ORIX CORP - Annual Report 2012 | FinancialReports.eu

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheets as of March 31, 2011 and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Income For the Years Ended March 31, 2010, 2011 and 2012 . . . . . . . . . . . . Consolidated Statements of Comprehensive Income For the Years Ended March 31, 2010, 2011 and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Changes in Equity For the Years Ended March 31, 2010, 2011 and 2012 . . . Consolidated Statements of Cash Flows For the Years Ended March 31, 2010, 2011 and 2012 . . . . . . . . . Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule II.—Valuation and Qualifying Accounts and Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Page
	F-2 F-4 F-6 F-8 F-9 F-12 F-13 F-131

Reports of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of March 31, 2011 and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income For the Years Ended March 31, 2010, 2011 and 2012 . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income For the Years Ended March 31, 2010, 2011
and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Equity For the Years Ended March 31, 2010, 2011 and 2012 . . .
Consolidated Statements of Cash Flows For the Years Ended March 31, 2010, 2011 and 2012 . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule II.—Valuation and Qualifying Accounts and Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

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F-6
F-8
F-9
F-12
F-13
F-131

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of ORIX Corporation:

We have audited the accompanying consolidated balance sheets of ORIX Corporation (a Japanese corporation) and its subsidiaries as of March 31, 2011 and 2012, 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, 2012, expressed in Japanese yen. In connection with our audits of the consolidated financial statements, we also have audited financial statement Schedule II. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ORIX Corporation and its subsidiaries as of March 31, 2011 and 2012, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2012, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note 1 (ag) to the consolidated financial statements, ORIX Corporation changed its method of accounting for transfers of financial assets and consolidation of variable interest entities in the year ended March 31, 2011.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), ORIX Corporation’s internal control over financial reporting as of March 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated June 27, 2012 expressed an unqualified opinion on the effectiveness of ORIX Corporation’s internal control over financial reporting.

The accompanying consolidated financial statements as of and for the year ended March 31, 2012 have been translated into United States dollars solely for the convenience of the reader. We have audited the translation, and, in our opinion, the consolidated financial statements, expressed in Japanese yen, have been translated into United States dollars on the basis set forth in Note 1 (ab) to the consolidated financial statements.

KPMG AZSA LLC Tokyo, Japan June 27, 2012

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of ORIX Corporation:

We have audited ORIX Corporation’s (a Japanese corporation) internal control over financial reporting as of March 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’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, included in Item 15 “Controls and Procedures” of the accompanying Form 20-F. Our responsibility is to express an opinion on ORIX Corporation’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 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.

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 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.

In our opinion, ORIX Corporation maintained, in all material respects, effective internal control over financial reporting as of March 31, 2012, based on criteria established in Internal Control—Integrated Framework 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), the consolidated balance sheets of ORIX Corporation and its subsidiaries as of March 31, 2011 and 2012, 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, 2012, expressed in Japanese yen, and our report dated June 27, 2012 expressed an unqualified opinion on those consolidated financial statements.

KPMG AZSA LLC Tokyo, Japan June 27, 2012

F-3

CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2011 AND 2012

ORIX Corporation and Subsidiaries

ASSETS Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restricted Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Time Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment in Direct Financing Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . Installment Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (The amount of ¥19,397 million ($236 million) of installment loans as of March 31, 2012 is measured at fair value by electing the fair value option under FASB Accounting Standards Codification 825-10.) Allowance for Doubtful Receivables on Direct Financing Leases and Probable Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment in Operating Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Operating Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment in Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Office Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen 2012 ¥ 786,892 123,295 24,070 900,886 2,769,898 (136,588) 1,309,998 1,147,390 224,092 331,717 188,108 79,654 39,547 123,338 442,577 ¥8,354,874	Millions of U.S. dollars
	2011 ¥ 732,127 118,065 5,148 830,853 2,983,164 (154,150) 1,270,295 1,175,381 235,430 373,376 182,013 108,410 44,551 102,403 574,516 ¥8,581,582		2012
			$ 9,574 1,500 293 10,961 33,701 (1,662) 15,939 13,960 2,726 4,036 2,289 969 481 1,501 5,385 $101,653

(Note)

Accounting Standards Update 2009-17 (ASC 810-10 (“Consolidation”)) has been adopted since April 1, 2010. Pursuant to ASU 2009-17, the assets of consolidated variable interest entities (VIEs) that can be used only to settle obligations of those VIEs are below:

Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment in Direct Financing Leases (Net of Allowance for Doubtful Receivables on Direct Financing Leases and Probable Loan Losses) . . Installment Loans (Net of Allowance for Doubtful Receivables on Direct Financing Leases and Probable Loan Losses) . . . . . . . . . . . . . . . . . . . . . Investment in Operating Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment in Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen 2012 ¥ 11,836 232,575 709,863 269,267 50,059 13,899 91,240 ¥1,378,739	Millions of U.S. dollars
	2011 ¥ 14,267 242,309 830,689 195,221 51,883 17,441 121,811 ¥1,473,621		2012
			$ 144 2,830 8,637 3,276 609 169 1,110 $16,775

F-4

CONSOLIDATED BALANCE SHEETS—(Continued) AS OF MARCH 31, 2011 AND 2012

ORIX Corporation and Subsidiaries

LIABILITIES AND EQUITY Liabilities: Short-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade Notes, Accounts Payable and Other Liabilities . . . . . . . . . . . . . . . . Accrued Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Policy Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income Taxes: Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Security Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Redeemable Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commitments and Contingent Liabilities Equity: Common stock: Authorized 259,000,000 shares Issued 110,245,846 shares in 2011 and 110,254,422 shares in 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . Treasury stock, at cost: 2,747,344 shares in 2011 and 2,732,701 shares in 2012 . . . . . . . ORIX Corporation Shareholders’ Equity . . . . . . . . . . . . . . Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Liabilities and Equity . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen 2012 ¥ 457,973 1,103,514 290,465 110,057 404,586 7,849 97,353 142,092 4,267,480 6,881,369 37,633 144,026 179,223 1,217,851 (96,056) (48,907) 1,396,137 39,735 1,435,872 ¥8,354,874	Millions of U.S. dollars
	2011 ¥ 478,633 1,065,175 304,354 118,359 398,265 21,983 160,518 128,097 4,531,268 7,206,652 33,902 143,995 179,137 1,141,559 (96,180) (49,170) 1,319,341 21,687 1,341,028 ¥8,581,582		2012
			$ 5,572 13,426 3,534 1,339 4,923 96 1,184 1,729 51,922 83,725 458 1,752 2,181 14,818 (1,169) (595) 16,987 483 17,470 $101,653

(Note)

Accounting Standards Update 2009-17 (ASC 810-10 (“Consolidation”)) has been adopted since April 1, 2010. Pursuant to ASU 2009-17, the liabilities of consolidated VIEs for which creditors (or beneficial interest holders) do not have recourse to the general credit of the Company and its subsidiaries are below:

Short-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade Notes, Accounts Payable and Other Liabilities . . . . . . . . . . . . . . . . Security Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen 2012 ¥ 1,233 8,120 8,333 1,039,927 5,829 ¥1,063,442	Millions of U.S. dollars
	2011 ¥ 1,847 9,803 6,884 1,160,042 6,674 ¥1,185,250		2012
			$ 15 99 101 12,653 71 $12,939

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

F-5

CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED MARCH 31, 2010, 2011 AND 2012

ORIX Corporation and Subsidiaries

Revenues: Direct financing leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest on loans and investment securities . . . . . . . . . . . . . . . . . . . Brokerage commissions and net gains on investment securities . . Life insurance premiums and related investment income . . . . . . . . Real estate sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gains on sales of real estate under operating leases . . . . . . . . . . . . Other operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenses: Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Costs of operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Life insurance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Costs of real estate sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selling, general and administrative expenses . . . . . . . . . . . . . . . . . Provision for doubtful receivables and probable loan losses . . . . . Write-downs of long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . Write-downs of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency transaction loss (gain), net . . . . . . . . . . . . . . . . . Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity in Net Income of Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gains on Sales of Subsidiaries and Affiliates and Liquidation Losses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income before Income Taxes and Discontinued Operations . . . . . . . . . Provision for Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from Continuing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued Operations:*1 Income from discontinued operations, net . . . . . . . . . . . . . . . . . . . Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations, net of applicable tax effect . . . . . . . . . . . Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Income (loss) Attributable to the Noncontrolling Interests . . . . . . . Net Income Attributable to the Redeemable Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Income Attributable to ORIX Corporation . . . . . . . . . . . . . . . . . . .	Millions ofyen	Millions ofyen	2012 ¥ 50,934 297,422 147,888 26,911 128,307 61,029 2,215 258,178 972,884 110,868 189,333 95,353 59,534 150,071 191,873 19,215 15,167 16,470 (195) 847,689 125,195 1,972 3,317 130,484 44,631 85,853 1,279 1,410 2,689 88,542 (332) 2,724 ¥ 86,150	Millions of U.S. dollars	Millions of U.S. dollars
	2010 ¥ 49,893 272,390 135,165 23,352 115,438 40,669 6,841 246,804 890,552 81,444 189,574 92,292 46,757 135,755 211,479 71,525 6,977 23,632 943 860,378 30,174 8,364 17,519 56,057 21,090 34,967 12,989 (7,019) 5,970 40,937 704 2,476 ¥ 37,757	2011 ¥ 51,211 280,913 169,932 21,119 118,315 54,741 5,103 245,544 946,878 122,765 186,740 91,426 58,930 142,241 199,044 31,103 17,400 21,747 186 871,582 75,296 16,806 1,199 93,301 26,143 67,158 12,220 (6,771) 5,449 72,607 2,373 2,959 ¥ 67,275			2012
					$ 620 3,619 1,799 327 1,561 743 27 3,141 11,837 1,349 2,304 1,160 724 1,826 2,334 234 185 200 (2) 10,314 1,523 24 41 1,588 543 1,045 15 17 32 1,077 (4) 33 $ 1,048

Pursuant to FASB Accounting Standards Codification 205-20 (“Presentation of Financial Statements— Discontinued Operations”), the results of operations which meet the criteria for discontinued operations are reported as a separate component of income, and those related amounts that had been previously reported are reclassified.

F-6

CONSOLIDATED STATEMENTS OF INCOME—(Continued) FOR THE YEARS ENDED MARCH 31, 2010, 2011 AND 2012

ORIX Corporation and Subsidiaries

Millions ofyen	Millions ofyen	Millions of U.S. dollars	Millions of U.S. dollars
2010 ¥31,475 6,282 ¥37,757	2011 ¥61,787 5,488 ¥67,275 Yen		2012
		$1,023 25 $1,048 U.S. dollars
2010 ¥308.87 61.65 ¥370.52 ¥265.10 50.81 ¥315.91 70.00	2011 ¥574.83 51.05 ¥625.88 ¥486.19 41.56 ¥527.75 75.00		2012
			$9.51 0.24 $9.75 $7.96 0.20 $8.16 0.97

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

F-7

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED MARCH 31, 2010, 2011 AND 2012

ORIX Corporation and Subsidiaries

Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other comprehensive income (loss), net of tax: Net change of unrealized gains (losses) on investment in securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net change of defined benefit pension plans . . . . . . . . . . . Net change of foreign currency translation adjustments . . . Net change of unrealized gains (losses) on derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total other comprehensive income (loss) . . . . . . . . . . . . . . . . . . Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Comprehensive Income (Loss) Attributable to the Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Comprehensive Income (Loss) Attributable to the Redeemable Noncontrolling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Comprehensive Income (Loss) Attributable to ORIX Corporation . .	Millions ofyen	Millions ofyen	2012 ¥88,542 5,121 (3,247) (1,392) (1,170) (688) 87,854 (849) 2,409 ¥86,294	Millions of U.S. dollars	Millions of U.S. dollars
	2010 ¥40,937 13,499 7,125 (8,462) (1,460) 10,702 51,639 (306) 876 ¥51,069	2011 ¥ 72,607 7,663 (2,006) (21,186) (782) (16,311) 56,296 1,734 606 ¥ 53,956			2012
					$1,077 62 (40) (16) (14) (8) 1,069 (10) 29 $1,050

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

F-8

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED MARCH 31, 2010, 2011 AND 2012

ORIX Corporation and Subsidiaries

			Millio	Millio	ns of yen
	ORIX Corporation Shar		eholders’ 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
¥102,216	¥136,313	¥1,071,919		¥(92,384) (92,384) (387) 13,497 7,129 (5,860) (1,454) (79,459) (3,406) (82,865)		¥1,167,530 1,758 1,169,288 83,024 0 (419) 37,757 13,497 7,129 (5,860) (1,454) 13,312 51,069 (6,261) 14 77 611 (3) 291 993 1,298,684 (25,901) 1,272,783		¥18,067 0 18,067 0 2,473 60 704 2 (4) (1,002) (6) (1,010) (306) (2,517) 0 0 0 0 0 0 17,777 4,233 22,010	¥1,185,597
		1,758							1,758
102,216	136,313	1,073,677							1,187,355
41,677 7 39	41,347 (32) 7 38 611 377								83,024 2,473 (359) 38,461 13,499 7,125 (6,862) (1,460)
									12,302
									50,763
									(8,778) 14 77 611 (3) 291 993
143,939	178,661								1,316,461
									(21,668)
143,939	178,661								1,294,793

F-9

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued) FOR THE YEARS ENDED MARCH 31, 2010, 2011 AND 2012

ORIX Corporation and Subsidiaries

Millions of yen	Millions of yen	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
	4 7,605 (2,006) (18,118) (800) (96,180) (20) 4,642 (3,245) (98) (1,155) ¥(96,056)	0 204 67,275 7,605 (2,006) (18,118) (800) (13,319) 53,956 (8,061) 14 98 142 (70) (70) 136 275 (49,170) 1,319,341 0 32 86,150 4,642 (3,245) (98) (1,155) 144 86,294 (8,599) 6 55 (1) (1) 264 (991) ¥(48,907) ¥1,396,137		3,864 (2,450) 2,373 58 0 (715) 18 (639) 1,734 (3,471) 0 0 0 0 0 21,687 21,503 (502) (332) 479 (2) (979) (15) (517) (849) (2,104) 0 0 0 0 ¥39,735	3,864 (2,246) 69,648 7,663 (2,006) (18,833) (782)
					(13,958)
					55,690
					(11,532) 14 98 142 (70) 275
					1,341,028 21,503 (470) 85,818 5,121 (3,247) (1,077) (1,170)
					(373)
					85,445
					(10,703) 6 55 (1) (991)
					¥1,435,872

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

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

F-10

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued) FOR THE YEARS ENDED MARCH 31, 2010, 2011 AND 2012

ORIX Corporation and Subsidiaries

Millions of U.S. dollars	Millions of U.S. dollars	Millions of U.S. dollars	Millions of U.S. dollars	Millions of U.S. dollars	Millions of U.S. dollars	Millions of U.S. dollars	Millions of U.S. dollars
ORIX Corporation Shareholders’ Equity Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total ORIX Corporation Shareholders’ Equity Noncontrolling Interests								Total Equity
	$1,752 0 0 $1,752	$2,180 1 0 0 0 $2,181	$13,889 1,048 (105) (14) $14,818	$(1,170) (0) 56 (40) (1) (14) $(1,169)	$(598) (0) 3 $(595)	$16,053 0 1 1,048 56 (40) (1) (14) 1 1,049 (105) 0 0 (0) (11) $16,987	$263 262 (6) (4) 6 (0) (12) (0) (6) (10) (26) 0 0 0 0 $483	$16,316
								262 (5) 1,044 62 (40) (13) (14)
								(5)
								1,039
								(131) 0 0 (0) (11)
								$17,470

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

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

F-11

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, 2010, 2011 AND 2012

ORIX Corporation and Subsidiaries

Millions ofyen	Millions ofyen	Millions ofyen	Millions of U.S. dollars
2010	2011	2012	2012
¥ 40,937 164,821 71,525 (32,927) (28,749) (6,496) (17,519) (6,907) (6,841) (7,552) 6,977 23,632 4,520 (29,725) 39,061 (518) (35,011) 30,083	¥ 72,607 166,484 31,103 (11,692) (18,790) (14,337) (1,199) (4,867) (5,103) (9,968) 17,400 21,747 (6,659) (28,372) 27,596 16,006 (22,042) (17,534)		$ 1,077 2,047 234 77 194 (11) (41) (109) (27) (179) 185 200 (63) 671 328 (96) 277 (712) 4,052 (7,337) 4,241 0 (9,023) 11,176 2,119 217 35 (7,968) 3,399 4,403 (2) (543) 302 (210) (113) 92 (280) 508 (727) 18,106 (21,682) 490 1 (105) 246 (13) (122) (69) (3,875) (19) 666 8,908 $ 9,574
209,311	212,380
(389,413) 352,316 28,305 (589,814) 937,895 162,988 (28,256) 12,532 (456,364) 181,033 162,292 (43,748) (19,656) 26,034 (4,898) (10,218) 123,613 (11,853)	(561,919) 384,288 0 (719,190) 1,130,718 159,369 36,945 4,622 (742,816) 340,634 310,594 0 (48,538) 25,614 (14,219) (46,554) 12,685 (20,635)
432,788	251,598
(121,399) 1,083,310 (1,678,649) 185,076 83,101 (6,261) 0 0 (13,400) 1,298	(72,584) 1,488,199 (1,918,774) 166,012 98 (8,061) 0 (6,008) (8,000) (4,472)
(466,924)	(363,590)
3,943	(7,348)
179,118	93,040
459,969	639,087
¥ 639,087	¥ 732,127

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

F-12

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 accounting principles generally accepted in the United States of America (“U.S. GAAP”), modified for the accounting for stock splits (see (o)). 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, use of the straight-line method of depreciation for operating lease equipment, deferral of life insurance policy acquisition costs, calculation of insurance policy liabilities, accounting for goodwill and intangible assets resulting from business combinations, accounting for pension plans, accounting for changes in a parent’s ownership interest in its subsidiary, accounting for securitization of financial assets, reflection of the income tax effect on such adjustments and reclassification of discontinued operations, and the presentation of the noncontrolling interests.

(b) Principles of consolidation

The consolidated financial statements include the accounts of the Company and all of its subsidiaries. Investments in affiliates, where the Company has the ability to exercise significant influence by way of 20% – 50% ownership or other means, are accounted for by using the equity method. Where the Company holds majority voting interests but noncontrolling shareholders have substantive participating rights to decisions that occur as part of the ordinary course of their business, the equity method is applied pursuant to FASB Accounting Standards Codification (“ASC”) 810-10-25-2 to 14 (“Consolidation—The Effect of Noncontrolling Rights on Consolidation”). In addition, the consolidated financial statements also include variable interest entities to which the Company and its subsidiaries are primary beneficiaries pursuant to ASC 810-10 (“Consolidation—Variable Interest Entities”).

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

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

(c) Use of estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company has identified ten areas where it believes assumptions and estimates are particularly critical to the financial statements. These are the selection of valuation techniques and determination of assumptions used in fair value measurements (see Note 2), the determination and periodic reassessment of the unguaranteed residual value for direct financing leases and operating leases (see (e)), the determination and reassessment of insurance policy liabilities and deferred policy acquisition costs (see (f)), the determination of the allowance for doubtful receivables on direct financing leases

F-13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

and probable loan losses (see (g)), the determination of impairment of long-lived assets (see (h)), the determination of impairment of investment in securities (see (i)), the determination of the valuation allowance for deferred tax assets and the evaluation of tax positions (see (j)), assessment and measurement of effectiveness in hedging relationship using derivative financial instruments (see (l)), the determination of benefit obligation and net periodic pension cost (see (m)) and the determination of impairment of goodwill and intangible assets not subject to amortization (see (w)).

(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.

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 accumulated other comprehensive income (loss) arise from the translation of foreign currency financial statements into Japanese yen.

(e) Recognition of revenues

Revenues are recognized when persuasive evidence of an arrangement exists, the service has been rendered or the goods have been delivered to the customer, the transaction price is fixed or determinable and collectibility is reasonably assured.

In addition to the aforementioned general policy, the policies as specifically described hereinafter are applied for each of the major revenue items.

Leases —The Company and its subsidiaries lease various assets to customers under direct financing or operating lease arrangements. Classification of a lease arrangement into either a direct financing lease or an operating lease is dependent upon the specific conditions of the arrangement. Revenue recognition policies applied for direct financing leases and operating leases are specifically described in sections following this paragraph. In providing leasing services, the Company and its subsidiaries execute supplemental services, such as paying insurance and handling taxes on leased assets on behalf of lessees. In some cases, automobile maintenance services are also provided to lessees. Where under terms of the lease or related maintenance agreements the Company and its subsidiaries bear the favorable or unfavorable variability of cost, revenues and expenses are recorded on a gross basis. For those arrangements in which the Company and its subsidiaries do not have substantial risks and rewards of ownership, but instead serve as an agent in collecting from lessees and remitting payments to third parties, the Company and its subsidiaries record revenues net of third-party services costs. Revenues from automobile maintenance services are taken into income over the contract period in proportion to the estimated service costs to be incurred and are recorded in other operating revenues in the accompanying consolidated statements of income.

(1) Recognition of revenues for direct financing leases

Direct financing leases consist of full-payout leases for various equipment types, including office equipment, industrial machinery and transportation equipment. The excess of aggregate lease rentals plus the estimated unguaranteed residual value over the cost of the leased equipment constitutes the unearned lease

F-14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

income to be taken into income over the lease term by using the interest method. The estimated residual values represent estimated proceeds from the disposition of equipment at the time the lease is terminated. Estimates of unguaranteed residual values are based on current market values of used equipment, estimates of when and how much equipment will become obsolete and actual recovery being experienced for similar used equipment. Initial direct costs are being deferred and amortized as a yield adjustment over the life of related lease by using the interest method. The unamortized balance of initial direct costs is reflected as a component of investment in direct financing leases.

(2) Recognition of revenues for operating leases

Revenues from operating leases are recognized on a straight-line basis over the contract terms. Investment in operating leases is recorded at cost less accumulated depreciation and is depreciated over their estimated useful lives mainly on a straight-line basis. Estimated average useful lives of principal operating lease assets classified as transportation equipment is 7 years, measuring and information-related equipment is 4 years, real estate is 33 years and other is 7 years. Depreciation expenses are included in costs of operating leases. Gains or losses arising from dispositions of operating lease assets, except real estate under operating leases, are included in operating lease revenues. With respect to some sales of real estate under operating leases such as commercial buildings, the Company or its subsidiaries may retain an interest in some cash flows of the real estate in the form of management or operation of the real estate. Where the Company or its subsidiaries have significant continuing involvement in the operations from the real estate under operating leases which have been disposed of, the gains or losses arising from such disposition are separately disclosed as gains on sales of real estate under operating leases, whereas if the Company or its subsidiaries have no significant continuing involvement in the operations from such disposed real estate, the gains or losses are reported as income from discontinued operations, net.

Estimates of residual values are based on current market values of used equipment, estimates of when and how much equipment will become obsolete and actual recovery being experienced for similar used equipment.

Installment loan s —Interest income on installment loans is recognized on an accrual basis. Certain direct loan origination costs, offset by loan 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 impaired 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 regardless of whether impairment is recognized or not.

Non-accrual policy —In common with all classes, 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 principals and interests are 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 direct financing 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. Accrued but uncollected interest is reclassified to investment in direct financing leases or installment loans in the accompanying consolidated balance sheets and becomes subject to the allowance for doubtful receivables and probable loan loss process.

F-15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

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 lease receivables when it becomes certain 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.

Brokerage commissions and net gains on investment securitie s —Brokerage commissions and net gains on investment securities are recorded on a trade date basis.

Real estate sales —Revenues from the sales of real estate are recognized when a contract is in place, a closing has taken place, the buyer’s initial and continuing investment is adequate to demonstrate a commitment to pay for the property and the Company and its subsidiaries do not have a substantial continuing involvement in the property.

(f) Insurance premiums and expenses

Premium income from life insurance policies is recognized as earned premiums when due.

Life insurance benefits are recorded as expenses when they are incurred. Policy liabilities for future policy benefits are established 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, and medical insurance. 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 Company’s life insurance 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.

ASC 944 (“Financial Services—Insurance”) requires insurance companies to defer certain costs associated with writing insurances, or deferred policy acquisition costs, and amortize them over the respective policy periods in proportion to anticipated premium revenue. These deferred policy acquisition costs are the costs related to the acquisition of new and renewal insurance policies and consist primarily of first-year commissions in excess of recurring policy maintenance costs and certain variable costs and expenses for underwriting policies (see (ag) regarding deferred policy acquisition costs).

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

The allowance for doubtful receivables on direct financing leases and probable loan losses is maintained at a level which, in the judgment of management, is appropriate to provide for probable losses inherent in lease and loan portfolios. The allowance is increased by provision charged to income and is decreased by charge-offs, net of recoveries.

Developing the allowance for doubtful receivables on direct financing leases and probable loan losses is subject to numerous estimates and judgments. In evaluating the adequacy of the allowance, management considers various factors, including the business characteristics and financial conditions of the obligors, current economic conditions and trends, prior charge-off experience, current delinquencies and delinquency trends, future cash flows expected to be received from the direct financing leases and loans and value of underlying collateral and guarantees. Impaired loans are individually evaluated for a valuation allowance based on the present value of expected future cash flows, the loan’s observable market price or the fair value of the collateral

F-16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

securing the loans if the loans are collateral-dependent. For non-impaired loans, including loans that are not individually evaluated for impairment, and direct financing leases, the Company and its subsidiaries evaluate prior charge-off experience segmented by the debtors’ industries and the purpose of the loans, and then develop the allowance for doubtful receivables on direct financing leases and probable loan losses considering the prior charge-off experience and current economic conditions.

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.

(h) Impairment of long-lived assets

The Company and its subsidiaries have followed ASC 360-10 (“Property, Plant, and Equipment— Impairment or Disposal of Long-Lived Assets”). Under ASC 360-10, long-lived assets to be held and used in operations, including tangible assets and intangible assets being amortized, consisting primarily of office building, condominiums, golf courses and other operating assets, shall be tested for recoverability whenever events or changes in circumstances indicate that the assets might be impaired. When the undiscounted future cash flows estimated to be generated by those assets are less than the carrying amount of those assets, the net 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 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

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

Available-for-sale securities are reported at fair value, and unrealized gains or losses are recorded in accumulated other comprehensive income (loss), net of applicable income taxes.

Held-to-maturity securities are recorded at amortized cost.

Other securities are recorded at cost or carrying value that reflects equity income and loss based on the Company’s share.

For available-for-sale securities, the Company and its subsidiaries generally recognize losses related to equity securities for which the fair value has been significantly below the acquisition cost (or current carrying value if an adjustment has been made in the past) for more than six months. Also, the Company and its subsidiaries charge against income losses related to equity securities in situations where, even though the fair value has not remained significantly below the carrying value for six months, the decline in the fair value of an equity security is based on the issuer’s specific economic conditions and not just general declines in the related market and where it is considered unlikely that the fair value of the equity security will recover within six months.

F-17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

security before recovery of its amortized cost basis and (3) the present value of estimated cash flows will fully cover the amortized cost of the security. On the other hand, the Company and its subsidiaries consider that an other-than-temporary impairment has occurred if (1) the Company and its subsidiaries intend to sell the debt security, (2) 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 or (3) the present value of estimated cash flows will not fully cover the amortized cost of the security. For the debt security for which an other-than-temporary impairment is considered to have occurred, the Company and its subsidiaries recognize the entire difference between the amortized cost and the fair value in earnings if the Company and its subsidiaries intend to sell the debt security or it is more likely than not that the Company and its subsidiary will be required to sell the debt security before recovery of its amortized cost basis less any current-period credit loss. On the other hand, if the Company and its subsidiaries do not intend to sell the debt security and it is not 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 less any currentperiod credit loss, the Company and its subsidiaries separate the difference between the amortized cost and the fair value of the debt securities into the credit loss component and the non-credit loss component. The credit loss component is recognized in earnings, and the non-credit loss component is recognized in other comprehensive income (loss), net of applicable income taxes.

For other securities, the Company and its subsidiaries reduce the carrying value of other security to the fair value and charge against income losses related to other securities in situations where it is considered that the decline in the value of other security is other than temporary.

(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 operating loss and tax credit 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. A valuation allowance is recognized if, based on the weight of available evidence, it is “more likely than not” that some portion or all of the deferred tax asset will not be realized.

The Company and its subsidiaries have followed ASC 740 (“Income Taxes”). According to ASC 740, the Company and its subsidiaries 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 the tax position that meets the recognition threshold at the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with the taxing authority. 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.

Effective for the fiscal year ended March 31, 2012, the Company and certain consolidated subsidiaries have elected to file a consolidated tax return.

(k) Securitized assets

The Company and its subsidiaries have securitized and sold to investors certain lease receivables, loan receivables and investment in securities. In the securitization process, the assets to be securitized (“the assets”) are sold to trusts and special-purpose entities that issue asset-backed beneficial interests and securities to the investors.

F-18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Until the end of the fiscal year 2010 (March 31, 2010), certain trusts and special-purpose entities that met the conditions of qualifying special-purpose entities (“QSPEs”) were not consolidated under the previous consolidation guidance for variable interest entities (“VIEs”) and the Company and its subsidiaries had accounted for those securitization transactions in which the financial assets were transferred to QSPEs as a sale when control over the transferred assets was surrendered. When the Company and its subsidiaries sold the assets in a securitization transaction, the carrying value of the assets was allocated to the portion sold and the portion that continued to be held, based on relative fair values. The Company and its subsidiaries recognized gains or losses for the difference between the net proceeds received and the allocated carrying value of the assets sold. Any gain or loss from a securitization transaction was recorded as revenue of direct financing leases, interest on loans and investment securities, or brokerage commissions and net gains on investment securities. Interests that continued to be held included senior interests, subordinated interests and cash reserve account. Interests that continued to be held were initially recorded at the allocated carrying value of the assets based on their respective fair values and were periodically reviewed for impairment. For an interest that continued to be held for which the fair value was less than the amortized cost basis amounts, we estimated the present value of cash flows expected to be collected from the interest and compared it with the amortized cost basis of the interest to determine whether a credit loss existed. If, based on current information and events, we determined a credit loss existed for that interest, an other-than-temporary impairment was considered to have occurred. We wrote down that interest to fair value with the credit loss component of the impairment recognized in earnings and the noncredit component recorded in other comprehensive income (loss), unless we intended to sell that interest or more likely than not would be required to sell that interest before recovery of its amortized cost basis less any current-period credit loss, in which case the entire impairment loss would be charged to earnings. Fair values of interests that continued to be held were estimated by determining the present value of future expected cash flows based on management’s estimates of key assumptions, including expected credit loss rate, discount rate and prepayment rate.

From April 1, 2010, the Company and its subsidiaries have adopted Accounting Standards Update 2009-16 (ASC 860 (“Transfers and Servicing”)), which removed the exemption from consolidation previously given to QSPEs and any SPEs for securitizing financial assets have become subject to the consolidation rule for VIEs. As a result, trusts or SPEs used in securitization transactions including those that were previously considered to be QSPEs of which the Company and its subsidiaries are the primary beneficiary have been consolidated, and the transfers of the financial assets to those consolidated trusts and SPEs are not accounted for as sales. Assets held by consolidated trusts or consolidated SPEs continue to be accounted for as direct financing lease receivables, loan receivable and investment securities, as they were before the transfer, and asset-backed beneficial interests and securities issued to the investors are accounted for as debt. In case the Company and its subsidiaries have transferred financial assets to a transferee which is not subject to consolidation, the Company and its subsidiaries account for the transfer as a sale when control over the transferred assets is surrendered.

A certain subsidiary originates and sells loans into the secondary market, while retaining the obligation to service those loans. In addition, it 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.

F-19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(l) Derivative financial instruments

The Company and its subsidiaries apply ASC 815 (“Derivatives and Hedging”) and all derivatives held by the Company and its subsidiaries are recognized on the consolidated balance sheets at fair value. The accounting treatment of subsequent changes in their fair value depends on their use, and whether they qualify as effective “hedges” for accounting purposes. Derivatives that are not hedges must be adjusted to fair value through the consolidated statements of income. If a derivative is a hedge, then depending on its nature, changes in its fair value will be either offset against change in the fair value of hedged assets or liabilities through the consolidated statements of income, or recorded in other comprehensive income (loss).

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) to the extent that the derivative is effective as a hedge, 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 foreign-currency fair-value or cash-flow hedge (“foreign currency” hedge), changes in the fair value of the derivative are recorded in either earnings or other comprehensive income (loss), depending on whether the hedged transaction is a fair-value hedge or a cash-flow hedge. However, if a derivative is used as a hedge of a net investment in a foreign operation, changes in its fair value, to the extent effective as a hedge, are recorded in the foreign currency translation adjustments account within other comprehensive income (loss).

