Orix Corp · 20-F · For 12/31/01

Filed On 6/28/02 10:29am ET   ·   SEC File 1-14856   ·   Accession Number 950103-2-641

Annual Report of a Foreign Private Issuer   ·   Form 20-F
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Document/Exhibit                   Description                      Pages   Size 

 1: 20-F        Annual Report of a Foreign Private Issuer            163    938K 
 2: EX-1.1      Underwriting Agreement                                10     33K 
 3: EX-10.1     Material Contract                                      1      6K 

20-F   ·   Annual Report of a Foreign Private Issuer
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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

--------- 

FORM 20-F 
(Mark One)                                                                      
 [ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) 
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2002
OR
 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to        
Commission file number: 001-14856 

ORIX KABUSHIKI KAISHA 
(Exact name of Registrant as specified in our charter)

ORIX CORPORATION
(Translation of Registrant's name into English) 

Japan 
(Jurisdiction of incorporation or organization) 

3-22-8 Shiba, Minato-ku 
Tokyo 105-8683, Japan 
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act: 

                                                         Name of each exchange
          Title of each class                          on which registered
            -------------------                          ---------------------
(1)  Common stock without par value (the "Shares")      New York Stock Exchange*

(2)  American Depository Shares ("ADSs"), each of       New York Stock Exchange 
which represents one-half of one Share                            

(3)  0.375% Convertible Notes due 2005 (the "Notes")    New York Stock Exchange 

(4)  American Depository Notes ("ADNs"), each of        New York Stock Exchange 
which represents one Note in the principal                        
amount of yen2,000,000                                            

Securities registered or to be registered pursuant to Section 12(g) of the Act: 

None
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d)  
of the Act: 
None
(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes 
of capital or common stock as of the close of the period covered by the 
annual report.

   As of March 31, 2002, 84,303,985 Shares and 855,720 ADSs are outstanding.

  Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of   
1934 during the preceding 12 months (or for such shorter period that the        
Registrant was required to file such reports), and (2) has been subject to such 
filing requirements for the past 90 days.                                       

   Yes  X               No
           ---                 ---
Indicate by check mark which financial statement item the Registrant has        
elected to follow.                                                    

       Item 17                  Item 18  X
                ---                      ---

    *Not for trading, but only in connection with the registration of American
Depositary Shares.                                                              

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TABLE OF CONTENTS 

----------------- 

                                                                          Page
                                                                          ----

Certain Defined Terms, Conventions and  Presentation of Financial               
Information..................................................................ii 

Forward Looking Statements...................................................ii 

PART I........................................................................1 
    Item 1.  Identity of Directors, Senior Management and Advisors...........1
    Item 2.  Offer Statistics and Expected Timetable.........................1
    Item 3.  Key information.................................................1
    Item 4.  Information on the Company......................................8
    Item 5.  Operating and Financial Review and Prospects...................36
    Item 6.  Directors, Senior Management and Employees.....................76
    Item 7.  Major Shareholders and Related Party Transactions..............85
    Item 8.  Financial Information..........................................86
    Item 9.  The Offer and Listing..........................................86
    Item 10. Additional Information.........................................88
    Item 11. Quantitative and Qualitative Disclosures About Market Risk.....96
    Item 12. Other than Equity Securities..................................101

PART II.....................................................................101 
    Item 13. Defaults, Dividend Arrearages and Delinquencies...............101
Item 14. Material Modifications to the Rights of Security Holders     
             and Use of Proceeds...........................................101
    Item 15. [Reserved]....................................................101
    Item 16. [Reserved]....................................................101

PART III....................................................................101 
    Item 17. Financial Statements..........................................101
    Item 18. Financial Statements..........................................101
    Item 19. Exhibits......................................................101

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CERTAIN DEFINED TERMS, CONVENTIONS AND
PRESENTATION OF FINANCIAL INFORMATION 

As used in this Annual Report, unless the context otherwise requires, "Company" 
and "ORIX" refer to ORIX Corporation and "we", "us", "our" and similar terms    
refer to ORIX Corporation and our subsidiaries.                                 

In this annual report, "subsidiary" and "subsidiaries" refer to consolidated    
subsidiaries of ORIX, companies in which ORIX owns more than 50%, and           
"affiliate" and "affiliates" refer to all of our affiliates accounted for by    
the equity method, companies in which ORIX owns 20-50%.                         

The consolidated financial statements of ORIX have been prepared in accordance  
with accounting principles generally accepted in the United States of America   
("U.S. GAAP"). Unless otherwise stated or the context otherwise requires, all   
amounts in such financial statements are expressed in Japanese yen.             

References in this Annual Report to "yen" or "yen" are to Japanese yen and      
references to "$" or "dollars" are to United States dollars.                    

Certain monetary amounts included in this Annual Report have been subject to    
rounding adjustments; accordingly, figures shown as totals in certain tables    
may not be equal to the arithmetic sum of the figures which precede them.       

The Company's fiscal year ends on March 31. The fiscal year ended March 31,     
2002 is referred to throughout this Annual Report as fiscal 2002 or the 2002    
fiscal year, and other fiscal years are referred to in a corresponding manner.  
References to years not specified as being fiscal years are to calendar years.  

--------- 

FORWARD LOOKING STATEMENTS

This annual report contains statements that constitute "forward-looking         
statements" within the meaning of Section 21(E) of the Securities Exchange Act  
of 1934. When included in this Annual Report, the words, "will", "should",      
"expects", "intends", "anticipates", "estimates" and similar expressions, among 
others, identify forward looking statements. Such statements, which include     
statements contained in "Item 5. Operating and Financial Review and Prospects." 
and "Item 11. Quantitative and Qualitative Disclosure About Market Risk",       
inherently are subject to a variety of risks and uncertainties that could cause 
actual results to differ materially from those set forth in such statements.    
These forward looking statements are made only as of the date of this Annual    
Report. The Company expressly disclaims any obligation or undertaking to        
release any update or revision to any forward looking statement contained       
herein to reflect any change in the Company's expectations with regard thereto  
or any change in events, conditions or circumstances on which any statement is  
based.                                                                          

ii  

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PART I

Item 1.  Identity of Directors, Senior Management and Advisors.                 

Not applicable.                                                       

Item 2.  Offer Statistics and Expected Timetable.                               

Not applicable.                                                       

Item 3.  Key information.                                                       

Selected Financial Data                                                         

    The following selected consolidated financial information has been derived
from our consolidated financial statements as of each of the dates and for each 
of the periods indicated below. This information should be read in conjunction  
with and is qualified in its entirety by reference to our consolidated          
financial statements, including the notes thereto, included in this Annual      
Report, which have been audited by Asahi & Co., a member firm of Andersen       
Worldwide SC, independent accountants.                                          

                                                        [Enlarge/Download Table]
                                                               Year ended March 31,                            
                                    ---------------------------------------------------------------------------
                                       1998        1999        2000         2001         2002         2002     
                                    ----------  ----------   ----------   ----------   ----------   ---------  
                                      (In millions of yen and millions of US dollars except per Share data)    
                                                                                                               
INCOME STATEMENT DATA                                                                                          
Total revenues..................... yen507,143  yen593,941   yen616,513   yen586,149   yen658,462      $4,942  
Interest expense...................    142,177     140,846      115,038      109,289       90,348         678  
Selling, general and                                                                                           
   administrative expenses.........     79,671      82,395       90,961      101,156      126,316         948  
Provision for doubtful receivables                                                                             
   and possible loan losses........     49,434      51,845       45,573       44,584       51,367         385  
Operating income...................     31,041      31,042       52,886       57,148       73,369         551  
Equity in net income (loss) of and                                                                             
   gain (loss) on sales of                                                                                     
   affiliates......................      7,371      (3,727)        (838)       2,088         (330)         (3) 
Income before income taxes.........     38,412      27,315       52,048       59,236       73,039         548  
Net income.........................     23,731      25,621       30,642       34,157       40,269         302  
Basic earnings per Share(1)........     305.33      330.43       385.27       417.77       489.19        3.67  
Diluted earnings per Share(1)......     305.33      330.43       377.02       400.99       467.11        3.51  
Cash dividends per Share...........      15.00       15.00        15.00        15.00        15.00        0.11  

---------                                                                       
(1)  Basic earnings per share and Diluted earnings per share have been          
retroactively adjusted for a stock split.                             

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                                                        [Enlarge/Download Table]
                                                                    As of March 31,                                   
                                 ------------------------------------------------------------------------------------ 
                                    1998           1999           2000           2001           2002           2002   
                                 -----------    ------------   ------------  -------------   ------------     ------- 
                                     (In millions of yen and millions of US dollars except number of Shares)          
                                                                                                                      
BALANCE SHEET DATA                                                                                                    
Investment in direct                                                                                                  
   financing leases(1).......    yen2,186,022   yen1,952,842   yen1,744,953   yen1,657,709   yen1,658,669     $12,448 
Installment loans(1).........       1,794,825      1,761,887      1,791,439      1,846,511      2,273,280      17,060 
                                 -----------    ------------   ------------   ------------   ------------     ------- 
Subtotal.....................       3,980,847      3,714,729      3,536,392      3,504,220      3,931,949      29,508 
Investment in operating                                                                                               
   leases....................         435,066        411,156        397,576        451,171        474,491       3,561 
Investment in securities.....         500,449        576,206        758,381        942,158        861,336       6,464 
Other operating assets.......          65,838         73,345         72,472        132,006        260,373       1,954 
                                 -----------    ------------   ------------   ------------   ------------     ------- 
Operating assets(2)..........       4,982,200      4,775,436      4,764,821      5,029,555      5,528,149      41,487 
Allowance for doubtful                                                                                                
   receivables on direct                                                                                              
   financing leases and                                                                                               
   possible loan losses......        (145,741)      (132,606)      (136,939)      (141,077)      (152,887)     (1,147)
Other assets.................         737,850        704,806        713,660        702,833        974,957       7,316 
                                 -----------    ------------   ------------   ------------   ------------     ------- 
Total assets.................    yen5,574,309   yen5,347,636   yen5,341,542   yen5,591,311   yen6,350,219     $47,656 
                                 ============   ============   ============   ============   ============     ======= 
Short-term debt..............       2,576,483      2,184,983      1,912,761      1,562,072      1,644,462      12,341 
Long-term debt...............       2,044,570      2,036,028      1,942,784      2,330,159      2,809,861      21,087 
Common stock.................          20,180         20,180         41,688         41,820         51,854         389 
Additional paid-in capital...          37,303         37,464         59,285         59,885         69,823         524 
Shareholders' equity.........         313,821        327,843        425,671        461,323        502,508       3,771 
Number of issued Shares......      64,870,299     64,870,299     68,630,294     82,388,025     84,303,985          -- 

                                                      1998         1999         2000          2001         2002       
                                                     ------       ------       ------        ------       ------      
                                                                               (%)                                    
SELECTED DATA AND RATIOS(3)                                                                                           
Shareholders' equity ratio...................         5.63         6.13         7.97          8.25         7.91       
Return on assets.............................         0.45         0.47         0.57          0.62         0.67       
Return on equity.............................         7.63         7.99         8.13          7.70         8.36       
Allowance/investment in direct financing                                                                              
   leases and installment loans..............          3.7          3.6          3.9           4.0          3.9       

---------                                                                       
(1)  The sum of assets considered 90 or more days past due and total impaired   
    assets measured pursuant to Financial Accounting Standards Boards, or FASB
Statement 114 amounted to yen271,177 million as of March 31, 2000,    
yen258,432 million as of March 31, 2001, and yen255,123 million as of 
   March 31, 2002. These sums included investment in direct financing leases
  considered 90 or more days past due of yen53,743 million as of March 31,
  2000, yen53,515 million as of March 31, 2001 and yen67,924 million as of
March 31, 2002, installment loans (excluding amounts attributable to  
    treatment under FASB Statement 114) considered 90 or more days past due of
   yen91,513 million as of March 31, 2000, yen84,827 million as of March 31,
 2001, and yen74,199 million as of March 31, 2002, and installment loans
  considered impaired under the definition contained in FASB Statement 114
    of yen125,921 million as of March 31, 2000, yen120,090 million as of March
31, 2001, and yen113,000 million as of March 31, 2002. See "Item 4.   
Information on the Company--Profile of Businesses--Direct Financing   
Leases" and "--Installment Loans and Investment Securities".          

(2)  Operating assets are defined as all assets subject to regular, active      
  sales and marketing activities including the assets shown on the balance
sheet as investment in                                                

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direct financing leases, installment loans, investment in operating   
leases, investment in securities and other operating assets. Operating
   assets are calculated before allowance for doubtful receivables on direct
financing leases and possible loan losses.                            

(3)  Shareholders' equity ratio is the ratio as of the period end of            
    shareholders' equity to total assets. Return on assets is the ratio of net
    income for the period to average total assets during the period. Return on
   equity is the ratio of net income for the period to average shareholders'
   equity during the period. Allowance/investment in direct financing leases
  and installment loans is the ratio as of the period end of the allowance
for doubtful receivables on direct financing leases and possible loan 
    losses to the sum of investment in direct financing leases and installment
loans.                                                                

 In certain parts of this Annual Report, we have translated Japanese yen
amounts into US dollars for the convenience of readers. The rate that we used   
for translations was yen133.25 = US$1.00, which was the approximate exchange    
rate in Japan on March 31, 2002. The following table provides the noon buying   
rates for Japanese Yen expressed in Japanese Yen per US$1.00 during the periods 
indicated. No representation is made that the Japanese yen or US dollar amounts 
referred to herein could have been or could be converted into US dollars or     
Japanese yen, as the case may be, at any particular rate or at all.             

                                                        [Enlarge/Download Table]
                                                                   Year Ended March 31,                        
                                               ----------------------------------------------------------------
                                                 1998          1999          2000         2001          2002   
                                               ---------    ----------    ---------     ---------     ---------
                                                                  (Yen per U.S. dollar)                        
                                                                                                               
High.......................................... yen133.99     yen147.14    yen124.45     yen125.54     yen134.77
Low...........................................    111.42        108.83       101.53        104.19        115.89
Average (of noon buying rates available on                                                                     
   the last day of each month during the                                                                       
   period)....................................    123.57        128.10       110.02        111.65        125.64
At period-end.................................    133.29        118.43       102.73        125.54        132.70

The following table provides the high and low noon buying rates for   
Japanese yen per $1.00 during the months indicated.                             

                                                        High           Low
                                                         ---------    ----------
2002                                                                            
January.........................................         yen134.64    yen130.93 
February........................................            134.77       132.26 
March...........................................            133.46       127.07 
April...........................................            133.40       128.13 
May.............................................            128.66       123.08 
June (through June 21)..........................            125.64       121.23 

Risk factors                                                                    

  Our business may continue to be adversely affected by the recession in Japan

Our business may continue to be adversely affected by the recession in
Japan. The recession may affect our new business origination volume, the credit 
quality of our assets and margins on operating assets.                          

   The Japanese economy has shown slow growth or negative growth for most of
the last decade. Although from 1995 to early 1997 the economy recovered to some 
extent, since 1997 recessionary conditions have prevailed.                      

  As a result of adverse economic conditions in Japan, we may be unable to
originate more leases and loans and our non-performing assets may increase. Our 
allowance for doubtful receivables on direct financing leases and possible loan 
losses may prove to be inadequate. Adverse economic conditions may prevent our  
customers from meeting their financial obligations. The value of collateral     
securing our loans and the value of equipment that we lease to customers may    
decline. Our ability to re-lease or remarket equipment on favorable terms may   
also be limited by adverse economic conditions in Japan. Any such event may     
have an adverse effect on our results of operation and financial condition.     

