value for the guarantee is recognized as a liability in the consolidated balance sheets. The Company and its subsidiaries recognize revenue mainly over the term of guarantee by a systematic and rational amortization method as the Company and the subsidiaries are released from the risk of the obligation.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
(4)
Non-accrual
policy
In common with all classes, for net investment in leases and installment loans,
past-due
financing receivables are receivables for which principal or interest is
past-due
30 days or more. Loans whose terms have been modified are not classified as
past-due
financing receivables if the principal and interest is not
past-due
30 days or more in accordance with the modified terms. The Company and its subsidiaries suspend accruing revenues on
past-due
installment loans and net investment in leases when principal or interest is
past-due
90 days or more, or earlier, if management determines that their collections are doubtful based on factors such as individual debtors’ creditworthiness, historical loss experience, current delinquencies and delinquency trends. However, delinquencies during the relevant period of
past-due
financing receivables are out of the scope of the suspension of revenue recognition unless their collections are doubtful when the government issues a request for grace of repayment within a maximum of 6 months due to reasons that cannot be attributed to the obligor, such as a disaster, or when similar requests are made by public bodies. Accrued but uncollected interest is reclassified to net investment in leases or installment loans in the accompanying consolidated balance sheets and becomes subject to the allowance for credit losses process. Cash repayments received on
non-accrual
loans are applied first against past due interest and then any surpluses are applied to principal in view of the conditions of the contract and obligors. The Company and its subsidiaries return
non-accrual
loans and net investment in leases to accrual status when it becomes probable that the Company and its subsidiaries will be able to collect all amounts due according to the contractual terms of these loans and receivables, as evidenced by continual payments from the debtors. The period of such continual payments before returning to accrual status varies depending on factors that we consider are relevant in assessing the debtors’ creditworthiness, such as the debtors’ business characteristics and financial conditions as well as relevant economic conditions and trends.
Operating leases
—
Revenues from operating leases are recognized on a straight-line basis over the contract terms. When lease payment is variable, it is accounted for as income in profit or loss in the period when the changes in facts and circumstances on which the variable payment is based occur. In principle, any conditions changed from original lease agreement should be accounted for as a lease modification. However, if lessees applied for
COVID-19
related rent concessions and changes of lease payments do not result in a substantial increase to the rights of the lessor or the obligations of the lessee, the concessions are eligible to be applied for the practical expedient. The Company and its subsidiaries applied the practical expedient when accounting for eligible rent concessions mentioned above. Taking lessees’ future business performance into consideration, the Company and its subsidiaries applied the practical expedient by the following 3 approaches: recognize revenue under the original lease contract, recognize revenue under the conditions changed by rent concessions or only recognize revenue when receiving the lease payments.
In providing leasing services, the Company and its subsidiaries simultaneously conduct supplementary businesses, such as handling taxes and paying insurance on leased assets on behalf of lessees. The compensations for those lessor costs received from lessees are recognized in operating lease revenues and those costs are recognized in costs of operating leases. Investment in operating leases is recorded at cost less accumulated depreciation. In addition, operating lease assets are depreciated over their estimated useful lives mainly on a straight-line basis. The estimated average useful lives of principal operating lease assets classified as transportation equipment is 5 years, measuring and information-related equipment is
4 years, real estate (other than land) is 31 years and other is 8 years. Depreciation expenses are included in costs of operating leases. Gains or losses arising from dispositions of operating lease assets are included in operating lease revenues.
Estimates of residual values are based on market values of used equipment, estimates of when and the extent to which equipment will become obsolete and actual recovery being experienced for similar used equipment. Initial direct costs of operating leases are being deferred and amortized as a straight-line basis over the life of the related lease. The unamortized balance of initial direct costs is reflected as investment in operating leases.
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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
(f) Insurance and reinsurance transactions
Premium income from life insurance policies, net of premiums on reinsurance ceded, is recognized as earned premiums when due.
Life insurance benefits are recorded as expenses when they are incurred. Policy liabilities and policy account balances for future policy benefits are measured using the net level premium method, based on actuarial estimates of the amount of future policyholder benefits. The policies are characterized as long-duration policies and mainly consist of whole life, term life, endowments, medical insurance and individual annuity insurance contracts. For policies other than individual annuity insurance contracts, computation of policy liabilities necessarily includes assumptions about mortality, morbidity, lapse rates, future yields on related investments and other factors applicable at the time the policies are written. A certain subsidiary continually evaluates the potential for changes in the estimates and assumptions applied in determining policy liabilities, both positive and negative and uses the results of these evaluations both to adjust recorded liabilities and to adjust underwriting criteria and product offerings.
The insurance contracts sold by the subsidiary include variable annuity, variable life and fixed annuity insurance contracts. The subsidiary manages investment assets on behalf of variable annuity and variable life policyholders, which consist of equity securities and are included in investment in securities in the consolidated balance sheets. These investment assets are measured at fair value with realized and unrealized gains or losses recognized in life insurance premiums and related investment income in the consolidated statements of income. The subsidiary elected the fair value option for the entire variable annuity and variable life insurance contracts with changes in the fair value recognized in life insurance costs.
The subsidiary provides minimum guarantees to variable annuity and variable life policyholders under which it is exposed to the risk of compensating losses incurred by the policyholders to the extent contractually required. To mitigate the risk, a portion of the minimum guarantee risk related to variable annuity and variable life insurance contracts is ceded to reinsurance companies and the remaining risk is economically hedged by entering into derivative contracts. The reinsurance contracts do not relieve the subsidiary from the obligation as the primary obligor to compensate certain losses incurred by the policyholders, and the default of the reinsurance companies may impose additional losses on the subsidiary. Certain subsidiaries have elected the fair value option for certain reinsurance contracts relating to variable annuity and variable life insurance contracts, which are included in other assets in the consolidated balance sheets.
Policy liabilities and policy account balances for fixed annuity insurance contracts are measured based on the single-premiums plus interest based on expected rate and fair value adjustments relating to the acquisition of the subsidiary, less withdrawals, expenses and other charges. The credited interest is recorded in life insurance costs in the consolidated statements of income.
Certain costs related directly to the successful acquisition of new or renewal insurance contracts, or deferred policy acquisition costs are deferred and amortized over the respective policy periods in proportion to anticipated premium revenue. These deferred policy acquisition costs consist primarily of agent commissions, except for recurring policy maintenance costs and certain variable costs and expenses for underwriting policies.
(g) Allowance for credit losses
The allowance for credit losses estimates all credit losses expected to occur in future over the remaining life of net investment in leases, financial assets measured at amortized cost, such as installment loans,
held-to-maturity
debt securities and other receivables, and is recognized adequately based on the management
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
judgement. Expected prepayments are reflected in the remaining life. The allowance for credit losses is increased by provision charged to income and is decreased by charge-offs, net of recoveries mainly.
Developing the allowance for credit losses is subject to numerous estimates and judgments. In evaluating the appropriateness of the allowance, management considers various factors, including the business characteristics and financial conditions of the obligors, prior
charge-off
experience, current delinquencies and delinquency trends, value of underlying collateral and guarantees, current economic and business conditions and expected outlook in the future.
The Company and its subsidiaries estimate the allowance for credit losses by using various methods according to these estimates and judgments. When certain financial assets have similar risk characteristics to other financial assets, these financial assets are collectively evaluated as a pool. On the contrary, when financial assets do not have similar risk characteristics to other financial assets, the financial assets are evaluated individually. The Company and its subsidiaries select the most appropriate calculation method based on available information, such as the nature and related risk characteristics on financial assets, the prior
charge-off
experience and future forecast scenario with correlated economic indicators.
The Company and its subsidiaries charge off doubtful receivables when the likelihood of any future collection is believed to be minimal considering debtors’ creditworthiness and the liquidation status of collateral, etc.
In addition, if the entity has a present contractual obligation to extend the credit and the obligation is not unconditionally cancelable by the entity, credit losses related the loan commitments of card loans and installment loans and financial guarantees are in the scope of the allowance for credit losses. For the loan commitments of card loans and installment loans, credit losses are recognized on the loan commitments for the portion expected to be drawn. For financial guarantees, the allowance is recognized for the contingent obligation which generates credit risk exposures. These allowance for
off-balance
sheet credit exposures is measured using the same measurement methodologies as the allowance for loans and net investment leases, considering quantitative and qualitative factors including historical loss experience, current economic and business conditions and reasonable and supportable forecasts. The allowance for
off-balance
sheet credit exposure is accounted for in other liabilities on the consolidated balance sheets.
(h) Impairment of long-lived assets
The Company and its subsidiaries perform a recoverability test for long-lived assets to be held and used in operations, including tangible assets and intangible assets being depreciated or amortized, consisting primarily of office buildings, condominiums, aircraft, ships, mega solar facilities and other properties under facility operations, whenever events or changes in circumstances indicated that the assets might be impaired. The assets are considered not recoverable when the undiscounted future cash flows estimated to be generated by those assets are less than the carrying amount of those assets. The carrying amount of assets not recoverable is reduced to fair value if lower than the carrying amount. The Company and its subsidiaries determine the fair value using appraisals prepared by independent third party appraisers or our own staff of qualified appraisers, and others based on recent transactions involving sales of similar assets or other valuation techniques such as discounted cash flows methodologies using future cash flows estimated to be generated from operation of the existing assets or completion of development projects, as appropriate.
(i) Investment in securities
Equity securities are generally reported at fair value with unrealized gains and losses included in income. Equity securities without readily determinable fair values are recorded at fair value at its cost minus impairment,
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
if any, plus or minus changes resulting from observable price changes under the election of the measurement alternative, except for investments which are valued at net asset value per share.
Equity securities elected to apply the measurement alternative are written down to its fair value with losses included in income if a qualitative assessment indicates that the investment is impaired and the fair value of the investment is less than its carrying value.
In addition, investments included in equity securities that are accounted for under the equity method are recorded at fair value with unrealized gains and losses included in income if certain subsidiaries elect the fair value option.
Trading debt securities are reported at fair value with unrealized gains and losses included in income.
Available-for-sale
debt securities are reported at fair value, and unrealized gains or losses are recorded in other comprehensive income (loss), net of applicable income taxes, except for investments which are recorded at fair value with unrealized gains and losses included in income by electing the fair value option.
For
available-for-sale
debt securities, if the fair value is less than the amortized cost, the debt securities are impaired. The Company and its subsidiaries identify per each impaired security whether the decline of fair value is due to credit losses component or
non-credit
losses component. Impairment related to credit losses is recognized in earnings through an allowance for credit losses. Impairment related to other factors than credit losses is recognized in other comprehensive income (loss), net of applicable income taxes. In estimating an allowance for credit losses, the Company and its subsidiaries consider that credit losses exist when the present value of estimated cash flows is less than the amortized cost basis. When the Company and its subsidiaries intend to sell the debt securities for which an allowance for credit losses is previously established or it is more likely than not that the Company and its subsidiaries will be required to sell the debt securities before recovery of the amortized cost basis, the allowance for credit losses is fully written off and the amortized cost is reduced to the fair value after recognizing additional impairment in earnings. In addition, the Company and its subsidiaries recognize in earnings the full difference between the amortized cost and the fair value of the debt securities by direct write-down, without any allowance for credit losses, if the debt securities are expected to be sold and the fair value is less than the amortized cost.
Held-to-maturity
debt securities are recorded at amortized cost.
Held-to-maturity
debt securities are in the scope of ASC 326 (“Financial Instruments—Credit Losses”), see Note 1 “Significant Accounting and Reporting Policies (g) Allowance for credit losses.”
(j) Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. The Company and its subsidiaries release to earnings stranded income tax effects in accumulated other comprehensive income (loss) resulting from changes in tax laws or rates or changes in judgment about realization of a valuation allowance on a specific identification basis when the individual items are completely sold or terminated. A valuation allowance is recognized if, based on the weight of available evidence, it is “more likely than not” that some portion or all of the deferred tax asset will not be realized.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The Company and its subsidiaries file tax returns in Japan and certain foreign tax jurisdictions and recognize the financial statement effects of a tax position taken or expected to be taken in a tax return when it is more likely than not, based on the technical merits, that the position will be sustained upon tax examination, including resolution of any related appeals or litigation processes, and measure tax positions that meet the recognition threshold at the largest amount of tax benefit that is greater than
50
percent likely to be realized upon settlement with the taxing authority. The Company and its subsidiaries present an unrecognized tax benefit as either a reduction of a deferred tax asset or a liability, based on the intended method of settlement. The Company and its subsidiaries classify penalties and interest expense related to income taxes as part of provision for income taxes in the consolidated statements of income.
The Company and its certain subsidiaries have applied Japanese Group Relief System for National Corporation tax purposes.
(k) Securitized assets
The Company and its subsidiaries have securitized and sold to investors various financial assets such as lease receivables and loan receivables. In the securitization process, the assets to be securitized are sold to SPEs, that issue asset-backed beneficial interests and securities to the investors.
SPEs used in securitization transactions are consolidated if the Company and its subsidiaries are the primary beneficiary of the SPEs, and the transfers of the financial assets to those consolidated SPEs are not accounted for as sales. Assets held by consolidated SPEs continue to be accounted for as lease receivables or loan receivables, as they were before the transfer, and asset-backed beneficial interests and securities issued to the investors are accounted for as debt. When the Company and its subsidiaries have transferred financial assets to a transferee that is not subject to consolidation, the Company and its subsidiaries account for the transfer as a sale if control over the transferred assets is surrendered.
The Company and certain subsidiaries originate and sell loans into the secondary market, while retaining the obligation to service those loans. In addition, a certain subsidiary undertakes obligations to service loans originated by others. The subsidiary recognizes servicing assets if it expects the benefit of servicing to more than adequately compensate it for performing the servicing or recognizes servicing liabilities if it expects the benefit of servicing to less than adequately compensate it. These servicing assets and liabilities are initially recognized at fair value and subsequently accounted for using the amortization method whereby the assets and liabilities are amortized in proportion to and over the period of estimated net servicing income or net servicing loss. On a quarterly basis, servicing assets and liabilities are evaluated for impairment or increased obligations. The fair value of servicing assets and liabilities is estimated using an internal valuation model, or by obtaining an opinion of value from an independent third-party vendor. Both methods are based on calculating the present value of estimated future net servicing cash flows, taking into consideration discount rates, prepayments and servicing costs. The internal valuation model is validated at least semiannually through third-party valuations.
(l) Derivative financial instruments
The Company and its subsidiaries recognize all derivatives on the consolidated balance sheets at fair value. The accounting treatment of subsequent changes in the fair value depends on their use, and whether they qualify as effective “hedges” for accounting purposes. Derivatives for the purpose of trading or economic hedge that are not qualified for hedge accounting are adjusted to fair value through the consolidated statements of income. If derivatives are qualified for hedge accounting, then depending on its nature, changes in its fair value will be either offset against changes in the fair value of hedged assets or liabilities through the consolidated statements of income, or recorded in other comprehensive income (loss), net of applicable income taxes.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
If a derivative is held as a hedge of the variability of fair value related to a recognized asset or liability or an unrecognized firm commitment (“fair value” hedge), changes in the fair value of the derivative are recorded in earnings along with the changes in the fair value of the hedged item.
If a derivative is held as a hedge of the variability of cash flows related to a forecasted transaction or a recognized asset or liability (“cash flow” hedge), changes in the fair value of the derivative are recorded in other comprehensive income (loss), net of applicable income taxes, until earnings are affected by the variability in cash flows of the designated hedged item.
If a derivative is held as a hedge of a net investment in a foreign operation, changes in the fair value of the derivative are recorded in the foreign currency translation adjustments account within other comprehensive income (loss), net of applicable income taxes.
The Company and its subsidiaries select either the amortization approach or the fair value approach, depending on the type of hedging activity, for the initial value of the component excluded from the assessment of effectiveness, and recognize it through the consolidated statements of income. When the amortization approach is adopted, the change in fair value is recognized in earnings using a systematic and rational method over the life of the hedging instrument and then any difference between the change in fair value and the amount recognized in earnings is recognized in other comprehensive income (loss), net of applicable income taxes. When the fair value approach is adopted, the change in the fair value is immediately recognized through the consolidated statements of income.
For all hedging relationships that are designated and qualified for hedge accounting, at the inception of the hedge, the Company and its subsidiaries formally document the details of the hedging relationship and the hedging activity. The Company and its subsidiaries formally assess, both at the hedge’s inception and on an ongoing basis, the effectiveness of the hedge relationship. The Company and its subsidiaries cease hedge accounting prospectively when the derivative no longer qualifies for hedge accounting.
(m) Pension plans
The Company and certain subsidiaries have contributory and
non-contributory
pension plans covering substantially all of their employees. Among the plans, the costs of defined benefit pension plans are accrued based on amounts determined using actuarial methods, with assumptions of discount rate, rate of increase in compensation level, expected long-term rate of return on plan assets and others.
The Company and its subsidiaries also recognize the funded status of pension plans, measured as the difference between the fair value of plan assets and the benefit obligation, on the consolidated balance sheets. Changes in that funded status are recognized in the year in which the changes occur through other comprehensive income (loss), net of applicable income taxes.
(n) Stock-based compensation
In principle, the Company and its subsidiaries measure stock-based compensation expense as consideration for services provided by employees based on the fair value on the grant date. The costs are recognized over the requisite service period.
(o) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits placed with banks and short-term highly liquid investments with original maturities of three months or less.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
(p) Property under facility operations
Property under facility operations consist primarily of operating facilities (including hotels and training facilities) and environmental assets (including mega solar, wind power plants and
coal-biomass
co-fired
power plants), which are stated at cost less accumulated depreciation, and depreciation is calculated mainly on a straight-line basis over the estimated useful lives of the assets. Depreciation expenses in fiscal 2021, 2022 and 2023 were ¥30,448 million, ¥29,871 million and ¥34,622 million, respectively. Accumulated depreciation was ¥147,459 million and ¥180,130 million as of March 31, 2022 and 2023, respectively. Estimated useful lives range up to 50 years for buildings, up to 60 years for structures and up to 44 years for others.
(q) Inventories
Inventories consist primarily of residential condominiums under development, completed residential condominiums (including those waiting to be delivered to buyers under the contract for sale), and merchandise for sale. Residential condominiums under development are carried at cost less any impairment losses, and completed residential condominiums and merchandise for sale are stated at the lower of cost or fair value less cost to sell. The cost of inventories that are unique and not interchangeable is determined on the specific identification method and the cost of other inventories is principally determined on the average method. As of March 31, 2022 and 2023, residential condominiums under development were ¥62,414 million and ¥74,621 million, respectively, and completed residential condominiums and merchandise for sale were ¥77,149 million and ¥94,400 million, respectively.
The Company and its subsidiaries recorded ¥2,510 million, ¥10,492 million and ¥1,205 million of write-downs principally on completed residential condominiums and merchandise for sale for fiscal 2021, 2022 and 2023, respectively, primarily resulting from a decrease in expected sales price. These write-downs were recorded in costs of goods and real estate sold and included in Real Estate segment, PE Investment and Concession segment, Corporate Financial Services and Maintenance Leasing segment,
Environment and Energy segment, and ORIX USA segment.
(r) Office facilities
Office facilities are stated at cost less accumulated depreciation. Depreciation is calculated on a
declining-balance
basis or straight-line basis over the estimated useful lives of the assets. Depreciation expenses in fiscal 2021, 2022 and 2023 were ¥8,269 million, ¥9,083 million and ¥8,373 million, respectively. Accumulated depreciations were ¥73,063 million and ¥74,507 million as of March 31, 2022 and 2023, respectively. Estimated useful lives range up to 62 years for buildings and structures and up to 46 years for machinery and equipment.
(s)
Right-of-use
assets
The Company and its subsidiaries record the ROU assets recognized from the lessee’s lease transaction as investment in operating leases, property under facility operations and office facilities. Lease liabilities are included in other liabilities.
ROU assets are consisted of the amount of the initial measurement of the lease liability and any lease payments made to the lessor at or before the commencement date and stated at cost less accumulated amortization. The initial measurement of the lease liability is at the present value of the lease payments not yet paid, discounted using the lessee’s incremental borrowing rate at lease commencement. ROU assets of finance leases are amortized mainly on a straight-line basis over the lease term. ROU assets of operating leases are
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ORIX Corporation and Subsidiaries
amortized over the lease term by the fixed term operating cost minus the interest cost. Amortization of ROU assets of finance leases and operating leases expenses are included in costs of operating leases, services expense and selling, general and administrative expenses.
(t) Other assets
Other assets consist primarily of goodwill and other intangible assets in acquisitions, reinsurance recoverables in relation to reinsurance contracts, deferred insurance policy acquisition costs which are amortized over the contract periods, leasehold deposits, advance payments made in relation to construction of real estate under operating leases and property under facility operations, prepaid benefit cost, prepaid expenses for property tax, maintenance fees and insurance premiums in relation to lease contracts, servicing assets, derivative assets, contract assets related to real estate contract works and deferred tax assets.
(u) Business combinations
The Company and its subsidiaries account for all business combinations using the acquisition method. The Company and its subsidiaries recognize intangible assets acquired in a business combination apart from goodwill if the intangible assets meet one of two criteria—either the contractual-legal criterion or the separately identifiable criterion. Goodwill is measured as an excess of the aggregate of consideration transferred and the fair value of noncontrolling interests over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed in the business combination measured at fair value. The Company and its subsidiaries would recognize a bargain purchase gain when the amount of recognized net assets exceeds the sum of consideration transferred and the fair value of noncontrolling interests. In a business combination achieved in stages, the Company and its subsidiaries remeasure their previously held equity interest at their acquisition-date fair value and recognize the resulting gain or loss, if any, in earnings.
(v) Goodwill and other intangible assets
The Company and its subsidiaries perform an impairment test for goodwill and any indefinite-lived intangible assets at least annually. Additionally, if events or changes in circumstances indicate that the asset might be impaired, the Company and its subsidiaries test for impairment whenever such events or changes occur.
The Company and its subsidiaries have the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before we perform a quantitative goodwill impairment test. The Company and its subsidiaries perform the qualitative assessment for some goodwill but bypass the qualitative assessment and proceed directly to the quantitative impairment test for other goodwill. For the goodwill for which the qualitative assessment is performed, if, after assessing the totality of events or circumstances, the Company and/or subsidiaries determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company and/or subsidiaries do not perform the quantitative goodwill impairment test. However, if the Company and/or subsidiaries conclude otherwise or determine to bypass the qualitative assessment, the Company and/or subsidiaries proceed to perform the quantitative goodwill impairment test. The quantitative goodwill impairment test calculates the fair value of the reporting unit and compares the fair value with the carrying amount of the reporting unit. If the fair value of the reporting unit falls below its carrying amount, an impairment loss is recognized in an amount equal to the difference. The Company and its subsidiaries test the goodwill at the reporting unit which is either the same level as an operating segment level or one level below an operating segment.
The Company and its subsidiaries have the option to perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired before we perform a quantitative
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
impairment test. The Company and its subsidiaries perform the qualitative assessment for some indefinite-lived intangible assets but bypass the qualitative assessment and perform the quantitative impairment test for other indefinite-lived intangible assets. For those indefinite-lived intangible assets for which the qualitative assessment is performed, if, after assessing the totality of events and circumstances, the Company and/or subsidiaries conclude that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the Company and/or subsidiaries do not perform the quantitative impairment test. However, if the Company and/or subsidiaries conclude otherwise or determine to bypass the qualitative assessment, the Company and/or subsidiaries calculate the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test. We compare the fair value with the carrying amount of the indefinite-lived intangible asset. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
Intangible assets with finite lives are amortized over their useful lives and tested for impairment. The Company and its subsidiaries perform a recoverability test for the intangible assets whenever events or changes in circumstances indicate that the assets might be impaired. The intangible assets are considered not recoverable when the undiscounted future cash flows estimated to be generated by those assets are less than the carrying amount of those assets, and the net carrying amount of assets not recoverable is reduced to fair value if lower than the carrying amount and an impairment loss is recognized in an amount equal to the difference.
(w) Other Liabilities
Other liabilities include primarily lease liabilities recognized from the lessee’s lease transaction, accrued expenses related to interest and bonus, accrued benefit liability, advances received from lessees in relation to lease contracts, deposits received from real estate transaction, contract liabilities mainly related to automobile maintenance services and software services, and derivative liabilities and allowance for credit losses on
off-balance
sheet credit exposures.
(x) Earnings per share
Basic earnings per share is computed by dividing net income attributable to ORIX Corporation shareholders by the weighted average number of shares of outstanding common stock in each period. Diluted earnings per share is calculated by reflecting the potential dilution that could occur if securities or other contracts issuing common stock were exercised or converted into common stock.
(y) Redeemable noncontrolling interests
Noncontrolling interests in a certain subsidiary are redeemable interests which are subject to call and put rights upon certain equity holder events. As redemption of the noncontrolling interest is not solely in the control of the subsidiary, it is recorded between liabilities and equity on the consolidated balance sheets at its estimated redemption value.
(z) New accounting pronouncements
In August 2018, Accounting Standards Update
2018-12
(“Targeted Improvements to the Accounting for Long-Duration Contracts”—ASC 944 (“Financial Services—Insurance”)) was issued, and the original effective date was deferred by two years by related amendments which were issued thereafter. These updates change the recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity. These updates require an insurance entity to review and, if there is a change, update cash flow
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
assumptions at least annually and to update discount rate used for liability for future policy benefits at each reporting date for nonparticipating traditional long-duration and limited-payment contracts. The effect of updating the discount rate is recognized in other comprehensive income (loss). These updates also require market risk benefits to be measured at fair value, and simplify amortization of deferred acquisition costs. Furthermore, these updates require additional disclosures for long-duration contracts. These updates are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early application is permitted. For the liability for future policy benefits and deferred acquisition costs, these updates are applied to contracts in force as of beginning of the earliest period presented (hereinafter, “the transition date” of these updates) on a
modified retrospective basis, and an insurance entity may elect to apply retrospectively. For the market risk benefits, these updates are applied retrospectively at the transition date, and the difference between fair value and carrying value requires an adjustment to retained earnings at the transition date. The cumulative effect of changes in the instrument-specific credit risk between contract inception date and the transition date should be recognized in accumulated other comprehensive income at the transition date. The Company and its subsidiaries will adopt these updates on April 1, 2023, with the transition date of April 1, 2021, on a modified retrospective basis. The adoption of these updates will change the measurement of the liability for future policy benefits, etc. In addition, the effect on the Company and its subsidiaries’ results of operations and financial position will be an increase of approximately
¥29,000 million in policy liabilities and policy account balances, a decrease of approximately ¥25,000
million in impact of changes in policy liability discount rate (accumulated other comprehensive income (loss)) in the consolidated balance sheet as of the transition date. These are due to changes in the applicable discount rate resulting from fluctuation in interest rate (mainly a decline in Japanese yen interest rates)
. In addition, the effect of the adoption of these updates on the Company and its subsidiaries’
results of operations and
financial position will be an increase of approximately ¥10,000 million in deferred policy acquisition costs (other asset
s
), a decrease of approximately ¥51,000 million in policy liabilities and policy account balances, an increase of approximately ¥38,000 million in impact of changes in policy liability discount rate (accumulated other comprehensive income (loss)), and an increase of approximately ¥6,000 million in retained earnings in the consolidated balance sheet, and a decrease of approximately ¥5,000 million in life insurance costs in the consolidated statement of income as of March 31, 2022.
These are due mainly to changes in the applicable discount rate resulting from fluctuation in interest rate (mainly an increase in US dollar interest rates), and a change in the amortization period of deferred policy acquisition costs.
Furthermore, the effect of the adoption of these updates on the Company and its subsidiaries’
results of operations and
financial position will be an increase of approximately ¥24,000 million in deferred policy acquisition costs (other asset
s
), a decrease of approximately ¥234,000 million in policy liabilities and policy account balances, an increase of approximately ¥165,000 million in impact of changes in policy liability discount rate (accumulated other comprehensive income (loss)), and an increase of approximately ¥23,000 million in retained earnings in the consolidated balance sheet, and a decrease of approximately ¥25,000 million in life insurance costs in the consolidated statement of income as of March 31, 2023.
These are due mainly to changes in the applicable discount rate resulting from fluctuation in interest rate (mainly an increase in US dollar interest rates), reversals of policy liability and policy account balance with updating net insurance premium rates due to discrepancies between actual benefits paid and forecasts, and change in the amortization period of deferred policy acquisition costs.
The Company and its subsidiaries will expand their disclosures that are required by these updates, regarding long-duration contracts.
In March 2020, Accounting Standards Update
2020-04
(“Facilitation of the Effects of Reference Rate Reform on Financial Reporting”—ASC 848 (“Reference Rate Reform”)) was issued, and related amendments were issued thereafter. These updates provide companies with optional expedients and exceptions to contract, hedging relationships and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. These updates are effective as of March 12, 2020 through December 31, 2024. The Company and its subsidiaries adopted certain optional expedients to relevant contract modifications and hedge accounting relationships from the three months ended
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
December 31, 2021, mainly in order to ease the administrative burden of accounting for contract modifications that replace a reference rate impacted by reference rate reform. The adoption of these updates had no material impact on the Company and its subsidiaries’ results of operations or financial position. Also, we do not expect a material impact in future reporting periods.
In July 2021, Accounting Standards Update
2021-05
(“Lessors—Certain Leases with Variable Lease Payments”) was issued as the amendments to ASC 842 (“Leases”). This update requires that lessors classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if classifying the lease as a sales-type lease or a direct financing lease would result in the recognition of a selling loss at lease commencement. The Company and its subsidiaries adopted this update on April 1, 2022 using the option to apply the amendments prospectively to leases that commence or are modified on or after the date that an entity first applies the amendments. The adoption of this update had no material effect on the Company and its subsidiaries’ results of operations or financial position.
In October 2021, Accounting Standards Update
2021-08
(“Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”—ASC 805 (“Business Combinations”)) was issued. This update requires us to apply ASC 606 (“Revenue from Contracts with Customers”) to recognize and measure contract assets and contract liabilities acquired in a business combination. Although the Company and its subsidiaries planned to adopt this update on April 1, 2023, the Company and its subsidiaries adopted this update early from the three months ended December 31, 2022, after considering the adoption of this update to newly acquired companies. The Company and its subsidiaries adopted this update retrospectively to business combinations for which the acquisition date occurred on or after April 1, 2022, and there were no accounting treatment applicable to this update for the three months ended June 30, 2022 and September 30, 2022. The adoption of this update had no material effect on the Company and its subsidiaries’ results of operations or financial position.
In November 2021, Accounting Standards Update
2021-10
(“Disclosures by Business Entities about Government Assistance”—ASC 832 (“Government Assistance”)) was issued. This update requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy to other accounting guidance. The annual disclosure shall include; (1) information about the nature of the transactions and the related accounting policy used to account for the transactions, (2) the line items on the consolidated balance sheet and consolidated income statement that are affected by the transactions, and the amounts applicable to each financial statement line item, and (3) significant terms and conditions of the transactions, including commitments and contingencies. The Company and its subsidiaries prospectively adopted this update on April 1, 2022 and included the relevant disclosures from March 31, 2023. The adoption of this update had no material effect on the Company and its subsidiaries’ results of operations or financial position. For further information, see Note 6 “Leases.”
In March 2022, Accounting Standards Update
2022-02
(“Troubled Debt Restructurings and Vintage Disclosures”—ASC 326 (“Financial Instruments—Credit Losses”)) was issued. This update eliminates the recognition and measurement guidance on troubled debt restructuring (hereinafter, “TDR”) and, instead, requires that an entity evaluate whether certain modifications on contractual terms made to borrowers experiencing financial difficulty should be accounted for as a new loan or a continuation of an existing loan. Additionally, enhanced disclosures for certain modifications made to borrowers experiencing financial difficulty are newly required. In addition, this update also requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic
326-20
(“Financial Instruments—Credit Losses—Measured at Amortized Cost”) in the existing vintage disclosure, where an entity discloses the amortized cost basis by credit quality indicator and class of financing receivable by year of origination. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022 and early adoption is permitted. This update should be applied prospectively from the beginning of the fiscal year of
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ORIX Corporation and Subsidiaries
adoption, including interim periods, except for the optional transition method related to the recognition and measurement of TDRs for which an entity may elect to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company and its subsidiaries will adopt this update on April 1, 2023. The Company and its subsidiaries expect that the adoption of this update will have no material impact on the Company and its subsidiaries’ results of operations or financial position. The Company and its subsidiaries will expand their disclosures that are required by this update.
In June 2022, Accounting Standards Update
2022-03
(“Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”—ASC 820 (“Fair Value Measurement”)) was issued. This update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value of an equity security. This update also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. This update also requires new disclosures for equity securities subject to contractual sale restrictions. The new disclosure shall include; (1) the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet, (2) the nature and remaining duration of the restrictions, and (3) the circumstances that could cause a lapse in the restrictions. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. This update should be applied prospectively for fair value measurement and disclosures from the adoption of the amendments. The Company and its subsidiaries will adopt this update on April 1, 2024. The Company and its subsidiaries are currently evaluating the effect that the adoption of this update will have on the Company and its subsidiaries’ results of operations or financial position, as well as changes in disclosures required by this update.
In September 2022, Accounting Standards Update
2022-04
(“Disclosure of Supplier Finance Program Obligations”—ASC 405-50 (“Liabilities—Supplier Finance Programs”)) was issued. This update requires that a buyer in a supplier finance program disclose sufficient information about the program in mainly annual disclosure, to allow a user of financial statements to understand the program’s nature, activities during the period, changes from period to period, and potential magnitude. The disclosure shall include (1) the key terms of the program and (2) the obligations that the buyer has confirmed as valid to the finance provider or intermediary. This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company and its subsidiaries will adopt this update on April 1, 2023. Since this update relates to disclosure requirements, the adoption will not have an effect on the Company and its subsidiaries’ results of operations or financial position.
In March 2023, Accounting Standards Update
2023-01
(“Common Control Arrangements”) was issued as the amendments to ASC 842 (“Leases”). This update requires that leasehold improvements associated with common control leases are amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term), as long as the lessee controls the use of the underlying asset (the leased asset) through a lease. And this update provides a practical expedient for private companies to determine whether a related party arrangement between entities under common control is a lease, or to determine the classification of and accounting for that lease when the arrangement is a lease. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. The Company and its subsidiaries will adopt this update on April 1, 2024. The Company and its subsidiaries are currently evaluating the effect that the adoption of this update will have on the Company and its subsidiaries’ results of operations or financial position.
In March 2023, Accounting Standards Update
2023-02
(“Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method”) was issued as the amendments to ASC 323 (“Investments—Equity Method and Joint Ventures”). This update expands the investments eligible to elect to
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
apply the proportional amortization method to tax equity investments in similar tax credit programs other than the
low-income
housing tax credit (LIHTC). Disclosures are required on an interim and annual basis for tax equity investments in tax credit programs for which the proportional amortization method (including investments within that elected program that do not meet the conditions to apply the proportional amortization method) is elected. This update is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company and its subsidiaries will adopt this update on April 1, 2024. The Company and its subsidiaries are currently evaluating the effect that the adoption of this update will have on the Company and its subsidiaries’ results of operations or financial position, as well as changes in disclosures required by this update.
2. Fair Value Measurements
The Company and its subsidiaries classify and prioritize inputs used in valuation techniques to measure fair value into the following three levels:

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

The Company and its subsidiaries differentiate between those assets and liabilities required to be carried at fair value at every reporting period (“recurring”) and those assets and liabilities that are only required to be adjusted to fair value under certain circumstances (“nonrecurring”). The Company and its subsidiaries mainly measure certain loans held for sale, trading debt securities,
available-for-sale
debt securities, certain equity securities, certain investment in affiliates, derivatives, certain reinsurance recoverables, and variable annuity and variable life insurance contracts at fair value on a recurring basis.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The following tables present recorded amounts of major financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and 2023:
March 31, 2022

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
March 31, 2023

|  | Millions of yen |
|  | Total Carrying Value in Consolidated Balance Sheets |  |  | Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans held for sale*1 |  | ¥ | 197,041 |  |  | ¥ | 0 |  |  | ¥ | 23,192 |  |  | ¥ | 173,849 |
Trading debt securities |  |  | 2,179 |  |  |  | 0 |  |  |  | 2,179 |  |  |  | 0 |
Available-for-sale debt securities: |  |  | 2,234,608 |  |  |  | 4,334 |  |  |  | 1,986,672 |  |  |  | 243,602 |
Japanese and foreign government bond securities*2 |  |  | 801,295 |  |  |  | 3,004 |  |  |  | 798,291 |  |  |  | 0 |
Japanese prefectural and foreign municipal bond securities |  |  | 369,246 |  |  |  | 0 |  |  |  | 365,915 |  |  |  | 3,331 |
Corporate debt securities*3 |  |  | 784,388 |  |  |  | 1,330 |  |  |  | 778,321 |  |  |  | 4,737 |
CMBS and RMBS in the Americas |  |  | 43,173 |  |  |  | 0 |  |  |  | 43,173 |  |  |  | 0 |
Other asset-backed securities and debt securities |  |  | 236,506 |  |  |  | 0 |  |  |  | 972 |  |  |  | 235,534 |
Equity securities*4*5 |  |  | 379,236 |  |  |  | 105,646 |  |  |  | 133,027 |  |  |  | 140,563 |
Certain investment in affiliates*6 |  |  | 2,511 |  |  |  | 0 |  |  |  | 0 |  |  |  | 2,511 |
Derivative assets: |  |  | 72,398 |  |  |  | 203 |  |  |  | 65,377 |  |  |  | 6,818 |
Interest rate swap agreements |  |  | 22,798 |  |  |  | 0 |  |  |  | 22,798 |  |  |  | 0 |
Options held/written and other |  |  | 30,487 |  |  |  | 0 |  |  |  | 23,669 |  |  |  | 6,818 |
Futures, foreign exchange contracts |  |  | 17,785 |  |  |  | 203 |  |  |  | 17,582 |  |  |  | 0 |
Foreign currency swap agreements |  |  | 1,325 |  |  |  | 0 |  |  |  | 1,325 |  |  |  | 0 |
Credit derivatives held |  |  | 3 |  |  |  | 0 |  |  |  | 3 |  |  |  | 0 |
Netting*7 |  |  | (22,052 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Net derivative assets |  |  | 50,346 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other assets: |  |  | 4,676 |  |  |  | 0 |  |  |  | 0 |  |  |  | 4,676 |
Reinsurance recoverables*8 |  |  | 4,676 |  |  |  | 0 |  |  |  | 0 |  |  |  | 4,676 |
Total |  | ¥ | 2,892,649 |  |  | ¥ | 110,183 |  |  | ¥ | 2,210,447 |  |  | ¥ | 572,019 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative liabilities: |  | ¥ | 71,366 |  |  | ¥ | 1,484 |  |  | ¥ | 55,240 |  |  | ¥ | 14,642 |
Interest rate swap agreements |  |  | 3,319 |  |  |  | 0 |  |  |  | 3,319 |  |  |  | 0 |
Options held/written and other |  |  | 28,423 |  |  |  | 0 |  |  |  | 13,781 |  |  |  | 14,642 |
Futures, foreign exchange contracts |  |  | 37,195 |  |  |  | 1,484 |  |  |  | 35,711 |  |  |  | 0 |
Foreign currency swap agreements |  |  | 2,426 |  |  |  | 0 |  |  |  | 2,426 |  |  |  | 0 |
Credit derivatives written |  |  | 3 |  |  |  | 0 |  |  |  | 3 |  |  |  | 0 |
Netting*7 |  |  | (22,052 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Net derivative Liabilities |  |  | 49,314 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Policy Liabilities and Policy Account Balances: |  |  | 163,734 |  |  |  | 0 |  |  |  | 0 |  |  |  | 163,734 |
Variable annuity and variable life insurance contracts*9 |  |  | 163,734 |  |  |  | 0 |  |  |  | 0 |  |  |  | 163,734 |
Total |  | ¥ | 235,100 |  |  | ¥ | 1,484 |  |  | ¥ | 55,240 |  |  | ¥ | 178,376 |

*1 | A certain subsidiary elected the fair value option on certain loans held for sale. These loans are multi-family and seniors housing loans and are sold to Federal National Mortgage Association (“Fannie Mae”), Federal

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

| Home Loan Mortgage Corporation (“Freddie Mac”) and institutional investors. Included in “Other (income) and expense” in the consolidated statements of income were losses of ¥3,260 million, ¥2,982 million and ¥2,429 million from the change in the fair value of the loans for fiscal 2021, 2022 and 2023, respectively. No gains or losses were recognized in earnings during fiscal 2021, 2022 and 2023 attributable to changes in instrument-specific credit risk. The amounts of aggregate unpaid principal balance and aggregate fair value of the loans held for sale as of March 31, 2022, were ¥151,672 million and ¥ 151,601 million, respectively, and the amount of the aggregate fair value was less than the amount of aggregate unpaid principal balance by ¥71 million. The amounts of aggregate unpaid principal balance and aggregate fair value of the loans held for sale as of March 31, 2023, were ¥199,674 million and ¥197,041 million, respectively, and the amount of the aggregate fair value was less than the amount of aggregate unpaid principal balance by ¥2,633 million. As of March 31, 2022 and 2023, there were no loans that are 90 days or more past due or, in non-accrual status.

*2 | A certain subsidiary elected the fair value option for investments in foreign government bond securities included in available-for-sale debt securities. Included in “Gains on investment securities and dividends” in the consolidated statements of income were a loss of ¥28 million, a gain of ¥51 million and a loss of ¥11 million from the change in the fair value of those investments for fiscal 2021, 2022 and 2023, respectively. There were no such investments elected the fair value option as of March 31, 2022. The amount of aggregate fair value elected the fair value option was ¥237 million as of March 31, 2023.

*3 | A certain subsidiary elected the fair value option for investments in foreign corporate debt securities included in available-for-sale debt securities. Included in “Gains on investment securities and dividends” in the consolidated statements of income were a gain of ¥1,080 million and losses of ¥365 million and ¥516 million from the change in the fair value of those investments for fiscal 2021, 2022 and 2023, respectively. The amounts of aggregate fair value elected the fair value option were ¥7,644 million and ¥6,605 million as of March 31, 2022 and 2023, respectively.

*4 | Certain subsidiaries elected the fair value option for certain investments in investment funds, and others included in equity securities. Included in “Gains on investment securities and dividends” and “Life insurance premiums and related investment income” in the consolidated statements of income were gains of ¥3,187 million, ¥1,199 million and ¥1,066 million from the change in the fair value of those investments for fiscal 2021, 2022 and 2023, respectively. The amounts of aggregate fair value elected the fair value option were ¥11,709 million and ¥16,032 million as of March 31, 2022 and 2023, respectively.

*5 | The amounts of investment funds measured at net asset value per share which are not included in the above tables were ¥25,999 million and ¥51,263 million as of March 31, 2022 and 2023, respectively.

*6 | A certain subsidiary elected the fair value option for certain investment in affiliates. No gains or losses were recognized in earnings from the change in the fair value of those investments for fiscal 2021, 2022 and 2023. There were no such investments elected the fair value option as of March 31, 2022. The amounts of aggregate fair value elected the fair value option were ¥2,511 million as of March 31, 2023.

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

*8 | Certain subsidiaries elected the fair value option for certain reinsurance contracts held. The fair value of the reinsurance contracts elected for the fair value option in other assets were ¥5,214 million and ¥4,676 million as of March 31, 2022 and 2023, respectively. For the effect of changes in the fair value of those reinsurance contracts on earnings for fiscal 2021, 2022 and 2023, see Note 23 “Life Insurance Operations.”

*9 | Certain subsidiaries elected the fair value option for the entire variable annuity and variable life insurance contracts held. The fair value of the variable annuity and variable life insurance contracts elected for the fair value option in policy liabilities and policy account balances were ¥198,905 million and ¥163,734 million as of March 31, 2022 and 2023, respectively. For the effect of changes in the fair value of the variable annuity and variable life insurance contracts on earnings for fiscal 2021, 2022 and 2023, see Note 23 “Life Insurance Operations.”