Changes in the fair value of a derivative, which is not held as a hedge, such as those held for trading use, or the ineffective portion of the change in fair value of a derivative that qualifies as a hedge, are recorded in earnings.

For all hedging relationships, at inception the Company and its subsidiaries formally document the details of the hedging relationship and hedged activity. The Company and its subsidiaries also 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. The Company and its subsidiaries apply ASC 715 (“Compensation— Retirement Benefits”), and the costs of pension plans are accrued based on amounts determined using actuarial methods under the 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 sheet. 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(n) Stock-based compensation

The Company and its subsidiaries apply ASC 718 (“Compensation—Stock Compensation”). ASC 718 requires, with limited exception, that the cost of employee services received in exchange for an award of equity instruments be measured based on the grant-date fair value. The costs are recognized over the requisite employee service period.

(o) Stock splits

Stock splits implemented prior to October 1, 2001 had been accounted for by transferring an amount equivalent to the par value of the shares from additional paid-in capital to common stock as required by the Japanese Commercial Code (the “Code”) before amendment. However, no such reclassification was made for stock splits when common stock already included a portion of the proceeds from shares issued at a price in excess of par value. This method of accounting was in conformity with accounting principles generally accepted in Japan.

As a result of a revision to the Code before amendment effective on October 1, 2001 and the Companies Act implemented on May 1, 2006, the above-mentioned method of accounting required by the Code has become unnecessary.

In the United States, stock splits in comparable circumstances are considered to be stock dividends and are accounted for by transferring from retained earnings to common stock and additional paid-in capital amounts equal to the fair market value of the shares issued. Common stock is increased by the par value of the shares and additional paid-in capital is increased by the excess of the market value over par value of the shares issued. Had such stock splits made prior to October 1, 2001 been accounted for in this manner, additional paid-in capital as of March 31, 2012 would have increased by approximately ¥24,674 million ($300 million), with a corresponding decrease in retained earnings. Total ORIX Corporation shareholders’ equity would remain unchanged. A stock split on May 19, 2000 was excluded from the above amounts because the stock split was not considered to be a stock dividend under U.S. GAAP.

(p) 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.

(q) Restricted cash

Restricted cash consists of deposits related to servicing agreements, deposits collected on behalf of the customers and applied to non-recourse loans, trust accounts under securitization programs and others.

(r) Other operating assets

Other operating assets consist primarily of operating facilities (including golf courses, hotels and training facilities and senior housing), 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 2010, 2011 and 2012 are ¥6,164 million, ¥6,857 million and ¥6,606 million ($80 million), respectively. Accumulated depreciation was ¥34,739 million and ¥37,765 million ($459 million) as of March 31, 2011 and 2012, respectively. Estimated useful lives range up to 50 years for buildings, up to 60 years for land improvement and up to 22 years for others.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(s) Other receivables

Other receivables include primarily payments made on behalf of lessees for property tax, maintenance fees and insurance premiums in relation to direct financing lease contracts, accounts receivables in relation to sales of assets to be leased, residential condominiums and other assets, and derivative assets.

(t) Inventories

Inventories consist primarily of advance and/or progress payments for development of residential condominiums for sale and completed residential condominiums (including completed residential condominiums waiting to be delivered to buyers under the contracts for sale). Advance and/or progress payments for development of residential condominiums for sale are carried at cost less any impairment losses and finished goods (including completed residential condominiums) are stated at the lower of cost or market. As of March 31, 2011 and 2012, advance and/or progress payments were ¥96,197 million and ¥69,816 million ($849 million), respectively, and finished goods were ¥12,213 million and ¥9,838 million ($120 million), respectively.

Certain subsidiaries recorded ¥7,115 million, ¥9,844 million and ¥4,039 million ($49 million) of writedowns principally for advance and/or progress payments for development of residential condominiums for sale for fiscal 2010, 2011 and 2012, resulting from an increase in development costs and/or a decrease in expected sales price. These write-downs were recorded in costs of real estate sales and included in the Real Estate segment.

(u) Office facilities

Office facilities are stated at cost less accumulated depreciation. Depreciation is calculated on a decliningbalance basis or straight-line basis over the estimated useful lives of the assets. Depreciation expenses in fiscal 2010, 2011 and 2012 are ¥3,120 million, ¥2,857 million and ¥3,228 million ($39 million), respectively. Accumulated depreciation was ¥39,057 million and ¥39,492 million ($480 million) as of March 31, 2011 and 2012, respectively. Estimated useful lives range up to 62 years for buildings and fixtures and up to 20 years for machinery and equipment.

(v) Other assets

Other assets consist primarily of the excess of purchase prices over the net assets acquired in acquisitions (goodwill) and other intangible assets (see (w)), deferred insurance policy acquisition costs which are amortized over the contract periods, leasehold deposits, advance payments made in relation to purchases of assets to be leased and to construction of real estate for operating lease, and deferred tax assets.

(w) Goodwill and other intangible assets

The Company and its subsidiaries have followed ASC 805 (“Business Combinations”) and ASC 350 (“Intangibles—Goodwill and Other”). ASC 805 requires that all business combinations be accounted for using the acquisition method. ASC 805 also requires that intangible assets acquired in a business combination be recognized apart from goodwill if the intangible assets meet one of two criteria—either the contractual-legal criterion or the separability criterion.

ASC 350 establishes how intangible assets (other than those acquired in a business combination) should be accounted for upon acquisition. It also addresses how goodwill and other intangible assets should be accounted for subsequent to their acquisition. Both goodwill and intangible assets that have indefinite useful lives are not amortized but tested at least annually for impairment. Additionally, if events or changes in circumstances indicate that the asset might be impaired, we test for impairment when such events or changes occur. The

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Company and its subsidiaries adopted Accounting Standards Update 2011-08 (“Testing Goodwill for Impairment”—ASC 350 (“Intangibles—Goodwill and Other”)) from the fiscal year ended March 31, 2012. According to ASU 2011-08, the Company and its subsidiaries perform a qualitative assessment before determining whether to calculate the fair value of a reporting unit under the first step of the two-step goodwill impairment test. If, after assessing the totality of events or circumstances, it is determined 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 two-step impairment test. However, if the Company and/or subsidiaries conclude otherwise, the Company and/or subsidiaries perform the first step of the two-step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. If the fair value of the reporting unit falls below its carrying amount, then the Company and/or subsidiaries perform the second step of the goodwill impairment test by comparing the fair value of goodwill with its carrying amount. If the carrying amount of goodwill exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The Company and its subsidiaries test the goodwill either at the operating segment level or one level below the operating segments.

Intangible assets with finite lives are amortized over their useful lives and tested for impairment in accordance with ASC 360-10 (“Property, Plant, and Equipment—Impairment or Disposal of Long-Lived Assets”).

(x) Trade notes, accounts payable and other liabilities

Trade notes, accounts payable and other liabilities include accounts payables, guarantee liabilities, and derivative liabilities.

(y) Capitalization of interest costs

The Company and its subsidiaries capitalized interest costs of ¥2,810 million, ¥3,646 million and ¥2,395 million ($29 million) in fiscal 2010, 2011 and 2012, respectively, related to specific long-term development projects.

(z) Advertising

The costs of advertising are expensed as incurred. The total amounts charged to advertising expense in fiscal 2010, 2011 and 2012 are ¥6,870 million, ¥6,165 million and ¥5,888 million ($72 million), respectively.

(aa) Discontinued operations

The Company and its subsidiaries have followed ASC 205-20 (“Presentation of Financial Statements— Discontinued Operations”). Under ASC 205-20, the scope of discontinued operations includes the operating results of any component of an entity with its own identifiable operations and cash flow and in which operations the Company and its subsidiaries will not have significant continuing involvement. Included in reported discontinued operations are the operating results of operations for the subsidiaries, the business units and certain properties sold or to be disposed of by sale without significant continuing involvements, which results of operations for prior periods presented have also been reclassified as discontinued operations in the accompanying consolidated statements of income.

(ab) Financial statements presentation in U.S. dollars

The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of the readers, using the prevailing exchange rate at March 31, 2012, which was ¥82.19 to $1.00. The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(ac) Earnings per share

Basic earnings per share is computed by dividing income attributable to ORIX Corporation from continuing operations and net income attributable to ORIX Corporation by the weighted average number of shares of common stock outstanding in each period and diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Earnings per share is adjusted for any stock splits and stock dividends retroactively.

Furthermore, the Company and its subsidiaries apply ASC 260-10-45-43 to 44 (“Earnings Per Share— Contingently Convertible Instruments”) to Liquid Yield Option Notes™.

(ad) Partial sale and additional acquisition of the parent’s ownership interest in subsidiaries

A partial sale and an additional acquisition of the parent’s ownership interest in subsidiaries where the parent continues to retain control of that subsidiary are accounted for as equity transactions. On the other hand, 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.

(ae) Redeemable noncontrolling interests

Noncontrolling interest in certain subsidiaries are subject to call and put rights upon certain shareholder 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 in accordance with provisions including EITF Topic No. D-98 (ASC 480-10-s99-3A) (“Classification and Measurement of Redeemable Securities”).

(af) Issuance of stock by an affiliate

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

(ag) New accounting pronouncements

In June 2009, FASB Statement No. 166 (“Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140”), which was codified by Accounting Standards Update 2009-16 (ASC 860 (“Transfers and Servicing”)), was issued. This Update removes the concept of a qualifying special-purpose entity and removes the exception from applying ASC 810-10 (“Consolidation-Variable Interest Entities”) to variable interest entities that are qualifying special-purpose entities. This Update also modifies the financial-components approach used in ASC 860 and limits the circumstances in which a transferor derecognizes a portion or component of a financial asset.

Furthermore, in June 2009, FASB Statement No. 167 (“Amendment of FASB Interpretation No. 46(R)” (“FIN 46(R)”)), which was codified by Accounting Standards Update 2009-17 (ASC 810 (“Consolidation”)), was issued. This Update requires an enterprise to perform qualitative analysis to identify the primary beneficiary. An enterprise that has both of the following characteristics is considered to be the primary beneficiary who shall consolidate a variable interest entity:

The power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

The obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity.

Additionally, this Update requires ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity.

These Updates are effective as of the beginning of the fiscal year that begins after November 15, 2009, for interim periods within that fiscal year, and for fiscal years and interim periods thereafter. The Company and its subsidiaries adopted these Updates on April 1, 2010. The effects of adopting these Updates on the Company and its subsidiaries’ financial conditions at the initial adoption date was an increase of ¥1,147 billion on total assets, an increase of ¥1,169 billion on total liabilities and a decrease of ¥22 billion on retained earnings, net of tax, respectively, in the consolidated balance sheets.

In January 2010, Accounting Standards Update 2010-06 (“Improving Disclosures about Fair Value Measurements”—ASC 820 (“Fair Value Measurements and Disclosures”)) was issued. This Update improves existing disclosures and adds new disclosures. The Company and its subsidiaries adopted certain disclosure requirements in the roll forward of activity in Level 3 fair value measurements on April 1, 2011. The Company and its subsidiaries already adopted the other disclosure requirements in the period ended March 31, 2010. The adoption did not have a material effect on the Company and its subsidiaries’ results of operation or financial position.

In July 2010, Accounting Standards Update 2010-20 (“Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses”—ASC 310 (“Receivables”)) was issued. This Update enhances disclosures about the credit quality of financing receivables and the allowance for credit losses, by requiring an entity to provide disaggregated information by portfolio segment or class of financing receivables, credit quality indicators, past due information, and information about modifications of its financing receivables, and other information. This Update requires the disclosures as of the end of a reporting period, and the disclosures about activity that occurs during a reporting period. The Company and its subsidiaries adopted the period-end disclosure requirements for the period ended December 31, 2010, and the activity disclosure requirements for the period beginning on April 1, 2011, respectively. This Update only relates to certain disclosure requirements and its adoption had no effect on the Company and its subsidiaries’ results of operations or financial position. In April 2011, Accounting Standards Update 2011-02 (“A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring”—ASC 310 (“Receivables”)) was issued. This Update clarifies the guidance on a creditor’s evaluation of whether a restructuring constitutes a troubled debt restructuring. Additionally, this Update requires entities to disclose certain information about troubled debt restructuring, which was deferred by the adoption of Accounting Standards Update 2011-01 (“Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No.2010-20”—ASC 310 (“Receivables”)). The Company and its subsidiaries adopted this Update on July 1, 2011 and applied the amendments in this Update retrospectively to restructurings that occurred on or after April 1, 2011. The adoption did not have a material effect on the Company and its subsidiaries’ results of operations or financial position.

In October 2010, Accounting Standards Update 2010-26 (“Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts”—ASC 944 (“Financial Services—Insurance”)) was issued. This Update modifies the current definition of the types of costs relating to the acquisition of new and renewal insurance contracts that can be deferred as deferred policy acquisition costs, and specifies that only certain costs related directly to the successful acquisition of new or renewal insurance contracts should be deferred. In accordance with the amendment in this Update, the advertising cost which does not meet certain capitalization criteria, and the cost relating to unsuccessful contract acquisition should be charged to expense as incurred. The Update is

F-25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011 and should be applied prospectively. Retrospective application to all prior periods presented upon the date of adoption is permitted. Upon initial adoption of this Update on April 1, 2012, the Company intends to retrospectively apply the Update to prior periods financial statements and estimates that the effect of the retrospective adoption on the financial position at the initial adoption date would be a decrease of approximately ¥22 billion in other assets and a decrease of approximately ¥15.4 billion in retained earnings, net of tax, in the consolidated balance sheets.

In December 2010, Accounting Standards Update 2010-28 (“When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts”—ASC 350 (“Goodwill and Other”)) was issued. This Update modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For these reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. Any resulting goodwill impairment should be recorded as a cumulative effect adjustment to beginning retained earnings in the period of adoption. Any goodwill impairments occurring after the initial adoption of the Update should be included in earnings. The Company and its subsidiaries adopted this Update on April 1, 2011. The adoption did not have a material effect on the Company and its subsidiaries’ results of operations or financial position.

In December 2010, Accounting Standards Update 2010-29 (“Disclosure of Supplementary Pro Forma Information for Business Combinations”—ASC 805 (“Business Combinations”)) was issued. This Update specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The Company and its subsidiaries adopted this Update on April 1, 2011. This Update only relates to certain disclosure requirements and its adoption had no effect on the Company and its subsidiaries’ results of operations or financial position.

In May 2011, Accounting Standards Update 2011-04 (“Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”—ASC 820 (“Fair Value Measurement”)) was issued. This Update is intended to result in a consistent definition of fair value and common requirements for measuring fair value and for disclosures about fair value between U.S. GAAP and IFRSs. Consequently, this Update changes some fair value measurement principles and enhances the disclosure requirements. The Company and its subsidiaries adopted this Update on January 1, 2012.The adoption did not have a significant effect on the Company and its subsidiaries’ results of operations or financial position.

In June 2011, Accounting Standards Update 2011-05 (“Presentation of Comprehensive Income”—ASC 220 (“Comprehensive Income”)) was issued. Under this Update, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The Update does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The Update does not change the option for an entity to present components of other comprehensive income either net of related tax effects or before related tax effects. The Update does not affect how earnings per share is calculated or presented. In December 2011, Accounting Standards Update 2011-12 (Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No.2011-05) was issued. This Update defers the effective date for certain amendments in Accounting Standards Update 2011-05 which require an entity to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income

F-26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

to net income. These Updates are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and should be applied retrospectively. Early adoption is permitted. These Updates only relate to certain disclosure requirements and their adoption will have no effect on the Company and its subsidiaries’ results of operations or financial position.

In September 2011, Accounting Standards Update 2011-08 (“Testing Goodwill for Impairment”—ASC 350 (“Intangibles—Goodwill and Other”)) was issued. This Update permits an entity to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount including goodwill before performing the two-step goodwill impairment test. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is not required. The Company and its subsidiaries adopted this Update in the period ended March 31, 2012.The adoption of this Update did not have a significant effect on the Company and its subsidiaries’ results of operations or financial position.

In December 2011, Accounting Standards Update 2011-10 (“Derecognition of in Substance Real Estate—a Scope Clarification”—ASC 360 (“Property, Plant, and Equipment”)) was issued. This Update is intended to resolve the diversity in practice and clarifies that when a parent (reporting entity) ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s non-recourse debt, the reporting entity should apply the guidance in ASC 360-20 (“Property, Plant, and Equipment—Real Estate Sales”) to determine whether it should derecognize the in substance real estate. The Update is effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. Early application is permitted. Generally, the effect of adopting this Update on the Company and its subsidiaries’ results of operations or financial position will depend on future transactions.

In December 2011, Accounting Standards Update 2011-11 (“Disclosures about Offsetting Assets and Liabilities”—ASC 210 (“Balance Sheet”)) was issued. This Update requires all entities that have financial instruments and derivative instruments that are either offset in the balance sheet or subject to an enforceable master netting arrangement or similar agreement to disclose information about offsetting and related arrangements. The Update is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. The Update only relates to certain disclosure requirements and its adoption will have no effect on the Company and its subsidiaries’ results of operations or financial position.

(ah) Reclassifications

Certain amounts in fiscal 2010 and 2011 consolidated financial statements have been reclassified to conform to fiscal 2012 presentation.

2. Fair Value Measurements

The Company and its subsidiaries apply ASC 820-10 (“Fair Value Measurement”). This Codification Section defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.

This Codification Section classifies and prioritizes 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

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.

This Codification Section differentiates 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 measure mainly loans held for sale, trading securities, available-for-sale securities, certain investment funds and derivatives at fair value on a recurring basis.

The following table presents recorded amounts of major financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2011 and March 31, 2012:

		March 31, 2011	March 31, 2011	March 31, 2011
		Millions of		yen
Total Carrying Value in Consolidated Balance Sheets ¥ 71,991 883,410 169,345 34,968 292,032 222,314 87,874 5,506 71,371 10,023 10,023 22,985 2,070 3,467 2,633 14,766 49 ¥988,409 ¥ 42,076 1,320 2,071 4,968 33,481 236 ¥ 42,076		Quoted Prices in Active Markets for Identical Assets (Level 1) ¥ 763 74,914 19,995 0 0 0 0 0 54,919 0 0 1,306 0 0 1,306 0 0 ¥76,983		Significant Other Observable Inputs (Level 2) ¥ 71,228 492,820 149,350 34,968 289,459 0 2,591 0 16,452 10,023 10,023 18,497 2,070 333 1,327 14,766 1 ¥592,568	Significant Unobservable Inputs (Level 3)
						¥ 0 315,676 0 0 2,573 222,314 85,283 5,506 0 0 0 3,182 0 3,134 0 0 48 ¥318,858 ¥ 236 0 0 0 0 236 ¥ 236
	¥ 42,076 1,320 2,071 4,968 33,481 236 ¥ 42,076		¥ 977 0 0 977 0 0 ¥ 977	¥ 40,863 1,320 2,071 3,991 33,481 0 ¥ 40,863

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

	March 31, 2012	March 31, 2012
	Millions of	yen
Total Carrying Value in Consolidated Balance Sheets ¥ 19,397 12,817 886,487 220,915 57,359 280,222 139,152 95,328 8,410 85,101 5,178 5,178 17,212 4,624 5,924 1,027 5,540 97 ¥941,091 ¥ 16,659 1,277 4,430 5,497 5,432 23 ¥ 16,659	Quoted Prices in Active Markets for Identical Assets (Level 1) ¥ 0 384 173,056 105,353 33 0 0 0 0 67,670 0 0 649 0 0 649 0 0 ¥174,089 ¥ 412 0 0 412 0 0 ¥ 412	Significant Other Observable Inputs (Level 2) ¥ 19,397 12,433 469,776 115,562 57,326 277,310 0 2,147 0 17,431 5,178 5,178 11,270 4,624 631 378 5,540 97 ¥518,054 ¥ 16,247 1,277 4,430 5,085 5,432 23 ¥ 16,247	Significant Unobservable Inputs (Level 3)
				¥ 0 0 243,655 0 0 2,912 139,152 93,181 8,410 0 0 0 5,293 0 5,293 0 0 0 ¥248,948 ¥ 0 0 0 0 0 0 ¥ 0

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

	March 31, 2012	March 31, 2012
	Millions of U.S. dollars
Total Carrying Value in Consolidated Balance Sheets $ 236 156 10,786 2,688 698 3,410 1,693 1,160 102 1,035 63 63 209 56 72 13 67 1 $11,450 $ 202 15 54 67 66 0 $ 202	Quoted Prices in Active Markets for Identical Assets (Level 1) $ 0 5 2,105 1,282 0 0 0 0 0 823 0 0 8 0 0 8 0 0 $2,118 $ 5 0 0 5 0 0 $ 5	Significant Other Observable Inputs (Level 2) $ 236 151 5,716 1,406 698 3,374 0 26 0 212 63 63 137 56 8 5 67 1 $6,303 $ 197 15 54 62 66 0 $ 197	Significant Unobservable Inputs (Level 3)
				$ 0 0 2,965 0 0 36 1,693 1,134 102 0 0 0 64 0 64 0 0 0 $3,029 $ 0 0 0 0 0 0 $ 0

A subsidiary elected the fair value option under ASC 825-10 (“Financial Instruments—Fair Value Option”) on the loans held for sale originated on and after October 1, 2011. These loans are multi-family and seniors housing loans and are sold to Federal National Mortgage Association (“Fannie Mae”) or institutional investors. Included in other operating revenues in the consolidated statements of income are gains from the change in the fair value of the loans of ¥1,024 million ($12 million), for the fiscal year ended March 31, 2012. No gains or losses were recognized in earnings during the fiscal year ended March 31, 2012 attributable to changes in instrument-specific credit risk. The amounts of aggregate unpaid principal balance and aggregate fair value at March 31, 2012, are ¥18,326 million ($223 million) and ¥19,397 million ($236 million), respectively, and the aggregate fair value exceeds the amount of aggregate unpaid principal balance by ¥1,071 million ($13 million). There are no loans that are 90 days or more past due, in non-accrual status, or both.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Changes in economic conditions or valuation methodologies may require the transfer of assets and liabilities from one fair value level to another. In such instances, the Company and its subsidiaries recognize the transfer at the beginning of quarter during which the transfers occur. The Company and its subsidiaries evaluate the significance of transfers between levels based upon size of the transfer relative to total assets, total liabilities or total earnings. For the year ended March 31, 2011 and for the nine months ended December 31, 2011, there were no significant transfers between Level 1 and Level 2. For the three months ended March 31, 2012, there were no transfers between Level 1 and Level 2.

The following table presents the reconciliation of financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during fiscal year 2010, 2011 and 2012:

	2010	2010	2010	2010
	Millions ofyen
Balance at April 1, 2009	Gains or losses (realized/unrealized)			Purchase, sales, and settlements (net)	Transfers in and/ or out of Level 3 *(net)3**	Balance at March 31, 2010	Change in unrealized gains or losses included in earnings for assets and liabilities still held at March 31, *20101**
	Included in *earnings 1**	Included in other comprehensive *income2**	Total
¥ 166 447,859 10,176 300,765 131,490 5,428 6,954 668 438 230	¥ 0 (9,394) (1,302) (989) (7,103) 0 (6,954) (175) (438) 263	¥ (170) (519) 492 (1,910) 845 54 0 0 0 0			¥ 0 855 855 0 0 0 0 0 0 0	¥ 53 401,804 6,841 246,305 143,176 5,482 0 493 0 493	¥ 0 (8,691) (801) (515) (7,375) 0 0 (175) (438) 263

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

2011

Millions ofyen Balance at April 1, 2010 Gains or losses (realized/ unrealized) Purchase, sales, and settlements (net) Included in *earnings1 Included in other comprehensive income2* Total Trading securities . . . . . . . . . . . . . . . . . ¥ 53 ¥ (26) ¥ (2) ¥ (28) ¥ (25) Available-for-sale securities . . . . . . . . . 401,804 (6,242) (3,248) (9,490) (33,102) Corporate debt securities . . . . . . . 6,841 (34) (83) (117) (2,094) Specified bonds issued by SPEs in Japan . . . . . . . . . . . . . . . . . . . . . 246,305 (5,195) 351 (4,844) (27,076) CMBS and RMBS in the U.S., and other asset-backed securities . . . . . . . . . . . . . . . . . . 143,176 (1,013) (3,540) (4,553) (3,932) Other debt securities . . . . . . . . . . . 5,482 0 24 24 0 Derivative assets and liabilities (net) . . 493 (206) 0 (206) 0 Options held/written, caps held and other . . . . . . . . . . . . . . . . . . 0 475 0 475 0 Credit derivatives held/written . . . 493 (681) 0 (681) 0 2012 Millions ofyen Balance at April 1, 2011 Gains or losses (realized/ unrealized) Purchases Sales Settlements Included in *earnings1 Included in other comprehensive Income2* Total Available-for-sale securities . . . . . . . ¥315,676 ¥(1,262) ¥ 1,443 ¥ 181 ¥63,980 ¥(18,054) ¥(118,596) Corporate debt securities . . . 2,573 (18) 108 90 2,549 (431) (2,337) Specified bonds issued by SPEs in Japan . . . . . . 222,314 (3,066) 2,178 (888) 6,668 (9,625) (79,317) CMBS and RMBS in the U.S., and other asset- backed securities . . . 85,283 1,822 (1,056) 766 49,072 (7,998) (33,942) Other debt securities . . . 5,506 0 213 213 5,691 0 (3,000) Derivative assets and liabilities (net) . . . 2,946 2,159 0 2,159 0 0 188 Options held/ written, caps held and other . . . . . . 3,134 2,159 0 2,159 0 0 0 Credit derivatives held/written . (188) 0 0 0 0 0 188	Millions ofyen Balance at April 1, 2010 Gains or losses (realized/ unrealized) Purchase, sales, and settlements (net) Included in *earnings1 Included in other comprehensive income2* Total Trading securities . . . . . . . . . . . . . . . . . ¥ 53 ¥ (26) ¥ (2) ¥ (28) ¥ (25) Available-for-sale securities . . . . . . . . . 401,804 (6,242) (3,248) (9,490) (33,102) Corporate debt securities . . . . . . . 6,841 (34) (83) (117) (2,094) Specified bonds issued by SPEs in Japan . . . . . . . . . . . . . . . . . . . . . 246,305 (5,195) 351 (4,844) (27,076) CMBS and RMBS in the U.S., and other asset-backed securities . . . . . . . . . . . . . . . . . . 143,176 (1,013) (3,540) (4,553) (3,932) Other debt securities . . . . . . . . . . . 5,482 0 24 24 0 Derivative assets and liabilities (net) . . 493 (206) 0 (206) 0 Options held/written, caps held and other . . . . . . . . . . . . . . . . . . 0 475 0 475 0 Credit derivatives held/written . . . 493 (681) 0 (681) 0 2012 Millions ofyen Balance at April 1, 2011 Gains or losses (realized/ unrealized) Purchases Sales Settlements Included in *earnings1 Included in other comprehensive Income2* Total Available-for-sale securities . . . . . . . ¥315,676 ¥(1,262) ¥ 1,443 ¥ 181 ¥63,980 ¥(18,054) ¥(118,596) Corporate debt securities . . . 2,573 (18) 108 90 2,549 (431) (2,337) Specified bonds issued by SPEs in Japan . . . . . . 222,314 (3,066) 2,178 (888) 6,668 (9,625) (79,317) CMBS and RMBS in the U.S., and other asset- backed securities . . . 85,283 1,822 (1,056) 766 49,072 (7,998) (33,942) Other debt securities . . . 5,506 0 213 213 5,691 0 (3,000) Derivative assets and liabilities (net) . . . 2,946 2,159 0 2,159 0 0 188 Options held/ written, caps held and other . . . . . . 3,134 2,159 0 2,159 0 0 0 Credit derivatives held/written . (188) 0 0 0 0 0 188		Millions ofyen	Millions ofyen	Millions ofyen	Millions ofyen
		Balance at April 1, 2010	Gains or losses (realized/ unrealized)			Purchase, sales, and settlements (net)	Transfers in and/ or out of Level 3 *(net)3**	Balance at March 31, 2011	Change in unrealized gains or losses included in earnings for assets and liabilities still held at March 31, *20111**
			Included in *earnings1**	Included in other comprehensive *income2**	Total
		¥ 53 401,804 6,841 246,305 143,176 5,482 493 0 493	¥ (26) (6,242) (34) (5,195) (1,013) 0 (206) 475 (681)	¥ (2) ¥ (28) ¥ (25) (3,248) (9,490) (33,102) (83) (117) (2,094) 351 (4,844) (27,076) (3,540) (4,553) (3,932) 24 24 0 0 (206) 0 0 475 0 0 (681) 0 2012			¥ 0 (43,536) (2,057) 7,929 (49,408) 0 2,659 2,659 0	¥ 0 315,676 2,573 222,314 85,283 5,506 2,946 3,134 (188)	¥ 0 (5,848) (72) (5,275) (501) 0 (206) 475 (681)
				Millions ofyen
Balance at April 1, 2011	Gains or losses (realized/ unrealized)						Transfers in and/ or out of Level 3 *(net)3**	Balance at March 31, 2012	Change in unrealized gains or losses included in earnings for assets and liabilities still held at March 31, *20121**
							¥468 468 0 0 0 0 0 0	¥243,655 2,912 139,152 93,181 8,410 5,293 5,293 0	¥(2,429) (35) (3,397) 1,003 0 2,159 2,159 0

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

				2012	2012
				Millions of U.S.		dollars
Balance at April 1, 2011	Gains or losses (realized/ unrealized)			Purchases	Sales	Settlements	Transfers in and/ or out of Level 3 *(net)3**	Balance at March 31, 2012	Change in unrealized gains or losses included in earnings for assets and liabilities still held at March 31, *20121**
	Included in *earnings1**	Included in other compre- hensive *income2**	Total
$3,841 31 2,705 1,038 67 36 38 (2)	$(15) (0) (37) 22 0 26 26 0	$ 17 1 26 (13) 3 0 0 0	$ 2 1 (11) 9 3 26 26 0	$778 31 81 597 69 0 0 0	$(220) (5) (118) (97) 0 0 0 0	$(1,442) (28) (964) (413) (37) 2 0 2	$6 6 0 0 0 0 0 0	$2,965 36 1,693 1,134 102 64 64 0	$(30) (0) (41) 11 0 26 26 0

*1 Principally, gains and losses from trading securities are included in “brokerage commissions and net gains (losses) on investment securities”; available-for-sale securities are included in “write-downs of securities” or “life insurance premiums and related investment income”; investment in affiliates are included in “equity in net income (loss) of affiliates” and derivative assets and liabilities (net) are included in “other operating revenues /expenses,” respectively. Also, for available-for-sale securities, amortization of interest recognized in interest on loans and investment securities are included in these columns.
*2 Unrealized gains and losses from available-for-sale securities are included in “Net change of unrealized gains (losses) on investment in securities.”
*3 The amount reported in “Transfers in and/or out of Level 3 (net)” is the fair value at the beginning of quarter during which the transfers occur.

From April 1, 2010, the Company and its subsidiaries adopted Accounting Standards Update 2009-16 (ASC 860 (“Transfers and Servicing”)), and Accounting Standards Update 2009-17 (ASC 810 (“Consolidation”)). As a result, there was an increase of ¥9,225 million in the Level 3 specified bonds issued by SPEs in Japan because these bonds are held by variable interest entities that have become subject to consolidation. On the other hand, there were decreases of ¥49,408 million in the Level 3 CMBS and RMBS in the United States and other asset-backed securities, and decreases of ¥1,296 million in the Level 3 specified bonds issued by SPEs in Japan, respectively, that are held by the Company and its subsidiaries, because these securities were issued by newly consolidated variable interest entities and accordingly have been eliminated in consolidation for the fiscal year ended March 31, 2011.