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

   At March 31, 2002, we had loans outstanding of yen311,609 million to real
estate-related companies and construction companies. Of that amount, we         
maintained an allowance for possible loan losses of yen31,045 million. Our      
allowance for doubtful receivables on direct financing leases and possible loan 
losses may be inadequate to cover credit losses on our loans to real estate     
related companies and construction companies.                                   

Japanese real estate-related companies and construction companies have
been severely affected by the collapse of the bubble economy in Japan. Because  
of the large declines in real estate prices, these companies have suffered      
enormous losses on investments in real estate and loans secured by real estate. 
Some of these losses have been recognized in the financial statements of these  
companies and some have not. Companies in these sectors are suffering from      
other difficult business conditions resulting from the collapse of the bubble   
economy, including the lack of liquidity in the real estate market and a        
decrease in major development projects. Therefore, these companies may have     
difficulty paying amounts due on loans. In addition, the value of real estate   
collateral securing our loans from real estate-related companies and            
construction companies may further decline. This may prevent us from fully      
recovering our loans to those companies if they default on their obligations.   

Our business may continue to be adversely affected by adverse economic    
conditions in the United States                                           

A portion of our revenue is derived from our operations in the United 
States, and we have significant investments in securities of US issuers. The US 
economy has shown slow growth since the second half of the year ended March 31, 
2001, accompanied by declining stock prices and corporate earnings, and         
according to some authorities is currently in recession. Our results of         
operations have been and may continue to be adversely affected by adverse       
economic conditions in the United States. Adverse effects on our US operations  
might include:                                                                  

   o    an increase in provisions for doubtful receivables and possible loan
       losses if the financial condition of our US customers deteriorates;

    o    an increase in write-downs of securities and other investments if the
         market values of securities continue to decline and such declines are
         not expected to be temporary or as a consequence of the insolvency of
issuers; and                                                

 o    an increase of losses on sale of or unrealized loss on real estate
 holdings if the value of our real estate in the United States
declines significantly.                                     

Adverse developments affecting other Asian economies may continue to      
adversely affect our business                                             

The economies of Hong Kong, Indonesia, Malaysia, Korea and other Asian
countries where we operate have experienced problems since the second half of   
1997. Although economic conditions in some of these countries have improved, we 
may suffer losses on investments in these countries and poor operating results  
on our businesses in these countries if these countries experience              

o    declines in the value of the local currency,                     

o    declines in gross domestic product,                              

o    declines in corporate earnings,                                  

o    political turmoil, or                                            

o    stock market volatility.                                         

These and other factors could result in                               

o    lower demand for our services,                                   

o    further deterioration of credit quality of our customers in Asian
markets,                                                    

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 o    the need to provide financial support to our Asian subsidiaries or
affiliates, or                                              

o    further write-offs of Asian assets.                              

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

 We are subject to risks relating to changes in market rates of interest
and currency exchange rates.                                                    

   Significant increases in market interest rates, or the perception that an
increase may occur, could adversely affect our ability to originate new         
transactions, including direct financing leases and loans, and our ability to   
grow.                                                                           

On the other hand, a decrease in interest rates could result in faster
prepayments of loans. In addition, changes in market interest rates could       
affect the interest income that we receive on interest-earning assets           
differently than the interest rates we pay on interest-bearing liabilities.     
This could increase our interest expense more than our revenues. An increase in 
market interest rates could make some of our floating-rate loan customers       
default on our loans to them.                                                   

Not all of our assets and liabilities are matched by currency. As a   
consequence, rapid or significant changes in currency exchange rates could have 
an adverse impact on our assets and our financial condition and results of      
operations.                                                                     

We may suffer losses on our investment portfolio                          

  We hold large investments in debt and equity securities, mainly in Japan
and the United States. At March 31, 2002, the book value of our investments in  
securities was yen861,336 million. We may suffer losses on these investments    
because of changes in market prices, defaults or other reasons. 6.2% of our     
investment in securities at March 31, 2002 was marketable equity securities,    
mainly common stock of Japanese listed companies. The market values of these    
equity securities are volatile and have declined substantially in recent years. 
Unrealized gains and losses on equity securities are generally recorded in      
shareholders' equity, net of income taxes, and are not directly charged to      
income. However, declines in market value on available-for-sale securities are  
charged to income if we believe that these declines are other than temporary.   
We recorded yen10,848 million in charges of this kind in the year ended March   
31, 2001 and yen19,742 million in charges of this kind in the year ended March  
31, 2002. We may have to record more charges of this kind in the future.        

We have substantial investments in debt securities, mainly long-term  
corporate bonds with fixed interest rates. We may realize losses on investments 
in debt securities as a result of issuer defaults or deterioration in issuers'  
credit quality. We may also realize losses on our investment portfolio if       
market interest rates increase. Current market interest rates for               
yen-denominated obligations are particularly low.                               

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

   We lease equipment under direct financing leases and operating leases. In
both cases there is a risk that we will suffer losses at the end of the lease   
if we are unable to realize the residual value of the equipment that is         
estimated at the beginning of the lease. This risk is particularly significant  
in operating leases, because the lease term is much shorter than the useful     
life of the equipment. If we are unable to sell or re-lease the equipment at    
the end of the lease, it may not recover our investment in the equipment and it 
may suffer losses. Our estimates of the residual value of equipment are based   
on current market values of used equipment and estimates of when and how much   
equipment will become obsolete. If equipment values and product market trends   
differ from our expectations, such estimates may prove to be wrong.             

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

We maintain an allowance for doubtful receivables on direct financing 
leases and possible loan losses. This allowance reflects our judgment of the    
loss potential, after considering factors such as:                              

o    the nature and characteristics of obligors,                      

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o    economic conditions and trends,                                  

o    charge-off experience,                                           

o    delinquencies,                                                   

o    future cash flows, and                                           

o    the value of underlying collateral and guarantees.               

 We cannot be sure that our allowance for doubtful receivables on direct
financing leases and possible loan losses will be adequate over time to cover   
credit losses in these portfolios. This allowance may turn out to be inadequate 
if adverse changes in the Japanese economy or other economies in which we       
compete or discrete events adversely affect specific customers, industries or   
markets. If our allowance for doubtful receivables on direct financing leases   
and possible loan losses is insufficient to cover these changes or events, we   
could be adversely affected.                                                    

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

We compete primarily on the basis of pricing, terms and transaction   
structure. Other important competitive factors include industry experience,     
client service and relationships. From time to time, our competitors seek to    
compete aggressively on the basis of pricing and terms and we may lose market   
share if we are unwilling to match our competitors because we want to maintain  
our interest margins. Because some of our competitors are larger than us and    
have access to capital at a lower cost than we have, they may be better able to 
maintain profitable interest margins while still reducing prices. To the extent 
that we match our competitors' pricing or terms, we may experience lower        
interest margins.                                                               

  Our access to liquidity and capital may be restricted by economic conditions

Our primary sources of funds are cash flow from operations, borrowings
from banks and other institutional lenders, and funding from capital markets    
activities, such as offerings of commercial paper, medium-term notes, straight  
bonds, asset-backed securitizations and other debt securities. A downgrade in   
our credit ratings could result in an increase in our interest expense and      
could have an adverse impact on our ability to access the commercial paper      
market or the public and private debt markets, which could have an adverse      
effect on our financial position and liquidity. Even if we are unable to access 
these markets on acceptable terms, we have access to other sources of           
liquidity, including bank borrowings, cash flow from our operations and sales   
of our assets. We cannot be sure, however, that these other sources will be     
adequate if our credit ratings are downgraded or other adverse conditions       
arise.                                                                          

We continue to rely significantly on short-term funding from Japanese 
commercial banks. Only a portion of this funding is provided under committed    
facilities. We also rely on the capital markets as a funding source, including  
the commercial paper and corporate bond markets. We are taking steps to reduce  
refinancing risks by diversifying our funding sources and increasing committed  
credit facilities from Japanese banks and foreign banks. Despite these efforts, 
committed credit facilities are subject to financial and other covenants and    
conditions to drawdown, including minimum net worth requirements, and the risk  
that we will be unable to roll over other short-term funding remains.           

Inability to assert claims against independent auditors                   

  Our consolidated financial statements as of March 31, 2001, and 2002 and
for the three years ended March 31, 2002 included in this Annual Report have    
been audited by Asahi & Co., independent public accountants and a member firm   
of Andersen Worldwide SC.                                                       

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  It has been reported in the press that Arthur Andersen LLP, which is the
US member firm of Andersen Worldwide SC, is under investigation by various      
agencies of the US government for its role as independent auditors of Enron     
Corp. and its subsidiaries ("Enron") and that Arthur Andersen LLP has been      
convicted in a US federal court on obstruction of justice charges. It has also  
been reported that shareholders and employees of Enron have commenced legal     
proceedings against Arthur Andersen LLP seeking substantial damages related to  
its audit of Enron. Arthur Andersen LLP may suffer significant financial and    
reputational loss as a result of such investigations and actions, including as  
a result of substantial damage or settlement payments and loss of audit clients 
and employees, which may ultimately lead to its insolvency and dissolution.     

Asahi & Co. has informed ORIX that:                                   

o    while it receives certain technical assistance and support from  
    Arthur Andersen LLP as a member firm of Andersen Worldwide SC in
   connection with its audit of our financial statements which are
      prepared in accordance with US GAAP, Asahi & Co. is a legal entity
      separate from Arthur Andersen LLP and therefore does not expect to
incur any direct or indirect liability as a result of any   
investigations or legal actions against Arthur Andersen LLP;

    o    Asahi & Co. may seek an affiliation with, or pursue a merger or other
      combination with another accounting firm in Japan affiliated with,
one of the other leading US accounting firms; and           

o    Asahi & Co. has entered into a binding cooperation agreement with
      KPMG International to provide Asahi & Co. with technical and other
services.                                                   

    However, there is no assurance that developments affecting Arthur Andersen
LLP will not have a material adverse effect on the financial condition of Asahi 
& Co. Asahi & Co. may not be able to establish a relationship with one of the   
other leading US accounting firms, through a combination with another Japanese  
accounting firm or otherwise. Furthermore, it is possible that the entity       
resulting from any such combination will not legally succeed to or otherwise    
assume the liabilities of Asahi & Co. Accordingly, there is no assurance that   
investors in ORIX securities will be able to assert any claims against, or      
recover any damages from, Asahi & Co. or its legal successors in respect of     
this Annual Report, including the consolidated financial statements of ORIX     
included herein.                                                                

Efforts by other companies to reduce their cross-shareholdings may        
adversely affect market prices for the Shares                             

Many companies in Japan have announced plans to reduce their          
cross-shareholdings in other companies. Our own dispositions of other           
companies' shares could encourage those companies to dispose of Shares.         
Dispositions by other companies of Shares may adversely affect market prices    
for the Shares.                                                                 

We expect to be treated as a passive foreign investment company           

   We expect, for the purpose of US federal income taxes, to be treated as a
passive foreign investment company because of the composition of our assets and 
the nature of our income. If an investor in our securities is a US person,      
because we are a passive foreign investment company, such investor will be      
subject to special US federal income tax rules that may have negative tax       
consequences on a disposition of such securities or on receipt of certain       
distributions on such securities and will require annual reporting.             

If you hold fewer than 100 shares, you will not have all the rights of    
shareholders with 100 or more shares                                      

    100 shares constitute one "unit". A holder who owns fewer than 100 shares,
or ADRs evidencing fewer than 200 ADSs, will own less than a whole unit. The    
Japanese Commercial Code restricts the rights of a shareholder who holds shares 
of less than a whole unit. In general, holders of shares constituting less than 
a unit do not have the right to vote, to bring derivative actions or to examine 
the books and records of the issuer. Transfers of shares constituting less than 
one unit are significantly limited. Under the unit share system, holders of     
shares constituting less than a unit have the right to require us to purchase   
their shares. However, holders of ADRs are unable to withdraw underlying shares 
representing less than one unit. Therefore, as a practical matter, they cannot  
require us to purchase these underlying shares. As a result, holders of ADRs    
with shares in lots of less than one unit may not have access to                

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the Japanese markets through the withdrawal mechanism to sell their shares. The 
unit share system does not affect the transfer of ADSs, which may be            
transferred in lots of any size.                                                

  Foreign Exchange Fluctuations May Affect the Value of the ADSs and Dividends

Market prices for the ADNs or ADSs may fall if the value of the yen   
declines against the U.S. dollar. In addition, the amount of principal,         
interest and other payments made to holders of ADNs or cash dividends and other 
cash payments made to holders of ADSs would be reduced if the value of the yen  
declines against the U.S. dollar.                                               

Item 4.  Information on the Company.                                            

General                                                                         

    ORIX Corporation is a corporation (kabushiki kaisha) formed under Japanese
law. Our principal place of business is at 3-22-8 Shiba, Minato-ku, Tokyo       
105-8683, 813-5419-5000. E-mail: koho@orix.co.jp; URL: www.orix.co.jp           

Corporate History                                                               

ORIX was founded as a Japanese corporation in 1964 in Osaka, Japan as 
Orient Leasing Co., Ltd., a specialist in equipment leasing. We have grown over 
the succeeding decades to become one of Japan's largest and most innovative     
financial services companies, providing a broad range of commercial and         
consumer finance products and services.                                         

Our historical development has until recently closely paralleled the  
expansion and globalization of the Japanese economy. Our initial expansion      
occurred just prior to a period of sustained economic growth in Japan that      
began in 1965 and lasted through the early 1970s. The Japanese leasing industry 
gradually matured over the course of the 1970s. During this period, we          
continued to grow rapidly by expanding and diversifying our range of products   
and services, as well as through overseas expansion. In 1971 we established our 
first overseas office in Hong Kong, which became a base for regional expansion. 
In April 1970 ORIX listed its shares on the second section of the Osaka         
Securities Exchange. From February 1973 the shares have been listed on the      
first sections of the Tokyo, Osaka, and Nagoya stock exchanges.                 

   In 1973, to respond to the outsourcing needs of our corporate clients for
automobile management, we established ORIX Auto Leasing Corporation, which      
exclusively leases automobiles. In 1976, we entered the domestic rental segment 
as we established ORIX Rentec Corporation, which rents measurement equipments   
to corporations.                                                                

In the 1980s, the Japanese financial sector began a process of gradual
deregulation, while the yen became a significant international currency. New    
entrants and competition within the leasing industry increased, prompting us    
and other leasing companies to provide more specialized and sophisticated       
services and to increase international leasing activities. During this period,  
we continued to expand our range of products and services, and placed increased 
emphasis on identifying and exploiting synergies among our various business     
units to make optimal use of corporate resources. In March 1986, we acquired    
ORIX Securities Corporation (then Akane Securities K.K.) and expanded the range 
of our financial products and services. In 1989, we changed our name to ORIX    
Corporation, reflecting our increasingly international profile and              
diversification from the leasing business.                                      

  Since the early 1990s, the Japanese economy has experienced a protracted
period of economic stagnation and, in recent years, instability within the      
financial sector. However, we have continued to diversify into other financial  
activities. For example, in 1990, we commenced the structuring and sale of      
commodities funds within Japan and, in 1991, we entered the life insurance      
business. We have also actively pursued real estate development, finance and    
management operations, using a variety of resources to provide total solutions  
to our customers' financing needs.                                              

We have also sought to enter into Japan's personal financial services 
markets. In this regard, in 1997, we established a Personal Financial Services  
Department. In April 1998, we acquired ORIX Trust and Banking Corporation (then 
Yamaichi Trust & Bank, Ltd.). This acquisition provided us with a general       
banking license, which                                                          

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includes permission to accept deposits, and a trust business license. Our       
housing loan and card loan operations have grown to become a significant part   
of these retail operations.                                                     

In September 1998, we became the twelfth Japanese company to list our 
shares on the New York Stock Exchange.                                          

   Deregulation in Japan has produced a more dynamic market environment that
we believe will bring significant changes in our principal businesses. To       
sustain our position in financial services and support profitability, we are    
working to augment our specialized capabilities and to exploit business         
opportunities presented by this environment. For example, we have reorganized   
our Investment Banking Headquarters and Real Estate Finance Headquarters to     
ensure that the extensive experience and sophisticated know-how gained over     
many years can be effectively utilized to develop and provide value-added and   
specialized services.                                                           

Capital Expenditures                                                            

We are a financial institution with significant leasing, real estate  
development and other operations based on investment in tangible assets. As     
such, we are continually acquiring and building such assets as part of our      
business. A detailed discussion of these activities is presented elsewhere in   
this annual report, including in "Item 4. Information on the Company" and "Item 
5. Operating and Financial Review and Prospects."                               