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The following tables present the reconciliation of financial assets and liabilities (net) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) in fiscal 2021, 2022 and 2023:
2021

|  | Millions of yen |
|  | Balance at April 1, 2020 |  |  | Gains or losses (realized/unrealized) |  |  | Purchases*3 |  |  | Sales |  |  | Settlements*4 |  |  | Transfers in and/ or out of Level 3 (net) |  |  | Balance at March 31, 2021 |  |  | Change in unrealized gains or losses included in earnings for assets and liabilities still held at March 31, 2021*1 |  |  | Change in unrealized gains or losses included in other comprehensive income for assets and liabilities still held at March 31, 2021*2 |
| Included in earnings*1 |  |  | Included in other comprehensive income*2 |  |  | Total |
Available-for-sale debt securities |  | ¥ | 88,353 |  |  | ¥ | (1,065 | ) |  | ¥ | 14,870 |  |  | ¥ | 13,805 |  |  | ¥ | 51,270 |  |  | ¥ | (12,890 | ) |  | ¥ | (5,187 | ) |  | ¥ | (1,894 | ) |  | ¥ | 133,457 |  |  | ¥ | (1,228 | ) |  | ¥ | 14,729 |
Japanese prefectural and foreign municipal bond securities |  |  | 2,832 |  |  |  | (115 | ) |  |  | 44 |  |  |  | (71 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 2,761 |  |  |  | (115 | ) |  |  | 44 |
Corporate debt securities |  |  | 3,994 |  |  |  | 0 |  |  |  | 1 |  |  |  | 1 |  |  |  | 0 |  |  |  | 0 |  |  |  | (974 | ) |  |  | (2,000 | ) |  |  | 1,021 |  |  |  | 0 |  |  |  | 1 |
Other asset-backed securities and debt securities |  |  | 81,527 |  |  |  | (950 | ) |  |  | 14,825 |  |  |  | 13,875 |  |  |  | 51,270 |  |  |  | (12,890 | ) |  |  | (4,213 | ) |  |  | 106 |  |  |  | 129,675 |  |  |  | (1,113 | ) |  |  | 14,684 |
Equity securities |  |  | 83,901 |  |  |  | 14,304 |  |  |  | 1,765 |  |  |  | 16,069 |  |  |  | 2,001 |  |  |  | (4,718 | ) |  |  | (5,518 | ) |  |  | (325 | ) |  |  | 91,410 |  |  |  | 14,042 |  |  |  | 1,769 |
Investment funds |  |  | 83,901 |  |  |  | 14,304 |  |  |  | 1,765 |  |  |  | 16,069 |  |  |  | 2,001 |  |  |  | (4,718 | ) |  |  | (5,518 | ) |  |  | (325 | ) |  |  | 91,410 |  |  |  | 14,042 |  |  |  | 1,769 |
Derivative assets and liabilities (net) |  |  | 19,230 |  |  |  | (5,474 | ) |  |  | 34 |  |  |  | (5,440 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 13,790 |  |  |  | (5,474 | ) |  |  | 34 |
Options held/written and other |  |  | 19,230 |  |  |  | (5,474 | ) |  |  | 34 |  |  |  | (5,440 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 13,790 |  |  |  | (5,474 | ) |  |  | 34 |
Other asset |  |  | 18,206 |  |  |  | (14,201 | ) |  |  | 0 |  |  |  | (14,201 | ) |  |  | 2,713 |  |  |  | 0 |  |  |  | (421 | ) |  |  | 0 |  |  |  | 6,297 |  |  |  | (14,201 | ) |  |  | 0 |
Reinsurance recoverables*5 |  |  | 18,206 |  |  |  | (14,201 | ) |  |  | 0 |  |  |  | (14,201 | ) |  |  | 2,713 |  |  |  | 0 |  |  |  | (421 | ) |  |  | 0 |  |  |  | 6,297 |  |  |  | (14,201 | ) |  |  | 0 |
Policy Liabilities and Policy Account Balances |  |  | 300,739 |  |  |  | (42,066 | ) |  |  | (1,248 | ) |  |  | (43,314 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (77,631 | ) |  |  | 0 |  |  |  | 266,422 |  |  |  | (42,066 | ) |  |  | (1,248 | )
Variable annuity and variable life insurance contracts*6 |  |  | 300,739 |  |  |  | (42,066 | ) |  |  | (1,248 | ) |  |  | (43,314 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (77,631 | ) |  |  | 0 |  |  |  | 266,422 |  |  |  | (42,066 | ) |  |  | (1,248 | )

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
2022

|  | Millions of yen |
|  | Balance at April 1, 2021 |  |  | Gains or losses (realized/unrealized) |  |  | Purchases*3 |  |  | Sales |  |  | Settlements*4 |  |  | Transfers in and/ or out of Level 3 (net) |  |  | Balance at March 31, 2022 |  |  | Change in unrealized gains or losses included in earnings for assets and liabilities still held at March 31, 2022*1 |  |  | Change in unrealized gains or losses included in other comprehensive income for assets and liabilities still held at March 31, 2022*2 |
| Included in earnings*1 |  |  | Included in other comprehensive income*2 |  |  | Total |
Available-for-sale debt securities |  | ¥ | 133,457 |  |  | ¥ | 7,041 |  |  | ¥ | 6,941 |  |  | ¥ | 13,982 |  |  | ¥ | 51,644 |  |  | ¥ | (9,465 | ) |  | ¥ | (48,558 | ) |  | ¥ | 0 |  |  | ¥ | 141,060 |  |  | ¥ | 2,445 |  |  | ¥ | 7,116 |
Japanese prefectural and foreign municipal bond securities |  |  | 2,761 |  |  |  | 0 |  |  |  | 292 |  |  |  | 292 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 3,053 |  |  |  | 0 |  |  |  | 291 |
Corporate debt securities |  |  | 1,021 |  |  |  | 0 |  |  |  | (1 | ) |  |  | (1 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (323 | ) |  |  | 0 |  |  |  | 697 |  |  |  | 0 |  |  |  | (1 | )
Other asset-backed securities and debt securities |  |  | 129,675 |  |  |  | 7,041 |  |  |  | 6,650 |  |  |  | 13,691 |  |  |  | 51,644 |  |  |  | (9,465 | ) |  |  | (48,235 | ) |  |  | 0 |  |  |  | 137,310 |  |  |  | 2,445 |  |  |  | 6,826 |
Equity securities |  |  | 91,410 |  |  |  | 16,350 |  |  |  | 8,779 |  |  |  | 25,129 |  |  |  | 24,606 |  |  |  | (26,795 | ) |  |  | (768 | ) |  |  | (610 | ) |  |  | 112,972 |  |  |  | 4,555 |  |  |  | 8,743 |
Investment funds, and others |  |  | 91,410 |  |  |  | 16,350 |  |  |  | 8,779 |  |  |  | 25,129 |  |  |  | 24,606 |  |  |  | (26,795 | ) |  |  | (768 | ) |  |  | (610 | ) |  |  | 112,972 |  |  |  | 4,555 |  |  |  | 8,743 |
Derivative assets and liabilities (net) |  |  | 13,790 |  |  |  | (18,340 | ) |  |  | 778 |  |  |  | (17,562 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (3,772 | ) |  |  | (18,340 | ) |  |  | 778 |
Options held/written and other |  |  | 13,790 |  |  |  | (18,340 | ) |  |  | 778 |  |  |  | (17,562 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (3,772 | ) |  |  | (18,340 | ) |  |  | 778 |
Other asset |  |  | 6,297 |  |  |  | (2,146 | ) |  |  | 0 |  |  |  | (2,146 | ) |  |  | 1,835 |  |  |  | 0 |  |  |  | (772 | ) |  |  | 0 |  |  |  | 5,214 |  |  |  | (2,146 | ) |  |  | 0 |
Reinsurance recoverables*5 |  |  | 6,297 |  |  |  | (2,146 | ) |  |  | 0 |  |  |  | (2,146 | ) |  |  | 1,835 |  |  |  | 0 |  |  |  | (772 | ) |  |  | 0 |  |  |  | 5,214 |  |  |  | (2,146 | ) |  |  | 0 |
Policy Liabilities and Policy Account Balances |  |  | 266,422 |  |  |  | (1,743 | ) |  |  | (467 | ) |  |  | (2,210 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (69,727 | ) |  |  | 0 |  |  |  | 198,905 |  |  |  | (1,743 | ) |  |  | (467 | )
Variable annuity and variable life insurance contracts*6 |  |  | 266,422 |  |  |  | (1,743 | ) |  |  | (467 | ) |  |  | (2,210 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (69,727 | ) |  |  | 0 |  |  |  | 198,905 |  |  |  | (1,743 | ) |  |  | (467 | )

2023

|  | Millions of yen |
| Balance at April 1, 2022 |  |  | Gains or losses (realized/unrealized) |  |  | Purchases*3 |  |  | Sales |  |  | Settlements*4 |  |  | Transfers in and/ or out of Level 3 (net) |  |  | Balance at March 31, 2023 |  |  | Change in unrealized gains or losses included in earnings for assets and liabilities still held at March 31, 2023*1 |  |  | Change in unrealized gains or losses included in other comprehensive income for assets and liabilities still held at March 31, 2023*2 |
| Included in earnings*1 |  |  | Included in other comprehensive income*2 |  |  | Total |
Loans held for sale |  | ¥ | 0 |  |  | ¥ | 18 |  |  | ¥ | 1,095 |  |  | ¥ | 1,113 |  |  | ¥ | 2,457 |  |  | ¥ | (5,776 | ) |  | ¥ | 0 |  |  | ¥ | 176,055 |  |  | ¥ | 173,849 |  |  | ¥ | 18 |  |  | ¥ | 1,095 |
Available-for-sale debt securities |  |  | 141,060 |  |  |  | 3,788 |  |  |  | 1,238 |  |  |  | 5,026 |  |  |  | 116,175 |  |  |  | (9,100 | ) |  |  | (9,559 | ) |  |  | 0 |  |  |  | 243,602 |  |  |  | 3,458 |  |  |  | 1,713 |
Japanese prefectural and foreign municipal bond securities |  |  | 3,053 |  |  |  | 0 |  |  |  | 278 |  |  |  | 278 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 3,331 |  |  |  | 0 |  |  |  | 278 |
Corporate debt securities |  |  | 697 |  |  |  | 89 |  |  |  | (1 | ) |  |  | 88 |  |  |  | 5,922 |  |  |  | (1,554 | ) |  |  | (416 | ) |  |  | 0 |  |  |  | 4,737 |  |  |  | (16 | ) |  |  | (0 | )
Other asset-backed securities and debt securities |  |  | 137,310 |  |  |  | 3,699 |  |  |  | 961 |  |  |  | 4,660 |  |  |  | 110,253 |  |  |  | (7,546 | ) |  |  | (9,143 | ) |  |  | 0 |  |  |  | 235,534 |  |  |  | 3,474 |  |  |  | 1,435 |
Equity securities |  |  | 112,972 |  |  |  | 22,823 |  |  |  | 9,642 |  |  |  | 32,465 |  |  |  | 4,685 |  |  |  | (7,223 | ) |  |  | (2,336 | ) |  |  | 0 |  |  |  | 140,563 |  |  |  | 22,113 |  |  |  | 9,509 |
Investment funds, and others |  |  | 112,972 |  |  |  | 22,823 |  |  |  | 9,642 |  |  |  | 32,465 |  |  |  | 4,685 |  |  |  | (7,223 | ) |  |  | (2,336 | ) |  |  | 0 |  |  |  | 140,563 |  |  |  | 22,113 |  |  |  | 9,509 |
Certain investment in affiliates |  |  | 0 |  |  |  | 0 |  |  |  | 5 |  |  |  | 5 |  |  |  | 2,506 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 2,511 |  |  |  | 0 |  |  |  | 5 |
Derivative assets and liabilities (net) |  |  | (3,772 | ) |  |  | (2,845 | ) |  |  | (1,207 | ) |  |  | (4,052 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (7,824 | ) |  |  | (2,845 | ) |  |  | (1,207 | )
Options held/written and other |  |  | (3,772 | ) |  |  | (2,845 | ) |  |  | (1,207 | ) |  |  | (4,052 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (7,824 | ) |  |  | (2,845 | ) |  |  | (1,207 | )
Other asset |  |  | 5,214 |  |  |  | (1,286 | ) |  |  | 0 |  |  |  | (1,286 | ) |  |  | 1,153 |  |  |  | 0 |  |  |  | (405 | ) |  |  | 0 |  |  |  | 4,676 |  |  |  | (1,286 | ) |  |  | 0 |
Reinsurance recoverables*5 |  |  | 5,214 |  |  |  | (1,286 | ) |  |  | 0 |  |  |  | (1,286 | ) |  |  | 1,153 |  |  |  | 0 |  |  |  | (405 | ) |  |  | 0 |  |  |  | 4,676 |  |  |  | (1,286 | ) |  |  | 0 |
Policy Liabilities and Policy Account Balances |  |  | 198,905 |  |  |  | 6,343 |  |  |  | 74 |  |  |  | 6,417 |  |  |  | 0 |  |  |  | 0 |  |  |  | (28,754 | ) |  |  | 0 |  |  |  | 163,734 |  |  |  | 6,343 |  |  |  | 74 |
Variable annuity and variable life insurance contracts*6 |  |  | 198,905 |  |  |  | 6,343 |  |  |  | 74 |  |  |  | 6,417 |  |  |  | 0 |  |  |  | 0 |  |  |  | (28,754 | ) |  |  | 0 |  |  |  | 163,734 |  |  |  | 6,343 |  |  |  | 74 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

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

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

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

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

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

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

In fiscal 2021, corporate debt securities totaling ¥2,000 million and investment funds totaling ¥325 million were transferred from Level 3 to Level 2, since the inputs became observable. In addition, other asset-backed securities and debt securities totaling ¥106 million were transferred from Level 2 to Level 3, since the inputs became unobservable.
In fiscal 2022, investment funds, and others totaling ¥610 million were transferred from Level 3 to Level 1, since the inputs became observable.
In fiscal 2023, loans held for sale totaling ¥176,055
million were transferred from Level 2 to Level 3, since the inputs became unobservable.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The following tables present recorded amounts of assets measured at fair value on a nonrecurring basis during fiscal 2022 and 2023. These assets are measured at fair value on a nonrecurring basis mainly to recognize impairment:
2022

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

2023

|  | Millions of yen |
|  | Total Carrying Value in Consolidated Balance Sheets |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans held for sale |  | ¥ | 1,139 |  |  | ¥ | 0 |  |  | ¥ | 1,139 |  |  | ¥ | 0 |
Real estate collateral-dependent loans (net of allowance for credit losses) |  |  | 5,970 |  |  |  | 0 |  |  |  | 0 |  |  |  | 5,970 |
Investment in operating leases, property under facility operations, office facilities and other assets |  |  | 4,568 |  |  |  | 0 |  |  |  | 31 |  |  |  | 4,537 |
Certain equity securities |  |  | 11,794 |  |  |  | 0 |  |  |  | 11,794 |  |  |  | 0 |
Certain investment in affiliates |  |  | 4,013 |  |  |  | 3,587 |  |  |  | 0 |  |  |  | 426 |
|  | ¥ | 27,484 |  |  | ¥ | 3,587 |  |  | ¥ | 12,964 |  |  | ¥ | 10,933 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The following is a description of the main valuation methodologies used for assets and liabilities measured at fair
value
.
Loans held for sale
Certain loans, which the Company and its subsidiaries have the intent and ability to sell to outside parties in the foreseeable future, are considered
held-for-sale.
The loans held for sale in the Americas are classified as Level 2, if the Company and its subsidiaries measure their fair value based on a market approach using inputs other than quoted prices that are observable for the assets such as treasury rate, swap rate and market spread. The loans held for sale in the Americas are classified as Level 3, if the Company and its subsidiaries measure their fair value based on discounted cash flow methodologies using inputs that are unobservable in the market.
Real estate collateral-dependent loans
The allowance for credit losses for large balance
non-homogeneous
loans is individually evaluated based on the present value of expected future cash flows, the loan’s observable market price or the fair value of the collateral securing the loans if the loans are collateral-dependent. According to ASC 820 (“Fair Value Measurement”), measurement for loans with deterioration in credit quality determined using a present value technique is not considered a fair value measurement. However, measurement for loans with deterioration in credit quality determined using the loan’s observable market price or the fair value of the collateral securing the collateral-dependent loans are fair value measurements and are subject to the disclosure requirements for nonrecurring fair value measurements.
The Company and its subsidiaries determine the fair value of the real estate collateral of real estate collateral-dependent loans using appraisals prepared by independent third party appraisers or our own staff of qualified appraisers based on recent transactions involving sales of similar assets or other valuation techniques such as discounted cash flows methodologies using future cash flows estimated to be generated from operation of the existing assets or completion of development projects, as appropriate. The Company and its subsidiaries generally obtain a new appraisal once a fiscal year. In addition, the Company and its subsidiaries periodically monitor circumstances of the real estate collateral and then obtain a new appraisal in situations involving a significant change in economic and/or physical conditions, which may materially affect the fair value of the collateral. Real estate collateral-dependent loans whose fair values are estimated using appraisals of the underlying collateral based on these valuation techniques are classified as Level 3 because such appraisals involve unobservable inputs. These unobservable inputs contain discount rates and cap rates as well as future cash flows estimated to be generated from real estate collateral. An increase (decrease) in the discount rate or cap rate and a decrease (increase) in the estimated future cash flows would result in a decrease (increase) in the fair value of real estate collateral-dependent loans.
Investment in operating leases, property under facility operations, office facilities and other assets, and land and buildings undeveloped or under construction
Investment in operating leases measured at fair value is mostly real estate. The Company and its subsidiaries determine the fair value of investment in operating leases, property under facility operations, office facilities and other assets, and land and buildings undeveloped or under construction using appraisals prepared by independent third party appraisers or the Company’s own staff of qualified appraisers, and others based on recent transactions involving sales of similar assets or other valuation techniques such as discounted cash flow methodologies using future cash flows estimated to be generated from operation of the existing assets or completion of development projects, as appropriate. The Company and its subsidiaries classified these assets as Level 3 because such
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
appraisals involve unobservable inputs. These unobservable inputs contain discount rates as well as future cash flows estimated to be generated from the assets or projects. An increase (decrease) in the discount rate and a decrease (increase) in the estimated future cash flows would result in a decrease (increase) in the fair value of investment in operating leases and property under facility operations and land and buildings undeveloped or under construction.
Movable properties owned by a certain subsidiary are classified as Level 2, because fair value measurement is based on observable inputs other than quoted prices included within Level 1, such as prices for similar assets.
Trading debt securities and
available-for-sale
debt securities
If active market prices are available, fair value measurement is based on quoted active market prices and, accordingly, these securities are classified as Level 1. If active market prices are not available, fair value measurement is based on observable inputs other than quoted prices included within Level 1, such as prices for similar assets and accordingly these securities are classified as Level 2. If market prices are not available and there are no observable inputs, then fair value is estimated by using valuation models such as discounted cash flow methodologies and broker quotes. Such securities are classified as Level 3, as the valuation models and broker quotes are based on inputs that are unobservable in the market. If fair value is based on broker quotes, the Company and its subsidiaries check the validity of received prices based on comparison to prices of other similar assets and market data such as relevant benchmark indices.
The Company and its subsidiaries classified CMBS and RMBS in the Americas and other asset-backed securities as Level 2 if the inputs such as trading price and/or bid price are observable. The Company and its subsidiaries classified CMBS and RMBS in the Americas and other asset-backed securities as Level 3 if the Company and subsidiaries evaluate the fair value based on the unobservable inputs. In determining whether the inputs are observable or unobservable, the Company and its subsidiaries evaluate various factors such as the lack of recent transactions, price quotations that are not based on current information or vary substantially over time or among market makers, a significant increase in implied risk premium, a wide
bid-ask
spread, significant decline in new issuances, little or no public information (e.g. a
principal-to-principal
market) and other factors. With respect to certain CMBS and RMBS in the Americas and other asset-backed securities, the Company and its subsidiaries classified these securities that were measured at fair value based on the observable inputs such as trading price and/or bit price as Level 2. But for those securities that lacked observable trades because they are older vintage or below investment grade securities, the Company and its subsidiaries limit the reliance on independent pricing service vendors and brokers. As a result, the Company and its subsidiaries established internally developed pricing models using valuation techniques such as discounted cash flow model using Level 3 inputs in order to estimate fair value of these debt securities and classified them as Level 3. Under the models, the Company and its subsidiaries use anticipated cash flows of the security discounted at a risk-adjusted discount rate that incorporates our estimate of credit risk and liquidity risk that a market participant would consider. The cash flows are estimated based on a number of assumptions such as default rate and prepayment speed, as well as seniority of the security. An increase (decrease) in the discount rate or default rate would result in a decrease (increase) in the fair value of CMBS and RMBS in the Americas and other asset-backed securities.
Equity securities and investment in affiliates
If active market prices are available, fair value measurement is based on quoted active market prices and, accordingly, these securities are classified as Level 1. If active market prices are not available, fair value measurement is based on observable inputs other than quoted prices included within Level 1, such as prices for similar assets and accordingly these securities are classified as Level 2. In addition, a certain Americas subsidiary
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
measures its investments held by the investment companies which are owned by the subsidiary at fair value. These investment funds, certain equity securities and certain investment in affiliates are classified as Level 3, because fair value measurement is based on the combination of discounted cash flow methodologies and market multiple valuation methods, or broker quotes. Discounted cash flow methodologies use future cash flows to be generated from investees, weighted average cost of capital (WACC) and others. Market multiple valuation methods use earnings before interest, taxes, depreciation and amortization (EBITDA) multiples based on actual and projected cash flows, comparable peer companies, and comparable precedent transactions and others. Furthermore, certain subsidiaries elected the fair value option for investments in some funds. These investment funds for which the fair value option is elected are classified as level 3, because the subsidiaries measure their fair value using discounting to net asset value based on inputs that are unobservable in the market, or broker quotes. A certain subsidiary elected the fair value option for certain investment in affiliates. These investment in affiliates are classified as Level 3, because fair value measurement is based on discounted cash flow methodologies.
Derivatives
For exchange-traded derivatives, fair value is based on quoted market prices, and accordingly, classified as Level 1. For
non-exchange
traded derivatives, fair value is based on commonly used models and discounted cash flow methodologies. If the inputs used for these measurements including yield curves and volatilities, are observable, the Company and its subsidiaries classify it as Level 2. If the inputs are not observable, the Company and its subsidiaries classify it as Level 3. These unobservable inputs contain discount rates. An increase (decrease) in the discount rate would result in a decrease (increase) in the fair value of derivatives.
Reinsurance recoverables
Certain subsidiaries have elected the fair value option for certain reinsurance contracts related to variable annuity and variable life insurance contracts to partially offset the changes in fair value recognized in earnings of the policy liabilities and policy account balances attributable to the changes in the minimum guarantee risks of the variable annuity and variable life insurance contracts. These reinsurance contracts for which the fair value option is elected are classified as Level 3 because the subsidiaries measure their fair value using discounted cash flow methodologies based on inputs that are unobservable in the market.
Variable annuity and variable life insurance contracts
A certain subsidiary has elected the fair value option for the entire variable annuity and variable life insurance contracts held in order to match earnings recognized for changes in fair value of policy liabilities and policy account balances with the earnings recognized for gains or losses from the investment assets managed on behalf of variable annuity and variable life policyholders, derivative contracts and changes in fair value of reinsurance contracts. The changes in fair value of the variable annuity and variable life insurance contracts are linked to the fair value of the investment in securities managed on behalf of variable annuity and variable life policyholders. These securities consist mainly of equity securities traded in the market. In addition, variable annuity and variable life insurance contracts are exposed to the minimum guarantee risk, and the subsidiary adjusts the fair value of the underlying investments by incorporating changes in fair value of the minimum guarantee risk in the evaluation of the fair value of the entire variable annuity and variable life insurance contracts. The variable annuity and variable life insurance contracts for which the fair value option is elected are classified as Level 3 because the subsidiary measures the fair value using discounted cash flow methodologies based on inputs that are unobservable in the market.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Reporting units including goodwill
Certain reporting units including goodwill are classified as level 3, because fair value measurement is based on discounted cash flow methodologies and business enterprise value multiples methodologies using inputs that are unobservable in the market. Discounted cash flow methodologies use future cash flows to be generated, weighted average cost of capital (WACC) and others. Business enterprise value multiples methodologies use earnings before interest, taxes, depreciation and amortization (EBITDA) multiples based on comparable peer companies, comparable precedent transactions and others.
Intangible assets acquired in business combinations
Certain intangible assets acquired in business combinations are classified as level 3, because fair value measurement is based on discounted cash flow methodologies using inputs that are unobservable in the market. Discounted cash flow methodologies use future cash flows, weighted average cost
of capital (WACC) and others.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Information about Level 3 Fair Value Measurements
The following tables provide information about the valuation techniques and significant unobservable inputs used in the valuation of Level 3 assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and 2023.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(
Continued
)
ORIX Corporation and Subsidiaries

|  | March 31, 2023 |
|  | Millions of yen |  |  | Valuation technique(s) |  | Significant unobservable inputs |  | Range (Weighted average) |
|  | Fair value |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Loans held for sale |  | ¥ | 173,849 |  |  | Discounted cash flows |  | Discount rate |  |  | 8.0% – 10.0 % |
|  |  |  |  |  |  |  |  |  |  | (9.0 %) |
Available-for-sale debt securities: |  |  |  |  |  |  |  |  |  |  |  |
Japanese prefectural and foreign municipal bond securities |  |  | 3,331 |  |  | Appraisals/Broker quotes |  | — |  |  | — |
Corporate debt securities |  |  | 280 |  |  | Discounted cash flows |  | Discount rate |  |  | 0.4 % |
|  |  |  |  |  |  |  |  |  |  | (0.4 %) |
|  |  | 4,457 |  |  | Appraisals/Broker quotes |  | — |  |  | — |
Other asset-backed securities and debt securities |  |  | 29,165 |  |  | Discounted cash flows |  | Discount rate |  |  | 0.2% – 51.2 % |
|  |  |  |  |  |  |  |  |  |  | (8.9 %) |
|  |  |  |  |  |  |  | Probability of default |  |  | 1.9 % |
|  |  |  |  |  |  |  |  |  |  | (1.9 %) |
|  |  | 206,369 |  |  | Appraisals/Broker quotes |  | — |  |  | — |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |
Investment funds |  |  | 120,744 |  |  | Discounted cash flows |  | WACC |  |  | 11.9% – 26.4 % |
|  |  |  |  |  |  |  |  |  |  | (17.2 %) |
|  |  |  |  |  |  |  | EV/Terminal EBITDA multiple |  |  | 7.5x- 12.0 x |
|  |  |  |  |  |  |  |  |  |  | (9.5 x) |
|  |  |  |  |  | Market multiples |  | EV/Last twelve months EBITDA multiple |  |  | 5.5x- 8.7 x |
|  |  |  |  |  |  |  |  |  |  | (7.9 x) |
|  |  |  |  |  |  |  | EV/Forward EBITDA multiple |  |  | 4.9x- 8.9 x |
|  |  |  |  |  |  |  |  |  |  | (7.6 x) |
|  |  |  |  |  |  |  | EV/Precedent transaction last twelve months EBITDA multiple |  |  | 7.5x- 14.5 x |
|  |  |  |  |  |  |  |  |  |  | (10.0 x) |
|  |  | 19,819 |  |  | Appraisals/Broker quotes |  | — |  |  | — |
Certain investment in affiliates |  |  | 2,511 |  |  | Discounted cash flows |  | Discount rate |  |  | 8.0% – 12.0 % |
|  |  |  |  |  |  |  |  |  |  | (10.0 %) |
Derivative assets: |  |  |  |  |  |  |  |  |  |  |  |
Options held/written and other |  |  | 6,818 |  |  | Discounted cash flows |  | Discount rate |  |  | 12.0% – 32.0 % |
|  |  |  |  |  |  |  |  |  |  | (14.4 %) |
Other assets: |  |  |  |  |  |  |  |  |  |  |  |
Reinsurance recoverables |  |  | 4,676 |  |  | Discounted cash flows |  | Discount rate |  |  | (0.4)% – 1.5 % |
|  |  |  |  |  |  |  |  |  |  | (0.4 %) |
|  |  |  |  |  |  |  | Mortality rate |  |  | 0.0% – 100.0 % |
|  |  |  |  |  |  |  |  |  |  | (2.6 %) |
|  |  |  |  |  |  |  | Lapse rate |  |  | 1.5% – 14.0 % |
|  |  |  |  |  |  |  |  |  |  | (5.0 %) |
|  |  |  |  |  |  |  | Annuitization rate (guaranteed minimum annuity benefit) |  |  | 0.0% – 100.0 % |
|  |  |  |  |  |  |  |  |  |  | (100.0 %) |
Total |  | ¥ | 572,019 |  |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Derivative liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Options held/written and other |  | ¥ | 14,603 |  |  | Discounted cash flows |  | Discount rate |  |  | 12.0% – 32.0 % |
|  |  |  |  |  |  |  |  |  |  | (14.4 %) |
|  |  | 39 |  |  | Appraisals/Broker quotes |  | — |  |  | — |
Policy liabilities and Policy Account Balances: |  |  |  |  |  |  |  |  |  |  |  |
Variable annuity and variable life insurance contracts |  |  | 163,734 |  |  | Discounted cash flows |  | Discount rate |  |  | (0.4)% – 1.5 % |
|  |  |  |  |  |  |  |  |  |  | (0.4 %) |
|  |  |  |  |  |  |  | Mortality rate |  |  | 0.0% – 100.0 % |
|  |  |  |  |  |  |  |  |  |  | (2.1 %) |
|  |  |  |  |  |  |  | Lapse rate |  |  | 1.5% – 30.0 % |
|  |  |  |  |  |  |  |  |  |  | (5.9 %) |
|  |  |  |  |  |  |  | Annuitization rate (guaranteed minimum annuity benefit) |  |  | 0.0% – 100.0 % |
|  |  |  |  |  |  |  |  |  |  | (68.8 %) |
Total |  | ¥ | 178,376 |  |  |  |  |  |  |  |  |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The following tables provide information about the valuation techniques and significant unobservable inputs used in the valuation of Level 3
assets measured at fair value on a nonrecurring basis during fiscal 2022 and 2023.

|  | 2022
|  | Millions of yen |  |  | Valuation technique(s) |  | Significant unobservable inputs |  | Range (Weighted average)
|  | Fair value |
Assets: |  |  |  |  |  |  |  |  |  |
Real estate collateral-dependent loans (net of allowance for credit losses) |  | ¥ | 1,511 |  |  | Direct capitalization |  | Capitalization rate |  | 5.0% – 8.5%
|  |  |  |  |  |  |  |  |  | (6.1%)
|  |  | 5,461 |  |  | Appraisals |  | — |  | —
Investment in operating leases, property under facility operations, office facilities and other assets |  |  | 32,328 |  |  | Discounted cash flows |  | Discount rate |  | 5.2%
|  |  |  |  |  |  |  |  |  | (5.2%)
|  |  | 27,257 |  |  | Appraisals |  | — |  | —
Certain investment in affiliates |  |  | 2,846 |  |  | Appraisals |  | — |  | —
Certain reporting units including goodwill |  |  | 192 |  |  | Discounted cash flows |  | Discount rate |  | 10.7%
|  |  |  |  |  |  |  |  |  | (10.7%)
Certain intangible assets acquired in business combinations |  |  | 98,014 |  |  | Discounted cash flows |  | Discount rate |  | 10.9%
|  |  |  |  |  |  |  |  |  | (10.9%)
|  | ¥ | 167,609 |  |  |  |  |  |  |
|  | 2023
|  | Millions of yen |  |  | Valuation technique(s) |  | Significant unobservable inputs |  | Range (Weighted average)
|  | Fair value |
Assets: |  |  |  |  |  |  |  |  |  |
Real estate collateral-dependent loans (net of allowance for credit losses) |  | ¥ | 1,351 |  |  | Direct capitalization |  | Capitalization rate |  | 4.7% – 6.6%
|  |  |  |  |  |  |  |  |  | (5.5%)
|  |  | 4,619 |  |  | Appraisals |  | — |  | —
Investment in operating leases, property under facility operations, office facilities and other assets |  |  | 3,257 |  |  | Discounted cash flows |  | Discount rate |  | 0.5% – 5.8%
|  |  |  |  |  |  |  |  |  | (4.9%)
|  |  | 1,280 |  |  | Appraisals |  | — |  | —
Certain investment in affiliates |  |  | 23 |  |  | Discounted cash flows |  | Discount rate |  | 3.7%
|  |  |  |  |  |  |  |  |  | (3.7%)
|  |  | 403 |  |  | Appraisals |  | — |  | —
|  | ¥ | 10,933 |  |  |  |  |  |  |

The Company and its subsidiaries generally use discounted cash flow methodologies or similar internally developed models to determine the fair value of Level 3 assets and liabilities. Use of these techniques requires determination of relevant inputs and assumptions, some of which represent significant unobservable inputs as indicated in the preceding table. Accordingly, changes in these unobservable inputs may have a significant impact on the fair value.
Certain of these unobservable inputs will have a directionally consistent impact on the fair value of the asset or liability for a given change in that input. Alternatively, the fair value of the asset or liability may move in an opposite direction for a given change in another input. Where multiple inputs are used within the valuation technique of an asset or liability, a change in one input in a certain direction may be offset by an opposite change in another input having a potentially muted impact to the overall fair value of that particular asset or liability. Additionally, a change in one unobservable input may result in a change to another unobservable input (that is, changes in certain inputs are interrelated to one another), which may counteract or magnify the fair value impact.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Unobservable inputs are weighted by the relative fair value of the asset or liability.
For more analysis of the uncertainty of each input, see the description of the main valuation methodologies used for assets and liabilities measured at fair value.
3. Acquisitions and Divestitures
(1) DHC Corporation acquisition
On November 11, 2022, in an effort to expand ORIX Group’s network in the healthcare business, the Company executed a share purchase agreement with Mr. Yoshiaki Yoshida, a major shareholder of DHC Corporation (hereinafter, “DHC”), and reached a basic agreement to acquire the shares of DHC. On
January 31, 2023
,
as the date of the business combination, the Company acquired the total number of issued shares of DHC and DHC became a wholly owned subsidiary of the Company.
The total cost of the acquisition consideration
i
s ¥300,000 million, which is paid in cash.
Transaction costs of ¥3,435 million are included in selling, general and administrative expenses in the Company’s consolidated statements of income for the year ended March 31, 2022 and 2023.
The Company allocated the acquisition consideration to DHC’s respective assets acquired and liabilities assumed, and recorded the identified assets and liabilities based on their fair values at the acquisition date by the acquisition method of accounting in accordance with ASC 805 (“Business Combinations”).
The following table provides preliminary fair value amounts allocated to assets acquired and liabilities assumed from DHC. The acquisition occurred during the three months ended March 31, 2023, and purchase price allocation has not yet been finalized as of June 26, 2023. In particular, the final fair value measurements for certain acquired intangible assets have not yet been completed, which could result in a change in the amount of the intangible assets. This change is not expected to have a significant effect on the Company’s consolidated statement of income.

|  | Millions of yen |
|  | Fair value amounts of assets, liabilities |
Cash and Cash Equivalents |  | ¥ | 101,254 |
Property under Facility Operations |  |  | 18,790 |
Trade Notes, Accounts and Other Receivable |  |  | 11,117 |
Inventories |  |  | 17,370 |
Office Facilities |  |  | 17,316 |
Other Assets and other |  |  | 197,840 |
Total Assets |  |  | 363,687 |
Short-Term Debt |  |  | 5,000 |
Trade Notes, Accounts and Other Payable |  |  | 13,748 |
Current and Deferred Income Taxes |  |  | 25,472 |
Other Liabilities |  |  | 19,114 |
Total Liabilities |  |  | 63,334 |
Noncontrolling interests |  |  | 353 |
Net |  | ¥ | 300,000 |

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ORIX Corporation and Subsidiaries
Goodwill with a preliminary fair value of ¥109,680 million, and other intangible assets of ¥84,300
million that were identified in connection with the acquisition are included in other assets in the above table and the Company’s consolidated balance sheet as of March 31, 2023. Goodwill is measured as an excess of consideration transferred over the net assets acquired recognized at fair value. The Company calculated the amount of goodwill based on estimates of fair value of assets acquired and liabilities assumed. The goodwill represents the future growth of ORIX Group from new revenue streams arising from the consolidation of DHC and synergies with the existing Company’s assets and businesses. The goodwill is not deductible for income tax purposes. The goodwill and other intangible assets recorded in connection with this acquisition are included in PE Investment and Concession segment.
Other intangible assets recognized in this acquisition consist of the following:

|  | Millions of yen |  |  | Years |
|  | Acquired intangibles recorded at fair value |  |  | Weighted-average amortization period |
Intangible assets that have indefinite useful lives: |  |  |  |  |  |  |  |
Trade names |  | ¥ | 68,800 |  |  |  | — |
Subtotal |  |  | 68,800 |  |  |  |  |
Intangibles subject to amortization: |  |  |  |  |  |  |  |
License |  |  | 15,500 |  |  |  | 15 |
Subtotal |  |  | 15,500 |  |  |  |  |
Total |  | ¥ | 84,300 |  |  |  |  |

The following unaudited supplemental pro forma financial information presents the combined results of operations of the Company and its
subsidiaries as though the acquisition had occurred as of April 1, 2021, the beginning of the fiscal year ended March 31, 2022:

|  | Millions of yen |
|  | March 31, 2022 |  |  | March 31, 2023 |
Total revenues |  | ¥ | 2,610,484 |  |  | ¥ | 2,756,904 |
Net Income |  |  | 322,756 |  |  |  | 294,352 |

There are no total revenues and net income of DHC after acquisition included in the Company’s consolidated statement of income for the fiscal year ended March 31, 2023.
The unaudited supplemental pro forma financial information is based on estimates and assumptions, that the Company believes are reasonable and should not be taken as indicative of what the Company’s consolidated financial results would have been had the acquisition been completed on that date.
(2) Other Acquisitions
During fiscal 2021, the Company and its subsidiaries acquired entities for a total cost of the acquisition consideration of ¥104,197 million, which was paid mainly in cash. Goodwill initially recognized in these transactions amounted to ¥59,186 million and the goodwill is not deductible for income tax purposes. The amount of acquired intangible assets other than goodwill recognized in these transactions was ¥30,595 million. The acquisitions were mainly included in PE Investment and Concession segment and ORIX Europe segment.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
During fiscal 2022, the Company and its subsidiaries acquired entities for a total cost of the acquisition consideration of ¥99,239 million, which was paid mainly in cash. Goodwill initially recognized in these transactions amounted to ¥49,393 million and the goodwill is not deductible for income tax purposes. The amount of acquired intangible assets other than goodwill recognized in these transactions was ¥39,977 million. The acquisitions were mainly included in Environment and Energy segment.
During fiscal 2023, the Company and its subsidiaries acquired entities, other than DHC, for a total cost of the acquisition consideration of ¥60,876 million, which was paid mainly in cash. Goodwill initially recognized in these transactions amounted to ¥17,644 million and the goodwill is not deductible for income tax purposes. The amount of acquired intangible assets other than goodwill recognized in these transactions was ¥31,087 million. The Company reflected certain preliminary estimates with respect to the fair value of certain components of the underlying net assets of these entities in determining amounts of the goodwill. The amount of the goodwill and intangible assets could possibly be adjusted because for certain of these acquisitions, the purchase price allocations have not been completed yet with respect to the final valuation of acquired intangible assets among others. The acquisitions were mainly included in PE Investment and Concession segment.
As a result of the reassessment of the provisional purchase price allocation of wind power generation subsidiaries in India and another acquisition executed during fiscal 2020, the Company recognized bargain purchase gains of ¥4,966 million during fiscal 2021. The bargain purchase gains consisted of ¥601 million in PE Investment and Concession segment and ¥4,365 million in Environment and Energy segment. The Company did not recognize any bargain purchase gain during fiscal 2022. The Company recognized a bargain purchase gain of ¥1,174 million associated with four of its acquisitions mainly in
Environment
and
Energy
segment during fiscal 2023. The bargain purchase gain could possibly be adjusted because the purchase price allocation has not been completed yet.
The segment in which goodwill is allocated is disclosed in Note 13 “Goodwill and Other Intangible Assets.”
(
3
) Divestitures
Gains on sales of subsidiaries and affiliates and liquidation losses, net for fiscal 2021, 2022 and 2023 amounted to ¥23,300 million, ¥187,787 million and ¥26,915 million, respectively. Gains on sales of subsidiaries and affiliates and liquidation losses, net for fiscal 2021 mainly consisted of ¥11,516 million in Environment and Energy segment, ¥4,261 million in ORIX USA segment and ¥6,604 million in Asia and Australia segment. Gains on sales of subsidiaries and affiliates and liquidation losses, net for fiscal 2022 mainly consisted of ¥163,775 million in Corporate Financial Services and Maintenance Leasing segment, ¥1,447 million in Environment and Energy segment, ¥15,815 million in ORIX USA segment and ¥6,715 million in Asia and Australia segment. Gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net for fiscal 2023 mainly consisted of ¥137 million in Real Estate segment, ¥2,367 million in PE Investment and Concession segment, ¥16,698 million in Environment and Energy segment, ¥(1,076) million in Aircraft and Ships segment, ¥4,116 million in ORIX USA segment and ¥4,676 million in Asia and Australia segment.
During fiscal 2022, the Company sold the business of Yayoi, which was a consolidated subsidiary of the Company. The sale resulted in a gain of ¥163,016 million which was included in gains on sales of subsidiaries and affiliates and liquidation losses, net. A gain on the sale was included in Corporate Financial Services and Maintenance Leasing segment.
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ORIX Corporation and Subsidiaries
4. Revenues from Contracts with Customers
The following table provides information about revenues from contracts with customers, and other sources of revenue in fiscal 2021, 2022 and 2023.

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Goods or services category |  |  |  |  |  |  |  |  |  |  |  |
Sales of goods |  | ¥ | 321,883 |  |  | ¥ | 340,697 |  |  | ¥ | 299,901 |
Real estate sales |  |  | 89,070 |  |  |  | 94,700 |  |  |  | 92,668 |
Asset management and servicing |  |  | 173,191 |  |  |  | 244,887 |  |  |  | 239,232 |
Automobile related services |  |  | 72,000 |  |  |  | 76,772 |  |  |  | 82,428 |
Facilities operation |  |  | 23,811 |  |  |  | 32,163 |  |  |  | 56,231 |
Environment and energy services |  |  | 137,011 |  |  |  | 156,327 |  |  |  | 209,649 |
Real estate management and brokerage |  |  | 101,942 |  |  |  | 100,304 |  |  |  | 98,593 |
Real estate contract work |  |  | 80,179 |  |  |  | 92,999 |  |  |  | 120,379 |
Other |  |  | 88,468 |  |  |  | 107,249 |  |  |  | 104,284 |
Total revenues from contracts with customers |  |  | 1,087,555 |  |  |  | 1,246,098 |  |  |  | 1,303,365 |
Other revenues * |  |  | 3,247 |  |  |  | 5,904 |  |  |  | 19,355 |
Total sales of goods and real estate and services income |  | ¥ | 1,090,802 |  |  | ¥ | 1,252,002 |  |  | ¥ | 1,322,720 |

* | Other revenues are not in the scope of revenue from contracts with customers.

The following table provides information about costs of goods sold and real estate sold and services expense in fiscal 2021, 2022 and 2023.

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Goods or services category |  |  |  |  |  |  |  |  |  |  |  |
Costs of goods sold |  | ¥ | 272,657 |  |  | ¥ | 302,948 |  |  | ¥ | 254,407 |
Costs of real estate sold |  |  | 75,064 |  |  |  | 78,171 |  |  |  | 78,602 |
Asset management and servicing |  |  | 42,145 |  |  |  | 56,810 |  |  |  | 52,918 |
Automobile related services |  |  | 45,734 |  |  |  | 47,952 |  |  |  | 52,260 |
Facilities operation |  |  | 41,461 |  |  |  | 46,515 |  |  |  | 57,143 |
Environment and energy services |  |  | 105,246 |  |  |  | 122,426 |  |  |  | 166,821 |
Real estate management and brokerage |  |  | 89,685 |  |  |  | 89,457 |  |  |  | 87,459 |
Real estate contract work |  |  | 69,815 |  |  |  | 81,704 |  |  |  | 105,492 |
Other |  |  | 45,147 |  |  |  | 50,246 |  |  |  | 49,034 |
Total expenses of costs of goods and real estate sold and services expenses |  | ¥ | 786,954 |  |  | ¥ | 876,229 |  |  | ¥ | 904,136 |

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ORIX Corporation and Subsidiaries
The Company and its subsidiaries recognize revenues when control of the promised goods or services is transferred to our customers, in the amounts that reflect the consideration we expect to receive in exchange for those goods or services. Revenues are recognized net of discounts, incentives and estimated sales returns. Amount to be collected for third party is deducted from revenues. The Company and its subsidiaries evaluate whether we are principal or agent on distinctive goods or services. When a revenue transaction involves a third party, if the Company and its subsidiaries control the goods or services before they are transferred to customers, revenue is recognized on gross amount as the principal. There is no significant variability in considerations included in revenues, except for the performance fees regarding asset management business hereinafter, and there is no significant financing component in considerations on transactions.
For further information about breakdowns of revenues disaggregated by goods or services category and geographical location by segment, see Note 31 “Segment Information.”
Revenue recognition criteria on each goods or services category are mainly as follows:
Sales of goods
The Company and its subsidiaries sell various goods such as precious metals, medical equipment, business management software and other to customers. Revenues from sales of goods are recognized when there is a transfer of control of the product to customers. The Company and its subsidiaries determine transfer of control based on when the products are shipped or delivered to customers, or inspected by customers.
Real estate sales
Certain subsidiaries are involved in condominium business. Revenues from sales of detached houses and residential condominiums are recognized when the real estate is delivered to customers.
Asset management and servicing
Certain subsidiaries offer customers investment management services for their financial assets, asset management as well as maintenance and administrative services for their real estate properties. Furthermore, the Company and its subsidiaries perform servicing on behalf of customers. Revenues from asset management and servicing primarily include management fees, servicing fees, and performance fees. Management and servicing fees are recognized over the contract period with customers, since the customers simultaneously receive and consume all of the benefits provided by the subsidiaries as the subsidiaries perform. Management fees are calculated based on the predetermined percentages of the market value of the assets under management or net assets of the investment funds in accordance with contract terms. Servicing fees are calculated based on the predetermined percentages of the amount in assets under management in accordance with contract terms. Fees based on the performance of the assets under management are recognized when the performance obligations are satisfied, to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The performance fee is estimated by using the most likely amount method, in accordance with contract terms. Servicing fees related to financial assets that the Company and its subsidiaries had originated and transferred to investors, are not in the scope of revenue from contracts with customers. These fees are accounted for servicing assets under which the benefits of servicing are expected to more than adequately compensate for performing the servicing, or servicing liabilities under which the benefits of servicing are not expected to adequately compensate for performing the servicing.
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ORIX Corporation and Subsidiaries
Automobile related services
Certain subsidiaries mainly provide automobile maintenance services to customers, as automobile related services. In the service, since customers simultaneously receive and consume all of the benefits provided by the subsidiaries as the subsidiaries perform, revenues are recognized over the contract period with customers. For measurement of progress, the cost incurred is used, because that reasonably describes transfer of control of services to customers. The subsidiaries receive payments from customers before satisfying performance obligations, and the amounts are reported in other liabilities on the consolidated balance sheets as contract liabilities.
Facilities operation
The Company and its subsidiaries are running hotels, Japanese inns, training facilities, a multipurpose dome and other facilities. Revenues from these operations are recognized over the customers’ usage period of the facilities, since customers simultaneously receive and consume all of the benefits provided by the Company and its subsidiaries as the Company and its subsidiaries perform. The value transferred to customers is directly measured based on the usage period. With respect to operation of a multipurpose dome, a certain subsidiary receives payments from customers before satisfying performance obligations, and the amounts are reported in other liabilities on the consolidated balance sheets as contract liabilities. Gains on sale of property under facility operations included in services income are not within the scope of revenue from contracts with customers because these gains refer to transfers of
non-financial
assets to counterparties that are not considered to be our customers.
Environment and energy services
The Company and its subsidiaries offer services that provide electric power to business operators’ factories, office buildings and other facilities. Revenues from electric power supply by purchasing electricity or running power plants are recognized over the contracted distribution period with customers, since customers simultaneously receive and consume all of the benefits provided by the Company and its subsidiaries as the Company and its subsidiaries perform. The value transferred to customers is directly measured based on electricity usage by customers. Furthermore, certain subsidiaries are running waste processing facilities. Revenues from resources and waste processing business are primarily recognized over the service contract period with customers, since customers simultaneously receive and consume all of the benefits provided by the subsidiaries as the subsidiaries perform. The value transferred to customers is directly measured based on the amount of resources and waste to be processed.
Real estate management and brokerage
The Company and its subsidiaries mainly offer management of condominiums, office buildings, facilities, and others, to customers, as real estate management and brokerage business. Since customers simultaneously receive and consume all of the benefits provided by the Company and its subsidiaries as the Company and its subsidiaries perform, revenues from these services are recognized over the contract period with customers. Direct measurement of the value transferred to customers based on time elapsed, is used as method of measuring progress. The Company and its subsidiaries receive payments from customers before satisfying performance obligations, and the amounts are reported in other liabilities on the consolidated balance sheets as contract liabilities.
Real estate contract work
Certain subsidiaries offer repair and contract work for condominiums, office buildings, facilities, and others, to customers. The work is held on the real estate where customers own or rent, and the subsidiaries’ performance
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
creates the asset that the customers’ control as the asset is created or enhanced. Additionally, the performance does not create an asset with an alternative use to the subsidiaries, and the subsidiaries have a substantial enforceable right to payment for performance completed to date so that revenues are recognized over the contract work period. For measurement of progress, the cost incurred is used, because that reasonably describes transfer of control of services to customers. The subsidiaries recognize a part of its performance obligations that it performs as contract assets, and the amounts are reported under other assets on the consolidated balance sheet. Furthermore, the subsidiaries receive payments from customers before satisfying performance obligations, and the amounts are reported in other liabilities on the consolidated balance sheets as contract liabilities.
Other
The Company and its subsidiaries have been developing a variety of businesses. Main revenue streams are as follows:
Maintenance services of software, measurement equipment and other:
Certain subsidiaries offer information systems hardware, software maintenance services and support, and maintenance of measurement equipment to customers. Revenues from these services are recognized over the contract period with customers, since customers simultaneously receive and consume all of the benefits provided by the subsidiaries as the subsidiaries perform. For measurement of progress, the cost incurred is used, because that reasonably describes transfer of control of services to customers. The subsidiaries receive payments from customers before satisfying performance obligations, and the amounts are reported in other liabilities on the consolidated balance sheets as contract liabilities.
Fee business:
The Company and its subsidiaries are involved in insurance policy referrals and other agency business. Commission revenues from these businesses are primarily recognized when the contract between our customers and their client is signed.
The following table provides information about balances from contracts with customers as of March 31, 2022 and 2023.

|  | Millions of yen |
|  | March 31, 2022 |  |  | March 31, 2023 |
Trade Notes, Accounts and Other Receivable |  | ¥ | 174,667 |  |  | ¥ | 223,635 |
Contract assets (Included in Other Assets) |  |  | 13,802 |  |  |  | 13,403 |
Contract liabilities (Included in Other Liabilities) |  |  | 32,978 |  |  |  | 34,338 |