In fiscal 2012, ¥468 million of Corporate debt securities was transferred from Level 2 to Level 3 due to a certain market becoming inactive. There was no transfer from Level 3 in fiscal 2012.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

The following table presents recorded amounts of major assets measured at fair value on a nonrecurring basis as of March 31, 2011 and March 31, 2012. These assets are measured at fair value on a nonrecurring basis mainly to recognize impairment:

	March 31, 2011	March 31, 2011
	Millions of	yen
Total Carrying Value in Consolidated Balance Sheets ¥ 3,776 11,439 110,329 26,813 30,595 2,090 ¥185,042	Quoted Prices in Active Markets for Identical Assets (Level 1) ¥ 0 0 0 0 0 236 ¥ 236	Significant Other Observable Inputs (Level 2) ¥ 0 11,439 0 0 0 0 ¥11,439	Significant Unobservable Inputs (Level 3)
				¥ 3,776 0 110,329 26,813 30,595 1,854 ¥173,367

	March 31, 2012	March 31, 2012
	Millions of	yen
Total Carrying Value in Consolidated Balance Sheets ¥ 9,715 73,319 16,159 20,445 15,660 ¥135,298	Quoted Prices in Active Markets for Identical Assets (Level 1) ¥ 0 0 0 0 10,775 ¥10,775	Significant Other Observable Inputs (Level 2) ¥0 0 0 0 0 ¥0	Significant Unobservable Inputs (Level 3)
				¥ 9,715 73,319 16,159 20,445 4,885 ¥124,523

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

	March 31, 2012	March 31, 2012
	Millions of U.S. dollars
Total Carrying Value in Consolidated Balance Sheets $ 118 892 196 249 191 $1,646	Quoted Prices in Active Markets for Identical Assets (Level 1) $ 0 0 0 0 131 $131	Significant Other Observable Inputs (Level 2) $0 0 0 0 0 $0	Significant Unobservable Inputs (Level 3)
				$ 118 892 196 249 60 $1,515

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

Valuation process

The Company and its subsidiaries determine fair value of Level 3 assets and liabilities by using valuation techniques such as internally developed models or using third-party pricing information. Internally developed models include the discounted cash flow methodologies and direct capitalization methodologies. To measure the fair value of the assets and liabilities, the Company and its subsidiaries select the valuation technique which best reflects the nature, characteristics and risks of each asset and liability. The appropriateness of valuation methods and unobservable inputs is verified when measuring fair values of the assets and liabilities by using internally developed models. The Company and its subsidiaries also use third-party pricing information to measure the fair value of certain assets and liabilities. In that case, the Company and its subsidiaries verify the appropriateness of the prices by monitoring available information about the assets and liabilities such as current conditions of the assets or liabilities as well as surrounding market information. When these prices are determined to be able to reflect the nature, characteristics and risks of assets and liabilities reasonably, the Company and its subsidiaries use these prices as fair value of the assets and liabilities.

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 United States are classified as Level 2, because 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.

Real estate collateral-dependent loans

The valuation allowance 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 820-10 (“Fair Value Measurement”), measurement for impaired loans determined using a present value technique is not considered a fair value

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

measurement. However, measurement for impaired loans 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. 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 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 and other operating 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 and other operating 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 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 the assets as Level 3 because such appraisals involve unobservable inputs. These unobservable inputs contain discount rates as well as future cash flows estimated to be generated from the assets or projects. An increase (decrease) in the discount rate and a decrease (increase) in the estimated future cash flows would result in a decrease (increase) in the fair value of operating leases and other operating assets and Land and buildings undeveloped or under construction.

Trading securities, Available-for-sale securities, Unlisted 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. 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. 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 bench mark indices.

The Company and its subsidiaries classified CMBS and RMBS in the United States, as level 3 due to a certain market being inactive. In determining whether a market is active or inactive, the Company and its subsidiaries evaluate various factors such as the lack of recent transactions, price quotations that are not based on

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

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 the CMBS and RMBS in the United States, the Company and its subsidiaries judged that there has been increased overall trading activity from previous years but 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, the Company and its subsidiaries established internally developed pricing models (Level 3 inputs) using valuation techniques such as discounted cash flow methodologies in order to estimate fair value of these 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 United States.

The Company and its subsidiaries classified the specified bonds as Level 3 because the Company and its subsidiaries measure their fair value using unobservable inputs. Since the specified bonds do not trade in an open market, no relevant observable market data is available. Accordingly the Company and its subsidiaries use discounted cash flow methodologies that incorporates significant unobservable inputs to measure their fair value. When evaluating the specified bonds issued by SPEs in Japan, the Company and its subsidiaries estimate the fair value by discounting future cash flows using a discount rate based on market interest rates and a risk premium. The future cash flows for the specified bonds issued by the SPEs in Japan are estimated based on contractual principal and interest repayment schedules on each of the specified bond issued by the SPEs in Japan. Since the discount rate is not observable for the specified bonds, the Company and its subsidiaries use an internally developed model to estimate a risk premium considering the value of the real estate collateral (which also involves unobservable inputs in many cases when using valuation techniques such as discounted cash flow methodologies) and the seniority of the bonds. Under the model, the Company and its subsidiaries consider the loan-to-value ratio and other relevant available information to reflect both the credit risk and the liquidity risk in our own estimate of the risk premium. Generally, the higher the loan-to-value ratio, the larger the risk premium the Company and its subsidiaries estimate under the model. The fair value of the specified bonds issued by SPEs in Japan rises when the fair value of the collateral real estate rises and the discount rate declines. The fair value of the specified bonds issued by SPEs in Japan declines when the fair value of the collateral real estate declines and the discount rate rises.

Investment funds

The fair value is based on the net asset value if the investments meet certain requirements that the investees have all of the attributes specified in ASC 946-10 (“Financial Services—Investment Companies”) and the investees calculate the net asset value. These investments are classified as Level 2, because they are not redeemable at the net asset value per share at the measurement date but they are redeemable at the net asset value per share in the near term after the measurement date.

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Information about Level 3 Fair Value Measurements

The following table provides information about the valuation techniques and significant unobservable inputs used in the valuation of Level 3 assets measured at fair value on a recurring basis as of March 31, 2012.

Financial Assets: Available-for-sale securities Corporate debt securities . . . . . . . . . . . Specified bonds issued by SPEs in Japan . . . . . . . CMBS and RMBS in the U.S., and other asset- backed securities . . . . . Other debt securities Derivative assets Options held/written, caps held and other . . . . . . .			March 31, 2012
	Millions of yen Fair Value ¥ 1,088 1,824 118,624 20,528 63,436 29,745 8,410 5,293 ¥248,948	Millions of U.S. dollars Fair Value $ 14 22 1,443 250 772 362 102 64 $3,029	Valuation Technique(s) Discounted cash flows Appraisals/ Broker quotes Discounted cash flows Appraisals/ Broker quotes Discounted cash flows Appraisals/ Broker quotes Discounted cash flows Discounted cash flows	Significant Unobservable Inputs Discount rate — Discount rate — Discount rate Probability of default — Discount rate Discount rate	Range (Weighted Average)
					2.9% – 7.5% (4.9%) — 1.0% – 13.0% (4.0%) — 2.7% – 44.1% (11.2%) 0.0% – 6.1% (0.9%) — 12.5% (12.5%) 10.0% – 15.0% (12.0%)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

The following table provides 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 the three months ended March 31, 2012.

			March 31, 2012	March 31, 2012
Millions of yen	Millions of U.S. dollars		Valuation Technique(s)	Significant Unobservable Inputs	Range (Weighted Average)
Fair Value	Fair Value
¥ 8,814 73,319 11,561 8,638 4,596		$ 107 892 141 105 56 $1,301	Discounted cash flows Discounted cash flows Direct capitalization Discounted cash flows Discounted cash flows Discounted cash flows	Discount rate Discount rate Capitalization rate Discount rate Discount rate Discount rate	4.2% – 12.5% (6.5%) 3.3% – 18.9% (7.9%) 5.2% – 29.0% (10.9%) 7.0% – 10.0% (8.2%) 6.0% (6.0%) 5.0% – 8.0% (6.5%)
¥106,928

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 (in isolation) 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.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

3. Acquisitions

During fiscal 2010, the Company and its subsidiaries acquired entities for a total cost of ¥12,142 million, which was paid in cash. In accordance with the finalization of purchase price allocation during fiscal 2011, the amount of goodwill was adjusted from ¥1,786 million to ¥1,740 million, which is not deductible for income tax calculation purposes and the amount of acquired intangible assets other than goodwill recognized in these transactions was adjusted from ¥0 to ¥140 million. Acquisitions were mainly included in the Real Estate segment.

During fiscal 2011, the Company and its subsidiaries acquired entities for a total cost of ¥64,875 million, which was paid in cash. In accordance with the finalization of purchase price allocation during fiscal 2012, the amount of goodwill was adjusted from ¥29,247 million to ¥28,674 million, which is not deductible for income tax calculation purposes and the amount of acquired intangible assets other than goodwill recognized in these transactions was adjusted from ¥0 to ¥998 million. Acquisitions were mainly included in the Overseas Business segment.

During fiscal 2012, the Company and its subsidiaries acquired entities for a total cost of ¥11,964 million ($146 million), which was paid in cash. Goodwill initially recognized in these transactions amounted to ¥4,024 million ($49 million), which is not deductible for income tax calculation purposes. The Company reflected certain preliminary estimates with respect to the value of the underlying net assets of these entities in determining amounts of the goodwill. The amount of the goodwill and intangible assets other than goodwill could possibly be adjusted upon completion of the purchase price allocation. Acquisitions were mainly included in the Corporate Financial Services segment and the Overseas Business segment.

The segment in which goodwill is allocated is disclosed in Note 13 (“Goodwill and Other Intangible Assets”).

4. Cash Flow Information

Cash payments during fiscal 2010, 2011 and 2012 are as follows:

Cash payments: Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen 2010 2011 2012 ¥85,801 ¥121,253 ¥116,271 43,927 50,153 49,190	Millions ofyen 2010 2011 2012 ¥85,801 ¥121,253 ¥116,271 43,927 50,153 49,190	Millions of U.S. dollars
	2010 ¥85,801 43,927	2011 ¥121,253 50,153	2012
			$1,415 598

As non-cash investing activities, the Company and its subsidiaries assumed ¥27,688 million, ¥142,906 million and ¥38,437 million ($468 million) of liabilities in connection with acquisitions in fiscal 2010, 2011 and 2012, respectively. Affiliate’s common stocks of ¥26,617 million were exchanged in connection with a sale of subsidiary in 2010. In addition, the Company sold a portion of a subsidiary’s ownership interest and the subsidiary became an equity-method affiliate after the sale during fiscal 2010. As a result, a loan of ¥95,547 million provided to the former subsidiary became a loan to the affiliate, and with the equity investment in the affiliate of ¥25,828 million, the balance of investment in affiliates increased by a total of ¥121,375 million. The sale of the subsidiary’s ownership interest is disclosed in Note 12 “Investment in Affiliates”.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Moreover, real estate under operating leases of ¥83,018 million, ¥59,783 million and ¥90,398 million ($1,100 million) were transferred from installment loans and investment in securities in fiscal 2010, 2011 and 2012, respectively, as a result of real estate collateral acquired from non-recourse loans.

For VIEs that were consolidated as a result of the application of new accounting standards starting from fiscal 2011, see Notes 11 “Variable Interest Entities”.

5. Investment in Direct Financing Leases

Investment in direct financing leases at March 31, 2011 and 2012 consists of the following:

Minimum lease payments receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Estimated residual value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Initial direct costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unearned lease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen 2011 2012 ¥ 927,607 ¥1,008,720 39,982 34,240 6,736 5,847 (143,472) (147,921) ¥ 830,853 ¥ 900,886	Millions of U.S. dollars	Millions of U.S. dollars
	2011 ¥ 927,607 39,982 6,736 (143,472) ¥ 830,853		2012
			$12,273 417 71 (1,800) $10,961

Minimum lease payments receivable are due in periodic installments through fiscal 2035. At March 31, 2012, the amounts due in each of the next five years and thereafter are as follows:

Years ending March 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen ¥ 295,331 241,517 169,191 110,189 58,667 133,825 ¥1,008,720	Millions of U.S. dollars	Millions of U.S. dollars
			$ 3,593 2,938 2,059 1,341 714 1,628 $12,273

Gains and losses from the disposition of direct financing lease assets were not significant for fiscal 2010, 2011 and 2012.

F-41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

6. Investment in Operating Leases

Investment in operating leases at March 31, 2011 and 2012 consists of the following:

Transportation equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Measuring and information-related equipment . . . . . . . . . . . . . . . . . . . . . Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued rental receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen 2012 ¥ 624,567 191,313 858,413 18,569 1,692,862 (404,818) 1,288,044 21,954 ¥1,309,998	Millions of U.S. dollars
	2011 ¥ 624,958 176,304 836,953 19,152 1,657,367 (402,697) 1,254,670 15,625 ¥1,270,295		2012
			$ 7,599 2,328 10,444 226 20,597 (4,925) 15,672 267 $15,939

Gains and losses from the disposition of real estate under operating leases are disclosed separately as gains on sales of real estate under operating leases or income from discontinued operations, net in the accompanying consolidated statements of income.

For fiscal 2010, 2011 and 2012, gains on sales of operating lease assets other than real estate are ¥7,552 million, ¥9,968 million and ¥14,721 million ($179 million), respectively, and are included in operating lease revenues.

Costs of operating leases include depreciation and various expenses (insurance, property tax and other). Depreciation and various expenses for fiscal 2010, 2011 and 2012 are as follows:

Depreciation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Various expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen	Millions ofyen	2012 ¥137,019 52,314 ¥189,333	Millions of U.S. dollars	Millions of U.S. dollars
	2010 ¥137,386 52,188 ¥189,574	2011 ¥134,791 51,949 ¥186,740			2012
					$1,667 637 $2,304

The operating lease contracts include non-cancelable lease terms that range up to 25 years. The minimum future rentals on non-cancelable operating leases are as follows:

Years ending March 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen ¥147,965 94,188 63,453 39,878 24,136 43,765 ¥413,385	Millions of U.S. dollars	Millions of U.S. dollars
			$1,800 1,146 772 485 294 533 $5,030

F-42

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, 2011 and 2012 is as follows:

Borrowers in Japan: Consumer— Housing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate— Real estate companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-recourse loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commercial, industrial and other companies . . . . . . . . . . . . . . . Overseas: Non-recourse loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchased loans* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen 2012 ¥ 864,764 13,826 878,590 297,562 226,887 503,454 1,027,903 549,326 216,520 765,846 97,559 ¥2,769,898	Millions of U.S. dollars	Millions of U.S. dollars
	2011 ¥ 823,974 14,317 838,291 345,078 303,640 513,853 1,162,571 648,933 222,034 870,967 111,335 ¥2,983,164			2012
				$10,522 168 10,690 3,620 2,761 6,125 12,506 6,684 2,634 9,318 1,187 $33,701

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 in accordance with ASC 310-30 (“Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality”).

Generally, installment loans are made under agreements, which require the borrower to provide collateral or guarantors.

At March 31, 2012, 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, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen ¥ 844,162 435,229 282,690 214,919 124,199 771,140 ¥2,672,339	Millions of U.S. dollars	Millions of U.S. dollars
			$10,271 5,295 3,439 2,615 1,511 9,383 $32,514

F-43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Included in interest on loans and investment securities in the consolidated statements of income is interest income on loans of ¥114,729 million, ¥152,242 million and ¥132,719 million ($1,615 million) for fiscal 2010, 2011 and 2012, respectively.

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 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 under ASC 825-10 (“Financial Instruments—Fair Value Option”) was elected. A subsidiary elected the fair value option under ASC 825-10 (“Financial Instruments—Fair Value Option”) on its loans held for sale originated on or after October 1, 2011. 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.

These loans held for sale are included in installment loans and the outstanding balances of these loans as of March 31, 2011 and March 31, 2012 were ¥13,718 million and ¥ 20,145 million ($245 million), respectively. There are ¥19,397 million ($236 million) of loans held for sale as of March 31, 2012, measured at fair value by electing the fair value option.

For 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, ASC 310-30 (Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality) requires that the investor recognize the excess of the loan’s cash flows expected at acquisition over the investor’s initial investment as interest income on the level-yield basis over the remaining life of the purchased loan (“accretable yield”). ASC 310-30, however, does not prohibit placing loans on non-accrual status subsequent to acquisition, including use of the cost recovery or cash basis methods of income recognition when it is not appropriate to recognize the accretable yield, such as when the investor does not have sufficient information to reasonably estimate cash flows expected to be collected to compute the accretable yield.

Purchased loans acquired by the Company and its subsidiaries are generally 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 ¥111,335 million and ¥97,559 million ($1,187 million) as of March 31, 2011 and 2012 and the fair value at the acquisition date of purchased loans acquired during fiscal 2011 and 2012 were ¥7,449 million and ¥11,428 million ($139 million), respectively.

When it is probable that the Company and its subsidiaries will be unable to collect all book value, the Company and its subsidiaries consider purchased loans impaired and a valuation allowance for the excess amount of the book value over the estimated recoverable amount of the loans is provided. For most cases, the recoverable amount is estimated based on the collateral value. Purchased loans for which valuation allowances were provided amounted to ¥36,685 million and ¥34,907 million ($425 million) as of March 31, 2011 and 2012.

F-44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Changes in the allowance for uncollectible accounts relating to the purchased loans for fiscal 2010, 2011 and 2012 are as follows:

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision charged to income . . . . . . . . . . . . . . . . . . . . . . . . . . . . Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen 2010 2011 2012 ¥ 9,520 ¥12,421 ¥17,455 3,481 5,261 3,188 (609) (230) (793) 29 3 (25) ¥12,421 ¥17,455 ¥19,825	Millions ofyen 2010 2011 2012 ¥ 9,520 ¥12,421 ¥17,455 3,481 5,261 3,188 (609) (230) (793) 29 3 (25) ¥12,421 ¥17,455 ¥19,825	Millions of U.S. dollars	Millions of U.S. dollars
	2010 ¥ 9,520 3,481 (609) 29 ¥12,421	2011 ¥12,421 5,261 (230) 3 ¥17,455		2012
				$212 39 (10) (0) $241

Other includes foreign currency translation adjustments.

The above-mentioned amounts are included in the allowance for doubtful receivables on direct financing leases and probable loan losses (see Note 8).

8. Credit Quality of Financing Receivables and the Allowance for Credit Losses

Changes in the allowance for doubtful receivables on direct financing leases and probable loan losses for fiscal 2010, 2011 and 2012 are as follows:

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effect of the application of the new accounting standards1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Beginning balance after the application of the new accounting standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision charged to income . . . . . . . . . . . . . . . . . . . . . . . . . Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen	Millions ofyen	2012 ¥154,150 0 ¥154,150 19,215 (38,610) 2,351 (518) ¥136,588	Millions of U.S. dollars 2012 $1,875 0 $1,875 234 (470) 29 (6) $1,662	Millions of U.S. dollars 2012 $1,875 0 $1,875 234 (470) 29 (6) $1,662
	2010 ¥158,544 0 ¥158,544 71,525 (60,412) 2,615 (14,749) ¥157,523	2011 ¥157,523 32,181 ¥189,704 31,103 (61,829) 175 (5,003) ¥154,150			2012
					$1,875 0 $1,875 234 (470) 29 (6) $1,662

*1 This effect results from our application of the new accounting standards for consolidation of VIEs under ASU 2009-16 and ASU 2009-17, effective April 1, 2010.
*2 Other includes foreign currency translation adjustments, amounts reclassified to discontinued operations and decrease in allowance related to sales of subsidiaries.

The Company and its subsidiaries adopted Accounting Standards Update 2010-20 (“Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses”—ASC 310 (“Receivables”)). This Update enhances disclosures about the credit quality of financing receivables and the allowance for credit losses, and requires an entity to provide the following information disaggregated by portfolio segment and class of financing receivable.

F-45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Allowance for credit losses—by portfolio segment

Credit quality of financing receivables—by class

Impaired loans
Credit quality indicators
Non-accrual and past-due financing receivables

Information about troubled debt restructurings—by class

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 and direct financing leases. Classes of financing receivables 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 financing receivables. Classes of financing receivables 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.

The following table provides information about the allowance for credit losses as of March 31, 2011 and 2012:

	March 31, 2011	March 31, 2011	March 31, 2011	March 31, 2011
	Millions ofyen
	Loans			Purchased *loans 1** ¥ 17,455	Direct financing leases ¥ 21,201	Total
Consumer ¥ 17,096	Corporate Non-recourse loans Other ¥ 27,426 ¥ 70,972
	Non-recourse loans ¥ 27,426
						¥ 154,150
3,016 14,080 ¥840,419		23,123 4,303 ¥952,573	55,170 15,802 ¥1,065,119	16,014 1,441 ¥111,335	0 21,201 ¥830,853	97,323 56,827 ¥3,800,299
8,312 832,107		73,029 879,544	194,005 871,114	36,685 74,650	0 830,853	312,031 3,488,268

F-46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

March 31, 2012

	Millions	Millions	ofyen
	Loans			Direct financing leases
Consumer			Purchased *loans1**
	Non-recourse loans
		¥ 27,426 6,509 (10,083) 16 (363) ¥ 23,505 20,657 2,848 ¥775,465 82,957 692,508	¥17,455 3,188 (793) 0 (25) ¥19,825 17,895 1,930 ¥97,559 34,907 62,652
				0 16,852 ¥900,886
				0 900,886

March 31, 2012

		March 31, 2012	March 31, 2012	March 31, 2012
Allowance for Credit Losses: Beginning Balance . . . . . . . . . . . . . . . . . . . . . Provision charged to income . . . . . . . . . . Charge-offs . . . . . . . . . . . . . . . . . . . . . . . Recoveries . . . . . . . . . . . . . . . . . . . . . . . . Other2 . . . . . . . . . . . . . . . . . . . . . . . . . . Ending Balance . . . . . . . . . . . . . . . . . . . . . . . . Individually Evaluated for Impairment . . . . . . Not Individually Evaluated for Impairment . . Financing receivables:* Ending Balance . . . . . . . . . . . . . . . . . . . . . . . . Individually Evaluated for Impairment . . . . . . Not Individually Evaluated for Impairment . .		Millions of U.S. dollars
		Loans			Direct financing leases
	Consumer			Purchased *loans1**
		Non-recourse loans
			$ 334 79 (123) 0 (4) $ 286 251 35 $ 9,435 1,009 8,426	$ 212 39 (10) 0 (0) $ 241 218 23 $ 1,187 425 762
					0 205 $ 10,961
					0 10,961

*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 in accordance with ASC 310-30 (“Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality”).

*2 Other includes foreign currency translation adjustments, amounts reclassified to discontinued operations and decrease in allowance related to sales of subsidiaries.

F-47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

In developing the allowance for credit losses, the Company and its subsidiaries consider, among other things, the following factors:

business characteristics and financial conditions of obligors;
current economic conditions and trends;
prior charge-off experience;
current delinquencies and delinquency trends; and
value of underlying collateral and guarantees.

The Company and its subsidiaries individually develop the allowance for credit losses for impaired loans. For non-impaired loans, including loans that are not individually evaluated for impairment, and direct financing leases, the Company and its subsidiaries evaluate prior charge-off experience as segmented by debtor’s industry and the purpose of the loans and develop the allowance for credit losses based on such prior charge-off experience as well as current economic conditions.

In common with all portfolio segments, a deterioration of debtors’ condition may increase the risk of delay in payments of principal and interest. For loans to consumer borrowers, the amount of the allowance for credit losses is changed by the variation of individual debtors’ creditworthiness and value of underlying collateral and guarantees. For loans to corporate other borrowers and direct financing leases, the amount of the allowance for credit losses is changed by current economic conditions and trends, the value of underlying collateral and guarantees, and the prior charge-off experience in addition to the debtors’ creditworthiness.

The decline of the value of underlying collateral and guarantees may increase the risk of inability to collect from the loans. Particularly for non-recourse loans for which cash flow from real estate is the source of repayment, their collection depends on the real estate collateral value, which may decline as a result of decrease in liquidity of the real estate market, rise in vacancy rate of rental properties, fall in rents and other factors. These risks may change the amount of the allowance for credit losses. For purchased loans, their collection may decrease due to a decline in the real estate collateral value and debtors’ creditworthiness. Thus, these risks may change 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 based upon an evaluation of the relevant debtors’ creditworthiness and the liquidation status of collateral.

F-48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

The following table provides information about the impaired loans as of March 31, 2011 and 2012:

March 31, 2011	March 31, 2011
Millions of Yen
Class Housing loans Other Japan U.S. Real estate companies Entertainment companies Other Housing loans Other Japan U.S. Real estate companies Entertainment companies Other Housing loans Other Japan U.S. Real estate companies Entertainment companies Other	Loans Individually Evaluated for Impairment ¥ 68,282 2,259 0 66,023 9,465 4,579 14,532 17,080 20,367 0 243,749 6,053 0 201,011 11,953 47,032 79,075 12,517 50,434 36,685 ¥ 312,031 8,312 0 267,034 21,418 51,611 93,607 29,597 70,801 36,685	Unpaid Principal Balance ¥ 68,183 2,259 0 65,924 9,443 4,579 14,516 17,031 20,355 0 242,843 6,052 0 200,106 11,895 46,786 78,808 12,486 50,131 36,685 ¥ 311,026 8,311 0 266,030 21,338 51,365 93,324 29,517 70,486 36,685	Related Allowance
			¥ 0 0 0 0 0 0 0 0 0 0 97,323 3,016 0 78,293 4,421 18,702 30,552 4,114 20,504 16,014
			¥97,323
			3,016
			0
			78,293
			4,421
			18,702
			30,552
			4,114
			20,504
			16,014

F-49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

March 31, 2012	March 31, 2012
Millions of Yen
Class Housing loans Other Japan U.S. Real estate companies Entertainment companies Other Housing loans Other Japan U.S. Real estate companies Entertainment companies Other Housing loans Other Japan U.S. Real estate companies Entertainment companies Other	Loans Individually Evaluated for Impairment ¥ 74,836 1,438 0 73,398 29,471 4,565 8,120 11,893 19,349 0 218,938 7,583 0 176,448 14,677 34,244 65,888 9,867 51,772 34,907 ¥ 293,774 9,021 0 249,846 44,148 38,809 74,008 21,760 71,121 34,907	Unpaid Principal Balance ¥ 74,581 1,421 0 73,160 29,455 4,565 8,102 11,718 19,320 0 217,560 7,566 0 175,087 14,661 34,150 65,412 9,667 51,197 34,907 ¥ 292,141 8,987 0 248,247 44,116 38,715 73,514 21,385 70,517 34,907	Related Allowance
			¥ 0 0 0 0 0 0 0 0 0 0 91,407 3,002 0 70,510 5,602 15,055 26,108 3,181 20,564 17,895
			¥91,407
			3,002
			0
			70,510
			5,602
			15,055
			26,108
			3,181
			20,564
			17,895

F-50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

		March	31, 2012
		Millions of U.S. dollars
			Loans
		Individually			Unpaid
		Evaluated for		Principal			Related
	Class	Impairment			Balance	Allowance
With no related allowance recorded*1: . . . . .		$	910	$	907	$	0
Consumer borrowers . . . . . . . . . . . . . . .	Housing loans		17		17		0
	Other		0		0		0
Corporate borrowers . . . . . . . . . . . . . . .			893		890		0
Non-recourse loans . . . . . . . . . . . .	Japan		359		358		0
	U.S.		55		55		0
Other . . . . . . . . . . . . . . . . . . . . . . .	Real estate companies		99		99		0
	Entertainment companies		145		143		0
	Other		235		235		0
Purchased loans . . . . . . . . . . . . . . . . . . .			0		0		0
With an allowance recorded*2: . . . . . . . . . . .			2,664		2,647		1,112
Consumer borrowers . . . . . . . . . . . . . . .	Housing loans		92		92		36
	Other		0		0		0
Corporate borrowers . . . . . . . . . . . . . . .			2,147		2,130		858
Non-recourse loans . . . . . . . . . . . .	Japan		178		177		68
	U.S.		417		416		183
Other . . . . . . . . . . . . . . . . . . . . . . .	Real estate companies		802		796		318
	Entertainment companies		120		118		39
	Other		630		623		250
Purchased loans . . . . . . . . . . . . . . . . . . .			425		425		218
Total: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		$	3,574	$	3,554	$	1,112
Consumer borrowers . . . . . . . . . . . . . . .	Housing loans		109		109		36
	Other		0		0		0
Corporate borrowers . . . . . . . . . . . . . . .			3,040		3,020		858
Non-recourse loans . . . . . . . . . . . .	Japan		537		535		68
	U.S.		472		471		183
Other . . . . . . . . . . . . . . . . . . . . . . .	Real estate companies		901		895		318
	Entertainment companies		265		261		39
	Other		865		858		250
Purchased loans . . . . . . . . . . . . . . . . . . .			425		425		218

*1 “With no related allowance recorded” represents impaired loans with no allowance for credit losses as all amounts are considered to be collectible.
*2 “With an allowance recorded” represents impaired loans with the allowance for credit losses as all or a part of the amounts are not considered to be collectible.

The Company and its subsidiaries recognize installment loans other than purchased loans and loans to consumer borrowers as impaired loans when principal or interest is past-due 90 days or more, or it is probable that the Company and its subsidiaries will be unable to collect all amounts due according to the contractual terms

F-51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

of the loan agreements due to various debtor conditions, including insolvency filings, suspension of bank transactions, dishonored bills and deterioration of businesses. For non-recourse loans, in addition to these conditions, the Company and its subsidiaries perform an impairment review using financial covenants, acceleration clauses, loan-to-value ratios, and other relevant available information.

For purchased loans, the Company and its subsidiaries recognize them as impaired loans when it is probable that the Company and its subsidiaries will be unable to collect book values of the remaining investment due to factors such as a decline in the real estate collateral value and debtors’ creditworthiness since the acquisition of these loans.

The Company and its subsidiaries consider that loans to consumer borrowers, including housing loans and other, are impaired when terms of these loans are modified in troubled debt restructurings.

Interest payments received on impaired 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 regardless of whether impairment is recognized or not.

In common with all classes, impaired loans are individually evaluated for a valuation allowance 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. For non-recourse loans, in principle, the estimated collectible amount is determined based on the fair value of the collateral securing the loans as they are collateral-dependent. Further for certain non-recourse 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. Non-recourse loans in the U.S. consist mainly of commercial mortgage loans held by the newly consolidated VIEs resulting from the application of new accounting standards in the fiscal year ended March 31, 2011 relating to the consolidation of VIEs (see Note 11 “Variable Interest Entities”). For impaired purchased loans, the Company and its subsidiaries develop the allowance for credit losses based on the difference between the book value and the estimated collectible amount of such loans.

The average recorded investments in impaired loans for fiscal 2010 and 2011 were ¥402,868 million and ¥368,539 million, respectively. The Company and its subsidiaries recognized interest income on impaired loans of ¥7,875 million and ¥4,225 million, and collected in cash interest on impaired loans of ¥4,841 million and ¥3,592 million in fiscal 2010 and 2011, respectively.

F-52

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

The following table provides information about the average recorded investments in impaired loans and interest income on impaired loans for fiscal 2012:

	March 31, 2012	March 31, 2012	March 31, 2012	March 31, 2012
	Millions ofyen
Class	Average Recorded Investments in *Impaired Loans1**		Interest Income on Impaired Loans		Interest on Impaired Loans Collected in Cash
Housing loans Other Japan U.S. Real estate companies Entertainment companies Other		¥ 8,933 0 252,683 30,021 41,399 84,121 25,796 71,346 34,063 ¥295,679		¥ 226 0 4,506 367 794 1,243 724 1,378 0 ¥4,732		¥ 204 0 3,976 311 695 1,102 711 1,157 0 ¥4,180

	March 31, 2012	March 31, 2012	March 31, 2012	March 31, 2012
	Millions of U.S. dollars
Class	Average Recorded Investments in *Impaired Loans1**		Interest Income on Impaired Loans		Interest on Impaired Loans Collected in Cash
Housing loans Other Japan U.S. Real estate companies Entertainment companies Other		$ 109 0 3,074 365 504 1,023 314 868 415 $ 3,598		$ 3 0 55 4 10 15 9 17 0 $ 58		$ 3 0 48 4 8 13 9 14 0 $ 51

*1 Average balances are calculated on the basis of fiscal beginning and quarter-end balances.