  We also have made a number of acquisitions of significant investments in
other companies. Some of our more significant recent transactions are described 
below.                                                                          

In July 1999, we acquired the lease and rental operations of NEC Home 
Electronics Lease Ltd., consisting primarily of direct financing lease          
receivables, for approximately yen55 billion. These operations were conducted   
by ORIX Media Supply. Financing lease receivables were subsequently transferred 
to ORIX, and in April 2001 we sold this subsidiary to Sogo Medical Corporation. 

    In July 1999, we acquired the remaining stake in Banc One Mortgage Capital
Markets, LLC in the United States, previously our joint venture with Bank One   
Corporation, a major US bank holding company, to increase our securitization    
capability and ability to service commercial property loans. As a result,       
investment in securities and installment loans increased $363 million and $149  
million respectively. Banc One Mortgage Capital Markets, LLC has been renamed   
and currently operates as ORIX Capital Markets, LLC.                            

 In September 2000, a consortium led by us, Softbank Corporation and The
Tokio Marine and Fire Insurance Company, Ltd. purchased all the shares of       
common stock of the Aozora Bank, Ltd. (then Nippon Credit Bank of Japan) from   
the Japanese Deposit Insurance Corporation. We acquired a 14.99% stake in the   
bank, and our investment amounted to approximatelyyen15 billion.                

In April 2001, we acquired the operating assets and employees of Nihon
Jisho. The assets include office buildings and residential rental properties    
owned and operated by Nihon Jisho, land for residential subdivision             
development, and shares in subsidiaries involved in building maintenance and    
real estate appraisal businesses. At the date of the acquisition, these assets  
amounted to yen23 billion.                                                      

 In July 2001, we acquired a 100%-owned leasing subsidiary of Senko Co.,
Ltd., a major transportation company based in Osaka. The acquisition of this    
subsidiary, with yen15 billion in total assets, marked our initial entry into   
the truck leasing market, a strategic priority. Shortly afterward, we           
significantly expanded on this market entry with the acquisition in September   
2001 of an 80% interest in IFCO Inc. ("IFCO") from Isuzu Motors Limited, which  
continues to hold the remaining 20% interest. We acquired our 80% interest at a 
price of yen20 billion. IFCO is a truck leasing company with approximately      
67,000 vehicles under lease and approximately yen300 billion in total assets as 
of September 30, 2001.                                                          

We purchased yen132 billion of housing loans from Asahi Mutual Life   
Company ("Asahi Mutual Life") in December 2001.                                 

    In March 2002, we acquired 22.14% of the outstanding common shares of Fuji
Fire and Marine Insurance Co. Ltd. ("Fuji Fire & Marine"). Under this           
agreement, the American International Group ("AIG") also obtained a             

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similar 22.14% stake in Fuji Fire & Marine. We purchased 108,768,000 shares at  
yen166 per share, for approximately yen18 billion.                              

Prior to and during the year ended March 31, 2002, we purchased       
approximately yen100 billion of real estate in connection with our              
establishment of a real estate investment corporation sponsored by ORIX ("the   
JREIT"), the investment units of which have been listed on the Tokyo Stock      
Exchange in June 2002. This real estate is included in other operating assets.  
Subsequent to completion of the offering of investment units of the JREIT,      
these assets no longer remain on our consolidated balance sheets. We retained   
approximately 20% of the investment units of the JREIT. In connection with the  
public offering of the investment units, we received the proceeds of            
approximately yen50 billion.                                                    

  In March 2002, we reached an agreement with Hiroshima Sogo-Bank, Ltd. to
form a strategic business alliance in which we purchased 95% of the outstanding 
shares of Hiroshima Sogo Leasing Co., Ltd. with Hiroshima Sogo-Bank, Ltd.       
retaining the remaining 5%. Hiroshima Sogo Leasing Co., Ltd. has assets of      
approximatelyyen27 billion.                                                     

  On May 24, 2002, we announced that it had reached a basic agreement with
Nippon Steel Corporation and Nippon Steel Trading Co., Ltd. to purchase 90% and 
10% of the outstanding shares of Nittetsu Lease Co., Ltd. and Nittetsu Leasing  
Auto Co., Ltd., respectively, from Nippon Steel Trading Co., Ltd. The purchase  
is scheduled to be completed in July 2002. Nittetsu Lease Co., Ltd. had a book  
value in total assets of approximatelyyen137 billion as of March 31, 2002.      

    In general, we seek to expand and deepen our product and service offerings
and enhance our financial performance by pursuing acquisition opportunities.    
Particularly in the current economic market environment in Japan, we believe    
there are numerous attractive potential acquisitions. We are continually        
reviewing acquisition opportunities, and is selectively pursuing several such   
opportunities. We have in the past deployed a significant amount of capital for 
acquisition activities, and expects to continue to do so.                       

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Our Portfolio                                                                   

   The following chart shows the breakdown of our portfolio of businesses as
of March 31, 2002.                                                              

                                                        [Enlarge/Download Table]
         Business profile                      Major customers                  Major operating companies   
---------------------------------  -------------------------------------  -------------------------------   
                                                                                                            
Direct financing leases                                                                                     
Information-related and office     Middle market corporate customers      ORIX Corporation                  
   equipment                       Shipping companies                     ORIX Auto Leasing Corporation     
Industrial equipment               Airline companies                      ORIX Alpha Corporation            
Construction and civil                                                    IFCO Inc.                         
   engineering machinery                                                  ORIX Asia Limited                 
Commercial services equipment                                             ORIX Financial Services, Inc.     
Automobiles                                                               ORIX Leasing Malaysia Berhad      
Marine vessels                                                            PT. ORIX Indonesia Finance        
Aircraft                                                                  ORIX Leasing Pakistan Limited     
                                                                          ORIX Australia Corporation Limited
                                                                          ORIX Europe Limited               

Operating leases                                                                                            
Measuring and analytical           Middle market corporate customers      ORIX Corporation                  
   equipment                       Shipping companies                     ORIX Rentec Corporation           
Automobiles                        Airline companies                      ORIX Rent-A-Car Corporation       
Marine vessels                                                            ORIX Real Estate Corporation      
Aircraft                                                                  ORIX Australia Corporation Limited
Real estate                                                               ORIX Aviation Systems Limited     

Installment loans                                                                                           
Corporate finance                  Middle market corporate customers      ORIX Corporation                  
Housing loans                      Consumers                              ORIX Trust and Banking Corporation
Card loans                                                                ORIX Credit Corporation           
Other consumer loans                                                      ORIX Club Corporation             
                                                                          ORIX Asia Limited                 
                                                                          ORIX Leasing Malaysia Berhad      
                                                                          PT. ORIX Indonesia Finance        
                                                                          ORIX Financial Services, Inc.     
                                                                          ORIX Europe Limited               
                                                                          ORIX IRELAND LIMITED              

Life insurance                                                                                              
Life insurance products sold       Middle market corporate customers      ORIX Life Insurance Corporation   
   through agents and directly     Consumers                                                                
   to consumers                                                                                             

Other operations                                                                                            
Securities brokerage               Consumers                              ORIX Corporation                  
Trust banking                      Middle market corporate customers      ORIX Securities Corporation       
Securities investment                                                     ORIX COMMODITIES Corporation      
Venture capital investment                                                ORIX Capital Corporation          
Securities and futures trading                                            ORIX Estate Corporation           
Alternative investment                                                                                      

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         Business profile                      Major customers                  Major operating companies   
---------------------------------  -------------------------------------  -------------------------------   
                                                                                                            
Commodities funds                                                         ORIX Real Estate Corporation      
Insurance agency services                                                 ORIX Asset Management Corporation 
Ship management                                                           ORIX Asset Management and Loan    
Real estate development and                                               Services Corporation              
   management                                                             ORIX Investment Corporation       
Asset management                                                          ORIX Trust and Banking Corporation
Leisure facility management                                               ORIX USA Corporation              
Golf course management                                                    ORIX Asia Limited                 
Training facilities management                                            ORIX Capital Markets, LLC         
Driving school                                                            ORIX Real Estate Equities, Inc.   
Commercial mortgage servicing                                             ORIX Investment and Management    
Hotel management                                                          Private Limited                   
Professional baseball team                                                ORIX Europe Limited               
Environmental services                                                    ORIX IRELAND LIMITED              


    The following table sets out certain information as of March 31, 2002 with
respect to the Company's significant subsidiaries including for each subsidiary 
the name, country of incorporation of residence, and proportion of ownership    
interest (direct or indirect) by ORIX:                                          

                                                        [Enlarge/Download Table]
              Company                          Principal business                   Country       ORIX ownership (%)
--------------------------------  ------------------------------------------  ------------------  ------------------
                                                                                                                    
Japan                                                                                                               
ORIX Alpha Corporation..........  Leasing, Lending                            Japan                  100            
ORIX Auto Leasing Corporation...  Automobile Leasing                          Japan                  100            
ORIX Rentec Corporation.........  Precision Measuring                         Japan                  100            
                                  and OA Equipment Rentals                                                          
ORIX Credit Corporation.........  Consumer Loans                              Japan                  100            
ORIX Capital Corporation........  Venture Capital                             Japan                  100            
ORIX Rent-A-Car Corporation.....  Automobile Rentals                          Japan                  100            
ORIX Securities Corporation.....  Securities Brokerage and Online Trading     Japan                  100            
ORIX Estate Corporation.........  Real Estate and Leisure Facility Management Japan                  100            
ORIX COMMODITIES Corporation....  Securities and Futures Trading              Japan                  100            
ORIX Club Corporation...........  Consumer Loans                              Japan                  100            
ORIX Life Insurance Corporation.  Life Insurance                              Japan                  100            
ORIX Trust and Banking                                                        Japan                  100            
   Corporation..................  Trust, Banking Services and Housing Loans                                         
ORIX Real Estate Corporation....  Real Estate Development and Management      Japan                  100            
ORIX Asset Management and Loan                                                                                      
   Services Corporation.........  Loan Servicing                              Japan                  100            
ORIX Investment Corporation.....  Alternative Investment                      Japan                  100            
ORIX Asset Management                                                                                               
   Corporation..................  REIT Management                             Japan                  100            
IFCO Inc........................  Automobile Leasing                          Japan                   80            

Asia & Oceania                                                                                                      
ORIX Investment and Management                                                                                      
   Private Limited..............  Venture Capital                             Singapore              100            

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              Company                          Principal business                   Country       ORIX ownership (%)
--------------------------------  ------------------------------------------  ------------------  ------------------
                                                                                                                    
ORIX Asia Limited...............  Leasing and Investment Banking              China (Hong Kong)      100            
ORIX Leasing Malaysia Berhad....  Leasing, Lending, Hire Purchase             Malaysia                80            
PT. ORIX Indonesia Finance......  Leasing, Automobile Leasing                 Indonesia               83            
ORIX Australia Corporation                                                                                          
   Limited......................  Leasing, Automobile Leasing and Rentals     Australia              100            

Middle East & North Africa                                                                                          
ORIX Leasing Pakistan Limited...  Leasing, Automobile Leasing, Lending        Pakistan                57            

North America                                                                                                       
ORIX Capital Markets, LLC.......  Loan Servicing, Corporate Debt Investment   USA                    100            
ORIX USA Corporation............  Investment Banking, Leasing                 USA                    100            
ORIX Real Estate Equities, Inc..  Real Estate Development and Management      USA                    100            
ORIX Financial Services, Inc....  Leasing, Lending                            USA                    100            

Europe                                                                                                              
ORIX Europe Limited.............  Corporate Financing                         UK                     100            
ORIX IRELAND LIMITED............  Accounting and Administration Services      Ireland                100            
ORIX Aviation Systems Limited...  Aircraft Leasing                            Ireland                100            

Strategy                                                                        

Business strategy                                                         

Strengthening core middle market cross selling activities                 

  The key to our strategy in Japan is a nation-wide corporate network that
allows us to serve a core customer base comprised mainly of small and           
medium-sized companies. This client base forms the foundation of our strategy   
of cross-selling a variety of products and services to our clients. We are      
working to further strengthen these cross-selling activities by increasing our  
client base and expanding the range of innovative and value-added financial     
solutions that we can provide.                                                  

   In efforts to increase the client base, we are pursuing three strategies.
First, we continue to leverage our existing sales force, which includes the     
sales personnel of the parent company and those of subsidiaries and affiliates, 
to search out new contacts. Second, ORIX has a program called ORIX Quick Lease, 
in which small-ticket leases are offered through vendors and other              
distributors. In this program, the vendors are in direct contact with customers 
and ORIX carries out the credit evaluation and administration. ORIX evaluates   
the applications for such leases, identifying and contacting potential          
candidates for other products that ORIX provides. Management believes that this 
strategy should continue to allow ORIX to efficiently search out new            
opportunities for cross-selling. Third, ORIX has made a number of substantial   
acquisitions in recent years, which has allowed it to expand our customer base. 
From these acquisitions ORIX can approach the existing clients of the acquired  
company to offer our other products and services.                               

   Members of our sales force act as both marketing agents and collectors of
information on market demand. After meeting with customers and assessing their  
needs, sales personnel offer suitable products from specialized sections within 
ORIX such as ORIX Auto Leasing, ORIX Life Insurance, ORIX Trust and Banking,    
ORIX Securities, the Investment Banking Headquarters or the Real Estate Finance 
Headquarters. The marketing staff also provides                                 

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information on market developments to these specialized sections in order that  
they can develop products tailored to customer demands.                         

Increasing profitability through greater specialization                   

 Our efforts to provide more innovative and value-added products support
our strategy of increasing profitability through greater specialization. The    
demands of our customers are diverse and require sophisticated solutions. A     
traditional approach to financing, especially in the low-margin environment     
prevailing in Japan, would not enable ORIX to meet financial objectives. In     
order to satisfy the increasingly sophisticated financing needs of our          
customers and increase profitability, ORIX continues to expand our areas of     
specialization by offering training to existing employees, employing outside    
specialists and implementing organizational reforms to promote synergies        
amongst different sectors within ORIX. In addition, ORIX has made a number of   
acquisitions of companies with specialist capabilities. Recent examples include 
two building maintenance companies, and IFCO, a specialist truck lessor.        