For fiscal 2022 and 2023, there were no significant changes in contract assets. For fiscal 2022, contract liabilities decreased due to deconsolidation of contract liabilities of ¥12,536 million related to maintenance service caused by the sale of the business of Yayoi. For fiscal 2023, there were no significant changes in contract liabilities.
For fiscal 2022 and 2023, revenue amounting to ¥35,258 million and ¥25,705 million were included in contract liabilities as of the beginning of each fiscal year, respectively.
As of March 31, 2023, transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) is mainly related to automobile related services, real estate sales and amounted to ¥198,729 million. Remaining term for the obligations ranges up to 12 years. Furthermore, automobile related services primarily constitute the performance obligations that are unsatisfied (or partially unsatisfied) will be
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ORIX Corporation and Subsidiaries
recognized as revenue over the next 10 years. The Company and its subsidiaries applied practical expedients in the disclosure, and performance obligations for contracts that have an original expected duration of one year or less and contracts under which the value transferred to a customer is directly measured and recognized as revenue by the amount it has a right to invoice to the customer are not included. The transaction price allocated to unsatisfied performance obligations does not include the estimate of material variable consideration.
As of March 31, 2022 and 2023, assets recognized from the costs to obtain or fulfill contracts with customers were not material.
5. Cash Flow Information
The following table provides information about Cash, Cash Equivalents and Restricted Cash which are included in the Company’s consolidated balance sheets as of March 31, 2022 and 2023, respectively.

|  | Millions of yen |
|  | 2022 |  |  | 2023 |
Cash and Cash Equivalents |  | ¥ | 954,827 |  |  | ¥ | 1,231,860 |
Restricted Cash |  |  | 136,985 |  |  |  | 135,048 |
Cash, Cash Equivalents and Restricted Cash |  | ¥ | 1,091,812 |  |  | ¥ | 1,366,908 |

Cash payments during fiscal 2021, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Cash payments: |  |  |  |  |  |  |  |  |  |  |  |
Interest |  | ¥ | 80,313 |  |  | ¥ | 65,965 |  |  | ¥ | 117,759 |
Income taxes, net |  |  | 76,292 |  |  |  | 83,030 |  |  |  | 187,246 |

The main
non-cash
activities in fiscal 2021, 2022 and 2023 are as follows.
In fiscal 2021
,
2022
and 202
3
, real estate under operating leases of
¥75 million,
¥464 million and ¥750
million, respectively, were recognized with the corresponding amounts of installment loans being derecognized as a result of acquiring real estate collateral. In fiscal 2021, 2022 and 2023, other assets of ¥
1 million, ¥6 million and ¥12 million, respectively, were recognized with the corresponding amounts of installment loans being derecognized as a result of acquiring real estate collateral.
In fiscal 2021, assets and liabilities decreased by ¥5,218 million and ¥18 million, in the Company’s consolidated balance sheet due to deconsolidation of a subsidiary and certain VIEs which had been consolidated by certain subsidiaries. The derecognized assets mainly consist of investment in securities, and the derecognized liabilities mainly consist of other liabilities. In fiscal 2022, assets and liabilities decreased by ¥13,378 million and ¥943 million in the Company’s consolidated balance sheet due to deconsolidation of a subsidiary and certain VIEs which had been consolidated by certain subsidiaries. The derecognized assets mainly consist of investment in securities, and the derecognized liabilities mainly consist of other liabilities. In fiscal 2023, assets and liabilities decreased by ¥7,752 million and ¥3,916
million in the Company’s consolidated balance sheet due to deconsolidation of a subsidiary and certain VIEs which had been consolidated by certain subsidiaries. The derecognized assets mainly consist of operating lease assets, and the derecognized liabilities mainly consist of long-term debt. Derecognition of these assets and liabilities were not included in cash flows from investing activities or financing activities in the consolidated statements of cash flows because they did not involve cash transactions.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
ROU assets obtained in exchange for lease liabilities were not included in cash flows from investing activities or financing activities because they did not involve cash transactions. For further information, see Note 6 “Leases.”
6. Leases
(1) Lessor
Some of the contracts include options to extend or to terminate the lease. The Company and its subsidiaries determine the lease term while taking such periods covered by options into account when determined the lease term when it is reasonably certain that it will exercise these options. The majority of the lease contracts do not contain bargain purchase options for customers.
The estimated unguaranteed residual value represents estimated proceeds from the disposition of equipment at the time the lease is terminated. The estimated unguaranteed residual value is determined based on market value of used equipment, estimates of when and how much equipment will become obsolete, and actual recovery being experienced for similar used equipment. The Company and its subsidiaries may incur losses if the estimated residual amounts are unable to collect or need to recognize valuation losses when the estimates differ from actual trends in equipment valuation and the secondhand market. The risk of loss on leased assets relating to the estimated unguaranteed residual value of the leased assets is monitored through projections of the estimated unguaranteed residual value at lease origination and periodic review of estimated unguaranteed residual value.
When auto leases are bundled with maintenance contracts, considerations on contracts are allocated based upon the estimated standalone selling prices of the lease and
non-lease
components. Lease components generally include product and financing cost, and
non-lease
components generally consist of maintenance contracts.
A certain subsidiary is providing automobile related services, and applying practical expedients, to not separate
non-lease
components from the associated lease components. In this service, ASC 606 is applied to the entire contract because the consideration related to
non-lease
components accounts for the majority of contract consideration. Revenues from these operations are recognized over the customers’ usage period of the services, since customers simultaneously receive and consume the benefits when the performance obligations are satisfied. The value transferred to customers is directly measured based on the usage period.
Lease income for fiscal 2021, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2021 |  |  | Fiscal Year ended March 31, 2022 |  |  | Fiscal Year ended March 31, 2023 |
Lease income – net investment in leases |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  | ¥ | 69,718 |  |  | ¥ | 73,379 |  |  | ¥ | 80,810 |
Other |  |  | 2,113 |  |  |  | 2,598 |  |  |  | 2,568 |
Lease income – operating leases* |  |  | 397,065 |  |  |  | 450,454 |  |  |  | 499,541 |
Total lease income |  | ¥ | 468,896 |  |  | ¥ | 526,431 |  |  | ¥ | 582,919 |

* | Gains from the disposition of real estate under operating leases included in operating lease revenues were ¥15,459 million, ¥17,912 million and ¥25,699 million, and gains from the disposition of operating lease assets other than real estate included in operating lease revenues were ¥10,899 million, ¥22,236 million and ¥31,233 million for fiscal 2021, 2022 and 2023, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Lease income from net investment in leases is included in finance revenues in the consolidated statements of income. Gains and losses from the disposition of net investment in leases were not material for fiscal 2021, 2022 and 2023.
Net investment in leases at March 31, 2022 and 2023 consists of the following:

|  | Millions of yen |
|  | March 31, 2022 |  |  | March 31, 2023 |
Lease receivables* |  | ¥ | 1,029,157 |  |  | ¥ | 1,057,990 |
Unguaranteed residual value |  |  | 27,361 |  |  |  | 28,145 |
Initial direct costs |  |  | 1,455 |  |  |  | 1,428 |
Total |  | ¥ | 1,057,973 |  |  | ¥ | 1,087,563 |

* | Some lease contracts are subject to government assistance for the customers’ acquisition of leased assets, mainly for the purpose of environmental measures. This government assistance is accounted for as a reduction of lease receivables of lease contracts when the Company and its subsidiaries confirm receipt of cash. The amount of a reduction of lease receivables is ¥ 28,532 million as of March 31, 2023. Benefits of the government assistance are attributed to the customers by the reduced lease payments. Furthermore, remaining term of government assistance contracts ranges up to 11 years. And when receiving the government assistance, restrictions mainly on disposal of property and duty of keeping documents occur for a certain period of time.

Investment in operating leases at March 31, 2022 and 2023 consists of the following:

|  | Millions of yen |
|  | March 31, 2022 |  |  | March 31, 2023 |
Transportation equipment |  | ¥ | 1,438,621 |  |  | ¥ | 1,521,865 |
Measuring and information-related equipment |  |  | 326,680 |  |  |  | 342,591 |
Real estate |  |  | 307,338 |  |  |  | 319,074 |
Other |  |  | 71,935 |  |  |  | 79,633 |
|  |  | 2,144,574 |  |  |  | 2,263,163 |
Accumulated depreciation |  |  | (819,839 | ) |  |  | (865,942 | )
Net |  |  | 1,324,735 |  |  |  | 1,397,221 |
Right-of-use assets |  |  | 107,742 |  |  |  | 98,417 |
Accrued rental receivables |  |  | 31,639 |  |  |  | 45,123 |
Allowance for doubtful receivables on operating leases |  |  | (914 | ) |  |  | (3,583 | )
Total |  | ¥ | 1,463,202 |  |  | ¥ | 1,537,178 |

Costs of operating leases include depreciation and various expenses (insurance, property tax and other). Depreciation and various expenses for fiscal 2021, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Depreciation expenses |  | ¥ | 217,212 |  |  | ¥ | 231,643 |  |  | ¥ | 245,180 |
Various expenses |  |  | 78,416 |  |  |  | 90,427 |  |  |  | 91,807 |
Total |  | ¥ | 295,628 |  |  | ¥ | 322,070 |  |  | ¥ | 336,987 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Remaining lease receivables of net investment in leases (including residual value guarantees) range up to 26 years at March 31, 2023. Remaining lease receivables of the operating lease contracts range up to 58 years at March 31, 2023. At March 31, 2023, the amounts due in each of the next five years and thereafter are as follows:

|  | Millions of yen |
Years ending March 31, |  | Net investment in leases |  |  | Operating leases |
2024 |  | ¥ | 447,559 |  |  | ¥ | 343,108 |
2025 |  |  | 302,161 |  |  |  | 215,400 |
2026 |  |  | 199,127 |  |  |  | 141,773 |
2027 |  |  | 116,071 |  |  |  | 84,474 |
2028 |  |  | 63,524 |  |  |  | 45,595 |
Thereafter |  |  | 60,252 |  |  |  | 129,854 |
Total lease payments |  |  | 1,188,694 |  |  | ¥ | 960,204 |
Less imputed interest |  |  | (130,704 | ) |  |  |  |
Total lease receivables |  | ¥ | 1,057,990 |  |  |  |  |

(2) Lessee
The Company and its subsidiaries determine if an arrangement is a lease at inception of each contract. The Company and its subsidiaries have operating and finance leases for various assets including lands, office buildings, employees’ accommodations, and vehicles.
Some of the lease arrangements include options to extend or terminate lease term. The Company and its subsidiaries determine the lease term while taking such options into account when determining the lease term when it is reasonably certain that it will exercise these options. The Company and its subsidiaries’ lease arrangements do not contain material residual value guarantees or material restrictive covenants. As a rate implicit in most of the leases cannot be readily determinable, the Company and its subsidiaries use incremental borrowing rate based on the information available at commencement to determine the present values of lease payments.
The component of lease expense for fiscal 2021, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | Year ended March 31, 2021 |  |  | Year ended March 31, 2022 |  |  | Year ended March 31, 2023 |
Finance lease cost |  |  |  |  |  |  |  |  |  |  |  |
Depreciation expenses of right-of-use assets |  | ¥ | 359 |  |  | ¥ | 534 |  |  | ¥ | 536 |
Interest expenses of lease liabilities |  |  | 131 |  |  |  | 106 |  |  |  | 150 |
|  |  | 490 |  |  |  | 640 |  |  |  | 686 |
Operating lease cost |  |  | 42,964 |  |  |  | 49,725 |  |  |  | 52,279 |
Short-term lease cost |  |  | 3,347 |  |  |  | 3,034 |  |  |  | 2,742 |
Variable lease cost |  |  | 230 |  |  |  | 65 |  |  |  | 1,297 |
Sublease income |  |  | (4,142 | ) |  |  | (3,192 | ) |  |  | (8,819 | )
Total |  | ¥ | 42,889 |  |  | ¥ | 50,272 |  |  | ¥ | 48,185 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Supplemental cash flow information related to leases for fiscal 2021, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | Year Ended March 31, 2021 |
|  | Finance leases |  |  | Operating leases |
Cash paid for amounts included in the measurements of lease liabilities: |  |  |  |  |  |  |  |
Cash flows from operating activities |  | ¥ | 131 |  |  | ¥ | 41,680 |
Cash flows from financing activities |  |  | 674 |  |  |  | 0 |
Right-of-use assets obtained in exchange for lease liabilities: |  | ¥ | 228 |  |  | ¥ | 55,344 |

|  | Millions of yen |
|  | Year Ended March 31, 2022 |
|  | Finance leases |  |  | Operating leases |
Cash paid for amounts included in the measurements of lease liabilities: |  |  |  |  |  |  |  |
Cash flows from operating activities |  | ¥ | 106 |  |  | ¥ | 47,321 |
Cash flows from financing activities |  |  | 878 |  |  |  | 0 |
Right-of-use assets obtained in exchange for lease liabilities: |  | ¥ | 278 |  |  | ¥ | 37,816 |

|  | Millions of yen |
|  | Year Ended March 31, 2023 |
|  | Finance leases |  |  | Operating leases |
Cash paid for amounts included in the measurements of lease liabilities: |  |  |  |  |  |  |  |
Cash flows from operating activities |  | ¥ | 150 |  |  | ¥ | 50,369 |
Cash flows from financing activities |  |  | 781 |  |  |  | 0 |
Right-of-use assets obtained in exchange for lease liabilities: |  | ¥ | 93 |  |  | ¥ | 39,823 |

Supplemental balance sheet information related to lessee leases at March 31, 2022 and 2023 are as follows:

|  | Millions of yen, except lease term and discount rate |
|  | March 31, 2022 |
|  | Finance leases |  |  | Operating leases |
Investment in Operating Leases |  | ¥ | 4,955 |  |  | ¥ | 102,787 |
Property under Facility Operations |  |  | 1,763 |  |  |  | 68,149 |
Office Facilities |  |  | 375 |  |  |  | 104,157 |
Total right-of-use assets |  |  | 7,093 |  |  |  | 275,093 |
Other Liabilities |  |  | 7,698 |  |  |  | 275,199 |
Total lease liabilities |  | ¥ | 7,698 |  |  | ¥ | 275,199 |
Weighted average remaining lease term |  |  | 25years |  |  |  | 11years |
Weighted average discount rate |  |  | 2.5 | % |  |  | 1.1 | %

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Millions of yen, except lease term and discount rate |
|  | March 31, 2023 |
|  | Finance leases |  |  | Operating leases |
Investment in Operating Leases |  | ¥ | 4,782 |  |  | ¥ | 93,635 |
Property under Facility Operations |  |  | 1,394 |  |  |  | 85,036 |
Office Facilities |  |  | 368 |  |  |  | 100,744 |
Total right-of-use assets |  |  | 6,544 |  |  |  | 279,415 |
Other Liabilities |  |  | 7,129 |  |  |  | 280,829 |
Total lease liabilities |  | ¥ | 7,129 |  |  | ¥ | 280,829 |
Weighted average remaining lease term |  |  | 37years |  |  |  | 11years |
Weighted average discount rate |  |  | 2.4 | % |  |  | 1.3 | %

At March 31, 2023, the amounts of lease liabilities related to lessee leases due in each of the next five years and thereafter are as follows:

|  | Millions of yen |
Years ending March 31, |  | Finance leases |  |  | Operating leases |
2024 |  | ¥ | 851 |  |  | ¥ | 53,153 |
2025 |  |  | 777 |  |  |  | 40,853 |
2026 |  |  | 447 |  |  |  | 35,134 |
2027 |  |  | 300 |  |  |  | 28,606 |
2028 |  |  | 280 |  |  |  | 24,029 |
Thereafter |  |  | 7,381 |  |  |  | 115,534 |
Total lease payments |  |  | 10,036 |  |  |  | 297,309 |
Less imputed interest |  |  | (2,907 | ) |  |  | (16,480 | )
Total lease liabilities |  | ¥ | 7,129 |  |  | ¥ | 280,829 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
7. Installment Loans
The composition of installment loans by domicile and type of borrower at March 31, 2022 and 2023 is as follows:

|  | Millions of yen |
|  | 2022 |  |  | 2023 |
Borrowers in Japan: |  |  |  |  |  |  |  |
Consumer— |  |  |  |  |  |  |  |
Real estate loans |  | ¥ | 2,007,570 |  |  | ¥ | 1,949,865 |
Card loans |  |  | 173,687 |  |  |  | 171,635 |
Other |  |  | 27,770 |  |  |  | 29,688 |
|  |  | 2,209,027 |  |  |  | 2,151,188 |
Corporate— |  |  |  |  |  |  |  |
Real estate companies |  |  | 278,607 |  |  |  | 296,228 |
Non-recourse loans |  |  | 74,085 |  |  |  | 124,499 |
Commercial, industrial and other companies |  |  | 168,607 |  |  |  | 165,951 |
|  |  | 521,299 |  |  |  | 586,678 |
Borrowers in overseas: |  |  |  |  |  |  |  |
Consumer— |  |  |  |  |  |  |  |
Real estate loans |  |  | 105,860 |  |  |  | 107,094 |
Other |  |  | 30,136 |  |  |  | 43,054 |
|  |  | 135,996 |  |  |  | 150,148 |
Corporate— |  |  |  |  |  |  |  |
Real estate companies |  |  | 273,789 |  |  |  | 277,839 |
Non-recourse loans |  |  | 80,918 |  |  |  | 38,654 |
Commercial, industrial and other companies |  |  | 627,828 |  |  |  | 660,840 |
|  |  | 982,535 |  |  |  | 977,333 |
Purchased loans* |  |  | 13,747 |  |  |  | 12,255 |
|  | ¥ | 3,862,604 |  |  | ¥ | 3,877,602 |

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

Generally, installment loans are made under agreements that require the borrower to provide collateral or guarantors.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
At March 31, 2023, the contractual maturities of installment loans (except purchased loans) for each of the next five years and thereafter are as follows:

Years ending March 31, |  | Millions of yen |
2024 |  | ¥ | 522,101 |
2025 |  |  | 429,107 |
2026 |  |  | 411,787 |
2027 |  |  | 270,538 |
2028 |  |  | 224,434 |
Thereafter |  |  | 2,007,380 |
Total |  | ¥ | 3,865,347 |

Revenues from installment loans which are included in finance revenues in the consolidated statements of income are ¥169,401 million, ¥174,485 million and ¥192,375 million for fiscal 2021, 2022 and 2023, respectively.
Certain loans, for which the Company and its subsidiaries have the intent and ability to sell to outside parties in the foreseeable future, are considered held for sale and are carried at the lower of cost or market value determined on an individual basis, except loans held for sale for which the fair value option was elected. A subsidiary elected the fair value option on its loans held for sale. The subsidiary enters into forward sale agreements to offset the change in the fair value of loans held for sale, and the election of the fair value option allows the subsidiary to recognize both the change in the fair value of the loans and the change in the fair value of the forward sale agreements due to changes in interest rates in the same accounting period. Loans held for sale are included in installment loans, and the outstanding balances of these loans as of March 31, 2022 and 2023 were ¥155,680 million and ¥201,355 million, respectively. There were ¥151,601 million and ¥197,041 million of loans held for sale as of March 31, 2022 and 2023, respectively, measured at fair value by electing the fair value option.
Purchased loans acquired by the Company and its subsidiaries are generally loans with evidence of deterioration of credit quality since origination and for which it is probable at acquisition that collection of all contractually required payments from the debtors is unlikely and characterized by extended period of
non-performance
by the borrower, and it is difficult to reliably estimate the amount, timing, or nature of collections. Because such loans are commonly collateralized by real estate, the Company and its subsidiaries may pursue various approaches to maximizing the return from the collateral, including arrangement of borrower’s negotiated transaction of such collateral before foreclosure, the renovation, refurbishment or the sale of such loans to third parties. Accordingly, although the acquired assets may remain loans in legal form, collections on these loans often do not reflect the normal historical experience of collecting delinquent accounts, and the need to tailor individual collateral-realization strategies often makes it difficult to reliably estimate the amount, timing, or nature of collections. Accordingly, the Company and its subsidiaries use the cost recovery method of income recognition for such purchased loans. The total carrying amounts of these purchased loans were ¥13,747 million and ¥12,255 million as of March 31, 2022 and 2023, respectively, and the fair value at the acquisition date of purchased loans acquired during fiscal 2022 and 2023 were ¥4,926 million and ¥2,444 million, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
8. Credit Quality of Financial Assets and the Allowance for Credit Losses
The Company and its subsidiaries provide the following information disaggregated by portfolio segment and class of financial assets.
Allowance for credit losses
Credit quality of financial assets

| • |  | Credit quality indicators

| • |  | Past-due financing receivables

| • |  | Non-accrual

Information about troubled debt restructurings
A portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. The Company and its subsidiaries classify our portfolio segments by instruments of loans, net investment in leases and other financial assets measured at amortized cost. Classes of financial assets are determined based on the initial measurement attribute, risk characteristics of the financing receivables and the method for monitoring and assessing obligors’ credit risk and are defined as the level of detail necessary for a financial statement user to understand the risks inherent in the financial assets. Classes of financial assets generally are a disaggregation of a portfolio segment, and the Company and its subsidiaries disaggregate our portfolio segments into classes by regions, instruments or industries of our debtors.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The following table provides information about the allowance for credit losses for installment loans, net investment in leases and other financial assets measured at amortized cost for fiscal 2021, 2022 and 2023:

|  | Fiscal Year ended March 31, 2021 |
|  | Millions of yen |
|  | Beginning balance |  |  | Cumulative effect of adopting According Standards Update 2016-13 |  |  | Reclassification to allowance for investment in operating leases *4 |  |  | Balance at April 1, 2020 |  |  | Provision (Reversal)*3 |  |  | Allowance of purchased loans during the reporting period |  |  | Charge- offs*5 |  |  | Recoveries |  |  | Other*6 |  |  | Ending balance*3 |  |  | Collective (pool) assessment |  |  | Individual assessment |
Allowance for credit losses : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Installment loans to consumer borrowers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  | ¥ | 3,112 |  |  | ¥ | 2,856 |  |  | ¥ | 0 |  |  | ¥ | 5,968 |  |  | ¥ | 390 |  |  | ¥ | 0 |  |  | ¥ | (495 | ) |  | ¥ | 59 |  |  | ¥ | 0 |  |  | ¥ | 5,922 |  |  | ¥ | 5,354 |  |  | ¥ | 568 |
Overseas |  |  | 128 |  |  |  | (102 | ) |  |  | 0 |  |  |  | 26 |  |  |  | 412 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1 |  |  |  | 31 |  |  |  | 470 |  |  |  | 470 |  |  |  | 0 |
Card loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 3,785 |  |  |  | 12,146 |  |  |  | 0 |  |  |  | 15,931 |  |  |  | (802 | ) |  |  | 0 |  |  |  | (2,150 | ) |  |  | 6 |  |  |  | (1 | ) |  |  | 12,984 |  |  |  | 12,283 |  |  |  | 701 |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 12,735 |  |  |  | (963 | ) |  |  | 0 |  |  |  | 11,772 |  |  |  | 5,875 |  |  |  | 0 |  |  |  | (9,296 | ) |  |  | 8 |  |  |  | 0 |  |  |  | 8,359 |  |  |  | 5,616 |  |  |  | 2,743 |
Overseas |  |  | 782 |  |  |  | 563 |  |  |  | 0 |  |  |  | 1,345 |  |  |  | 739 |  |  |  | 0 |  |  |  | (1,754 | ) |  |  | 577 |  |  |  | 368 |  |  |  | 1,275 |  |  |  | 1,038 |  |  |  | 237 |
Installment loans to corporate borrowers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-recourse loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 13 |  |  |  | 24 |  |  |  | 0 |  |  |  | 37 |  |  |  | (5 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 32 |  |  |  | 32 |  |  |  | 0 |
The Americas |  |  | 1,773 |  |  |  | 1,577 |  |  |  | 0 |  |  |  | 3,350 |  |  |  | 43 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 57 |  |  |  | 3,450 |  |  |  | 3,218 |  |  |  | 232 |
Real estate companies |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 983 |  |  |  | 46 |  |  |  | 0 |  |  |  | 1,029 |  |  |  | (58 | ) |  |  | 0 |  |  |  | (96 | ) |  |  | 25 |  |  |  | 1 |  |  |  | 901 |  |  |  | 621 |  |  |  | 280 |
Overseas |  |  | 2,010 |  |  |  | 1,579 |  |  |  | 0 |  |  |  | 3,589 |  |  |  | (1,502 | ) |  |  | 0 |  |  |  | (570 | ) |  |  | 33 |  |  |  | (11 | ) |  |  | 1,539 |  |  |  | 1,539 |  |  |  | 0 |
Commercial, industrial companies |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 2,447 |  |  |  | 98 |  |  |  | 0 |  |  |  | 2,545 |  |  |  | (27 | ) |  |  | 0 |  |  |  | (592 | ) |  |  | 11 |  |  |  | 1 |  |  |  | 1,938 |  |  |  | 199 |  |  |  | 1,739 |
Overseas |  |  | 14,769 |  |  |  | 9,002 |  |  |  | 0 |  |  |  | 23,771 |  |  |  | 10,410 |  |  |  | 0 |  |  |  | (15,427 | ) |  |  | 18 |  |  |  | (9 | ) |  |  | 18,763 |  |  |  | 13,013 |  |  |  | 5,750 |
Purchased loans*1 |  |  | 1,458 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1,458 |  |  |  | 353 |  |  |  | 3,899 |  |  |  | (4,040 | ) |  |  | 46 |  |  |  | 119 |  |  |  | 1,835 |  |  |  | 681 |  |  |  | 1,154 |
Net investment in leases: |  |  | 11,692 |  |  |  | 3,550 |  |  |  | 0 |  |  |  | 15,242 |  |  |  | 3,285 |  |  |  | 0 |  |  |  | (2,668 | ) |  |  | 10 |  |  |  | 653 |  |  |  | 16,522 |  |  |  | 13,267 |  |  |  | 3,255 |
Subtotal |  |  | 55,687 |  |  |  | 30,376 |  |  |  | 0 |  |  |  | 86,063 |  |  |  | 19,113 |  |  |  | 3,899 |  |  |  | (37,088 | ) |  |  | 794 |  |  |  | 1,209 |  |  |  | 73,990 |  |  |  | 57,331 |  |  |  | 16,659 |
Other financial assets measured at amortized cost*2 |  |  | 1,149 |  |  |  | 1,369 |  |  |  | (312 | ) |  |  | 2,206 |  |  |  | 4,483 |  |  |  | 0 |  |  |  | (344 | ) |  |  | 11 |  |  |  | (351 | ) |  |  | 6,005 |  |  |  | 810 |  |  |  | 5,195 |
Total |  | ¥ | 56,836 |  |  | ¥ | 31,745 |  |  | ¥ | (312 | ) |  | ¥ | 88,269 |  |  | ¥ | 23,596 |  |  | ¥ | 3,899 |  |  | ¥ | (37,432 | ) |  | ¥ | 805 |  |  | ¥ | 858 |  |  | ¥ | 79,995 |  |  | ¥ | 58,141 |  |  | ¥ | 21,854 |

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Fiscal Year ended March 31, 2022 |
|  | Millions of yen |
|  | Beginning balance |  |  | Provision (Reversal)*3 |  |  | Allowance of purchased loans during the reporting period |  |  | Charge- offs*5 |  |  | Recoveries |  |  | Other*6 |  |  | Ending balance*3 |  |  | Collective (pool) assessment |  |  | Individual assessment |
Allowance for credit losses : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Installment loans to consumer borrowers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  | ¥ | 5,922 |  |  | ¥ | 340 |  |  | ¥ | 0 |  |  | ¥ | (570 | ) |  | ¥ | 24 |  |  | ¥ | 0 |  |  | ¥ | 5,716 |  |  | ¥ | 5,211 |  |  | ¥ | 505 |
Overseas |  |  | 470 |  |  |  | (34 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 4 |  |  |  | 15 |  |  |  | 455 |  |  |  | 455 |  |  |  | 0 |
Card loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 12,984 |  |  |  | (1,301 | ) |  |  | 0 |  |  |  | (1,669 | ) |  |  | 4 |  |  |  | 1 |  |  |  | 10,019 |  |  |  | 9,423 |  |  |  | 596 |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 8,359 |  |  |  | 4,948 |  |  |  | 0 |  |  |  | (8,114 | ) |  |  | 11 |  |  |  | 0 |  |  |  | 5,204 |  |  |  | 2,946 |  |  |  | 2,258 |
Overseas |  |  | 1,275 |  |  |  | 300 |  |  |  | 0 |  |  |  | (644 | ) |  |  | 0 |  |  |  | 174 |  |  |  | 1,105 |  |  |  | 961 |  |  |  | 144 |
Installment loans to corporate borrowers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-recourse loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 32 |  |  |  | 49 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 81 |  |  |  | 81 |  |  |  | 0 |
The Americas |  |  | 3,450 |  |  |  | (1,035 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 276 |  |  |  | 2,691 |  |  |  | 1,836 |  |  |  | 855 |
Real estate companies |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 901 |  |  |  | (204 | ) |  |  | 0 |  |  |  | (109 | ) |  |  | 29 |  |  |  | 0 |  |  |  | 617 |  |  |  | 490 |  |  |  | 127 |
Overseas |  |  | 1,539 |  |  |  | (855 | ) |  |  | 0 |  |  |  | (10 | ) |  |  | 0 |  |  |  | 61 |  |  |  | 735 |  |  |  | 735 |  |  |  | 0 |
Commercial, industrial companies |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 1,938 |  |  |  | 93 |  |  |  | 0 |  |  |  | (761 | ) |  |  | 67 |  |  |  | 0 |  |  |  | 1,337 |  |  |  | 505 |  |  |  | 832 |
Overseas |  |  | 18,763 |  |  |  | 3,503 |  |  |  | 0 |  |  |  | (6,185 | ) |  |  | 155 |  |  |  | 2,060 |  |  |  | 18,296 |  |  |  | 13,367 |  |  |  | 4,929 |
Purchased loans*1 |  |  | 1,835 |  |  |  | (227 | ) |  |  | 2,210 |  |  |  | (2,372 | ) |  |  | 114 |  |  |  | 15 |  |  |  | 1,575 |  |  |  | 608 |  |  |  | 967 |
Net investment in leases: |  |  | 16,522 |  |  |  | 1,577 |  |  |  | 0 |  |  |  | (2,802 | ) |  |  | 21 |  |  |  | 985 |  |  |  | 16,303 |  |  |  | 12,480 |  |  |  | 3,823 |
Subtotal |  |  | 73,990 |  |  |  | 7,154 |  |  |  | 2,210 |  |  |  | (23,236 | ) |  |  | 429 |  |  |  | 3,587 |  |  |  | 64,134 |  |  |  | 49,098 |  |  |  | 15,036 |
Other financial assets measured at amortized cost*2 |  |  | 6,005 |  |  |  | 2,662 |  |  |  | 0 |  |  |  | (1,661 | ) |  |  | 45 |  |  |  | 231 |  |  |  | 7,282 |  |  |  | 562 |  |  |  | 6,720 |
Total |  | ¥ | 79,995 |  |  | ¥ | 9,816 |  |  | ¥ | 2,210 |  |  | ¥ | (24,897 | ) |  | ¥ | 474 |  |  | ¥ | 3,818 |  |  | ¥ | 71,416 |  |  | ¥ | 49,660 |  |  | ¥ | 21,756 |

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Fiscal Year ended March 31, 2023 |
|  | Millions of yen |
|  | Beginning balance |  |  | Provision (Reversal)*3 |  |  | Allowance of purchased loans during the reporting period |  |  | Charge- offs*5 |  |  | Recoveries |  |  | Other*6 |  |  | Ending balance*3 |  |  | Collective (pool) assessment |  |  | Individual assessment |
Allowance for credit losses : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Installment loans to consumer borrowers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  | ¥ | 5,716 |  |  | ¥ | (1,437 | ) |  | ¥ | 0 |  |  | ¥ | (215 | ) |  | ¥ | 27 |  |  | ¥ | 1 |  |  | ¥ | 4,092 |  |  | ¥ | 3,644 |  |  | ¥ | 448 |
Overseas |  |  | 455 |  |  |  | (19 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 1 |  |  |  | 9 |  |  |  | 446 |  |  |  | 446 |  |  |  | 0 |
Card loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 10,019 |  |  |  | (421 | ) |  |  | 0 |  |  |  | (584 | ) |  |  | 8 |  |  |  | 0 |  |  |  | 9,022 |  |  |  | 8,329 |  |  |  | 693 |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 5,204 |  |  |  | 4,672 |  |  |  | 0 |  |  |  | (2,124 | ) |  |  | 8 |  |  |  | (1 | ) |  |  | 7,759 |  |  |  | 5,337 |  |  |  | 2,422 |
Overseas |  |  | 1,105 |  |  |  | 1,265 |  |  |  | 0 |  |  |  | (508 | ) |  |  | 0 |  |  |  | 27 |  |  |  | 1,889 |  |  |  | 1,467 |  |  |  | 422 |
Installment loans to corporate borrowers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-recourse loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 81 |  |  |  | 173 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (1 | ) |  |  | 253 |  |  |  | 253 |  |  |  | 0 |
The Americas |  |  | 2,691 |  |  |  | (1,186 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (11 | ) |  |  | 1,494 |  |  |  | 560 |  |  |  | 934 |
Real estate companies |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 617 |  |  |  | 131 |  |  |  | 0 |  |  |  | 0 |  |  |  | 28 |  |  |  | 1 |  |  |  | 777 |  |  |  | 663 |  |  |  | 114 |
Overseas |  |  | 735 |  |  |  | 264 |  |  |  | 0 |  |  |  | (29 | ) |  |  | 0 |  |  |  | 37 |  |  |  | 1,007 |  |  |  | 1,007 |  |  |  | 0 |
Commercial, industrial companies |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 1,337 |  |  |  | 102 |  |  |  | 0 |  |  |  | (358 | ) |  |  | 71 |  |  |  | 0 |  |  |  | 1,152 |  |  |  | 477 |  |  |  | 675 |
Overseas |  |  | 18,296 |  |  |  | 7,164 |  |  |  | 0 |  |  |  | (8,212 | ) |  |  | 329 |  |  |  | 1,555 |  |  |  | 19,132 |  |  |  | 16,455 |  |  |  | 2,677 |
Purchased loans*1 |  |  | 1,575 |  |  |  | (261 | ) |  |  | 6,901 |  |  |  | (7,142 | ) |  |  | 64 |  |  |  | 11 |  |  |  | 1,148 |  |  |  | 541 |  |  |  | 607 |
Net investment in leases: |  |  | 16,303 |  |  |  | 1,678 |  |  |  | 0 |  |  |  | (2,637 | ) |  |  | 27 |  |  |  | 348 |  |  |  | 15,719 |  |  |  | 12,032 |  |  |  | 3,687 |
Subtotal |  |  | 64,134 |  |  |  | 12,125 |  |  |  | 6,901 |  |  |  | (21,809 | ) |  |  | 563 |  |  |  | 1,976 |  |  |  | 63,890 |  |  |  | 51,211 |  |  |  | 12,679 |
Other financial assets measured at amortized cost*2 |  |  | 7,282 |  |  |  | 555 |  |  |  | 0 |  |  |  | (6,563 | ) |  |  | 30 |  |  |  | 178 |  |  |  | 1,482 |  |  |  | 548 |  |  |  | 934 |
Total |  | ¥ | 71,416 |  |  | ¥ | 12,680 |  |  | ¥ | 6,901 |  |  | ¥ | (28,372 | ) |  | ¥ | 593 |  |  | ¥ | 2,154 |  |  | ¥ | 65,372 |  |  | ¥ | 51,759 |  |  | ¥ | 13,613 |

Notes: | 1. Loans held for sale and policy loan receivables of an insurance entity are not scope to allowance for credit losses.

| 2. | Held-to-maturity debt securities held by the Company and subsidiaries consist of Japanese government bonds (JGBs) and other securities secured by JGBs. There was no allowance for credit losses on these held-to-maturity debt securities. And there is no delinquency or on non-accrual status on held-to-maturity debt securities.

*1 | Purchased loans represent loans with evidence of deterioration of credit quality since origination and for which it is probable at acquisition that collection of all contractually required payments from the debtors is unlikely. Due to the adoption of Credit Losses s tandard, allowance of ¥176,714 million was recorded as credit loss gross-up treatment for purchased loans on April 1, 2020, and the same amount has been charged-off.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

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

*3 | “Provision for credit losses” in the consolidated statements of income amounted to provisions of ¥16,021 million, ¥3,939 million and ¥7,756 million for fiscal 2021, 2022 and 2023, respectively. “Allowance for credit losses” on the consolidated balance sheets amounted to ¥78,945 million, ¥69,459 million and ¥64,723 million as of March 31, 2021, 2022 and 2023, respectively. The reconciliation between the above table and the amounts reported on the consolidated financial statements in fiscal 2021, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2021 |  |  | March 31, 2021 |  |  | Fiscal Year ended March 31, 2022 |  |  | March 31, 2022 |  |  | Fiscal Year ended March 31, 2023 |  |  | March 31, 2023 |
|  | Provision for credit losses |  |  | Allowance for credit losses |  |  | Provision for credit losses |  |  | Allowance for credit losses |  |  | Provision for credit losses |  |  | Allowance for credit losses |
Net investment in leases |  | ¥ | 3,285 |  |  | ¥ | 16,522 |  |  | ¥ | 1,577 |  |  | ¥ | 16,303 |  |  | ¥ | 1,678 |  |  | ¥ | 15,719 |
Installment loans |  |  | 15,828 |  |  |  | 57,468 |  |  |  | 5,577 |  |  |  | 47,831 |  |  |  | 10,447 |  |  |  | 48,171 |
Subtotal in the above table |  |  | 19,113 |  |  |  | 73,990 |  |  |  | 7,154 |  |  |  | 64,134 |  |  |  | 12,125 |  |  |  | 63,890 |
Other financial assets measured at amortized cost |  |  | 4,483 |  |  |  | 6,005 |  |  |  | 2,662 |  |  |  | 7,282 |  |  |  | 555 |  |  |  | 1,482 |
Total in the above table |  |  | 23,596 |  |  |  | 79,995 |  |  |  | 9,816 |  |  |  | 71,416 |  |  |  | 12,680 |  |  |  | 65,372 |
Off-balance sheet credit exposures*3(a) |  |  | (7,437 | ) |  |  | — |  |  |  | (4,449 | ) |  |  | — |  |  |  | (4,542 | ) |  |  | — |
Available-for-sale debt securities*3(b) |  |  | 117 |  |  |  | — |  |  |  | 21 |  |  |  | — |  |  |  | (21 | ) |  |  | — |
Less: Loans to affiliates *3(c) |  |  | (255 | ) |  |  | (1,050 | ) |  |  | (1,449 | ) |  |  | (1,957 | ) |  |  | (361 | ) |  |  | (649 | )
Amount reported on the consolidated financial statements |  | ¥ | 16,021 |  |  | ¥ | 78,945 |  |  | ¥ | 3,939 |  |  | ¥ | 69,459 |  |  | ¥ | 7,756 |  |  | ¥ | 64,723 |

| *3(a) | The allowance for off-balance sheet credit exposure were ¥26,094 million, ¥22,120 million and ¥17,843 million as of March 31, 2021, 2022 and 2023, respectively, and the amounts are recorded in “Other liabilities” on the consolidated balance sheets. For further information, see Note 30 “Commitments, Guarantees and Contingent Liabilities.”

| *3(b) | The allowance for available-for-sale debt securities were ¥120 million, ¥153 million and ¥144 million as of March 31, 2021, 2022 and 2023, respectively, and the amounts are recorded as a reduction in “Investment in securities” on the consolidated balance sheets. For further information, see Note 9 “Investment in Securities.”

| *3(c) | The provision for credit losses on loans to affiliates were provisions of ¥255 million, ¥1,449 million and ¥361 million during fiscal 2021, 2022 and 2023, respectively, and the amounts are recorded in “Equity in net income (loss) of affiliates” in the consolidated statements of income. The allowance for credit losses on loans to affiliates were ¥1,050 million, ¥1,957 million and ¥649 million as of March 31, 2021, 2022 and 2023, respectively, and the amounts are recorded as a reduction in “Investment in affiliates” on the consolidated balance sheets.

*4 | The allowance for accrued lease payments for receivable from operating leases was reclassified to the investment in operating leases balance on April 1, 2020, due to the application of the Credit Losses s tandard.

*5 | Included in Charge-off in write-offs of purchased loans at acquisition date were ¥3,899 million, ¥2,210 million and ¥6,901 million during fiscal 2021, 2022 and 2023, respectively.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The following table provides information about purchased loans which were acquired for fiscal 2021, 2022 and 2023:

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2021 |  |  | Fiscal Year ended March 31, 2022 |  |  | Fiscal Year ended March 31, 2023 |
Purchase price |  | ¥ | 2,705 |  |  | ¥ | 4,926 |  |  | ¥ | 2,444 |
Allowance for credit losses at acquisition date |  |  | 3,899 |  |  |  | 2,210 |  |  |  | 6,901 |
Discount or premium attributable to other factors |  |  | 254 |  |  |  | 220 |  |  |  | 261 |
Par value |  | ¥ | 6,858 |  |  | ¥ | 7,356 |  |  | ¥ | 9,606 |

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

| • |  | business characteristics and financial conditions of obligors;

| • |  | prior charge-off experience;

| • |  | current delinquencies and delinquency trends;

| • |  | value of underlying collateral and guarantees; and

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

The Company and its subsidiaries manage credit risk using various indicators specific to the region, industry, and types of assets, in accordance with the group risk management policy. For credit transactions, the basic group policy is to obtain sufficient collateral and guarantees, and to diversify industries and borrowers, and the Company and its subsidiaries comprehensively evaluate and monitor the financial condition and cash flows of borrowers, underlying collateral and guarantees, and profitability. The Company and its subsidiaries also manage exposure to potentially high-risk markets by establishing appropriate credit limits through portfolio analysis.
Due to the diversity of assets and risk indicators held by the Company and its subsidiaries, the Company and its subsidiaries monitor the credit quality indicators as performing and
non-performing
assets as indicators that are common across all classes. The category of
non-performing
assets includes financing receivables for debtors who have filed for insolvency proceedings, whose bank transactions are suspended, whose bills are dishonored, whose businesses have deteriorated, whose repayment is
past-due
90 days or more, financing receivables modified as troubled debt restructurings, and performing assets include all other financing receivables. Regarding purchased loans, they are classified as
non-performing
assets when it is probable that the acquisition cost of purchased loans cannot be collected, while all the other purchased loans are included in the category of performing assets.
When certain performing financial assets mainly have similar risk characteristics to other financial assets, the performing financial assets are collectively evaluated as a pool. On the contrary, when financial assets do not have similar risk characteristics to other financial assets, the financial assets are evaluated individually.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Loans to consumer borrowers
Loans to consumer borrowers mainly consist of real estate loans and card loans.
The credit quality of real estate loans is affected by the cash flows derived from the property and its collateral value.
The credit quality of card loans is affected by the repayment ability of customers such as customer credit standing or payment history.
The Company and its subsidiaries use these factors to estimate the allowance for credit losses because they are reflected in the probability of default and loss given default in each portfolio.
Loans to corporate borrowers
Loans to corporate borrowers are classified into
non-recourse
loans and loans other than
non-recourse
loans.
The credit quality of
non-recourse
loans for which cash flows from real estate are the source of repayment depends mainly on the real estate collateral value.
Loans other than
non-recourse
loans are classified into either real estate companies or commercial, industrial and other companies, each of which are further divided into Japan and overseas.
The credit quality of real estate companies is affected by mainly Japanese and Americas real estate markets and trends.
The credit quality of commercial, industrial and other companies, which consist of various industries, is affected mainly by broader financial and economic conditions and trends in Japan, the Americas and Asian countries.
The allowance for credit losses for loans to corporate borrowers is estimated by considering, among others, debtors’ situation, as well as economic conditions and trends in its industries, the value of underlying collateral and guarantees, and probability of default and loss given default.
Net investment in leases
Net investment in leases consists of leases of various equipment types, including office equipment, industrial machinery, transportation equipment and real estate properties. The allowance for credit losses for net investment in leases is estimated based on the value of the underlying leased assets, debtors’ situation, economic conditions and trends in its industries, and probability of default and loss given default.
In common with portfolio segments, the forecasted future economic indicators correlated with the prior
charge-off
experience are reflected to the estimate of the allowance for credit losses. Economic indicators correlated with prior
charge-off
experience are determined over the reasonable and supportable forecasted period. Economic indicators include GDP growth rates, consumer price indices, unemployment rates, and government bond interest rates. It also considers forward-looking scenarios of how the selected economic indicators will change in the future. The Company and its subsidiaries use the latest economic forecasts available from the economic reports published by governments and central banks, as well as from third-party information providers as economic indicators. For the impact of the spread of
COVID-19
etc., the Company and its subsidiaries revise forward-looking scenarios, as necessary, with a quantitative adjustment based on the analysis of impact to the portfolios and the referenced economic indicators.
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ORIX Corporation and Subsidiaries
On the other hand, for periods beyond which the Company and its subsidiaries are able to make or obtain reasonable and supportable forecasts of future economic indicators of the entire life of the financial asset, expected credit losses are estimated for the remaining life mainly using an appropriate reversion approach, mainly immediate reversion to historical credit loss information.
There have been no significant changes during fiscal 2023 to methodologies and economic indicators used to estimate the allowance for Credit Losses.
When
non-performing
financial assets with deteriorated credit quality have similar risk characteristics to other financial assets, the allowance for credit losses is collectively evaluated based on mainly loss given default. On the other hand, if the
non-performing
financial assets do not have similar risk characteristics to other financial assets, the allowance for credit losses is individually evaluated.
In the individual assessment the allowance for credit losses is estimated individually based on the present value of expected future cash flows, the observable market price or the fair value of the collateral securing the financial receivables if the financial receivables are collateral-dependent.
The collateral-dependent financial receivables are defined as the finance receivables, which a debtor would be in financial difficulty and the collection significantly depend on the collateral. These financial receivables are mainly
non-recourse
loans and purchased loans for which cash flows from underlying real estate is the source of repayment.
For
non-recourse
loans, their collection depends on the real estate collateral value, which may decline as a result of a decrease in liquidity of the real estate market, a rise in vacancy rate of rental properties, a fall in rents and other factors.
For purchased loans, their collection may decrease due to a decline in the real estate collateral value and debtors’ creditworthiness. Thus, the changes in these risks affect the amount of the allowance for credit losses.
In common with all portfolio segments, the Company and its subsidiaries charge off doubtful receivables when the likelihood of any future collection is believed to be minimal, mainly based upon an evaluation of the relevant debtors’ creditworthiness and the liquidation status of collateral.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The following table provides information about the origination years of financial assets as of March 31, 2022 and 2023. Card loans to consumer borrowers with a revolving repayment feature that cannot be classified into the origination year are excluded from the table.