F-53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

The following table provides information about the credit quality indicators as of March 31, 2011 and 2012:

March 31, 2011

	Millions ofyen	Millions ofyen	Millions ofyen	Millions ofyen	Millions ofyen	Millions ofyen
Class	Performing	Non-performing					Total
		Loans individually evaluated for impairment		90+ days past-due loans not individually evaluated for impairment		Subtotal
Housing loans Other Japan U.S. Real estate companies Entertainment companies Other Japan Overseas	¥ 807,194 14,876 1,750,658 282,222 597,322 292,607 115,876 462,631 74,650 624,919 183,147		¥ 8,312 0 267,034 21,418 51,611 93,607 29,597 70,801 36,685 0 0 ¥312,031		¥ 9,972 65 0 0 0 0 0 0 0 17,908 4,879 ¥32,824	¥ 18,284 65 267,034 21,418 51,611 93,607 29,597 70,801 36,685 17,908 4,879	¥ 825,478 14,941 2,017,692 303,640 648,933 386,214 145,473 533,432 111,335 642,827 188,026
	¥3,455,444					¥344,855	¥3,800,299

March 31, 2012

Millions of yen

Class	Performing	Non-performing	Non-performing	Non-performing	Non-performing	Non-performing	Total
		Loans individually evaluated for impairment		90+ days past-due loans not individually evaluated for impairment		Subtotal
Housing loans Other Japan U.S Real estate companies Entertainment companies Other Japan Overseas	¥ 849,303 14,555 1,520,865 181,991 510,517 267,294 115,484 445,579 62,652 658,277 225,168		¥ 9,021 0 249,846 44,148 38,809 74,008 21,760 71,121 34,907 0 0 ¥293,774		¥ 8,603 1 0 0 0 0 0 0 0 14,406 3,035 ¥26,045	¥ 17,624 1 249,846 44,148 38,809 74,008 21,760 71,121 34,907 14,406 3,035	¥ 866,927 14,556 1,770,711 226,139 549,326 341,302 137,244 516,700 97,559 672,683 228,203
	¥3,330,820					¥319,819	¥3,650,639

F-54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

March 31, 2012

		March 31, 2012	March 31, 2012	March 31, 2012	March 31, 2012	March 31, 2012	March 31, 2012
Consumer borrowers . . . . . . Corporate borrowers . . . . . . Non-recourse loans . . . . . . . Other . . . . . . . . . . . . . . . . . . Purchased loans . . . . . . . . . . Direct financing leases . . . . Total . . . . . . . . . . . . . . . . . . . . . .		Millions of U.S. dollars
	Class	Performing		Non-performing					Total
				Loans individually evaluated for impairment		90+ days past-due loans not individually evaluated for impairment		Subtotal
	Housing loans Other Japan U.S Real estate companies Entertainment companies Other Japan Overseas		$10,334 177 18,504 2,214 6,212 3,252 1,405 5,421 762 8,009 2,740 $40,526		$ 109 0 3,040 537 472 901 265 865 425 0 0 $3,574		$105 0 0 0 0 0 0 0 0 175 37 $317	$ 215 0 3,040 537 472 901 265 865 425 175 37 $3,891	$10,548 177 21,544 2,751 6,684 4,153 1,670 6,286 1,187 8,184 2,777
									$44,417

In common with all classes, the Company and its subsidiaries monitor the credit quality indicators as performing and non-performing assets. 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, or whose repayment is past-due 90 days or more, and performing assets include all other financing receivables. Regarding purchased loans, they are classified as non-performing assets when considered impaired, while all the other loans are included in the category of performing assets.

Out of non-performing assets presented above, the Company and its subsidiaries consider smaller balance homogeneous loans, including housing loans which are not restructured and direct financing leases, as 90 days or more past-due financing receivables not individually evaluated for impairment, and consider the others as loans individually evaluated for impairment. After the Company and its subsidiaries have set aside 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 status of management of the debtors and other important factors in order to report to management and develop additional provision as necessary.

F-55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

The following table provides information about the non-accrual and past-due financing receivables as of March 31, 2011 and 2012:

	March 31, 2011	March 31, 2011	March 31, 2011
	Millions ofyen
Class	Past-Due Financing Receivables			Total Financing Receivables	Non-Accrual
	30-89 Days Past-Due	90 Days or More Past-Due	Total Past-Due
Housing loans Other Japan U.S. Real estate companies Entertainment companies Other Japan Overseas	¥ 4,119 0 120,127 5,697 97,114 4,556 3,093 9,667 3,307 2,500	¥ 15,031 65 125,826 9,925 19,747 54,566 5,487 36,101 17,908 4,879	¥ 19,150 65 245,953 15,622 116,861 59,122 8,580 45,768 21,215 7,379	¥ 825,478 14,941 2,017,692 303,640 648,933 386,214 145,473 533,432 642,827 188,026		¥ 15,031 65 125,826 9,925 19,747 54,566 5,487 36,101 17,908 4,879 ¥163,709
	¥130,053	¥163,709	¥293,762	¥3,688,964

	March 31, 2012	March 31, 2012	March 31, 2012
	Millions ofyen
Class	Past-Due Financing Receivables			Total Financing Receivables	Non-Accrual
	30-89 Days Past-Due	90 Days or More Past-Due	Total Past-Due
Housing loans Other Japan U.S Real estate companies Entertainment companies Other Japan Overseas	¥ 3,518 33 83,316 10,306 71,042 809 2 1,157 2,724 2,007 ¥91,598	¥ 12,942 1 112,537 14,134 14,689 42,831 2,362 38,521 14,406 3,035	¥ 16,460 34 195,853 24,440 85,731 43,640 2,364 39,678 17,130 5,042	¥ 866,927 14,556 1,770,711 226,139 549,326 341,302 137,244 516,700 672,683 228,203		¥ 12,942 1 112,537 14,134 14,689 42,831 2,362 38,521 14,406 3,035 ¥142,921
		¥142,921	¥234,519	¥3,553,080

F-56

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

	March 31, 2012	March 31, 2012	March 31, 2012	March 31, 2012
	Millions of U.S. dollars
Class	Past-Due Financing Receivables				Total Financing Receivables		Non-Accrual
	30-89 Days Past-Due		90 Days or More Past-Due $ 157 0 1,369 172 179 521 29 468 175 37 $1,738	Total Past Due
Housing loans Other Japan U.S Real estate companies Entertainment companies Other Japan Overseas		$ 43 0 1,014 125 864 10 0 15 33 24 $1,114		$ 200 0 2,383 297 1,043 531 29 483 208 61 $2,852		$10,548 177 21,544 2,751 6,684 4,153 1,670 6,286 8,184 2,777 $43,230		$ 157 0 1,369 172 179 521 29 468 175 37 $1,738

In common with all classes, the Company and its subsidiaries consider financing receivables as past-due financing receivables when 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 principals and interests are 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 direct financing 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 lease receivables when it becomes certain 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 information about troubled debt restructurings of financing receivables that occurred during the fiscal 2012 is as follows:

March 31, 2012	March 31, 2012	March 31, 2012	March 31, 2012
Class Housing loans Japan U.S. Real estate companies Other	Millions ofyen
	Pre-modification Outstanding Recorded Investment ¥ 1,867 27,471 943 7,783 6,436 12,309 ¥29,338	Post-modification Outstanding Recorded Investment
			¥ 1,690 26,112 943 7,518 5,636 12,015 ¥27,802

F-57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

March 31, 2012

Consumer borrowers . . . . . . . . . . . . . . . Corporate borrowers . . . . . . . . . . . . . . . Non-recourse loans . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Class Housing loans Japan U.S. Real estate companies Other	Millions of U.S. dollars	Millions of U.S. dollars	Millions of U.S. dollars
		Pre-modification Outstanding Recorded Investment $ 23 334 11 95 78 150 $357	Post-modification Outstanding Recorded Investment
				$ 21 317 11 91 69 146 $338

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

The Company and its subsidiaries offer various types of concessions to our debtors to protect as much of our investment as possible in troubled debt restructurings. For the debtors of non-recourse loans, 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. For the debtors of all financing receivables other than non-recourse loans, the Company and its subsidiaries offer concessions such as a reduction of the loan principal, a temporary reduction in the interest payments, or 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, 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 in troubled debt restructurings are recognized as impaired and are individually evaluated for a valuation allowance. 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 provision for the restructured receivables.

The information about financing receivables modified as troubled debt restructurings within the previous 12 months from the current period end and for which there was a payment default during the fiscal 2012 is as follows:

March 31, 2012	March 31, 2012	March 31, 2012
Class Housing loans U.S. Other	Millions ofyen
	Recorded Investment
		¥ 392 2,331 409 1,922 ¥2,723

F-58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Consumer borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-recourse loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	March 31, 2012	March 31, 2012
	Class Housing loans U.S. Other	Millions of U.S. dollars
		Recorded Investment
		$ 5 28 5 23 $33

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 revenues and may recognize additional provision as necessary for the defaulted financing receivables.

9. Investment in Securities

Investment in securities at March 31, 2011 and 2012 consists of the following:

Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen 2012 ¥ 12,817 886,487 43,830 204,256 ¥1,147,390	Millions of U.S. dollars	Millions of U.S. dollars
	2011 ¥ 71,991 883,410 43,695 176,285 ¥1,175,381			2012
				$ 156 10,786 533 2,485 $13,960

Gains and losses realized from the sale of trading securities and net unrealized holding gains (losses) on trading securities are included in net gains on investment securities. For further information, see Note 22 “Brokerage Commissions and Net Gains on Investment Securities ”.

For fiscal 2010, 2011 and 2012, net unrealized holding gains and losses on trading securities were losses of ¥7,211 million, gains of ¥2,065 million and gains of ¥4,730 million ($58 million), respectively.

During fiscal 2010 and 2011, the Company and its subsidiaries sold available-for-sale securities for aggregate proceeds of ¥181,033 million and ¥340,634 million, respectively, resulting in gross realized gains of ¥7,547 million and ¥5,579 million, respectively, and gross realized losses of ¥640 million and ¥712 million, respectively. During fiscal 2012, the Company and its subsidiaries sold available-for-sale securities for aggregate proceeds of ¥279,367 million ($3,399 million), resulting in gross realized gains of ¥9,882 million ($120 million) and gross realized losses of ¥963 million ($12 million). The cost of the securities sold was based on the average cost of each such security held at the time of the sale.

During fiscal 2010, 2011 and 2012, the Company and its subsidiaries charged losses on securities of ¥23,632 million, ¥21,747 million and ¥16,470 million ($200 million), respectively, to the accompanying consolidated statements of income for declines in market value of securities where the decline was considered as other than temporary.

F-59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Other securities consist mainly of non-marketable equity securities, preferred capital shares carried at cost and investment funds carried at an amount that reflects equity income and loss based on the investor’s share.

The aggregate carrying amount of other securities accounted for under the cost method totaled ¥67,366 million and ¥84,431 million ($1,027 million) at March 31, 2011 and 2012. Investments with an aggregate cost of ¥63,590 million and ¥74,716 million ($909 million) were not evaluated for impairment because the Company and its subsidiaries did not identify any events or changes in circumstances that might have had significant adverse effect on the fair value of those investments and it was not practicable to estimate the fair value of the investments.

The amortized cost basis amounts, gross unrealized holding gains, gross unrealized holding losses and fair values of available-for-sale securities and held-to-maturity securities in each major security type at March 31, 2011 and 2012 are as follows:

March 31, 2011

	Millions	ofyen
Amortized cost ¥168,818 34,907 292,836 225,393 87,898 5,518 48,415 863,785 43,695 ¥907,480	Gross unrealized gains ¥ 696 153 1,287 46 3,819 0 25,229 31,230 412 ¥31,642	Gross unrealized losses ¥ (169) (92) (2,091) (3,125) (3,843) (12) (2,273) (11,605) 0 ¥(11,605)	Fair value
			¥169,345 34,968 292,032 222,314 87,874 5,506 71,371
			883,410
			44,107
			¥927,517

F-60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

March 31, 2012

March 31, 2012
Available-for-sale: Japanese and foreign government bond securities . . . . . . . . . Japanese prefectural and foreign municipal bond securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . Specified bonds issued by SPEs in Japan . . . . . . . . . . . . . . . . CMBS and RMBS in the U.S., and other asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Held-to-maturity: Japanese government bond securities and other . . . . . . . . . . . March 31, 2012 Available-for-sale: Japanese and foreign government bond securities . . . . . . . . . . Japanese prefectural and foreign municipal bond securities . . . Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Specified bonds issued by SPEs in Japan . . . . . . . . . . . . . . . . . CMBS and RMBS in the U.S., and other asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Held-to-maturity: Japanese government bond securities and other . . . . . . . . . . . .			Millions	ofyen
	Amortized cost ¥219,729 56,108 280,540 140,054 95,788 7,961 61,773 861,953 43,830 ¥905,783 Amortized cost $ 2,674 682 3,414 1,704 1,165 97 752 10,488 533 $11,021		Gross unrealized gains Gross unrealized losses ¥ 1,191 ¥ (5) 1,358 (107) 2,325 (2,643) 192 (1,094) 3,078 (3,538) 449 0 26,853 (3,525) 35,446 (10,912) 2,819 0 ¥38,265 ¥(10,912) Millions of U.S. dollars				Fair value
							¥220,915 57,359 280,222 139,152 95,328 8,410 85,101
							886,487
							46,649
							¥933,136

		Amortized cost $ 2,674 682 3,414 1,704 1,165 97 752 10,488 533 $11,021	Gross unrealized gains $ 14 17 28 2 38 5 327 431 35 $466		Gross unrealized losses			Fair value
						$ (0) (1) (32) (13) (43) 0 (44) (133) 0 $(133)		$ 2,688 698 3,410 1,693 1,160 102 1,035
								10,786
								568
								$11,354

The unrealized losses of ¥392 million and ¥857 million ($10 million) of debt securities for which an otherthan-temporary impairment related to the credit loss had been recognized in earnings according to ASC 320-10-35-34 (“Investments—Debt and Equity Securities—Recognition of Other-Than-Temporary Impairments”) were included in the gross unrealized losses of CMBS and RMBS in the U.S., and other assetbacked securities (before taxes) at March 31, 2011 and March 31, 2012, respectively. The unrealized losses are other-than-temporary impairment related to the non-credit losses and recorded as accumulated other comprehensive income.

F-61

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

The following table provides information about available-for-sale securities and held-to-maturity securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2011 and 2012, respectively:

March 31, 2011

	Millions ofyen
Less than 12 months Fair value Gross unrealized losses ¥ 63,438 ¥ (169) 22,444 (92) 184,185 (2,071) 49,180 (2,025) 6,660 (853) 0 0 11,196 (1,470) ¥337,103 ¥(6,680)	12 months or more Fair value Gross unrealized losses ¥ 0 ¥ 0 0 0 1,980 (20) 49,398 (1,100) 24,288 (2,990) 2,988 (12) 4,891 (803) ¥83,545 ¥(4,925)	Total
Fair value ¥ 63,438 22,444 184,185 49,180 6,660 0 11,196 ¥337,103	Fair value ¥ 0 0 1,980 49,398 24,288 2,988 4,891 ¥83,545	Fair value ¥ 63,438 22,444 186,165 98,578 30,948 2,988 16,087 ¥420,648	Gross unrealized losses
			¥ (169) (92) (2,091) (3,125) (3,843) (12) (2,273) ¥(11,605)

March 31, 2012

	Millions ofyen
Less than 12 months Fair value Gross unrealized losses ¥ 74,978 ¥ (5) 11,316 (107) 23,568 (208) 32,139 (499) 29,586 (198) 14,097 (2,092) ¥185,684 ¥(3,109)	12 months or more Fair value Gross unrealized losses ¥ 0 ¥ 0 0 0 24,982 (2,435) 29,826 (595) 11,316 (3,340) 11,239 (1,433) ¥77,363 ¥(7,803)	Total
Fair value ¥ 74,978 11,316 23,568 32,139 29,586 14,097 ¥185,684	Fair value ¥ 0 0 24,982 29,826 11,316 11,239 ¥77,363	Fair value ¥ 74,978 11,316 48,550 61,965 40,902 25,336 ¥263,047	Gross unrealized losses
			¥ (5) (107) (2,643) (1,094) (3,538) (3,525) ¥(10,912)

F-62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

March 31, 2012

Millions of U.S. dollars	Millions of U.S. dollars
Less than 12 months Fair value Gross unrealized losses $ 912 $ (0) 138 (1) 287 (3) 391 (6) 360 (2) 171 (26) $2,259 $(38)	12 months or more Fair value Gross unrealized losses $ 0 $ 0 0 0 304 (29) 363 (7) 138 (41) 136 (18) $941 $(95)	Total
Fair value $ 912 138 287 391 360 171 $2,259	Fair value $ 0 0 304 363 138 136 $941	Fair value $ 912 138 591 754 498 307 $3,200	Gross unrealized losses
				$ (0) (1) (32) (13) (43) (44) $(133)

Approximately 449 and 225 investment securities were in an unrealized loss position as of March 31, 2011 and 2012, respectively. The gross unrealized losses on these securities are attributable to a number of factors including changes in interest rates, credit spreads and market trends.

For debt securities, in the case of the fair value being below the amortized cost, the Company and its subsidiaries consider whether those securities are other-than-temporarily impaired using all available information about the collectibility. The Company and its subsidiaries consider that an other-than-temporary impairment has occurred if (1) the Company and its subsidiaries intend to sell the debt security; (2) 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, or (3) the Company and its subsidiaries do not expect to recover the entire amortized cost of the security (that is, a credit loss exists). In assessing whether a credit loss exists, the Company and its subsidiaries compare the present value of the expected cash flows to the security’s amortized cost basis at the balance sheet date.

Debt securities with unrealized loss position mainly include corporate debt securities in Japan, specified bonds issued by special purpose entities in Japan and CMBS and RMBS.

The unrealized loss associated with corporate debt securities is primarily due to changes in the market interest rate and risk premium. Considering all available information to assess the collectibility of those investments (such as the financial condition of and business prospects for the issuers), the Company and its subsidiaries believe that the Company and its subsidiaries are able to recover the entire amortized cost basis of those investments. Because the Company and its subsidiaries do not intend to sell the investments and it is not more likely than not that the Company and its subsidiaries will be required to sell the investments before recovery of their amortized cost basis, the Company and its subsidiaries do not consider these investments to be other-than-temporarily impaired at March 31, 2012.

The unrealized loss associated with specified bonds is primarily due to changes in the market interest rate and risk premium because of deterioration in the real estate market in Japan and the credit crunch in the capital and financial markets. Considering all available information to assess the collectibility of those investments (such as performance and value of the underlying real estate, and seniority of the bonds), the Company and its

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

subsidiaries believe that the Company and its subsidiaries are able to recover the entire amortized cost basis of those investments. Because the Company and its subsidiaries do not intend to sell the investments and it is not more likely than not that the Company and its subsidiaries will be required to sell the investments before recovery of their amortized cost basis, the Company and its subsidiaries do not consider these investments to be other-than-temporarily impaired at March 31, 2012.

The unrealized loss associated with CMBS and RMBS is primarily caused by changes in credit spreads and interest rates. In order to determine whether a credit loss exists, the Company and its subsidiaries estimate the present value of anticipated cash flows, discounted at the current yield to accrete the security. 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. Then, a credit loss is assessed by comparing the present value of the expected cash flows to the security’s amortized cost basis. Based on that assessment, the Company and its subsidiaries expect to recover the entire amortized cost basis. Because the Company and its subsidiaries do not intend to sell the investments and it is not more likely than not that the Company and its subsidiaries will be required to sell the investments before recovery of their amortized cost basis, the Company and its subsidiaries do not consider these investments to be other-than-temporarily impaired at March 31, 2012.

For equity securities with unrealized losses, the Company and its subsidiaries consider various factors to determine whether the decline is other-than-temporary, including the length of time and the extent to which the fair value has been less than the carrying value and the issuer’s specific economic conditions as well as the ability and intent to hold these securities for a period of time sufficient to recover the securities’ carrying amounts. Based on our ongoing monitoring process, the Company and its subsidiaries do not consider these investments to be other-than-temporarily impaired at March 31, 2012.

The total other-than-temporary impairment with an offset for the amount of the total other-than-temporary impairment recognized in other comprehensive income (loss) for fiscal 2010, 2011 and 2012 are as follows:

Total other-than-temporary impairment losses . . . . . . . . . . . . . . . . . . Portion of loss recognized in other comprehensive income (before taxes) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net impairment losses recognized in earnings . . . . . . . . . . . . . . . . . .	Millions ofyen 2010 2011 2012 ¥26,055 ¥22,210 ¥17,100 (2,423) (463) (630) ¥23,632 ¥21,747 ¥16,470	Millions ofyen 2010 2011 2012 ¥26,055 ¥22,210 ¥17,100 (2,423) (463) (630) ¥23,632 ¥21,747 ¥16,470	Millions of U.S. dollars	Millions of U.S. dollars
	2010 ¥26,055 (2,423) ¥23,632	2011 ¥22,210 (463) ¥21,747		2012
				$208 (8) $200

Other-than-temporary impairment losses related to debt securities are recognized mainly on certain specified bonds, which have experienced credit losses due to significant decline in the value of the underlying assets, as well as on certain mortgage-backed and other asset-backed securities, which have experienced credit losses due to a decrease in cash flows attributable to significant default and bankruptcies on the underlying loans. Because the Company and its subsidiaries do not intend to sell these securities and it is not more likely than not that the Company and its subsidiaries will be required to sell these securities before recovery of their amortized cost basis, the Company and its subsidiaries charged only the credit loss component of the total impairment to earnings with the remaining non-credit component recognized in other comprehensive income (loss). The credit loss assessment was made by comparing the securities’ amortized cost basis with the portion of the estimated fair value of the underlying assets available to repay the specified bonds, or with the present value of the expected cash flows from the mortgage-backed and other asset- backed securities, that were estimated based on a number of assumptions such as default rate and prepayment speed, as well as seniority of the security.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Roll-forwards of the amount related to credit losses on other-than-temporarily impaired debt securities recognized in earnings for fiscal 2010, 2011 and 2012 are as follows:

Beginning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reduction to the beginning balance* . . . . . . . . . . . . . . . . . . . . . . . . . . . Beginning after reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Addition during the period: Credit loss for which an other-than-temporary impairment was not previously recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit loss for which an other-than-temporary impairment was previously recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reduction during the period: For securities sold or redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . Due to change in intent to sell or requirement to sell . . . . . . . . . . . Ending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen 2010 2011 2012 ¥ 906 ¥ 5,016 ¥ 9,022 0 (1,810) 0 0 3,206 9,022 3,744 7,292 3,524 366 736 320 0 (307) (3,530) 0 (1,905) (1,137) ¥5,016 ¥ 9,022 ¥ 8,199	Millions ofyen 2010 2011 2012 ¥ 906 ¥ 5,016 ¥ 9,022 0 (1,810) 0 0 3,206 9,022 3,744 7,292 3,524 366 736 320 0 (307) (3,530) 0 (1,905) (1,137) ¥5,016 ¥ 9,022 ¥ 8,199	Millions of U.S. dollars	Millions of U.S. dollars
	2010 ¥ 906 0 0 3,744 366 0 0 ¥5,016	2011 ¥ 5,016 (1,810) 3,206 7,292 736 (307) (1,905) ¥ 9,022		2012
				$110 0 110 43 4 (43) (14) $100

Cumulative effects of adopting Accounting Standards Update 2009-16 (ASC 860 (“Transfers and Servicing”)), and Accounting Standards Update 2009-17 (ASC 810 (“Consolidation”)) have been deducted from the beginning balance.

The Company and its subsidiaries adopted Accounting Standards Update 2009-12 (“Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)—ASC 820 (“Fair Value Measurements and Disclosures”)”). Under ASC 820, the information about the fund investments the Company and its subsidiaries hold at March 31, 2011 and 2012, respectively are as follows:

March 31, 2011 and 2012

Type of Fund Investment Hedge Fund* . . . . . . . . Total . . . . . . . . . . . . . .	2011 (Millions of Yen)	2011 (Millions of Yen)	2012 (Millions of Yen)	2012 (Millions of Yen)	2012 (Millions of U.S. dollars)	Redemption Frequency (If Currently Eligible)	Redemption Notice Period
		¥10,023 ¥10,023		¥5,178 ¥5,178	$63 $63	Monthly – Quarterly —	5 days – 60 days —

This category includes several hedge funds that seek profits using investment strategies such as managed futures, global macro and relative value. The fair value of the investments in this category is calculated based on the net asset value of the investees.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

The following is a summary of the contractual maturities of debt securities classified as available-for-sale securities and held-to-maturity securities held at March 31, 2012:

Available-for-sale securities held at March 31, 2012:

Due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Due after one to five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Due after five to ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Due after ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen Fair value ¥292,226 261,582 132,667 114,911 ¥801,386	Millions of U.S. dollars	Millions of U.S. dollars	Millions of U.S. dollars
	Amortized cost ¥292,242 260,303 134,331 113,304 ¥800,180		Amortized cost $3,556 3,167 1,634 1,379 $9,736	Fair value
					$3,555 3,183 1,614 1,398 $9,750

Held-to-maturity securities held at March 31, 2012:

Due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Due after one to five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Due after ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen Fair value ¥ 159 13 46,477 ¥46,649	Millions of U.S. dollars	Millions of U.S. dollars	Millions of U.S. dollars
	Amortized cost ¥ 159 13 43,658 ¥43,830		Amortized cost $ 2 0 531 $533	Fair value
					$ 2 0 566 $568

Securities not due at a single maturity date, such as mortgage-backed securities, are included in the above table based on their final maturities.

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 interest on loans and investment securities in the consolidated statements of income is interest income on investment securities of ¥20,436 million, ¥17,690 million and ¥15,169 million ($184 million) for fiscal 2010, 2011 and 2012, respectively.

A certain foreign subsidiary acquired debt securities with evidence of deterioration of credit quality at the time of acquisition, and it was not probable those debt securities were able to recover all contractual amounts. In accordance with the provision of ASC 310-30 (Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality), the subsidiary determined the expected future cash flows taking into account historical cash collections for debt securities with similar characteristics as well as expected prepayments and the amount and the timing of undiscounted expected principal, interest and other cash flows for each pool of debt securities. Accretable yield represents the excess of expected future cash flows over carrying value of the debt securities, which is recognized as interest income over the remaining life of the debt securities. For a debt security for which the fair value is less than the amortized cost basis, the subsidiary estimates the present value of cash flows expected to be collected from the security and compares it with the amortized cost basis of the security to determine whether a credit loss exists. If, based on current information and events, the subsidiary determines a credit loss exists for that security, an other-than-temporary impairment is considered to have

F-66

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

occurred. The subsidiary writes down that security to fair value with the credit loss component of the impairment recognized in earnings and the noncredit component recorded in other comprehensive income (loss), unless the subsidiary intends to sell that security or more likely than not will be required to sell that security before recovery, in which case the entire impairment loss would be charged to earnings. As of March 31, 2011 and 2012, the carrying amount and the nominal value of debt securities acquired with evidence of deterioration of credit quality were ¥7,393 million and ¥5,906 million ($71 million), and ¥16,719 million and ¥13,125 million ($159 million), and the outstanding balance of accretable yield was ¥5,780 million and ¥4,057 million ($49 million) respectively.

10. Securitization Transactions

The Company and its subsidiaries have securitized various financial assets such as direct financing lease receivables, installment loans (commercial mortgage loans, housing loans and other) and investments in securities.

In the securitization process, these financial assets are transferred to various vehicles (the “SPEs”), such as trusts and special-purpose companies 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 retain 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 first absorb the risk of decline in cash flows in relation to defaults and prepayments of the transferred financial assets, and therefore are exposed to credit and prepayment risks different from those of the senior investments. 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.

Until March 31, 2010, the Company and its subsidiaries did not consolidate qualified special-purpose entities (“QSPEs”) meeting certain requirements and the Company and its subsidiaries accounted for the transfer of financial assets to QSPEs as a sale when control over the financial assets was surrendered.

From April 1, 2010, the Company and its subsidiaries apply Accounting Standards Update 2009-16 (ASC 860 (“Transfers and Servicing”)). This Update removes the concept of a QSPE and removes the exception from applying ASC 810-10 (“Consolidation—Variable Interest Entities”) to variable interest entities that are QSPEs. This Update also modifies the financial-components approach used in former ASC 860 (“Transfers and Servicing”) and limits the circumstances in which a transferor derecognizes a portion or component of a financial asset. As a result, many SPEs for securitization which had not been consolidated because they met QSPE criteria have been consolidated in accordance with Accounting Standards Update 2009-17 (ASC 810 (“Consolidation”)). For further information, see Note 11 “Variable Interest Entities.”

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

During fiscal 2010, certain information with respect to these securitization transactions accounted for as sales is as follows. During fiscal 2011 and 2012, there was no securitization transaction accounted for as a sale.

Direct financing leases:
Balance sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains (losses) on sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interests that continue to be held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Millions ofyen

2010

¥27,974
331
23,207

Regarding securitizations of direct financing lease receivables, for fiscal 2010, revenues from interests that continue to be held of ¥4,744 million, are included in revenues from direct financing leases in the consolidated statements of income. Regarding securitizations of installment loans, revenues from interests that continue to be held of ¥1,630 million for fiscal 2010, are included in interest on loans and investment securities in the consolidated statements of income. Regarding securitizations of investment in securities, revenues from interests that continue to be held of ¥2,378 million for fiscal 2010, are included in interest on loans and investment securities in the consolidated statements of income. Due to the adoption of Accounting Standards Update 2009-16 and 2009-17, almost all vehicles used for securitization have been consolidated. As a result, revenues from interests that continue to be held are not disclosed for fiscal 2011 and 2012 as the amounts have been eliminated in consolidation.

Economic assumptions used in measuring the interests that continue to be held related to securitization transactions completed during fiscal 2010 are as follows. There are no interests that continue to be held related to securitization transactions completed during fiscal 2011 and 2012.

Expected credit loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annual prepayment rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010

Direct
financing
leases

%
1.51 – 1.55
2.33 – 4.28
6.24 – 6.59

Certain cash flows received from/paid to SPEs for all securitization activities in fiscal 2010 are summarized as follows:

Proceeds from new securitizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Servicing fees received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows received on interests that continue to be held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases of ineligible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Millions ofyen

2010

¥ 28,305
385
29,336
(18,487)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Quantitative information about delinquencies, impaired loans and components of financial assets sold on securitization and other assets managed together as of March 31, 2011 and 2012, and quantitative information about net credit loss for the fiscal years ended March 31, 2010, 2011 and 2012 are as follows:

Direct financing leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Installment loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assets recorded on the balance sheet . . . . . . . . . . . . . . . . . . . . . . Direct financing leases sold on securitization . . . . . . . . . . . . . . . Total assets managed together or sold on securitization . . . . . . .	Totalprincipal amount of receivables Millions ofyen Millions of dollars March 31, 2011 March 31, 2012 March 31, 2012 ¥ 830,853 ¥ 900,886 $10,961 2,983,164 2,769,898 33,701 3,814,017 3,670,784 44,662 12,651 3,969 48 ¥3,826,668 ¥3,674,753 $44,710	Totalprincipal amount of receivables Millions ofyen Millions of dollars March 31, 2011 March 31, 2012 March 31, 2012 ¥ 830,853 ¥ 900,886 $10,961 2,983,164 2,769,898 33,701 3,814,017 3,670,784 44,662 12,651 3,969 48 ¥3,826,668 ¥3,674,753 $44,710	Totalprincipal amount of receivables Millions ofyen Millions of dollars March 31, 2011 March 31, 2012 March 31, 2012 ¥ 830,853 ¥ 900,886 $10,961 2,983,164 2,769,898 33,701 3,814,017 3,670,784 44,662 12,651 3,969 48 ¥3,826,668 ¥3,674,753 $44,710
		Millions of dollars
		March 31, 2012
			$10,961 33,701 44,662 48 $44,710

Direct financing leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Installment loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assets recorded on the balance sheet . . . . . . . . . . . . . . . . . . . . . . Direct financing leases sold on securitization . . . . . . . . . . . . . . . Total assets managed together or sold on securitization . . . . . . .	Principal amount of receivables m past-due and impaired Millions ofyen March 31, 2011 March 31, 2012 ¥ 22,787 ¥ 17,441 322,068 302,378 344,855 319,819 0 0 ¥344,855 ¥319,819	ore than 90 days loans	ore than 90 days loans
		Millions of dollars
		March 31, 2012
			$ 212 3,679 3,891 0 $3,891

Credit loss	Credit loss
Millions ofyen 2010 2011 2012 ¥ 8,744 ¥ 7,505 ¥ 6,783 49,053 54,149 29,476 57,797 61,654 36,259 0 0 0 ¥57,797 ¥61,654 ¥36,259		Millions of dollars
2010 ¥ 8,744 49,053 57,797 0 ¥57,797	2011 ¥ 7,505 54,149 61,654 0 ¥61,654		2012
			$ 82 359 441 0 $441

A certain subsidiary originates and sells loans into the secondary market while retaining the obligation to service those loans. In addition, it undertakes obligations to service loans originated by others. The servicing assets related to those servicing activities are included in other operating assets and the balances of these servicing assets as of March 31, 2011 and March 31, 2012 were ¥11,577 million and ¥11,533 million ($140 million), respectively. During the fiscal year ended March 31, 2012, the servicing assets were increased by ¥2,505 million mainly from loans sold with servicing retained and decreased by ¥2,416 million mainly from amortization and by ¥133 million from the effects of changes in foreign exchange rates. The fair value of the servicing assets as of March 31, 2011 and 2012 were ¥14,093 million and ¥13,826 million ($168 million), respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

11. Variable Interest Entities

The Company and its subsidiaries use special purpose companies, partnerships and trusts (hereinafter referred to as 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 those SPEs. ASC 810-10 (“Consolidation—Variable Interest Entities”) addresses consolidation by business enterprises of SPEs within the scope of the ASC Section. Generally these SPEs are entities where (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, or (2) the obligation to absorb the expected losses of the entity or (3) the right to receive the expected residual returns of the entity. Entities within the scope of the ASC Section are called variable interest entities (“VIEs”).