   An important component of this focus on specialization is to increase the
fee component of financial services. Particularly in Japan, where interest      
rates remain at record low levels and competition in the financing business is  
intense, it is necessary to create value by concentrating on providing          
value-added services along with financing. For example, ORIX Auto Leasing       
provides automobile fleet leasing to corporate clients that includes not only   
financing, but also service contracts that increase the overall profitability   
of the auto leasing business.                                                   

Pursuing investment banking opportunities                                 

Based on our extensive experience in corporate finance and real       
estate-related businesses, we are pursuing a number of investment banking       
opportunities. These activities are conducted primarily by the Investment       
Banking Headquarters and the Real Estate Finance Headquarters located in the    
parent company, ORIX Corporation. Both these areas are important components of  
efforts to increase profitability through greater specialization. ORIX will     
continue to leverage our existing marketing network to gather information and   
provide investment banking services to our core customer base of small and      
medium-sized enterprises and pursue new sources of revenues, including          
investment banking and advisory fee businesses.                                 

In order to promote more synergies, ORIX established the Investment   
Banking Headquarters in August 2000 by combining a number of teams and          
specialists that were spread throughout the company and were involved in        
investment banking activities. Our sales staff began receiving incentives based 
on the information that they gather for the investment banking business and it  
believes the potential in this area is substantial.                             

  Part of our investment banking strategy includes making selective equity
investments in existing companies. ORIX intends to provide the necessary        
expertise, information and human resources from the ORIX network, with the goal 
of raising the market value of the companies in which it invests and realizing  
capital gains when such companies are listed or sold.                           

   Related to this investment banking focus is the strengthening of our real
estate-related finance operations. ORIX formed the Real Estate Finance          
Headquarters to restructure and concentrate resources from a number of          
subsidiaries into one specialized section and to leverage our existing          
strengths in order to better position ourself to take advantage of deregulation 
and structural changes in the real estate market in Japan and the opportunities 
created thereby. We are one of the few companies in Japan that have the         
expertise to handle both the financing as well as the development, leasing and  
management of real estate. In addition, ORIX has been able to transfer know-how 
from our real estate operations in the United States and combine such           
experience with our expertise in the Japanese market.                           

In addition, with the restructuring of financial markets in Japan and 
deregulation that has opened up more opportunities for loan servicing           
companies, we have expanded our operations in loan servicing via our            
wholly-owned subsidiary, ORIX Asset Management and Loan Services Corporation    
("OAMLS") that was established in 1999. OAMLS is now a major player in the      
distressed asset business in Japan. OAMLS also became the first company to be   
rated as a master, primary and special servicer in Japan, receiving the second  
highest ranking in all three categories by Standards and Poor's. ORIX expects   
the loan servicing business to become an important fee                          

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business in the coming years. In 2000, ORIX also established ORIX Asset         
Management to engage in the management of JREITs.                               

Growing retail financial services                                         

ORIX believes that the retail financial services market in Japan has  
strong growth potential, aided by deregulation and growing consumer demand for  
innovative and attractive products and services. The range of products now      
offered by ORIX includes:                                                       

o    Life insurance and medical insurance                             

o    Bank deposits                                                    

o    Housing loans                                                    

o    Consumer card loans                                              

o    Small-lot commodities funds                                      

o    Discount brokerage services                                      

 We are taking advantage of direct marketing methods and technologies to
make our products available and attractive to retail customers on a             
cost-effective basis. For example, ORIX Life Insurance markets life insurance   
through newspaper advertisements and the Internet rather than through sales     
offices and agents, thereby reducing costs and insurance premiums. ORIX Trust   
and Banking also reduces our administrative costs for direct deposits by        
servicing our customers over the Internet and by telephone, thus allowing it to 
offer higher interest rates on our deposits.                                    

   As part of this retail strategy, We are also making efforts to strengthen
the ORIX brand. ORIX Create Corporation was established in 1999 to build and    
manage the ORIX brand and has focused our efforts on creating, maintaining and  
promoting the ORIX brand in the retail financial markets.                       

Pursuing selected international opportunities                             

By actively pursuing selected business opportunities in the Americas, 
Asia-Oceania, Europe, the Middle East and Northern Africa, ORIX has been able   
to take advantage of our expertise in leasing and other financial services to   
expand into these local markets while diversifying our sources of income.       
International operations have also allowed ORIX to introduce new products and   
services from overseas markets into the Japanese market.                        

The United States, where ORIX has operated since 1974, is likely to   
continue to be the largest single concentration of international operations,    
and ORIX expects to continue the strategy of focusing on selected specialized   
areas in leasing, corporate lending, real estate development and management,    
the corporate and real estate debt market, and commercial mortgage-backed       
securities business.                                                            

  Despite recent economic deterioration in a number of Asian markets where
ORIX operates, ORIX intends generally to maintain our present operations, and   
may pursue selected opportunities to expand our business in these markets if    
attractive opportunities arise.                                                 

  In all geographic areas, ORIX will focus on areas where it expects to be
able to utilize our existing expertise to expand operations or acquire          
specialized knowledge in particular financial services in order to pursue       
opportunities outside of Japan.                                                 

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The Leasing Market in Japan                                                     

The Japanese leasing industry is highly fragmented, with 310 companies
registered with the Japan Leasing Association as of March 31, 2002. In addition 
to these companies, a number of large credit companies not registered with the  
Japan Leasing Association also finance installment sales, which from the        
customer's perspective are economically similar to lease contracts. Except as   
otherwise noted, the data below is derived from data published by the Japan     
Leasing Association. Comparable data is not available for installment sales.    

   In fiscal 2002, the total annual value of new lease contracts reported by
the Japan Leasing Association was yen7,734 billion. The value of new lease      
contracts in fiscal 2002 based on purchase costs represented 8.71% of total     
private fixed investment in Japan, as estimated by the Cabinet Office, a        
ministry of the Central Japanese Government. These leases include only          
financing leases as defined under Japanese GAAP, and as a result do not include 
installment sales contracts classified under U.S. GAAP, and by us, as direct    
financing leases.                                                               

The largest segment of financing leases in fiscal 2002 was            
information-related equipment (including computers and related equipment),      
which represented 39.8% of the total value of lease contracts, followed by      
industrial equipment (17.8%) and commercial service equipment (14.4%).          

  Small and medium-sized companies represented 45.1% of the total customer
base in Japan as measured by value of lease contracts, while large companies    
comprised 47.7% of the customer base.                                           

The following tables contain some additional information regarding the
Japanese leasing market. The figures for the year ended March 31, 2002 in the   
Annual New Lease Contracts table are preliminary estimates. The figures for     
private fixed investments are estimates provided by the Cabinet Office.         

Lease Financings by Equipment Type

                                                        [Enlarge/Download Table]
                                                               Years ended March 31,                    
                                              --------------------------------------------------------- 
                                              1998         1999          2000         2001         2002 
                                              ----         ----          ----         ----         ---- 
                                                                                                        
Information-related equipment................ 42.4%        44.0%         43.6%        39.8%        39.8%
Industrial equipment......................... 18.1         16.7          18.4         18.6         17.8 
Commercial service equipment................. 14.6         14.5          13.8         15.0         14.4 
Office equipment.............................  8.7          8.1           8.1          8.0          8.5 
Transportation equipment.....................  7.2          6.6           6.5          7.4          8.1 
Medical equipment............................  3.4          3.8           3.9          4.1          4.3 
Other........................................  5.6          6.3           5.8          7.1          7.2 

Annual New Lease Contracts

                                                        [Enlarge/Download Table]
                                                                 Year ended March 31,                       
                                              --------------------------------------------------------------
                                                1998         1999          2000         2001          2002  
                                              --------      --------     --------     --------      --------
                                                                  (Billions of yen)                         
                                                                                                            
Total receivables under new lease contracts.. yen7,930      yen7,145     yen7,402     yen7,946      yen7,734
Annual new lease contracts (cost basis)......    7,018         6,315        6,586        6,992         6,915
Private fixed investment.....................   83,571        77,797       75,232       79,989        79,400
Annual new lease contracts as a percentage                                                                  
   of private fixed investment...............    8.40%         8.12%        8.75%        8.74%         8.71%

Overview of Activities                                                          

Scope of domestic operations                                              

  Domestically our group is comprised as of March 31, 2002 of the Company,
100 subsidiaries, and a number of investments in affiliates. As of that date,   
we employed approximately 8,250 staff in Japan excluding our affiliates, and    
our domestic operations were serviced by a network of approximately 650 offices 
throughout Japan.                                                               

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Approximately 78% of our revenues in the year ended March 31, 2002 were         
generated by our domestic operations. Activities conducted principally through  
subsidiaries include our automobile leasing business conducted by ORIX Auto     
Leasing and our operating lease business for high-precision measuring equipment 
and personal computers conducted by ORIX Rentec.                                

    In addition to our leasing business, we have developed major operations in
areas such as the life insurance business conducted by ORIX Life Insurance and  
real estate management and development conducted by ORIX Real Estate.           

Scope of international activities                                         

  Since the establishment of our first overseas subsidiary in Hong Kong in
1971, we have competed in selected international markets through subsidiaries   
and investments in joint ventures as affiliates. At March 31, 2002, we operated 
in 21 countries outside Japan through 94 subsidiaries and affiliates. Our       
overseas operations, including the affiliates, employ approximately 4,500       
staff, and include a network of approximately 200 offices.                      

ORIX USA is our base for operations in the Americas. Stockton Holdings
Limited, an affiliate, conducts reinsurance operations and trades in futures.   
In July 1999, we increased our ownership of Banc One Mortgage Capital Markets,  
LLC from 45% to 100% and renamed the operations as ORIX Capital Markets, LLC,   
which services commercial mortgage loans and corporate debt.                    

In the Asia and Oceania region, ORIX Asia, a Hong Kong operating      
subsidiary, is engaged in leasing and installment sales operations and makes    
housing loans. Singapore has also become an important center for our business   
in the region.                                                                  

 ORIX also engages in leasing activities in other countries. Some of our
domestic subsidiaries, such as ORIX Rentec and ORIX Auto Leasing, have also     
established overseas operations.                                                

Profile of Businesses                                                           

    Domestic operations are conducted by ORIX and a number of subsidiaries and
affiliates.                                                                     

    In general, our domestic sales staff sells the full range of our products.
However, some staff, such as the real estate staff, have specialized functions. 
Domestic subsidiaries, such as ORIX Auto Leasing, ORIX Rentec and ORIX Life     
Insurance, offer opportunities for cross-selling and other coordinated          
activities with our companies. Other subsidiaries serve more specialized        
functions. Products and services of these subsidiaries are handled by their     
dedicated sales staff, whose specialized training and experience are required   
in the markets they serve.                                                      

   Our main customer base is comprised of small and medium-sized businesses.
However, it has expanded our client base to large corporations in some business 
segments, such as leasing of high-precision measuring equipment. We have also   
targeted individual customers as a growth area in various business segments,    
such as the card loan, housing loan, rent-a-car and life insurance businesses.  

   Through our various product lines and distribution channels, we provide a
variety of financing solutions responsive to the varying financing needs of our 
customers. We offer financing alternatives that accommodate specific            
maintenance, asset risk, cash flow, accounting, tax and other requirements of   
our customers. In many of our financing operations, we are able to offer a      
variety of financing alternatives for the same asset, including direct          
financing leases, operating leases or installment loans. We also offer options  
such as fixed or variable interest rates, principal installments and varying    
prepayment or cancellation options.                                             

The extensive experience of our staff in leasing and secured financing
allows them to effectively evaluate residual value risk and to manage equipment 
and residual value risks by locating alternative users or purchasers. See       
"--Management of residual assets".                                              

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Direct financing leases                                                   

    Direct financing leases are one of our core business activities. The table
below provides a geographical breakdown of our investment in direct financing   
leases as of March 31, 2002:                                                    

                                                        [Enlarge/Download Table]
                                                                           As of March 31,                   
                                                         ----------------------------------------------------
                                                                                2002                         
                                                         ----------------------------------------------------
                                                                                          (Percentage of     
                                                         (In millions of yen)        direct financing leases)
                                                         --------------------        ------------------------
                                                                                                             
Investment in direct financing leases in:                                                                    
Japan...................................................      yen1,255,537                      75.7%        
Overseas................................................           403,132                      24.3         
                                                              ------------                    ------         
     Total..............................................      yen1,658,669                     100.0%        
                                                              ============                     =====         

As of March 31, 2002, the total balance of our investment in direct   
financing leases represented 30.0% of our total operating assets.               

The table below provides a geographical breakdown of revenues from our
direct financing leases for the year ended March 31, 2002:                      

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                                                        [Enlarge/Download Table]
                                                                        Year ended March 31,                 
                                                         ----------------------------------------------------
                                                                                2002                         
                                                         ----------------------------------------------------
                                                                                          (Percentage of     
                                                         (In millions of yen)        direct financing leases)
                                                         --------------------        ------------------------
                                                                                                             
Revenues from direct financing leases in:                                                                    
Japan...................................................         yen84,151                      69.0%        
Overseas................................................            37,763                      31.0         
                                                                ----------                    ------         
     Total..............................................        yen121,914                     100.0%        
                                                                ==========                    ======         

  Our revenues from direct financing leases represented 18.5% of our total
revenues in the year ended March 31, 2002.                                      

The typical direct financing lease is for one specific user, with     
financial terms designed to recoup most, if not all, of the initial cost of the 
equipment during the initial contractual lease term. Payments are usually made  
monthly in a fixed amount. A direct financing lease is generally                
non-cancellable during the term of the lease. The term of a typical direct      
financing lease in Japan is approximately five years. We engage in direct       
financing lease operations in Japan and in most countries in which we have      
operations. Our direct financing lease operations cover most types of           
equipment, broadly categorized into information-related and office equipment,   
industrial equipment, commercial services equipment, transportation equipment,  
and other equipment.                                                            

   The following table shows the balance of direct financing lease assets by
category of equipment:                                                          

                                                        [Enlarge/Download Table]
                                                                          As of March 31,                         
                                              ------------------------------------------------------------------- 
                                                   1998          1999         2000          2001         2002     
                                              ------------  ------------  ------------  ------------  ------------
                                                                     (In millions of yen)                         
                                                                                                                  
Information-related and office equipment..... yen  623,203  yen  493,298  yen  373,281  yen  334,174  yen  262,524
Industrial equipment.........................      473,140       444,261       394,581       372,542       286,942
Commercial services equipment................      273,730       224,080       194,809       193,624       186,115
Transportation equipment.....................      443,486       414,093       398,521       415,246       603,843
Other........................................      372,463       377,110        83,761       342,123       319,245
                                              ------------  ------------  -----------   ------------  ------------
     Total................................... yen2,186,022  yen1,952,842  yen1,744,953  yen1,657,709  yen1,658,669
                                              ============  ============  ============  ============  ============

   The balance of investment in direct financing leases as of March 31, 2002
is essentially unchanged from that of the prior fiscal year-end, as a sharp     
increase in the balance of transportation equipment leases primarily due to     
acquisitions was offset by declines in other categories due to the              
securitization of lease assets and a decline in the level of new contracts      
compared with the previous fiscal year.                                         

   The above table does not include securitized lease assets. If securitized
assets were included the total balance of direct financing lease assets would   
be yen1,968,872 million as of March 31, 2001, and yen2,033,818 million as of    
March 31, 2002.                                                                 

   At March 31, 2002, no single lessee represented more than 1% of our total
portfolio of direct finance leases. As of March 31, 2002, approximately 75.7%   
of our direct financing leases were to lessees located in Japan, and            
approximately 15.0% of our direct financing leases were to lessees located in   
the United States.                                                              

  The following table shows a breakdown of the components of investment in
direct financing leases:                                                        

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                                                        [Enlarge/Download Table]
                                                                      As of March 31,                              
                                              -------------------------------------------------------------------- 
                                                 1998         1999         2000          2001         2002         
                                              ------------  ------------  ------------  ------------  ------------ 
                                                                   (In millions of yen)                            
                                                                                                                   
Minimum lease payments receivable............ yen2,348,361  yen2,100,934  yen1,881,289  yen1,771,625  yen1,727,729 
Estimated residual value.....................       64,052        58,827        57,900        56,566        80,206 
Initial direct costs.........................       28,294        29,374        26,042        24,616        23,224 
Unearned lease income........................    (254,685)     (236,293)     (220,278)      (195,098)     (172,490)
                                              ------------  ------------  ------------  ------------  ------------ 
     Total................................... yen2,186,022  yen1,952,842  yen1,744,953  yen1,657,709  yen1,658,669 
                                              ============  ============  ============  ============  ============ 

Information-related and office equipment                              

 Information-related and office equipment includes computers and related
equipment, as well as communication-related equipment. Japanese companies have  
significantly increased investment in information systems, and outsourcing by   
Japanese firms has increased the importance of lease financing. This category   
represents a major portion of our direct financing lease portfolio, reflecting  
our strategy to focus on profitable small-ticket leasing. Profitability was     
emphasized and contracted lease balances were stringently monitored. In         
addition, due to the small-lot nature of this type of agreement, lease assets   
in this market were often securitized, causing a decline in balance. We have    
also employed vendor programs in this sector to improve the efficiency of our   
origination activities, and we have systematized the contract process and       
automated credit evaluation. In the small-ticket lease sector we compete mainly 
with captive and non-captive credit companies rather than traditional leasing   
firms. We compete with these firms by maintaining a nationwide network of sales 
offices. We have been successful in penetrating the market. In particular we    
have developed a new customer base through our relationships with dealers and   
distributors. We also provide a range of complementary products and services.   