|  |  |  | March 31, 2022 |
|  |  |  | Millions of yen |
Portfolio segment |  |  |  | Origination year (years ended March 31) |  |  |  |
Class |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Credit Quality |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | Prior |  |  | Total |
Consumer borrowers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  | ¥ | 322,924 |  |  | ¥ | 314,935 |  |  | ¥ | 387,988 |  |  | ¥ | 314,163 |  |  | ¥ | 202,309 |  |  | ¥ | 595,321 |  |  | ¥ | 2,137,640 |
|  | Non-Performing |  |  | 8,282 |  |  |  | 4,595 |  |  |  | 3,852 |  |  |  | 2,098 |  |  |  | 961 |  |  |  | 11,915 |  |  | ¥ | 31,703 |
Real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 302,695 |  |  |  | 309,893 |  |  |  | 382,612 |  |  |  | 311,959 |  |  |  | 198,974 |  |  |  | 594,612 |  |  | ¥ | 2,100,745 |
|  | Non-Performing |  |  | 26 |  |  |  | 94 |  |  |  | 489 |  |  |  | 380 |  |  |  | 222 |  |  |  | 11,474 |  |  | ¥ | 12,685 |
Other* |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 20,229 |  |  |  | 5,042 |  |  |  | 5,376 |  |  |  | 2,204 |  |  |  | 3,335 |  |  |  | 709 |  |  | ¥ | 36,895 |
|  | Non-Performing |  |  | 8,256 |  |  |  | 4,501 |  |  |  | 3,363 |  |  |  | 1,718 |  |  |  | 739 |  |  |  | 441 |  |  | ¥ | 19,018 |
Corporate borrowers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 487,433 |  |  |  | 188,634 |  |  |  | 283,950 |  |  |  | 127,128 |  |  |  | 96,851 |  |  |  | 111,640 |  |  | ¥ | 1,295,636 |
|  | Non-Performing |  |  | 412 |  |  |  | 3,184 |  |  |  | 4,138 |  |  |  | 4,747 |  |  |  | 14,562 |  |  |  | 21,000 |  |  | ¥ | 48,043 |
Non-recourse loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 26,991 |  |  |  | 6,686 |  |  |  | 24,244 |  |  |  | 5,256 |  |  |  | 2,750 |  |  |  | 8,158 |  |  | ¥ | 74,085 |
The Americas |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 0 |  |  |  | 5,547 |  |  |  | 51,467 |  |  |  | 11,744 |  |  |  | 7,721 |  |  |  | 1,397 |  |  | ¥ | 77,876 |
|  | Non-Performing |  |  | 0 |  |  |  | 64 |  |  |  | 0 |  |  |  | 1,587 |  |  |  | 0 |  |  |  | 1,391 |  |  | ¥ | 3,042 |
Other than non-recourse loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate companies in Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 102,719 |  |  |  | 48,420 |  |  |  | 37,845 |  |  |  | 28,727 |  |  |  | 24,481 |  |  |  | 34,111 |  |  | ¥ | 276,303 |
|  | Non-Performing |  |  | 0 |  |  |  | 245 |  |  |  | 938 |  |  |  | 71 |  |  |  | 0 |  |  |  | 1,050 |  |  | ¥ | 2,304 |
Real estate companies in overseas |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 24,104 |  |  |  | 26,751 |  |  |  | 41,644 |  |  |  | 2,256 |  |  |  | 5,478 |  |  |  | 740 |  |  | ¥ | 100,973 |
|  | Non-Performing |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 371 |  |  |  | 12,790 |  |  |  | 7,717 |  |  | ¥ | 20,878 |
Commercial, industrial and other companies in Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 75,273 |  |  |  | 24,808 |  |  |  | 26,748 |  |  |  | 13,746 |  |  |  | 6,457 |  |  |  | 13,806 |  |  | ¥ | 160,838 |
|  | Non-Performing |  |  | 156 |  |  |  | 457 |  |  |  | 1,392 |  |  |  | 124 |  |  |  | 392 |  |  |  | 773 |  |  | ¥ | 3,294 |
Commercial, industrial and other companies in overseas |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 258,346 |  |  |  | 76,422 |  |  |  | 102,002 |  |  |  | 65,399 |  |  |  | 49,964 |  |  |  | 53,428 |  |  | ¥ | 605,561 |
|  | Non-Performing |  |  | 256 |  |  |  | 2,418 |  |  |  | 1,808 |  |  |  | 2,594 |  |  |  | 1,380 |  |  |  | 10,069 |  |  | ¥ | 18,525 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  |  |  | March 31, 2022 |
|  |  |  | Millions of yen |
Portfolio segment |  |  |  | Origination year (years ended March 31) |  |  |  |
Class |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Credit Quality |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | Prior |  |  | Total |
Purchased loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 0 |  |  |  | 0 |  |  |  | 24 |  |  |  | 281 |  |  |  | 1,072 |  |  |  | 10,885 |  |  | ¥ | 12,262 |
|  | Non-Performing |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1,485 |  |  | ¥ | 1,485 |
Net investment in leases: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 328,428 |  |  |  | 249,106 |  |  |  | 190,125 |  |  |  | 113,190 |  |  |  | 77,683 |  |  |  | 80,217 |  |  | ¥ | 1,038,749 |
|  | Non-Performing |  |  | 2,608 |  |  |  | 2,899 |  |  |  | 3,474 |  |  |  | 2,787 |  |  |  | 2,178 |  |  |  | 5,278 |  |  | ¥ | 19,224 |
Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 119,538 |  |  |  | 154,757 |  |  |  | 133,589 |  |  |  | 91,691 |  |  |  | 68,087 |  |  |  | 78,283 |  |  | ¥ | 645,945 |
|  | Non-Performing |  |  | 402 |  |  |  | 605 |  |  |  | 1,044 |  |  |  | 1,103 |  |  |  | 1,247 |  |  |  | 2,109 |  |  | ¥ | 6,510 |
Overseas |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 208,890 |  |  |  | 94,349 |  |  |  | 56,536 |  |  |  | 21,499 |  |  |  | 9,596 |  |  |  | 1,934 |  |  | ¥ | 392,804 |
|  | Non-Performing |  |  | 2,206 |  |  |  | 2,294 |  |  |  | 2,430 |  |  |  | 1,684 |  |  |  | 931 |  |  |  | 3,169 |  |  | ¥ | 12,714 |
Other financial assets measured at amortized cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 14,287 |  |  |  | 2,220 |  |  |  | 345 |  |  |  | 0 |  |  |  | 817 |  |  |  | 17,743 |  |  | ¥ | 35,412 |
|  | Non-Performing |  |  | 0 |  |  |  | 0 |  |  |  | 58 |  |  |  | 0 |  |  |  | 1,586 |  |  |  | 0 |  |  | ¥ | 1,644 |
Total (excluding revolving repayment card loans) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  | ¥ | 1,153,072 |  |  | ¥ | 754,895 |  |  | ¥ | 862,432 |  |  | ¥ | 554,762 |  |  | ¥ | 378,732 |  |  | ¥ | 815,806 |  |  | ¥ | 4,519,699 |
|  | Non-Performing |  | ¥ | 11,302 |  |  | ¥ | 10,678 |  |  | ¥ | 11,522 |  |  | ¥ | 9,632 |  |  | ¥ | 19,287 |  |  | ¥ | 39,678 |  |  | ¥ | 102,099 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  |  |  | March 31, 2023 |
|  |  |  | Millions of yen |
Portfolio segment |  |  |  | Origination year (years ended March 31) |  |  |  |
Class |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Credit Quality |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Total |
Consumer borrowers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  | ¥ | 300,198 |  |  | ¥ | 200,041 |  |  | ¥ | 281,872 |  |  | ¥ | 360,726 |  |  | ¥ | 293,297 |  |  | ¥ | 656,584 |  |  | ¥ | 2,092,718 |
|  | Non-Performing |  |  | 10,896 |  |  |  | 5,259 |  |  |  | 3,140 |  |  |  | 2,257 |  |  |  | 1,078 |  |  |  | 12,324 |  |  | ¥ | 34,954 |
Real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 266,663 |  |  |  | 190,076 |  |  |  | 279,690 |  |  |  | 359,321 |  |  |  | 292,388 |  |  |  | 655,811 |  |  | ¥ | 2,043,949 |
|  | Non-Performing |  |  | 17 |  |  |  | 81 |  |  |  | 378 |  |  |  | 474 |  |  |  | 239 |  |  |  | 11,821 |  |  | ¥ | 13,010 |
Other* |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 33,535 |  |  |  | 9,965 |  |  |  | 2,182 |  |  |  | 1,405 |  |  |  | 909 |  |  |  | 773 |  |  | ¥ | 48,769 |
|  | Non-Performing |  |  | 10,879 |  |  |  | 5,178 |  |  |  | 2,762 |  |  |  | 1,783 |  |  |  | 839 |  |  |  | 503 |  |  | ¥ | 21,944 |
Corporate borrowers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 427,902 |  |  |  | 346,629 |  |  |  | 127,984 |  |  |  | 171,314 |  |  |  | 103,628 |  |  |  | 139,503 |  |  | ¥ | 1,316,960 |
|  | Non-Performing |  |  | 257 |  |  |  | 793 |  |  |  | 5,485 |  |  |  | 4,959 |  |  |  | 4,624 |  |  |  | 24,008 |  |  | ¥ | 40,126 |
Non-recourse loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 65,874 |  |  |  | 17,831 |  |  |  | 6,699 |  |  |  | 22,384 |  |  |  | 4,158 |  |  |  | 7,553 |  |  | ¥ | 124,499 |
The Americas |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 2,901 |  |  |  | 706 |  |  |  | 5,217 |  |  |  | 15,153 |  |  |  | 10,595 |  |  |  | 834 |  |  | ¥ | 35,406 |
|  | Non-Performing |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 3,248 |  |  | ¥ | 3,248 |
Other than non-recourse loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate companies in Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 124,452 |  |  |  | 43,210 |  |  |  | 30,996 |  |  |  | 27,022 |  |  |  | 22,251 |  |  |  | 46,222 |  |  | ¥ | 294,153 |
|  | Non-Performing |  |  | 0 |  |  |  | 230 |  |  |  | 0 |  |  |  | 913 |  |  |  | 9 |  |  |  | 923 |  |  | ¥ | 2,075 |
Real estate companies in overseas |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 34,508 |  |  |  | 12,639 |  |  |  | 9,091 |  |  |  | 6,998 |  |  |  | 1,627 |  |  |  | 1,165 |  |  | ¥ | 66,028 |
|  | Non-Performing |  |  | 0 |  |  |  | 0 |  |  |  | 741 |  |  |  | 0 |  |  |  | 813 |  |  |  | 12,063 |  |  | ¥ | 13,617 |
Commercial, industrial and other companies in Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 76,764 |  |  |  | 27,327 |  |  |  | 16,743 |  |  |  | 17,003 |  |  |  | 8,383 |  |  |  | 12,878 |  |  | ¥ | 159,098 |
|  | Non-Performing |  |  | 125 |  |  |  | 80 |  |  |  | 431 |  |  |  | 264 |  |  |  | 133 |  |  |  | 399 |  |  | ¥ | 1,432 |
Commercial, industrial and other companies in overseas |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 123,403 |  |  |  | 244,916 |  |  |  | 59,238 |  |  |  | 82,754 |  |  |  | 56,614 |  |  |  | 70,851 |  |  | ¥ | 637,776 |
|  | Non-Performing |  |  | 132 |  |  |  | 483 |  |  |  | 4,313 |  |  |  | 3,782 |  |  |  | 3,669 |  |  |  | 7,375 |  |  | ¥ | 19,754 |
Purchased loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 26 |  |  |  | 396 |  |  |  | 0 |  |  |  | 21 |  |  |  | 406 |  |  |  | 10,385 |  |  | ¥ | 11,234 |
|  | Non-Performing |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1,021 |  |  | ¥ | 1,021 |
Net investment in leases: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 440,421 |  |  |  | 257,871 |  |  |  | 139,306 |  |  |  | 103,726 |  |  |  | 53,604 |  |  |  | 75,794 |  |  | ¥ | 1,070,722 |
|  | Non-Performing |  |  | 2,757 |  |  |  | 3,228 |  |  |  | 1,806 |  |  |  | 2,042 |  |  |  | 1,720 |  |  |  | 5,288 |  |  | ¥ | 16,841 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  |  |  | March 31, 2023 |
|  |  |  | Millions of yen |
Portfolio segment |  |  |  | Origination year (years ended March 31) |  |  |  |
Class |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Credit Quality |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Total |
Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 193,297 |  |  |  | 136,285 |  |  |  | 99,739 |  |  |  | 80,542 |  |  |  | 44,853 |  |  |  | 72,295 |  |  | ¥ | 627,011 |
|  | Non-Performing |  |  | 212 |  |  |  | 660 |  |  |  | 658 |  |  |  | 798 |  |  |  | 811 |  |  |  | 1,970 |  |  | ¥ | 5,109 |
Overseas |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 247,124 |  |  |  | 121,586 |  |  |  | 39,567 |  |  |  | 23,184 |  |  |  | 8,751 |  |  |  | 3,499 |  |  | ¥ | 443,711 |
|  | Non-Performing |  |  | 2,545 |  |  |  | 2,568 |  |  |  | 1,148 |  |  |  | 1,244 |  |  |  | 909 |  |  |  | 3,318 |  |  | ¥ | 11,732 |
Other financial assets measured at amortized cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  |  | 3,197 |  |  |  | 0 |  |  |  | 2,089 |  |  |  | 282 |  |  |  | 0 |  |  |  | 21,301 |  |  | ¥ | 26,869 |
|  | Non-Performing |  |  | 0 |  |  |  | 298 |  |  |  | 0 |  |  |  | 0 |  |  |  | 368 |  |  |  | 0 |  |  | ¥ | 666 |
Total (excluding revolving repayment card loans) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performing |  | ¥ | 1,171,744 |  |  | ¥ | 804,937 |  |  | ¥ | 551,251 |  |  | ¥ | 636,069 |  |  | ¥ | 450,935 |  |  | ¥ | 903,567 |  |  | ¥ | 4,518,503 |
|  | Non-Performing |  |  | 13,910 |  |  |  | 9,578 |  |  |  | 10,431 |  |  |  | 9,258 |  |  |  | 7,790 |  |  |  | 42,641 |  |  | ¥ | 93,608 |

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

* | Other in loans to consumer borrowers includes claims receivable arising from payments on guarantee of consumer loans. For further information, see Note 30 “Commitments, Guarantees and Contingent Liabilities.”

The information about card loans to consumer borrowers with a
revolving
repayment feature that cannot be classified into the origination year as of March 31, 2022 and 2023 are as follows:

|  | March 31, 2022 |
|  | Millions of yen |
Portfolio segment |  | Revolving repayment card loans |  |  | Modification of collection condition by relief of contract condition |  |  | Total—revolving repayment card loans |  |  | Total— origination year (excluding revolving repayment card loans) |  |  | Total— financial assets measured at amortized cost |
Credit quality
Consumer borrowers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | ¥ | 169,601 |  |  | ¥ | 0 |  |  | ¥ | 169,601 |  |  | ¥ | 4,519,699 |  |  | ¥ | 4,689,300 |
Non-Performing |  |  | 671 |  |  |  | 3,415 |  |  |  | 4,086 |  |  |  | 102,099 |  |  | ¥ | 106,185 |

|  | March 31, 202 3 |
|  | Millions of yen |
Portfolio segment |  | Revolving repayment card loans |  |  | Modification of collection condition by relief of contract condition |  |  | Total—revolving repayment card loans |  |  | Total— origination year (excluding revolving repayment card loans) |  |  | Total— financial assets measured at amortized cost |
Credit quality
Consumer borrowers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | ¥ | 166,392 |  |  | ¥ | 0 |  |  | ¥ | 166,392 |  |  | ¥ | 4,518,503 |  |  | ¥ | 4,684,895 |
Non-Performing |  |  | 1,588 |  |  |  | 3,655 |  |  |  | 5,243 |  |  |  | 93,608 |  |  | ¥ | 98,851 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Of
non-performing
assets, the Company and its subsidiaries consider smaller balance homogeneous loans (including real estate loans and card loans, among others, which are not restructured) and net investment in leases as the 90 days or more
past-due
financing receivables not individually evaluated, and consider all others as the loans individually evaluated. After the Company and its subsidiaries have set aside a provision for those
non-performing
assets, the Company and its subsidiaries continue to monitor at least on a quarterly basis the quality of any underlying collateral, the business conditions of the debtors and other important factors in order to report to management and develop additional provision for credit losses as necessary.
The following table provides information about the
past-due
financial assets as of March 31, 2022 and 2023:

|  | March 31, 2022 |
|  |  |  | Millions of yen |
|  |  |  | Past-due financing assets |  |  |  |
Portfolio segment |  | Class |  | 30-89 days past-due |  |  | 90 days or more past-due |  |  | Total past-due |  |  | Total financing receivables |
Consumer borrowers |  |  |  | ¥ | 4,183 |  |  | ¥ | 5,637 |  |  | ¥ | 9,820 |  |  | ¥ | 2,343,030 |
|  | Real estate loans |  |  | 1,473 |  |  |  | 2,262 |  |  |  | 3,735 |  |  |  | 2,113,430 |
|  | Card loans |  |  | 371 |  |  |  | 503 |  |  |  | 874 |  |  |  | 173,687 |
|  | Other |  |  | 2,339 |  |  |  | 2,872 |  |  |  | 5,211 |  |  |  | 55,913 |
Corporate borrowers |  |  |  |  | 20,840 |  |  |  | 31,935 |  |  |  | 52,775 |  |  |  | 1,343,679 |
Non-recourse loans |  | Japan |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 74,085 |
|  | The Americas |  |  | 514 |  |  |  | 3,042 |  |  |  | 3,556 |  |  |  | 80,918 |
Other than Non-recourse loans |  | Real estate companies in Japan |  |  | 578 |  |  |  | 350 |  |  |  | 928 |  |  |  | 278,607 |
|  | Real estate companies in overseas |  |  | 16,113 |  |  |  | 20,879 |  |  |  | 36,992 |  |  |  | 121,851 |
|  | Commercial, industrial and other companies in Japan |  |  | 1,243 |  |  |  | 1,268 |  |  |  | 2,511 |  |  |  | 164,132 |
|  | Commercial, industrial and other companies in overseas |  |  | 2,392 |  |  |  | 6,396 |  |  |  | 8,788 |  |  |  | 624,086 |
Net investment in leases |  |  |  |  | 9,322 |  |  |  | 17,746 |  |  |  | 27,068 |  |  |  | 1,057,973 |
|  | Japan |  |  | 2,252 |  |  |  | 5,782 |  |  |  | 8,034 |  |  |  | 652,455 |
|  | Overseas |  |  | 7,070 |  |  |  | 11,964 |  |  |  | 19,034 |  |  |  | 405,518 |
Total |  |  |  | ¥ | 34,345 |  |  | ¥ | 55,318 |  |  | ¥ | 89,663 |  |  | ¥ | 4,744,682 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | March 31, 2023 |
|  |  |  | Millions of yen |
|  |  |  | Past-due financing assets |  |  |  |
Portfolio segment |  | Class |  | 30-89 days past-due |  |  | 90 days or more past-due |  |  | Total past-due |  |  | Total financing receivables |
Consumer borrowers |  |  |  | ¥ | 4,574 |  |  | ¥ | 10,047 |  |  | ¥ | 14,621 |  |  | ¥ | 2,299,307 |
|  | Real estate loans |  |  | 1,739 |  |  |  | 2,181 |  |  |  | 3,920 |  |  |  | 2,056,959 |
|  | Card loans |  |  | 514 |  |  |  | 1,364 |  |  |  | 1,878 |  |  |  | 171,635 |
|  | Other |  |  | 2,321 |  |  |  | 6,502 |  |  |  | 8,823 |  |  |  | 70,713 |
Corporate borrowers |  |  |  |  | 5,628 |  |  |  | 21,363 |  |  |  | 26,991 |  |  |  | 1,357,086 |
Non-recourse loans |  | Japan |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 124,499 |
|  | The Americas |  |  | 0 |  |  |  | 1,494 |  |  |  | 1,494 |  |  |  | 38,654 |
Other than Non-recourse loans |  | Real estate companies in Japan |  |  | 159 |  |  |  | 219 |  |  |  | 378 |  |  |  | 296,228 |
|  | Real estate companies in overseas |  |  | 1,412 |  |  |  | 13,618 |  |  |  | 15,030 |  |  |  | 79,645 |
|  | Commercial, industrial and other companies in Japan |  |  | 1,366 |  |  |  | 1,118 |  |  |  | 2,484 |  |  |  | 160,530 |
|  | Commercial, industrial and other companies in overseas |  |  | 2,691 |  |  |  | 4,914 |  |  |  | 7,605 |  |  |  | 657,530 |
Net investment in leases |  |  |  |  | 9,181 |  |  |  | 15,583 |  |  |  | 24,764 |  |  |  | 1,087,563 |
|  | Japan |  |  | 2,648 |  |  |  | 4,431 |  |  |  | 7,079 |  |  |  | 632,120 |
|  | Overseas |  |  | 6,533 |  |  |  | 11,152 |  |  |  | 17,685 |  |  |  | 455,443 |
Total |  |  |  | ¥ | 19,383 |  |  | ¥ | 46,993 |  |  | ¥ | 66,376 |  |  | ¥ | 4,743,956 |

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

In common with all classes, the Company and its subsidiaries consider financial assets as
past-due
financial assets when principal or interest is
past-due
30 days or more. Loans whose terms have been modified are not classified as
past-due
financial assets if the principals and interests are not
past-due
30 days or more in accordance with the modified terms.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The following table provides information about
non-accrual
of financial assets as of March 31, 2022 and 2023:

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | March 31, 2023 |
|  | Millions of yen |
|  | Beginning balance |  |  | Ending balance |  |  | Interest income recognized during the reporting period |  |  | Balance not associated allowance for credit losses among financial assets measured at amortized cost, which is suspending recognition of income |
Non-accrual of financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Installment loans to consumer borrowers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  | ¥ | 1,824 |  |  | ¥ | 1,693 |  |  | ¥ | 235 |  |  | ¥ | 41 |
Overseas |  |  | 475 |  |  |  | 547 |  |  |  | 0 |  |  |  | 0 |
Card loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 503 |  |  |  | 1,367 |  |  |  | 28 |  |  |  | 0 |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 2,391 |  |  |  | 5,429 |  |  |  | 170 |  |  |  | 10 |
Overseas |  |  | 519 |  |  |  | 1,105 |  |  |  | 0 |  |  |  | 0 |
Installment loans to corporate borrowers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-recourse loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
The Americas |  |  | 8,787 |  |  |  | 3,248 |  |  |  | 0 |  |  |  | 0 |
Real estate companies |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 351 |  |  |  | 219 |  |  |  | 51 |  |  |  | 13 |
Overseas |  |  | 20,879 |  |  |  | 12,804 |  |  |  | 0 |  |  |  | 0 |
Commercial, industrial companies and other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 1,267 |  |  |  | 1,118 |  |  |  | 71 |  |  |  | 190 |
Overseas |  |  | 18,634 |  |  |  | 20,470 |  |  |  | 0 |  |  |  | 2,113 |
Net investment in leases |  |  | 17,771 |  |  |  | 16,627 |  |  |  | 0 |  |  |  | 0 |
Total |  | ¥ | 73,401 |  |  | ¥ | 64,627 |  |  | ¥ | 555 |  |  | ¥ | 2,367 |

The Company and its subsidiaries suspend accruing interest on
past-due
installment loans and net investment in leases when principal or interest is
past-due
90 days or more, or earlier, if management determines that their collections are doubtful based on factors such as individual debtors’ creditworthiness, historical loss experience, current delinquencies and delinquency trends. Cash repayments received on
non-accrual
loans are applied first against past due interest and then any surpluses are applied to principal in view of the conditions of the contract and obligors. The Company and its subsidiaries return to accrual status
non-accrual
loans and net investment in leases when it becomes probable that the Company and its subsidiaries will be able to collect all amounts due according to the contractual terms of these loans and lease receivables, as evidenced by continual payments from the debtors. The period of such continual payments before returning to accrual status varies depending on factors that are considered relevant in assessing the debtor’s creditworthiness, such as the debtor’s business characteristics and financial conditions as well as relevant economic conditions and trends.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The following table provides information about troubled debt restructurings of financing receivables that occurred during the fiscal year ended March 31, 2021, 2022 and 2023:

|  | Fiscal Year ended March 31, 2021 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Pre-modification outstanding recorded investment |  |  | Post-modification outstanding recorded investment |
Consumer borrowers |  |  |  | ¥ | 9,279 |  |  | ¥ | 6,727 |
|  | Real estate loans |  |  | 34 |  |  |  | 23 |
|  | Card loans |  |  | 1,677 |  |  |  | 1,261 |
|  | Other |  |  | 7,568 |  |  |  | 5,443 |
Corporate borrowers |  |  |  |  | 14,723 |  |  |  | 13,049 |
Other than Non-recourse loans |  | Real estate companies in overseas |  |  | 111 |  |  |  | 111 |
|  | Commercial, industrial and other companies in Japan |  |  | 38 |  |  |  | 38 |
|  | Commercial, industrial and other companies in overseas |  |  | 14,574 |  |  |  | 12,900 |
Total |  |  |  | ¥ | 24,002 |  |  | ¥ | 19,776 |

|  | Fiscal Year ended March 31, 2022 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Pre-modification outstanding recorded investment |  |  | Post-modification outstanding recorded investment |
Consumer borrowers |  |  |  | ¥ | 8,761 |  |  | ¥ | 6,152 |
|  | Real estate loans |  |  | 15 |  |  |  | 6 |
|  | Card loans |  |  | 1,385 |  |  |  | 1,072 |
|  | Other |  |  | 7,361 |  |  |  | 5,074 |
Corporate borrowers |  |  |  |  | 5,481 |  |  |  | 5,319 |
Other than Non-recourse loans |  | Commercial, industrial and other companies in overseas |  |  | 5,481 |  |  |  | 5,319 |
Total |  |  |  | ¥ | 14,242 |  |  | ¥ | 11,471 |

|  | Fiscal Year ended March 31, 2023 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Pre-modification outstanding recorded investment |  |  | Post-modification outstanding recorded investment |
Consumer borrowers |  |  |  | ¥ | 7,977 |  |  | ¥ | 6,171 |
|  | Real estate loans |  |  | 10 |  |  |  | 4 |
|  | Card loans |  |  | 1,536 |  |  |  | 1,312 |
|  | Other |  |  | 6,431 |  |  |  | 4,855 |
Corporate borrowers |  |  |  |  | 10,510 |  |  |  | 10,507 |
Other than Non-recourse loans |  | Real estate companies in Japan |  |  | 231 |  |  |  | 230 |
|  | Commercial, industrial and other companies in overseas |  |  | 10,279 |  |  |  | 10,277 |
Total |  |  |  | ¥ | 18,487 |  |  | ¥ | 16,678 |

A troubled debt restructuring is defined as a restructuring of a financing receivable in which the creditor grants a concession to the debtor for economic or other reasons related to the debtor’s financial difficulties.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The Company and its subsidiaries offer various types of concessions to our debtors to protect as much of the investment as possible in troubled debt restructurings. For the debtors of all financing receivables, the Company and its subsidiaries offer concessions including an extension of the maturity date at an interest rate lower than the current market rate for a debt with similar risk characteristics. In addition, for the debtors of all financing receivables other than
non-recourse
loans, the Company and its subsidiaries also offer concessions such as a reduction of the loan principal or a temporary reduction in the interest payments. Furthermore, the Company and its subsidiaries may acquire collateral assets from the debtors in troubled debt restructurings to satisfy fully or partially the loan principal or past due interest.
In common with all portfolio segments, financing receivables modified as troubled debt restructurings are recognized as impaired and are individually evaluated for allowance for credit losses. In most cases, these financing receivables have already been considered impaired and individually evaluated for allowance for credit losses prior to the restructurings. However, as a result of the restructuring, the Company and its subsidiaries may recognize additional allowance for credit losses for the restructured receivables.
For fiscal 2021, 2022 and 2023, while there are financial assets for which the payments were deferred other than those in the troubled debt restructuring stated above due to the spread of
COVID-19,
the payment deferrals, which are determined not to meet the definition of a troubled debt restructuring are not included in the troubled debt restructuring stated the above.
The following table provides information about financing receivables modified as troubled debt restructurings within the previous 12 months from March 31, 2021 and for which there was a payment default during the fiscal year ended March 31, 2021:

|  | Fiscal Year ended March 31, 2021 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Recorded investment |
Consumer borrowers |  |  |  | ¥ | 387 |
|  | Card loans |  |  | 36 |
|  | Other |  |  | 351 |
Corporate borrowers |  |  |  |  | 752 |
Other than Non-recourse loans |  | Commercial, industrial other companies in overseas |  |  | 752 |
Total |  |  |  | ¥ | 1,139 |

The following table provides information about financing receivables modified as troubled debt restructurings within the previous 12 months from March 31, 2022 and for which there was a payment default during the fiscal year ended March 31, 2022:

|  | Fiscal Year ended March 31, 2022 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Recorded investment |
Consumer borrowers |  |  |  | ¥ | 900 |
|  | Real estate loans |  |  | 4 |
|  | Card loans |  |  | 6 |
|  | Other |  |  | 890 |
Total |  |  |  | ¥ | 900 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The following table provides information about financing receivables modified as troubled debt restructurings within the previous 12 months from March 31, 2023 and for which there was a payment default during the fiscal year ended March 31, 2023:

|  | Fiscal Year ended March 31, 2023 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Recorded investment |
Consumer borrowers |  |  |  | ¥ | 808 |
|  | Real estate loans |  |  | 5 |
|  | Card loans |  |  | 2 |
|  | Other |  |  | 801 |
Corporate borrowers |  |  |  |  | 4,692 |
Other than Non-recourse loans |  | Commercial, industrial and other companies in overseas |  |  | 4,692 |
Total |  |  |  | ¥ | 5,500 |

The Company and its subsidiaries consider financing receivables whose terms have been modified in a restructuring as defaulted receivables when principal or interest is
past-due
90 days or more in accordance with the modified terms.
In common with all portfolio segments, the Company and its subsidiaries suspend accruing interest and may recognize additional allowance for credit losses as necessary for the defaulted financing receivables.
As of March 31, 2022 and 2023, there were no foreclosed residential real estate properties. The carrying amounts of installment loans in consumer real estate loans collateralized by residential real estate property that are in the process of foreclosure were ¥162 million and ¥57 million as of March 31, 2022 and 2023, respectively.
9. Investment in Securities
Investment in securities as of March 31, 2022 and 2023 consists of the following:

|  | Millions of yen |
|  | 2022 |  |  | 2023 |
Equity securities * |  | ¥ | 560,643 |  |  | ¥ | 589,312 |
Trading debt securities |  |  | 2,503 |  |  |  | 2,179 |
Available-for-sale debt securities |  |  | 2,174,891 |  |  |  | 2,234,608 |
Held-to-maturity debt securities |  |  | 114,312 |  |  |  | 114,759 |
Total |  | ¥ | 2,852,349 |  |  | ¥ | 2,940,858 |

* | The amount of assets under management of variable annuity and variable life insurance contracts included in equity securities were ¥185,115 million and ¥151,445 million as of March 31, 2022 and 2023, respectively. The amount of investment funds that are accounted for under the equity method included in equity securities were ¥90,650 million and ¥90,993 million as of March 31, 2022 and 2023, respectively. The amount of investment funds and others elected the fair value option included in equity securities were ¥11,709 million and ¥16,032 million as of March 31, 2022 and 2023, respectively.

Gains and losses realized from the sale of equity securities and net unrealized holding gains (losses) on equity securities are included in gains on investment securities and dividends, life insurance premiums and
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ORIX Corporation and Subsidiaries
related investment income, and write-downs of securities. For further information, see Note 22 “Gains on Investment Securities and Dividends” and Note 23 “Life Insurance Operations.” Net unrealized holding gains (losses) on equity securities held as of March 31, 2021, 2022 and 2023 were gains of ¥83,643 million, ¥26,075 million and ¥18,065 million for fiscal 2021, 2022 and 2023, respectively, which did not include net unrealized holding gains (losses) on both investment funds above mentioned.
Equity securities include
non-marketable
equity securities and preferred equity securities, etc. elected for the measurement alternative. Upward or downward adjustments resulting from observable price changes are included in gains on investment securities and dividends and life insurance premiums and related investment income. Impairments are included in write-downs of securities. The following tables provide information about impairment and upward or downward adjustments resulting from observable price changes as of March 31, 2022 and 2023, and for fiscal 2022 and 2023.

|  | Millions of yen |
|  | March 31, 2022 |  |  | Fiscal Year ended March 31, 2022 |
|  | Carrying value |  |  | Accumulated impairments and downward adjustments |  |  | Accumulated upward adjustments |  |  | Impairments and downward adjustments |  |  | Upward adjustments |
Equity securities measured using the measurement alternative |  | ¥ | 58,723 |  |  | ¥ | (13,880 | ) |  | ¥ | 401 |  |  | ¥ | (208 | ) |  | ¥ | 163 |
|  | Millions of yen |
|  | March 31, 2023 |  |  | Fiscal Year ended March 31, 2023 |
|  | Carrying value |  |  | Accumulated impairments and downward adjustments |  |  | Accumulated upward adjustments |  |  | Impairments and downward adjustments |  |  | Upward adjustments |
Equity securities measured using the measurement alternative |  | ¥ | 67,820 |  |  | ¥ | (14,062 | ) |  | ¥ | 1,742 |  |  | ¥ | (787 | ) |  | ¥ | 1,360 |

Gains and losses realized from the sale of trading debt securities and net unrealized holding gains (losses) on trading debt securities are included in gains on investment securities and dividends. Net unrealized holding gains (losses) on trading debt securities held as of March 31, 2021, 2022 and 2023 were gains of ¥120 million, ¥213 million and
losses of
¥469 million for fiscal 2021, 2022 and 2023, respectively.
During fiscal 2021, 2022 and 2023, the Company and its subsidiaries sold
available-for-sale
debt securities for aggregate proceeds of ¥285,836 million, ¥239,250 million and ¥323,773 million, respectively, resulting in gross realized gains of ¥8,854 million, ¥6,493 million and ¥7,757 million, respectively, and gross realized losses of ¥1,918 million, ¥1,236 million and ¥8,367 million, respectively. The cost of the
available-for-sale
securities or the debt securities sold was based on the average cost of each issue of securities held at the time of the sale.
Certain subsidiaries elected the fair value option for certain investments in investment funds, and others included in equity securities whose net asset values do not represent the fair value of investments due to the illiquid nature of these investments. The subsidiaries manage these investments on a fair value basis and the election of the fair value option enables the subsidiaries to reflect more appropriate assumptions to measure the fair value of these investments. As of March 31, 2022 and 2023, these investments were fair valued at ¥11,709 million and ¥16,032 million, respectively.
A certain subsidiary elected the fair value option for investments in foreign government bond securities included in
available-for-sale
debt securities to mitigate volatility in the consolidated statements of income
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ORIX Corporation and Subsidiaries
caused by the difference in recognition of gain or loss that would otherwise exist between the foreign government bond securities and the derivatives used to reduce the risks of fluctuations in market interest rates and exchange rates on these foreign government bond securities. There were no such investments as of March 31, 2022. As of March 31, 2023, these investments were fair valued at ¥237 million.
A certain subsidiary elected the fair value option for investments in foreign corporate debt securities included in
available-for-sale
debt securities to mitigate volatility in the consolidated statements of income caused by the difference in recognition of gain or loss that would otherwise exist between the foreign corporate debt securities and the derivatives used to reduce the risks of fluctuations in market interest rates and exchange rates on these foreign corporate debt securities. As of March 31, 2022 and 2023, these investments were fair valued at ¥7,644 million and ¥6,605 million, respectively.
The amortized cost basis amounts, gross unrealized holding gains, gross unrealized holding losses and fair values of
available-for-sale
debt securities and
held-to-maturity
debt securities in each major security type as of March 31, 2022 and 2023 are as follows:
March 31, 2022

|  | Millions of yen |
|  | Amortized cost |  |  | Allowance for credit losses |  |  | Gross unrealized gains |  |  | Gross unrealized losses |  |  | Fair value |
Available-for-sale debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japanese and foreign government bond securities |  | ¥ | 905,004 |  |  | ¥ | 0 |  |  | ¥ | 5,178 |  |  | ¥ | (77,569 | ) |  | ¥ | 832,613 |
Japanese prefectural and foreign municipal bond securities |  |  | 333,449 |  |  |  | (132 | ) |  |  | 2,482 |  |  |  | (10,195 | ) |  |  | 325,604 |
Corporate debt securities |  |  | 873,178 |  |  |  | 0 |  |  |  | 10,014 |  |  |  | (33,632 | ) |  |  | 849,560 |
CMBS and RMBS in the Americas |  |  | 29,349 |  |  |  | 0 |  |  |  | 112 |  |  |  | (729 | ) |  |  | 28,732 |
Other asset-backed securities and debt securities |  |  | 135,445 |  |  |  | (21 | ) |  |  | 5,456 |  |  |  | (2,498 | ) |  |  | 138,382 |
|  |  | 2,276,425 |  |  |  | (153 | ) |  |  | 23,242 |  |  |  | (124,623 | ) |  |  | 2,174,891 |
Held-to-maturity debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japanese government bond securities and other |  |  | 114,312 |  |  |  | 0 |  |  |  | 21,129 |  |  |  | 0 |  |  |  | 135,441 |
|  | ¥ | 2,390,737 |  |  | ¥ | (153 | ) |  | ¥ | 44,371 |  |  | ¥ | (124,623 | ) |  | ¥ | 2,310,332 |

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ORIX Corporation and Subsidiaries
March 31, 2023

|  | Millions of yen |
|  | Amortized cost |  |  | Allowance for credit losses |  |  | Gross unrealized gains |  |  | Gross unrealized losses |  |  | Fair value |
Available-for-sale debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japanese and foreign government bond securities |  | ¥ | 962,969 |  |  | ¥ | 0 |  |  | ¥ | 2,863 |  |  | ¥ | (164,537 | ) |  | ¥ | 801,295 |
Japanese prefectural and foreign municipal bond securities |  |  | 389,150 |  |  |  | (144 | ) |  |  | 1,146 |  |  |  | (20,906 | ) |  |  | 369,246 |
Corporate debt securities |  |  | 851,525 |  |  |  | 0 |  |  |  | 6,270 |  |  |  | (73,407 | ) |  |  | 784,388 |
CMBS and RMBS in the Americas |  |  | 45,292 |  |  |  | 0 |  |  |  | 62 |  |  |  | (2,181 | ) |  |  | 43,173 |
Other asset-backed securities and debt securities |  |  | 239,922 |  |  |  | 0 |  |  |  | 5,735 |  |  |  | (9,151 | ) |  |  | 236,506 |
|  |  | 2,488,858 |  |  |  | (144 | ) |  |  | 16,076 |  |  |  | (270,182 | ) |  |  | 2,234,608 |
Held-to-maturity debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japanese government bond securities and other |  |  | 114,759 |  |  |  | 0 |  |  |  | 14,919 |  |  |  | 0 |  |  |  | 129,678 |
|  | ¥ | 2,603,617 |  |  | ¥ | (144 | ) |  | ¥ | 30,995 |  |  | ¥ | (270,182 | ) |  | ¥ | 2,364,286 |

The following table presents rollforwards of the allowance for credit losses for fiscal 2021, 2022 and 2023, respectively.

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2021 |
|  | Foreign municipal bond securities |  |  | Total |
Beginning |  | ¥ | 0 |  |  | ¥ | 0 |
Additions to the allowance for credit losses on available-for-sale debt securities for which credit losses were not previously recorded* |  |  | 120 |  |  |  | 120 |
Ending |  | ¥ | 120 |  |  | ¥ | 120 |

* | An increase from the effects of changes in foreign exchange rates of ¥3 million was included in additions to the allowance for credit losses on available-for-sale debt securities for fiscal 2021.

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2022 |
|  | Foreign municipal bond securities |  |  | Japanese other asset- backed securities and debt securities |  |  | Total |
Beginning |  | ¥ | 120 |  |  | ¥ | 0 |  |  | ¥ | 120 |
Additions to the allowance for credit losses on available-for-sale debt securities for which credit losses were not previously recorded |  |  | 0 |  |  |  | 21 |  |  |  | 21 |
Increase (Decrease) from the effects of changes in foreign exchange rates |  |  | 12 |  |  |  | 0 |  |  |  | 12 |
Ending |  | ¥ | 132 |  |  | ¥ | 21 |  |  | ¥ | 153 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2023 |
|  | Foreign municipal bond securities |  |  | Japanese other asset- backed securities and debt securities |  |  | Total |
Beginning |  | ¥ | 132 |  |  | ¥ | 21 |  |  | ¥ | 153 |
Additional increases (decreases) to the allowance for credit losses on AFS debt securities that had an allowance recorded in a previous period, net |  |  | 0 |  |  |  | (21 | ) |  |  | (21 | )
Increase (Decrease) from the effects of changes in foreign exchange rates |  |  | 12 |  |  |  | 0 |  |  |  | 12 |
Ending |  | ¥ | 144 |  |  | ¥ | 0 |  |  | ¥ | 144 |

The following tables provide information about
available-for-sale
debt securities with gross unrealized losses (including allowance for credit losses) and the length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2022 and 2023, respectively:
March 31, 2022

|  | Millions of yen |
|  | Less than 12 months |  |  | 12 months or more |  |  | Total |
|  | Fair value |  |  | Gross unrealized losses |  |  | Fair value |  |  | Gross unrealized losses |  |  | Fair value |  |  | Gross unrealized losses |
Available-for-sale debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japanese and foreign government bond securities |  | ¥ | 217,457 |  |  | ¥ | (16,117 | ) |  | ¥ | 521,633 |  |  | ¥ | (61,452 | ) |  | ¥ | 739,090 |  |  | ¥ | (77,569 | )
Japanese prefectural and foreign municipal bond securities |  |  | 190,081 |  |  |  | (6,509 | ) |  |  | 46,391 |  |  |  | (3,818 | ) |  |  | 236,472 |  |  |  | (10,327 | )
Corporate debt securities |  |  | 373,506 |  |  |  | (19,340 | ) |  |  | 156,687 |  |  |  | (14,292 | ) |  |  | 530,193 |  |  |  | (33,632 | )
CMBS and RMBS in the Americas |  |  | 6,458 |  |  |  | (98 | ) |  |  | 17,542 |  |  |  | (631 | ) |  |  | 24,000 |  |  |  | (729 | )
Other asset-backed securities and debt securities |  |  | 66,543 |  |  |  | (995 | ) |  |  | 37,432 |  |  |  | (1,524 | ) |  |  | 103,975 |  |  |  | (2,519 | )
|  | ¥ | 854,045 |  |  | ¥ | (43,059 | ) |  | ¥ | 779,685 |  |  | ¥ | (81,717 | ) |  | ¥ | 1,633,730 |  |  | ¥ | (124,776 | )

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ORIX Corporation and Subsidiaries
March 31, 2023

|  | Millions of yen |
|  | Less than 12 months |  |  | 12 months or more |  |  | Total |
|  | Fair value |  |  | Gross unrealized losses |  |  | Fair value |  |  | Gross unrealized losses |  |  | Fair value |  |  | Gross unrealized losses |
Available-for-sale debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japanese and foreign government bond securities |  | ¥ | 2,588 |  |  | ¥ | (207 | ) |  | ¥ | 662,897 |  |  | ¥ | (164,330 | ) |  | ¥ | 665,485 |  |  | ¥ | (164,537 | )
Japanese prefectural and foreign municipal bond securities |  |  | 97,721 |  |  |  | (1,508 | ) |  |  | 194,280 |  |  |  | (19,542 | ) |  |  | 292,001 |  |  |  | (21,050 | )
Corporate debt securities |  |  | 191,669 |  |  |  | (6,570 | ) |  |  | 401,994 |  |  |  | (66,837 | ) |  |  | 593,663 |  |  |  | (73,407 | )
CMBS and RMBS in the Americas |  |  | 16,691 |  |  |  | (672 | ) |  |  | 23,653 |  |  |  | (1,509 | ) |  |  | 40,344 |  |  |  | (2,181 | )
Other asset-backed securities and debt securities |  |  | 63,958 |  |  |  | (2,300 | ) |  |  | 88,503 |  |  |  | (6,851 | ) |  |  | 152,461 |  |  |  | (9,151 | )
|  | ¥ | 372,627 |  |  | ¥ | (11,257 | ) |  | ¥ | 1,371,327 |  |  | ¥ | (259,069 | ) |  | ¥ | 1,743,954 |  |  | ¥ | (270,326 | )

The following table provides information about
available-for-sale
debt securities with gross unrealized losses for which allowance for credit losses were not recorded and the length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2022 and 2023, respectively:
March 31, 2022

|  | Millions of yen |
|  | Less than 12 months |  |  | 12 months or more |  |  | Total |
|  | Fair value |  |  | Gross unrealized losses |  |  | Fair value |  |  | Gross unrealized losses |  |  | Fair value |  |  | Gross unrealized losses |
Available-for-sale debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japanese and foreign government bond securities |  | ¥ | 217,457 |  |  | ¥ | (16,117 | ) |  | ¥ | 521,633 |  |  | ¥ | (61,452 | ) |  | ¥ | 739,090 |  |  | ¥ | (77,569 | )
Japanese prefectural and foreign municipal bond securities |  |  | 190,081 |  |  |  | (6,509 | ) |  |  | 43,338 |  |  |  | (3,686 | ) |  |  | 233,419 |  |  |  | (10,195 | )
Corporate debt securities |  |  | 373,506 |  |  |  | (19,340 | ) |  |  | 156,687 |  |  |  | (14,292 | ) |  |  | 530,193 |  |  |  | (33,632 | )
CMBS and RMBS in the Americas |  |  | 6,458 |  |  |  | (98 | ) |  |  | 17,542 |  |  |  | (631 | ) |  |  | 24,000 |  |  |  | (729 | )
Other asset-backed securities and debt securities |  |  | 66,489 |  |  |  | (974 | ) |  |  | 37,432 |  |  |  | (1,524 | ) |  |  | 103,921 |  |  |  | (2,498 | )
|  | ¥ | 853,991 |  |  | ¥ | (43,038 | ) |  | ¥ | 776,632 |  |  | ¥ | (81,585 | ) |  | ¥ | 1,630,623 |  |  | ¥ | (124,623 | )

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ORIX Corporation and Subsidiaries
March 31, 2023

|  | Millions of yen |
|  | Less than 12 months |  |  | 12 months or more |  |  | Total |
|  | Fair value |  |  | Gross unrealized losses |  |  | Fair value |  |  | Gross unrealized losses |  |  | Fair value |  |  | Gross unrealized losses |
Available-for-sale debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japanese and foreign government bond securities |  | ¥ | 2,588 |  |  | ¥ | (207 | ) |  | ¥ | 662,897 |  |  | ¥ | (164,330 | ) |  | ¥ | 665,485 |  |  | ¥ | (164,537 | )
Japanese prefectural and foreign municipal bond securities |  |  | 97,721 |  |  |  | (1,508 | ) |  |  | 190,805 |  |  |  | (19,398 | ) |  |  | 288,526 |  |  |  | (20,906 | )
Corporate debt securities |  |  | 191,669 |  |  |  | (6,570 | ) |  |  | 401,994 |  |  |  | (66,837 | ) |  |  | 593,663 |  |  |  | (73,407 | )
CMBS and RMBS in the Americas |  |  | 16,691 |  |  |  | (672 | ) |  |  | 23,653 |  |  |  | (1,509 | ) |  |  | 40,344 |  |  |  | (2,181 | )
Other asset-backed securities and debt securities |  |  | 63,958 |  |  |  | (2,300 | ) |  |  | 88,503 |  |  |  | (6,851 | ) |  |  | 152,461 |  |  |  | (9,151 | )
|  | ¥ | 372,627 |  |  | ¥ | (11,257 | ) |  | ¥ | 1,367,852 |  |  | ¥ | (258,925 | ) |  | ¥ | 1,740,479 |  |  | ¥ | (270,182 | )