Until March 31, 2010, in accordance with ASC 810-10 before amendment, the Company and its subsidiaries were required to consolidate a VIE as the primary beneficiary if the Company and its subsidiaries had a variable interest to absorb a majority of the VIE’s expected loss or receive a majority of the VIE’s expected residual returns or meet both of these conditions by using quantitative analysis.

Also, until March 31, 2010, if SPEs met the criteria for qualifying special-purpose entity (“QSPE”) status in accordance with ASC 860 (“Transfer and Servicing”) and ASC 810-10 before amendment, the Company and its subsidiaries excluded the QSPE from the scope of consolidation.

In June 2009, FASB Statement No. 166 (“Accounting for Transfers of Financial Assets—an amendment of FASB Statement No.140”), which was codified by Accounting Standards Update 2009-16 (ASC 860 (“Transfers and Servicing”)) and FASB Statement No. 167 (“Amendment of FASB Interpretation No.46(R)”), which was codified by Accounting Standards Update 2009-17 (ASC 810 (“Consolidation”)), were issued. These Updates remove the concept of a QSPE and remove the exception from applying ASC 810-10 to variable interest entities that are QSPEs and require the Company and its subsidiaries to perform a qualitative analysis to identify the primary beneficiary of all variable interest entities, including QSPEs. The Company and its subsidiaries adopted these Updates on April 1, 2010. The effect of adopting these Updates on our financial conditions at the initial adoption date was an increase of ¥1,147 billion on total assets, and an increase of ¥1,169 billion on total liabilities, respectively, in the consolidated balance sheets. These are mainly included in (f) VIEs for securitizing financial assets such as direct financing lease receivable and loan receivable, and (g) VIEs for securitization of commercial mortgage loans originated by third parties.

According to these Updates, effective from April 1, 2010, the Company and its subsidiaries are required to perform a qualitative analysis to identify the primary beneficiary of variable interest entities. An enterprise that has both of the following characteristics is considered to be the primary beneficiary who shall consolidate a variable interest entity:

The power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance
The obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

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 variable interest entity.

The following are the items that the Company and its subsidiaries are considering in a qualitative assessment.

Which activities most significantly impact the economic performance of the VIE and who has the power to direct such activities
Characteristics of the Company and its subsidiaries’ variable interest or interests and other involvements (including involvement of related parties and de facto agents)
Involvement of other variable interest holders
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
providing liquidity and other financial support

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Information about VIEs for the Company and its subsidiaries are as follows:

Consolidated VIEs

March 31, 2011

Types of VIEs: (a) VIEs for liquidating customer assets . . . . . . . . . . . . . (b) VIEs for acquisition of real estate and real estate development projects for customers . . . . . . . . . . . . . (c) VIEs for acquisition of real estate for the Company and its subsidiaries’ real estate-related business . . . . (d) VIEs for corporate rehabilitation support business . . (e) VIEs for investment in securities . . . . . . . . . . . . . . . . (f) VIEs for securitizing financial assets such as direct financing lease receivable and loan receivable . . . . . (g) VIEs for securitization of commercial mortgage loans originated by third parties . . . . . . . . . . . . . . . . . (h) Other VIEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		Millions ofyen	Millions ofyen
	Total assets(1) ¥ 5,222 16,051 343,394 15,988 83,694 505,421 669,375 154,176 ¥1,793,321	Total liabilities(1) ¥ 3,846 4,493 120,908 142 13,675 352,034 671,349 66,529 ¥1,232,976	Assets which are pledged as collateral(2) ¥ 5,222 5,660 226,319 0 33,169 505,421 660,237 139,260 ¥1,575,288	Commitments(3)
					¥ 0 0 1,076 0 1,491 0 0 4,140 ¥6,707

March 31, 2012

Types of VIEs: (a) VIEs for liquidating customer assets . . . . . . . . . . . . . (b) VIEs for acquisition of real estate and real estate development projects for customers . . . . . . . . . . . . . (c) VIEs for acquisition of real estate for the Company and its subsidiaries’ real estate-related business . . . . (d) VIEs for corporate rehabilitation support business . . (e) VIEs for investment in securities . . . . . . . . . . . . . . . . (f) VIEs for securitizing financial assets such as direct financing lease receivable and loan receivable . . . . . (g) VIEs for securitization of commercial mortgage loans originated by third parties . . . . . . . . . . . . . . . . . (h) Other VIEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		Millions ofyen	Millions ofyen
	Total assets(1) ¥ 5,094 49,781 341,421 14,302 61,713 465,376 569,272 145,958 ¥1,652,917	Total liabilities(1) ¥ 3,719 28,848 124,227 205 7,050 303,784 575,712 62,640 ¥1,106,185	Assets which are pledged as collateral(2) ¥ 5,094 35,486 245,994 0 18,365 465,376 569,263 128,950 ¥1,468,528	Commitments(3)
					¥ 0 0 0 0 15 0 0 5,687 ¥5,702

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

March 31, 2012

Millions of U.S. dollars Types of VIEs: Total assets(1) Total liabilities(1) Assets which are pledged as collateral(2) Commitments(3) (a) VIEs for liquidating customer assets . . . . . . . . . . . . . $ 62 $ 45 $ 62 $ 0 (b) VIEs for acquisition of real estate and real estate development projects for customers . . . . . . . . . . . . . 606 351 432 0 (c) VIEs for acquisition of real estate for the Company and its subsidiaries’ real estate-related business . . . . 4,154 1,511 2,993 0 (d) VIEs for corporate rehabilitation support business . . 174 2 0 0 (e) VIEs for investment in securities . . . . . . . . . . . . . . . . 751 86 223 1 (f) VIEs for securitizing financial assets such as direct financing lease receivable and loan receivable . . . . . 5,662 3,696 5,662 0 (g) VIEs for securitization of commercial mortgage loans originated by third parties . . . . . . . . . . . . . . . . . 6,926 7,005 6,926 0 (h) Other VIEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,776 763 1,569 68 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,111 $13,459 $17,867 $69 Note: (1) The assets of most VIEs are used only to repay the liabilities of the VIEs, and the creditors of the liabilities of the 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, 2011 Millions of yen		Millions of U.S. dollars	Millions of U.S. dollars	Millions of U.S. dollars
					Commitments(3)
		Carrying amount of the variable interests in the VIEs held by the Company and its subsidiaries
Types of VIEs: (a) VIEs for liquidating customer assets . . . . . . . . . . . . . . . (b) VIEs for acquisition of real estate and real estate development projects for customers . . . . . . . . . . . . . . . (c) VIEs for acquisition of real estate for the Company and its subsidiaries’ real estate-related business . . . . . . . . . (d) VIEs for corporate rehabilitation support business . . . . (e) VIEs for investment in securities . . . . . . . . . . . . . . . . . . (f) VIEs for securitizing financial assets such as direct financing lease receivable and loan receivable . . . . . . . (g) VIEs for securitization of commercial mortgage loans by third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (h) Other VIEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Total assets ¥ 66,710 1,090,147 0 0 1,143,069 0 2,535,037 83,811 ¥4,918,774		Specified bonds and non-recourse loans ¥ 1,073 174,380 0 0 0 0 4,000 697 ¥180,150	Investments ¥ 6,979 52,850 0 0 22,349 0 25,493 3,132 ¥110,803		Maximum exposure to loss(4)
						¥ 8,052 260,935 0 0 37,287 0 31,478 3,829
						¥341,581

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

March 31, 2012

	Millions ofyen	Millions ofyen
Total assets ¥ 53,300 958,965 0 0 1,290,243 0 2,277,844 42,283 ¥4,622,635	Carrying amount of the variable interests in the VIEs held by the Company and its subsidiaries Specified bonds and non-recourse loans Investments ¥ 8,542 ¥ 4,326 125,746 59,144 0 0 0 0 0 24,371 0 0 0 43,792 4,380 3,304 ¥138,668 ¥134,937		Maximum exposure to loss(4)
		Specified bonds and non-recourse loans ¥ 8,542 125,746 0 0 0 0 0 4,380 ¥138,668
			¥ 12,868 224,707 0 0 37,960 0 44,427 7,684 ¥327,646

March 31, 2012

	Millions of U.S. dollars
Total assets $ 648 11,668 0 0 15,698 0 27,714 515 $56,243	Carrying amount of the variable interests in the VIEs held by the Company and its subsidiaries Specified bonds and non-recourse loans Investments $ 104 $ 53 1,530 720 0 0 0 0 0 297 0 0 0 533 53 39 $1,687 $1,642	Maximum exposure to loss(4)
	Specified bonds and non-recourse loans $ 104 1,530 0 0 0 0 0 53 $1,687
			$ 157 2,734 0 0 462 0 541 92 $3,986

Note: (4) 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(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. By using cash flows from the liquidated assets, these VIEs repay the loan and pay dividends to equity investors if sufficient funds exist.

The Company and its subsidiaries provide non-recourse loans to such VIEs and occasionally make investments in them. The Company and its subsidiaries have consolidated some of those VIEs because the Company or its subsidiary effectively controls the VIEs by acting as the asset manager of the VIEs. In the consolidated balance sheets, assets of the consolidated VIEs are mainly included in investment in operating leases and liabilities of the consolidated VIEs are mainly included in long-term debt, respectively.

With respect to the variable interests of non-consolidated VIEs, which the Company and its subsidiaries have, non-recourse loans are included in installment loans, and investments are mainly included in other operating assets in the 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 some of those VIEs because the Company or its subsidiary effectively controls the VIEs by acting as the asset manager of the VIEs. In the consolidated balance sheets, assets of the consolidated VIEs are mainly included in cash and cash equivalents, investment in operating leases and other operating assets and liabilities of those consolidated VIEs are mainly included in long-term debt, respectively.

With respect to the variable interests of non-consolidated VIEs, which the Company and its subsidiaries have, specified bonds are included in investment in securities, non-recourse loans are included in installment loans, and investments are mainly included in other operating assets and investment in securities in the consolidated balance sheets. The Company and its subsidiaries have commitment agreements by which the Company and its subsidiaries might be required to provide additional investment in certain non-consolidated VIEs, as long as the agreed-upon terms are met. Under these agreements, the Company and its subsidiaries are committed to invest in these VIEs with the other investors based on their respective ownership percentages.

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.

(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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

subsidiaries have consolidated 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.

The Company and its subsidiaries contributed additional funding to certain non-consolidated VIEs to support their repayment, since those VIEs had difficulty repaying debt and accounts payable. The amount of those additional fundings for the years ended March 31, 2011 and 2012 were ¥14,613 million and ¥497 million ($6 million), respectively. As a result, the Company and its subsidiaries performed the reassessment and consolidated those VIEs.

In the consolidated balance sheets, assets of the consolidated VIEs are mainly included in investment in operating leases, office facilities, cash and cash equivalents and other assets, and liabilities of those consolidated VIEs are mainly included in long-term debt, respectively.

(d) VIEs for corporate rehabilitation support business

Financial institutions, the Company and its subsidiary 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 that 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 subsidiary consolidated such VIEs since the Company and the subsidiary 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 consolidated balance sheets, assets of the consolidated VIEs are mainly included in installment loans and liabilities of those consolidated VIEs are mainly included in trade notes, accounts payable and other liabilities, respectively.

(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 mainly by fund management companies that are independent of the Company and its subsidiaries.

The Company consolidated certain such VIEs since the Company has the majority of the investment share of them, and has 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 and/or other means.

In the consolidated balance sheets, assets of the consolidated VIEs are mainly included in investment in securities, other receivables, investment in affiliates, cash and cash equivalents and liabilities of those consolidated VIEs are mainly included in short-term debt and long-term debt, respectively. The Company has commitment agreements by which the Company might be required to make additional investment in certain such consolidated VIEs.

Variable interests of non-consolidated VIEs, which the Company and its subsidiaries have, are included in investment in securities. The Company has commitment agreement by which the Company might be required to make additional investment in certain such non-consolidated VIEs.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

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

The Company and its subsidiaries use VIEs to securitize financial assets such as direct financing leases receivable and loans receivable. 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 take a role 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 consolidated balance sheets, assets of the consolidated VIEs are mainly included in investment in direct financing leases and installment loans and liabilities of those consolidated VIEs are mainly included in long-term debt, respectively.

(g) VIEs for securitization of commercial mortgage loans originated by third parties

The Company and its subsidiaries invest in CMBS originated by third parties. In some cases of such securitization, the Company’s subsidiaries hold the subordinated portion of CMBS and the subsidiaries take a role as a special-servicer of the securitization transaction. As the special servicer, the Company’s 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 the 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 consolidated balance sheets, assets of the consolidated VIEs are mainly included in installment loans and investment in securities and liabilities of those consolidated VIEs are mainly included in long-term debt, respectively.

Variable interests of non-consolidated VIEs are included in investment in securities.

(h) 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, a subsidiary has consolidated a VIE which is not included in the categories (a) through (g) above, because the subsidiary holds the subordinated portion of the VIE and the VIE is effectively controlled by the subsidiary. The Company has commitment agreement by which the Company might be required to make additional investment in such consolidated VIEs.

In Japan, certain subsidiaries provide investment products to their customers that employ a contractual mechanism known as a kumiai, which in part result in the subsidiaries forming a type of SPE. As a means 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

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 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 consolidated statements of income.

In some cases, the Company and its subsidiaries make investments to the kumiai or its related SPE and these VIEs are consolidated because the Company and its subsidiaries have a responsibility to absorb any significant potential loss through the investments and have the power to direct the activities that most significantly impact their economic performance. In other cases, the Company and its subsidiaries are not considered to be the primary beneficiary of the VIEs or kumiais because the Company and its subsidiaries did not make significant investments or guarantee or otherwise have any significant financial commitments or exposure with respect to the kumiai or its related SPE.

The Company and its subsidiaries may use VIEs to finance. The Company and its subsidiaries transfer their own held assets to SPEs, which borrow non-recourse loan from financial institutions and effectively pledge such assets as collateral. The Company guarantees the performance of obligation of the SPEs. The Company and its subsidiaries continually hold subordinated interests in the SPEs and perform administrative work of such assets. The Company and its subsidiaries consolidate such SPEs because the Company and its subsidiaries have 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 have the obligation to absorb losses expected of them by holding the subordinated interests.

Assets of the consolidated SPEs are mainly included in investment in operating leases and other assets and liabilities are mainly included in long- term debt in the consolidated balance sheets, respectively.

12. Investment in Affiliates

Investment in affiliates at March 31, 2011 and 2012 consists of the following:

Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen 2012 ¥296,228 35,489 ¥331,717	Millions of U.S. dollars	Millions of U.S. dollars
	2011 ¥311,556 61,820 ¥373,376			2012
				$3,604 432 $4,036

Certain affiliates are listed on stock exchanges. The aggregate investment in and quoted market value of those affiliates amounted to ¥53,851 million and ¥ 54,237 million, respectively, as of March 31, 2011 and ¥48,569 million ($591 million) and ¥58,213 million ($708 million), respectively, as of March 31, 2012.

In fiscal 2010, 2011 and 2012, the Company and its subsidiaries received dividends from affiliates of ¥1,702 million, ¥2,875 million and ¥8,653 million ($105 million), respectively.

The balance of excess of cost over the underlying equity at acquisition dates of investment in affiliates amounted to ¥32,187 million and ¥16,884 million ($205 million) as of March 31, 2011 and 2012, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

ORIX JREIT Inc. (“ORIX JREIT”), an equity method affiliate, entered into an asset management agreement with one of the Company’s subsidiaries and paid management fees of ¥1,572 million, ¥1,555 million and ¥1,691 million ($21 million) for fiscal 2010, 2011 and 2012, respectively.

In fiscal 2010 through 2012, certain subsidiaries sold to ORIX JREIT, office buildings and condominiums mainly under operating leases. As a result of the sales, the subsidiaries recognized gains of ¥3,564 million and ¥3,905 million in earnings as gains on sales of real estate under operating leases for fiscal 2010 and 2011, respectively. As for fiscal 2012, the subsidiaries recognized gains of ¥989 million ($12 million) in earnings as gains on sales of real estate under operating leases, and gains of ¥1,995 million ($24 million) as life insurance premiums and related investment income. The related intercompany profits have been eliminated based on the Company’s proportionate share.

During fiscal 2010, a loss of ¥6,954 million was recorded in equity in net income (loss) of affiliates in the consolidated statements of income, for a change in fair value of an investment that is measured at fair value by the election of fair value option under ASC 825-10 (“Financial Instruments—Fair Value Option”). In addition, the Company and its subsidiaries sold the investment and recognized a loss of ¥2,724 million in gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net, in the consolidated statements of income for the fiscal 2010.

During fiscal 2010, the Company transferred its 51% share ownership in ORIX Credit, a domestic subsidiary that operates a card loan business, to Sumitomo Mitsui Banking Corporation (“SMBC”), and ORIX Credit became an affiliate accounted for by the equity method with an investment of 49%. The sales of the portion of ownership interest transferred resulted in a gain of ¥3,571 million and the remeasurement to fair value of the interest retained resulted in a gain of ¥3,430 million, both of which were included in earnings as gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net for fiscal 2010. The Company used a dividend discount model and other models to measure fair value of the interest retained. A part of the Company’s loan to ORIX Credit was repaid as a result of the alliance with SMBC and the aggregate amount of the proceed from the sale of the equity interest and the repayment of the loan is included in sales of subsidiaries, net of cash disposed in the accompanying consolidated statement of cash flows . As of March 31, 2010, the investment in ORIX Credit amounted to ¥123,590 million, ¥96,680 million of which consisted of loans.

During fiscal 2010, ORIX Securities, a domestic subsidiary that operates securities business, made a share swap with Monex Group, Inc. (“Monex Group”) to become a wholly owned subsidiary of Monex Group. The Company acquired 22% share ownership of Monex Group and Monex Group became an affiliate accounted for by the equity method. As a result of the swap, a gain of ¥9,337 million was recognized in earnings as gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net.

During fiscal 2010, DAIKYO issued 99,950,000 shares to the public and a third party at ¥182 per share, amounting to ¥18,216 million. As a result, the ownership interest of the Company in DAIKYO decreased from 41% to 31%. Because the issuance price per share issued by DAIKYO was more than the average carrying amount per share of the Company, the Company was required to adjust the carrying amount of its investments in DAIKYO by ¥3,789 million and recognized the gain in earnings as gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net.

During fiscal 2010, Fuji Fire issued 156,976,000 shares to a third party at ¥86 per share, amounting to ¥13,500 million. As a result, the ownership interest of the Company in Fuji Fire decreased from 20% to 15%. Because the issuance price per share issued by Fuji Fire was less than the average carrying amount per share of the Company, the Company was required to adjust the carrying amount of its investment in Fuji Fire by

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

¥1,839 million and recognized the loss in earnings as gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net. As a result of the decrease of share of ownership, Fuji Fire became a non affiliate accounted for as available-for–sale equity securities.

During fiscal 2011, Monex Group issued 140,000 shares to a third party at ¥22,765 per share, amounting to ¥3,187 million. Besides, Monex Group issued 65,685 shares for the purpose of the acquisition of Boom Group. As a result of these issuances, the ownership interest of the Company in Monex Group decreased from 22% to 21%. Because the issuance price per share issued by Monex Group was less than the average carrying amount per share of the Company, the Company was required to adjust the carrying amount of its investment by ¥710 million and recognized the loss in earnings as gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net.

During fiscal 2012, Monex Group acquired its shares from the market and canceled its own shares. As a result, the ownership interest of the Company in Monex Group increased from 21% to 22%. Additionally the Company recognized ¥12,713 million ($155 million) of impairment losses because it was judged that the downward stock price movement of the Monex Group was other than temporary.

Companies comprising a significant portion of investment in affiliates were DAIKYO (31% of equity share), ORIX Credit (49% of equity share) and Monex Group (22% of equity share) as of March 31, 2010, DAIKYO (31% of equity share), ORIX Credit (49% of equity share) and Monex Group (21% of equity share) as of March 31, 2011 and DAIKYO (31% of equity share), ORIX Credit (49% of equity share) and Monex Group (22% of equity share) as of March 31, 2012.

Combined and condensed information relating to the affiliates for fiscal 2010, 2011 and 2012 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):

Operations: Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income before income taxes . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial position: Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen	Millions ofyen	2012 ¥ 945,635 74,223 51,940 ¥4,561,537 3,508,038 1,053,499	Millions of U.S. dollars
	2010 ¥1,093,173 139,067 89,368 ¥3,983,524 2,968,953 1,014,571	2011 ¥ 850,947 108,175 92,763 ¥4,237,580 3,174,222 1,063,358		2012
				$11,505 903 632 $55,500 42,682 12,818

The Company and its subsidiaries had no significant transactions with these companies except as described above.

For information regarding ORIX Credit, see Note 33 of “Subsequent Events.”

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

13. Goodwill and Other Intangible Assets

Changes in goodwill by reportable segment for fiscal 2010, 2011 and 2012 are as follows:

In fiscal 2012, in line with a change of management classification, the Company changed certain segment classifications. Due to the changes, the reclassified figures are shown for fiscal 2010, 2011 and 2012.

Balance at March 31, 2009 Goodwill . . . . . . . . . . . . . . . Accumulated impairment losses . . . . . . . . . . . . . . . . Acquired . . . . . . . . . . . . . . . . . . . Impairment . . . . . . . . . . . . . . . . . Other (net) . . . . . . . . . . . . . . . . . Balance at March 31, 2010 Goodwill . . . . . . . . . . . . . . . Accumulated impairment losses . . . . . . . . . . . . . . . . Acquired . . . . . . . . . . . . . . . . . . . Impairment . . . . . . . . . . . . . . . . . Other (net) . . . . . . . . . . . . . . . . . Balance at March 31, 2011 Goodwill . . . . . . . . . . . . . . . Accumulated impairment losses . . . . . . . . . . . . . . . . Acquired . . . . . . . . . . . . . . . . . . . Impairment . . . . . . . . . . . . . . . . . Other (net)* . . . . . . . . . . . . . . . . . Balance at March 31, 2012 Goodwill . . . . . . . . . . . . . . . Accumulated impairment losses . . . . . . . . . . . . . . . .			Millions ofyen	Millions ofyen			Total ¥80,834 (3,590) 77,244 1,786 (2,688) (5,268) 76,484 (5,410) 71,074 29,247 (173) (5,358) 97,397 (2,607) 94,790 4,024 0 (3,003) 96,107 (296) ¥95,811
	Corporate Financial Services ¥1,029 (617) 412 173 (295) 0 1,202 (912) 290 0 (173) 0 547 (430) 117 380 0 0 754 (257) ¥497	Maintenance Leasing ¥282 0 282 0 0 0 282 0 282 0 0 0 282 0 282 0 0 0 282 0 ¥282	Real Estate ¥19,230 0 19,230 1,473 0 (2,167) 18,536 0 18,536 148 0 363 19,047 0 19,047 44 0 (28) 19,063 0 ¥19,063	Investment and Operation ¥8,969 (2,973) 5,996 140 (2,393) (912) 7,329 (4,498) 2,831 0 0 (1,334) 3,674 (2,177) 1,497 14 0 (1,238) 312 (39) ¥273	Retail ¥4,452 0 4,452 0 0 0 4,452 0 4,452 0 0 0 4,452 0 4,452 0 0 0 4,452 0 ¥4,452	Overseas ¥46,872 0 46,872 0 0 (2,189) 44,683 0 44,683 29,099 0 (4,387) 69,395 0 69,395 3,586 0 (1,737) 71,244 0 ¥71,244

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

		Millions of U.S. dollars	Millions of U.S. dollars
Corporate Financial Services $ 7 (6) 1 5 0 0 9 (3) $ 6	Maintenance Leasing $3 0 3 0 0 0 3 0 $3	Real Estate $232 0 232 0 0 (0) 232 0 $232	Investment and Operation $ 44 (26) 18 0 0 (15) 3 (0) $ 3	Retail $54 0 54 0 0 0 54 0 $54	Overseas $845 0 845 44 0 (21) 868 0 $868	Total
						$1,185 (32)
						1,153 49 0 (36)
						1,169 (3)
						$1,166

Other includes foreign currency translation adjustments and certain other reclassifications.

Other intangible assets at March 31, 2011 and 2012 consist of the following:

Intangible assets not subject to amortization: Trade name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets subject to amortization: Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen 2012 ¥ 18,062 521 18,583 69,261 13,533 82,794 (49,017) 33,777 ¥ 52,360	Millions of U.S. dollars	Millions of U.S. dollars
	2011 ¥ 18,175 463 18,638 58,654 15,601 74,255 (43,737) 30,518 ¥ 49,156			2012
				$ 220 6 226 843 164 1,007 (596) 411 $ 637

The aggregate amortization expenses for intangible assets are ¥8,203 million, ¥7,244 million and ¥7,066 million ($86 million) in fiscal 2010, 2011 and 2012, respectively.

The estimated amortization expenses for each of five succeeding fiscal years are ¥7,053 million ($86 million) in fiscal 2013, ¥6,054 million ($74 million) in fiscal 2014, ¥4,775 million ($58 million) in fiscal 2015, ¥4,062 million ($49 million) in fiscal 2016 and ¥1,983 million ($24 million) in fiscal 2017, respectively.

As a result of the impairment test, the Company and its subsidiaries have recognized no impairment losses on intangible assets from fiscal 2010 through fiscal 2012.

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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 notes payable to banks, bank overdrafts, commercial paper and notes.

The composition of short-term debt and the weighted average contract interest rate on short-term debt at March 31, 2011 and 2012 are as follows:

March 31, 2011

Short-term debt in Japan, mainly from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short-term debt outside Japan, mainly from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commercial paper in Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen ¥194,728 103,107 180,798 ¥478,633	Weighted average rate
		1.3% 3.1 0.2 1.3

March 31, 2012

Short-term debt in Japan, mainly from banks . . . . . . . . . . . . . . . . . . . . . . Short-term debt outside Japan, mainly from banks . . . . . . . . . . . . . . . . . . Commercial paper in Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commercial paper outside Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes outside Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen ¥168,012 107,568 176,415 4,023 1,955 ¥457,973	Millions of U.S. dollars $2,044 1,309 2,146 49 24 $5,572	Weighted average rate
			0.7% 4.2 0.2 4.0 5.3 1.4

The composition of long-term debt, the weighted average contract interest rate on long-term debt and the repayment due dates at March 31, 2011 and 2012 are as follows:

March 31, 2011

Banks: Fixed rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Floating rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Insurance companies and others: Fixed rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Floating rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured convertible bonds with stock acquisition rights . . . . . . . . . . Unsecured bond with stock acquisition rights . . . . . . . . . . . . . . . . . . . . . Unsecured notes under medium-term note program . . . . . . . . . . . . . . . . Payables under securitized lease receivables . . . . . . . . . . . . . . . . . . . . . Payables under securitized loan receivables and investment in securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Due (Fiscal Year) 2012~2025 2012~2026 2012~2018 2012~2028 2012~2021 2014 2023 2012~2018 2012~2016 2012~2039	Millions ofyen ¥ 240,904 1,263,844 325,006 233,345 1,177,582 149,974 34,233 88,190 170,820 847,370 ¥4,531,268	Weighted average rate
			2.8% 1.3 1.8 1.1 1.9 1.0 0.0 1.9 1.5 4.3 2.1

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

March 31, 2012

Banks: Fixed rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Floating rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Insurance companies and others: Fixed rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Floating rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured convertible bonds with stock acquisition rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unsecured bond with stock acquisition rights . . . . . . . . . . . Unsecured notes under medium-term note program . . . . . . Payables under securitized lease receivables . . . . . . . . . . . . Payables under securitized loan receivables and investment in securities . . . . . . . . . . . . . . . . . . . . . . . . . .	Due (Fiscal Year) 2013~2025 2013~2027 2013~2020 2013~2028 2013~2021 2014 2023 2013~2018 2013~2018 2013~2039	Millions ofyen ¥ 248,452 1,223,127 289,871 240,277 1,144,539 149,968 35,630 60,911 172,917 701,788 ¥4,267,480	Millions of U.S. dollars $ 3,023 14,881 3,527 2,923 13,925 1,825 434 741 2,104 8,539 $51,922	Weighted average rate
				2.7% 1.3 1.8 1.1 2.1 1.0 0.0 2.0 1.1 4.5 2.1

The repayment schedule for the next five years and thereafter for long-term debt at March 31, 2012 is as follows:

Years ending March 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen ¥1,149,478 1,158,887 533,415 599,510 497,025 329,165 ¥4,267,480	Millions of U.S. dollars $13,986 14,100 6,490 7,294 6,047 4,005 $51,922	Millions of U.S. dollars $13,986 14,100 6,490 7,294 6,047 4,005 $51,922
			$13,986 14,100 6,490 7,294 6,047 4,005 $51,922

For borrowings from banks, insurance companies and other financial institutions, and for bonds, interest payments are usually paid semi-annually and principal repayments are made upon maturity of the loan contracts or bonds. For medium-term notes, interest payments are mainly made semi-annually and principal is repaid upon maturity of the notes.

For unsecured convertible bond with stock acquisition rights, the Company issued series three unsecured convertible bond with stock acquisition rights of ¥150,000 million in December 2008. As of March 31, 2012, the bond had stock acquisition rights that were convertible into 21,916,494 shares of common stock at a conversion price of ¥6,842.70 ($83.25) per share. The conversion price shall be adjusted mainly in a situation where the Company issues new shares at less than the current market price of the shares.

For unsecured bond with stock acquisition rights, the Company issued Liquid Yield Option Notes[TM] of $400 million, net of unamortized discount of $622 million, in June 2002. As of March 31, 2012, the bond had stock acquisition rights that were convertible into 2,493,309 shares of common stock at a conversion price of $115.12 per share. The stock acquisition rights may be exercised (1) if the closing price at Tokyo Stock Exchange for the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

shares for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of the previous quarter is more than specified conversion trigger price which will be accreted from $126.63 for the quarter including the date of issuance to $320.72 for the quarter including the date of the bond maturity, (2) during any period in which the issuer rating or the long-term senior debt credit rating assigned to the Company is below a specified level, (3) if the bond is called for redemption or (4) if specified corporate transactions have occurred. The conversion price shall be adjusted mainly in a situation where the Company issues new shares at less than the current market price of the shares.

During fiscal 2010, 2011 and 2012, the Company and certain subsidiaries recognized net amortization expenses of bond premiums and discounts, and deferred issuance costs of bonds and medium-term notes in the amount of ¥4,022 million, ¥3,996 million and ¥3,999 million ($49 million), respectively.

Total committed credit lines for the Company and its subsidiaries were ¥464,432 million and ¥463,969 million ($5,645 million) at March 31, 2011 and 2012, respectively, and, of these lines, ¥410,447 million and ¥427,435 million ($5,201 million) were available at March 31, 2011 and 2012, respectively. Of the available committed credit lines, ¥107,010 million and ¥210,139 million ($2,557 million) were long-term committed credit lines at March 31, 2011 and 2012, respectively.

Some of the debt and commitment contracts contain covenant clauses, and some of these include financial restrictions, such as maintenance of certain ORIX Corporation shareholders’ equity ratios, as well as maintenance of specified credit ratings. As of March 31, 2012, the Company and its subsidiaries were in compliance with such objective covenant requirements.

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 longterm 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 variable interest entities pledged as collateral for financing described in Note 11 (“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, 2012:

Minimum lease payments, loans and investment in operating leases . . . . . . . . . . . . . . . Investment in securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other operating assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen ¥102,256 82,602 9,672 2,122 ¥196,652	Millions of U.S. dollars	Millions of U.S. dollars
			$1,244 1,005 118 26 $2,393

As of March 31, 2012, investment in securities of ¥27,641 million ($336 million) was pledged for primarily collateral deposits.

Under loan agreements relating to short-term and long-term debt from commercial banks and certain insurance companies, the Company and certain subsidiaries are required to provide collateral against these debts at any time if requested by the lenders. The Company and the subsidiaries did not receive any such requests from the lenders as of March 31, 2012.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

15. Deposits

Deposits at March 31, 2011 and 2012 consist of the following:

Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen 2012 ¥ 894,169 209,345 ¥1,103,514	Millions of U.S. dollars	Millions of U.S. dollars
	2011 ¥ 921,352 143,823 ¥1,065,175			2012
				$10,879 2,547 $13,426

The balances of time deposits and certificates of deposit issued in amounts of ¥10 million ($122 thousand) or more were ¥581,761 million and ¥588,550 million ($7,161 million) at March 31, 2011 and 2012, respectively.