Industrial equipment                                                  

Industrial equipment primarily consists of construction and heavy     
equipment, and pulp and paper milling equipment. The balance of investment in   
industrial machinery has decreased in line with the lower level of new          
contracts compared to previous year due to depressed domestic demand and the    
slowdown of the US economy.                                                     

Commercial services equipment                                         

 Commercial services equipment includes gaming machines, cash registers,
showcases and point-of-sales systems. Despite an overall decline in Japanese    
personal consumption, the balance of investment in commercial services          
equipment has declined only slightly.                                           

Transportation equipment                                              

Transportation equipment within the direct financing lease portfolio  
consists almost entirely of automobile fleet leasing to corporate clients. ORIX 
Auto Leasing and IFCO, 80% of which was acquired in September 2001, are our     
main companies handling domestic operations. We also have automobile leasing    
companies in several countries in Asia and Oceania. This segment has become     
important in the direct financing lease portfolio as the demand for auto        
leasing services has increased both in Japan and in our overseas markets.       
Domestic demand for automobile leasing services has increased due to the        
general trends towards outsourcing and greater acceptance of fleet leasing by   
corporate customers. In addition, there is an increasing trend for Japanese     
companies not to own their own vehicle fleets, particularly when dealer         
negotiation, maintenance and the payment of taxes, insurance and other costs    
can be handled by one vendor, such as us.                                       

    We maintain a nationwide service network of approximately 8,000 agents and
repair shops with which we have entered into arrangements to provide services   
for our leased automobiles. To further upgrade automobile maintenance           
capabilities, we supply ORIX-brand low-cost, high-quality automobile            
replacement parts to cooperating auto repair facilities. In addition, in a      
joint arrangement with three oil refining and distribution companies in 1998,   
we began to issue an Auto Management Service Card that can be used anywhere in  
Japan to allow customers to monitor fuel costs on a centralized basis and       
obtain other data services. Moreover, to deal with legal, labor-related,        
accident, and other types of risks, we provide comprehensive risk management    
services and                                                                    

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assist customers, from a variety of perspectives, in effectively managing and   
controlling costs related to automobile usage.                                  

    We are coordinating the marketing activities of our various business lines
and subsidiaries to promote automobile leasing. In recent periods we have       
increased the scope of our corporate fleet leasing operations. As of March 31,  
2002, we had a total of approximately 390,000 vehicles under lease. Based on    
the year ended March 31, 2001 data, we had a market share of approximately 12%  
of the domestic automobile leasing industry, which we believe made us the       
largest independent automobile lessor in Japan. We believe that our value-added 
services relating to vehicle maintenance and post-accident procedures enable us 
to provide quick and efficient comprehensive maintenance services. In order to  
diversify our access to secondary markets, and increase the returns on the      
eventual sale of vehicles from our fleet on which leases have expired, we have  
established five specialist automobile auction sites in Japan. These sites      
handled the sale of approximately 40,000 vehicles in the year ended March 31,   
2002.                                                                           

Other equipment                                                       

    Other equipment that we lease to Japanese clients includes a wide range of
medical equipment.                                                              

Quality of our assets                                                 

 The following table provides information about our past due receivables
and provisions for direct financing leases. Average balances are calculated on  
the basis of fiscal quarter-end balances:                                       

                                                        [Enlarge/Download Table]
                                                                              As of March 31,             
                                                          ------------------------------------------------
                                                            2000               2001                2002   
                                                          ---------          ---------           ---------
                                                         (In millions of yen, except percentage data)     
                                                                                                          
90+ days past due direct financing leases...............  yen53,743          yen53,515           yen67,924
90+ days past due direct financing leases as a                                                            
   percentage of the balance of investment in direct                                                      
   financing leases.....................................       3.1%               3.2%                4.1%
Provisions as a percentage of average balance of                                                          
   investment in direct financing leases................       1.1%               1.3%                1.3%
Allowance for direct financing leases...................  yen35,783          yen40,885           yen50,837
Allowance for direct financing leases as a percentage                                                     
   of the balance of 90+ days past due direct financing                                                   
   leases...............................................      66.6%              76.4%               74.8%
Allowance for direct financing leases as a percentage                                                     
   of the balance of investment in direct financing                                                       
   leases...............................................      2.05%              2.47%               3.06%

The allowance for direct financing leases increased at March 31, 2002 
mainly due to the consolidation of IFCO which was acquired by ORIX in September 
2001. See "--Direct financing leases".                                          

We believe that the ratio of allowance for doubtful receivables as a  
percentage of the balance of investment in direct financing leases was adequate 
as of March 31, 2002, because:                                                  

o    lease receivables are generally diversified and the amount of the
    realized loss on each contract is likely to be relatively small;

  o    all the lease contracts are collateralized by the underlying leased
    equipment and we can expect to recover at least a portion of the
      outstanding lease receivables by selling the underlying equipment;
and                                                         

   o    the allowance for doubtful receivables on direct financing leases as
     a percentage of the balance of 90+ days past due direct financing
leases was 74.8% as of March 31, 2002.                      

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   The ratio of charge-offs as a percentage of the balance of the investment
in direct financing leases averaged 0.95% for the three years ended March 31,   
2002. We recognize that, due to our charge-off policy, historical ratios of     
charge-offs as a percentage of the balance of our investment in direct          
financing leases may be lower than if we had taken charge-offs on a more timely 
basis. Accordingly, in evaluating whether the ratio of allowance for doubtful   
receivables as a percentage of the balance of our investment in direct          
financing leases is adequate, we do not give as much weight to historical       
charge-off ratios as we do to the other factors discussed above.                

Operating leases                                                          

   Operating leases constitute another of our principal business activities.
The table below provides a geographical breakdown of our operating lease assets 
as of March 31, 2002:                                                           

                                                        [Enlarge/Download Table]
                                                                        As of March 31, 2002               
                                                         --------------------------------------------------
                                                                                       (percentage of total
                                                         (In millions of yen)            operating leases) 
                                                         --------------------          --------------------
                                                                                                           
Investment in operating leases in:                                                                         
Japan...................................................       yen338,719                       71.4%      
Overseas................................................          135,772                       28.6       
                                                               ----------                      -----       
   Total................................................       yen474,491                      100.0%      
                                                               ==========                      =====       

As of March 31, 2002, our total operating lease assets represented 8.6% of our  
total operating assets.                                                         

The table below provides a geographical breakdown of revenues from our          
operating leases for the year ended March 31, 2002:                             

                                                        [Enlarge/Download Table]
                                                                        Year ended March 31, 2002               
                                                         -------------------------------------------------------
                                                                                  (percentage of total revenues 
                                                         (In millions of yen)         from operating leases)    
                                                         --------------------     ------------------------------
                                                                                                                
Revenues from operating leases in:                                                                              
Japan...................................................       yen 87,732                      72.6%            
Overseas................................................           33,075                      27.4             
                                                               ----------                    ------             
   Total................................................       yen120,807                     100.0%            
                                                               ==========                    ======             

In the year ended March 31, 2002, our revenues from operating leases  
represented 18.3% of our total revenues.                                        

Operating leases differ from direct financing leases in that they are 
generally cancellable by the lessee. The lessor does not substantially recoup   
the initial cost of the item through lease payments during the initial lease    
term.                                                                           

Therefore, the lessor usually leases out the same item sequentially to
more than one customer (or to the same customer under successive lease          
contracts) during its useful life. In the Japanese marketplace, operating       
leases are often referred to as rentals. The lessor in an operating lease bears 
the inventory risk. This means that the lessor must always maintain strong      
links to secondary markets for the purchase and sale of used equipment. The     
principal participants in these informal, unregulated markets are brokers and   
dealers who specialize in the purchase and sale of used equipment.              

 Our operating lease operations cover most types of equipment. These are
broadly classified into three principal market segments: transportation         
equipment, measuring equipment and personal computers, and real estate and      
other.                                                                          

The following table shows the balance of operating lease assets by    
segment:                                                                        

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                                                        [Enlarge/Download Table]
                                                                  As of March 31,                           
                                              --------------------------------------------------------------
                                                1998         1999         2000          2001         2002   
                                              ----------   ----------   ----------   ----------   ----------
                                                                 (In millions of yen)                       
                                                                                                            
Transportation equipment..................... yen195,392   yen181,886   yen159,548   yen165,218   yen187,605
Measuring equipment and personal computers...     59,989       58,552       58,431       77,808       71,527
Real estate and other........................    179,685      170,718      179,597      208,145      215,359
                                              ----------   ----------   ----------   ----------   ----------
     Total................................... yen435,066   yen411,156   yen397,576   yen451,171   yen474,491
                                              ==========   ==========   ==========   ==========   ==========

    The balance of our total investment in operating leases increased by 5.2%,
or yen23,320 million, from March 31, 2001 to March 31, 2002.                    

Transportation equipment                                              

    Transportation equipment that we lease out under operating leases consists
mainly of aircraft, automobiles and oceangoing vessels. Our fleet of aircraft   
as of March 31, 2002 stood at 23 owned and 39 managed aircraft. These are       
leased principally to European and North American carriers. We own 21 Airbus    
320s, one Airbus 340 and one Boeing 737. We have limited our investment to      
these types of aircraft due to their relative liquidity in the leasing market.  
Our aircraft lease operations are managed by ORIX Aviation Systems. The         
weighted average useful life of our transportation equipment is 12 years.       

 Our two principal markets for automobile operating leases are Japan and
Australia, although we also maintain automobile operating lease operations in   
several Asian countries.                                                        

Measuring equipment and personal computers                            

 We have developed a strong position in the domestic measuring equipment
and personal computer rental sector. We believe that we are the industry leader 
in the domestic market for measuring equipment. Our customers include major     
domestic and overseas electronics companies. We rent measuring equipment and    
personal computers primarily through a specialist subsidiary, ORIX Rentec. We   
believe that our inventory of more than 380,000 pieces of measuring and         
diagnostic equipment is the largest of its kind in Japan.                       

Our measuring and diagnostic equipment is used mainly in manufacturing
facilities and research and development centers. This includes:                 

o    equipment for testing emissions from cellular phones and personal
handyphones;                                                

o    equipment for testing noise emissions;                           

o    equipment for testing compliance of electrical circuitry with    
prescribed standards;                                       

o    laboratory and field use meteorological and environmental testing
equipment (pollution monitoring equipment); and             

   o    equipment for monitoring, testing and evaluating the electromagnetic
performance of printed circuit boards and the efficiency of 
microprocessors.                                            

    ORIX Rentec maintains a website for the auction of used personal computers
and measuring equipment. The weighted average useful life for our measuring     
equipment and personal computers is three years.                                

Real estate and other                                                 

  We maintain a portfolio of 57 rental dormitories, which we rent to major
domestic corporations for use by their staff. We also own and operate for       
rental purposes office buildings, approximately 2,000 apartment units, and a    
number of other real estate properties, located mainly in or near Tokyo and     
Osaka. The weighted average useful life for our real estate and other is 40     
years.                                                                          

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Installment loans and investment securities                               

   In the year ended March 31, 2002, our revenues from interest on loans and
investment securities were yen121,962 million representing 18.5% of our total   
revenues. As of March 31, 2002, the balance of installment loans was            
yen2,273,280 million and the balance of investment in securities was yen861,336 
million.                                                                        

Installment loans                                                         

The table below provides a geographical breakdown of investment in    
installment loans as of March 31, 2002:                                         

                                                        [Enlarge/Download Table]
                                                                      As of March 31, 2002              
                                                        ------------------------------------------------
                                                                                    (percentage of total
                                                        (In millions of yen)         installment loans) 
                                                        --------------------        --------------------
                                                                                                        
Investment in installment loans:                                                                        
Japan..................................................     yen1,840,289                      81.0%     
Overseas...............................................          432,991                      19.0      
                                                            ------------                    ------      
     Total.............................................     yen2,273,280                     100.0%     
                                                            ============                    ======      

    The following table shows the balance of installment loans by domicile and
type of borrowers.                                                              

                                                        [Enlarge/Download Table]
                                                                      As of March 31,                          
                                              -----------------------------------------------------------------
                                                  1998         1999         2000           2001         2002   
                                              ------------ ------------ ------------  ------------ ------------
                                                                   (In millions of yen)                        
                                                                                                               
Domestic consumer:                                                                                             
     Housing loans........................... yen  426,559 yen  411,215 yen  396,748  yen  392,896 yen  557,461
     Card loans..............................       98,187      118,347      121,272       181,215      230,358
     Other...................................       55,811       43,663       56,461        43,959       44,829
                                              ------------ ------------ ------------  ------------ ------------
     Subtotal................................      580,557      573,225      574,481       618,070      832,648
                                              ------------ ------------ ------------  ------------ ------------
Domestic commercial:                                                                                           
     Real estate related companies...........      213,911      188,085      203,537       222,818      278,367
     Commercial and industrial companies.....      607,952      614,988      657,355       627,252      708,031
                                              ------------ ------------ ------------  ------------ ------------
     Subtotal................................      821,863      803,073      860,892       850,070      986,398
                                              ------------ ------------ ------------  ------------ ------------
     Total domestic consumer and commercial..    1,402,420    1,376,298    1,435,373     1,468,140    1,819,046
Foreign commercial, industrial and other                                                                       
   borrowers.................................      377,761      368,661      337,754       357,446      432,771
Direct loan origination costs, net...........       14,644       16,928       18,312        20,925       21,463
                                              ------------ ------------ ------------  ------------ ------------
Total........................................ yen1,794,825 yen1,761,887 yen1,791,439  yen1,846,511 yen2,273,280
                                              ============ ============ ============  ============ ============

  As of March 31, 2002, we had no concentration of loans to borrowers in a
single industry, other than loans to real estate related companies. At March    
31, 2002, it had loans outstanding of yen311,609 million to real estate related 
companies and construction companies. Of that amount, a valuation allowance was 
required for loans with an outstanding balance of yen31,045 million. The        
remaining outstanding balance represents performing loans or the portion of     
loans secured by collateral.                                                    

As of March 31, 2002, approximately 81% of loans were to borrowers in 
Japan and approximately 11% were to borrowers in the United States.             