The number of investment securities that were in an unrealized loss position as of March 31, 2022 and 2023 were 963 and 1,208, respectively. The gross unrealized losses on these debt securities are attributable to a number of factors including changes in interest rates, credit spreads and market trends.
As of March 31, 2022 and 2023, the amount of accrued revenues on
available-for-sale
debt securities were ¥8,798 million and ¥10,781 million, respectively, which was included in other assets. The Company and its subsidiaries estimate credit losses and develop an allowance for credit losses for accrued interest receivables. There was no allowance for credit losses for accrued interest receivables as of March 31, 2023.
For
available-for-sale
debt securities, if the fair value is less than the amortized cost, the debt securities are impaired. The Company and its subsidiaries identify per each impaired security whether the decline of fair value is due to credit losses component or
non-credit
losses component. Impairment related to credit losses is recognized in earning through an allowance for credit losses. Impairment related to other factors than credit losses is recognized in other comprehensive income (loss), net of applicable income taxes. In estimating an allowance of credit losses, the Company and its subsidiaries consider the existence of credit losses if the present value of estimated cash flows is less than the amortized cost basis. When the Company and its subsidiaries intend to sell the debt securities for which an allowance for credit losses is previously established or it is more likely than not that the Company and its subsidiaries will be required to sell the debt securities before recovery of the amortized cost basis, the allowance for credit losses is fully
written-off
and the amortized cost is reduced to the fair value after recognizing additional impairment in earnings. In addition, the Company and its subsidiaries recognize in earnings the full difference between the amortized cost and the fair value of the debt securities by direct write-down, without any allowance for credit losses, if the debt securities are expected to be sold and the fair value is less than the amortized cost.
Credit losses related to available-for-sale debt securities recognized for fiscal 2021 were resulting from foreign municipal bond securities due to a decrease in the occupancy rate of the underlying assets. Credit losses related to
available-for-sale
debt securities recognized for fiscal 2022 were resulting from Japanese other asset-backed securities and debt securities due to deterioration in the financial condition of the credit guarantor of the underlying receivables. Reversals of credit losses related to
available-for-sale
debt securities recognized for fiscal
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ORIX Corporation and Subsidiaries
2023 resulted from the redemption of Japanese other asset-backed and debt securities, as of March 31, 2023. The evaluation of credit losses with
available-for-sale
debt securities is compared to the amortized cost of debt securities with the present value of cash flows estimated based on a number of overall conditions, including estimated fair value of the underlying receivables and the repayment priority of the securities. Because the Company and its subsidiaries do not intend to sell the debt security or it is more likely than not that the Company and its subsidiaries will be required to sell the debt security before recovery of its amortized cost basis, the Company and its subsidiaries recognized the allowance for credit losses.
Unrealized losses on
available-for-sale
debt securities mainly result from changes in market interest rates and foreign exchange rates, and changes in risk premiums. In order to evaluate the recoverability of the
available-for-sale
debt securities, the Company and its subsidiaries utilize all available information such as issuer’s financial condition and business outlook. The fair value of Japanese and foreign government bond securities, Japanese prefectural and foreign municipal bond, and corporate debt securities is mainly estimated based on prices for similar assets. If there are no prices for similar assets available, the fair value of these securities is estimated by using discounted cash flow methodologies and broker quotes. The fair value of CMBS and RMBS in the Americas and other asset-backed securities and debt securities refers to prices from independent pricing service vendors and brokers, such as trading prices and bit prices. If the Company and its subsidiaries cannot rely on such prices, the fair value is calculated by using discounted cash flow methodologies and broker quotes. In discounted cash flow methodologies, future cash flows estimated based on a number of assumptions such as default rate, prepayment rate, and seniority are discounted by discount rate adjusted for credit risk and liquidity risk.
The following is a summary of the contractual maturities of
available-for-sale
debt securities and
held-to-maturity
debt securities held as of March 31, 2023:
Available-for-sale
debt securities held as of March 31, 2023

|  | Millions of yen |
|  | Amortized cost |  |  | Fair value |
Due within one year |  | ¥ | 75,103 |  |  | ¥ | 75,662 |
Due after one to five years |  |  | 305,405 |  |  |  | 305,832 |
Due after five to ten years |  |  | 378,144 |  |  |  | 364,070 |
Due after ten years |  |  | 1,730,206 |  |  |  | 1,489,044 |
|  | ¥ | 2,488,858 |  |  | ¥ | 2,234,608 |

Held-to-maturity
debt securities held as of March 31, 2023

|  | Millions of yen |
|  | Amortized cost |  |  | Fair value |
Due after five to ten years |  | ¥ | 28,658 |  |  | ¥ | 32,204 |
Due after ten years |  |  | 86,101 |  |  |  | 97,474 |
|  | ¥ | 114,759 |  |  | ¥ | 129,678 |

Debt securities not due at a single maturity date, such as mortgage-backed securities, are included in the above table based on their final maturities.
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ORIX Corporation and Subsidiaries
Certain borrowers may have the right to call or prepay obligations. This right may cause actual maturities to differ from the contractual maturities summarized above.
Included in finance revenues in the consolidated statements of income is interest income on investment securities of ¥11,870 million, ¥12,737 million and ¥19,906 million for fiscal 2021, 2022 and 2023, respectively.
There were no
available-for-sale
debt securities accounted for as purchased credit deterioration financial assets acquired during fiscal 2022 and 2023.
10. Transfer of Financial Assets
The Company and its subsidiaries have securitized and transferred financial assets such as installment loans (commercial mortgage loans, housing loans and other).
In the securitization process, these financial assets are transferred to SPEs that issue beneficial interests of the securitization trusts and securities backed by the financial assets to investors. The cash flows collected from these assets transferred to the SPEs are then used to repay these asset-backed beneficial interests and securities. As the transferred assets are isolated from the Company and its subsidiaries, the investors and the SPEs have no recourse to other assets of the Company and its subsidiaries in cases where the debtors or the issuers of the transferred financial assets fail to perform under the original terms of those financial assets.
The Company and its subsidiaries often have continuing involvement with transferred financial assets by retaining the servicing arrangements and the interests in the SPEs in the form of the beneficial interest of the securitization trusts. Those interests that continue to be held include interests in the transferred assets and are often subordinate to other tranche(s) of the securitization. Those beneficial interests that continue to be held by the Company and its subsidiaries are subject to credit risk, interest rate risk and prepayment risk on the securitized financial assets. With regards to these subordinated interests that the Company and its subsidiaries retain, they are subordinated to the senior investments and are exposed to different credit and prepayment risks, since they first absorb the risk of the decline in the cash flows from the financial assets transferred to the SPEs for defaults and prepayment of the transferred assets. If there is any excess cash remaining in the SPEs after payment to investors in the securitization of the contractual rate of returns, most of such excess cash is distributed to the Company and its subsidiaries for payments of the subordinated interests. SPEs used in securitization transactions have been consolidated if the Company and its subsidiaries are the primary beneficiary of the SPEs.
When the Company and its subsidiaries have transferred financial assets to a transferee that is not subject to consolidation, the Company and its subsidiaries account for the transfer as a sale if control over the transferred assets is surrendered.
During fiscal 2021, 2022 and 2023, the amount of installment loans that has been derecognized due to new securitization and transfer of loans were ¥1,306,495 million, ¥1,317,496 million and ¥905,218 million, respectively. For fiscal 2021, 2022 and 2023, gains (losses) from the securitization and transfer of loans were ¥36,624 million, ¥34,301 million and ¥18,462 million, respectively, which is included in finance revenues in the consolidated statements of income.
A certain subsidiary originates and sells loans into the secondary market while retaining the obligation to service those loans. In addition, the subsidiary undertakes obligations to service loans originated by others. The
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
servicing assets related to those servicing activities are included in other assets in the consolidated balance sheets and roll-forwards of the amount of the servicing assets during fiscal 2022 and 2023 are as follows:

|  | Millions of yen |
|  | 2022 |  |  | 2023 |
Beginning balance |  | ¥ | 63,754 |  |  | ¥ | 70,254 |
Increase mainly from loans sold with servicing retained |  |  | 13,285 |  |  |  | 9,546 |
Decrease mainly from amortization |  |  | (13,518 | ) |  |  | (13,959 | )
Increase (Decrease) from the effects of changes in foreign exchange rates |  |  | 6,733 |  |  |  | 6,424 |
Ending balance |  | ¥ | 70,254 |  |  | ¥ | 72,265 |

The fair value of the servicing assets as of March 31, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | March 31, 2022 |  |  | March 31, 2023 |
Beginning balance |  | ¥ | 74,135 |  |  | ¥ | 83,732 |
Ending balance |  | ¥ | 83,732 |  |  | ¥ | 101,375 |

11. Variable Interest Entities
The Company and its subsidiaries use SPEs in the ordinary course of business.
These SPEs are not always controlled by voting rights, and there are cases where voting rights do not exist for these SPEs. The Company and its subsidiaries determine a variable interest entity (hereinafter, “VIE”) among those SPEs when (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by any parties, including the equity holders or (b) as a group, the holders of the equity investment at risk do not have (1) the ability to make decisions about an entity’s activities that most significantly impact the entity’s economic performance through voting rights or similar rights, (2) the obligation to absorb the expected losses of the entity or (3) the right to receive the expected residual returns of the entity.
The Company and its subsidiaries perform a qualitative analysis to identify the primary beneficiary of VIEs. An enterprise that has both of the following characteristics is considered to be the primary beneficiary and therefore results in the consolidation of the VIE:

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

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

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

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

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ORIX Corporation and Subsidiaries

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

| • |  | involvement of other variable interest holders; and

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

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

| • |  | designing the structuring of a transaction;

| • |  | providing an equity investment and debt financing;

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

| • |  | providing liquidity and other financial support.

The Company and its subsidiaries do not have the power to direct activities of a VIE that most significantly impact the VIE’s economic performance if that power is shared among multiple unrelated parties, and accordingly do not consolidate such VIE.
Information about VIEs (consolidated and
non-consolidated)
for the Company and its subsidiaries are as follows:

1. | Consolidated VIEs

March 31, 2022

|  | Millions of yen |
Types of VIEs |  | Total assets*1 |  |  | Total liabilities*1 |  |  | Assets which are pledged as collateral*2 |  |  | Commitments*3 |
(a)   VIEs for liquidating customer assets |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 0 |
(b)   VIEs for acquisition of real estate and real estate development projects for customers |  |  | 1,988 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
(c)   VIEs for acquisition of real estate for the Company and its subsidiaries’ real estate-related business |  |  | 60,762 |  |  |  | 12,576 |  |  |  | 16,241 |  |  |  | 0 |
(d)   VIEs for corporate rehabilitation support business |  |  | 214 |  |  |  | 5 |  |  |  | 0 |  |  |  | 0 |
(e)   VIEs for investment in securities |  |  | 132,805 |  |  |  | 302 |  |  |  | 0 |  |  |  | 45,241 |
(f)   VIEs for securitizing financial assets such as finance lease receivable and loan receivable |  |  | 223,807 |  |  |  | 160,434 |  |  |  | 223,807 |  |  |  | 0 |
(g)   VIEs for securitization of loan receivable originated by third parties |  |  | 542 |  |  |  | 1,093 |  |  |  | 542 |  |  |  | 0 |
(h)   VIEs for power generation projects |  |  | 278,660 |  |  |  | 219,476 |  |  |  | 260,551 |  |  |  | 42,742 |
(i) Other VIEs |  |  | 199,186 |  |  |  | 89,672 |  |  |  | 174,807 |  |  |  | 0 |
Total |  | ¥ | 897,964 |  |  | ¥ | 483,558 |  |  | ¥ | 675,948 |  |  | ¥ | 87,983 |

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ORIX Corporation and Subsidiaries
March 31, 2023

|  | Millions of yen |
Types of VIEs |  | Total assets*1 |  |  | Total liabilities*1 |  |  | Assets which are pledged as collateral*2 |  |  | Commitments*3 |
(a)   VIEs for liquidating customer assets |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 0 |
(b)   VIEs for acquisition of real estate and real estate development projects for customers |  |  | 1,907 |  |  |  | 1 |  |  |  | 0 |  |  |  | 0 |
(c)   VIEs for acquisition of real estate for the Company and its subsidiaries’ real estate-related business |  |  | 55,456 |  |  |  | 13,060 |  |  |  | 15,596 |  |  |  | 0 |
(d)   VIEs for corporate rehabilitation support business |  |  | 664 |  |  |  | 7 |  |  |  | 0 |  |  |  | 0 |
(e)   VIEs for investment in securities |  |  | 180,569 |  |  |  | 399 |  |  |  | 0 |  |  |  | 62,340 |
(f)   VIEs for securitizing financial assets such as finance lease receivable and loan receivable |  |  | 224,949 |  |  |  | 155,706 |  |  |  | 224,949 |  |  |  | 0 |
(g)   VIEs for securitization of loan receivable originated by third parties |  |  | 548 |  |  |  | 1,106 |  |  |  | 548 |  |  |  | 0 |
(h)   VIEs for power generation projects |  |  | 258,396 |  |  |  | 164,813 |  |  |  | 187,892 |  |  |  | 38,099 |
(i) Other VIEs |  |  | 168,574 |  |  |  | 63,864 |  |  |  | 137,481 |  |  |  | 0 |
Total |  | ¥ | 891,063 |  |  | ¥ | 398,956 |  |  | ¥ | 566,466 |  |  | ¥ | 100,439 |

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

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

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

2. | Non-consolidated VIEs

March 31, 2022

|  | Millions of yen |
|  |  |  |  | Carrying amount of the variable interests in the VIEs held by the Company and its subsidiaries |  |  |  |
Types of VIEs |  | Total assets |  |  | Non-recourse loans |  |  | Investments |  |  | Maximum exposure to loss * |
(a)   VIEs for liquidating customer assets |  | ¥ | 13,391 |  |  | ¥ | 405 |  |  | ¥ | 991 |  |  | ¥ | 1,396 |
(b)   VIEs for acquisition of real estate and real estate development projects for customers |  |  | 546,953 |  |  |  | 8,134 |  |  |  | 9,119 |  |  |  | 18,735 |
(c)   VIEs for acquisition of real estate for the Company and its subsidiaries’ real estate-related business |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
(d)   VIEs for corporate rehabilitation support business |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
(e)   VIEs for investment in securities |  |  | 6,901,686 |  |  |  | 0 |  |  |  | 79,050 |  |  |  | 123,674 |
(f)   VIEs for securitizing financial assets such as finance lease receivable and loan receivable |  |  | 154 |  |  |  | 0 |  |  |  | 2 |  |  |  | 2 |
(g)   VIEs for securitization of loan receivable originated by third parties |  |  | 1,231,246 |  |  |  | 0 |  |  |  | 15,254 |  |  |  | 15,254 |
(h)   VIEs for power generation projects |  |  | 9,103 |  |  |  | 0 |  |  |  | 402 |  |  |  | 402 |
(i) Other VIEs |  |  | 914,801 |  |  |  | 3,140 |  |  |  | 15,098 |  |  |  | 32,123 |
Total |  | ¥ | 9,617,334 |  |  | ¥ | 11,679 |  |  | ¥ | 119,916 |  |  | ¥ | 191,586 |

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ORIX Corporation and Subsidiaries
March 31, 2023

|  | Millions of yen |
|  |  |  |  | Carrying amount of the variable interests in the VIEs held by the Company and its subsidiaries |  |  |  |
Types of VIEs |  | Total assets |  |  | Non-recourse loans |  |  | Investments |  |  | Maximum exposure to loss * |
(a)   VIEs for liquidating customer assets |  | ¥ | 8,247 |  |  | ¥ | 0 |  |  | ¥ | 991 |  |  | ¥ | 991 |
(b)   VIEs for acquisition of real estate and real estate development projects for customers |  |  | 648,468 |  |  |  | 10,721 |  |  |  | 8,805 |  |  |  | 20,526 |
(c)   VIEs for acquisition of real estate for the Company and its subsidiaries’ real estate-related business |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
(d)   VIEs for corporate rehabilitation support business |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
(e)   VIEs for investment in securities |  |  | 10,887,430 |  |  |  | 0 |  |  |  | 98,742 |  |  |  | 173,314 |
(f)   VIEs for securitizing financial assets such as finance lease receivable and loan receivable |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
(g)   VIEs for securitization of loan receivable originated by third parties |  |  | 901,544 |  |  |  | 0 |  |  |  | 10,475 |  |  |  | 10,475 |
(h)   VIEs for power generation projects |  |  | 16,138 |  |  |  | 0 |  |  |  | 3,691 |  |  |  | 4,491 |
(i) Other VIEs |  |  | 1,726,717 |  |  |  | 3,333 |  |  |  | 28,835 |  |  |  | 43,405 |
Total |  | ¥ | 14,188,544 |  |  | ¥ | 14,054 |  |  | ¥ | 151,539 |  |  | ¥ | 253,202 |

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

(a) VIEs for liquidating customer assets
The Company and its subsidiaries may use VIEs in structuring financing for customers to liquidate specific customer assets. The VIEs are typically used to provide a structure that is bankruptcy remote with respect to the customer and the use of VIE structure is requested by such customer. Such VIEs typically acquire assets to be liquidated from the customer, borrow
non-recourse
loans from financial institutions and have an equity investment made by the customer. The Company and its subsidiaries provide
non-recourse
loans to such VIEs and make investments in them. By using cash flows from the liquidated assets, these VIEs repay the loan and pay dividends to equity investors if sufficient funds exist.
With respect to variable interests of
non-consolidated
VIEs held by the Company and its subsidiaries,
non-recourse
loans are included in installment loans, and investments are mainly included in other assets in the Company’s consolidated balance sheets.
(b) VIEs for acquisition of real estate and real estate development projects for customers
Customers, and the Company and its subsidiaries, are involved with VIEs formed to acquire real estate and/or develop real estate projects. In each case, a customer establishes and makes an equity investment in a VIE that is designed to be bankruptcy remote from the customer. The VIEs acquire real estate and/or develop real estate projects.
The Company and its subsidiaries provide
non-recourse
loans to such VIEs and hold specified bonds issued by them and/or make investments in them. The Company and its subsidiaries have consolidated certain VIEs because the Company or its subsidiary effectively controls the VIEs by acting as the asset manager of the VIEs.
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ORIX Corporation and Subsidiaries
In the Company’s consolidated balance sheets, assets of consolidated VIEs are mainly included in cash and cash equivalents, and investment in affiliates.
With respect to variable interests of
non-consolidated
VIEs held by the Company and its subsidiaries,
non-recourse
loans are included in installment loans, and investments are mainly included in investment in securities, investment in affiliates and other assets in the Company’s consolidated balance sheets. The Company and its subsidiaries concluded that the VIEs are not consolidated because the power to direct these VIEs is held by unrelated parties. In some cases, the Company and its subsidiaries concluded that the VIEs are not consolidated because the power to direct these VIEs is shared among multiple unrelated parties. Certain subsidiaries have commitment agreements by which the Company and its subsidiaries may be required to make additional investment in certain such
non-consolidated
VIEs.
(c) VIEs for acquisition of real estate for the Company and its subsidiaries’ real estate-related business
The Company and its subsidiaries establish VIEs and acquire real estate to borrow
non-recourse
loans from financial institutions and simplify the administration activities necessary for the real estate.
The Company and its subsidiaries consolidate such VIEs even though the Company and its subsidiaries may not have voting rights if substantially all of such VIEs’ subordinated interests are issued to the Company and its subsidiaries, and therefore the VIEs are controlled by and for the benefit of the Company and its subsidiaries.
In the Company’s consolidated balance sheets, assets of the consolidated VIEs are mainly included in cash and cash equivalents, restricted cash, investment in operating leases, investment in securities, property under facility operations and other assets, and liabilities of those consolidated VIEs are mainly included in short-term debt, long-term debt and other liabilities.
(d) VIEs for corporate rehabilitation support business
Financial institutions, the Company and its subsidiaries are involved with VIEs established for the corporate rehabilitation support business. VIEs receive the funds from investors including the financial institutions, the Company and the subsidiary, and purchase loan receivables due from borrowers which have financial problems, but are deemed to have the potential to recover in the future. The servicing operations for the VIEs are conducted by the subsidiary.
The Company and its subsidiaries consolidated such VIEs since the Company and its subsidiaries have the majority of the investment share of such VIEs, and have the power to direct the activities of the VIEs that most significantly impact the entities’ economic performance through the servicing operations.
In the Company’s consolidated balance sheets, assets of the consolidated VIEs are mainly included in installment loans, and liabilities of those consolidated VIEs are mainly included in other liabilities.
(e) VIEs for investment in securities
The Company and its subsidiaries have interests in VIEs that are investment funds and mainly invest in equity and debt securities. Such VIEs are managed by certain subsidiaries or fund management companies that are independent of the Company and its subsidiaries.
Certain subsidiaries consolidated certain such VIEs since the subsidiaries have the majority of the investment share of them, and have the power to direct the activities of those VIEs that most significantly impact the entities’ economic performance through involvement with the design of the VIEs or other means.
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ORIX Corporation and Subsidiaries
In the Company’s consolidated balance sheets, assets of the consolidated VIEs are mainly included in investment in securities and investment in affiliates, and liabilities of those consolidated VIEs are mainly included in other liabilities. The Company and certain subsidiaries have commitment agreements by which the Company and the subsidiaries may be required to make additional investment or execute loans in certain such consolidated VIEs.
Variable interests of
non-consolidated
VIEs, which the Company and its subsidiaries have, are included in investment in securities in the Company’s consolidated balance sheets. The Company and its subsidiaries have commitment agreements by which the Company and its subsidiaries may be required to make additional investment in certain such
non-consolidated
VIEs.
(f) VIEs for securitizing financial assets such as finance lease receivable and loan receivable
The Company and its subsidiaries use VIEs to securitize financial assets such as loan receivables. In the securitization process, these financial assets are transferred to SPEs, and the SPEs issue beneficial interests or securities backed by the transferred financial assets to investors. After the securitization, the Company and its subsidiaries continue to hold a subordinated part of the securities and act as a servicer.
The Company and its subsidiaries consolidated such VIEs since the Company and its subsidiaries have the power to direct the activities that most significantly impact the entity’s economic performance by designing the securitization scheme and conducting servicing activities, and have a responsibility to absorb losses of the VIEs that could potentially be significant to the entities by retaining the subordinated part of the securities.
In the Company’s consolidated balance sheets, assets of the consolidated VIEs are mainly included in restricted cash and installment loans, and liabilities of those consolidated VIEs are mainly included in long-term debt. Variable interests of
non-consolidated
VIEs, which the Company and its subsidiaries have, are included in other assets in the Company’s consolidated balance sheets.
(g) VIEs for securitization of loan receivable originated by third parties
The Company and its subsidiaries invest in CMBS, RMBS and other asset-backed securities originated by third parties. In some cases of such securitization, certain subsidiaries hold the subordinated portion and the subsidiaries act as a special-servicer of the securitization transaction. As the special servicer, the subsidiaries have rights to dispose of real estate collateral related to the securitized commercial mortgage loans.
The subsidiaries consolidate certain of these VIEs when the subsidiaries have the power to direct the activities of the VIEs that most significantly impact the entities’ economic performance through its role as special-servicer, including the right to dispose of the collateral, and have a responsibility to absorb losses of the VIEs that could potentially be significant to the entities by holding the subordinated part of the securities.
In the Company’s consolidated balance sheets, assets of the consolidated VIEs are mainly included in installment loans, and liabilities of those consolidated VIEs are mainly included in long-term debt.
Variable interests of
non-consolidated
VIEs, which the Company and its subsidiaries have, are included in investment in securities in the Company’s consolidated balance sheets.
(h) VIEs for power generation projects
The Company and its subsidiaries may use VIEs in power generation projects. VIEs receive the funds from the Company and its subsidiaries, construct solar power stations and coal-biomass
co-fired
power plants on
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ORIX Corporation and Subsidiaries
acquired or leased lands, and sell the generated power to electric power companies. The Company and its subsidiaries have consolidated certain VIEs because the Company and its subsidiaries have the majority of the investment shares of such VIEs and effectively control the VIEs by acting as the asset manager of the VIEs.
In the Company’s consolidated balance sheets, assets of the consolidated VIEs are mainly included in cash and cash equivalents, restricted cash, property under facility operations and other assets, and liabilities of those consolidated VIEs are mainly included in long-term debt and other liabilities. The Company and certain subsidiaries have commitment agreements by which the Company and the subsidiaries may be required to make additional investment or execute loans in certain such consolidated VIEs.
Variable interests of
non-consolidated
VIEs, which the Company has, are included in investment in affiliates in the Company’s consolidated balance sheets. The Company has commitment agreements by which the Company may be required to make additional investment in certain such
non-consolidated
VIEs.
(i) Other VIEs
The Company and its subsidiaries are involved with other types of VIEs for various purposes. Consolidated and
non-consolidated
VIEs of this category are mainly kumiai structures. In addition, certain subsidiaries have consolidated VIEs that are not included in the categories (a) through (h) above, because the subsidiaries hold the subordinated portion of the VIEs and the VIEs are effectively controlled by the subsidiaries.
In Japan, certain subsidiaries provide investment products to their customers that employ a contractual mechanism known as a kumiai, which in part result in the subsidiaries forming a type of SPEs. As a way to finance the purchase of aircraft or other large-ticket items to be leased to third parties, the Company and its subsidiaries arrange and market kumiai products to investors, who invest a portion of the funds necessary into the kumiai structure. The remainder of the purchase funds is borrowed by the kumiai structure in the form of a
non-recourse
loan from one or more financial institutions. The kumiai investors (and any lenders to the kumiai structure) retain all of the economic risks and rewards in connection with purchasing and leasing activities of the kumiai structure, and all related gains or losses are recorded on the financial statements of the investors in the kumiai. The Company and its subsidiaries are responsible for the arrangement and marketing of these products and may act as servicer or administrator in kumiai transactions. The fee income for the arrangement and administration of these transactions is recognized in the Company’s consolidated statements of income. In some cases, the Company and its subsidiaries make investments in the kumiai or its related SPEs, and these VIEs are consolidated because the Company and its subsidiaries have a responsibility to absorb any significant potential loss through the investments and have the power to direct the activities that most significantly impact their economic performance. In other cases, the Company and its subsidiaries are not considered to be the primary beneficiary of the VIEs or kumiais because the Company and its subsidiaries did not make significant investments or guarantee or otherwise undertake any significant financial commitments or exposure with respect to the kumiai or its related SPEs.
The Company may use VIEs for financing. The Company transfers its own held assets to SPEs, which borrow
non-recourse
loan from financial institutions and effectively pledge such assets as collateral. The Company continually holds subordinated interests in the SPEs and performs administrative work of such assets. The Company consolidates such SPEs because the Company has a right to direct the activities of them that most significantly impact their economic performance by setting up the scheme and performing administrative work of the assets and has the obligation to absorb expected losses of them by holding the subordinated interests.
In the Company’s consolidated balance sheets, assets of the consolidated VIEs are mainly included in investment in operating leases, investment in affiliates, office facilities and other assets, and liabilities of those consolidated VIEs are mainly included in long-term debt and other liabilities.
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ORIX Corporation and Subsidiaries
With respect to variable interests of
non-consolidated
VIEs held by the
Co
mpany and its subsidiaries,
non-recourse
loans are included in installment loans, and investments are mainly included in investment in securities and investment in affiliates in the Company’s consolidated balance sheets. Certain subsidiaries have commitment agreements by which the Company and its subsidiaries may be required to make additional investment in certain such
non-consolidated
VIEs.
12. Investment in Affiliates
Investment in affiliates at March 31, 2022 and 2023 consists of the following:

|  | Millions of yen |
| 2022 |  |  | 2023 |
Shares* |  | ¥ | 943,090 |  |  | ¥ | 973,929 |
Loans and others |  |  | 34,943 |  |  |  | 26,775 |
|  | ¥ | 978,033 |  |  | ¥ | 1,000,704 |

* | The re were investees measured at fair value by electing the fair value option, primarily to reduce volatility in the equity in net income (loss) of the investees arising from the difference in the measurement basis of their assets and liabilities. The amount of shares include ¥2,511 million in amounts invested in these investees as of March 31, 2023.

Certain affiliates are listed on stock exchanges. The aggregate investment in and quoted market value of those affiliates amounted to ¥166,492 million and ¥223,834 million, respectively, as of March 31, 2022 and ¥148,045 million and ¥196,793 million, respectively, as of March 31, 2023.
In fiscal 2021, 2022 and 2023, the Company and its subsidiaries received dividends from affiliates of ¥15,416 million, ¥17,759 million and ¥21,072 million, respectively.
In the Company’s consolidated balance sheets, the book value of investment in affiliates over the underlying equity in the net assets of such affiliates as of date of the most recent available financial statements of the investees were ¥135,897 million and ¥112,977 million as of March 31, 2022 and 2023, respectively. The basis differences mainly consist of goodwill and fair value adjustments for fixed assets. The basis differences would be amortized and adjusted for impairment, if any, and the changes in the differences are included in equity in net income (loss) of affiliates.
Companies comprising a significant portion of investment in affiliates were Avolon Holdings Limited (30% of equity share) and Kansai Airports (40% of equity share) as of March 31, 2022 and 2023.
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ORIX Corporation and Subsidiaries
Combined and condensed information relating to the affiliates (including the affiliates elected the fair value option) for fiscal 2021, 2022 and 2023 are as follows (some operation data for entities reflect only the period since the Company and its subsidiaries made the investment and on a lag basis):

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Operations: |  |  |  |  |  |  |  |  |  |  |  |
Total revenues |  | ¥ | 1,155,974 |  |  | ¥ | 1,194,172 |  |  | ¥ | 1,316,683 |
Income before income taxes |  |  | 85,667 |  |  |  | 108,065 |  |  |  | 165,612 |
Net income |  |  | 74,008 |  |  |  | 88,572 |  |  |  | 129,331 |
Financial position: |  |  |  |  |  |  |  |  |  |  |  |
Total assets |  | ¥ | 12,858,129 |  |  | ¥ | 14,974,191 |  |  | ¥ | 16,438,275 |
Total liabilities |  |  | 9,203,980 |  |  |  | 10,729,973 |  |  |  | 11,950,087 |
Total equity |  |  | 3,654,149 |  |  |  | 4,244,218 |  |  |  | 4,488,188 |

The Company and its subsidiaries had no significant transactio
n
s with these companies except as described above.
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ORIX Corporation and Subsidiaries
13. Goodwill and Other Intangible Assets
Changes in goodwill by reportable segment for fiscal 2021, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | Corporate Financial Services and Maintenance Leasing |  |  | Real Estate |  |  | PE Investment and Concession |  |  | Environment and Energy |  |  | Insurance |  |  | Banking and Credit |
Balance at March 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  | ¥ | 66,865 |  |  | ¥ | 16,359 |  |  | ¥ | 89,455 |  |  | ¥ | 4,116 |  |  | ¥ | 5,124 |  |  | ¥ | 10,971 |
Accumulated impairment losses |  |  | (837 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (39 | ) |  |  | 0 |  |  |  | 0 |
|  |  | 66,028 |  |  |  | 16,359 |  |  |  | 89,455 |  |  |  | 4,077 |  |  |  | 5,124 |  |  |  | 10,971 |
Acquired |  |  | 478 |  |  |  | 0 |  |  |  | 47,011 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Impairment |  |  | (12 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other (net)* |  |  | 7 |  |  |  | 0 |  |  |  | (14,002 | ) |  |  | (3,933 | ) |  |  | (109 | ) |  |  | 0 |
Balance at March 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 67,350 |  |  |  | 16,359 |  |  |  | 122,464 |  |  |  | 183 |  |  |  | 5,015 |  |  |  | 10,971 |
Accumulated impairment losses |  |  | (849 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (39 | ) |  |  | 0 |  |  |  | 0 |
|  |  | 66,501 |  |  |  | 16,359 |  |  |  | 122,464 |  |  |  | 144 |  |  |  | 5,015 |  |  |  | 10,971 |
Acquired |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 49,115 |  |  |  | 0 |  |  |  | 0 |
Impairment |  |  | 0 |  |  |  | (191 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (371 | ) |  |  | 0 |
Other (net)* |  |  | (54,925 | ) |  |  | 0 |  |  |  | (22,526 | ) |  |  | 357 |  |  |  | 0 |  |  |  | 0 |
Balance at March 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 12,425 |  |  |  | 16,359 |  |  |  | 99,938 |  |  |  | 49,655 |  |  |  | 5,015 |  |  |  | 10,971 |
Accumulated impairment losses |  |  | (849 | ) |  |  | (191 | ) |  |  | 0 |  |  |  | (39 | ) |  |  | (371 | ) |  |  | 0 |
|  |  | 11,576 |  |  |  | 16,168 |  |  |  | 99,938 |  |  |  | 49,616 |  |  |  | 4,644 |  |  |  | 10,971 |
Acquired |  |  | 3,529 |  |  |  | 0 |  |  |  | 119,767 |  |  |  | 4,028 |  |  |  | 0 |  |  |  | 0 |
Impairment |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other (net)* |  |  | 0 |  |  |  | 0 |  |  |  | (12,954 | ) |  |  | 4,524 |  |  |  | 0 |  |  |  | 0 |
Balance at March 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 15,954 |  |  |  | 16,359 |  |  |  | 206,751 |  |  |  | 58,207 |  |  |  | 5,015 |  |  |  | 10,971 |
Accumulated impairment losses |  |  | (849 | ) |  |  | (191 | ) |  |  | 0 |  |  |  | (39 | ) |  |  | (371 | ) |  |  | 0 |
|  | ¥ | 15,105 |  |  | ¥ | 16,168 |  |  | ¥ | 206,751 |  |  | ¥ | 58,168 |  |  | ¥ | 4,644 |  |  | ¥ | 10,971 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | Aircraft and Ships |  |  | ORIX USA |  |  | ORIX Europe |  |  | Asia and Australia |  |  | Corporate |  |  | Total |
Balance at March 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  | ¥ | 587 |  |  | ¥ | 129,246 |  |  | ¥ | 117,953 |  |  | ¥ | 7,390 |  |  | ¥ | 0 |  |  | ¥ | 448,066 |
Accumulated impairment losses |  |  | (587 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (2,785 | ) |  |  | 0 |  |  |  | (4,248 | )
|  |  | 0 |  |  |  | 129,246 |  |  |  | 117,953 |  |  |  | 4,605 |  |  |  | 0 |  |  |  | 443,818 |
Acquired |  |  | 0 |  |  |  | 0 |  |  |  | 11,697 |  |  |  | 0 |  |  |  | 0 |  |  |  | 59,186 |
Impairment |  |  | 0 |  |  |  | (1,494 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (1,506 | )
Other (net)* |  |  | 0 |  |  |  | 566 |  |  |  | 10,847 |  |  |  | 402 |  |  |  | 0 |  |  |  | (6,222 | )
Balance at March 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 587 |  |  |  | 129,812 |  |  |  | 140,497 |  |  |  | 7,792 |  |  |  | 0 |  |  |  | 501,030 |
Accumulated impairment losses |  |  | (587 | ) |  |  | (1,494 | ) |  |  | 0 |  |  |  | (2,785 | ) |  |  | 0 |  |  |  | (5,754 | )
|  |  | 0 |  |  |  | 128,318 |  |  |  | 140,497 |  |  |  | 5,007 |  |  |  | 0 |  |  |  | 495,276 |
Acquired |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 278 |  |  |  | 49,393 |
Impairment |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (562 | )
Other (net)* |  |  | 0 |  |  |  | 12,682 |  |  |  | 8,773 |  |  |  | 388 |  |  |  | 0 |  |  |  | (55,251 | )
Balance at March 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 587 |  |  |  | 142,494 |  |  |  | 149,270 |  |  |  | 8,180 |  |  |  | 278 |  |  |  | 495,172 |
Accumulated impairment losses |  |  | (587 | ) |  |  | (1,494 | ) |  |  | 0 |  |  |  | (2,785 | ) |  |  | 0 |  |  |  | (6,316 | )
|  |  | 0 |  |  |  | 141,000 |  |  |  | 149,270 |  |  |  | 5,395 |  |  |  | 278 |  |  |  | 488,856 |
Acquired |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 127,324 |
Impairment |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other (net)* |  |  | 0 |  |  |  | 10,582 |  |  |  | 9,318 |  |  |  | 33 |  |  |  | 0 |  |  |  | 11,503 |
Balance at March 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 587 |  |  |  | 153,076 |  |  |  | 158,588 |  |  |  | 8,213 |  |  |  | 278 |  |  |  | 633,999 |
Accumulated impairment losses |  |  | (587 | ) |  |  | (1,494 | ) |  |  | 0 |  |  |  | (2,785 | ) |  |  | 0 |  |  |  | (6,316 | )
|  | ¥ | 0 |  |  | ¥ | 151,582 |  |  | ¥ | 158,588 |  |  | ¥ | 5,428 |  |  | ¥ | 278 |  |  | ¥ | 627,683 |

* | Other includes foreign currency translation adjustments, decreases due to sale of ownership interest in subsidiaries and certain other reclassifications.

As a result of the impairment test, the Company and its subsidiaries recognized impairment losses on goodwill of ¥12 million in Corporate Financial Services and Maintenance Leasing segment, and ¥1,494 million in ORIX USA segment during fiscal 2021. The Company and its subsidiaries recognized impairment losses on goodwill of ¥191 million in Real Estate segment, and ¥371
million in Insurance segment during fiscal 2022. The Company and its subsidiaries recognized no impairment losses on goodwill during fiscal 2023. These impairment losses are accounted in other (income) and expense. The fair values of these reporting units were measured using mainly discounted cash flow methodologies and business enterprise value multiples methodologies.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Other intangible assets at March 31, 2022 and 2023 consist of the following:

|  | Millions of yen |
|  | 2022 |  |  | 2023 |
Indefinite-lived intangible assets: |  |  |  |  |  |  |  |
Trade names |  | ¥ | 44,975 |  |  | ¥ | 115,049 |
Asset management contracts |  |  | 48,533 |  |  |  | 51,558 |
Others |  |  | 12,126 |  |  |  | 12,375 |
|  |  | 105,634 |  |  |  | 178,982 |
Intangible assets subject to amortization: |  |  |  |  |  |  |  |
Software |  |  | 130,118 |  |  |  | 141,747 |
Customer relationships |  |  | 143,963 |  |  |  | 161,936 |
Asset management contracts |  |  | 98,014 |  |  |  | 104,481 |
Others |  |  | 123,397 |  |  |  | 154,413 |
|  |  | 495,492 |  |  |  | 562,577 |
Accumulated amortization |  |  | (197,505 | ) |  |  | (223,417 | )
Net |  |  | 297,987 |  |  |  | 339,160 |
|  | ¥ | 403,621 |  |  | ¥ | 518,142 |

The aggregate amortization expenses for intangible assets are ¥28,748 million, ¥32,235 million and ¥34,212 million in fiscal 2021, 2022 and 2023, respectively.
The estimated amortization expenses for each of five succeeding fiscal years are ¥39,737 million in fiscal 2024, ¥35,454 million in fiscal 2025, ¥31,148 million in fiscal 2026, ¥28,437 million in fiscal 2027 and ¥24,291 million in fiscal 2028, respectively.
Intangible assets subject to amortization increased during fiscal 2023 are ¥78,181 million. They mainly consist of ¥25,279
million of software, ¥
14,703 million of customer relationships recognized in acquisitions
and ¥15,500 million of license recognized in acquisitions for others
. The weighted average amortization periods for the software
,
customer relationships
recognized in acquisitions and license
recognized in acquisitions are 6 years
,
14 years
and 15 years
, respectively.
As a result of the impairment test, the Company and its subsidiaries recognized impairment losses of ¥2 million on intangible assets included in Corporate Financial Services and Maintenance Leasing segment, ¥217 million on intangible assets included in Real Estate segment, ¥4 million on intangible assets included in PE Investment and Concession segment, ¥2 million on intangible assets included in Environment and Energy segment, ¥2 million on intangible assets included in Insurance segment, ¥505 million on intangible assets included in Aircraft and Ships segment, and ¥414 million on intangible assets included in ORIX USA segment during fiscal 2021. The Company and its subsidiaries recognized impairment losses of ¥650 million on intangible assets included in Corporate Financial Services and Maintenance Leasing segment, ¥259 million on intangible assets included in Aircraft and Ships segment, and ¥21,090 million on intangible assets included in ORIX Europe segment during fiscal 2022. The Company and its subsidiaries recognized impairment losses of ¥1 million on intangible assets included in Corporate Financial Services and Maintenance Leasing segment, ¥405 million on intangible assets included in Aircraft and Ships segment, and ¥110 million on intangible assets included in ORIX USA segment during fiscal 2023. The impairment losses for fiscal 2021, 2022 and 2023 are included in other (income) and expense in the consolidated statements of income. These impairment losses are recognized due to the reduction in the estimated future cash flow, which brought the fair values of the intangible assets below its carrying amount. The fair values of these intangible assets were measured using mainly discounted cash flow methodologies.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
14. Short-Term and Long-Term Debt
Short-term debt consists of borrowings from financial institutions and commercial paper.
The composition of short-term debt and the weighted average contract interest rate on short-term debt at March 31, 2022 and 2023 are as follows:
March 31, 2022

|  | Millions of yen |  |  | Weighted average rate |
Short-term debt in Japan, mainly from banks |  | ¥ | 161,799 |  |  |  | 0.7 | %
Short-term debt outside Japan, mainly from banks |  |  | 237,790 |  |  |  | 2.1 |
Commercial paper in Japan |  |  | 37,999 |  |  |  | 0.0 |
Commercial paper outside Japan |  |  | 2,051 |  |  |  | 1.0 |
|  | ¥ | 439,639 |  |  |  | 1.4 |

March 31, 2023

|  | Millions of yen |  |  | Weighted average rate |
Short-term debt in Japan, mainly from banks |  | ¥ | 145,768 |  |  |  | 1.8 | %
Short-term debt outside Japan, mainly from banks |  |  | 318,519 |  |  |  | 4.5 |
Commercial paper in Japan |  |  | 42,997 |  |  |  | 0.1 |
Commercial paper outside Japan |  |  | 1,512 |  |  |  | 4.1 |
|  | ¥ | 508,796 |  |  |  | 3.4 |

The composition of long-term debt, the weighted average contract interest rate on long-term debt and the repayment due dates at March 31, 2022 and 2023 are as follows:
March 31, 2022

|  | Due (Fiscal Year) |  |  | Millions of yen |  |  | Weighted average rate |
Banks: |  |  |  |  |  |  |  |  |  |  |  |
Fixed rate |  |  | 2023~2082 |  |  | ¥ | 545,320 |  |  |  | 1.3 | %
Floating rate |  |  | 2023~2077 |  |  |  | 2,076,802 |  |  |  | 1.1 |
Insurance companies and others: |  |  |  |  |  |  |  |  |  |  |  |
Fixed rate |  |  | 2023~2082 |  |  |  | 322,411 |  |  |  | 0.8 |
Floating rate |  |  | 2023~2077 |  |  |  | 296,230 |  |  |  | 0.8 |
Unsecured bonds |  |  | 2024~2081 |  |  |  | 997,654 |  |  |  | 1.6 |
Unsecured notes under medium-term note program |  |  | 2023~2027 |  |  |  | 32,279 |  |  |  | 4.1 |
Payables under securitized loan receivables and investment in securities |  |  | 2033~2043 |  |  |  | 156,350 |  |  |  | 3.1 |
|  |  |  |  |  | ¥ | 4,427,046 |  |  |  | 1.3 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
March 31, 2023

|  | Due (Fiscal Year) |  |  | Millions of yen |  |  | Weighted average rate |
Banks: |  |  |  |  |  |  |  |  |  |  |  |
Fixed rate |  |  | 2025~2083 |  |  | ¥ | 666,764 |  |  |  | 1.6 | %
Floating rate |  |  | 2024~2077 |  |  |  | 2,448,488 |  |  |  | 2.8 |
Insurance companies and others: |  |  |  |  |  |  |  |  |  |  |  |
Fixed rate |  |  | 2025~2083 |  |  |  | 323,653 |  |  |  | 0.8 |
Floating rate |  |  | 2026~2077 |  |  |  | 295,625 |  |  |  | 2.0 |
Unsecured bonds |  |  | 2024~2081 |  |  |  | 1,175,087 |  |  |  | 2.0 |
Unsecured notes under medium-term note program |  |  | 2025~2029 |  |  |  | 149,535 |  |  |  | 3.7 |
Payables under securitized loan receivables and investment in securities |  |  | 2024~2051 |  |  |  | 150,571 |  |  |  | 5.5 |
|  |  |  |  |  | ¥ | 5,209,723 |  |  |  | 2.4 |

The repayment schedule for the next five years and thereafter for long-term debt at March 31, 2023 is as follows:

Years ending March 31, |  | Millions of yen |
2024 |  | ¥ | 877,260 |
2025 |  |  | 696,472 |
2026 |  |  | 572,991 |
2027 |  |  | 601,434 |
2028 |  |  | 618,527 |
Thereafter |  |  | 1,843,039 |
Total |  | ¥ | 5,209,723 |

Borrowings with fixed rate from banks, insurance companies and others include the amount of ¥44,000 million of subordinated syndicated loan (hybrid loan)
. Out of this amount, ¥10,000 million
was executed in fiscal 2022,
and
will mature in fiscal 2082 and may be redeemed after 5 years from the execution.
¥34,000 million was executed in fiscal 2023, and will mature in fiscal 2083 and may be redeemed after 5 years from the execution.
Borrowings with floating rate from banks, insurance companies and others as of March 31, 2022 include the amount of ¥34,000 million of subordinated syndicated loan (hybrid loan) that was executed in fiscal 2017, will mature in fiscal 2077 and may be redeemed after 7 years from the execution.
Unsecured bonds include the amount of ¥150,000 million of unsecured subordinated bonds with interest payment deferrable clauses and optional early redemption conditions (hybrid bonds). Out of this amount, ¥100,000 million was executed in fiscal 2020, and will mature in fiscal 2080, of which ¥60,000 million and ¥40,000 million may be redeemed after 5 years, and 10 years from the execution, respectively. ¥50,000 million was executed in fiscal 2021, and will mature in fiscal 2081, of which ¥29,000 million and ¥21,000 million may be redeemed after 5 years, and 10 years from the execution, respectively.
For borrowings from banks, insurance companies and other financial institutions, for bonds, and for medium-term notes, principal repayments are made upon maturity of the loan contracts and interest payments are usually paid semi-annually.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
During fiscal 2021, 2022 and 2023, the Company and certain subsidiaries recognized net amortization expenses of premiums and discounts of bonds and medium-term notes, and deferred issuance costs of bonds and medium-term notes in the amount of ¥1,010 million, ¥1,013 million and ¥1,093 million, respectively.
Total committed credit lines for the Company and its subsidiaries were ¥651,379 million and ¥698,560 million at March 31, 2022 and 2023, respectively, and, of these lines, ¥507,181 million and ¥518,585 million were available at March 31, 2022 and 2023, respectively. Of the available committed credit lines, ¥442,547 million and ¥479,039 million were long-term committed credit lines at March 31, 2022 and 2023, respectively.
The agreements related to debt payable to banks provide that the banks under certain circumstances may request additional security for loans and have the right to offset cash deposited against any short-term or long-term debt that becomes due and, in case of default and certain other specified events, against all other debt payable to the banks.
Other than the assets of the consolidated VIEs pledged as collateral for financing (see Note 1
1
“Variable Interest Entities”), the Company and certain subsidiaries provide the following assets as collateral for the short-term and long-term debt payables to financial institutions as of March 31, 2023:

|  | Millions of yen |
Lease payments, loans and investment in operating leases |  | ¥ | 148,057 |
Investment in securities |  |  | 183,441 |
Property under facility operations |  |  | 130,191 |
Other assets and other |  |  | 110,159 |
|  | ¥ | 571,848 |

As of March 31, 2023, debt liabilities were secured by shares of subsidiaries of ¥407,495 million, which were eliminated through consolidation adjustment, and debt liabilities of affiliates were secured by investment in affiliates of ¥31,379 million. As of March 31, 2023, debt liabilities were secured by loans to subsidiaries, which were eliminated through consolidation adjustment, of ¥9,911 million. In addition, ¥101,827 million was pledged primarily by investment in securities for collateral deposits and deposits for real estate transaction as of March 31, 2023.
Under loan agreements relating to short-term and long-term debt from commercial banks and certain insurance companies, the Company and certain subsidiaries are required to provide collateral against these debts at any time if req
ue
sted by the lenders. The Company and the subsidiaries did not receive any such requests from the lenders as of March 31, 2023.
15. Deposits
Deposits at March 31, 2022 and 2023 consist of the following:

|  | Millions of yen |
|  | 2022 |  |  | 2023 |
Time deposits |  | ¥ | 1,876,129 |  |  | ¥ | 1,885,970 |
Other deposits |  |  | 400,029 |  |  |  | 360,375 |
Total |  | ¥ | 2,276,158 |  |  | ¥ | 2,246,345 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The balances of time deposits and certificates of deposit issued in amounts of ¥10 million or more were ¥920,545 million and ¥888,821 million at March 31, 2022 and 2023, respectively.
The maturity schedule of time deposits at March 31, 2023 is as follows:

Years ending March 31, |  | Millions of yen |
2024 |  | ¥ | 879,884 |
2025 |  |  | 409,259 |
2026 |  |  | 369,171 |
2027 |  |  | 94,053 |
2028 |  |  | 52,596 |
Thereafter |  |  | 81,007 |
Total |  | ¥ | 1,885,970 |

16. Income Taxes
Income before income taxes and the provision for income taxes in fiscal 2021, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Income before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Japan |  | ¥ | 171,569 |  |  | ¥ | 311,351 |  |  | ¥ | 176,158 |
Overseas |  |  | 115,992 |  |  |  | 193,525 |  |  |  | 191,010 |
|  | ¥ | 287,561 |  |  | ¥ | 504,876 |  |  | ¥ | 367,168 |
Provision for income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current— |  |  |  |  |  |  |  |  |  |  |  |
Japan |  | ¥ | 45,262 |  |  | ¥ | 136,623 |  |  | ¥ | 30,808 |
Overseas |  |  | 19,967 |  |  |  | 38,433 |  |  |  | 27,490 |
|  |  | 65,229 |  |  |  | 175,056 |  |  |  | 58,298 |
Deferred— |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 10,642 |  |  |  | (631 | ) |  |  | 14,302 |
Overseas |  |  | 14,876 |  |  |  | 12,839 |  |  |  | 14,900 |
|  |  | 25,518 |  |  |  | 12,208 |  |  |  | 29,202 |
Provision for income taxes |  | ¥ | 90,747 |  |  | ¥ | 187,264 |  |  | ¥ | 87,500 |

In fiscal 2021, 2022 and 2023, the Company and its subsidiaries in Japan were subject to a National Corporation tax of approximately 24%, an Inhabitant tax of approximately 4% and a deductible Enterprise tax of approximately 4%, which in the aggregate result in a statutory income tax rate of approximately 31.5%.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Reconciliations of the differences between the tax provision computed at the statutory rate and the consolidated provision for income taxes in fiscal 2021, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Income before income taxes |  | ¥ | 287,561 |  |  | ¥ | 504,876 |  |  | ¥ | 367,168 |
Tax provision computed at the statutory rate |  | ¥ | 90,582 |  |  | ¥ | 159,036 |  |  | ¥ | 115,658 |
Increases (reductions) in taxes due to: |  |  |  |  |  |  |  |  |  |  |  |
Change in valuation allowance |  |  | 6,808 |  |  |  | 11,464 |  |  |  | 2,533 |
Nondeductible expenses |  |  | 2,751 |  |  |  | 4,066 |  |  |  | 4,794 |
Nontaxable income |  |  | (1,629 | ) |  |  | (2,611 | ) |  |  | (3,347 | )
Effect of lower tax rates on certain subsidiaries |  |  | (12,895 | ) |  |  | (16,584 | ) |  |  | (19,631 | )
Effect of investor taxes on earnings of subsidiaries |  |  | 4,590 |  |  |  | 8,155 |  |  |  | 4,789 |
Effect of the tax law and rate changes |  |  | 1,158 |  |  |  | (142 | ) |  |  | 180 |
Effect of sale or liquidation of subsidiaries |  |  | 878 |  |  |  | 25,642 |  |  |  | (16,754 | )
Other, net |  |  | (1,496 | ) |  |  | (1,762 | ) |  |  | (722 | )
Provision for income taxes |  | ¥ | 90,747 |  |  | ¥ | 187,264 |  |  | ¥ | 87,500 |

The effective income tax rate is different from the statutory income tax rate primarily because of certain nondeductible expenses, nontaxable income, changes in valuation allowance, the effect of lower tax rates on certain subsidiaries, effect of investor taxes on earnings of subsidiaries and effect of sale or liquidation of subsidiaries.
Total income tax expense recognized in fiscal 2021, 2022 and 2023 was allocated as follows:

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Provision for income taxes |  | ¥ | 90,747 |  |  | ¥ | 187,264 |  |  | ¥ | 87,500 |
Income tax expense (benefit) allocated to other comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |  |
Net change of unrealized gains (losses) on investment in securities |  |  | (6,212 | ) |  |  | (21,897 | ) |  |  | (41,961 | )
Net change of debt valuation adjustments |  |  | (349 | ) |  |  | (131 | ) |  |  | 20 |
Net change of defined benefit pension plans |  |  | 2,615 |  |  |  | 4,889 |  |  |  | 1,630 |
Net change of foreign currency translation adjustments |  |  | (13,958 | ) |  |  | (17,347 | ) |  |  | (17,325 | )
Net change of unrealized gains (losses) on derivative instruments |  |  | 1,883 |  |  |  | 4,734 |  |  |  | 3,514 |
Adjustments to retained earnings for changes in accounting principles* |  |  | (17,113 | ) |  |  | (215 | ) |  |  | 0 |
Other direct adjustments to shareholders’ equity |  |  | 1,521 |  |  |  | 214 |  |  |  | 36 |
Total income tax expense |  | ¥ | 59,134 |  |  | ¥ | 157,511 |  |  | ¥ | 33,414 |

* | The amount for fiscal 2021 reflects the tax effect of the adoption of Accounting Standards Update 2016-13 (“Measurement of Credit Losses on Financial Instruments”—ASC 326 (“Financial Instruments—Credit Losses”)). The amount for fiscal 2022 reflects the tax effect of the adoption of Accounting Standards Update 2019-12 (“Simplifying the Accounting for Income Taxes”—ASC 740 (“Income Taxes”)).