The maturity schedule of time deposits at March 31, 2012 is as follows:

Years ending March 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen ¥517,647 120,256 129,918 66,772 59,576 ¥894,169	Millions of U.S. dollars	Millions of U.S. dollars
			$ 6,298 1,463 1,581 812 725 $10,879

16. Income Taxes

Income before income taxes and discontinued operations, and the provision for income taxes in fiscal 2010, 2011 and 2012 are as follows:

Income before income taxes and discontinued operations: Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for income taxes: Current— Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred— Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen 2010 2011 2012 ¥ 14,785 ¥ 38,569 ¥ 74,291 41,272 54,732 56,193 ¥ 56,057 ¥ 93,301 ¥130,484 ¥ 32,286 ¥ 26,566 ¥ 12,302 17,553 18,367 16,423 49,839 44,933 28,725 (23,322) (15,137) 17,766 (5,427) (3,653) (1,860) (28,749) (18,790) 15,906 ¥ 21,090 ¥ 26,143 ¥ 44,631	Millions ofyen 2010 2011 2012 ¥ 14,785 ¥ 38,569 ¥ 74,291 41,272 54,732 56,193 ¥ 56,057 ¥ 93,301 ¥130,484 ¥ 32,286 ¥ 26,566 ¥ 12,302 17,553 18,367 16,423 49,839 44,933 28,725 (23,322) (15,137) 17,766 (5,427) (3,653) (1,860) (28,749) (18,790) 15,906 ¥ 21,090 ¥ 26,143 ¥ 44,631	Millions of U.S. dollars	Millions of U.S. dollars
	2010 ¥ 14,785 41,272 ¥ 56,057 ¥ 32,286 17,553 49,839 (23,322) (5,427) (28,749) ¥ 21,090	2011 ¥ 38,569 54,732 ¥ 93,301 ¥ 26,566 18,367 44,933 (15,137) (3,653) (18,790) ¥ 26,143		2012
				$ 904 684 $1,588 $ 149 200 349 216 (22) 194 $ 543

F-86

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

In fiscal 2010, 2011 and 2012, the Company and its subsidiaries in Japan are subject to a National Corporate tax of 30%, an Inhabitant tax of approximately 6% and a deductible Enterprise tax of approximately 8%, which in the aggregate result in a statutory income tax rate of 40.9%.

Reconciliation of the differences between the tax provision computed at the statutory rate and the consolidated provision for income taxes in fiscal 2010, 2011 and 2012 are as follows:

Millions ofyen 2010 2011 2012 ¥56,057 ¥93,301 ¥130,484	Millions ofyen 2010 2011 2012 ¥56,057 ¥93,301 ¥130,484	Millions ofyen 2010 2011 2012 ¥56,057 ¥93,301 ¥130,484	Millions of U.S. dollars
2010 ¥56,057	2011 ¥93,301		2012
			$1,588 $ 649 50 16 (35) (85) (100) 48 $ 543
¥22,927 1,165 1,638 (635) (3,699) 0 (306) ¥21,090	¥38,160 (5,647) 1,024 (2,697) (4,335) 0 (362) ¥26,143	¥ 53,368 4,071 1,336 (2,852) (6,994) (8,195) 3,897 ¥ 44,631

The effective income tax rate is different from the statutory tax rate primarily because of certain non-deductible expenses for tax purposes, non-taxable income for tax purposes, a change in valuation allowance, the effect of lower income tax rates on foreign subsidiaries and a domestic life insurance subsidiary and the effect of the tax reforms as discussed in the following paragraph.

On November 30, 2011, the bill for reconstruction funding after the March 11, 2011 Great East Japan Earthquake and the bill for the 2011 tax reform were approved by the National Diet of Japan. From fiscal years beginning on or after April 1, 2012, the Japanese corporation tax rate will be reduced, and as a result, the statutory income tax rate for fiscal years beginning between April 1, 2012 and March 31, 2015 will be reduced to approximately 38.3%. The rate for fiscal years beginning after April 1, 2015 will be reduced to approximately 35.9%. In addition, the tax loss carry-forward rules have been amended. The carry-forward period will be extended to 9 years, compared to 7 years under the pre-amendment rules. Further, the deductible amount will be limited to 80% of taxable income for the year, while total amount of taxable income for the year was available for the deduction under the pre-amendment rules. The amendment to the carry-forward period will be applicable for tax losses incurred in fiscal years ending on or after April 1, 2008 and the amendment to the deductible amount will be applicable for fiscal years beginning on or after April 1, 2012. Increase and decrease of the deferred tax assets and liabilities due to these tax reforms resulted in a decrease of provision for income taxes by ¥7,661 million ($93 million) in the accompanying consolidated statements of income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Total income taxes recognized in fiscal 2010, 2011 and 2012 are as follows:

Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes on discontinued operations . . . . . . . . . . . . . . . . . . . . . . . Income taxes on other comprehensive income (loss): Net unrealized gains (losses) on investment in securities . . . . . . Defined benefit pension plans . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . Net unrealized gains (losses) on derivative instruments . . . . . . . Total income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen 2010 2011 2012 ¥21,090 ¥26,143 ¥44,631 7,019 6,771 (1,410) 7,816 3,403 1,357 4,925 (1,427) (1,774) 4,722 (214) 335 (1,066) (338) (648) ¥44,506 ¥34,338 ¥42,491	Millions ofyen 2010 2011 2012 ¥21,090 ¥26,143 ¥44,631 7,019 6,771 (1,410) 7,816 3,403 1,357 4,925 (1,427) (1,774) 4,722 (214) 335 (1,066) (338) (648) ¥44,506 ¥34,338 ¥42,491	Millions of U.S. dollars 2012 $543 (17) 17 (22) 4 (8) $517	Millions of U.S. dollars 2012 $543 (17) 17 (22) 4 (8) $517
	2010 ¥21,090 7,019 7,816 4,925 4,722 (1,066) ¥44,506	2011 ¥26,143 6,771 3,403 (1,427) (214) (338) ¥34,338		2012
				$543 (17) 17 (22) 4 (8) $517

The tax effects of temporary differences giving rise to the deferred tax assets and liabilities at March 31, 2011 and 2012 are as follows:

Assets: Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allowance for doubtful receivables on direct financing leases and probable loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment in securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other operating assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Installment loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities: Investment in direct financing leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment in operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred insurance policy acquisition costs . . . . . . . . . . . . . . . . . . . . . . . Policy liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Undistributed earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen 2012 ¥ 41,288 50,016 5,325 3,928 7,294 22,970 40,449 171,270 (24,138) 147,132 12,535 63,372 31,723 22,159 19,792 8,860 60,271 218,712 ¥ 71,580	Millions of U.S. dollars	Millions of U.S. dollars
	2011 ¥ 47,623 69,917 6,672 2,638 11,865 24,747 30,521 193,983 (26,794) 167,189 16,462 64,992 29,233 21,123 23,892 11,992 68,950 236,644 ¥ 69,455			2012
				$ 502 609 65 48 89 279 492 2,084 (294) 1,790 152 771 386 270 241 108 733 2,661 $ 871

The valuation allowance is mainly recognized for deferred tax assets of consolidated subsidiaries with net operating loss carryforwards for tax purposes. 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

F-88

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

the periods in which those 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 the Company and its subsidiaries will realize the benefits of these deductible temporary differences and tax loss carryforwards, net of the existing valuation allowances at March 31, 2012. 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 decreases of ¥1,789 million in fiscal 2010 and decreases of ¥16,052 million in fiscal 2011, and decreases of ¥2,656 million ($32 million) in fiscal 2012, respectively.

The Company and certain subsidiaries have net operating loss carryforwards of ¥170,866 million ($2,079 million) at March 31, 2012, which expire as follows:

Year ending March 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen ¥ 11,076 4,572 6,816 28,915 26,589 92,898 ¥170,866	Millions of U.S. dollars	Millions of U.S. dollars
			$ 135 56 83 352 323 1,130 $2,079

Net deferred tax assets and liabilities at March 31, 2011 and 2012 are reflected in the accompanying consolidated balance sheets under the following captions:

Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes: Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen 2011 2012 ¥ 91,063 ¥25,773 160,518 97,353 ¥ 69,455 ¥71,580	Millions of U.S. dollars	Millions of U.S. dollars
	2011 ¥ 91,063 160,518 ¥ 69,455		2012
			$ 313 1,184 $ 871

The Company and its subsidiaries adopted ASC 740 (“Income Taxes”). The unrecognized tax benefits as of March 31, 2011 and March 31, 2012 were not material. The Company and its subsidiaries believe that it is not reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of March 31, 2012.

The total amounts of penalties and interest expense related to income taxes recognized in the consolidated balance sheets as of March 31, 2011 and March 31, 2012, and in the consolidated statements of income for the years ended March 31, 2010, 2011 and 2012 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 for the tax years prior to fiscal 2011, and its major domestic subsidiaries are no longer subject to ordinary tax examination for the tax years prior to fiscal 2009, respectively.

Subsidiaries in the United States remain subject to a tax examination for the tax years after fiscal 2003.

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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 its subsidiaries’ funding policy is to contribute annually the amounts actuarially determined. Assets of the plans are invested primarily in interest-bearing securities and marketable equity securities.

The funded status of the defined benefit pension plans, a substantial portion of which consists of domestic pension plans, as of March 31, 2011 and 2012 is as follows:

Change in benefit obligation: Benefit obligation at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange rate change . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plan Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefit obligation at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in plan assets: Fair value of plan assets at beginning of year . . . . . . . . . . . . . . . . . . . . . . . Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Employer contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange rate change . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plan settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fair value of plan assets at end of year . . . . . . . . . . . . . . . . . . . . . . . . . The funded status of the plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amount recognized in the consolidated balance sheets consists of: Prepaid benefit cost included in prepaid expenses . . . . . . . . . . . . . . . . . . . . Accrued benefit liability included in accrued expenses . . . . . . . . . . . . . . . . Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen 2012 ¥58,589 3,049 1,339 3,170 (35) (2,195) 0 (198) 63,719 85,396 108 2,542 (2,090) (11) 0 85,945 ¥22,226 ¥24,459 (2,233) ¥22,226	Millions of U.S. dollars	Millions of U.S. dollars
	2011 ¥56,390 3,104 1,355 1,147 (415) (2,423) (231) (338) 58,589 85,967 (449) 2,556 (2,362) (277) (39) 85,396 ¥26,807 ¥29,125 (2,318) ¥26,807			2012
				$ 713 37 16 39 (0) (27) 0 (2) 776 1,039 1 31 (25) (0) 0 1,046 $ 270 $ 298 (28) $ 270

F-90

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Amount recognized in accumulated other comprehensive income (loss), pre-tax, at March 31, 2011 and 2012 consisted of:

Net prior service credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net transition obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total recognized in accumulated other comprehensive income (loss), pre-tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions	ofyen 2012 ¥ 7,697 (31,120) (325) ¥(23,748)	Millions of U.S. dollars	Millions of U.S. dollars
	2011 ¥ 8,910 (27,257) (382) ¥(18,729)			2012
				$ 94 (379) (4) ¥(289)

The estimated portions of the net prior service credit, net actuarial loss and net transition obligation above that will be recognized as a component of net pension cost in 2013 are ¥1,166 million ($14 million), ¥1,496 million ($18 million) and ¥56 million ($1 million), respectively.

The accumulated benefit obligations for all defined benefit pension plans were ¥52,701 million and ¥56,766 million ($691 million), respectively, at March 31, 2011 and 2012.

The aggregate projected benefit obligations, aggregate accumulated benefit obligations and aggregate fair values of plan assets for the plans with the accumulated benefit obligations in excess of plan assets were ¥4,631 million, ¥4,384 million and ¥2,375 million, respectively, at March 31, 2011 and ¥5,210 million ($63 million), ¥4,898 million ($60 million) and ¥3,019 million ($37 million), respectively, at March 31, 2012.

Net pension cost of the plans for fiscal 2010, 2011 and 2012 consists of the following:

Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of transition obligation . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of prior service credit . . . . . . . . . . . . . . . . . . . . . . . . . . . Plan curtailments and settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net periodic pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen 2010 2011 2012 ¥ 3,255 ¥ 3,104 ¥ 3,049 1,265 1,355 1,339 (1,747) (2,025) (2,019) (3) (4) 56 2,098 1,036 1,218 (1,209) (1,193) (1,193) 3 0 0 ¥ 3,662 ¥ 2,273 ¥ 2,450	Millions ofyen 2010 2011 2012 ¥ 3,255 ¥ 3,104 ¥ 3,049 1,265 1,355 1,339 (1,747) (2,025) (2,019) (3) (4) 56 2,098 1,036 1,218 (1,209) (1,193) (1,193) 3 0 0 ¥ 3,662 ¥ 2,273 ¥ 2,450	Millions of U.S. dollars
	2010 ¥ 3,255 1,265 (1,747) (3) 2,098 (1,209) 3 ¥ 3,662	2011 ¥ 3,104 1,355 (2,025) (4) 1,036 (1,193) 0 ¥ 2,273	2012
			$ 37 16 (25) 1 15 (14) 0 $ 30

F-91

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for fiscal 2010, 2011 and 2012 are summarized as follows:

Current year actuarial gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prior service credit due to amendments . . . . . . . . . . . . . . . . . . . . . . . . Amortization of prior service credit . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of transition obligation . . . . . . . . . . . . . . . . . . . . . . . . . . Plan curtailments and settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange rate change . . . . . . . . . . . . . . . . . . . . . . . . Total recognized in other comprehensive income (loss), pre-tax . . . . .	Millions ofyen 2010 2011 2012 ¥11,275 ¥(3,446) ¥(5,144) 2,098 1,036 1,218 (183) 8 7 (1,209) (1,193) (1,193) (3) (4) 56 3 0 18 69 166 19 ¥12,050 ¥(3,433) ¥(5,019)	Millions ofyen 2010 2011 2012 ¥11,275 ¥(3,446) ¥(5,144) 2,098 1,036 1,218 (183) 8 7 (1,209) (1,193) (1,193) (3) (4) 56 3 0 18 69 166 19 ¥12,050 ¥(3,433) ¥(5,019)	Millions of U.S. dollars
	2010 ¥11,275 2,098 (183) (1,209) (3) 3 69 ¥12,050	2011 ¥(3,446) 1,036 8 (1,193) (4) 0 166 ¥(3,433)	2012
			$(63) 15 0 (14) 1 0 0 $(61)

The Company and certain subsidiaries use March 31 as a measurement date for all of our material plans.

Significant assumptions of domestic and overseas pension plans used to determine these amounts are as follows:

Domestic Weighted-average assumptions used to determine benefit obligations at March 31: Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rate of increase in compensation levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted-average assumptions used to determine net periodic pension cost for years ended March 31: Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rate of increase in compensation levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected long-term rate of return on plan assets . . . . . . . . . . . . . . . . . . . . . . Overseas Weighted-average assumptions used to determine benefit obligations at March 31: Discount rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rate of increase in compensation levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted-average assumptions used to determine net periodic pension cost for years ended March 31: Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rate of increase in compensation levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected long-term rate of return on plan assets . . . . . . . . . . . . . . . . . . . . . .	2010 2.1% 5.9% 1.9% 5.8% 2.2% 2010 6.0% 0.8% 7.1% 0.6% 8.1%	2011 2.1% 6.1% 2.1% 5.9% 2.2% 2011 5.5% 0.8% 6.0% 0.8% 8.1%	2012
			1.8% 6.1% 2.1% 6.1% 2.2% 2012
			4.5% 0.7% 5.5% 0.8% 7.2%

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

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 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.

The three levels of input used to measure fair value are described in Note 2.

The fair value of pension plan assets at March 31, 2011 and 2012, by asset category, are as follows:

	March 31, 2011	March 31, 2011
	Millions of	yen
Total Carrying Value in Consolidated Balance Sheets ¥ 1,016 18,690 11,864 25,468 1,076 7,655 11,633 5,386 2,608 ¥85,396	Quoted Prices in Active Markets for Identical Assets (Level 1) ¥1,016 0 0 0 0 0 0 0 0 ¥1,016	Significant Other Observable Inputs (Level 2) ¥ 0 18,690 11,864 25,468 1,076 7,655 6,685 5,386 2,608 ¥79,432	Significant Unobservable Inputs (Level 3)
				¥ 0 0 0 0 0 0 4,948 0 0 ¥4,948

*1 Equity securities of Japanese companies in which the Company and certain subsidiaries invest as pension plan assets include units of ORIX JREIT Inc. in the amounts of ¥34 million at March 31, 2011.

*2 These funds invest in listing shares.

*3 These funds invest in listing shares.

*4 These funds invest approximately 70% in Japanese government bonds, approximately 10% in Japanese municipal bonds, and approximately 20% in Japanese corporate bonds.

*5 These funds invest mainly in foreign government bonds.

*6 These funds invest in hedge funds as alternative investments.

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

*8 Others include mainly short-term instruments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

At March 31, 2011, our policy for the portfolio of plans consisted of four major components: approximately 40% was invested in equity securities, approximately 40% was invested in debt securities, approximately 10% was invested in alternative investments and approximately 10% was invested in other investment vehicles, primarily consisting of investments in life insurance company general accounts.

	March 31, 2012	March 31, 2012
	Millions of	yen
Total Carrying Value in Consolidated Balance Sheets ¥ 9,360 11,826 25,182 2,791 12,894 17,280 6,612 ¥85,945	Quoted Prices in Active Markets for Identical Assets (Level 1) ¥ 0 0 0 0 0 0 0 ¥ 0	Significant Other Observable Inputs (Level 2) ¥ 9,360 11,826 25,182 2,791 12,894 17,280 6,612 ¥85,945	Significant Unobservable Inputs (Level 3)
				¥ 0 0 0 0 0 0 0 ¥ 0

	March 31, 2012	March 31, 2012
	Millions of U.S. dollars
Total Carrying Value in Consolidated Balance Sheets $ 114 144 306 34 157 210 81 $1,046	Quoted Prices in Active Markets for Identical Assets (Level 1) $ 0 0 0 0 0 0 0 $ 0	Significant Other Observable Inputs (Level 2) $ 114 144 306 34 157 210 81 $1,046	Significant Unobservable Inputs (Level 3)
				$ 0 0 0 0 0 0 0 $ 0

F-94

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

*1 These funds invest in listing shares and include units of ORIX JREIT Inc. in the amounts of ¥89 million ($1milion) at March 31, 2012.
*2 These funds invest in listing shares.
*3 These funds invest approximately 70% in Japanese government bonds, approximately 10% in Japanese municipal bonds, and approximately 20% in Japanese corporate bonds.
*4 These funds invest approximately 80% in foreign government bonds, and approximately 20% in foreign municipal 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, 2012, 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 investment vehicles, 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, 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 pooled funds that invest in equity, debt securities and hedge funds and investments in life insurance company general accounts. Pooled funds are valued at the net asset value per share at the measurement date. They are not redeemable at the net asset value per share at the measurement date but they are redeemable at the net asset value per share in the near term after the measurement date. Investments in life insurance company general accounts are valued at conversion value. Level 3 assets are comprised of pooled funds that invest in hedge funds that are measured at their net asset values. However, the hedge funds are not redeemable at the net asset values at the measurement date or within a near term after the measurement date.

The following table represents the reconciliation for the Level 3 plan assets during fiscal 2011 and 2012:

Alternative investments	Alternative investments	Alternative investments
	Pooled funds
2011 Millions of yen ¥4,728 220 0 ¥4,948	2012 Millions of yen ¥ 4,948 18 (4,966) ¥ 0	2012
		Millions of U.S. dollars $ 60 0 (60) $ 0

The Company and certain subsidiaries expect to contribute ¥2,736 million ($33 million) to pension plans during the year ending March 31, 2013.

F-95

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

At March 31, 2012, 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:

Years ending March 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2018-2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen ¥ 1,832 1,437 1,536 1,652 1,775 11,460 ¥19,692	Millions of U.S. dollars	Millions of U.S. dollars
			$ 22 17 19 20 22 140 $240

The cost recognized for the defined contribution pension plans of the Company and certain of its subsidiaries for the years ended March 31, 2010, 2011 and 2012 were ¥1,305 million, ¥1,578 million and ¥1,409 million ($17 million), respectively.

18. Redeemable Noncontrolling Interests

Changes in redeemable noncontrolling interests in fiscal 2010, 2011 and 2012 are as follows:

Beginning Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contribution to subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustment of redeemable noncontrolling interests to redemption value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transaction with noncontrolling interests . . . . . . . . . . . . . . . . . . Comprehensive income (loss) Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . Net change of foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total other comprehensive income (loss) . . . . . . . . . . . . . . Comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ending Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen 2010 2011 2012 ¥25,396 ¥28,095 ¥33,902 0 10,219 0 (139) (73) 1,188 1,962 1,063 1,213 2,476 2,959 2,724 (1,600) (2,353) (315) (1,600) (2,353) (315) 876 606 2,409 0 (6,008) (1,079) ¥28,095 ¥33,902 ¥37,633	Millions ofyen 2010 2011 2012 ¥25,396 ¥28,095 ¥33,902 0 10,219 0 (139) (73) 1,188 1,962 1,063 1,213 2,476 2,959 2,724 (1,600) (2,353) (315) (1,600) (2,353) (315) 876 606 2,409 0 (6,008) (1,079) ¥28,095 ¥33,902 ¥37,633	Millions of U.S. dollars	Millions of U.S. dollars
	2010 ¥25,396 0 (139) 1,962 2,476 (1,600) (1,600) 876 0 ¥28,095	2011 ¥28,095 10,219 (73) 1,063 2,959 (2,353) (2,353) 606 (6,008) ¥33,902		2012
				$412 0 14 15 33 (4) (4) 29 (12) $458

19. Stock-Based Compensation

The Company has a number of stock-based compensation plans as incentive plans for directors, executive officers, corporate auditors and selected employees.

Stock-option program

Since fiscal 2003, the Company has granted stock acquisition rights that have a vesting period between 1.67 and 1.92 years and an exercise period between 9.67 and 9.92 years. The acquisition rights were to purchase the Company’s common stock at an exercise price and were distributed to directors, executive officers, corporate

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ORIX Corporation and Subsidiaries

auditors and certain employees of the Company, subsidiaries and capital tie-up companies such as affiliated companies. As for fiscal 2010, 2011 and 2012, the Company has not granted stock options.

A summary of information related to the Company’s stock acquisition rights is as follows:

Years ended March 31, 2003 . . . . . . . . . . . . . . . . . . . . . . 2004 . . . . . . . . . . . . . . . . . . . . . . 2005 . . . . . . . . . . . . . . . . . . . . . . 2006 . . . . . . . . . . . . . . . . . . . . . . 2007 . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . 2009 . . . . . . . . . . . . . . . . . . . . . .	Exerciseperiod From June 27, 2004 to June 26, 2012 From June 26, 2005 to June 25, 2013 From June 24, 2006 to June 23, 2014 From June 22, 2007 to June 21, 2015 From June 21, 2008 to June 20, 2016 From July 5, 2009 to June 22, 2017 From July 18, 2010 to June 24, 2018	Number of shares Initially granted 453,300 516,000 528,900 477,400 194,200 144,980 147,900	Exerciseprice	Exerciseprice
			Yen ¥ 7,206 6,991 11,720 18,903 29,611 31,009 16,888	U.S. dollars
				$ 88 85 143 230 360 377 205

For the stock-option programs, the exercise prices, which are determined by a formula linked to the price of the Company’s common stock on the Tokyo Stock Exchange, are equal or greater than the fair market value of the Company’s common stock at the grant dates.

The following table summarizes information about the activity of these stock options for the year ended 2012:

Outstanding at beginning of the year . . . . . . . . . . . . . . . . . . . . . . Exercised . . . . . . . . . . . . . . . . . . . Forfeited or expired . . . . . . . . . . . Outstanding at end of year . . . . . . Exercisable at end of year . . . . . .	Number of shares 1,222,360 (7,700) (166,840) 1,047,820 1,047,820	Weighted average *exerciseprice() Yen U.S. dollar** ¥18,493 $225 7,072 86 15,834 193 19,001 231 ¥19,001 $231	Weighted average remaining contractual life Years 3.52 3.52	Aggregate intrinsic value	Aggregate intrinsic value
		Yen ¥18,493 7,072 15,834 19,001 ¥19,001		Millions ofyen ¥107 ¥107	Millions of U.S. dollar
					$ 1 $ 1

The exercise prices of the granted options were adjusted in July 2009 for the issuance of new 18 million shares.

The Company received ¥77 million, ¥98 million and ¥55 million ($1 million) in cash from the exercise of stock options during fiscal 2010, 2011 and 2012, respectively.

The total intrinsic value of options exercised during fiscal 2010, 2011 and 2012 was ¥6 million, ¥19 million and ¥5 million ($0 million), respectively.

The Company recognized incremental stock-based compensation costs of its stock-option program in the amount of ¥611 million and ¥142 million for fiscal 2010 and 2011, respectively. In fiscal 2012, the Company did not recognize any incremental stock-based compensation costs of its stock-option program. As of March 31, 2012, the total unrecognized compensation costs were nothing.

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Stock compensation program

The Company maintains a stock compensation program, under which points are granted annually to directors, executive officers and group executives of the Company based upon the prescribed standards of the Company. Upon retirement, each of eligible directors, executive officers, and group executives effectively receives a certain number of the Company’s common shares calculated by translating each point earned by that retiree to one common share adjusted for applicable withholding tax effect. The Company’s common shares are provided either from the treasury stock or by issuing new shares as necessary. In fiscal 2012, the Company granted 37,600 points, and 17,929 points were settled for individuals who retired during fiscal 2012. Total points outstanding under the stock compensation program as of March 31, 2012 were 142,679 points.

During fiscal 2010, 2011 and 2012, the Company recognized incremental stock-based compensation costs of its stock compensation program in the amount of ¥355 million, ¥255 million and ¥288 million ($4 million), respectively.

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20. Accumulated Other Comprehensive Income (Loss)

Changes in each component of accumulated other comprehensive income (loss) attributable to ORIX Corporation in fiscal 2010, 2011 and 2012 are as follows. 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 (“Redeemable Noncontrolling Interests”). Total comprehensive income (loss) and its components have been reported, net of tax, in the consolidated statements of comprehensive income.

Balance at March 31, 2009 . . . . . . . . . . . . . . . . . . . . Net unrealized gains on investment in securities, net of tax of ¥(6,610) million . . . . . . . . . . . . . . . . . . . . Reclassification adjustment included in net income, net of tax of ¥(1,206) million . . . . . . . . . . . . . . . . . Defined benefit pension plans, net of tax of ¥(4,567) million . . . . . . . . . . . . . . . . . . . . . . . . . . . Reclassification adjustment included in net income, net of tax of ¥(358) million . . . . . . . . . . . . . . . . . . Foreign currency translation adjustments, net of tax of ¥(4,487) million . . . . . . . . . . . . . . . . . . . . . . . . . Reclassification adjustment included in net income, net of tax of ¥(235) million . . . . . . . . . . . . . . . . . . Net unrealized losses on derivative instruments, net of tax of ¥743 million . . . . . . . . . . . . . . . . . . . . . . Reclassification adjustment included in net income, net of tax of ¥323 million . . . . . . . . . . . . . . . . . . . Change during year . . . . . . . . . . . . . . . . . . . . . . . . . . Balance at March 31, 2010 . . . . . . . . . . . . . . . . . . . . Cumulative effect of applying new accounting standards for the consolidation of variable interest entities, net of tax of ¥2,265 million . . . . . . . . . . . Balance at April 1, 2010 . . . . . . . . . . . . . . . . . . . . . . Net unrealized gains on investment in securities, net of tax of ¥(2,379) million . . . . . . . . . . . . . . . . . . . . Reclassification adjustment included in net income, net of tax of ¥(3,289) million . . . . . . . . . . . . . . . . . Defined benefit pension plans, net of tax of ¥1,339 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reclassification adjustment included in net income, net of tax of ¥88 million . . . . . . . . . . . . . . . . . . . . Foreign currency translation adjustments, net of tax of ¥245 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reclassification adjustment included in net income, net of tax of ¥(31) million . . . . . . . . . . . . . . . . . . . Net unrealized losses on derivative instruments, net of tax of ¥488 million . . . . . . . . . . . . . . . . . . . . . . Reclassification adjustment included in net income, net of tax of ¥(150) million . . . . . . . . . . . . . . . . . . Change during year . . . . . . . . . . . . . . . . . . . . . . . . . .				Millions ofyen	Millions ofyen	Millions ofyen	Millions ofyen
	Net unrealized gains (losses) on investment in securities		Defined benefit pension plans	Foreign currency translation adjustments		Net unrealized gains (losses) on derivative instruments		Accumulated other comprehensive income (loss)
		¥ (5,615) 11,357 1,753 13,110 7,495 (3,597) 3,898 3,292 4,313 7,605	¥(16,221) 6,601 528 7,129 (9,092) (9,092) (1,934) (72) (2,006)		¥(71,791) (6,199) 339 (5,860) (77,651) 191 (77,460) (18,158) 44 (18,114)		¥ 1,243 (630) (824) (1,454) (211) (211) (1,011) 211 (800)		¥(92,384) 11,357 1,753 6,601 528 (6,199) 339 (630) (824) 12,925 (79,459) (3,406) (82,865) 3,292 4,313 (1,934) (72) (18,158) 44 (1,011) 211 (13,315)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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Millions ofyen Net unrealized gains (losses) on investment in securities Defined benefit pension plans Foreign currency translation adjustments Net unrealized gains (losses) on derivative instruments Balance at March 31, 2011 . . . . . . . . . . . . . . . . . . ¥11,503 ¥(11,098) ¥(95,574) ¥(1,011) Net unrealized gains on investment in securities, net of tax of ¥(2,820) million . . . . . . . . . . . . . . . 6,963 Reclassification adjustment included in net income, net of tax of ¥1,463 million . . . . . . . . . (2,321) Defined benefit pension plans, net of tax of ¥1,807 million . . . . . . . . . . . . . . . . . . . . . . . . . . (3,292) Reclassification adjustment included in net income, net of tax of ¥(33) million . . . . . . . . . . 47 Foreign currency translation adjustments, net of tax of ¥(335) million . . . . . . . . . . . . . . . . . . . . . (118) Reclassification adjustment included in net income, net of tax of ¥0 million . . . . . . . . . . . . . 0 Net unrealized losses on derivative instruments, net of tax of ¥450 million . . . . . . . . . . . . . . . . . (974) Reclassification adjustment included in net income, net of tax of ¥198 million . . . . . . . . . . . (181) Change during year . . . . . . . . . . . . . . . . . . . . . . . . 4,642 (3,245) (118) (1,155) Balance at March 31, 2012 . . . . . . . . . . . . . . . . . . ¥16,145 ¥(14,343) ¥(95,692) ¥(2,166) Millions of U.S. dollars Net unrealized gains (losses) on investment in securities Defined benefit pension plans Foreign currency translation adjustments Net unrealized gains (losses) on derivative instruments Balance at March 31, 2011 . . . . . . . . . . . . . . . $140 $(135) $(1,163) $(12) Net unrealized gains on investment in securities, net of tax of $(34) million . . . . . 84 Reclassification adjustment included in net income, net of tax of $17 million . . . . . . . . (28) Defined benefit pension plans, net of tax of $22 million . . . . . . . . . . . . . . . . . . . . . . . . . . (40) Reclassification adjustment included in net income, net of tax of $0 million . . . . . . . . . 0 Foreign currency translation adjustments, net of tax of $(4) million . . . . . . . . . . . . . . . . . . (1) Reclassification adjustment included in net income, net of tax of $0 million . . . . . . . . . 0 Net unrealized losses on derivative instruments, net of tax of $6 million . . . . . . (12) Reclassification adjustment included in net income, net of tax of $2 million . . . . . . . . . (2) Change during year . . . . . . . . . . . . . . . . . . . . . 56 (40) (1) (14) Balance at March 31, 2012 . . . . . . . . . . . . . . . $196 $(175) $(1,164) $(26)						Millions ofyen	Millions ofyen	Millions ofyen	Millions ofyen	Millions ofyen
	Net unrealized gains (losses) on investment in securities			Defined benefit pension plans		Foreign currency translation adjustments			Net unrealized gains (losses) on derivative instruments		Accumulated other comprehensive income (loss)
		¥11,503 6,963 (2,321) 4,642 ¥16,145					¥(95,574) (118) 0 (118) ¥(95,692)			¥(1,011) (974) (181) (1,155) ¥(2,166)		¥(96,180) 6,963 (2,321) (3,292) 47 (118) 0 (974) (181) 124 ¥(96,056)
				Millions of U.S. dollars
Net unrealized gains (losses) on investment in securities $140 84 (28) 56 $196			Defined benefit pension plans $(135) (40) 0 (40) $(175)		Foreign currency translation adjustments $(1,163) (1) 0 (1) $(1,164)			Net unrealized gains (losses) on derivative instruments $(12) (12) (2) (14) $(26)			Accumulated other comprehensive income (loss)
												$(1,170) 84 (28) (40) 0 (1) 0 (12) (2) 1 $(1,169)

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ORIX Corporation and Subsidiaries

21. ORIX Corporation Shareholders’ Equity

Changes in the number of shares issued in fiscal 2010, 2011 and 2012 are as follows:

Number of shares	Number of shares
2010 92,217,067 18,000,000 11,000 1,881 110,229,948	2011 110,229,948 0 14,000 1,898 110,245,846	2012
		110,245,846 0 7,700 876
		110,254,422

The Japanese Companies Act (the “Act”), effective on May 1, 2006, 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, by specifying 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 2012 that a total of ¥9,676 million ($118 million) dividends shall be distributed to the shareholders of record as of March 31, 2012. 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. On July 21, 2009, the Company issued 18,000,000 shares of common stock primarily by way of a Japanese public offering and an international offering. As a result of those offerings, common stock and additional paid-in capital increased by ¥41,677 million and ¥41,347 million, respectively.