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    The above table does not include securitized assets. If securitized assets
were included, the total balance of installment loans would be yen1,887,596     
million as of March 31, 2001 and yen2,349,242 million as of March 31, 2002.     

Loans to domestic consumer borrowers                                  

 We have three distinct categories of domestic consumer lending: housing
loans, card loans and other lending. We select the type of borrower, undertake  
systematic credit and risk analysis, and tailor products to meet specific       
customer needs. Our lending experience in the real estate development sector    
has enabled us to form strong relationships with developers which provide us    
with attractive housing loan opportunities.                                     

Substantially all of our card loans and small-lot consumer loans are  
unsecured. Despite the relatively small size of these loans, we have emphasized 
the selection of borrower type, and has developed products that differentiate   
it from our competitors. For example, it provides card loans that offer higher  
credit-quality individuals lower interest rates than those offered by consumer  
finance companies. It also undertakes rigorous credit evaluation procedures.    

We distribute our housing loans principally through contacts with real
estate developers and brokers while we distribute other consumer loan products  
through direct mail, print media and the Internet.                              

    In the year ended March 31, 2000, we transferred our housing loan business
from our Real Estate Finance Headquarters to ORIX Trust and Banking in order to 
respond effectively to diverse demands for housing loans from owners-occupiers  
as well as investors.                                                           

 In September 2001, the Company, ORIX Trust and Banking and Asahi Mutual
Life reached a preliminary agreement for ORIX Trust and Banking to purchase     
housing loan assets from Asahi Mutual Life. The purchase was completed at the   
end of December 2001 (approximately 14,400 loans totaling yen132 billion).      

Loans to domestic commercial borrowers                                

Loans to domestic commercial borrowers include loans to real          
estate-related companies, as well as general corporate lending. Historically, a 
substantial portion of loans extended by ORIX were to real estate-related       
companies. However, in recent years, we have made few new loans to real         
estate-related companies. Reflecting changing industry trends, we receive       
financing proposals more for short-term bridge finance for homes and other real 
estate than for long-term project finance. We expect steady demand to continue  
for this type of lending in the short-to-medium term. Commercial lending covers 
the spectrum of Japanese corporate lending, including loans to the leisure      
industry, loans to consumer finance companies, and loans to the Japanese retail 
sector. Despite sluggish economic conditions in Japan, we have been able to     
achieve moderate growth in this segment by offering financing products that     
meet our customers' diverse needs.                                              

Loans to foreign borrowers                                            

 Loans to foreign borrowers include our overseas ship finance operations
and general corporate lending. These borrowers are primarily in the United      
States and Hong Kong. Substantially all of our overseas installment loans are   
to corporate customers, such as multinational shipping companies and North      
American corporate customers.                                                   

Quality of our assets                                                 

 We classify past due installment loans into two categories: installment
loans considered impaired under the definitions contained in FASB Statement 114 
and 90+ days past due loans excluding amounts attributable to treatment under   
FASB Statement 114.                                                             

   The following table provides information about our recorded investment in
loans considered impaired under the definition contained in FASB Statement 114. 
The valuation allowance for each period is the required valuation allowance     
less the value of the collateral from impaired loans, calculated under FASB     
Statement 114.                                                                  

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                                                        [Enlarge/Download Table]
                                                                       As of March 31,                  
                                                        ------------------------------------------------
                                                          2000               2001               2002    
                                                        ----------         ----------         ----------
                                                                      (In millions of yen)              
                                                                                                        
Impaired loans......................................... yen125,921         yen120,090         yen113,000
Impaired loans requiring a valuation allowance.........     83,408             73,636             71,802
Valuation allowance....................................     51,791             47,037             45,862

 The allowance for impaired loans accounted for under FASB Statement 114
relates mainly to non-performing assets resulting from the collapse of the      
Japanese real estate market in and following 1992. Following the adoption of    
FASB Statement 114 in the year ended March 31, 1996, we increased the allowance 
for the category, principally as a result of a decline in the value of real     
estate collateral supporting these loans, despite the absence of significant    
change in the level of total outstanding value of these loans. In the year      
ended March 31, 2002, a charge-off of impaired loans amounting to yen8,475      
million resulted in a decrease in the outstanding balances of impaired loans as 
of March 31, 2002 compared to March 31, 2001.                                   

    The following table provides the outstanding balances of impaired loans by
region and type of borrowers. Domestic consumer loans in the "Others" category  
primarily consist of loans secured by stock and golf club memberships:          

                                                        [Enlarge/Download Table]
                                                                        As of March 31,                 
                                                        ------------------------------------------------
                                                          2000                2001               2002   
                                                        ----------         ----------         ----------
                                                                     (In millions of yen)               
                                                                                                        
Domestic consumer:                                                                                      
     Housing loans..................................... yen     --         yen     --         yen     --
     Card loans........................................         --                 --                 --
     Others............................................        646                625              2,193
                                                        ----------         ----------         ----------
         Subtotal......................................        646                625              2,193
Domestic commercial:                                                                                    
     Real estate related companies.....................     49,432             48,527             40,184
     Commercial and industrial companies...............     64,131             59,288             58,338
                                                        ----------         ----------         ----------
         Subtotal......................................    113,563            107,815             98,522
Foreign, commercial, industrial and other borrowers....     11,712             11,650             12,285
                                                        ----------         ----------         ----------
Total.................................................. yen125,921         yen120,090         yen113,000
                                                        ==========         ==========         ==========

The following table provides information as to past due loans and     
allowance for installment loans, excluding amounts attributable to treatment    
under FASB Statement 114. Average balances are calculated on the basis of       
fiscal quarter-end balances:                                                    

                                                        [Enlarge/Download Table]
                                                                         As of March 31,                  
                                                         ------------------------------------------------ 
                                                            2000               2001                2002   
                                                         ----------         ----------         ---------- 
                                                           (In millions of yen, except percentage data)   
                                                                                                          
90+ days past due loans not attributable to treatment                                                     
   under FASB Statement 114.............................  yen91,513          yen84,827           yen74,199
90+ days past due loans not attributable to treatment                                                     
   under FASB Statement 114 as a percentage of the                                                        
   balance of installment loans excluding FASB                                                            
   Statement 114 loans..................................       5.4%               4.9%                3.4%
Provisions as a percentage of average balance of                                                          
   installment loans....................................       1.1%               1.0%                1.0%
Allowance for possible loan losses not attributable to                                                    
   treatment under FASB Statement 114...................  yen49,365          yen53,155           yen56,188

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                                                                         As of March 31,                  
                                                         ------------------------------------------------ 
                                                            2000               2001                2002   
                                                         ----------         ----------         ---------- 
                                                           (In millions of yen, except percentage data)   
                                                                                                          
Allowance for loans not attributable to treatment under                                                   
   FASB Statement 114 as a percentage of the balance of                                                   
   90+ days past due loans not attributable to                                                            
   treatment under FASB Statement 114...................      53.9%              62.7%               75.7%
Allowance for loans not attributable to treatment under                                                   
   FASB Statement 114 as a percentage of the balance of                                                   
   installment loans excluding FASB Statement 114 loans.      2.96%              3.08%               2.60%

  At March 31, 2002, the allowance for loans not attributable to treatment
under FASB Statement 114 as a percentage of 90+ days past due loans not         
attributable to treatment under FASB Statement 114 loans increased, reflecting  
a decline in value of collateral underlying assets and overall economic         
conditions in Japan with remained stagnant.                                     

The following table shows the balance of 90+ days past due loans not  
attributable to treatment under FASB Statement 114 by domicile and type of      
borrowers:                                                                      

                                                        [Enlarge/Download Table]
                                                                        As of March 31,                
                                                        -----------------------------------------------
                                                          2000               2001               2002   
                                                        ---------          ---------          ---------
                                                                     (In millions of yen)              
                                                                                                       
Domestic consumer:                                                                                     
     Housing loans..................................... yen67,066          yen60,316          yen53,577
     Card loans and other..............................    16,825             14,832              9,585
Domestic commercial:                                                                                   
     Real estate related companies.....................       191                808                195
     Commercial and industrial companies...............     2,103              2,050              2,192
Foreign, commercial, industrial and other borrowers....     5,328              6,821              8,650
                                                        ---------          ---------          ---------
         Total......................................... yen91,513          yen84,827          yen74,199
                                                        =========          =========          =========

The majority of these past-due loans were domestic housing loans to   
consumers secured by collateral (mostly first mortgages) where we received      
partial payments. A significant majority of these housing loans are to          
consumers who purchased condominiums for investment purposes. We make           
provisions against losses in this portfolio by way of general reserves for      
installment loans included in allowance for doubtful receivables. We make       
allowance for domestic housing loans after careful evaluation of the value of   
collateral underlying the loans, past loss experience and any economic          
conditions that may affect the default rate. These conditions include corporate 
and personal bankruptcies and increased unemployment rates.                     

  We determine the allowance for card loans and other on the basis of past
loss experience, general economic conditions and the current portfolio          
composition. In addition, we determine the amounts of necessary charge-offs and 
these amounts are added to provision against losses.                            

We believe that the level of the allowance as of March 31, 2002 was   
adequate because:                                                               

o    we expect to recover a portion of the outstanding balance for 90+
      days past due loans (excluding FASB Statement 114 loans) primarily
    because most 90+ days past due loans are domestic housing loans,
    which are generally made to individuals and generally secured by
first mortgages; and                                        

   o    the allowance for possible loan losses not attributable to treatment
       under FASB Statement 114 as a percentage of the balance of 90+ days
         past due loans not attributable to treatment under FASB Statement 114
was 75.7% as of March 31, 2002.                             

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The ratio of charge-offs as a percentage of the balance of installment
loans averaged 0.93% for the three years ended March 31, 2002. We recognize     
that, due to our charge-off policies, historical ratios of charge-offs as a     
percentage of the balance of our investment in installment loans may be lower   
than if we had taken charge-offs on a more timely basis. Accordingly, in        
evaluating whether the ratio of allowance for possible loan losses as a         
percentage of the balance of installment loans is adequate, we do not give as   
much weight to historical charge-off ratios as we do to the other factors       
discussed above.                                                                

Investment securities                                                     

We maintain a sizable investment in various securities. The largest   
segment of this portfolio is the investment of the reserves in our life         
insurance operations. This is approximately 53.1% of our total investment in    
securities as of March 31, 2002. These reserves are generally invested in       
corporate debt. Overseas, we also have substantial holdings in corporate debt   
in the United States as well as emerging markets in Latin America, Eastern      
Europe and Southeast Asia. The following table shows our investment in          
securities by category of investment:                                           

                                                        [Enlarge/Download Table]
                                                              As of March 31,                              
                                 --------------------------------------------------------------------------
                                         2000                       2001                      2002         
                                 --------------------       --------------------       --------------------
                                                (In millions of yen, except percentage data)               
                                                                                                           
Trading securities.............. yen    390      0.1%       yen    581      0.1%       yen    879      0.1%
Available-for-sale securities...    689,638     90.9           841,409     89.3           718,919     83.5 
Held-to-maturity securities.....     11,404      1.5            13,005      1.4            16,008      1.9 
Other securities................     56,949      7.5            87,163      9.2           125,530     14.5 
                                 ----------    -----        ----------    -----        ----------    ----- 
     Total...................... yen758,381    100.0%       yen942,158    100.0%       yen861,336    100.0%
                                 ==========    =====        ==========    =====        ==========    ===== 

    Corporate debt securities consist of general obligation and fixed interest
rate instruments. Our portfolio included investments by our US operations in    
high yield debt securities with a balance of yen45,649 million and in           
commercial mortgage-backed securities with a balance of yen109,930 million as   
of March 31, 2002. Trading securities include securities held in the trading    
portfolio of ORIX Securities, ORIX Commodities and ORIX Capital Markets.        

The following table provides the fair value of available-for-sale and 
held-to-maturity securities in each major security type:                        

                                                        [Enlarge/Download Table]
                                                                    As of March 31,                     
                                                        ------------------------------------------------
                                                           2000               2001               2002   
                                                        ----------         ----------         ----------
                                                                 (In millions of yen)                   
                                                                                                        
Available-for-sale securities:                                                                          
Japanese and foreign government bond securities........ yen 12,895         yen 25,431         yen 25,308
Japanese prefectural and foreign municipal bond                                                         
   securities..........................................     33,021             39,692             24,374
Corporate debt securities..............................    482,417            604,145            497,838
Mortgage-backed and other asset-backed securities......     54,475             94,236            112,891
Funds in trust.........................................      2,479              5,508              4,987
Equity securities......................................    104,351             72,397             53,521
                                                        ----------         ----------         ----------
                                                        yen689,638         yen841,409         yen718,919
                                                        ==========         ==========         ==========
Held-to-maturity securities:                                                                            
Japanese and foreign government bond securities........ yen     --         yen    142         yen    205
Asset-backed securities................................     11,404             12,864             17,513
                                                        ----------         ----------         ----------
                                                        yen 11,404         yen 13,006         yen 17,718
                                                        ==========         ==========         ==========

   At March 31, 2002, marketable equity securities amounted to approximately
6.2% of our total investment in securities. We make these equity investments    
mainly to strengthen business relationships with customers.                     

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Life insurance                                                            

Our life insurance business includes insurance underwriting and agency
sales. Our life insurance underwriting business is conducted by our subsidiary  
ORIX Life Insurance. Our life insurance agency sales business is conducted by   
the Company. Revenues from life insurance premiums and related investment       
income for the year ended March 31, 2002 were yen152,333 million ($1,143        
million), or 23.1% of our total revenues.                                       

ORIX Life Insurance                                                   

   ORIX Life Insurance is a full-line life insurance underwriter, with total
value of insurance contracts in force at March 31, 2002 amounting to yen3,653   
billion. ORIX Life Insurance traditionally distributed our products through     
agents, including ORIX as well as independent agents. In September 1997 ORIX    
Life Insurance initiated ORIX Direct. ORIX Direct is Japan's first product      
suite that includes whole life, endowment, and term life insurance products     
offered through direct channels. Since this insurance is sold via newspaper     
advertisements, the Internet, and other direct channels, administration         
expenses such as agent fees and marketing office expenses are lower than for    
agency-based businesses.                                                        

The following table shows a breakdown of the balance of investments by
ORIX Life Insurance as of March 31, 2002:                                       

                                                  As of March 31, 2002
                                                   -----------------------------
                                                  (In millions of yen)
Fixed income securities............................          yen433,463         
Marketable equity securities.......................                  73         
Other securities...................................              23,596         
Total investment in securities................             457,132    
Other investments.............................              86,606    
Total.....................................          yen543,738

Investments by ORIX Life Insurance other than securities consisted    
principally of real estate for rental and loans.                                