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The tax effects of temporary differences and carryforwards giving rise to the deferred tax assets and liabilities as of March 31, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | 2022 |  |  | 2023 |
Assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | ¥ | 32,914 |  |  | ¥ | 59,516 |
Allowance for credit losses |  |  | 23,381 |  |  |  | 16,382 |
Investment in securities |  |  | 6,685 |  |  |  | 12,745 |
Accrued expenses |  |  | 23,900 |  |  |  | 25,735 |
Investment in operating leases |  |  | 15,099 |  |  |  | 14,999 |
Property under facility operations |  |  | 27,358 |  |  |  | 24,615 |
Installment loans |  |  | 4,361 |  |  |  | 5,445 |
Unrealized losses on investment in securities |  |  | 29,372 |  |  |  | 71,277 |
Lease liabilities |  |  | 77,367 |  |  |  | 79,636 |
Other |  |  | 91,837 |  |  |  | 103,210 |
|  |  | 332,274 |  |  |  | 413,560 |
Less: valuation allowance |  |  | (35,155 | ) |  |  | (37,287 | )
|  |  | 297,119 |  |  |  | 376,273 |
Liabilities: |  |  |  |  |  |  |  |
Net investment in Leases |  |  | 13,501 |  |  |  | 10,599 |
Investment in operating leases |  |  | 121,337 |  |  |  | 137,618 |
Unrealized gains on investment in securities |  |  | 2,505 |  |  |  | 4,779 |
Deferred insurance policy acquisition costs |  |  | 73,077 |  |  |  | 74,211 |
Policy liabilities and policy account balances |  |  | 74,939 |  |  |  | 87,150 |
Property under facility operations |  |  | 21,931 |  |  |  | 22,022 |
Other intangible assets |  |  | 108,257 |  |  |  | 141,864 |
Undistributed earnings |  |  | 59,134 |  |  |  | 76,281 |
Prepaid benefit cost |  |  | 14,483 |  |  |  | 17,290 |
Advances paid |  |  | 8,647 |  |  |  | 8,346 |
Right-of-use assets |  |  | 77,003 |  |  |  | 78,631 |
Other |  |  | 22,081 |  |  |  | 28,772 |
|  |  | 596,895 |  |  |  | 687,563 |
Net deferred tax liability |  | ¥ | 299,776 |  |  | ¥ | 311,290 |

Net deferred tax assets and liabilities at March 31, 2022 and 2023 are reflected in the accompanying consolidated balance sheets under the following captions:

|  | Millions of yen |
|  | 2022 |  |  | 2023 |
Other assets |  | ¥ | 46,065 |  |  | ¥ | 48,292 |
Income taxes: Deferred |  |  | 345,841 |  |  |  | 359,582 |
Net deferred tax liability |  | ¥ | 299,776 |  |  | ¥ | 311,290 |

The valuation allowance is primarily recognized for deferred tax assets of consolidated subsidiaries with operating loss carryforwards. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and operating loss carryforwards are utilizable.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and
tax-planning
strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company and its subsidiaries will realize the benefits of these deductible temporary differences and operating loss carryforwards, net of the existing valuation allowances at March 31, 2023. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. The net changes in the total valuation allowance were increases of ¥6,191 million in fiscal 2021, increases of ¥13,595 million in fiscal 2022, and increases of ¥2,132 million in fiscal 2023. The decrease in the total valuation allowance recognized in earnings due to the utilization of net operating loss carryforwards were ¥553 million in fiscal 2021, ¥1,742 million in fiscal 2022 and ¥1,465 million in fiscal 2023. The adjustments to the
beginning-of-the-year
amount in the total valuation allowance resulting from changes in judgment about the realizability of deferred tax assets in future years were net decreases of ¥743 million in fiscal 2021 (increases of ¥1,032 million and decreases of ¥1,775 million on a gross basis), net increases of ¥436 million in fiscal 2022 (increases of ¥1,947 million and decreases of ¥1,511 million on a gross basis), and net increases of ¥628 million in fiscal 2023 (increases of ¥2,120 million and decreases of ¥1,492 million on a gross basis), respectively.
The Company and certain subsidiaries have net operating loss carryforwards of ¥456,985 million at March 31, 2023, which expire as follows:

Years ending March 31, |  | Millions of yen |
2024 |  | ¥ | 17,360 |
202 5 |  |  | 21,183 |
202 6 |  |  | 24,810 |
202 7 |  |  | 13,686 |
202 8 |  |  | 7,993 |
Thereafter |  |  | 279,892 |
Indefinite period |  |  | 92,061 |
Total |  | ¥ | 456,985 |

The unrecognized tax benefits as of March 31, 2022 and 2023 were not material. The Company and its subsidiaries do not believe that it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of March 31, 2023.
The total amounts of penalties and interest expense related to income taxes recognized in the consolidated balance sheets as of March 31, 2022 and 2023, and in the consolidated statements of income for the fiscal 2021, 2022 and 2023 were not material.
The Company and its subsidiaries file tax returns in Japan and certain foreign tax jurisdictions. The Company is no longer subject to ordinary tax examination in Japan for the tax years prior to fiscal 2021, and its major domestic subsidiaries are no longer subject to ordinary tax examination for the tax years prior to fiscal 2018, respectively.
Subsidiaries in the United States remain subject to a tax examination for the tax years after fiscal 2019. Subsidiaries in the Netherlands remain subject to a tax examination for the tax years after fiscal 2016.
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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
17. Pension Plans
The Company and certain subsidiaries have contributory and
non-contributory
pension plans covering substantially all of their employees. Those contributory funded pension plans include defined benefit pension plans and defined contribution pension plans. Under the plans, employees are entitled to
lump-sum
payments at the time of termination of their employment or pension payments. Defined benefit pension plans consist of a plan of which the amounts of such payments are determined on the basis of length of service and remuneration at the time of termination and a cash balance plan.
The Company and certain subsidiaries’ funding policy is to contribute annually the amounts actuarially determined. Assets of the plans are invested primarily in debt securities and marketable equity securities.
The funded status of the defined benefit pension plans, which consists of Japanese plans and overseas plans, as of March 31, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | Japanese plans |  |  | Overseas plans |
|  | 2022 |  |  | 2023 |  |  | 2022 |  |  | 2023 |
Change in benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  | ¥ | 114,556 |  |  | ¥ | 111,010 |  |  | ¥ | 128,573 |  |  | ¥ | 121,148 |
Service cost |  |  | 6,058 |  |  |  | 5,704 |  |  |  | 3,947 |  |  |  | 3,432 |
Interest cost |  |  | 791 |  |  |  | 731 |  |  |  | 1,329 |  |  |  | 2,309 |
Actuarial loss (income) |  |  | (3,977 | ) |  |  | (6,538 | ) |  |  | (18,503 | ) |  |  | (25,124 | )
Plan participant’s contributions |  |  | 0 |  |  |  | 0 |  |  |  | 295 |  |  |  | 334 |
Benefits paid |  |  | (4,776 | ) |  |  | (4,770 | ) |  |  | (1,552 | ) |  |  | (1,131 | )
Business combinations |  |  | 0 |  |  |  | 4,733 |  |  |  | 0 |  |  |  | 196 |
Plan amendments |  |  | (1,642 | ) |  |  | (1,111 | ) |  |  | 254 |  |  |  | (285 | )
Foreign currency exchange rate change |  |  | 0 |  |  |  | 0 |  |  |  | 6,805 |  |  |  | 7,537 |
Benefit obligation at end of year |  |  | 111,010 |  |  |  | 109,759 |  |  |  | 121,148 |  |  |  | 108,416 |
Change in plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  |  | 134,392 |  |  |  | 137,317 |  |  |  | 119,858 |  |  |  | 127,251 |
Actual return on plan assets |  |  | 2,819 |  |  |  | (3,108 | ) |  |  | (836 | ) |  |  | (15,709 | )
Employer contribution |  |  | 3,909 |  |  |  | 4,162 |  |  |  | 2,530 |  |  |  | 2,927 |
Plan participant’s contributions |  |  | 0 |  |  |  | 0 |  |  |  | 295 |  |  |  | 334 |
Benefits paid |  |  | (3,803 | ) |  |  | (3,913 | ) |  |  | (1,439 | ) |  |  | (962 | )
Business combinations |  |  | 0 |  |  |  | 2,456 |  |  |  | 0 |  |  |  | 175 |
Plan amendments |  |  | 0 |  |  |  | (111 | ) |  |  | 0 |  |  |  | 0 |
Foreign currency exchange rate change |  |  | 0 |  |  |  | 0 |  |  |  | 6,843 |  |  |  | 8,188 |
Fair value of plan assets at end of year |  |  | 137,317 |  |  |  | 136,803 |  |  |  | 127,251 |  |  |  | 122,204 |
The funded status of the plans |  | ¥ | 26,307 |  |  | ¥ | 27,044 |  |  | ¥ | 6,103 |  |  | ¥ | 13,788 |
Amount recognized in the consolidated balance sheets consists of: |  |  |  |  |  |  |  |  |  |  |  |  |
Prepaid benefit cost included in other assets |  | ¥ | 40,118 |  |  | ¥ | 42,337 |  |  | ¥ | 7,753 |  |  | ¥ | 15,465 |
Accrued benefit liability included in other liabilities |  |  | (13,811 | ) |  |  | (15,293 | ) |  |  | (1,650 | ) |  |  | (1,677 | )
Net amount recognized |  | ¥ | 26,307 |  |  | ¥ | 27,044 |  |  | ¥ | 6,103 |  |  | ¥ | 13,788 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Amount recognized in accumulated other comprehensive income (loss),
pre-tax,
at March 31, 2022 and 2023 consisted of:

|  | Millions of yen |
|  | Japanese plans |  |  | Overseas plans |
|  | 2022 |  |  | 2023 |  |  | 2022 |  |  | 2023 |
Net prior service credit |  | ¥ | 266 |  |  | ¥ | 1,100 |  |  | ¥ | 746 |  |  | ¥ | 433 |
Net actuarial gain (loss) |  |  | (12,912 | ) |  |  | (12,183 | ) |  |  | (1,432 | ) |  |  | 3,394 |
Net transition obligation |  |  | 0 |  |  |  | 0 |  |  |  | 3 |  |  |  | 5 |
Total recognized in accumulated other comprehensive income (loss), pre-tax |  | ¥ | (12,646 | ) |  | ¥ | (11,083 | ) |  | ¥ | (683) |  |  | ¥ | 3,832 |

The accumulated benefit obligations for all Japanese defined benefit pension plans were ¥99,161 million and ¥98,880 million, respectively, at March 31, 2022 and 2023. The accumulated benefit obligations for all overseas defined benefit pension plans were ¥114,930 million and ¥102,624 million, respectively, at March 31, 2022 and 2023.
The accumulated benefit obligations and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets at March 31, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | Japanese plans |  |  | Overseas plans |
|  | 2022 |  |  | 2023 |  |  | 2022 |  |  | 2023 |
Accumulated benefit obligations |  | ¥ | 13,386 |  |  | ¥ | 17,335 |  |  | ¥ | 7,407 |  |  | ¥ | 7,256 |
Fair value of plan assets |  |  | 0 |  |  |  | 2,563 |  |  |  | 5,842 |  |  |  | 5,630 |

The projected benefit obligations and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets at March 31, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | Japanese plans |  |  | Overseas plans |
|  | 2022 |  |  | 2023 |  |  | 2022 |  |  | 2023 |
Projected benefit obligations |  | ¥ | 13,811 |  |  | ¥ | 17,856 |  |  | ¥ | 8,484 |  |  | ¥ | 7,307 |
Fair value of plan assets |  |  | 0 |  |  |  | 2,563 |  |  |  | 6,834 |  |  |  | 5,630 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Net pension cost of the plans for fiscal 2021, 2022 and 2023 consists of the following:

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Japanese plans: |  |  |  |  |  |  |  |  |  |  |  |
Service cost |  | ¥ | 5,831 |  |  | ¥ | 6,058 |  |  | ¥ | 5,704 |
Interest cost |  |  | 698 |  |  |  | 791 |  |  |  | 731 |
Expected return on plan assets |  |  | (2,427 | ) |  |  | (2,663 | ) |  |  | (2,739 | )
Amortization of prior service credit |  |  | (178 | ) |  |  | (66 | ) |  |  | (47 | )
Amortization of net actuarial loss |  |  | 1,320 |  |  |  | 412 |  |  |  | 79 |
Plan amendments |  |  | 0 |  |  |  | 0 |  |  |  | (44 | )
Net periodic pension cost |  | ¥ | 5,244 |  |  | ¥ | 4,532 |  |  | ¥ | 3,684 |
Overseas plans: |  |  |  |  |  |  |  |  |  |  |  |
Service cost |  | ¥ | 3,288 |  |  | ¥ | 3,947 |  |  | ¥ | 3,432 |
Interest cost |  |  | 1,711 |  |  |  | 1,329 |  |  |  | 2,309 |
Expected return on plan assets |  |  | (3,618 | ) |  |  | (4,192 | ) |  |  | (4,982 | )
Amortization of prior service credit |  |  | (269 | ) |  |  | (320 | ) |  |  | (329 | )
Amortization of net actuarial loss |  |  | 313 |  |  |  | 500 |  |  |  | 9 |
Amortization of transition obligation |  |  | 1 |  |  |  | 1 |  |  |  | 1 |
Net periodic pension cost |  | ¥ | 1,426 |  |  | ¥ | 1,265 |  |  | ¥ | 440 |

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

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for fiscal 2021, 2022 and 2023 are summarized as follows:

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Japanese plans: |  |  |  |  |  |  |  |  |  |  |  |
Current year actuarial gain (loss) |  | ¥ | 10,424 |  |  | ¥ | 3,795 |  |  | ¥ | 650 |
Amortization of net actuarial loss |  |  | 1,320 |  |  |  | 412 |  |  |  | 79 |
Prior service credit due to amendments |  |  | (402 | ) |  |  | 367 |  |  |  | 881 |
Amortization of prior service credit |  |  | (178 | ) |  |  | (66 | ) |  |  | (47 | )
Total recognized in other comprehensive income, pre-tax |  | ¥ | 11,164 |  |  | ¥ | 4,508 |  |  | ¥ | 1,563 |
Overseas plans: |  |  |  |  |  |  |  |  |  |  |  |
Current year actuarial gain (loss) |  | ¥ | (2,308 | ) |  | ¥ | 13,672 |  |  | ¥ | 4,810 |
Amortization of net actuarial loss |  |  | 313 |  |  |  | 500 |  |  |  | 9 |
Prior service credit due to amendments |  |  | (10 | ) |  |  | (255 | ) |  |  | (36 | )
Amortization of prior service credit |  |  | (269 | ) |  |  | (320 | ) |  |  | (329 | )
Amortization of transition obligation |  |  | 1 |  |  |  | 1 |  |  |  | 1 |
Foreign currency exchange rate change |  |  | (946 | ) |  |  | (215 | ) |  |  | 60 |
Total recognized in other comprehensive income (loss), pre-tax |  | ¥ | (3,219 | ) |  | ¥ | 13,383 |  |  | ¥ | 4,515 |

The Company and certain subsidiaries use March 31 as a measurement date for all of our material plans.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Significant assumptions of Japanese pension plans and overseas pension plans used to determine these amounts are as follows:

Japanese plans |  | 2021 |  |  | 2022 |  |  | 2023 |
Weighted-average assumptions used to determine benefit obligations at March 31: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  |  | 0.7 | % |  |  | 0.6 | % |  |  | 1.1 | %
Rate of increase in compensation levels |  |  | 4.0 | % |  |  | 4.0 | % |  |  | 4.3 | %
Interest crediting rate for cash balance plans |  |  | 1.5 | % |  |  | 1.5 | % |  |  | 1.5 | %
Weighted-average assumptions used to determine net periodic pension cost for years ended March 31: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  |  | 0.6 | % |  |  | 0.7 | % |  |  | 0.6 | %
Rate of increase in compensation levels |  |  | 4.0 | % |  |  | 4.0 | % |  |  | 4.0 | %
Expected long-term rate of return on plan assets |  |  | 2.0 | % |  |  | 2.0 | % |  |  | 2.0 | %
Interest crediting rate for cash balance plans |  |  | 1.5 | % |  |  | 1.5 | % |  |  | 1.5 | %
Overseas plans |  | 2021 |  |  | 2022 |  |  | 2023 |
Weighted-average assumptions used to determine benefit obligations at March 31: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  |  | 1.0 | % |  |  | 1.7 | % |  |  | 3.3 | %
Rate of increase in compensation levels |  |  | 2.2 | % |  |  | 2.2 | % |  |  | 2.3 | %
Interest crediting rate for cash balance plans |  |  | — |  |  |  | — |  |  |  | — |
Weighted-average assumptions used to determine net periodic pension cost for years ended March 31: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  |  | 1.7 | % |  |  | 1.0 | % |  |  | 1.7 | %
Rate of increase in compensation levels |  |  | 2.2 | % |  |  | 2.2 | % |  |  | 2.2 | %
Expected long-term rate of return on plan assets |  |  | 3.3 | % |  |  | 3.5 | % |  |  | 4.9 | %
Interest crediting rate for cash balance plans |  |  | — |  |  |  | — |  |  |  | — |

The Company and certain subsidiaries determine the expected long-term rate of return on plan assets annually based on the composition of the pension asset portfolios and the expected long-term rate of return on these portfolios. The expected long-term rate of return is designed to approximate the long-term rate of return actually earned on the plans’ assets over time to ensure that funds are available to meet the pension obligations that result from the services provided by employees. The Company and certain subsidiaries use a number of factors to determine the expected rate of return, including actual historical returns on the asset classes of the plans’ portfolios and independent projections of returns of the various asset classes.
The Company and certain subsidiaries’ investment policies are designed to ensure adequate plan assets are available to provide future payments of pension benefits to eligible participants. The Company and certain subsidiaries formulate a policy portfolio appropriate to produce the expected long-term rate of return on plan assets and to ensure that plan assets are allocated under this policy portfolio. The Company and certain subsidiaries periodically have an external consulting firm monitor the results of actual return and revise the policy portfolio if necessary.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The fair value of Japanese pension plan assets at March 31, 2022 and 2023, by asset category, are as follows. The three levels of input used to measure fair value are described in Note 2 “Fair Value Measurements.”

|  | Millions of yen |
|  | March 31, 2022 |
|  | Total Carrying Value in Consolidated Balance Sheets |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pooled funds*1 |  | ¥ | 16,002 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 0 |
Other than Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pooled funds*2 |  |  | 21,366 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pooled funds*3 |  |  | 27,845 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other than Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pooled funds*4 |  |  | 38,070 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Life insurance company general accounts*5 |  |  | 29,462 |  |  |  | 0 |  |  |  | 29,462 |  |  |  | 0 |
Others*6 |  |  | 4,572 |  |  |  | 0 |  |  |  | 4,572 |  |  |  | 0 |
|  | ¥ | 137,317 |  |  | ¥ | 0 |  |  | ¥ | 34,034 |  |  | ¥ | 0 |

*1 | These funds invest in listed shares including shares of ORIX Corporation in the amounts of ¥22 million at March 31, 2022.

*2 | These funds invest in listed shares.

*3 | These funds invest approximately 70% in Japanese government bonds, and approximately 30% in Japanese corporate bonds. These funds include corporate bonds of ORIX Corporation in the amounts of ¥37 million at March 31, 2022.

*4 | These funds invest approximately 90% in foreign government bonds and approximately 10% in foreign corporate bonds.

*5 | Life insurance company general accounts are accounts with guaranteed capital and minimum interest rate, in which life insurance companies manage funds on several contracts.

*6 | Others include derivative instruments held for hedging change in the fair value of equity securities, and short-term instruments.

At March 31, 2022, our policy for the portfolio of plans consists of three major components: approximately 30% is invested in equity securities, approximately 50% is invested in debt securities and approximately 20% is invested in other assets, primarily consisting of investments in life insurance company general accounts.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Level 2 assets are comprised principally of investments in life insurance company general accounts. Investments in life insurance company general accounts are valued at conversion value. Pooled funds are valued at the net asset value per share at the measurement date and they have not been classified in the fair value hierarchy.

|  | Millions of yen |
|  | March 31, 2023 |
|  | Total Carrying Value in Consolidated Balance Sheets |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pooled funds*1 |  | ¥ | 13,607 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 0 |
Other than Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pooled funds*2 |  |  | 19,692 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pooled funds*3 |  |  | 24,972 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other than Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pooled funds*4 |  |  | 38,176 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Life insurance company general accounts*5 |  |  | 32,372 |  |  |  | 0 |  |  |  | 32,372 |  |  |  | 0 |
Others*6 |  |  | 7,984 |  |  |  | 0 |  |  |  | 7,984 |  |  |  | 0 |
|  | ¥ | 136,803 |  |  | ¥ | 0 |  |  | ¥ | 40,356 |  |  | ¥ | 0 |

*1 | These funds invest in listed shares including shares of ORIX Corporation in the amounts of ¥22 million at March 31, 2023.

*2 | These funds invest in listed shares.

*3 | These funds invest approximately 70% in Japanese government bonds, and approximately 30% in Japanese corporate bonds. These funds include corporate bonds of ORIX Corporation in the amounts of ¥35 million at March 31, 2023.

*4 | These funds invest approximately 90% in foreign government bonds and approximately 10% in foreign corporate bonds.

*5 | Life insurance company general accounts are accounts with guaranteed capital and minimum interest rate, in which life insurance companies manage funds on several contracts.

*6 | Others include derivative instruments held for hedging change in the fair value of equity securities, and short-term instruments.

At March 31, 2
0
23, our policy for the portfolio of plans consists of three major components: approximately 20% is invested in equity securities, approximately 50% is invested in debt securities and approximately 30% is invested in other assets, primarily consisting of investments in life insurance company general accounts.
Level 2 assets are comprised principally of investments in life insurance company general accounts. Investments in life insurance company general accounts are valued at conversion value. Pooled funds are valued at the net asset value per share at the measurement date and they have not been classified in the fair value hierarchy.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The fair value of overseas pension plan assets at March 31, 2022 and 2023, by asset category, are as follows. The three levels of input used to measure fair value are described in Note 2 “Fair Value Measurements.”

|  | Millions of yen |
|  | March 31, 2022 |
|  | Total Carrying Value in Consolidated Balance Sheets |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other than Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Shares |  | ¥ | 59,932 |  |  | ¥ | 59,932 |  |  | ¥ | 0 |  |  | ¥ | 0 |
Pooled funds*1 |  |  | 1,031 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other than Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government bonds |  |  | 55,999 |  |  |  | 55,999 |  |  |  | 0 |  |  |  | 0 |
Municipal bonds |  |  | 4,411 |  |  |  | 0 |  |  |  | 4,411 |  |  |  | 0 |
Other assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Life insurance company general accounts*2 |  |  | 351 |  |  |  | 0 |  |  |  | 351 |  |  |  | 0 |
Others*3 |  |  | 5,527 |  |  |  | 0 |  |  |  | 5,527 |  |  |  | 0 |
|  | ¥ | 127,251 |  |  | ¥ | 115,931 |  |  | ¥ | 10,289 |  |  | ¥ | 0 |

*1 | These funds invest in listed shares.

*2 | Life insurance company general accounts are accounts with guaranteed capital and minimum interest rate, in which life insurance companies manage funds on several contracts.

*3 | Others include derivative instruments held for hedging change in the fair value of equity securities, and short-term instruments.

At March 31, 2022, our policy for the portfolio of plans consists of two major components: approximately 50% is invested in equity securities and approximately 50% is invested in debt securities.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Each level into which assets are categorized is based on inputs used to measure the fair value of the assets. Level 1 assets are comprised principally of equity securities and debt securities, which are valued using unadjusted quoted market prices in active markets with sufficient volume and frequency of transactions. Level 2 assets are comprised principally of debt securities and investments in life insurance company general accounts. Investments in life insurance company general accounts are valued at conversion value. Pooled funds are valued at the net asset value per share at the measurement date and they have not been classified in the fair value hierarchy.

|  | Millions of yen |
|  | March 31, 2023 |
|  | Total Carrying Value in Consolidated Balance Sheets |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other than Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Shares |  | ¥ | 49,040 |  |  | ¥ | 49,040 |  |  | ¥ | 0 |  |  | ¥ | 0 |
Pooled funds*1 |  |  | 960 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other than Japan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government bonds |  |  | 58,310 |  |  |  | 58,310 |  |  |  | 0 |  |  |  | 0 |
Municipal bonds |  |  | 4,111 |  |  |  | 0 |  |  |  | 4,111 |  |  |  | 0 |
Other assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Life insurance company general accounts*2 |  |  | 486 |  |  |  | 0 |  |  |  | 486 |  |  |  | 0 |
Others*3 |  |  | 9,297 |  |  |  | 0 |  |  |  | 9,297 |  |  |  | 0 |
|  | ¥ | 122,204 |  |  | ¥ | 107,350 |  |  | ¥ | 13,894 |  |  | ¥ | 0 |

*1 | These funds invest in listed shares.

*2 | Life insurance company general accounts are accounts with guaranteed capital and minimum interest rate, in which life insurance companies manage funds on several contracts.

*3 | Others include derivative instruments held for hedging change in the fair value of equity securities, and short-term instruments.

At March 31, 2023, our policy for the portfolio of plans consists of t
hree
major components: approximately 40% is invested in equity securities, approximately 50% is invested in debt securities and approximately 10% is invested in other assets, primarily consisting of investments in life insurance company general accounts.
Each level into which assets are categorized is based on inputs used to measure the fair value of the assets. Level 1 assets are comprised principally of equity securities and debt securities, which are valued using unadjusted quoted market prices in active markets with sufficient volume and frequency of transactions. Level 2 assets are comprised principally of debt securities and investments in life insurance company general accounts. Investments in life insurance company general accounts are valued at conversion value. Pooled funds are valued at the net asset value per share at the measurement date and they have not been classified in the fair value hierarchy.
The Company and certain subsidiaries expect to contribute ¥4,121 million to its Japanese pension plans and ¥2,652 million to its overseas pension plans during the year ending March 31, 202
4
.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
At March 31, 2023, the benefits expected to be paid in each of the next five fiscal years, and in the aggregate for the five years thereafter are as follows:

|  | Millions of yen |
Years ending March 31, |  | Japanese plans |  |  | Overseas plans |
202 4 |  | ¥ | 5,578 |  |  | ¥ | 2,267 |
202 5 |  |  | 5,698 |  |  |  | 2,368 |
202 6 |  |  | 5,882 |  |  |  | 2,341 |
202 7 |  |  | 5,806 |  |  |  | 2,468 |
202 8 |  |  | 5,668 |  |  |  | 2,614 |
202 9 -203 3 |  |  | 31,909 |  |  |  | 16,148 |
Total |  | ¥ | 60,541 |  |  | ¥ | 28,206 |

The cost recognized for Japanese defined contribution pension plans of the Company and certain of its subsidiaries for fiscal 2021, 2022 and 2023 were ¥1,873 million, ¥1,997 million and ¥2,100 million, respectively. The cost recognized for overseas defined contribution pension plans of the Company and certain of its subsidiaries for fiscal 2021, 2022 and 2023 were ¥2,446 million, ¥2,892 million and ¥3,498 million, respectively.
18. Redeemable Noncontrolling Interests
Changes in redeemable
noncontrolling
interests in fiscal 2021, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Beginning Balance |  | ¥ | 10,331 |  |  | ¥ | 0 |  |  | ¥ | 0 |
Transaction with noncontrolling interests |  |  | (10,028 | ) |  |  | 0 |  |  |  | 959 |
Adjustment of redeemable noncontrolling interests to redemption value |  |  | 0 |  |  |  | 0 |  |  |  | 3 |
Comprehensive income (loss) |  |  |  |  |  |  |  |  |  |  |  |
Net Income (loss) |  |  | (23 | ) |  |  | 0 |  |  |  | 32 |
Other comprehensive income (loss) |  |  |  |  |  |  |  |  |  |  |  |
Net unrealized gains (losses) on investment in debt securities |  |  | 0 |  |  |  | 0 |  |  |  | (24 | )
Net change of foreign currency translation adjustments |  |  | (280 | ) |  |  | 0 |  |  |  | (25 | )
Total other comprehensive income (loss) |  |  | (280 | ) |  |  | 0 |  |  |  | (49 | )
Comprehensive income (loss) |  |  | (303 | ) |  |  | 0 |  |  |  | (17 | )
Ending Balance |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 945 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
19. Stock-Based Compensation
The Company maintains a stock compensation program for directors, executive officers and group executives of the Company. The Compensation Committee resolved in July 2014 and the Company’s shares are provided to retiree as the way of provision of the compensation through the Board Incentive Plan Trust. The Board Incentive Plan Trust purchases the Company’s common shares including future granting shares by an entrusted fund which the Company set in advance. The Company holds those shares as entrusted assets, separately from other treasury stock which the Company holds
.
Under
the program, points are granted annually to directors, executive officers and group executives of the Company based upon the prescribed standards of the Company. Upon retirement, eligible directors, executive officers and group executives receive a certain number of the Company’s common shares calculated by translating each point earned by that retiree to one common share.
In fiscal 2023, the Company granted 467,124 points, and 59,416 points were settled for individuals who retired during fiscal 2023. Total points outstanding under the stock compensation program as of March 31, 2023 were 2,273,956 points. The points were adjusted for the
10-for-1
stock split implemented on April 1, 2013.
During fiscal 2021, 2022 and 2023, the Company recognized stock-based compensation costs of its stock compensation program in the amount of ¥885 million, ¥1,191 million and ¥937 million, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
20. Accumulated Other Comprehensive Income (Loss)
Changes in each component of accumulated other comprehensive income (loss) attributable to ORIX Corporation Shareholders in fiscal 2021, 2022 and 2023 are as follows:

|  | Millions of yen |
|  | Net unrealized gains (losses) on investment in securities |  |  | Debt valuation adjustments |  |  | Defined benefit pension plans |  |  | Foreign currency translation adjustments |  |  | Net unrealized gains (losses) on derivative instruments |  |  | Accumulated other comprehensive income (loss) |
Balance at March 31, 2020 |  | ¥ | (5,001 | ) |  | ¥ | 1,457 |  |  | ¥ | (26,375 | ) |  | ¥ | (72,471 | ) |  | ¥ | (16,142 | ) |  | ¥ | (118,532 | )
Net unrealized gains (losses) on investment in securities, net of tax of ¥5,702 million |  |  | (11,188 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (11,188 | )
Reclassification adjustment included in net income, net of tax of ¥510 million |  |  | 6 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 6 |
Debt valuation adjustments, net of tax of ¥321 million |  |  |  |  |  |  | (826 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (826 | )
Reclassification adjustment included in net income, net of tax of ¥28 million |  |  |  |  |  |  | (73 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (73 | )
Defined benefit pension plans, net of tax of ¥(2,247) million |  |  |  |  |  |  |  |  |  |  | 4,511 |  |  |  |  |  |  |  |  |  |  |  | 4,511 |
Reclassification adjustment included in net income, net of tax of ¥(368) million |  |  |  |  |  |  |  |  |  |  | 819 |  |  |  |  |  |  |  |  |  |  |  | 819 |
Foreign currency translation adjustments, net of tax of ¥14,709 million |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 32,180 |  |  |  |  |  |  |  | 32,180 |
Reclassification adjustment included in net income, net of tax of ¥(751) million |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 4,066 |  |  |  |  |  |  |  | 4,066 |
Net unrealized gains (losses) on derivative instruments, net of tax of ¥40 million |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (997 | ) |  |  | (997 | )
Reclassification adjustment included in net income, net of tax of ¥(1,923) million |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 5,779 |  |  |  | 5,779 |
Total other comprehensive income (loss) |  |  | (11,182 | ) |  |  | (899 | ) |  |  | 5,330 |  |  |  | 36,246 |  |  |  | 4,782 |  |  |  | 34,277 |
Less: Other Comprehensive Income Attributable to the Noncontrolling Interests |  |  | 25 |  |  |  | 0 |  |  |  | 28 |  |  |  | 511 |  |  |  | 111 |  |  |  | 675 |
Less: Other Comprehensive Income (Loss) Attributable to the Redeemable Noncontrolling Interests |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (280 | ) |  |  | 0 |  |  |  | (280 | )
Balance at March 31, 2021 |  | ¥ | (16,208 | ) |  | ¥ | 558 |  |  | ¥ | (21,073 | ) |  | ¥ | (36,456 | ) |  | ¥ | (11,471 | ) |  | ¥ | (84,650 | )
Net unrealized gains (losses) on investment in securities, net of tax of ¥21,836 million |  |  | (52,477 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (52,477 | )
Reclassification adjustment included in net income, net of tax of ¥61 million |  |  | (4,207 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (4,207 | )
Debt valuation adjustments, net of tax of ¥121 million |  |  |  |  |  |  | (311 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (311 | )
Reclassification adjustment included in net income, net of tax of ¥10 million |  |  |  |  |  |  | (26 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (26 | )
Defined benefit pension plans, net of tax of ¥(4,738) million |  |  |  |  |  |  |  |  |  |  | 12,626 |  |  |  |  |  |  |  |  |  |  |  | 12,626 |
Reclassification adjustment included in net income, net of tax of ¥(151) million |  |  |  |  |  |  |  |  |  |  | 376 |  |  |  |  |  |  |  |  |  |  |  | 376 |
Foreign currency translation adjustments, net of tax of ¥17,642 million |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 105,079 |  |  |  |  |  |  |  | 105,079 |
Reclassification adjustment included in net income, net of tax of ¥(295) million |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 614 |  |  |  |  |  |  |  | 614 |
Net unrealized gains (losses) on derivative instruments, net of tax of ¥(3,256) million |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 10,634 |  |  |  | 10,634 |
Reclassification adjustment included in net income, net of tax of ¥(1,478) million |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 4,436 |  |  |  | 4,436 |
Total other comprehensive income (loss) |  |  | (56,684 | ) |  |  | (337 | ) |  |  | 13,002 |  |  |  | 105,693 |  |  |  | 15,070 |  |  |  | 76,744 |
Transaction with noncontrolling interests |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (1,472 | ) |  |  | (3 | ) |  |  | (1,475 | )
Less: Other Comprehensive Income Attributable to the Noncontrolling Interests |  |  | 0 |  |  |  | 0 |  |  |  | 1 |  |  |  | 5,851 |  |  |  | 808 |  |  |  | 6,660 |
Balance at March 31, 2022* |  | ¥ | (72,892 | ) |  | ¥ | 221 |  |  | ¥ | (8,072 | ) |  | ¥ | 61,914 |  |  | ¥ | 2,788 |  |  | ¥ | (16,041 | )

* | As of March 31, 2022, there were no net unrealized gains (losses) on investment in securities related to available-for-sale debt securities with allowance for credit losses.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | Net unrealized gains (losses) on investment in securities |  |  | Debt valuation adjustments |  |  | Defined benefit pension plans |  |  | Foreign currency translation adjustments |  |  | Net unrealized gains (losses) on derivative instruments |  |  | Accumulated other comprehensive income (loss) |
Balance at March 31, 2022 |  | ¥ | (72,892 | ) |  | ¥ | 221 |  |  | ¥ | (8,072 | ) |  | ¥ | 61,914 |  |  | ¥ | 2,788 |  |  | ¥ | (16,041 | )
Net unrealized gains (losses) on investment in securities, net of tax of ¥41,871 million |  |  | (109,745 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (109,745 | )
Reclassification adjustment included in net income, net of tax of ¥90 million |  |  | (421 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (421 | )
Debt valuation adjustments, net of tax of ¥(25) million |  |  |  |  |  |  | 67 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 67 |
Reclassification adjustment included in net income, net of tax of ¥5 million |  |  |  |  |  |  | (13 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (13 | )
Defined benefit pension plans, net of tax of ¥(1,706) million |  |  |  |  |  |  |  |  |  |  | 4,659 |  |  |  |  |  |  |  |  |  |  |  | 4,659 |
Reclassification adjustment included in net income, net of tax of ¥76 million |  |  |  |  |  |  |  |  |  |  | (211 | ) |  |  |  |  |  |  |  |  |  |  | (211 | )
Foreign currency translation adjustments, net of tax of ¥19,131 million |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 90,616 |  |  |  |  |  |  |  | 90,616 |
Reclassification adjustment included in net income, net of tax of ¥(1,806) million |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 4,091 |  |  |  |  |  |  |  | 4,091 |
Net unrealized gains (losses) on derivative instruments, net of tax of ¥(3,106) million |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 18,232 |  |  |  | 18,232 |
Reclassification adjustment included in net income, net of tax of ¥(408) million |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,438 |  |  |  | 1,438 |
Total other comprehensive income (loss) |  |  | (110,166 | ) |  |  | 54 |  |  |  | 4,448 |  |  |  | 94,707 |  |  |  | 19,670 |  |  |  | 8,713 |
Transaction with noncontrolling interests |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 2,903 |  |  |  | 1,493 |  |  |  | 4,396 |
Less: Other Comprehensive Income (loss) Attributable to the Noncontrolling Interests |  |  | 0 |  |  |  | 0 |  |  |  | (7 | ) |  |  | 3,637 |  |  |  | 1,868 |  |  |  | 5,498 |
Less: Other Comprehensive Income Attributable to the Redeemable Noncontrolling Interests |  |  | (24 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (25 | ) |  |  | 0 |  |  |  | (49 | )
Balance at March 31, 2023* |  | ¥ | (183,034 | ) |  | ¥ | 275 |  |  | ¥ | (3,617 | ) |  | ¥ | 155,912 |  |  | ¥ | 22,083 |  |  | ¥ | (8,381 | )

* | As of March 31, 2023, there were no net unrealized gains (losses) on investment in securities related to available-for-sale debt securities with allowance for credit losses.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Amounts reclassified to net income from accumulated other comprehensive income (loss) for fiscal 2021, 2022 and 2023 are as follows:

|  | March 31, 2021
Details about accumulated other comprehensive income components |  | Reclassification adjustment included in net income |  |  | Consolidated statements of income caption
|  | Millions of yen |  |  |
Net unrealized gains (losses) on investment in securities |  |  |  |  |  |
Sales of debt securities |  | ¥ | 2,473 |  |  | Gains on investment securities and dividends
Sales of debt securities |  |  | 5,433 |  |  | Life insurance premiums and related investment income
Amortization of debt securities |  |  | (1,468 | ) |  | Finance revenues
Amortization of debt securities |  |  | (1,340 | ) |  | Life insurance premiums and related investment income
Others |  |  | (4,594 | ) |  | Write-downs of securities
|  |  | 504 |  |  | Total before income tax
|  |  | (510 | ) |  | Income tax (expense) or benefit
|  | ¥ | (6 | ) |  | Net of tax
Debt valuation adjustments |  |  |  |  |  |
Fulfillment of policy liabilities and amortization of policy account balances |  | ¥ | 101 |  |  | Life insurance costs
|  |  | 101 |  |  | Total before income tax
|  |  | (28 | ) |  | Income tax (expense) or benefit
|  | ¥ | 73 |  |  | Net of tax
Defined benefit pension plans |  |  |  |  |  |
Amortization of prior service credit |  | ¥ | 447 |  |  | See Note 17 “Pension Plans”
Amortization of net actuarial loss |  |  | (1,633 | ) |  | See Note 17 “Pension Plans”
Amortization of transition obligation |  |  | (1 | ) |  | See Note 17 “Pension Plans”
|  |  | (1,187 | ) |  | Total before income tax
|  |  | 368 |  |  | Income tax (expense) or benefit
|  | ¥ | (819 | ) |  | Net of tax
Foreign currency translation adjustments |  |  |  |  |  |
Foreign exchange contracts |  |  | (2,057 | ) |  | Gains on sales of subsidiaries and affiliates and liquidation losses, net/Interest expense/Other (income) and expense
Sales or liquidation |  |  | (2,760 | ) |  | Gains on sales of subsidiaries and affiliates and liquidation losses, net
|  |  | (4,817 | ) |  | Total before income tax
|  |  | 751 |  |  | Income tax (expense) or benefit
|  | ¥ | (4,066 | ) |  | Net of tax
Net unrealized gains (losses) on derivative instruments |  |  |  |  |  |
Interest rate swap agreements |  | ¥ | (1,522 | ) |  | Interest expense
Foreign exchange contracts |  |  | (242 | ) |  | Interest expense/Other (income) and expense
Foreign currency swap agreements |  |  | (5,938 | ) |  | Interest expense/Other (income) and expense
|  |  | (7,702 | ) |  | Total before income tax
|  |  | 1,923 |  |  | Income tax (expense) or benefit
|  | ¥ | (5,779 | ) |  | Net of tax