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 ¥243,823 million ($2,967 million) as of March 31, 2012.

Retained earnings at March 31, 2012 include ¥37,095 million ($451 million) relating to equity in undistributed earnings of the companies accounted for by the equity method.

As of March 31, 2012, the restricted net assets of certain subsidiaries, which include regulatory capital requirements mainly for banking operations and life insurance of ¥51,373 million ($625 million), do not exceed 25% of consolidated net assets.

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22. Brokerage Commissions and Net Gains on Investment Securities

Brokerage commissions and net gains on investment securities in fiscal 2010, 2011 and 2012 consist of the following:

Brokerage commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net gains on investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen 2010 2011 2012 ¥ 3,418 ¥ 119 ¥ 24 14,862 16,656 22,468 5,072 4,344 4,419 ¥23,352 ¥21,119 ¥26,911	Millions ofyen 2010 2011 2012 ¥ 3,418 ¥ 119 ¥ 24 14,862 16,656 22,468 5,072 4,344 4,419 ¥23,352 ¥21,119 ¥26,911	Millions of U.S. dollars	Millions of U.S. dollars
	2010 ¥ 3,418 14,862 5,072 ¥23,352	2011 ¥ 119 16,656 4,344 ¥21,119		2012
				$ 0 273 54 $327

Trading activities —Net gains on investment securities include net trading gains of ¥8,762 million, net trading gains of ¥4,607 million and net trading gains of ¥9,324 million ($113 million) for fiscal 2010, 2011 and 2012, respectively. Net losses of ¥239 million, net gains of ¥1,977 million and net losses of ¥ 1,188 million ($14 million) on derivative trading instruments are also included in net gains on investment securities for fiscal 2010, 2011 and 2012, respectively.

23. Life Insurance Operations

Life insurance premiums and related investment income in fiscal 2010, 2011 and 2012 consist of the following:

Life insurance premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Life insurance related investment income . . . . . . . . . . . . . . . . . . .	Millions ofyen	Millions ofyen	2012 ¥116,836 11,471 ¥128,307	Millions of U.S. dollars	Millions of U.S. dollars
	2010 ¥104,133 11,305 ¥115,438	2011 ¥107,860 10,455 ¥118,315			2012
					$1,421 140 $1,561

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 relating to policy issuance and underwriting). These policy acquisition costs are amortized over the respective policy periods in proportion to premium revenue recognized. Amortization charged to income for fiscal 2010, 2011 and 2012 amounted to ¥10,994 million, ¥9,661 million and ¥9,106 million ($111 million), respectively.

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24. Other Operations

Other operating revenues and other operating expenses in fiscal 2010, 2011 and 2012 consist of the following:

Millions ofyen	Millions ofyen	Millions of U.S. dollars	Millions of U.S. dollars
2010 2011 ¥ 41,408 ¥ 40,760 54,996 50,659 22,909 22,757 22,093 26,640 105,398 104,728 ¥246,804 ¥245,544 Millions ofyen			2012
		$ 489 565 278 348 1,461 $3,141 Millions of U.S. dollars
2010 ¥ 34,837 19,395 21,382 60,141 ¥135,755	2011 ¥ 33,790 20,630 24,676 63,145 ¥142,241		2012
			$ 386 246 317 877 $1,826

Other items consist of revenues and expenses from training facilities and senior housing, operating results from a real estate related business, operating results from electric power related business, commissions for the sale of insurance and other financial products, and revenues and expenses from other operations, of which there were no items exceeding 10% of total other operating revenues and expenses in fiscal 2010, 2011 and 2012, respectively.

Gains and losses from the disposition of operating facilities included in other operating assets are not significant for fiscal 2010, 2011 and 2012.

25. Write-downs of Long-Lived Assets

In accordance with ASC 360-10 (“Property, Plant, and Equipment—Impairment or Disposal of Long-Lived Assets”), the Company and its subsidiaries perform tests for recoverability on assets 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. We determine the fair value using appraisals prepared by independent third party appraisers or our own staff of qualified appraisers, based on recent

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ORIX Corporation and Subsidiaries

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 existing assets or completion of development projects, as appropriate.

During fiscal 2010, 2011 and 2012, the Company and certain subsidiaries recognized impairment losses for the difference between carrying amounts and fair values in the amount of ¥9,483 million, ¥20,310 million and ¥20,246 million ($246 million), respectively, which are reflected as write-downs of long-lived assets and income from discontinued operations. Of these amounts, ¥6,977 million, ¥17,400 million and ¥15,167 million ($185 million) are reflected as write-downs of long-lived assets in the accompanying consolidated statements of income for fiscal 2010, 2011 and 2012, respectively. Breakdowns of these amounts by segment are provided in Note 32 (“Segment Information”).

The details of significant write-downs are as follows.

Office Buildings —During fiscal 2010 and fiscal 2011, write-downs of ¥1,025 million and ¥2,464 million were recorded in relation to four office buildings and seven office buildings respectively, mainly due to a decline in estimated cash flows of each unit. During fiscal 2012, write-downs of ¥1,055 million ($13 million) were recorded for 17 office buildings held for sale, and write-downs of ¥605 million ($7 million) were recorded in relation to three office buildings due to a decline in estimated cash flows of each unit.

Condominiums —During fiscal 2010, write-downs of ¥2,451 million were recorded for 43 condominiums mainly held for sale. During fiscal 2011, write-downs of ¥1,353 million were recorded for 26 condominiums held for sale, and write-downs of ¥2,758 million were recorded in relation to 18 condominiums due to a decline in estimated cash flows of each unit. During fiscal 2012, write-downs of ¥1,108 million ($13 million) were recorded for 25 condominiums held for sale, and write-downs of ¥269 million ($3 million) were recorded in relation to five condominiums due to a decline in estimated cash flows of each unit.

Commercial Facilities Other Than Office Buildings —During fiscal 2010 and fiscal 2011, write-downs of ¥1,461 million and ¥5,284 million were recorded in relation to four buildings and 12 buildings respectively, mainly due to a decline in estimated cash flows of each unit. During fiscal 2012, write-downs of ¥385 million ($5 million) were recorded for seven buildings held for sale.

Land undeveloped or under construction —During fiscal 2010, write-downs of ¥1,678 million were recorded in relation to land undeveloped or under construction due to a decline in estimated cash flows of each unit. During fiscal 2011, there was no impairment. During fiscal 2012, write-downs of ¥2,220 million ($27 million) were recorded for land undeveloped or under construction held for sale, and write-downs of ¥6,983 million ($85 million) were recorded in relation to land undeveloped or under construction due to a decline in estimated cash flows of each unit.

Others —During fiscal 2010, 2011 and 2012, write-downs of ¥2,868 million, ¥8,451 million and ¥7,621 million ($93 million), respectively, for long-lived assets other than the above, mainly because the carrying amounts exceeded the estimated undiscounted future cash flows, which decreased due to deterioration in operating performance.

26. Discontinued Operations

ASC 205-20 (“Presentation of Financial Statements—Discontinued Operations”) requires that the Company and its subsidiaries reclassify the operations sold or to be disposed of by sale without significant continuing involvement in the operations to discontinued operations. Under this Codification Section, the Company and its

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ORIX Corporation and Subsidiaries

subsidiaries report the gains on sales and the results of these operations of subsidiaries, business units, and certain properties, which have been sold or are to be disposed of by sale, as income from discontinued operations in the accompanying consolidated statements of income. Revenues and expenses generated by the operations of such subsidiaries, business units and properties recognized in fiscal 2010 and 2011 have also been reclassified as income from discontinued operations in the accompanying consolidated statements of income.

During fiscal 2010, the Company completed the liquidation procedure for a subsidiary in Europe. A subsidiary sold its subsidiary which operated a spa in Japan, and the Company also sold a subsidiary which operated a real estate management and brokerage business in Japan. In addition, the Company recorded a gain in line with the dilution of the Company’s ownership share resulting from the issuance of new shares of its subsidiary which operated amusement parks in Japan. As a result, the Company recognized ¥2,810 million of aggregated gain during fiscal 2010.

During fiscal 2011, the Company and its subsidiary completed the liquidation procedure for a subsidiary in Japan which operated PFI (“Private Finance Initiative”) business for hospital management, and the Company wound up a subsidiary in Japan that was established in order to enter into derivative business. The Company sold a subsidiary which operated hairdressing business, and also sold a subsidiary which operated internet related business. In addition, a subsidiary sold its subsidiary in Japan, which operated consulting business in medical and nursing care field. As a result, ¥6,895 million of aggregated gain was recognized during fiscal 2011. Furthermore, the Company has determined to wind up a subsidiary in Japan, which operated asbestos removal business during fiscal 2011 and completed the liquidation procedure for the subsidiary in fiscal 2012.

During fiscal 2012, the Company and its subsidiaries sold a subsidiary which operated real-estate rental business, a subsidiary that operated a Japanese inn and hotel, a subsidiary that operated a golf course, a subsidiary that operated ski resorts, a subsidiary that operated a property management business and a subsidiary that operated a spa facility. In addition, the Company liquidated a kumiai , which was effectively a type of SPE, seeking for rent revenue. As a result of the sales and the liquidation, a loss of ¥361 million ($4 million) was recognized during fiscal 2012.

The Company and its subsidiaries own various real estate properties, including commercial and office buildings, for rental operations. In fiscal 2010, 2011 and 2012, the Company and its subsidiaries recognized ¥11,246 million, ¥7,498 million and ¥4,531 million ($55 million) of aggregated gains on sales of such real estate properties, respectively. In addition, the Company and its subsidiaries determined to dispose by sale of rental properties of ¥27,486 million and ¥33,933 million ($413 million) which are mainly included in investment in operating leases at March 31, 2011 and 2012, respectively.

Discontinued operations in fiscal 2010, 2011 and 2012 consist of the following:

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from discontinued operations, net* . . . . . . . . . . . . . . . . . . . . . Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations, net of applicable tax effect . . . . . . . . .	Millions ofyen 2010 2011 2012 ¥72,783 ¥46,272 ¥22,148 12,989 12,220 1,279 (7,019) (6,771) 1,410 ¥ 5,970 ¥ 5,449 ¥ 2,689	Millions ofyen 2010 2011 2012 ¥72,783 ¥46,272 ¥22,148 12,989 12,220 1,279 (7,019) (6,771) 1,410 ¥ 5,970 ¥ 5,449 ¥ 2,689	Millions of U.S. dollars	Millions of U.S. dollars
	2010 ¥72,783 12,989 (7,019) ¥ 5,970	2011 ¥46,272 12,220 (6,771) ¥ 5,449		2012
				$269 15 17 $ 32

Income from discontinued operations, net includes aggregate gains on sales of subsidiaries, business units, and rental properties in the amount of ¥14,056 million, ¥14,393 million and ¥4,170 million ($51 million) in fiscal 2010, 2011 and 2012, respectively.

F-105

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

27. Per Share Data

Reconciliation of the differences between basic and diluted earnings per share (EPS) in fiscal 2010, 2011 and 2012 is as follows:

In fiscal 2010, the diluted EPS calculation excludes convertible bond for 2,475 thousand shares and stock options for 1,411 thousand shares, as they were antidilutive. In fiscal 2011, the diluted EPS calculation excludes stock options for 1,139 thousand shares, as they were antidilutive. In fiscal 2012, the diluted EPS calculation excludes stock options for 982 thousand shares, as they were antidilutive.

Millions ofyen Millions of U.S. dollars 2010 2011 2012 2012 ¥31,475 ¥61,787 ¥84,055 $1,023 1,305 2,393 2,364 28 ¥32,780 ¥64,180 ¥86,419 $1,051 Thousands of shares 2010 2011 2012 . . . . . . . . . 101,901 107,489 107,509 . . . . . . . . . 21,664 24,412 24,411 . . . . . . . . . 86 107 123 . . . . . . . . . 123,651 132,008 132,043 Yen U.S. dollars 2010 2011 2012 2012 ¥308.87 ¥574.83 ¥781.84 $9.51 265.10 486.19 654.47 7.96	Millions ofyen Millions of U.S. dollars 2010 2011 2012 2012 ¥31,475 ¥61,787 ¥84,055 $1,023 1,305 2,393 2,364 28 ¥32,780 ¥64,180 ¥86,419 $1,051 Thousands of shares 2010 2011 2012 . . . . . . . . . 101,901 107,489 107,509 . . . . . . . . . 21,664 24,412 24,411 . . . . . . . . . 86 107 123 . . . . . . . . . 123,651 132,008 132,043 Yen U.S. dollars 2010 2011 2012 2012 ¥308.87 ¥574.83 ¥781.84 $9.51 265.10 486.19 654.47 7.96	Millions ofyen Millions of U.S. dollars 2010 2011 2012 2012 ¥31,475 ¥61,787 ¥84,055 $1,023 1,305 2,393 2,364 28 ¥32,780 ¥64,180 ¥86,419 $1,051 Thousands of shares 2010 2011 2012 . . . . . . . . . 101,901 107,489 107,509 . . . . . . . . . 21,664 24,412 24,411 . . . . . . . . . 86 107 123 . . . . . . . . . 123,651 132,008 132,043 Yen U.S. dollars 2010 2011 2012 2012 ¥308.87 ¥574.83 ¥781.84 $9.51 265.10 486.19 654.47 7.96	Millions of U.S. dollars	Millions of U.S. dollars
2010 ¥31,475 1,305 ¥32,780 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				2012

	2010	2011	2012 107,509 24,411 123 132,043 U.S. dollars	2012
	101,901 21,664 86	107,489 24,412 107		107,509 24,411 123
	123,651	132,008		132,043
	Yen
2010 ¥308.87 265.10			2012
			$9.51 7.96

28. Derivative Financial Instruments and Hedging

Risk management policy

The Company and its subsidiaries manage interest rate risk through asset and liability management systems. The Company and its subsidiaries use derivative financial instruments to hedge interest rate risk and avoid changes in interest rates having 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 employ foreign currency borrowings, foreign exchange contracts, and foreign currency swap agreements to hedge risks that are associated with certain transactions and investments

F-106

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

denominated in foreign currencies due to the potential for changes in exchange rates. Similarly, overseas subsidiaries generally structure their liabilities to match the currency-denomination of assets in each region.

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.

(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. The forecasted transactions related to the above-mentioned agreements and contracts as of March 31, 2012 mature at various dates through 2024. Net gains (losses) before deducting applicable taxes on derivative contracts were reclassified from accumulated 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 gains of ¥824 million, net losses of ¥211 million and net gains of ¥181 million ($2 million) during fiscal 2010, 2011 and 2012, respectively. No amount of net gains (losses), which represent the ineffectiveness of cash flow hedges, was recorded in earnings for fiscal 2010, 2011 and 2012. Approximately ¥852 million ($10 million) of net derivative losses included in accumulated other comprehensive income (loss), net of applicable income taxes at March 31, 2012 will be reclassified into earnings within fiscal 2013.

(b) Fair value hedges

The Company and its subsidiaries use financial instruments designated as fair value hedges to hedge their exposure to interest rate risk and foreign currency exchange risk. The Company and its subsidiaries designate foreign currency swap agreements and foreign exchange contracts to minimize foreign currency exposures on lease receivables, loan receivables and borrowings, denominated in foreign currency. The Company and its subsidiaries designate interest rate swap to hedge interest rate exposure of the fair values of loan receivables. The Company and certain overseas subsidiaries, which issued medium-term notes or bonds with fixed interest rates, use interest rate swap contracts to hedge interest rate exposure of the fair values of these medium-term notes. In cases where the medium-term notes were denominated in other than the subsidiaries’ local currencies, foreign currency swap agreements are used to hedge foreign exchange rate exposure. A certain overseas subsidiary uses foreign currency long-term-debt to hedge foreign exchange rate exposure from unrecognized firm commitment. For fiscal 2010, 2011 and 2012, net losses of ¥307 million, ¥231 million and ¥265 million ($3 million) of hedge ineffectiveness associated with instruments designated as fair value hedges were recorded in earnings.

(c) Hedges of net investment in foreign operations

The Company uses foreign exchange contracts, borrowings and bonds denominated in the subsidiaries’ local currencies to hedge the foreign currency exposure of the net investment in overseas subsidiaries. The gains and losses of these hedging instruments were recorded in foreign currency translation adjustments, which is a part of other comprehensive income (loss).

(d) Trading derivatives or derivatives not designated as hedging instruments

The Company and its subsidiaries engage in trading activities with various future contracts. Therefore the Company and the subsidiaries are at various risks such as share price fluctuation risk, interest rate risk and

F-107

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

foreign currency exchange risk. The Company and the subsidiaries check that these risks are below a certain level by using internal indicators and determine whether such contracts should be continued or not. The Company and certain subsidiaries entered into interest rate swap agreements, foreign currency swap agreements and foreign exchange contracts for risk management purposes but not qualified for hedge accounting under ASC 815 (“Derivatives and Hedging”).

ASC 815-10-50 (“Derivatives and Hedging—Disclosures”) requires companies to disclose the fair value of derivative instruments and their gains (losses) in tabular format, as well as information about credit-risk-related contingent features in derivative agreements.

The effect of derivative instruments on the consolidated statements of income, pre-tax, for fiscal 2010 is as follows.

(1) Cash flow hedges

Interest rate swap agreements . . . . . . . . . . . . . . Foreign exchange contracts . . . Foreign currency swap agreements . . . . . . . . . . . . . .	Gains (losses) recognized in other comprehensive income on derivative (effectiveportion) Millions ofyen ¥ 1,070 (28) (2,415)	Gains (losses) reclassified from accumulated other comprehensive income (loss) into income (effectiveportion) Consolidated statements of income location Millions ofyen Interest on loans and investment securities/ Interest expense ¥ 89 Foreign currency transaction loss 28 Interest on loans and investment securities/ Interest expense/Foreign currency transaction loss 1,030	Gains (losses) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)	Gains (losses) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)
		Consolidated statements of income location Interest on loans and investment securities/ Interest expense Foreign currency transaction loss Interest on loans and investment securities/ Interest expense/Foreign currency transaction loss	Consolidated statements of income location — — —	Millions ofyen
				¥ 0 0 0

(2) Fair value hedges

Interest rate swap agreements . . . . . . . . Foreign exchange contracts . . . . . . . . . Foreign currency swap agreements . . .	Gains (losses) recognized in income on derivative Millions ofyen Consolidated statements of income location ¥ 924 Interest on loans and investment securities/Interest expense 4,700 Foreign currency transaction loss 349 Foreign currency transaction loss	Gains (losses) recognized in income on hedged item	Gains (losses) recognized in income on hedged item
	Millions ofyen ¥ 924 4,700 349	Millions ofyen ¥(1,231) (4,700) (349)	Consolidated statements of income location
			Interest on loans and investment securities/Interest expense Foreign currency transaction loss Foreign currency transaction loss

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(3) Hedges of net investment in foreign operations

Foreign exchange contracts . . . . Borrowings and bonds in local currency . . . . . . . . . . . . . . . . .	Gains (losses) recognized in other comprehensive income on derivative and others (effectiveportion) Millions ofyen ¥ (45) 1,783	Gains (losses) reclassified from accumulated other comprehensive income (loss) into income (effectiveportion) Consolidated statements of income location Millions ofyen Gains on sales of subsidiaries and affiliates and liquidation losses, net ¥820 — 0	Gains (losses) recognized in income on derivative and others (ineffective portion and amount excluded from effectiveness testing)	Gains (losses) recognized in income on derivative and others (ineffective portion and amount excluded from effectiveness testing)
		Consolidated statements of income location Gains on sales of subsidiaries and affiliates and liquidation losses, net —	Consolidated statements of income location — —	Millions ofyen
				¥0 0

(4) Trading derivatives or derivatives not designated as hedging instruments

Interest rate swap agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency swap agreements . . . . . . . . . . . . . . . . . . . . . . . . Futures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit derivatives held/written . . . . . . . . . . . . . . . . . . . . . . . . . . . Options held/written, Caps held . . . . . . . . . . . . . . . . . . . . . . . . . .	Gains (losses) recognized in income on derivative	Gains (losses) recognized in income on derivative
	Millions ofyen ¥ 14 998 (147) 67 383 (477)	Consolidated statements of income location
		Other operating revenues/expenses Other operating revenues/expenses Brokerage commissions and net gains on investment securities Brokerage commissions and net gains on investment securities Other operating revenues/expenses Other operating revenues/expenses

F-109

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

The effect of derivative instruments on the consolidated statements of income, pre-tax, for fiscal 2011 is as follows.

(1) Cash flow hedges

Interest rate swap agreements . . . . . Foreign exchange contracts . . . . . . Foreign currency swap agreements . . . . . . . . . . . . . . . . .	Gains (losses) recognized in other comprehensive income on derivative (effectiveportion)	Gains (losses) reclassified from accumulated other comprehensive income (loss) into income (effectiveportion)	Gains (losses) reclassified from accumulated other comprehensive income (loss) into income (effectiveportion)	Gains (losses) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing) Consolidated statements of income location Millions ofyen — ¥ 0 — 0 — 0	Gains (losses) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing) Consolidated statements of income location Millions ofyen — ¥ 0 — 0 — 0
	Millions ofyen	Consolidated statements of income location	Millions ofyen		Millions ofyen
	¥ 598 526 (2,623)	Interest on loans and investment securities/Interest expense Foreign currency transaction loss Interest on loans and investment securities/Interest expense/Foreign currency transaction loss	¥ 313 (291) (383)		¥ 0 0 0

(2) Fair value hedges

Interest rate swap agreements . . . . . . . . Foreign exchange contracts . . . . . . . . . . Foreign currency swap agreements . . . . Foreign currency long-term-debt . . . . . .	Gains (losses) recognized in income on derivative and other	Gains (losses) recognized in income on derivative and other		Gains (losses) recognized in income on hedged item
	Millions ofyen	Consolidated statements of income location	Millions ofyen ¥(2,217) (8,765) (4,297) (1,193)	Consolidated statements of income location
	¥1,986 8,765 4,297 1,193	Interest on loans and investment securities/Interest expense Foreign currency transaction loss Foreign currency transaction loss Foreign currency transaction loss		Interest on loans and investment securities/Interest expense Foreign currency transaction loss Foreign currency transaction loss Foreign currency transaction loss

F-110

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(3) Hedges of net investment in foreign operations

Foreign exchange contracts . . . . . . Borrowings and bonds in local currency . . . . . . . . . . . . . . . . . . .	Gains (losses) recognized in other comprehensive income on derivative and others (effectiveportion)	Gains (losses) reclassified from accumulated other comprehensive income (loss) into income (effectiveportion)	Gains (losses) reclassified from accumulated other comprehensive income (loss) into income (effectiveportion)	Gains (losses) recognized in income on derivative and others (ineffective portion and amount excluded from effectiveness testing)	Gains (losses) recognized in income on derivative and others (ineffective portion and amount excluded from effectiveness testing)
	Millions ofyen	Consolidated statements of income location	Millions ofyen	Consolidated statements of income location	Millions ofyen
	¥ 4,468 3,711	Gains on sales of subsidiaries and affiliates and liquidation losses, net —	¥ 39 0	— —	¥ 0 0

(4) Trading derivatives or derivatives not designated as hedging instruments

Interest rate swap agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency swap agreements . . . . . . . . . . . . . . . . . . . . . . . . Futures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit derivatives held/written . . . . . . . . . . . . . . . . . . . . . . . . . . . Options held/written, Caps held and other . . . . . . . . . . . . . . . . . .	Gains (losses) recognized in income on derivative	Gains (losses) recognized in income on derivative
	Millions ofyen ¥ 34 (10) 1,897 (245) (675) 660	Consolidated statements of income location
		Other operating revenues/expenses Other operating revenues/expenses Brokerage commissions and net gains on investment securities Brokerage commissions and net gains on investment securities Other operating revenues/expenses Other operating revenues/expenses

F-111

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

The effect of derivative instruments on the consolidated statements of income, pre-tax, for fiscal 2012 is as follows.

(1) Cash flow hedges

Interest rate swap agreements . . . . . . . . . . Foreign exchange contracts . . . . . . . . . . . Foreign currency swap agreements . . . . . . . . . .	Gains (losses) recognized in other comprehensive income on derivative (effectiveportion) Millions ofyen Millions of U.S. dollars ¥(489) $(6) (526) (7) (409) (5)	Gains (losses) reclassified from accumulated other comprehensive income (loss) into income (effectiveportion) Gains (losses) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)
		Consolidated statements of income location Millions ofyen Millions of U.S. dollars Consolidated statements of income location Millions ofyen Millions of U.S. dollars
		Interest on loans and investment securities/ Interest expense ¥ 44 $ 0 — ¥0 $0 Foreign currency transaction loss (696) (8) — 0 0 Interest on loans and investment securities/ Interest expense/ Foreign currency transaction loss 1,031 12 — 0 0

(2) Fair value hedges

Interest rate swap
agreements . . . . . . . . . . . . . .
Foreign exchange contracts . . .
Foreign currency swap
agreements . . . . . . . . . . . . . .
Foreign currency long-term-
debt . . . . . . . . . . . . . . . . . . . .

Gains (losses) recognized
in income on derivative and other
Gains (losses) recognized
in income on hedged item

Millions
ofyen
Millions of
U.S. dollars
Consolidated
statements of
income location
Millions
ofyen
Millions of
U.S. dollars
Consolidated
statements of
income location

¥4,072
$50
Interest on loans and
investment securities/Interest
expense
¥(4,337)
$(53)
Interest on loans and
investment securities/Interest
expense

972
12
Foreign currency transaction
loss
(972)
(12)
Foreign currency transaction
loss

227
3
Foreign currency transaction
loss
(227)
(3)
Foreign currency transaction
loss

69
1
Foreign currency transaction
loss
(69)
(1)
Foreign currency transaction
loss

F-112

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(3) Hedges of net investment in foreign operations

Foreign exchange contracts . . . . . . . .
Borrowings and bonds in local
currency . . . . . . . . . . . . . . . . . . . . .

Gains (losses)
recognized
in other
comprehensive
income on
derivative
and others
(effectiveportion)
Gains (losses) reclassified from
accumulated other comprehensive
income (loss) into income
(effectiveportion)
Gains (losses) recognized
in income on derivative and others
(ineffective portion and amount
excluded from effectiveness testing)

¥(1,198)
$(15)
—
¥0
$0
—
¥0
$0

1,348
16
—
0
0
—
0
0

(4) Trading derivatives or derivatives not designated as hedging instruments

Interest rate swap agreements . . . . . . . . . . . . . . . . . . . . . . Foreign currency swap agreements . . . . . . . . . . . . . . . . . Futures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . Credit derivatives held/written . . . . . . . . . . . . . . . . . . . . . Options held/written, Caps held and other . . . . . . . . . . . .		Gains (losses) recognized in income on derivative	Gains (losses) recognized in income on derivative
	Millions ofyen ¥ 23 24 (1,056) 615 (92) 137	Millions of U.S. dollars $ 0 0 (13) 7 (1) 2	Consolidated statements of income location
			Other operating revenues/expenses Other operating revenues/expenses Brokerage commissions and net gains on investment securities Brokerage commissions and net gains on investment securities Other operating revenues/expenses Other operating revenues/expenses

F-113

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Notional amounts of derivative instruments and other, fair values of derivative instruments and other in consolidated balance sheets at March 31, 2011 and 2012 are as follows.

March 31, 2011

Derivatives designated as hedging instruments: Interest rate swap agreements . . . . . . . . . Futures, Foreign exchange contracts . . . . Foreign currency swap agreements . . . . . Foreign currency long-term-debt . . . . . . Trading derivatives or derivatives not designated as hedging instruments: Interest rate swap agreements . . . . . . . . . Options held/written, Caps held . . . . . . . Futures, Foreign exchange contracts . . . . Foreign currency swap agreements . . . . . Credit derivatives held/written . . . . . . . .	Asset derivatives Notional amount Fair value Consolidated balance sheets location Millions ofyen Millions ofyen	Asset derivatives	Liability derivatives
			Fair value Consolidated balance sheets location Millions ofyen
	¥276,132 ¥ 2,070 Other receivables ¥ 1,273 Trade notes, accounts payable and other liabilities 163,342 1,075 Other receivables 3,509 Trade notes, accounts payable and other liabilities 179,429 13,072 Other receivables 31,830 Trade notes, accounts payable and other liabilities 116,695 0 — 0 — ¥ 3,129 ¥ 0 — ¥ 47 Trade notes, accounts payable and other liabilities 124,034 3,467 Other receivables 2,071 Trade notes, accounts payable and other liabilities 227,640 1,558 Other receivables 1,459 Trade notes, accounts payable and other liabilities 10,073 1,694 Other receivables 1,651 Trade notes, accounts payable and other liabilities 36,027 49 Other receivables 236 Trade notes, accounts payable and other liabilities

F-114

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

March 31, 2012

March 31, 2012
Derivatives designated as hedging instruments and other: Interest rate swap agreements . . . . . . . . . . Futures, Foreign exchange contracts . . . . . . . . . . . . Foreign currency swap agreements . . . . . . . . . . Foreign currency long- term-debt . . . . . . . . . . . . Trading derivatives or derivatives not designated as hedging instruments: Interest rate swap agreements . . . . . . . . . . Options held/written, Caps held and other . . . . . . . . Futures, Foreign exchange contracts . . . . . . . . . . . . Credit derivatives held . . .	Notional amount	Asset derivatives	Liability derivatives
		Fair value Consolidated balance sheets location Millions ofyen Millions of U.S. dollars	Fair value Consolidated balance sheets location Millions ofyen Millions of U.S. dollars
	Millions ofyen Millions of U.S. dollars
	¥234,523 $2,853 90,813 1,105 87,480 1,064 152,508 1,856 ¥ 1,329 $ 16 157,134 1,912 188,446 2,293 9,913 121	¥4,624 $56 Other receivables ¥1,253 $15 Trade notes, accounts payable and other liabilities 325 4 Other receivables 4,985 61 Trade notes, accounts payable and other liabilities 5,540 67 Other receivables 5,432 66 Trade notes, accounts payable and other liabilities 0 0 — 0 0 — ¥ 0 $ 0 — ¥ 24 $ 0 Trade notes, accounts payable and other liabilities 5,924 72 Other receivables 4,430 54 Trade notes, accounts payable and other liabilities 702 9 Other receivables 512 6 Trade notes, accounts payable and other liabilities 97 1 Other receivables 23 0 Trade notes, accounts payable and other liabilities

Certain of the Company’s derivative instruments contain provisions that require the Company to maintain an investment grade credit rating from each of the major credit rating agencies.

If the Company’s credit rating were to fall below investment grade, it would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate payment on derivative instruments that are in net liability positions.

There are no derivative instruments with credit-risk-related contingent features that are in a liability position on March 31, 2011 and 2012.

F-115

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

ASC 815-10-50 (“Derivatives and Hedging—Disclosures”) requires sellers of credit derivatives to disclose additional information about credit- risk-related potential payment risk.

The Company and its subsidiaries have contracted credit derivatives for the purpose of trading. Details of credit derivatives written are as follows as of March 31, 2011. There are no credit derivatives written as of March 31, 2012.