Real estate development and management                                    

 In addition to our real estate lending operations, we are involved in a
range of property development and property management services. We own, operate 
and provide management services, including tenant and rental income management, 
for a number of commercial and other properties in Japan, including a corporate 
training facility, golf courses and hotels. Following our acquisition of Nihon  
Jisho in April 2001, we also own office building and residential property owned 
and operated by Nihon Jisho and land for subdivision development, and have      
subsidiaries involved in building maintenance and real estate appraisal         
business.                                                                       

    In August 2001, we acquired the majority of Kansai Maintenance, a building
maintenance company through a tender offer. We expect that the acquisition of   
Kansai Maintenance will strengthen our ability to provide property operations   
and management services. In March 2002, we acquired the rest of Kansai          
Maintenance through a share exchange. The building maintenance business of      
Nihon Jisho and Kansai Maintenance were combined under a holding company called 
ORIX Facilities Corporation in May 2002.                                        

   We actively engage in real estate development. We have earned substantial
profit from the planning and development of condominium buildings in Japan. In  
the year ended March 31, 2002, operating revenues from the condominium business 
accounted for approximately 48% of other operating revenues. In the United      
States, ORIX Real Estate Equities engages in real estate development, focusing  
on "build-to-suit" real estate development. This type of development enables us 
to secure the profitability of new projects through the prior arrangement of    
long-term leases and sales contracts.                                           

Our real estate development activities cover both the residential and 
commercial property markets in Japan. We completed the subdivision and sale of  
approximately 1,100 residential apartment units in the year ended March 31,     

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2001 and approximately 1,900 units in the year ended March 31, 2002. We are     
also involved in commercial real estate development. The expertise that we have 
accumulated in more than 16 years in the Japanese real estate market, coupled   
with our financing capabilities, allow us to create one-stop development        
packages.                                                                       

Since the adoption of the Law Concerning Securitization of Specified  
Assets by Special Purpose Companies in September 1998, we have actively engaged 
in the securitization of real estate assets. In this area, we draw on our       
experience from US operations and other expertise in handling leases, loans to  
corporations, and real estate business as we actively work to expand our        
securitization of real estate and other types of assets as well as developing   
our loan servicing operations.                                                  

On May 7, 2002, ORIX JREIT Inc. submitted a filing to the Tokyo Stock 
Exchange indicating our intention to make an initial public offering of units   
in the JREIT, 100% of which are presently owned by us. Prior to and during the  
year ended March 31, 2002, we acquired approximately yen100 billion in real     
property that was subsequently sold to JREIT. Subsequent to completion of the   
offering of investment units of the JREIT, these assets no longer remain on our 
consolidated balance sheets. We retained approximately 20% of the investment    
units of the JREIT. In connection with the public offering of the investment    
units, we received proceeds of approximately yen50 billion.                     

Other operations                                                                

Our other operations include the sale and structuring of commodities  
funds, securities brokerage, the sale of life and non-life insurance products   
offered by insurance companies other than ORIX Life Insurance, and several      
other businesses.                                                               

Securities brokerage                                                  

ORIX Securities Corporation is engaged primarily in equity and other  
securities brokerage activities. As financial sector deregulation proceeds in   
Japan, we expect that there will be significant opportunities to offer products 
and services that capitalize on synergies with our other affiliated companies.  
ORIX Securities has seats on the Tokyo Stock Exchange and the Osaka Securities  
Exchange.                                                                       

  Taking advantage of the deregulation of brokerage commissions in October
1999, ORIX Securities is offering discount brokerage services to individual     
investors. As part of this move to further develop our activities, ORIX         
Securities in May 1999 began to offer "ORIX ONLINE," an equity trading service  
available via telephone and the Internet.                                       

Venture capital                                                       

    In 1983 we established ORIX Capital to provide venture capital and related
consultancy services for companies that are potential candidates for initial    
public offerings in Japan. As of March 31, 2002, assets under ORIX Capital's    
management were approximately yen20,342 million, consisting entirely of equity  
securities.                                                                     

Insurance agency sales                                                

We engage in life insurance agency sales through our network of       
approximately 1,900 registered sales agents. We serve as a sales agent for ORIX 
Life Insurance. ORIX Life Insurance also contracts with independent specialized 
insurance sales agents to market our products. ORIX Life Insurance's sales      
agents market through customer visits.                                          

In September 1999, we formed a joint venture with the American        
International Group (AIG) to operate in the Japanese nonlife insurance sector.  
ORIX Insurance Planning Corporation is a domestic nonlife insurance agency that 
provides various types of nonlife insurance products such as fire and casualty  
insurance and other products including new types of liability insurance. ORIX   
Insurance Planning is developing new nonlife insurance products tailored to     
customers' requirements in cooperation with AIG and organizing distinctive      
marketing programs for those products.                                          

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Personal financial services                                           

In 1997, we established our Personal Financial Services Department to 
examine the potential for it to enter the Japanese financial services sector.   
This market sector has been highly regulated with little product                
differentiation in Japan, and, consequently, offered us few opportunities.      
However, with the advent of financial deregulation in Japan, we expect that     
there will be many opportunities for us to enter the market, and capitalize on  
the brand recognition that we have built to date. We provide financial          
consulting and financial products tailored to meet the needs of Japanese        
consumers.                                                                      

  The Personal Financial Services Department began to offer Life Insurance
Diagnostic Services in July 1997. These services provide detailed advice to     
customers regarding the type of insurance most suited to their individual       
lifetime financial plans. In addition, based on the data gathered while         
providing these services, the Personal Financial Services Department makes      
proposals for insurance products tailored to individual customers.              

General and trust banking                                             

 ORIX Trust and Banking provides us with a general banking license and a
trust business license. We engage primarily in direct marketing of deposit      
products and housing loans. As of March 31, 2002, the balance of deposits was   
approximately yen225 billion and the balance of these housing loans was         
approximately yen318 billion.                                                   

Waste management                                                      

  We established ORIX Eco Services Corporation in 1998 to help our leasing
clients deal with their waste management problems. Our activities include       
organizing a network of waste disposal companies and introducing as well as     
acting as intermediary between our customers and these waste disposal           
companies.                                                                      

Loan Servicing                                                        

    Through our subsidiary ORIX Capital Markets, we engage in the servicing of
commercial mortgage loans collateralized primarily by real estate. As of March  
31, 2002, ORIX Capital Markets serviced commercial loan portfolios on behalf of 
itself and outside investors with unpaid principal balances of approximately    
yen4,957 billion.                                                               

Other financial services                                              

We maintain a network of leasing affiliates throughout Japan that have
been established in cooperation with leading regional banks and other financial 
institutions.                                                                   

Other activities                                                      

We own the ORIX Baseball Club, a professional baseball team named ORIX
BlueWave which we acquired in 1988, as part of an overall initiative to promote 
our corporate image.                                                            

Management of Residual Assets                                                   

Our personnel have extensive experience in managing equipment over its
full life cycle. We have the expertise to provide or arrange for required       
maintenance and repairs, to obtain required regulatory permits and to repossess 
equipment or real estate from defaulting credits. Although the estimated        
residual value of equipment under direct financing leases is on average         
approximately 3% of total receivables, this figure is greater for operating     
leases which carry inherently higher obsolescence and resale risks.             

We have established relationships with service, repair and resale     
facilities throughout Japan, which reduce these risks. For example, ORIX Auto   
Leasing maintains alliances with approximately 8,000 servicing agents and       
repair facilities throughout Japan.                                             

 ORIX Rentec maintains two fully automated facilities that offer repair,
servicing and recalibration services on personal computers and measuring        
equipment, as well as its own Internet auction site for used personal computers 

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and measuring equipment. We also maintain a relationship with a major personal  
computer manufacturer for personal computer servicing. We also coordinate the   
disposal of items that are of no further commercial use.                        

  Environmental services provided by ORIX Eco Services include those which
systematize the ultimate disposal of used leasing equipment.                    

International Operations                                                        

  Since the establishment of our first overseas subsidiary in Hong Kong in
1971, we have competed in selected international markets through our            
subsidiaries and investments in international joint ventures. Our approach to   
international expansion has been to focus first on direct financing leases. We  
have either established wholly-owned operations or set up joint ventures with a 
strong local partner. In the cases of ORIX Financial Services in the United     
States and ORIX Polska S.A. in Poland, we have expanded through acquisitions.   
In addition to direct financing leases, in our international operations in      
various jurisdictions we offer automobile maintenance leases, operating leases  
for measuring equipment, personal financial services and aircraft leases. In    
the United States, we have undertaken a diverse range of financial and real     
estate-related business including corporate finance as well as real estate      
financing and development operations.                                           

Our international operations have become a substantial part of our    
operations, generating approximately 22.3% of our total revenues in the year    
ended March 31, 2002. Of these overseas revenues, approximately 51.3% are from  
the Americas, 38.7% from the Asia and Oceania region, and the remaining 10.0%   
from Europe. Approximately 21.2% of our total assets are overseas operating     
assets, excluding assets attributable to the corporate segment and assets which 
belong to affiliate operations. Approximately 59.1% of overseas assets as of    
March 31, 2002 related to the Americas, 32.4% to Asia and Oceania, and the      
remaining 8.5% to Europe.                                                       

The Americas                                                              

After opening a representative office in 1974, we commenced formal    
operations in the United States in 1981 when we established a wholly-owned      
subsidiary, ORIX USA. Since then, we have significantly expanded our activities 
in the United States. ORIX USA owns 100% of the equity of ORIX Real Estate      
Equities, ORIX Financial Services and ORIX Capital Markets.                     

In the year ended March 31, 2002, we restructured our US operations in
order to improve efficiency and to strengthen risk control. Most of the lease   
receivables of ORIX USA were transferred to ORIX Financial Services, while most 
of its loan receivables and investment securities were transferred to ORIX      
Capital Markets.                                                                

ORIX Real Estate Equities is a real estate development and management 
company, which we acquired in 1987. ORIX Real Estate Equities is headquartered  
in Chicago with offices in several major cities in the Unites States, and       
properties in ten states in the US and Toronto, Canada. The current operations  
of ORIX Real Estate Equities are focused on three main activities:              

   o    build-to-suit development of retail, industrial and office projects;

o    the acquisition of office and industrial properties that offer   
value-enhancement opportunities; and                        

o    asset and property management.                                   

 These activities cover properties in our own portfolio as well as third
party properties.                                                               

ORIX Financial Services, which was acquired in 1989, specializes in   
equipment finance and corporate lending.                                        

  In the year ended March 31, 2002, weakening conditions in the US economy
continued to adversely affect the leasing business related to transportation,   
construction and other heavy equipment, resulting in an increase in doubtful    
receivables on direct financial leases. We are proactively responding to this   
development by implementing a restructuring program of ORIX Financial Services. 

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We have installed a new management team at ORIX Financial Services,   
replacing 40 members of senior management, and have reduced the number of ORIX  
Financial Services employees by roughly 40%. In addition, a specialist recovery 
team has been set up to pursue quick recovery on problem loans. At the same     
time, we are moving to diversify our portfolio further by increasing activities 
in business credit, structured finance and other new lending businesses.        

In 1989 we became involved in the field of commodities trading and    
management, primarily through our investment in Stockton Holdings, a company    
that traded in futures and provided reinsurance. As of March 31, 2002 we owned  
29.4% of the equity of Stockton Holdings, without taking into account           
outstanding options.                                                            

We increased our ownership from 45% to 100% in July 1999 of Banc One  
Mortgage Capital Markets, LLC, currently called ORIX Capital Markets. ORIX      
Capital Markets combines origination, commercial mortgage-backed securities     
investment, and servicing functions into a single entity focused on commercial  
mortgage capital markets. ORIX Capital Markets is a leading servicer of         
performing mortgage loans and the largest special servicer in the United States 
providing loan workout and liquidation expertise on securitized and privately   
held portfolios. In addition, ORIX Capital Markets also manages a portfolio of  
principally high yield corporate debt which was transferred from ORIX USA in    
August 2001.                                                                    

Asia, Oceania and the Middle East                                         

   In 1971 we established our first overseas office in Hong Kong, and had 56
subsidiaries and affiliates at March 31, 2002. These companies do business in   
16 countries in the Asia, Oceania and the Middle East regions. During about 30  
years that we have maintained a presence in Asia, ORIX Asia, based in Hong      
Kong, has been the base for our expansion and operations in the region. ORIX    
Asia provides a wide range of financial services. Singapore has been another    
center for our activity in the region. We now have five ORIX subsidiaries and   
affiliates in Singapore undertaking leasing, rental, ship financing, securities 
investment and venture capital operations.                                      

Although we provide a broad range of financial products and services  
throughout the Asia and Oceania region, our primary focus has been on the       
leasing operations. We introduced lease financing to, and are the leading       
lessor in, most of the countries in this region. In this region, as in other    
regions, we have employed two strategies in managing our operations. First, we  
have focused on local business demand rather than on expatriate business        
demand. This strategy has resulted in our Asia and Oceania portfolios being     
composed of a large volume of small transactions which has had the effect of    
dispersing risk. Second, we have sought to procure funds and transact business  
in the relevant local currency and thus minimize currency fluctuation risk.     

 Our domestic subsidiaries have also been expanding into the region. For
example, we have established specialized auto leasing operations in Singapore,  
Taiwan and Malaysia, and ORIX Rentec established personal computer and          
measuring equipment rental operations in Singapore in 1995, Malaysia in 1996    
and South Korea in 2001.                                                        

   We have also expanded our activities into and throughout Asia and Oceania
including the Middle East and North Africa through our overseas subsidiaries    
and affiliates such as ORIX Australia Corporation Limited, ORIX New Zealand     
Limited, ORIX Leasing Pakistan Limited, ORIX Investment Bank Pakistan Limited   
and Infrastructure Leasing & Financial Services, Ltd in India.                  

Europe                                                                    

We initiated our activities in Europe in 1974, when we established a  
liaison office in London. We conduct our current European operations            
principally through ORIX Europe Limited ("ORIX Europe"), ORIX IRELAND LIMITED   
(established in 1988 as a finance vehicle for our European operations), ORIX    
Aviation Systems in Dublin (which has marketing, technical, legal and           
administrative teams to develop our international aircraft operating lease      
business), and ORIX Polska S.A. (an equipment leasing company in Warsaw).       
Multinational transportation operators are the principal customers of our       
European operations.                                                            

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  Established in 1982, ORIX Europe provides leasing, general and corporate
lending and other financial services throughout Europe. These include           
international ship financing, real estate financing and investment in           
international securities.                                                       

Property, Plants and Equipment                                                  

   Because our main business is to provide diverse financial services to our
clients, we do not own any factories or facilities which manufacture products.  
There are no factories currently under construction, and we have no plans to    
build any factories in the future.                                              

   Our most important facility that we own is our headquarters building. Our
headquarters is in Shiba, Minato-ku, Tokyo and covers a floor space of 19,662   
square meters. We have no plans to expand our headquarters or to build          
additional material offices. See also "--Description of Property".              

Regulation                                                                      

    We are incorporated under the Commercial Code and our corporate activities
are governed by the Commercial Code.                                            

   There is no specific regulatory regime in Japan which governs the conduct
of our direct financing lease and operating lease businesses. Our installment   
loan business is regulated by two principal laws which also regulate the        
activities of credit card providers: the Acceptance of Contributions, Money and 
Interest Law and the Regulation of Moneylending Business Law.                   