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | March 31, 2022
Details about accumulated other comprehensive income components |  | Reclassification adjustment included in net income |  |  | Consolidated statements of income caption
|  | Millions of yen |  |  |
Net unrealized gains (losses) on investment in securities |  |  |  |  |  |
Sales of debt securities |  | ¥ | 4,619 |  |  | Gains on investment securities and dividends
Sales of debt securities |  |  | 737 |  |  | Life insurance premiums and related investment income
Amortization of debt securities |  |  | 92 |  |  | Finance revenues
Amortization of debt securities |  |  | (658 | ) |  | Life insurance premiums and related investment income
Others |  |  | (522 | ) |  | Write-downs of securities
|  |  | 4,268 |  |  | Total before income tax
|  |  | (61 | ) |  | Income tax (expense) or benefit
|  | ¥ | 4,207 |  |  | Net of tax
Debt valuation adjustments |  |  |  |  |  |
Fulfillment of policy liabilities and amortization of policy account balances |  | ¥ | 36 |  |  | Life insurance costs
|  |  | 36 |  |  | Total before income tax
|  |  | (10 | ) |  | Income tax (expense) or benefit
|  | ¥ | 26 |  |  | Net of tax
Defined benefit pension plans |  |  |  |  |  |
Amortization of prior service credit |  | ¥ | 386 |  |  | See Note 17 “Pension Plans”
Amortization of net actuarial loss |  |  | (912 | ) |  | See Note 17 “Pension Plans”
Amortization of transition obligation |  |  | (1 | ) |  | See Note 17 “Pension Plans”
|  |  | (527 | ) |  | Total before income tax
|  |  | 151 |  |  | Income tax (expense) or benefit
|  | ¥ | (376 | ) |  | Net of tax
Foreign currency translation adjustments |  |  |  |  |  |
Foreign exchange contracts |  | ¥ | (1,782 | ) |  | Gains on sales of subsidiaries and affiliates and liquidation losses, net/Interest expense/Other (income) and expense
Sales or liquidation |  |  | 873 |  |  | Gains on sales of subsidiaries and affiliates and liquidation losses, net
|  |  | (909 | ) |  | Total before income tax
|  |  | 295 |  |  | Income tax (expense) or benefit
|  | ¥ | (614 | ) |  | Net of tax
Net unrealized gains (losses) on derivative instruments |  |  |  |  |  |
Interest rate swap agreements |  | ¥ | (1,615 | ) |  | Interest expense
Foreign exchange contracts |  |  | (710 | ) |  | Interest expense/Other (income) and expense
Foreign currency swap agreements |  |  | (3,589 | ) |  | Interest expense/Other (income) and expense
|  |  | (5,914 | ) |  | Total before income tax
|  |  | 1,478 |  |  | Income tax (expense) or benefit
|  | ¥ | (4,436 | ) |  | Net of tax

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | March 31, 2023
Details about accumulated other comprehensive income components |  | Reclassification adjustment included in net income |  |  | Consolidated statements of income caption
|  | Millions of yen |  |  |
Net unrealized gains (losses) on investment in securities |  |  |  |  |  |
Sales of debt securities |  | ¥ | 155 |  |  | Gains on investment securities and dividends
Sales of debt securities |  |  | (765 | ) |  | Life insurance premiums and related investment income
Amortization of debt securities |  |  | 509 |  |  | Finance revenues
Amortization of debt securities |  |  | 1,148 |  |  | Life insurance premiums and related investment income
Others |  |  | (536 | ) |  | Write-downs of securities
|  |  | 511 |  |  | Total before income tax
|  |  | (90 | ) |  | Income tax (expense) or benefit
|  | ¥ | 421 |  |  | Net of tax
Debt valuation adjustments |  |  |  |  |  |
Fulfillment of policy liabilities and amortization of policy account balances |  | ¥ | 18 |  |  | Life insurance costs
|  |  | 18 |  |  | Total before income tax
|  |  | (5 | ) |  | Income tax (expense) or benefit
|  | ¥ | 13 |  |  | Net of tax
Defined benefit pension plans |  |  |  |  |  |
Amortization of prior service credit |  | ¥ | 376 |  |  | See Note 17 “Pension Plans”
Amortization of net actuarial loss |  |  | (88 | ) |  | See Note 17 “Pension Plans”
Amortization of transition obligation |  |  | (1 | ) |  | See Note 17 “Pension Plans”
|  |  | 287 |  |  | Total before income tax
|  |  | (76 | ) |  | Income tax (expense) or benefit
|  | ¥ | 211 |  |  | Net of tax
Foreign currency translation adjustments |  |  |  |  |  |
Foreign exchange contracts |  | ¥ | (14,673 | ) |  | Gains on sales of subsidiaries and affiliates and liquidation losses, net/Interest expense/Other (income) and expense
Sales or liquidation |  |  | 8,776 |  |  | Gains on sales of subsidiaries and affiliates and liquidation losses, net
|  |  | (5,897 | ) |  | Total before income tax
|  |  | 1,806 |  |  | Income tax (expense) or benefit
|  | ¥ | (4,091 | ) |  | Net of tax
Net unrealized gains (losses) on derivative instruments |  |  |  |  |  |
Interest rate swap agreements |  | ¥ | (175 | ) |  | Interest expense
Foreign exchange contracts |  |  | 0 |  |  | Interest expense/Other (income) and expense
Foreign currency swap agreements |  |  | (1,671 | ) |  | Interest expense/Other (income) and expense
|  |  | (1,846 | ) |  | Total before income tax
|  |  | 408 |  |  | Income tax (expense) or benefit
|  | ¥ | (1,438 | ) |  | Net of tax

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Comprehensive income (loss) and its components attributable to ORIX Corporation and noncontrolling interests have been reported, net of tax, in the consolidated statements of changes in equity, and information about comprehensive income (loss) and its components attributable to redeemable noncontrolling interests is provided in Note 18 “Red
ee
mable Noncontrolling Interests.” Total comprehensive income (loss) and its components have been reported, net of tax, in the consolidated statements of comprehensive income.
21. ORIX Corporation Shareholders’ Equity
Changes in the number of shares issued in fiscal 2021, 2022 and 2023 are as follows:

|  | Number of shares |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Beginning balance |  |  | 1,324,629,128 |  |  |  | 1,285,724,480 |  |  |  | 1,258,277,087 |
Cancellation of treasury stock |  |  | (38,904,648 | ) |  |  | (27,447,393 | ) |  |  | (23,427,745 | )
Ending balance |  |  | 1,285,724,480 |  |  |  | 1,258,277,087 |  |  |  | 1,234,849,342 |

The Japanese Companies Act (the “Act”) provides that an amount equivalent to 10% of any dividends resulting from appropriation of retained earnings be appropriated to the legal reserve until the aggregate amount of the additional
paid-in
capital and the legal reserve equals 25% of the issued capital. The Act also provides that both additional
paid-in
capital and the legal reserve are not available for dividends but may be capitalized or may be reduced by resolution of the general meeting of shareholders. However, if specified in the Company’s articles of incorporation, dividends can be declared by the Board of Directors instead of the general meeting of shareholders. In accordance with this, the Board of Directors of the Company resolved in May 2023 that a total of ¥50,209 million dividends shall be distributed to the shareholders of record as of March 31, 2023. The liability for declared dividends and related impact on total equity is accounted for in the period of such Board of Directors’ resolution.
The Act provides that at least
one-half
of amounts paid for new shares are included in common stock when they are issued. In conformity therewith, the Company has divided the principal amount of bonds converted into common stock and proceeds received from the issuance of common stock, including the exercise of warrants and stock acquisition rights, equally between common stock and additional
paid-in
capital, and set off expenses related to the issuance from the additional
paid-in
capital.
The amount available for dividends under the Act is calculated based on the amount recorded in the Company’s
non-consolidated
financial statements prepared in accordance with accounting principles generally accepted in Japan. As a result, the amount available for dividends is ¥884,149 million as of March 31, 2023.
Retained earnings at March 31, 2023 include ¥104,346 million relating to equity in undistributed earnings of the companies accounted or by the equity method.
As of March 31, 2023, the restricted net assets of certain subsidiaries include regulatory capital requirements mainly for banking and life insurance operations of ¥13,623 million.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
22. Gains on Investment Securities and Dividends
Gains on investment securities and dividends in fiscal 2021, 2022 and 2023 consist of the following:

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Net gains on investment securities |  | ¥ | 44,622 |  |  | ¥ | 54,585 |  |  | ¥ | 30,284 |
Dividends income |  |  | 1,475 |  |  |  | 1,925 |  |  |  | 2,146 |
|  | ¥ | 46,097 |  |  | ¥ | 56,510 |  |  | ¥ | 32,430 |

* | Unrealized changes in fair value of investments in equity securities have been included in “Net gains on investment securities.”

23. Life Insurance Operations
Life insurance premiums and related investment income in fiscal 2021, 2022 and 2023 consist of the following:

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Life insurance premiums |  | ¥ | 403,799 |  |  | ¥ | 431,289 |  |  | ¥ | 451,404 |
Life insurance related investment income* |  |  | 83,751 |  |  |  | 50,521 |  |  |  | 42,666 |
|  | ¥ | 487,550 |  |  | ¥ | 481,810 |  |  | ¥ | 494,070 |

* | Life insurance related investment income in fiscal 2021, 2022 and 2023 include net unrealized holding gains of ¥61,351 million and ¥8,004 million and ¥851 million on equity securities held as of March 31, 2021, 2022 and 2023, respectively.

Life insurance premiums include reinsurance benefits, net of reinsurance premiums. For fiscal 2021, 2022 and 2023, reinsurance benefits and reinsurance premiums included in life insurance premiums are as follows:

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Reinsurance benefits |  | ¥ | 2,333 |  |  | ¥ | 2,744 |  |  | ¥ | 3,239 |
Reinsurance premiums |  |  | (5,196 | ) |  |  | (4,498 | ) |  |  | (4,891 | )

The benefits and expenses of life insurance operations included in life insurance costs in the consolidated statements of income are recognized so as to associate with earned premiums over the life of contracts. This association is accomplished by means of the provision for future policy benefits and the deferral and subsequent amortization of policy acquisition costs (principally commissions and certain other expenses directly relating to policy issuance and underwriting). Amortization charged to income for fiscal 2021, 2022 and 2023 amounted to ¥21,928 million, ¥21,213 million and ¥25,966 million, respectively.
Life insurance premiums and related investment income include net realized and unrealized gains or losses from investment assets under management on behalf of variable annuity and variable life policyholders, and net gains or losses from derivative contracts, which consist of gains or losses from futures and foreign exchange contracts, entered to economically hedge a portion of the minimum guarantee risk relating to variable annuity and variable life insurance contracts. In addition, the fair value option was elected for the entire variable annuity and variable life insurance contracts to offset earnings recognized for gains or losses from the investment assets
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
managed on behalf of variable annuity and variable life policyholders, derivative contracts and the changes in the fair value of reinsurance contracts. Life insurance costs include the net amount of the changes in fair value of the variable annuity and variable life insurance contracts for which the fair value option was elected and insurance costs recognized for insurance and annuity payouts as a result of insured events. Certain subsidiaries have elected the fair value option for certain reinsurance contracts to partially offset the changes in fair value recognized in earnings of the policy liabilities and policy account balances attributable to the changes in the minimum guarantee risks of the variable annuity and variable life insurance contracts, and the changes in the fair value of the reinsurance contracts were recorded in life insurance costs.
The portion of the total change in the fair value of variable annuity and variable life insurance contracts that results from a change in the instrument-specific credit risk is recognized in other comprehensive income (loss), net of applicable income taxes.
The above mentioned gains or losses relating to variable annuity and variable life insurance contracts for fiscal 2021, 2022 and 2023 are mainly as follows:

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Life insurance premiums and related investment income : |  |  |  |  |  |  |  |  |  |  |  |
Net realized and unrealized gains or losses from investment assets |  | ¥ | 76,470 |  |  | ¥ | 8,501 |  |  | ¥ | (2,312 | )
Net gains or losses from derivative contracts : |  |  | (10,271 | ) |  |  | (1,520 | ) |  |  | (1,360 | )
Futures |  |  | (9,412 | ) |  |  | (1,075 | ) |  |  | (855 | )
Foreign exchange contracts |  |  | (261 | ) |  |  | (445 | ) |  |  | (505 | )
Options held |  |  | (598 | ) |  |  | 0 |  |  |  | 0 |
Life insurance costs : |  |  |  |  |  |  |  |  |  |  |  |
Changes in the fair value of the policy liabilities and policy account balances |  | ¥ | (35,565 | ) |  | ¥ | (67,984 | ) |  | ¥ | (35,097 | )
Insurance costs recognized for insurance and annuity payouts as a result of insured events |  |  | 77,631 |  |  |  | 69,727 |  |  |  | 28,754 |
Changes in the fair value of the reinsurance contracts |  |  | 11,909 |  |  |  | 1,083 |  |  |  | 538 |

24. Write-Downs of Long-Lived Assets
The Company and its subsidiaries perform tests for recoverability on long-lived assets classified as held and used for which events or changes in circumstances indicated that the assets might be impaired. The Company and its subsidiaries consider an asset’s carrying amount as not recoverable when such carrying amount exceeds the undiscounted future cash flows estimated to result from the use and eventual disposition of the asset. The net carrying amount of assets not recoverable is reduced to fair value if lower than the carrying amount.
As of March 31, 2022 and 2023, the long-lived assets and liabilities associated with those assets classified as held for sale in the accompanying consolidated balance sheets are as follows.

|  | Millions of yen |
| 2022 |  |  | 2023 |
Investment in operating leases |  | ¥ | 35,061 |  |  | ¥ | 13,104 |
Property under facility operations |  |  | 8,376 |  |  |  | 10 |
Office facilities |  |  | 1,375 |  |  |  | 55 |
Other assets |  |  | 1,556 |  |  |  | 0 |
Other liabilities |  |  | 1,761 |  |  |  | 0 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The long-lived assets classified as held for sale as of March 31, 2022 are included in Corporate Financial Services and Maintenance Leasing segment, Real Estate segment, PE Investment and Concession segment, Aircraft and Ships segment and ORIX USA segment. The long-lived assets classified as held for sale as of March 31, 2023 are included in Corporate Financial Services and Maintenance Leasing segment, Real Estate segment, Environment and Energy segment, Aircraft and Ships segment and ORIX USA segment.
The Company and its subsidiaries determine the fair value using appraisals prepared by independent third party appraisers or our own staff of qualified appraisers, and others based on recent transactions involving sales of similar assets or other valuation techniques such as discounted cash flows methodologies using future cash flows estimated to be generated from operation of the existing assets or completion of development projects, as appropriate.
During fiscal 2021, 2022 and 2023, the Company and its subsidiaries recognized impairment losses for the difference between carrying amounts and fair values in the amount of ¥3,020 million, ¥35,666 million and ¥2,297 million, respectively, which are reflected as write-downs of long-lived assets. Breakdowns of these amounts are as follows.

Fiscal Year ended March 31, 2021 |  | Write-downs of the assets held for sale |  |  | Write-downs due to decline in estimated future cash flows |
| Amount (Millions of yen) |  |  | The number of properties |  |  | Amount (Millions of yen) |  |  | The number of properties |
Office buildings |  | ¥ | 0 |  |  |  | — |  |  | ¥ | 331 |  |  |  | 1 |
Commercial facilities other than office buildings |  |  | 1,067 |  |  |  | 5 |  |  |  | 189 |  |  |  | 1 |
Condominiums |  |  | 0 |  |  |  | — |  |  |  | 64 |  |  |  | 2 |
Land undeveloped or under construction |  |  | 0 |  |  |  | — |  |  |  | 98 |  |  |  | 2 |
Others* |  |  | 0 |  |  |  | — |  |  |  | 1,271 |  |  |  | — |
Total |  | ¥ | 1,067 |  |  |  | — |  |  | ¥ | 1,953 |  |  |  | — |

Fiscal Year ended March 31, 2022 |  | Write-downs of the assets held for sale |  |  | Write-downs due to decline in estimated future cash flows |
| Amount (Millions of yen) |  |  | The number of properties |  |  | Amount (Millions of yen) |  |  | The number of properties |
Commercial facilities other than office buildings |  | ¥ | 858 |  |  |  | 3 |  |  | ¥ | 11 |  |  |  | 1 |
Condominiums |  |  | 13 |  |  |  | 2 |  |  |  | 83 |  |  |  | 49 |
Others* |  |  | 11,878 |  |  |  | — |  |  |  | 22,823 |  |  |  | — |
Total |  | ¥ | 12,749 |  |  |  | — |  |  | ¥ | 22,917 |  |  |  | — |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

Fiscal Year ended March 31, 2023 |  | Write-downs of the assets held for sale |  |  | Write-downs due to decline in estimated future cash flows |
| Amount (Millions of yen) |  |  | The number of properties |  |  | Amount (Millions of yen) |  |  | The number of properties |
Office buildings |  | ¥ | 0 |  |  |  | — |  |  |  | 1,535 |  |  |  | 2 |
Commercial facilities other than office buildings |  |  | 0 |  |  |  | — |  |  |  | 51 |  |  |  | 2 |
Condominiums |  |  | 2 |  |  |  | 1 |  |  |  | 15 |  |  |  | 19 |
Others* |  |  | 241 |  |  |  | — |  |  |  | 453 |  |  |  | — |
Total |  | ¥ | 243 |  |  |  | — |  |  | ¥ | 2,054 |  |  |  | — |

* | For the “Others”, the numbers of properties are omitted. Write-downs of long-lived assets for fiscal 2021 include write-downs of ¥1,099 million of hotels. Write-downs of long-lived assets for fiscal 2022 include write-downs of ¥31,205 million of property under facility operations and others held by subsidiaries, of which ¥19,564 million related to write-downs of two coal-biomass co-fired power plants, and ¥2,331 million of two aircraft.

Breakdowns of these amounts by segment are provided in Note 31 “
Segment
Information.”
25. Per Share Data
Reconciliation of the differences between basic and diluted earnings per share (EPS) in fiscal 2021, 2022 and 2023 is as follows:
In fiscal 2021, 2022 and 2023, there was no stock compensation which was antidilutive.

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Net Income attributable to ORIX Corporation shareholders |  | ¥ | 192,384 |  |  | ¥ | 312,135 |  |  | ¥ | 273,075 |
|  | Thousands of shares |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Weighted-average shares |  |  | 1,236,897 |  |  |  | 1,203,452 |  |  |  | 1,180,356 |
Effect of dilutive securities |  |  |  |  |  |  |  |  |  |  |  |
Stock compensation |  |  | 1,197 |  |  |  | 1,400 |  |  |  | 1,589 |
Weighted-average shares for diluted EPS computation |  |  | 1,238,094 |  |  |  | 1,204,852 |  |  |  | 1,181,945 |
|  | Yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Earnings per share for net income attributable to ORIX Corporation shareholders: |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | ¥ | 155.54 |  |  | ¥ | 259.37 |  |  | ¥ | 231.35 |
Diluted |  |  | 155.39 |  |  |  | 259.07 |  |  |  | 231.04 |

Note: |  | The Company’s shares held through the Board Incentive Plan Trust are included in the number of treasury stock to be deducted in calculation of the weighted-average shares for EPS computation (1,897,979 shares, 2,104,640 shares and 2,496,724 shares in fiscal 2021, 2022 and 2023).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
26. Derivative Financial Instruments and Hedging
Risk management policy
The Company and its subsidiaries manage interest rate risk through asset-liability management (“ALM”). The Company and its subsidiaries use derivative financial instruments to hedge interest rate risk and avoid changes in interest rates that could have a significant adverse effect on the Company’s results of operations. As a result of interest rate changes, the fair value and/or cash flow of interest sensitive assets and liabilities will fluctuate. However, such fluctuation will generally be offset by using derivative financial instruments as hedging instruments. Derivative financial instruments that the Company and its subsidiaries use as part of the interest risk management include interest rate swaps.
The Company and its subsidiaries utilize foreign currency borrowings, foreign exchange contracts and foreign currency swap agreements to hedge exchange rate risk that are associated with certain transactions and investments denominated in foreign currencies. Similarly, overseas subsidiaries generally structure their liabilities to match the currency-denomination of assets in each region. A certain subsidiary holds futures and foreign exchange contracts for the purpose of economic hedges against minimum guarantee risk of variable annuity and variable life insurance contracts.
By using derivative instruments, the Company and its subsidiaries are exposed to credit risk in the event of nonperformance by counterparties. The Company and its subsidiaries attempt to manage the credit risk by carefully evaluating the content of transactions and the quality of counterparties in advance and regularly monitoring the amount of notional principal, fair value, type of transaction and other factors pertaining to each counterparty.
The Company and its subsidiaries have no derivative instruments with credit-risk-related contingent features as of March 31, 2022 and 2023.
(a) Cash flow hedges
The Company and its subsidiaries designate interest rate swap agreements, foreign currency swap agreements and foreign exchange contracts as cash flow hedges for variability of cash flows originating from floating rate borrowings and forecasted transactions and for exchange fluctuations. Net gains (losses) before deducting applicable taxes on derivative contracts were reclassified from other comprehensive income (loss) into earnings when earnings were affected by the variability in cash flows of the designated hedged item. The amounts of these net gains (losses) after deducting applicable taxes were net losses of ¥5,779 million, ¥4,436 million and ¥1,438 million during fiscal 2021, 2022 and 2023, respectively. The amount of net derivative gains, ¥1,977 million, included in other comprehensive income (loss), net of applicable income taxes at March 31, 2023 will be reclassified into earnings within fiscal 2024.
(b) Fair value hedges
The Company and its subsidiaries use financial instruments designated as fair value hedges to hedge their exposure to interest rate risk and foreign currency exchange risk. A certain subsidiary designates foreign exchange contracts to minimize foreign currency exposures on bonds in foreign currencies in the insurance business. The subsidiary also uses interest rate swap agreements to hedge interest rate exposure of the fair values of bonds in foreign currencies in the insurance business.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
(c) Hedges of net investment in foreign operations
The Company and its subsidiaries use foreign exchange contracts and borrowings and bonds denominated in foreign currencies to hedge the foreign currency exposure of the net investment in overseas subsidiaries and affiliates.
(d) Derivatives not designated as hedging instruments
The Company and its subsidiaries entered into interest rate swap agreements, futures and foreign exchange contracts for risk management purposes which are not qualified for hedge accounting. A certain subsidiary holds futures and foreign exchange contracts for the purpose of economic hedges against minimum guarantee risk of variable annuity and variable life insurance contracts.
The effect of derivative instruments on the consolidated statements of income,
pre-tax,
for fiscal 2021 is as follows.
(1) Cash flow hedges

|  | Millions of yen |
|  | Gains (losses) recognized in other comprehensive income on derivative |  |  | Gains (losses) reclassified from other comprehensive income (loss) into income |
|  | Interest expense |  |  | Other (income) and expense |
Interest rate swap agreements |  | ¥ | 5,051 |  |  | ¥ | 1,522 |  |  | ¥ | 0 |
Foreign exchange contracts |  |  | (45 | ) |  |  | 827 |  |  |  | (585 | )
Foreign currency swap agreements |  |  | (6,043 | ) |  |  | 553 |  |  |  | 5,385 |

(2) Fair value hedges

|  | Millions of yen |
|  | Gains (losses) recognized in income on derivative and other |  |  | Gains (losses) recognized in income on hedged item |
|  | Life insurance premiums and related investment income |  |  | Other (income) and expense |  |  | Life insurance premiums and related investment income |  |  | Other (income) and expense |
Interest rate swap agreements |  | ¥ | 9,533 |  |  | ¥ | 0 |  |  | ¥ | (8,990 | ) |  | ¥ | 0 |
Foreign exchange contracts |  |  | (5,032 | ) |  |  | 438 |  |  |  | 3,591 |  |  |  | (356 | )

(3) Hedges of net investment in foreign operations

|  | Millions of yen |
|  | Gains (losses) recognized in other comprehensive income on derivative and others |  |  | Gains (losses) reclassified from other comprehensive income (loss) into income |
|  | Gains on sales of subsidiaries and affiliates and liquidation losses, net |  |  | Interest expense |  |  | Other (income) and expense |
Foreign exchange contracts |  | ¥ | (27,128 | ) |  | ¥ | 1,145 |  |  | ¥ | 3,181 |  |  | ¥ | 21 |
Borrowings and bonds in foreign currencies |  |  | (15,840 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
(4) Derivatives not designated as hedging instruments

|  | Millions of yen |
|  | Gains (losses) recognized in income on derivative |
|  | Life insurance premiums and related investment income* |  |  | Interest expense |  |  | Other (income) and expense |
Interest rate swap agreements |  | ¥ | 0 |  |  | ¥ | 7 |  |  | ¥ | (13 | )
Futures |  |  | (9,412 | ) |  |  | 0 |  |  |  | 6,980 |
Foreign exchange contracts |  |  | (215 | ) |  |  | 2,085 |  |  |  | 12,814 |
Credit derivatives held |  |  | 0 |  |  |  | 0 |  |  |  | 1 |
Options held/written and other |  |  | (598 | ) |  |  | 0 |  |  |  | (2,419 | )

* | Futures, foreign exchange contracts and options held/written and other in the above table include gains (losses) arising from futures, foreign exchange contracts and options held to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts for fiscal 2021 (see Note 23 “Life Insurance Operations”).

The effect of derivative instruments on the consolidated statements of income,
pre-tax,
for fiscal 2022 is as follows.
(1) Cash flow hedges

|  | Millions of yen |
|  | Gains (losses) recognized in other comprehensive income on derivative |  |  | Gains (losses) reclassified from other comprehensive income (loss) into income |
|  | Interest expense |  |  | Other (income) and expense |
Interest rate swap agreements |  | ¥ | 16,507 |  |  | ¥ | 1,615 |  |  | ¥ | 0 |
Foreign exchange contracts |  |  | (542 | ) |  |  | 223 |  |  |  | 487 |
Foreign currency swap agreements |  |  | (2,075 | ) |  |  | 559 |  |  |  | 3,030 |

(2) Fair value hedges

|  | Millions of yen |
|  | Gains (losses) recognized in income on derivative and other |  |  | Gains (losses) recognized in income on hedged item |
|  | Life insurance premiums and related investment income |  |  | Other (income) and expense |  |  | Life insurance premiums and related investment income |  |  | Other (income) and expense |
Interest rate swap agreements |  | ¥ | 4,142 |  |  | ¥ | 0 |  |  | ¥ | (4,068 | ) |  | ¥ | 0 |
Foreign exchange contracts |  |  | (37,997 | ) |  |  | 5 |  |  |  | 37,659 |  |  |  | 89 |

(3) Hedges of net investment in foreign operations

|  | Millions of yen |
|  | Gains (losses) recognized in other comprehensive income on derivative and others |  |  | Gains (losses) reclassified from other comprehensive income (loss) into income |
|  | Gains on sales of subsidiaries and affiliates and liquidation losses, net |  |  | Interest expense |  |  | Other (income) and expense |
Foreign exchange contracts |  | ¥ | (28,498 | ) |  | ¥ | (104 | ) |  | ¥ | 1,673 |  |  | ¥ | 5 |
Borrowings and bonds in foreign currencies |  |  | (63,922 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
(4) Derivatives not designated as hedging instruments

|  | Millions of yen |
|  | Gains (losses) recognized in income on derivative |
|  | Life insurance premiums and related investment income* |  |  | Interest expense |  |  | Other (income) and expense |
Interest rate swap agreements |  | ¥ | 0 |  |  | ¥ | 6 |  |  | ¥ | (22 | )
Futures |  |  | (1,075 | ) |  |  | 0 |  |  |  | 186 |
Foreign exchange contracts |  |  | 20,254 |  |  |  | 1,308 |  |  |  | 38,330 |
Credit derivatives held |  |  | 0 |  |  |  | 0 |  |  |  | (1 | )
Options held/written and other |  |  | 0 |  |  |  | 0 |  |  |  | (749 | )

* | Futures and foreign exchange contracts in the above table include gains (losses) arising from futures and foreign exchange contracts held to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts for fiscal 2022 (see Note 23 “Life Insurance Operations”).

The effect of derivative instruments on the consolidated statements of income,
pre-tax,
for fiscal 2023 is as follows.
(1) Cash flow hedges

|  | Millions of yen |
|  | Gains (losses) recognized in other comprehensive income on derivative |  |  | Gains (losses) reclassified from other comprehensive income (loss) into income |
|  | Interest expense |  |  | Other (income) and expense |
Interest rate swap agreements |  | ¥ | 23,838 |  |  | ¥ | 175 |  |  | ¥ | 0 |
Foreign exchange contracts |  |  | (184 | ) |  |  | (893 | ) |  |  | 893 |
Foreign currency swap agreements |  |  | (2,268 | ) |  |  | 766 |  |  |  | 905 |
Options held/written and other |  |  | (48 | ) |  |  | 0 |  |  |  | 0 |

(2) Fair value hedges

|  | Millions of yen |
|  | Gains (losses) recognized in income on derivative and other |  |  | Gains (losses) recognized in income on hedged item |
|  | Life insurance premiums and related investment income |  |  | Other (income) and expense |  |  | Life insurance premiums and related investment income |  |  | Other (income) and expense |
Interest rate swap agreements |  | ¥ | 2,633 |  |  | ¥ | 0 |  |  | ¥ | (2,499 | ) |  | ¥ | 0 |
Foreign exchange contracts |  |  | (42,947 | ) |  |  | (412 | ) |  |  | 43,006 |  |  |  | 332 |

(3) Hedges of net investment in foreign operations

|  | Millions of yen |
|  | Gains (losses) recognized in other comprehensive income on derivative and others |  |  | Gains (losses) reclassified from other comprehensive income (loss) into income |
|  | Gains on sales of subsidiaries and affiliates and liquidation losses, net |  |  | Interest expense |  |  | Other (income) and expense |
Foreign exchange contracts |  | ¥ | (21,316 | ) |  | ¥ | (7,874 | ) |  | ¥ | 7,051 |  |  | ¥ | (252 | )
Borrowings and bonds in foreign currencies |  |  | (66,947 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
(4) Derivatives not designated as hedging instruments

|  | Millions of yen |
|  | Gains (losses) recognized in income on derivative |
|  | Life insurance premiums and related investment income* |  |  | Interest expense |  |  | Other (income) and expense |
Interest rate swap agreements |  | ¥ | 0 |  |  | ¥ | 5 |  |  | ¥ | (222 | )
Futures |  |  | (855 | ) |  |  | 0 |  |  |  | (1,300 | )
Foreign exchange contracts |  |  | 21,659 |  |  |  | 4,231 |  |  |  | 49,589 |
Credit derivatives held/written |  |  | 0 |  |  |  | 0 |  |  |  | 3 |
Options held/written and other |  |  | 0 |  |  |  | 0 |  |  |  | 1,828 |

* | Futures and foreign exchange contracts in the above table include gains (losses) arising from futures and foreign exchange contracts held to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts for fiscal 2023 (see Note 23 “Life Insurance Operations”).

The effect of the components excluded from the assessment of hedge effectiveness on the consolidated statements of income,
pre-tax,
for fiscal 2021 is as follows.
Fair value hedges

|  | Millions of yen |
|  | Gains (losses) recognized in income |
|  | Life insurance premiums and related investment income |  |  | Interest expense |  |  | Other (income) and expense |
Foreign exchange contracts |  | ¥ | (1,249 | ) |  | ¥ | 6 |  |  | ¥ | 0 |
Options held/written and other |  |  | 0 |  |  |  | 0 |  |  |  | 32 |

The effect of the components excluded from the assessment of hedge effectiveness on the consolidated statements of income,
pre-tax,
for fiscal 2022 is as follows.
Fair value hedges

|  | Millions of yen |
|  | Gains (losses) recognized in income |
|  | Life insurance premiums and related investment income |  |  | Interest expense |  |  | Other (income) and expense |
Foreign exchange contracts |  | ¥ | (1,233 | ) |  | ¥ | 9 |  |  | ¥ | 0 |
Options held/written and other |  |  | 0 |  |  |  | 0 |  |  |  | 31 |

The carrying amount of hedged assets and liabilities recognized in balance sheets in fair value hedges and the cumulative amount of fair value hedging adjustments included in the carrying amount (excluding the effect of changes in foreign exchange rates) at March 31, 2022 is as follows.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The effect of the components excluded from the assessment of hedge effectiveness on the consolidated statements of income,
pre-tax,
for fiscal 2023 is as follows.
Fair value hedges

|  | Millions of yen |
|  | Gains (losses) recognized in income |
|  | Life insurance premiums and related investment income |  |  | Interest expense |  |  | Other (income) and expense |
Foreign exchange contracts |  | ¥ | (12,299 | ) |  | ¥ | 20 |  |  | ¥ | 0 |
Options held/written and other |  |  | 0 |  |  |  | 0 |  |  |  | 55 |

The carrying amount of hedged assets and liabilities recognized in balance sheets in fair value hedges and the cumulative amount of fair value hedging adjustments included in the carrying amount (excluding the effect of changes in foreign exchange rates) at March 31, 2023 is as follows.

Assets as hedged items in fair value hedges |  |  | Liabilities as hedged items in fair value hedges |
|  | Millions of yen |  |  |  |  |  | Millions of yen |
Consolidated balance sheets location |  | Carrying amount |  |  | The cumulative amount of fair value hedging adjustments included in the carrying amount |  |  | Consolidated balance sheets location |  |  | Carrying amount |  |  | The cumulative amount of fair value hedging adjustments included in the carrying amount |
Investment in Securities |  | ¥ | 470,204 |  |  | ¥ | (1,107 | ) |  |  | — |  |  | ¥ | 0 |  |  | ¥ | 0 |
Installment Loans |  |  | 13,969 |  |  |  | (1 | ) |  |  | — |  |  |  | 0 |  |  |  | 0 |

Notional amounts of derivative instruments and other, fair values of derivative instruments and other before offsetting at March 31, 2022 and 2023 are as follows.
March 31, 2022

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

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

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
March 31, 2023

|  |  |  |  | Derivative assets |  |  | Derivative liabilities |
|  | Notional amount |  |  | Fair value |  |  | Consolidated balance sheets location |  |  | Fair value |  |  | Consolidated balance sheets location |
|  | Millions of yen |  |  | Millions of yen |  |  | Millions of yen |
Derivatives designated as hedging instruments and other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap agreements |  | ¥ | 568,864 |  |  | ¥ | 22,798 |  |  |  | Other Assets |  |  | ¥ | 3,311 |  |  |  | Other Liabilities |
Options held/written and other |  |  | 9,486 |  |  |  | 52 |  |  |  | Other Assets |  |  |  | 88 |  |  |  | Other Liabilities |
Futures, foreign exchange contracts |  |  | 933,988 |  |  |  | 2,735 |  |  |  | Other Assets |  |  |  | 26,217 |  |  |  | Other Liabilities |
Foreign currency swap agreements |  |  | 99,878 |  |  |  | 1,325 |  |  |  | Other Assets |  |  |  | 2,426 |  |  |  | Other Liabilities |
Foreign currency long-term debt |  |  | 748,396 |  |  |  | 0 |  |  |  | — |  |  |  | 0 |  |  |  | — |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap agreements |  | ¥ | 464 |  |  | ¥ | 0 |  |  |  | — |  |  | ¥ | 8 |  |  |  | Other Liabilities |
Options held/written and other |  |  | 632,211 |  |  |  | 30,435 |  |  |  | Other Assets |  |  |  | 28,335 |  |  |  | Other Liabilities |
Futures, foreign exchange contracts* |  |  | 788,361 |  |  |  | 15,050 |  |  |  | Other Assets |  |  |  | 10,978 |  |  |  | Other Liabilities |
Credit derivatives held/written |  |  | 1,098 |  |  |  | 3 |  |  |  | Other Assets |  |  |  | 3 |  |  |  | Other Liabilities |

* | The notional amounts of futures and foreign exchange contracts in the above table include futures contracts of ¥14,758 million and foreign exchange contracts of ¥5,554 million to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts at March 31, 2023, respectively. Derivative assets in the above table include fair value of the futures and foreign exchange contracts before offsetting of ¥52 million and ¥12 million and derivative liabilities include fair value of the futures and foreign exchange contracts before offsetting of ¥200 million and ¥179 million at March 31, 2023, respectively.

The Company and its subsidiaries have contracted credit derivatives for the purpose of trading. Details of credit derivatives written as of March 31, 2023 are as follows and there are no credit derivatives written as of March 31, 2022.

Types of derivatives |  | The events or circumstances that would require the seller to perform under the credit derivative |  | Maximum potential amount of future payment under the credit derivative |  |  | Approximate remaining term of the credit derivative |  | Fair value of the credit derivative |
| Millions of yen |  |  | Millions of yen |
Credit default swap |  | In case of credit event (bankruptcy, failure to pay, restructuring) occurring in underlying refence company* |  | ¥ | 1,000 |  |  | Less than five years |  | ¥ | (3 | )

* | Underlying reference company’s credit ratings are A1 or better rated by rating agencies as of March 31, 2023.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
27. Offsetting Assets and Liabilities
The gross amounts recognized, gross amounts offset, and net amounts presented in the consolidated balance sheets regarding derivative assets and liabilities as of March 31, 2022 and 2023 are as follows.
March 31, 2022

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

March 31, 2023

|  | Millions of yen |
|  | Gross amounts recognized |  |  | Gross amounts offset in the consolidated balance sheets |  |  | Net amounts presented in the consolidated balance sheets |  |  | Gross amounts not offset in the consolidated balance sheets* |  |  | Net amount |
| Financial instruments |  |  | Collateral received/ pledged |
Derivative assets |  | ¥ | 72,398 |  |  | ¥ | (22,052 | ) |  | ¥ | 50,346 |  |  | ¥ | 0 |  |  | ¥ | (4,973 | ) |  | ¥ | 45,373 |
Total assets |  | ¥ | 72,398 |  |  | ¥ | (22,052 | ) |  | ¥ | 50,346 |  |  | ¥ | 0 |  |  | ¥ | (4,973 | ) |  | ¥ | 45,373 |
Derivative liabilities |  | ¥ | 71,366 |  |  | ¥ | (22,052 | ) |  | ¥ | 49,314 |  |  | ¥ | (1,786 | ) |  | ¥ | (509 | ) |  | ¥ | 47,019 |
Total liabilities |  | ¥ | 71,366 |  |  | ¥ | (22,052 | ) |  | ¥ | 49,314 |  |  | ¥ | (1,786 | ) |  | ¥ | (509 | ) |  | ¥ | 47,019 |

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

28. Significant Concentrations of Credit Risk
The Company and its subsidiaries have established various policies and procedures to manage credit exposure, including initial credit approval, credit limits, collateral and guarantee requirements, obtaining rights of offset and continuous oversight. The Company and its subsidiaries’ principal financial instrument portfolio consists of investment in net investment in leases which are secured by title to the leased assets and installment loans which are secured by assets specifically collateralized in relation to loan agreements. When deemed necessary, guarantees are also obtained. The value and adequacy of the collateral are continually monitored. Consequently, the risk of credit loss from counterparties’ failure to perform in connection with collateralized financing activities is believed to be minimal. The Company and its subsidiaries have access to collateral in case of bankruptcy and other losses. However, a significant decline in real estate markets could result in a decline in fair value of the collateral real estate below the mortgage setting amount, which would expose the Company and certain subsidiaries to unsecured credit risk.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
At March 31, 2022 and 2023, no concentration with a single obligor exceeded 1% of the Company’s consolidated total assets. With respect to the Company and its subsidiaries’ credit exposures on a geographic basis, ¥7,138 billion, or 70%, at March 31, 2022 and ¥7,487 billion, or 70%, at March 31, 2023 of the credit risks arising from all financial instruments are attributable to customers located in Japan. The largest concentration of credit risk outside of Japan is exposure attributable to obligors located in the Americas. The gross amount of such exposure is ¥1,355 billion and ¥1,429 billion as of March 31, 2022 and 2023, respectively.
The Company and its subsidiaries have transportation equipment such as automobile operations and aircraft. Transportation equipment is mainly recorded in investment in net investment in leases and operating leases. In connection with investment in net investment in leases and operating leases, the percentage of investment in transportation equipment to consolidated total assets is 9.3% and 9.2% as of March 31, 2022 and 2023, respectively.
The Company and its subsidiaries provide consumers with real estate loans. In connection with installment loans, the percentage of real estate loans for consumers to consolidated total assets is 14.8% and 13.5% as of March 31, 2022 and 2023, respectively.
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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
29. Estimated Fair Value of Financial Instruments
The following information is provided to help readers gain an understanding of the relationship between carrying amounts of financial instruments reported in the Company’s consolidated balance sheets and the related market or fair value. The disclosures do not include net investment in leases, investment in affiliates accounted for under the equity method, pension obligations and insurance contracts and reinsurance contracts except for those classified as investment contracts.
March 31, 2022

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

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
March 31, 2023

|  | Millions of yen |
|  | Carrying amount |  |  | Estimated fair value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | ¥ | 1,231,860 |  |  | ¥ | 1,231,860 |  |  | ¥ | 1,231,860 |  |  | ¥ | 0 |  |  | ¥ | 0 |
Restricted cash |  |  | 135,048 |  |  |  | 135,048 |  |  |  | 135,048 |  |  |  | 0 |  |  |  | 0 |
Installment loans (net of allowance for credit losses) |  |  | 3,829,431 |  |  |  | 3,807,987 |  |  |  | 0 |  |  |  | 128,249 |  |  |  | 3,679,738 |
Equity securities*1 |  |  | 379,236 |  |  |  | 379,236 |  |  |  | 105,646 |  |  |  | 133,027 |  |  |  | 140,563 |
Trading debt securities |  |  | 2,179 |  |  |  | 2,179 |  |  |  | 0 |  |  |  | 2,179 |  |  |  | 0 |
Available-for-sale debt securities |  |  | 2,234,608 |  |  |  | 2,234,608 |  |  |  | 4,334 |  |  |  | 1,986,672 |  |  |  | 243,602 |
Held-to-maturity debt securities |  |  | 114,759 |  |  |  | 129,678 |  |  |  | 0 |  |  |  | 108,326 |  |  |  | 21,352 |
Certain investment in affiliates |  |  | 2,511 |  |  |  | 2,511 |  |  |  | 0 |  |  |  | 0 |  |  |  | 2,511 |
Other Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Time deposits |  |  | 4,374 |  |  |  | 4,374 |  |  |  | 0 |  |  |  | 4,374 |  |  |  | 0 |
Derivative assets*2 |  |  | 50,346 |  |  |  | 50,346 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Reinsurance recoverables (Investment contracts) |  |  | 5,301 |  |  |  | 5,009 |  |  |  | 0 |  |  |  | 0 |  |  |  | 5,009 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short-term debt |  | ¥ | 508,796 |  |  | ¥ | 508,796 |  |  | ¥ | 0 |  |  | ¥ | 508,796 |  |  | ¥ | 0 |
Deposits |  |  | 2,086,340 |  |  |  | 2,087,035 |  |  |  | 0 |  |  |  | 2,087,035 |  |  |  | 0 |
Policy liabilities and Policy account balances (Investment contracts) |  |  | 143,407 |  |  |  | 143,842 |  |  |  | 0 |  |  |  | 0 |  |  |  | 143,842 |
Long-term debt |  |  | 5,209,723 |  |  |  | 5,164,112 |  |  |  | 0 |  |  |  | 1,667,119 |  |  |  | 3,496,993 |
Other Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative liabilities*2 |  |  | 49,314 |  |  |  | 49,314 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |

*1 | The amount of ¥51,263 million of investment funds measured at net asset value per share is not included.