March 31, 2011

Types of derivatives Credit default swap . . . . . . . . . . . . . . . . . . . . . . Total return swap . . . . . . . . . . . . . . . . . . . . . . . .	The events or circumstances that would require the seller to perform under the credit derivative In case of credit event (bankruptcy, failure to pay, restructuring) occurring in underlying reference company1 In case of underlying reference CMBS price falling beyond certain extent2	Maximum potential amount of future payment under the credit derivative Millions ofyen ¥ 7,000 28,606	Approximate remaining term of the credit derivative Less than one year Less than one year	Fair value of the credit derivative
				Millions ofyen
				¥ 48 (236)

*1 Underlying reference company’s credit ratings are BBB+ or better rated by rating agencies as of March 31, 2011.
*2 Underlying reference CMBS is highest grade tranche and its credit rating is BBB or better rated by rating agencies as of March 31, 2011. Unless such highest grade tranche of CMBS incurs a loss, the Company and its subsidiaries will not suffer a loss.

29. 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 direct financing 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.

The Company and its subsidiaries make investments in securities for various purposes. The risk of incurring great loss during a certain period is believed to be minimal due to the diversification in the investment portfolio. However, various factors, including the issuer’s credit risk and market trends, would expose the Company and its subsidiaries to a risk of unexpected loss.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

At March 31, 2011 and 2012, no concentration with a single obligor exceeded 1% of consolidated total assets. With respect to the Company and its subsidiaries’ credit exposures on a geographic basis, ¥4,854 billion, or 76%, at March 31, 2011 and ¥4,733 billion ($57,584 million), or 77%, at March 31, 2012 of the credit risks arising from all financial instruments are attributable to customers located in Japan. The largest concentration of credit risks outside of Japan is exposure attributable to obligors located in the United States of America. The gross amount of such exposure is ¥1,001 billion and ¥858 billion ($10,442 million) as of March 31, 2011 and 2012, respectively. Since we adopted ASU 2009-16 and ASU 2009-17 on April 1, 2010, which changed the circumstances under which we are required to consolidate certain VIEs, the amounts above in relation to our exposure in the U.S. mainly include the effect of such consolidated VIEs.

The Company and its subsidiaries run businesses such as development and rental of commercial real estate and office buildings, condominium development and sales, hotel, golf course, and training facility operation. Real estate in development and rental business is mainly recorded in investment in direct financing leases and operating leases. In connection with investment in direct financing leases and operating leases, the percentage of investment in real estate to consolidated total assets is 12.7% and 12.5% as of March 31, 2011 and 2012, respectively.

The Company and its subsidiaries provide consumers with housing loans in Japan. In connection with installment loans, the percentage of housing loans to consolidated total assets is 9.62% and 10.38% as of March 31, 2011 and 2012, respectively.

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30. Estimated Fair Value of Financial Instruments

The following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying consolidated financial statements and the related market or fair value.

The disclosures include financial instruments and derivative financial instruments, except for investment in direct financing leases, investment in subsidiaries and affiliates, pension obligations and insurance contracts.

March 31, 2011

Trading instruments Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Futures, Foreign exchange contracts: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit derivatives held/written: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options held/written, Caps held, and other: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-trading instruments Assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Installment loans (net of allowance for probable loan losses) . . . . . . . . . . . . . . . . Investment in securities: Practicable to estimate fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not practicable to estimate fair value* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities: Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Futures, Foreign exchange contracts: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency swap agreements: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate swap agreements: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen	Millions ofyen
	Carrying amount ¥ 71,991 1,524 1,254 49 236 3,467 2,071 ¥ 732,127 118,065 5,148 2,850,215 937,129 166,261 478,633 1,065,175 4,531,268 1,109 3,714 14,766 33,481 2,070 1,320	Estimated fair value
		¥ 71,991 1,524 1,254 49 236 3,467 2,071 ¥ 732,127 118,065 5,148 2,860,886 937,541 166,261 478,633 1,070,513 4,491,271 1,109 3,714 14,766 33,481 2,070 1,320

The fair value of investment securities of ¥166,261 million was not estimated, as it was not practical.

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ORIX Corporation and Subsidiaries

March 31, 2012

Trading instruments Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . Futures, Foreign exchange contracts: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit derivatives held: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . Options held/written, Caps held, and other: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-trading instruments Assets: Cash and cash equivalents . . . . . . . . . . . . . . Restricted cash . . . . . . . . . . . . . . . . . . . . . . . Time deposits . . . . . . . . . . . . . . . . . . . . . . . . Installment loans (net of allowance for probable loan losses) . . . . . . . . . . . . . . . . Investment in securities: Practicable to estimate fair value . . . . . Not practicable to estimate fair value* . . . . . . . . . . . . . . . . . . . . . . . . Liabilities: Short-term debt . . . . . . . . . . . . . . . . . . . . . . . Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term debt . . . . . . . . . . . . . . . . . . . . . . . Futures, Foreign exchange contracts: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency swap agreements: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate swap agreements: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .		Millions ofyen	Millions ofyen	Millions ofyen
	Carrying amount ¥ 12,817 692 482 97 23 5,924 4,430 ¥ 786,892 123,295 24,070 2,650,162 935,495 199,078 ¥ 457,973 1,103,514 4,267,480 335 5,015 5,540 5,432 4,624 1,277	Estimated fair value ¥ 12,817 692 482 97 23 5,924 4,430 ¥ 786,892 123,295 24,070 2,669,196 938,314 199,078 ¥ 457,973 1,107,440 4,262,612 335 5,015 5,540 5,432 4,624 1,277	Level 1 ¥ 384 649 412 0 0 0 0 ¥786,892 123,295 0 0 173,056 0 ¥ 0 0 0 0 0 0 0 0 0	Level 2 ¥ 12,433 43 70 97 23 631 4,430 ¥ 0 0 24,070 78,934 521,603 0 ¥ 457,973 1,107,440 1,491,620 335 5,015 5,540 5,432 4,624 1,277	Level 3
					¥ 0 0 0 0 0 5,293 0 ¥ 0 0 0 2,590,262 243,655 0 ¥ 0 0 2,770,992 0 0 0 0 0 0

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ORIX Corporation and Subsidiaries

Trading instruments Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . Futures, Foreign exchange contracts: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit derivatives held: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Options held/written, Caps held, and other: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-trading instruments Assets: Cash and cash equivalents . . . . . . . . . . . . . . . . Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . Installment loans (net of allowance for probable loan losses) . . . . . . . . . . . . . . . . . . Investment in securities: Practicable to estimate fair value . . . . . . . Not practicable to estimate fair value* . . . Liabilities: Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . Futures, Foreign exchange contracts: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency swap agreements: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate swap agreements: Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		Millions of U.S. dollars	Millions of U.S. dollars	Millions of U.S. dollars
	Carrying amount $ 156 8 6 1 0 72 54 $ 9,574 1,500 293 32,244 11,382 2,422 $ 5,572 13,426 51,922 4 61 67 66 56 16	Estimated fair value $ 156 8 6 1 0 72 54 $ 9,574 1,500 293 32,476 11,416 2,422 $ 5,572 13,474 51,863 4 61 67 66 56 16	Level 1 $ 5 7 5 0 0 0 0 $ 9,574 1,500 0 0 2,105 0 $ 0 0 0 0 0 0 0 0 0	Level 2 $ 151 1 1 1 0 8 54 $ 0 0 293 960 6,346 0 $ 5,572 13,474 18,148 4 61 67 66 56 16	Level 3
					$ 0 0 0 0 0 64 0 $ 0 0 0 31,516 2,965 0 $ 0 0 33,715 0 0 0 0 0 0

The fair value of investment securities of ¥199,078 million ($2,422 million) was not estimated, as it was not practical.

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 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.

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ORIX Corporation and Subsidiaries

Estimation of fair value

The following methods and significant assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate a value:

Cash and cash equivalents, restricted cash, time deposits and short-term debt —The carrying amounts recognized in the balance sheets were determined to be reasonable estimates of their fair values due to their short maturity.

Installment loans —The carrying amounts of floating-rate installment loans with no significant changes in credit risk and which could be repriced within a short-term period were determined to be reasonable estimates of their fair values. The carrying amounts of purchased loans were determined to be reasonable estimates of their fair values because the carrying amounts (net of allowance) are considered to properly reflect the recoverability and value of these loans. For certain homogeneous categories of medium- and long-term fixed-rate loans, such as housing loans, the estimated fair values were calculated by discounting the future cash flows using the current interest rates charged by the Company and its subsidiaries for new loans made to borrowers with similar credit ratings and remaining maturities. Concerning above, if available, estimated fair values were based on quoted market prices or quotations provided by dealers.

Investment in securities —For trading securities and available-for-sale securities other than specified bonds issued by SPEs and certain other mortgage-backed and asset-backed securities, the estimated fair values, which are also the carrying amounts recorded in the balance sheets, were generally based on quoted market prices or quotations provided by dealers. As for the specified bonds issued by the SPEs and certain other mortgage-backed and asset-backed securities included in available-for-sale securities, the Company and its subsidiaries estimated the fair value by using valuation models including discounted cash flow methodologies, commonly used optionpricing models and broker quotes (see Note 2). For held-to-maturity securities, the estimated fair values were based on quoted market prices. For certain investment funds included in other securities, the fair values are estimated based on net asset value per share. With regard to other securities other than the investment funds described above, the Company and its subsidiaries have not estimated the fair value, as it is not practicable to do so. Those other securities mainly consist of non-marketable equity securities and preferred capital shares. Because there were no quoted market prices for such other securities and each security has a different nature and characteristics, reasonable estimates of fair values could not be made without incurring excessive costs.

Deposits —The carrying amounts of demand deposits recognized in the consolidated balance sheets were determined to be reasonable estimates of their fair values. The estimated fair values of time deposits were calculated by discounting the future cash flows. The current interest rates offered for the deposits with similar terms and remaining average maturities were used as the discount rates.

Long-term debt —The carrying amounts of long-term debt with floating rates which could be repriced within short-term periods were determined to be reasonable estimates of their fair values. For medium-and longterm fixed-rate debt, the estimated fair values were calculated by discounting the future cash flows. The borrowing interest rates that were currently available to the Company and its subsidiaries offered by financial institutions for debt with similar terms and remaining average maturities were used as the discount rates. Concerning above, if available, estimated fair values were based on quoted market prices or quotations provided by dealers.

Derivatives —For exchange-traded derivatives, fair value is based on quoted market prices. Fair value estimates for other derivatives generally reflect the estimated amounts that the Company and its subsidiaries would receive or pay to terminate the contracts at the reporting date, thereby taking into account the current

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ORIX Corporation and Subsidiaries

unrealized gains or losses of open contracts. Discounted amounts of future cash flows using the current interest rate are used when estimating the fair values for most of the Company’s and its subsidiaries’ derivatives.

31. Commitments, Guarantees and Contingent Liabilities

Commitments —As of March 31, 2012, the Company and its subsidiaries have commitments for the purchase of equipment to be leased, having a cost of ¥12,337 million ($150 million).

The minimum future rentals on non-cancelable operating leases are as follows.

Years ending March 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen ¥ 3,653 3,325 2,362 2,157 2,070 15,771 ¥29,338	Millions of U.S. dollars	Millions of U.S. dollars
			$ 44 40 29 26 25 193 $357

The Company and its subsidiaries lease office space under operating lease agreements, which are primarily cancelable, and made rental payments totaling ¥9,571 million, ¥8,131 million and ¥7,681 million ($93 million) in fiscal 2010, 2011 and 2012, respectively.

Certain computer systems of the Company and its subsidiaries have been operated and maintained under non-cancelable contracts with third-party service providers. For such services, the Company and its subsidiaries made payments totaling ¥1,029 million, ¥759 million and ¥442 million ($5 million) in fiscal 2010, 2011 and 2012, respectively. The longest contract of them will mature in fiscal 2016. As of March 31, 2012, the amounts due are as follows:

Years ending March 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen ¥157 97 97 35 ¥386	Millions of U.S. dollars
		$2 1 1 1 $5

The Company and its subsidiaries have commitments to fund estimated construction costs to complete ongoing real estate development projects and other commitments, totaling ¥79,224 million ($964 million) as of March 31, 2012.

The Company and its subsidiaries have agreements to commit to execute loans for consumers, and to invest in funds, as long as the agreed-upon terms are met. As of March 31, 2012, the total unused credit and capital amount available is ¥97,235 million ($1,183 million).

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Guarantees —The Company and its subsidiaries apply ASC 460-10 (“Guarantees”), and at the inception of a guarantee recognize a liability in the consolidated balance sheets for the fair value of the guarantee within the scope of ASC 460-10. 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, 2011 and 2012:

	2011		2012	2012	2012	2012
Millions	ofyen Book value of guarantee liabilities ¥1,958 2,218 2,353 4 ¥6,533	Millions	ofyen Book value of guarantee liabilities ¥1,577 3,869 4,536 7 ¥9,989	Millions of U.S. dollars
Potential future payment ¥325,557 166,936 16,949 294 ¥509,736		Potential future payment ¥360,436 162,554 19,511 1,991 ¥544,492		Potential future payment $4,385 1,978 238 24 $6,625	Book value of guarantee liabilities
						$ 19 47 56 0 $122

Guarantee of corporate loans: The Company and certain subsidiaries mainly guarantee corporate loans issued by financial institutions for customers. The Company and its 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 its subsidiaries assume the guaranteed customers’ obligation, the Company and its subsidiaries obtain a right to claim the collateral assets. In other cases, certain contracts that guarantee corporate loans issued by financial institutions for customers include contracts that the amounts of performance guarantee are limited to a range of guarantee commissions. As of March 31, 2011 and March 31, 2012, total notional amount of the loans subject to such guarantees are ¥1,227,000 million and ¥1,234,000 million ($15,014 million) respectively, and book value of guarantee liabilities which amount is included in the table above are ¥702 million and ¥666 million ($8 million), respectively. The potential future payment amounts included in the table above for these guarantees are limited to the agreed range of the guarantee commissions, which are less than the total notional amounts of the loans subject to these guarantees.

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 2012.

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 from Federal National Mortgage Association (“Fannie Mae”) under Fannie Mae’s Delegated Underwriting and Servicing program. As part of this program, Fannie Mae provides a commitment to purchase the loans.

In return for the delegated authority, the subsidiary guarantees the performance of certain housing loans transferred to Fannie Mae and has the payment or performance risk of the guarantees to absorb some of the losses when losses arise from the transferred loans.

There have been no significant changes in the payment or performance risk of the guarantees in fiscal 2012.

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ORIX Corporation and Subsidiaries

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

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 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.

Litigation — The Company and its 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.

32. Segment Information

Financial information about its operating segments reported below is information that is separately available and evaluated regularly by the management in deciding how to allocate resources and in assessing performance.

In line with a change of management classification, from September 1, 2011, the environment and energy related businesses, which were heretofore included in the Corporate Financial Services segment, have been included in the Investment Banking segment, and the Investment Banking segment has been renamed the Investment and Operation segment.

Due to these changes, the reclassified figures are shown for the years ended March 31, 2010 and 2011.

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

Corporate Financial Services : Lending, leasing, commission business for the sale of financial products Maintenance Leasing : Automobile leasing and rentals, car sharing, and precision measuring and ITrelated equipment rentals and leasing Real Estate : Real estate development, rental and financing, facility operation, REIT asset management, real estate investment and advisory services Investment and Operation : Loan servicing (asset recovery), principal investment, venture capital and the environment and energy-related businesses Retail : Life insurance, banking, and card loan business Overseas Business : Leasing, lending, investment in bonds, investment banking, and ship- and aircraft-related operations

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ORIX Corporation and Subsidiaries

Financial information of the segments for the years ended March 31, 2010, 2011 and 2012 is as follows:

Year ended March 31, 2010 Revenues . . . . . . . . . . . . . . . . Interest revenue . . . . . . . . . . . Interest expense . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . Other significant non-cash items: Provision for doubtful receivables and probable loan losses . . . . . . . . . . . Write-downs of long-lived assets . . . . . . . . . . . . . . . Increase (Decrease) in policy liabilities . . . . . . Equity in net income (loss) of affiliates and gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net . . . . . . . . . . . . . Discontinued operations . . . . Segment profits (losses) . . . . Segment assets . . . . . . . . . . . Long-lived assets . . . . . . . . . Expenditures for long-lived assets . . . . . . . . . . . . . . . . . Investment in affiliates . . . . .			Millions ofyen	Millions ofyen
	Corporate Financial Services ¥ 84,167 33,511 18,455 10,776 40,533 152 0 613 (77) (19,481) 1,140,251 25,626 4,623 15,605	Maintenance Leasing ¥226,179 74 5,611 100,316 2,013 0 0 86 0 23,307 515,716 303,809 77,261 631	Real Estate ¥ 215,001 16,021 21,131 17,305 9,521 4,379 0 3,747 12,732 138 1,677,402 1,013,190 51,001 82,768	Investment and Operation ¥ 87,318 24,339 7,393 2,199 2,278 283 0 (6,233) 917 (2,350) 511,333 48,540 765 56,704	Retail ¥ 155,491 34,174 10,580 14,241 9,277 0 (32,927) 19,039 104 31,104 1,578,758 44,838 24 167,293	Overseas Business ¥185,906 26,926 17,273 29,206 7,901 2,163 0 8,635 (733) 37,142 860,815 133,462 26,939 86,700	Total
							¥ 954,062 135,045 80,443 174,043 71,523 6,977 (32,927) 25,887 12,943 69,860 6,284,275 1,569,465 160,613 409,701

F-125

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Year ended March 31, 2011 Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest revenue . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . Other significant non-cash items: Provision for doubtful receivables and probable loan losses . . . . . . . . . . . . . . . Write-downs of long-lived assets . . . . . . . Increase (Decrease) in policy liabilities . . Equity in net income (loss) of affiliates and gains (losses) on sales of subsidiaries and affiliates and liquidation losses, net . . . . . Discontinued operations . . . . . . . . . . . . . . . . Segment profits . . . . . . . . . . . . . . . . . . . . . . . Segment assets . . . . . . . . . . . . . . . . . . . . . . . Long-lived assets . . . . . . . . . . . . . . . . . . . . . Expenditures for long-lived assets . . . . . . . . Investment in affiliates . . . . . . . . . . . . . . . . .			Millions ofyen	Millions ofyen	Millions ofyen
	Corporate Financial Services	Maintenance Leasing	Real Estate	Investment and Operation	Retail	Overseas Business	Total
	¥ 79,305 23,830 12,877 5,605 12,718 104 0 487 121 10,035 968,327 37,919 3,744 15,993	¥225,830 189 4,998 98,577 1,955 0 0 157 0 26,203 502,738 312,261 118,283 710	¥ 217,590 13,181 18,706 17,148 1,131 13,278 0 2,585 7,004 54 1,539,814 1,016,039 40,270 84,325	¥ 89,595 24,083 6,639 1,760 6,772 996 0 1,333 6,225 13,212 506,011 45,139 6,168 55,151	¥ 148,768 ¥176,875 ¥ 937,963 28,171 34,841 124,295 8,980 16,931 69,131 11,129 27,662 161,881 1,409 3,226 27,211 0 1,770 16,148 (11,692) 0 (11,692) 52 13,382 17,996 87 (51) 13,386 23,777 45,639 118,920 1,653,704 972,224 6,142,818 42,686 193,724 1,647,768 86 58,156 226,707 110,375 106,813 373,367

F-126

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

Year ended March 31, 2012
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest revenue . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . .
Other significant non-cash items:
Provision for doubtful receivables and
probable loan losses . . . . . . . . . . . . . . . . .
Write-downs of long-lived assets . . . . . . . .
Increase (Decrease) in policy liabilities . . . .
Equity in net income (loss) of affiliates and
gains (losses) on sales of subsidiaries and
affiliates and liquidation losses, net . . . . . . .
Discontinued operations . . . . . . . . . . . . . . . . .
Segment profits . . . . . . . . . . . . . . . . . . . . . . . .
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . .
Long-lived assets . . . . . . . . . . . . . . . . . . . . . . .
Expenditures for long-lived assets . . . . . . . . . .
Investment in affiliates . . . . . . . . . . . . . . . . . . .

Millions ofyen

Corporate
Financial
Services
Maintenance
Leasing
Real Estate
Investment
and
Operation
Retail
Overseas
Business
Total

¥ 72,449
¥231,951
¥ 222,631 ¥ 73,293 ¥ 160,071 ¥187,240 ¥ 947,635

19,901
343
10,729
21,716
29,041
32,212
113,942

9,759
4,186
16,188
5,757
7,195
19,212
62,297

3,420
98,810
19,427
1,814
10,849
28,194
162,514

2,278
10
2,988
7,471
1,128
3,811
17,686

793
0
11,311
713
0
798
13,615

0
0
0
0
6,321
0
6,321

687
146
1,310
7,033
(9,996)
6,299
5,479

475
0
(644)
(401)
592
666
688

21,532
34,710
1,349
15,983
21,825
49,768
145,167

898,776
537,782
1,369,220
471,145
1,738,454 986,762 6,002,139

27,029
327,489
977,102
33,964
44,986 195,207 1,605,777

909
126,779
22,945
507
14
63,506
214,660

16,842
880
84,697
61,469
79,255
88,564
331,707

Millions of U.S. dollars

Corporate
Financial
Services
Maintenance
Leasing
Real Estate
Investment
and
Operation
Retail
Overseas
Business
Total

$ 881
$ 2,822
$ 2,709 $ 892 $ 1,948 $ 2,278 $ 11,530

242
4
131
264
353
392
1,386

119
51
197
70
88
233
758

42
1,202
236
22
132
343
1,977

28
0
36
91
14
46
215

10
0
137
9
0
10
166

0
0
0
0
77
0
77

8
2
16
86
(122)
77
67

6
0
(8)
(5)
7
8
8

262
422
16
194
266
606
1,766

10,935
6,543
16,659
5,733
21,152
12,006
73,028

329
3,985
11,888
413
547
2,375
19,537

11
1,543
279
6
0
773
2,612

205
11
1,031
748
964
1,077
4,036

Segment figures reported in these tables include operations classified as discontinued operations in the accompanying consolidated statements of income.

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, discontinued operations and the consolidation of certain variable interest entities (VIEs). Most of selling, general and

F-127

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

administrative expenses, including compensation costs that are directly related to the revenue generating activities of each segment, have been accumulated by and charged to each segment. Since the Company and its subsidiaries evaluate performance for the segments based on profit or loss before income taxes, tax expenses are not included in segment profits or losses. Net income attributable to the noncontrolling interests, net income attributable to the redeemable noncontrolling interests and discontinued operations, which are recognized net of tax, are adjusted to profit or loss before income tax. Gains and losses that management does not consider for evaluating the performance of the segments, such as write-downs of certain securities and certain foreign exchange gains or losses are excluded from the segment profits or losses, and are regarded as corporate items.

Assets attributed to each segment are investment in direct financing leases, installment loans, investment in operating leases, investment in securities, other operating assets, inventories, advances for investment in operating leases (included in other assets) and investment in affiliates. 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.

For those VIEs that are used for securitization and are consolidated in accordance with ASC 810-10 (“Consolidations”), for which the VIE’s assets can be used only to settle related obligations of those VIEs and the creditors (or beneficial interest holders) do not have recourse to other assets of the Company or its subsidiaries, segment assets are measured based on the amount of the Company and its subsidiaries’ net investments in the VIEs, which is different from the amount of total assets of the VIEs, and accordingly, segment revenues are also measured at a net amount representing the revenues earned on the net investments in the VIEs.

Certain gains or losses related to assets and liabilities of consolidated VIEs, which are not ultimately attributable to the Company and its subsidiaries, are excluded from segment profits.

F-128

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

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.

Segment revenues: Total revenues for segments . . . . . . . . . . . . . . . . . . . . . Revenues related to corporate assets . . . . . . . . . . . . . . Revenues related to certain VIEs . . . . . . . . . . . . . . . . . Revenues from discontinued operations . . . . . . . . . . . . Total consolidated revenues . . . . . . . . . . . . . . . . . . . . . Segment profits: Total profits for segments . . . . . . . . . . . . . . . . . . . . . . . Corporate interest expenses, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . Corporate write-downs of securities . . . . . . . . . . . . . . . Corporate net gains (losses) on investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate other gains (losses) . . . . . . . . . . . . . . . . . . . Gains (losses) related to assets or liabilities of certain VIEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . Net income attributable to the noncontrolling interests and net income attributable to the redeemable noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . Total consolidated income before income taxes and discontinued operations . . . . . . . . . . . . . . . . . . . . . . Segment assets: Total assets for segments . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents, restricted cash and time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allowance for doubtful receivables on direct financing leases and probable loan losses . . . . . . . . Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other corporate assets . . . . . . . . . . . . . . . . . . . . . . . . . . Assets of certain VIEs . . . . . . . . . . . . . . . . . . . . . . . . . Total consolidated assets . . . . . . . . . . . . . . . . . . . . . . .	Millions ofyen	Millions ofyen	2012 ¥ 947,635 5,564 41,833 (22,148) ¥ 972,884 ¥ 145,167 (14,690) 0 0 (3,689) 2,583 (1,279) 2,392 ¥ 130,484 ¥6,002,139 934,257 (136,588) 188,108 501,023 865,935 ¥8,354,874	Millions of U.S. dollars
	2010 ¥ 954,062 5,818 3,455 (72,783) ¥ 890,552 ¥ 69,860 (276) (887) 173 (3,004) 0 (12,989) 3,180 ¥ 56,057 ¥6,284,275 717,121 (157,523) 210,521 485,746 199,660 ¥7,739,800	2011 ¥ 937,963 3,440 51,747 (46,272) ¥ 946,878 ¥ 118,920 (11,852) (615) 203 (4,876) (1,591) (12,220) 5,332 ¥ 93,301 ¥6,142,818 855,340 (154,150) 182,013 543,728 1,011,833 ¥8,581,582		2012
				$ 11,530 67 509 (269) $ 11,837 $ 1,766 (187) 0 0 (36) 31 (15) 29 $ 1,588 $ 73,028 11,367 (1,662) 2,289 6,095 10,536 $101,653

From April 1, 2010, certain assets and revenues related to certain VIEs and certain gains (losses) related to assets or liabilities of certain VIEs are included in the reconciliation of segment totals to consolidated financial statement amounts. Due to these changes, the reclassified figures are shown for the year ended March 31, 2010.

F-129

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 ofyen	Millions ofyen
		Year Ended March 31, 2010
Japan ¥784,537 33,180	*America2** ¥ 96,879 18,743	*Other3** ¥81,919 17,123	Difference between Geographic Total and Consolidated Amounts ¥(72,783) (12,989) Millions ofyen	Consolidated Amounts
				¥890,552 56,057
		Year Ended March 31, 2011
Japan ¥771,403 62,477	*America2** ¥138,975 18,411	*Other3** ¥82,772 24,633	Difference between Geographic Total and Consolidated Amounts ¥(46,272) (12,220) Millions ofyen	Consolidated Amounts
				¥946,878 93,301
		Year Ended March 31, 2012
Japan ¥768,955 77,439	*America2** ¥130,717 26,894	*Other3 Difference between Geographic Total and Consolidated Amounts ¥95,360 ¥(22,148) 27,430 (1,279) Millions of U.S. dollars**		Consolidated Amounts
				¥972,884 130,484
		Year Ended March 31, 2012
Japan $ 9,356 942	*America2** $ 1,590 327	*Other3** $ 1,160 334	Difference between Geographic Total and Consolidated Amounts $ (269) (15)	Consolidated Amounts
				$ 11,837 1,588

*Note: 1. Results of discontinued operations are included in each amount attributed to each geographic area. 2. Mainly United States

Mainly Asia, Europe, Oceania and Middle East

ASC 280-10 (“Segment Reporting”) requires disclosure of revenues from external customers for each product and service as enterprise-wide information. The consolidated statements of income in which the revenues are categorized based on the nature of the types of business conducted include the required information.

No single customer accounted for 10% or more of the total revenues for the years ended March 31, 2010, 2011 and 2012.

33. Subsequent Events

On April 26, 2012, the Company entered into an agreement with Sumitomo Mitsui Banking Corporation, (hereinafter, “SMBC”) to transfer all shares (4,004,824 shares, 51% of the outstanding shares) of ORIX Credit Corporation (hereinafter, “ORIX Credit”) held by SMBC to the Company, resulting in the reclassification of ORIX Credit from an equity-method affiliate to a wholly-owned subsidiary of the Company at the time of the transfer.

F-130

Schedule II.—Valuation and Qualifying Accounts and Reserves

ORIX Corporation and Subsidiaries

		Millions ofyen	Millions ofyen
		Year Ended March 31, 2010
Balance at beginning ofperiod ¥ 148 0 0 ¥ 148	Acquisitions ¥ 0 0 0 ¥ 0	Addition: Charged to costs and expenses Deduction ¥ 9 ¥ (85) 3 (3) 16 0 ¥ 28 ¥ (88) Millions ofyen		Translation adjustment ¥ 25 0 0 ¥ 25		Balance at end ofperiod
							¥ 97 0 16 ¥ 113
		Year Ended March 31, 2011
Balance at beginning ofperiod ¥ 97 16 ¥ 113	Acquisitions ¥ 0 0 ¥ 0	Addition: Charged to costs and expenses Deduction ¥ 42 ¥ (59) 0 (16) ¥ 42 ¥ (75) Millions ofyen		Translation adjustment ¥ (2) 0 ¥ (2)		Balance at end ofperiod
							¥ 78 0 ¥ 78
		Year Ended March 31, 2012
Balance at beginning ofperiod ¥ 78 0 ¥ 78	Acquisitions ¥ 0 0 ¥ 0	Addition: Charged to costs and expenses Deduction ¥ 0 ¥ (38) 15 (15) ¥ 15 ¥ (53) Millions ofyen		Translation adjustment ¥ (1) 0 ¥ (1)		Balance at end ofperiod
							¥ 39 0 ¥ 39
Balance at beginning ofperiod ¥44,635 ¥42,846 ¥26,794	Acquisitions ¥100 ¥669 ¥875	Addition: Charged to costs and expenses ¥3,501 ¥6,220 ¥6,339	*Deduction1** ¥ (5,448) ¥(22,778) ¥ (6,836)		*Other2** ¥ 58 ¥ (163) ¥(3,034)	Balance at end ofperiod
						¥42,846 ¥26,794 ¥24,138

*Note: 1. The amount of deduction includes expiry of loss carryforwards and sales of subsidiary.

The amount of other includes translation adjustment and the effect of changes in statutory tax rate.

F-131

AI assistant

ORIX CORP — Annual Report 2012

30155_rns_2012-03-31_15366cef-65cc-4fd7-ab7c-c7c882859bf9.pdf

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2011 AND 2012

ORIX Corporation and Subsidiaries

(Note)

CONSOLIDATED BALANCE SHEETS—(Continued) AS OF MARCH 31, 2011 AND 2012

ORIX Corporation and Subsidiaries

(Note)

CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED MARCH 31, 2010, 2011 AND 2012

ORIX Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME—(Continued) FOR THE YEARS ENDED MARCH 31, 2010, 2011 AND 2012

ORIX Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED MARCH 31, 2010, 2011 AND 2012

ORIX Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED MARCH 31, 2010, 2011 AND 2012

ORIX Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued) FOR THE YEARS ENDED MARCH 31, 2010, 2011 AND 2012

ORIX Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued) FOR THE YEARS ENDED MARCH 31, 2010, 2011 AND 2012

ORIX Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, 2010, 2011 AND 2012

ORIX Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ORIX Corporation and Subsidiaries

1. Significant Accounting and Reporting Policies

(a) Basis of presenting financial statements

(b) Principles of consolidation

(c) Use of estimates

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(d) Foreign currencies translation

(e) Recognition of revenues

(1) Recognition of revenues for direct financing leases

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(2) Recognition of revenues for operating leases

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(f) Insurance premiums and expenses

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(h) Impairment of long-lived assets

(i) Investment in securities

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(j) Income taxes

(k) Securitized assets

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(l) Derivative financial instruments

(m) Pension plans

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(n) Stock-based compensation

(o) Stock splits

(p) Cash and cash equivalents

(q) Restricted cash

(r) Other operating assets

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(s) Other receivables

(t) Inventories

(u) Office facilities

(v) Other assets

(w) Goodwill and other intangible assets

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX Corporation and Subsidiaries

(x) Trade notes, accounts payable and other liabilities

(y) Capitalization of interest costs

(z) Advertising

(aa) Discontinued operations

(ab) Financial statements presentation in U.S. dollars

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ORIX CORP Annual Report 2012