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

Input level of fair value measurement
If active market prices are available, fair value measurement is based on quoted active market prices and classified as Level 1. If active market prices are not available, fair value measurement is based on observable inputs other than quoted prices included within Level 1 such as quoted market prices of similar assets and classified as Level 2. If market prices are not available and there are no observable inputs, then fair value is estimated by using valuation models including discounted cash flow methodologies, commonly used option-pricing models and broker quotes and classified as Level 3, as the valuation models and broker quotes are based on inputs that are unobservable in the market.
30. Commitments, Guarantees and Contingent Liabilities
Commitments
—As of March 31, 2023, the Company and certain subsidiaries have commitments for the purchase of equipment to be leased, having a cost of ¥4,066 million.
Certain computer systems of the Company and certain subsidiaries have been operated and maintained under
non-cancelable
contracts with third-party service providers. For such services, the Company and certain
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ORIX Corporation and Subsidiaries
subsidiaries made payments totaling ¥6,486 million, ¥8,036 million and ¥8,738 million in fiscal 2021, 2022 and 2023, respectively. The longest contract of them will mature in fiscal 2029. As of March 31, 2023, the amounts due are as follows:

Years ending March 31, |  | Millions of yen |
2024 |  | ¥ | 5,846 |
2025 |  |  | 4,263 |
2026 |  |  | 1,663 |
2027 |  |  | 1,468 |
2028 |  |  | 958 |
Thereafter |  |  | 1 |
Total |  | ¥ | 14,199 |

The Company and certain subsidiaries have commitments to fund estimated construction costs and so forth to complete ongoing real estate development projects and other commitments, totaling
¥
128,449 million and
¥146,945 million as of March 31,
2022 and March 31,
2023
, respectivel
y.
The Company and certain subsidiaries have agreements to commit to execute loans for customers, and to invest in funds, as long as the agreed-upon terms are met. As of March 31, 2022 and March 31, 2023, the total unused credit and capital amount available are ¥436,784 million and ¥
458,994
million respectively.
Guarantees
—At the inception of a guarantee, the Company and its subsidiaries recognize a liability in the consolidated balance sheets at fair value for the guarantee that is within the scope of ASC 460 (“Guarantees”). Some of these guarantees, whose contractual obligations cannot be unconditionally cancelled, are in the scope of the Credit Loss Standard and are recognized as other liabilities in the consolidated balance sheets. The following table represents the summary of potential future payments, book value recorded as guarantee liabilities of the guarantee contracts outstanding and maturity of the longest guarantee contracts as of March 31, 2022 and 2023:

|  | 2022 |  |  | 2023 |
|  | Millions of yen |  |  | Fiscal year |  |  | Millions of yen |  |  | Fiscal year |
Guarantees |  | Potential future payment |  |  | Book value of guarantee liabilities |  |  | Maturity of the longest contract |  |  | Potential future payment |  |  | Book value of guarantee liabilities |  |  | Maturity of the longest contract |
Corporate loans |  | ¥ | 436,414 |  |  | ¥ | 4,895 |  |  |  | 2027 |  |  | ¥ | 479,406 |  |  | ¥ | 5,033 |  |  |  | 2029 |
Transferred loans |  |  | 417,587 |  |  |  | 4,103 |  |  |  | 2062 |  |  |  | 436,069 |  |  |  | 2,185 |  |  |  | 2062 |
Consumer loans |  |  | 284,891 |  |  |  | 47,461 |  |  |  | 2033 |  |  |  | 295,273 |  |  |  | 48,207 |  |  |  | 2034 |
Real estate loans |  |  | 12,087 |  |  |  | 3,953 |  |  |  | 2048 |  |  |  | 18,193 |  |  |  | 2,031 |  |  |  | 2048 |
Other |  |  | 2,294 |  |  |  | 46 |  |  |  | 2035 |  |  |  | 2,484 |  |  |  | 0 |  |  |  | 2036 |
Total |  | ¥ | 1,153,273 |  |  | ¥ | 60,458 |  |  |  | — |  |  | ¥ | 1,231,425 |  |  | ¥ | 57,456 |  |  |  | — |

Guarantee of corporate loans:
The Company and certain subsidiaries mainly guarantee corporate loans issued by financial institutions for customers. The Company and the subsidiaries are obliged to pay the outstanding loans when the guaranteed customers fail to pay principal and/or interest in accordance with the contract terms. In some cases, the corporate loans are secured by the guaranteed customers’ assets. Once the Company and the subsidiaries assume the guaranteed customers’ obligation, the Company and the subsidiaries obtain a right to claim the collateral assets. In other cases, certain contracts that guarantee corporate loans issued by financial institutions for customers include contracts that the amounts of performance guarantee are limited to
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
a certain range of guarantee commissions. As of March 31, 2022 and 2023, total notional amount of the loans subject to such guarantees are ¥
563,000 million and ¥494,000 million, respectively, and book value of guarantee liabilities are ¥2,317 million and ¥2,309 million, respectively. The potential future payment amounts for these guarantees are limited to a certain range of the guarantee commissions, which are less than the total notional amounts of the loans subject to these guarantees. The potential future payment amounts for the contract period are calculated from the guarantee limit which is arranged by financial institutions in advance as to contracts that the amounts of performance guarantee are unlimited to a certain range of guarantee commissions. For this reason, the potential future payment amounts for these guarantees include the amount of the guarantee which may occur in the future, which is larger than the balance of guarantee executed as of the end of fiscal year. The executed guarantee balance includes defrayment by financial institutions which we bear temporarily at the time of execution, and credit risk for financial institutions until liquidation of this guarantee. Our substantial amounts of performance guarantee except credit risk for financial institutions are limited to our defrayment which is arranged by financial institutions in advance.
Payment or performance risk of the guarantees is considered based on the historical experience of credit events. There have been no significant changes in the payment or performance risk of the guarantees in fiscal 2023.
Guarantee of transferred loans:
A subsidiary in the United States is authorized to underwrite, originate, fund, and service multi-family and seniors housing loans without prior approval mainly from Fannie Mae under the Delegated Underwriting and Servicing program and Freddie Mac under the Delegated Underwriting Initiative program. As part of these programs, Fannie Mae and Freddie Mac provide a commitment to purchase the loans.
Under these programs, the subsidiary guarantees the performance of the loans transferred to Fannie Mae and Freddie Mac and has the payment or performance risk of the guarantees to absorb some of the losses when losses arise from the transferred loans. There were no significant changes in the payment or performance risk of these guarantees in fiscal 2023.
As of March 31, 2022 and 2023, the total outstanding principal amount of loans transferred under the Delegated Underwriting and Servicing program, for which the subsidiary guarantees to absorb some of the losses, were ¥2,121,074 million and ¥2,175,722 million, respectively.
Guarantee of consumer loans:
A certain subsidiary guarantees consumer loans, typically card loans, issued by Japanese financial institutions. The subsidiary is obligated to pay the outstanding obligations when these loans become delinquent generally three months or more.
Payment or performance risk of the guarantees is considered based on the historical experience of credit events. There were no significant changes in the payment or performance risk of the guarantees in fiscal 2023.
Guarantee of real estate loans:
The Company and certain subsidiaries guarantee real estate loans for consumer issued by Japanese financial institutions to third party individuals. The Company and the subsidiaries are typically obliged to pay the outstanding loans when these loans become delinquent three months or more. The real estate loans are usually secured by the real properties. Once the Company and the subsidiaries assume the guaranteed parties’ obligation, the Company and the subsidiaries obtain a right to claim the collateral assets.
Payment or performance risk of the guarantees is considered based on the historical experience of credit events. There were no significant changes in the payment or performance risk of the guarantees in fiscal 2023.
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ORIX Corporation and Subsidiaries
Other guarantees:
Other guarantees include the guarantees to financial institutions and the guarantees derived from collection agency agreements. Pursuant to the contracts of the guarantees to financial institutions, a certain subsidiary pays to the financial institutions when customers of the financial institutions become debtors and default on the debts. Pursuant to the agreements of the guarantees derived from collection agency agreements, the Company and certain subsidiaries collect third parties’ debt and pay the uncovered amounts.
Allowance for
off-balance
sheet credit exposures
—
If the entity has a present contractual obligation to extend the credit and the obligation is not unconditionally cancelable by the entity, credit losses related the loan commitments of card loans and installment loans and financial guarantees are in the scope of the allowance for credit losses. For the loan commitments of card loans and installment loans, credit losses are recognized on the loan commitments for the portion expected to be drawn. For financial guarantees, the allowance is recognized for the contingent obligation which generates credit risk exposures. These allowance for off-balance sheet credit exposures is measured using the same measurement methodologies as the allowance for loans and net investment leases, considering quantitative and qualitative factors including historical loss experience, current economic and business conditions and reasonable and supportable forecasts. The allowance for off-balance sheet credit exposure is recorded as other liabilities in the consolidated balance sheets and the allowance were ¥
22,120 million and ¥17,843 million as of March 31, 2022 and 2023, respectively.
Additionally, the provision for credit losses in the consolidated statements of income in fiscal 2022 was a reversal of ¥
4,449
million, which was mainly caused by improved macroeconomic forecast in the Americas. The provision for credit losses in the consolidated statements of income in fiscal 2023 was a
reversal of ¥
4,542
million, which was mainly caused by economic recovery from the COVID-19 in the Americas.
Contingencies
—Among some of our private equity investees, which are consolidated subsidiaries, manufacturing defects have been found in certain parts of their products. The Company recognizes the allowances for losses, when the losses are highly probable that an outflow of resources embodying economic benefits will occur in relation to this matter and the amount of such losses can be reasonably estimated. It is possible that additional write-downs or allowances for losses may be recorded due to the occurrence of new events, however at this time, the amount and timing of the potential losses cannot be reasonably estimated.
In addition, the Company and certain subsidiaries are involved in legal proceedings and claims in the ordinary course of business. In the opinion of management, none of such proceedings and claims will have a significant impact on the Company’s financial position or results of operations
.
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ORIX Corporation and Subsidiaries
31. Segment Information
Based on our business management organization which is classified by the nature of major products and services, customer base, regulations, and business areas, our business is organized into ten operating segments: Corporate Financial Services and Maintenance Leasing, Real Estate, PE Investment and Concession, Environment and Energy, Insurance, Banking and Credit, Aircraft and Ships, ORIX USA, ORIX Europe, and Asia and Australia.
Financial information about the operating segments reported below is that which is available by segment and evaluated regularly by the chief operating decision maker to make decision about resource allocations and assess performance.
An overview of operations for each of the ten segments follows below.

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

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ORIX Corporation and Subsidiaries
Financial information of the segments for fiscal 2021, 2022 and 2023 is as follows:

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2021 |
|  | Corporate Financial Services and Maintenance Leasing |  |  | Real Estate |  |  | PE Investment and Concession |  |  | Environment and Energy |  |  | Insurance |  |  | Banking and Credit |  |  | Aircraft and Ships |
Revenues |  | ¥ | 431,015 |  |  | ¥ | 359,798 |  |  | ¥ | 331,222 |  |  | ¥ | 141,971 |  |  | ¥ | 491,894 |  |  | ¥ | 83,724 |  |  | ¥ | 31,617 |
Finance revenues |  |  | 58,996 |  |  |  | 6,206 |  |  |  | 152 |  |  |  | 1,315 |  |  |  | 242 |  |  |  | 78,071 |  |  |  | 1,172 |
Interest expense |  |  | 6,252 |  |  |  | 2,493 |  |  |  | 1,719 |  |  |  | 10,821 |  |  |  | 500 |  |  |  | 5,207 |  |  |  | 13,103 |
Depreciation and amortization |  |  | 162,620 |  |  |  | 15,249 |  |  |  | 9,406 |  |  |  | 20,221 |  |  |  | 28,366 |  |  |  | 1,279 |  |  |  | 13,566 |
Other significant non-cash items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Provision for credit losses |  |  | 1,074 |  |  |  | 818 |  |  |  | 3,621 |  |  |  | 469 |  |  |  | 7 |  |  |  | 508 |  |  |  | (159 | )
Write-downs of long-lived assets |  |  | 207 |  |  |  | 1,167 |  |  |  | 0 |  |  |  | 98 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Increase in policy liabilities and policy account balances |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 230,947 |  |  |  | 0 |  |  |  | 0 |
Equity in net income (loss) of affiliates and gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net |  |  | 1,485 |  |  |  | 6,132 |  |  |  | (8,449 | ) |  |  | 12,423 |  |  |  | 0 |  |  |  | 3 |  |  |  | 8,718 |
Bargain Purchase Gain |  |  | 0 |  |  |  | 0 |  |  |  | 601 |  |  |  | 4,365 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Segment profits |  |  | 58,662 |  |  |  | 24,353 |  |  |  | 3,431 |  |  |  | 26,946 |  |  |  | 54,615 |  |  |  | 47,685 |  |  |  | 4,924 |
Segment assets |  |  | 1,676,063 |  |  |  | 872,095 |  |  |  | 378,698 |  |  |  | 489,174 |  |  |  | 1,959,521 |  |  |  | 2,690,627 |  |  |  | 601,762 |
Long-lived assets |  |  | 542,284 |  |  |  | 544,232 |  |  |  | 74,130 |  |  |  | 285,155 |  |  |  | 28,538 |  |  |  | 0 |  |  |  | 262,019 |
Expenditures for long-lived assets |  |  | 155,713 |  |  |  | 100,494 |  |  |  | 12,123 |  |  |  | 17,681 |  |  |  | 3 |  |  |  | 0 |  |  |  | 32,920 |
Investment in affiliates |  |  | 18,049 |  |  |  | 99,105 |  |  |  | 55,421 |  |  |  | 180,492 |  |  |  | 0 |  |  |  | 200 |  |  |  | 293,469 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2021 |
|  | ORIX USA |  |  | ORIX Europe |  |  | Asia and Australia |  |  | Total |
Revenues |  | ¥ | 138,017 |  |  | ¥ | 160,798 |  |  | ¥ | 128,309 |  |  | ¥ | 2,298,365 |
Finance revenues |  |  | 87,172 |  |  |  | 171 |  |  |  | 39,931 |  |  |  | 273,428 |
Interest expense |  |  | 20,471 |  |  |  | (75 | ) |  |  | 20,439 |  |  |  | 80,930 |
Depreciation and amortization |  |  | 2,474 |  |  |  | 962 |  |  |  | 50,837 |  |  |  | 304,980 |
Other significant non-cash items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Provision for credit losses |  |  | 6,221 |  |  |  | 34 |  |  |  | 3,424 |  |  |  | 16,017 |
Write-downs of long-lived assets |  |  | 1,458 |  |  |  | 0 |  |  |  | 90 |  |  |  | 3,020 |
Increase in policy liabilities and policy account balances |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 230,947 |
Equity in net income (loss) of affiliates and gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net |  |  | 8,423 |  |  |  | 245 |  |  |  | (5,200 | ) |  |  | 23,780 |
Bargain Purchase Gain |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 4,966 |
Segment profits |  |  | 39,419 |  |  |  | 39,063 |  |  |  | 12,179 |  |  |  | 311,277 |
Segment assets |  |  | 1,220,081 |  |  |  | 369,546 |  |  |  | 1,084,222 |  |  |  | 11,341,789 |
Long-lived assets |  |  | 13,656 |  |  |  | 0 |  |  |  | 231,307 |  |  |  | 1,981,321 |
Expenditures for long-lived assets |  |  | 592 |  |  |  | 0 |  |  |  | 87,327 |  |  |  | 406,853 |
Investment in affiliates |  |  | 43,816 |  |  |  | 1,770 |  |  |  | 195,413 |  |  |  | 887,735 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2022 |
|  | Corporate Financial Services and Maintenance Leasing |  |  | Real Estate |  |  | PE Investment and Concession |  |  | Environment and Energy |  |  | Insurance |  |  | Banking and Credit |  |  | Aircraft and Ships |
Revenues |  | ¥ | 445,338 |  |  | ¥ | 390,688 |  |  | ¥ | 385,739 |  |  | ¥ | 160,232 |  |  | ¥ | 486,704 |  |  | ¥ | 84,821 |  |  | ¥ | 38,639 |
Finance revenues |  |  | 57,580 |  |  |  | 5,602 |  |  |  | 237 |  |  |  | 1,001 |  |  |  | 265 |  |  |  | 76,190 |  |  |  | 2,580 |
Interest expense |  |  | 5,783 |  |  |  | 2,873 |  |  |  | 2,547 |  |  |  | 5,365 |  |  |  | 551 |  |  |  | 5,259 |  |  |  | 11,400 |
Depreciation and amortization |  |  | 156,116 |  |  |  | 16,164 |  |  |  | 22,325 |  |  |  | 18,140 |  |  |  | 27,884 |  |  |  | 1,335 |  |  |  | 15,669 |
Other significant non-cash items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Provision for credit losses |  |  | 1,296 |  |  |  | 173 |  |  |  | 924 |  |  |  | 0 |  |  |  | (0 | ) |  |  | 2,395 |  |  |  | (0 | )
Write-downs of long-lived assets |  |  | 1,092 |  |  |  | 88 |  |  |  | 11,657 |  |  |  | 19,564 |  |  |  | 0 |  |  |  | 0 |  |  |  | 2,331 |
Increase in policy liabilities and policy account balances |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 141,201 |  |  |  | 0 |  |  |  | 0 |
Equity in net income (loss) of affiliates and gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net |  |  | 164,020 |  |  |  | 1,575 |  |  |  | (11,040 | ) |  |  | 7,295 |  |  |  | 0 |  |  |  | 1 |  |  |  | (5,472 | )
Segment profits |  |  | 239,802 |  |  |  | 31,990 |  |  |  | (11,682 | ) |  |  | 3,048 |  |  |  | 53,290 |  |  |  | 41,498 |  |  |  | (2,319 | )
Segment assets |  |  | 1,516,795 |  |  |  | 910,101 |  |  |  | 353,581 |  |  |  | 703,608 |  |  |  | 2,072,145 |  |  |  | 2,687,156 |  |  |  | 684,098 |
Long-lived assets |  |  | 508,035 |  |  |  | 574,661 |  |  |  | 85,698 |  |  |  | 388,399 |  |  |  | 27,962 |  |  |  | 0 |  |  |  | 271,592 |
Expenditures for long-lived assets |  |  | 146,851 |  |  |  | 78,601 |  |  |  | 11,884 |  |  |  | 30,200 |  |  |  | 0 |  |  |  | 0 |  |  |  | 70,370 |
Investment in affiliates |  |  | 16,929 |  |  |  | 113,178 |  |  |  | 43,498 |  |  |  | 204,260 |  |  |  | 0 |  |  |  | 67 |  |  |  | 320,058 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2022 |
|  | ORIX USA |  |  | ORIX Europe |  |  | Asia and Australia |  |  | Total |
Revenues |  | ¥ | 161,344 |  |  | ¥ | 221,112 |  |  | ¥ | 148,055 |  |  | ¥ | 2,522,672 |
Finance revenues |  |  | 90,708 |  |  |  | 56 |  |  |  | 47,166 |  |  |  | 281,385 |
Interest expense |  |  | 17,140 |  |  |  | (647 | ) |  |  | 20,548 |  |  |  | 70,819 |
Depreciation and amortization |  |  | 2,678 |  |  |  | 1,225 |  |  |  | 59,768 |  |  |  | 321,304 |
Other significant non-cash items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Provision for credit losses |  |  | (1,726 | ) |  |  | 0 |  |  |  | 885 |  |  |  | 3,947 |
Write-downs of long-lived assets |  |  | 928 |  |  |  | 0 |  |  |  | 6 |  |  |  | 35,666 |
Increase in policy liabilities and policy account balances |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 141,201 |
Equity in net income (loss) of affiliates and gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net |  |  | 20,593 |  |  |  | 449 |  |  |  | 25,370 |  |  |  | 202,791 |
Segment profits |  |  | 75,235 |  |  |  | 49,334 |  |  |  | 51,165 |  |  |  | 531,361 |
Segment assets |  |  | 1,364,142 |  |  |  | 401,869 |  |  |  | 1,306,089 |  |  |  | 11,999,584 |
Long-lived assets |  |  | 13,399 |  |  |  | 0 |  |  |  | 280,684 |  |  |  | 2,150,430 |
Expenditures for long-lived assets |  |  | 717 |  |  |  | 0 |  |  |  | 113,594 |  |  |  | 452,217 |
Investment in affiliates |  |  | 45,337 |  |  |  | 2,221 |  |  |  | 232,471 |  |  |  | 978,019 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2023 |
|  | Corporate Financial Services and Maintenance Leasing |  |  | Real Estate |  |  | PE Investment and Concession |  |  | Environment and Energy |  |  | Insurance |  |  | Banking and Credit |  |  | Aircraft and Ships |
Revenues |  | ¥ | 429,907 |  |  | ¥ | 418,736 |  |  | ¥ | 376,405 |  |  | ¥ | 215,770 |  |  | ¥ | 499,487 |  |  | ¥ | 84,286 |  |  | ¥ | 54,009 |
Finance revenues |  |  | 60,066 |  |  |  | 5,562 |  |  |  | 159 |  |  |  | 1,230 |  |  |  | 300 |  |  |  | 78,066 |  |  |  | 6,660 |
Interest expense |  |  | 6,375 |  |  |  | 3,367 |  |  |  | 2,376 |  |  |  | 12,276 |  |  |  | 365 |  |  |  | 5,698 |  |  |  | 18,877 |
Depreciation and amortization |  |  | 149,545 |  |  |  | 16,613 |  |  |  | 22,649 |  |  |  | 22,486 |  |  |  | 31,810 |  |  |  | 1,402 |  |  |  | 16,257 |
Other significant non-cash items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Provision for credit losses |  |  | 1,036 |  |  |  | 61 |  |  |  | (84 | ) |  |  | (8 | ) |  |  | (1 | ) |  |  | 716 |  |  |  | 1 |
Write-downs of long-lived assets |  |  | 67 |  |  |  | 1,724 |  |  |  | 229 |  |  |  | 58 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Increase in policy liabilities and policy account balances |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 101,743 |  |  |  | 0 |  |  |  | 0 |
Equity in net income (loss) of affiliates and gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net |  |  | 1,508 |  |  |  | 9,580 |  |  |  | (5,275 | ) |  |  | 19,966 |  |  |  | 0 |  |  |  | 0 |  |  |  | 9,744 |
Bargain Purchase Gain |  |  | 0 |  |  |  | 0 |  |  |  | 58 |  |  |  | 1,018 |  |  |  | 0 |  |  |  | 0 |  |  |  | 98 |
Segment profits |  |  | 73,176 |  |  |  | 51,523 |  |  |  | 2,686 |  |  |  | 35,682 |  |  |  | 37,980 |  |  |  | 37,610 |  |  |  | 18,583 |
Segment assets |  |  | 1,514,070 |  |  |  | 935,027 |  |  |  | 605,471 |  |  |  | 773,617 |  |  |  | 2,050,412 |  |  |  | 2,698,747 |  |  |  | 742,890 |
Long-lived assets |  |  | 500,111 |  |  |  | 592,190 |  |  |  | 100,848 |  |  |  | 450,797 |  |  |  | 27,194 |  |  |  | 0 |  |  |  | 295,549 |
Expenditures for long-lived assets |  |  | 160,920 |  |  |  | 89,380 |  |  |  | 15,328 |  |  |  | 76,556 |  |  |  | 0 |  |  |  | 0 |  |  |  | 103,993 |
Investment in affiliates |  |  | 16,961 |  |  |  | 117,040 |  |  |  | 36,678 |  |  |  | 190,384 |  |  |  | 0 |  |  |  | 0 |  |  |  | 348,583 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2023 |
|  | ORIX USA |  |  | ORIX Europe |  |  | Asia and Australia |  |  | Total |
Revenues |  | ¥ | 189,045 |  |  | ¥ | 206,486 |  |  | ¥ | 189,744 |  |  | ¥ | 2,663,875 |
Finance revenues |  |  | 106,599 |  |  |  | 812 |  |  |  | 59,933 |  |  |  | 319,387 |
Interest expense |  |  | 43,643 |  |  |  | 4,317 |  |  |  | 31,992 |  |  |  | 129,286 |
Depreciation and amortization |  |  | 3,023 |  |  |  | 6,619 |  |  |  | 75,867 |  |  |  | 346,271 |
Other significant non-cash items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Provision for credit losses |  |  | 3,495 |  |  |  | 0 |  |  |  | 2,544 |  |  |  | 7,760 |
Write-downs of long-lived assets |  |  | 114 |  |  |  | 0 |  |  |  | 57 |  |  |  | 2,249 |
Increase in policy liabilities and policy account balances |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 101,743 |
Equity in net income (loss) of affiliates and gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net |  |  | 3,118 |  |  |  | 683 |  |  |  | 12,750 |  |  |  | 52,074 |
Bargain Purchase Gain |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1,174 |
Segment profits |  |  | 49,021 |  |  |  | 40,675 |  |  |  | 34,319 |  |  |  | 381,255 |
Segment assets |  |  | 1,462,067 |  |  |  | 417,941 |  |  |  | 1,395,096 |  |  |  | 12,595,338 |
Long-lived assets |  |  | 12,639 |  |  |  | 0 |  |  |  | 321,000 |  |  |  | 2,300,328 |
Expenditures for long-lived assets |  |  | 1,428 |  |  |  | 0 |  |  |  | 152,906 |  |  |  | 600,511 |
Investment in affiliates |  |  | 52,408 |  |  |  | 2,714 |  |  |  | 235,586 |  |  |  | 1,000,354 |

The accounting policies of the segments are almost the same as those described in Note 1 “Significant Accounting and Reporting Policies” except for the treatment of income tax expenses, net income attributable to the noncontrolling interests, net income attributable to the redeemable noncontrolling interests. Net income attributable to noncontrolling interests and redeemable noncontrolling interests are not included in segment profits or losses because the management evaluates segments’ performance based on profits or losses
(pre-tax)
attributable to ORIX Corporation Shareholders. Income taxes are not included in segment profits or losses because the management evaluates segments’ performance on a
pre-tax
basis. Most of selling, general and administrative expenses, including compensation costs that are directly related to the revenue generating activities of each segment and excluding the expenses that should be borne by ORIX Group as a whole, have been accumulated by and charged to each segment. Gains and losses that management does not consider for evaluating the performance of the segments, such as write-downs of certain long-lived assets and certain foreign exchange gains or losses (included in other (income) and expense) are excluded from the segment profits or losses, and are regarded as corporate items.
Assets attributed to each segment are net investment in leases, installment loans, investment in operating leases, investment in securities, property under facility operations, investment in affiliates, inventories, advances for finance lease and operating lease (included in other assets), advances for property under facility operations (included in other assets), goodwill, intangible assets acquired in business combinations (included in other assets) and servicing assets (included in other assets). This has resulted in the depreciation of office facilities being included in each segment’s profit or loss while the carrying amounts of corresponding assets are not allocated to each segment’s assets. However, the effect resulting from this allocation is not significant.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
Since April 1, 2021, a portion of interest expenses, which were initially included in the difference between segment total profits and consolidated amounts, have been charged directly to its respective segments. In addition, a portion of selling, general and administrative expenses, which were initially recorded in each respective segment, have been included in the difference between segment total profits and consolidated amounts. Furthermore, a portion of the leasing business in the Environment and Energy segment was transferred to the Corporate Financial Services and Maintenance Leasing segment. As a result of these changes, segment data for fiscal 2021 has been retrospectively restated.
Since April 1, 2022, a portion of interest expenses and a portion of selling, general and administrative expenses, which were initially included in the difference between segment total profits and consolidated amounts, have been charged directly to their respective segments. As a result of these changes, segment data for fiscal 2021 and 2022 have been retrospectively restated.
The reconciliation of segment totals to consolidated financial statement amounts is as follows:
Significant items to be reconciled are segment revenues, segment profits and segment assets. Other items do not have a significant difference between segment amounts and consolidated amounts.

|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Segment revenues: |  |  |  |  |  |  |  |  |  |  |  |
Total revenues for segments |  | ¥ | 2,298,365 |  |  | ¥ | 2,522,672 |  |  | ¥ | 2,663,875 |
Revenues related to corporate assets |  |  | 12,010 |  |  |  | 16,696 |  |  |  | 23,947 |
Revenues from inter-segment transactions |  |  | (17,667 | ) |  |  | (19,003 | ) |  |  | (21,449 | )
Total consolidated revenues |  | ¥ | 2,292,708 |  |  | ¥ | 2,520,365 |  |  | ¥ | 2,666,373 |
Segment profits: |  |  |  |  |  |  |  |  |  |  |  |
Total segment profits |  | ¥ | 311,277 |  |  | ¥ | 531,361 |  |  | ¥ | 381,255 |
Corporate losses |  |  | (28,325 | ) |  |  | (32,483 | ) |  |  | (22,092 | )
Net income attributable to the noncontrolling interests and net income attributable to the redeemable noncontrolling interests |  |  | 4,609 |  |  |  | 5,998 |  |  |  | 8,005 |
Total consolidated income before income taxes |  | ¥ | 287,561 |  |  | ¥ | 504,876 |  |  | ¥ | 367,168 |
Segment assets: |  |  |  |  |  |  |  |  |  |  |  |
Total segment assets |  | ¥ | 11,341,789 |  |  | ¥ | 11,999,584 |  |  | ¥ | 12,595,338 |
Cash and cash equivalents, restricted cash |  |  | 1,079,575 |  |  |  | 1,091,812 |  |  |  | 1,366,908 |
Allowance for credit losses |  |  | (78,945 | ) |  |  | (69,459 | ) |  |  | (64,723 | )
Trade notes, accounts and other receivable |  |  | 354,334 |  |  |  | 359,949 |  |  |  | 441,803 |
Other corporate assets |  |  | 866,329 |  |  |  | 888,786 |  |  |  | 926,865 |
Total consolidated assets |  | ¥ | 13,563,082 |  |  | ¥ | 14,270,672 |  |  | ¥ | 15,266,191 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The following information represents geographical revenues and income before income taxes, which are attributed to geographic areas, based on the country location of the Company and its subsidiaries.

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2021 |
|  | Japan |  |  | The Americas*1 |  |  | Other*2 |  |  | Total |
Total Revenues |  | ¥ | 1,817,124 |  |  | ¥ | 208,072 |  |  | ¥ | 267,512 |  |  | ¥ | 2,292,708 |
Income before Income Taxes |  |  | 177,157 |  |  |  | 57,304 |  |  |  | 53,100 |  |  |  | 287,561 |
|  | Millions of yen |
|  | Fiscal Year ended March 31, 2022 |
|  | Japan |  |  | The Americas*1 |  |  | Other*2 |  |  | Total |
Total Revenues |  | ¥ | 1,946,153 |  |  | ¥ | 240,234 |  |  | ¥ | 333,978 |  |  | ¥ | 2,520,365 |
Income before Income Taxes |  |  | 322,755 |  |  |  | 94,759 |  |  |  | 87,362 |  |  |  | 504,876 |
|  | Millions of yen |
|  | Fiscal Year ended March 31, 2023 |
|  | Japan |  |  | The Americas*1 |  |  | Other*2 |  |  | Total |
Total Revenues |  | ¥ | 2,006,349 |  |  | ¥ | 261,948 |  |  | ¥ | 398,076 |  |  | ¥ | 2,666,373 |
Income before Income Taxes |  |  | 195,254 |  |  |  | 73,179 |  |  |  | 98,735 |  |  |  | 367,168 |

*1 | Mainly the United States

*2 | Mainly Asia, Europe, Australasia and Middle East

No single customer accounted for 10% or more of the Company’s total revenues for fiscal 2021, 2022 and 2023.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries
The following information represents disaggregation of revenues for revenues from contracts with customers, by goods or services category and geographical location.

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2021 |
|  | Reportable segments |
|  | Corporate Financial Services and Maintenance Leasing |  |  | Real Estate |  |  | PE Investment and Concession |  |  | Environment and Energy |  |  | Insurance |  |  | Banking and Credit |  |  | Aircraft and Ships |
Goods or services category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales of goods |  | ¥ | 10,348 |  |  | ¥ | 2,836 |  |  | ¥ | 301,732 |  |  | ¥ | 3,816 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 0 |
Real estate sales |  |  | 0 |  |  |  | 88,512 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Asset management and servicing |  |  | 354 |  |  |  | 6,216 |  |  |  | 33 |  |  |  | 45 |  |  |  | 0 |  |  |  | 207 |  |  |  | 23 |
Automobile related services |  |  | 59,903 |  |  |  | 0 |  |  |  | 0 |  |  |  | 225 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Facilities operation |  |  | 0 |  |  |  | 23,301 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Environment and energy services |  |  | 3,060 |  |  |  | 0 |  |  |  | 0 |  |  |  | 134,424 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate management and brokerage |  |  | 0 |  |  |  | 103,457 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate contract work |  |  | 0 |  |  |  | 80,455 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other |  |  | 49,548 |  |  |  | 1,505 |  |  |  | 21,997 |  |  |  | 1,667 |  |  |  | 1,667 |  |  |  | 4,771 |  |  |  | 3,317 |
Total revenues from contracts with customers |  |  | 123,213 |  |  |  | 306,282 |  |  |  | 323,762 |  |  |  | 140,177 |  |  |  | 1,667 |  |  |  | 4,978 |  |  |  | 3,340 |
Geographical location |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 122,232 |  |  |  | 306,282 |  |  |  | 323,762 |  |  |  | 130,077 |  |  |  | 1,667 |  |  |  | 4,978 |  |  |  | 1,194 |
The Americas |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other |  |  | 981 |  |  |  | 0 |  |  |  | 0 |  |  |  | 10,100 |  |  |  | 0 |  |  |  | 0 |  |  |  | 2,146 |
Total revenues from contracts with customers |  |  | 123,213 |  |  |  | 306,282 |  |  |  | 323,762 |  |  |  | 140,177 |  |  |  | 1,667 |  |  |  | 4,978 |  |  |  | 3,340 |
Other revenues* |  |  | 307,802 |  |  |  | 53,516 |  |  |  | 7,460 |  |  |  | 1,794 |  |  |  | 490,227 |  |  |  | 78,746 |  |  |  | 28,277 |
Segment revenues/Total revenues |  | ¥ | 431,015 |  |  | ¥ | 359,798 |  |  | ¥ | 331,222 |  |  | ¥ | 141,971 |  |  | ¥ | 491,894 |  |  | ¥ | 83,724 |  |  | ¥ | 31,617 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2021 |
|  | Reportable segments |  |  | Corporate revenue and intersegment transactions |  |  | Total revenues |
|  | ORIX USA |  |  | ORIX Europe |  |  | Asia and Australia |  |  | Total |
Goods or services category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales of goods |  | ¥ | 2,407 |  |  | ¥ | 0 |  |  | ¥ | 65 |  |  | ¥ | 321,204 |  |  | ¥ | 679 |  |  | ¥ | 321,883 |
Real estate sales |  |  | 558 |  |  |  | 0 |  |  |  | 0 |  |  |  | 89,070 |  |  |  | 0 |  |  |  | 89,070 |
Asset management and servicing |  |  | 16,099 |  |  |  | 150,302 |  |  |  | 0 |  |  |  | 173,279 |  |  |  | (88 | ) |  |  | 173,191 |
Automobile related services |  |  | 0 |  |  |  | 0 |  |  |  | 11,874 |  |  |  | 72,002 |  |  |  | (2 | ) |  |  | 72,000 |
Facilities operation |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 23,301 |  |  |  | 510 |  |  |  | 23,811 |
Environment and energy services |  |  | 960 |  |  |  | 0 |  |  |  | 0 |  |  |  | 138,444 |  |  |  | (1,433 | ) |  |  | 137,011 |
Real estate management and brokerage |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 103,457 |  |  |  | (1,515 | ) |  |  | 101,942 |
Real estate contract work |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 80,455 |  |  |  | (276 | ) |  |  | 80,179 |
Other |  |  | 3,254 |  |  |  | 86 |  |  |  | 613 |  |  |  | 88,425 |  |  |  | 43 |  |  |  | 88,468 |
Total revenues from contracts with customers |  |  | 23,278 |  |  |  | 150,388 |  |  |  | 12,552 |  |  |  | 1,089,637 |  |  |  | (2,082 | ) |  |  | 1,087,555 |
Geographical location |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 0 |  |  |  | 0 |  |  |  | 1 |  |  |  | 890,193 |  |  |  | (1,956 | ) |  |  | 888,237 |
The Americas |  |  | 23,278 |  |  |  | 62,249 |  |  |  | 0 |  |  |  | 85,527 |  |  |  | 0 |  |  |  | 85,527 |
Other |  |  | 0 |  |  |  | 88,139 |  |  |  | 12,551 |  |  |  | 113,917 |  |  |  | (126 | ) |  |  | 113,791 |
Total revenues from contracts with customers |  |  | 23,278 |  |  |  | 150,388 |  |  |  | 12,552 |  |  |  | 1,089,637 |  |  |  | (2,082 | ) |  |  | 1,087,555 |
Other revenues* |  |  | 114,739 |  |  |  | 10,410 |  |  |  | 115,757 |  |  |  | 1,208,728 |  |  |  | (3,575 | ) |  |  | 1,205,153 |
Segment revenues/Total revenues |  | ¥ | 138,017 |  |  | ¥ | 160,798 |  |  | ¥ | 128,309 |  |  | ¥ | 2,298,365 |  |  | ¥ | (5,657 | ) |  | ¥ | 2,292,708 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2022 |
|  | Reportable segments |
|  | Corporate Financial Services and Maintenance Leasing |  |  | Real Estate |  |  | PE Investment and Concession |  |  | Environment and Energy |  |  | Insurance |  |  | Banking and Credit |  |  | Aircraft and Ships |
Goods or services category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales of goods |  | ¥ | 9,741 |  |  | ¥ | 2,521 |  |  | ¥ | 320,104 |  |  | ¥ | 3,861 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 0 |
Real estate sales |  |  | 0 |  |  |  | 94,617 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Asset management and servicing |  |  | 347 |  |  |  | 6,107 |  |  |  | 20 |  |  |  | 93 |  |  |  | 0 |  |  |  | 326 |  |  |  | 38 |
Automobile related services |  |  | 62,897 |  |  |  | 0 |  |  |  | 0 |  |  |  | 228 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Facilities operation |  |  | 0 |  |  |  | 31,421 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Environment and energy services |  |  | 2,911 |  |  |  | 0 |  |  |  | 76 |  |  |  | 154,081 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate management and brokerage |  |  | 0 |  |  |  | 102,689 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate contract work |  |  | 0 |  |  |  | 93,265 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other |  |  | 52,489 |  |  |  | 1,393 |  |  |  | 28,877 |  |  |  | 903 |  |  |  | 2,062 |  |  |  | 6,101 |  |  |  | 7,401 |
Total revenues from contracts with customers |  |  | 128,385 |  |  |  | 332,013 |  |  |  | 349,077 |  |  |  | 159,166 |  |  |  | 2,062 |  |  |  | 6,427 |  |  |  | 7,439 |
Geographical location |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 127,918 |  |  |  | 332,013 |  |  |  | 349,077 |  |  |  | 154,311 |  |  |  | 2,062 |  |  |  | 6,427 |  |  |  | 3,642 |
The Americas |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other |  |  | 467 |  |  |  | 0 |  |  |  | 0 |  |  |  | 4,855 |  |  |  | 0 |  |  |  | 0 |  |  |  | 3,797 |
Total revenues from contracts with customers |  |  | 128,385 |  |  |  | 332,013 |  |  |  | 349,077 |  |  |  | 159,166 |  |  |  | 2,062 |  |  |  | 6,427 |  |  |  | 7,439 |
Other revenues* |  |  | 316,953 |  |  |  | 58,675 |  |  |  | 36,662 |  |  |  | 1,066 |  |  |  | 484,642 |  |  |  | 78,394 |  |  |  | 31,200 |
Segment revenues/Total revenues |  | ¥ | 445,338 |  |  | ¥ | 390,688 |  |  | ¥ | 385,739 |  |  | ¥ | 160,232 |  |  | ¥ | 486,704 |  |  | ¥ | 84,821 |  |  | ¥ | 38,639 |

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2022 |
|  | Reportable segments |  |  | Corporate revenue and intersegment transactions |  |  | Total revenues |
|  | ORIX USA |  |  | ORIX Europe |  |  | Asia and Australia |  |  | Total |
Goods or services category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales of goods |  | ¥ | 2,251 |  |  | ¥ | 0 |  |  | ¥ | 577 |  |  | ¥ | 339,055 |  |  | ¥ | 1,642 |  |  | ¥ | 340,697 |
Real estate sales |  |  | 84 |  |  |  | 0 |  |  |  | 0 |  |  |  | 94,701 |  |  |  | (1 | ) |  |  | 94,700 |
Asset management and servicing |  |  | 18,880 |  |  |  | 219,132 |  |  |  | 0 |  |  |  | 244,943 |  |  |  | (56 | ) |  |  | 244,887 |
Automobile related services |  |  | 0 |  |  |  | 0 |  |  |  | 13,630 |  |  |  | 76,755 |  |  |  | 17 |  |  |  | 76,772 |
Facilities operation |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 31,421 |  |  |  | 742 |  |  |  | 32,163 |
Environment and energy services |  |  | 1,187 |  |  |  | 0 |  |  |  | 0 |  |  |  | 158,255 |  |  |  | (1,928 | ) |  |  | 156,327 |
Real estate management and brokerage |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 102,689 |  |  |  | (2,385 | ) |  |  | 100,304 |
Real estate contract work |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 93,265 |  |  |  | (266 | ) |  |  | 92,999 |
Other |  |  | 4,698 |  |  |  | 75 |  |  |  | 905 |  |  |  | 104,904 |  |  |  | 2,345 |  |  |  | 107,249 |
Total revenues from contracts with customers |  |  | 27,100 |  |  |  | 219,207 |  |  |  | 15,112 |  |  |  | 1,245,988 |  |  |  | 110 |  |  |  | 1,246,098 |
Geographical location |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 975,450 |  |  |  | 219 |  |  |  | 975,669 |
The Americas |  |  | 27,100 |  |  |  | 77,647 |  |  |  | 0 |  |  |  | 104,747 |  |  |  | 0 |  |  |  | 104,747 |
Other |  |  | 0 |  |  |  | 141,560 |  |  |  | 15,112 |  |  |  | 165,791 |  |  |  | (109 | ) |  |  | 165,682 |
Total revenues from contracts with customers |  |  | 27,100 |  |  |  | 219,207 |  |  |  | 15,112 |  |  |  | 1,245,988 |  |  |  | 110 |  |  |  | 1,246,098 |
Other revenues* |  |  | 134,244 |  |  |  | 1,905 |  |  |  | 132,943 |  |  |  | 1,276,684 |  |  |  | (2,417 | ) |  |  | 1,274,267 |
Segment revenues/Total revenues |  | ¥ | 161,344 |  |  | ¥ | 221,112 |  |  | ¥ | 148,055 |  |  | ¥ | 2,522,672 |  |  | ¥ | (2,307 | ) |  | ¥ | 2,520,365 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2023 |
|  | Reportable segments |
|  | Corporate Financial Services and Maintenance Leasing |  |  | Real Estate |  |  | PE Investment and Concession |  |  | Environment and Energy |  |  | Insurance |  |  | Banking and Credit |  |  | Aircraft and Ships |
Goods or services category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales of goods |  | ¥ | 5,356 |  |  | ¥ | 3,373 |  |  | ¥ | 280,361 |  |  | ¥ | 4,200 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | 624 |
Real estate sales |  |  | 0 |  |  |  | 92,657 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Asset management and servicing |  |  | 326 |  |  |  | 7,807 |  |  |  | 0 |  |  |  | 214 |  |  |  | 0 |  |  |  | 482 |  |  |  | 66 |
Automobile related services |  |  | 63,414 |  |  |  | 0 |  |  |  | 0 |  |  |  | 248 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Facilities operation |  |  | 0 |  |  |  | 55,231 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Environment and energy services |  |  | 3,023 |  |  |  | 40 |  |  |  | 84 |  |  |  | 207,037 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate management and brokerage |  |  | 0 |  |  |  | 100,137 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate contract work |  |  | 0 |  |  |  | 96,509 |  |  |  | 24,105 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other |  |  | 39,779 |  |  |  | 1,243 |  |  |  | 31,745 |  |  |  | 834 |  |  |  | 2,626 |  |  |  | 6,577 |  |  |  | 10,805 |
Total revenues from contracts with customers |  |  | 111,898 |  |  |  | 356,997 |  |  |  | 336,295 |  |  |  | 212,533 |  |  |  | 2,626 |  |  |  | 7,059 |  |  |  | 11,495 |
Geographical location |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 111,898 |  |  |  | 356,997 |  |  |  | 336,295 |  |  |  | 188,196 |  |  |  | 2,626 |  |  |  | 7,059 |  |  |  | 3,566 |
The Americas |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Other |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 24,337 |  |  |  | 0 |  |  |  | 0 |  |  |  | 7,929 |
Total revenues from contracts with customers |  |  | 111,898 |  |  |  | 356,997 |  |  |  | 336,295 |  |  |  | 212,533 |  |  |  | 2,626 |  |  |  | 7,059 |  |  |  | 11,495 |
Other revenues* |  |  | 318,009 |  |  |  | 61,739 |  |  |  | 40,110 |  |  |  | 3,237 |  |  |  | 496,861 |  |  |  | 77,227 |  |  |  | 42,514 |
Segment revenues/Total revenues |  | ¥ | 429,907 |  |  | ¥ | 418,736 |  |  | ¥ | 376,405 |  |  | ¥ | 215,770 |  |  | ¥ | 499,487 |  |  | ¥ | 84,286 |  |  | ¥ | 54,009 |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | Fiscal Year ended March 31, 2023 |
|  | Reportable segments |  |  | Corporate revenue and intersegment transactions |  |  | Total revenues |
|  | ORIX USA |  |  | ORIX Europe |  |  | Asia and Australia |  |  | Total |
Goods or services category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales of goods |  | ¥ | 2,023 |  |  | ¥ | 0 |  |  | ¥ | 1,698 |  |  | ¥ | 297,635 |  |  | ¥ | 2,266 |  |  | ¥ | 299,901 |
Real estate sales |  |  | 11 |  |  |  | 0 |  |  |  | 0 |  |  |  | 92,668 |  |  |  | 0 |  |  |  | 92,668 |
Asset management and servicing |  |  | 22,900 |  |  |  | 207,679 |  |  |  | 9 |  |  |  | 239,483 |  |  |  | (251 | ) |  |  | 239,232 |
Automobile related services |  |  | 0 |  |  |  | 0 |  |  |  | 18,763 |  |  |  | 82,425 |  |  |  | 3 |  |  |  | 82,428 |
Facilities operation |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 55,231 |  |  |  | 1,000 |  |  |  | 56,231 |
Environment and energy services |  |  | 1,433 |  |  |  | 0 |  |  |  | 0 |  |  |  | 211,617 |  |  |  | (1,968 | ) |  |  | 209,649 |
Real estate management and brokerage |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 100,137 |  |  |  | (1,544 | ) |  |  | 98,593 |
Real estate contract work |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 120,614 |  |  |  | (235 | ) |  |  | 120,379 |
Other |  |  | 6,649 |  |  |  | 150 |  |  |  | 1,633 |  |  |  | 102,041 |  |  |  | 2,243 |  |  |  | 104,284 |
Total revenues from contracts with customers |  |  | 33,016 |  |  |  | 207,829 |  |  |  | 22,103 |  |  |  | 1,301,851 |  |  |  | 1,514 |  |  |  | 1,303,365 |
Geographical location |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1,006,637 |  |  |  | 2,737 |  |  |  | 1,009,374 |
The Americas |  |  | 33,016 |  |  |  | 73,820 |  |  |  | 0 |  |  |  | 106,836 |  |  |  | 0 |  |  |  | 106,836 |
Other |  |  | 0 |  |  |  | 134,009 |  |  |  | 22,103 |  |  |  | 188,378 |  |  |  | (1,223 | ) |  |  | 187,155 |
Total revenues from contracts with customers |  |  | 33,016 |  |  |  | 207,829 |  |  |  | 22,103 |  |  |  | 1,301,851 |  |  |  | 1,514 |  |  |  | 1,303,365 |
Other revenues* |  |  | 156,029 |  |  |  | (1,343 | ) |  |  | 167,641 |  |  |  | 1,362,024 |  |  |  | 984 |  |  |  | 1,363,008 |
Segment revenues/Total revenues |  | ¥ | 189,045 |  |  | ¥ | 206,486 |  |  | ¥ | 189,744 |  |  | ¥ | 2,663,875 |  |  | ¥ | 2,498 |  |  | ¥ | 2,666,373 |

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

32. Subsequent Events
On May 10, 2023, the Company’s Board of Directors has passed a resolution approving the matters required under Article 156, Paragraph 1 of the Companies Act for the repurchase of its own shares for capital efficiency and shareholder returns, pursuant to Articles 34 of the Articles of Incorporation, which is in accordance with Article 459, Paragraph 1 Companies Act.
Details of Share Repurchase

| • |  | Class of shares to be repurchased: Common shares

| • |  | Total number of shares: Up to 40,000,000 shares

(approximately 3.4% of the total outstanding shares (excluding treasury shares))

| • |  | Total purchase price of shares to be repurchased: Up to 50 billion yen

| • |  | Repurchase period: From May 17, 2023 to March 31, 2024

| • |  | Method of share repurchase: Market purchases based on the discretionary dealing contract regarding repurchase of own shares

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Schedule II.—Valuation and Qualifying Accounts and Reserves
ORIX Corporation and Subsidiaries

|  | Millions of yen |
|  | Year Ended March 31, 2021 |
Description |  | Balance at beginning of period |  |  | Acquisitions |  |  | Addition: Charged to costs and expenses |  |  | Deduction |  |  | Translation adjustment |  |  | Balance at end of period |
Restructuring cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance and other benefits to terminated employees |  | ¥ | 690 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | (474 | ) |  | ¥ | 36 |  |  | ¥ | 252 |
Total |  | ¥ | 690 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | (474 | ) |  | ¥ | 36 |  |  | ¥ | 252 |
|  | Millions of yen |
|  | Year Ended March 31, 2022 |
Description |  | Balance at beginning of period |  |  | Acquisitions |  |  | Addition: Charged to costs and expenses |  |  | Deduction |  |  | Translation adjustment |  |  | Balance at end of period |
Restructuring cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance and other benefits to terminated employees |  | ¥ | 252 |  |  | ¥ | 0 |  |  | ¥ | 2,781 |  |  | ¥ | (187 | ) |  | ¥ | 4 |  |  | ¥ | 2,850 |
Total |  | ¥ | 252 |  |  | ¥ | 0 |  |  | ¥ | 2,781 |  |  | ¥ | (187 | ) |  | ¥ | 4 |  |  | ¥ | 2,850 |
|  | Millions of yen |
|  | Year Ended March 31, 2023 |
Description |  | Balance at beginning of period |  |  | Acquisitions |  |  | Addition: Charged to costs and expenses |  |  | Deduction |  |  | Translation adjustment |  |  | Balance at end of period |
Restructuring cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance and other benefits to terminated employees |  | ¥ | 2,850 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | (2,373 | ) |  | ¥ | 3 |  |  | ¥ | 480 |
Total |  | ¥ | 2,850 |  |  | ¥ | 0 |  |  | ¥ | 0 |  |  | ¥ | (2,373 | ) |  | ¥ | 3 |  |  | ¥ | 480 |
|  | Millions of yen |
Description |  | Balance at beginning of period |  |  | Acquisitions |  |  | Addition: Charged to costs and expenses |  |  | Deduction*1 |  |  | Other*2 |  |  | Balance at end of period |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Valuation allowance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Year ended March 31, 2021 |  | ¥ | 15,369 |  |  | ¥ | 805 |  |  | ¥ | 7,458 |  |  | ¥ | (2,487 | ) |  | ¥ | 415 |  |  | ¥ | 21,560 |
Year ended March 31, 2022 |  | ¥ | 21,560 |  |  | ¥ | 1,403 |  |  | ¥ | 13,414 |  |  | ¥ | (2,445 | ) |  | ¥ | 1,223 |  |  | ¥ | 35,155 |
Year ended March 31, 2023 |  | ¥ | 35,155 |  |  | ¥ | 143 |  |  | ¥ | 4,123 |  |  | ¥ | (2,814 | ) |  | ¥ | 680 |  |  | ¥ | 37,287 |

*1 | The amount of deduction includes benefits recognized in earnings, expiration of loss carryforwards and sales of subsidiaries. The amounts of benefits recognized in earnings were ¥553 million in fiscal 2021, ¥1,742 million in fiscal 2022 and ¥1,465 million in fiscal 2023.

*2 | The amount of other includes translation adjustment and the effect of changes in statutory tax rate.

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