   The Moneylending Business Law requires all companies engaged in the money
lending business, whether they are installment finance companies, leasing       
companies, credit card companies or specialized consumer loan finance           
companies, to register with the relevant authorities. As registered             
moneylenders, our registered companies are regulated by the Financial Services  
Agency, which has the right to review registered moneylenders' operations and   
inspect their records to monitor compliance with the provisions of the          
Moneylending Business Law. The Financial Services Agency has the authority, and 
is obliged, to cancel a registration upon substantial noncompliance with law,   
failure to comply with some administrative orders and under other               
circumstances.                                                                  

The insurance industry in Japan is regulated by the Insurance Business
Law. Insurance business may not be carried out without a license from the       
Financial Services Agency. There are two kinds of licenses related to insurance 
businesses: one for life insurance businesses and another for non-life          
insurance businesses. The same entity cannot obtain both of these licenses. In  
general, ORIX Life Insurance, as an insurance company, is prohibited from       
engaging in any other activity. Insurance solicitation which we conduct is also 
governed by the Insurance Business Law. We are registered as a sales agent with 
the Ministry of Finance, the government authority formerly in charge of         
supervising the insurance business at the time of our application for the       
registration.                                                                   

    We operate our securities business through ORIX Securities. The Securities
and Exchange Law of Japan (the "Securities and Exchange Law") and related laws  
and regulations apply to the securities industry in Japan. The Securities and   
Exchange Law regulates both the business activities of securities companies and 
the conduct of securities transactions. ORIX Securities is subject to these and 
other laws and regulations. Violation of these provisions could result in       
sanctions against ORIX Securities or our officers and employees.                

 General banking and trust businesses, which are operated by our banking
subsidiary, ORIX Trust and Banking, are also regulated. In general, the Banking 
Law governs the general banking business and the Trust Law and the Trust        
Business Law govern the trust business. These banking businesses may not be     
carried out without a license from the Financial Services Agency and are        
supervised by the Financial Services Agency.                                    

    The Law for Special Measures Concerning the Debt Management and Collection
Business (the Servicer Law), which was enacted in 1998, allows companies        
meeting certain specified criteria to obtain a license to manage and collect    
certain assets. At the time of enactment, the consumer loans did not fall       
within the definition of qualifying assets such that the Servicer Law was       
essentially not applicable to the servicing of consumer loans. The amendments   
to the Servicer Law, in effect since September 1, 2001, have expanded the       
definition of assets to include (i) loan receivables owned by moneylenders      
which are registered under the Money Lending Business Law, (ii) monetary        

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receivables owned by certain special purpose companies incorporated for the     
special purpose of collecting and managing the specified assets, and (iii)      
monetary receivables, regardless of the owner thereof, in respect of which      
insolvency proceedings have been commenced.                                     

  ORIX Asset Management, a wholly-owned subsidiary of ORIX Corporation, is
registered under the Laws Concerning Investment Trusts and Investment           
Corporations (the "Investment Trust Law") as an asset manager for JREITs. Under 
the Investment Trust Law, investment trusts and investment corporations may     
only make investments that are specifically prescribed by law. Real estate was  
not among the prescribed investments until November 2000. Permitted real estate 
investments are not limited to physical real estate, but include investments in 
specifically prescribed real estate-related rights, such as trust beneficiary   
interests in real estate. Units can be listed on a stock exchange and are       
eligible for certain tax benefits, provided they meet applicable requirements   
under Japanese law. JREITs which are listed on the Tokyo Stock Exchange may     
only make investments permitted by the JREIT listing rules of the Tokyo Stock   
Exchange and the rules of the Investment Trusts Association. Investment         
corporations must register with the Financial Services Agency prior to          
commencing their investment activities.                                         

 Outside of Japan, some of our businesses are also subject to regulation
and supervision in the jurisdictions in which we operate.                       

Competition                                                                     

 Our markets are highly competitive and are characterized by competitive
factors that vary by product and geographic region. Our competitors include     
independent and captive leasing and finance companies and commercial banks.     
Some of our competitors have substantial market positions. Many of our          
competitors are large companies that have substantial capital and marketing     
resources, and some of these competitors are larger than us and may have access 
to capital at a lower cost than we do. Competition in Japan and a number of     
other geographical markets has increased in recent years because of             
deregulation and increased liquidity. The markets for most of our products are  
characterized by a large number of competitors. However, in some of our         
markets, such as automobile leasing and small-ticket leasing, competition is    
relatively more concentrated.                                                   

Japan's leasing industry has a small number of independent leasing    
companies. Many leasing firms are affiliated with banks, trading houses,        
manufacturers and financial organizations. Furthermore, many of these           
specialize in specific products, product ranges, or geographical regions. We    
have established a nationwide network and distribute a full range of leasing    
and other financial products. Similarly, our array of other financial products  
and services, and the seamless way in which they are presented, make us unique  
in the Japanese marketplace. This ability to provide comprehensive financial    
solutions through a single sales staff and cross-sell a variety of products is  
one of our competitive advantages, and sets it apart from our domestic          
competitors. Credit tightening has led to a general reduction in aggressive     
marketing from most domestic competitors. We believe that this factor, coupled  
with our ability to access funds directly from the capital markets, will allow  
us to expand our domestic leasing operations as consolidation proceeds within   
the industry.                                                                   

Recently, a number of non-Japanese finance companies have established 
bases in Japan, or are in the process of increasing sales and marketing         
initiatives. Many of these companies compete with us in specific fields.        
However, in general we maintain the same competitive advantage that we enjoy    
over many domestic competitors in that we offer a range of products and         
services that offer customers more than a simple leasing product. Furthermore,  
our established network of sales offices and experience in the Japanese         
marketplace provides us with advantages over foreign leasing and asset finance  
firms entering the Japanese marketplace.                                        

 In small-ticket leasing we compete more with credit companies than with
traditional leasing firms. These companies, like us, have significant           
experience and expertise in handling a large volume of small-ticket             
transactions. We use our nationwide coverage and ability to offer a broad range 
of financial products and services to compete with these firms.                 

    Recent consolidation and alliances among life insurance companies in Japan
have increased competition within the insurance industry. While Japanese        
commercial banks are not currently permitted to sell insurance products         
directly, scheduled deregulation of the insurance industry is expected to       
permit them to sell life insurance products through subsidiary or affiliate     
insurance companies at the bank branch offices. In the event that such          
deregulation is                                                                 

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implemented, the commercial banks could pose a competitive challenge to our     
life insurance operations. If existing Japanese life insurers are acquired by   
foreign insurers, such foreign insurers would gain access to established        
networks of sales agents.                                                       

Description of Property                                                         

   Our operations are generally conducted in leased office space in numerous
cities throughout Japan and the other countries in which it operates. Our       
leased office space is suitable and adequate for our needs. We utilize, or plan 
to utilize in the foreseeable future, substantially all of our leased office    
space.                                                                          

We own office buildings, including one used as our principal executive
offices, apartment buildings and recreational facilities for our employees with 
an aggregate value as of March 31, 2002 of yen76,987 million.                   

Legal Proceedings                                                               

  We are a defendant in various lawsuits arising in the ordinary course of
our business. We aggressively manage our pending litigation and assesses        
appropriate responses to lawsuits in light of a number of factors, including    
potential impact of the actions on the conduct of our operations. In the        
opinion of management, none of the pending legal matters is expected to have a  
material adverse effect on our financial condition or results of operations.    
However, there can be no assurance that an adverse decision in one or more of   
these lawsuits will not have a material adverse effect.                         

Item 5.  Operating and Financial Review and Prospects.                          

General                                                                         

    The following discussion and analysis provides information that management
believes to be relevant to understanding our consolidated financial condition   
and results of operations. This discussion should be read in conjunction with   
the consolidated financial statements of ORIX, including the notes thereto,     
included in this Annual Report.                                                 

Overview                                                                        

   We are engaged principally in financial service businesses. These include
leasing and commercial and consumer finance businesses in Japan and in overseas 
markets. We earn our revenues mainly from direct financing leases, operating    
leases and life insurance premiums, as well as interest on loans and investment 
securities. Our expenses include mainly interest expense, depreciation on       
operating leases, life insurance costs, selling, general and administrative     
expenses and provision for doubtful receivables on direct financing leases and  
possible loan losses. We require funds mainly to purchase equipment for leases, 
extend loans and invest in securities.                                          

  We earn most of our revenues from our operations in Japan. Revenues from
overseas operations have also contributed significantly to our operating        
results in recent periods. Overseas operations generated 24.4% and 22.3% of our 
total revenues in the years ended March 31, 2001 and March 31, 2002,            
respectively.                                                                   

Presentation of income from investments                                   

  We present income from investments in separate lines of our consolidated
statements of income, depending upon the type of security and whether the       
security is held in connection with our life insurance operations. The balances 
of our investments in securities are shown by type of security and operation as 
of the end of each of the last three years ended March 31, 2002 in the tables   
below.                                                                          

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                                                        [Enlarge/Download Table]
                                                                       As of March 31, 2000                
                                                        ---------------------------------------------------
                                                        Life Insurance    Other operations         Total   
                                                        --------------    ----------------       ----------
                                                                    (In millions of yen)                   
                                                                                                           
Fixed income securities................................    yen390,523         yen203,689         yen594,212
Marketable equity securities...........................        13,243             91,108            104,351
Other securities.......................................        13,379             46,439             59,818
                                                           ----------         ----------         ----------
     Total                                                 yen417,145         yen341,236         yen758,381
                                                           ==========         ==========         ==========

                                                        [Enlarge/Download Table]
                                                                       As of March 31, 2000                
                                                        ---------------------------------------------------
                                                        Life Insurance    Other operations         Total   
                                                        --------------    ----------------       ----------
                                                                    (In millions of yen)                   
                                                                                                           
Fixed income securities................................    yen519,995         yen256,514         yen776,509
Marketable equity securities...........................         7,167             65,230             72,397
Other securities.......................................         9,975             83,277             93,252
                                                           ----------         ----------         ----------
     Total                                                 yen537,137         yen405,021         yen942,158
                                                           ==========         ==========         ==========

                                                        [Enlarge/Download Table]
                                                                       As of March 31, 2000                
                                                        ---------------------------------------------------
                                                        Life Insurance    Other operations         Total   
                                                        --------------    ----------------       ----------
                                                                    (In millions of yen)                   
                                                                                                           
Fixed income securities................................    yen433,463         yen242,956         yen676,419
Marketable equity securities...........................            73             53,448             53,521
Other securities.......................................        23,596            107,800            131,396
                                                           ----------         ----------         ----------
     Total                                                 yen457,132         yen404,204         yen861,336
                                                           ==========         ==========         ==========

Interest we earn on fixed income securities and on interest-earning   
securities classified in other securities held in connection with operations    
other than life insurance is reflected in our consolidated statements of income 
as interest on loans and investment securities. All other income and losses     
(other than foreign currency transaction gain or loss and write-downs of        
securities) we recognize on securities held in connection with operations other 
than life insurance are reflected in our consolidated statements of income as   
brokerage commissions and gains on investment securities. All income and losses 
(other than foreign currency transaction gain or loss and write-downs of        
securities) we recognize on securities held in connection with life insurance   
operations are reflected in our consolidated statements of income as life       
insurance premiums and related investment income.                               

Policies relating to non-performing assets and charge-offs                

   We review delinquencies or other transactions which are not in compliance
with our internal policies as frequently as every two weeks in the case of      
domestic transactions. Transactions with payments three months or more overdue  
are reported to the corporate executive officer responsible for the Investment  
and Credit Evaluation Group. We stop accruing revenues on direct financing      
leases and installment loans when principal or interest is past due 180 days or 
more, or earlier if management determines that it is doubtful that it can       
collect on direct financing leases and installment loans. The decision is based 
on factors such as the general economic environment, individual clients'        
creditworthiness and historical loss experience, delinquencies and accruals.    
After we have set aside provisions for a non-performing asset, we carefully     
monitor the quality of any underlying collateral, the status of management of   
the obligor and other important factors. When we determine that there is little 
likelihood of continued repayment by the borrower or lessee, we sell the leased 
equipment or loan collateral, and we record a charge-off for the portion of the 
lease or loan that remains outstanding.                                         

Our charge-off policy is greatly affected by Japanese tax law, which  
limits the amount of tax deductible charge-offs. Japanese tax law allows        
companies to charge off doubtful receivables on a tax deductible basis only     
when specified conditions are met. Japanese tax law does not allow a partial    
charge-off against the total outstanding receivables to an obligor. Japanese    
regulations do not specify a maximum time period after which charge-offs must   
occur.                                                                          

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   It is common in the United States for companies to charge-off loans after
they are past due for a specific arbitrary period, for example, six months or   
one year. However, we are required to keep our primary records in accordance    
with Japanese tax law. Japanese tax law does not allow Japanese companies to    
adopt a policy similar to that in the United States. If we had prepared our     
accounting records as if each charge-off had occurred at an arbitrary date, the 
differences in our financial statements would be a reduction in gross           
receivables, an identical reduction in the allowance for doubtful receivables   
and a change in the timing of charge-offs. We believe that the most significant 
of these differences, when comparing ourselves to other non-Japanese companies  
(particularly US companies), may be the delay in when we record a charge-off.   
In a period of worsening economic conditions and increasing delinquencies, we   
may reflect a lower charge-off ratio than we would if we applied the charge-off 
policies used by some non-Japanese companies.                                   

FASB Statement 121 requires that long-lived assets and certain        
identifiable intangibles held and used by ORIX and its subsidiaries be reviewed 
for impairment whenever events or changes in circumstances indicate that the    
carrying amount of an asset may not be recoverable. We conduct this review for  
impairment by using undiscounted future cash flows expected to be generated by  
the assets. During the three years ended March 31, 2002, ORIX and certain       
subsidiaries wrote down certain real estate development projects included in    
investment in operating leases, other operating assets, and advances in the     
consolidated balance sheets to their fair values. An impairment loss was        
recognized for each of the periods in the amount by which the carrying amount   
of the assets exceeded fair value determined by external appraisals.            

Risk Management                                                                 

Our business activities contain elements of risk. We consider the     
principal types of risk to be credit risk, asset/liability risk, and, to a      
lesser extent, operational and legal risk.                                      

   We consider the management of risk essential to conducting our businesses
and to maintaining profitability. Accordingly, our risk management systems and  
procedures are designed to identify and analyze our risks, to set appropriate   
policies and limits and to continually monitor these risks and limits by means  
of reliable administrative and information systems and other policies and       
programs.                                                                       

Credit risk management                                                    

  We have established an organizational structure specifically designed to
allow the management of credit risk in each business segment. We employ a risk  
management system under which both the relevant marketing department and our    
independent Investment and Credit Evaluation Group make thorough evaluations of 
customer-, industry-, and country-related risks. The Investment and Credit      
Evaluation Group consists of approximately 70 specialized staff. In addition,   
some of our domestic subsidiaries, such as ORIX Auto Leasing and ORIX Credit,   
have their own independent credit departments. Another independent specialized  
Real Estate Appraisal Department, consisting of approximately 40 specialized    
staff, focuses on the appraisal of real estate collateral. Based on internal    
standards, we methodically evaluate individual financing proposals and          
determines whether or not they should be approved. Financing and leasing assets 
are evaluated for credit and collateral risk both during the credit granting    
process and periodically after the advancement of funds.                        

 We maintain a unified set of credit evaluation practices with regard to
all of our operations. Our credit evaluation consists of three basic steps: (i) 
initial evaluation to determine whether it will enter into each individual      
transaction; (ii) monitoring of contracts for potential defaults or problems;   
and (iii) corrective action for the management of defaults and other problem    
transactions.                                                                   

Initial evaluation--domestic                                          

   Staff members in our sales and marketing business units are authorized to
approve credit within limits that correspond to the seniority of the staff      
member making the credit evaluation. If proposed transactions exceed these      
credit limits within the marketing departments, the transaction is referred to  
our Investment and Credit Evaluation Group. In addition, a composite, on-line   
record of all transactions able to be approved within the sales and marketing   
business units is available to almost all of our employees, including the       
Investment and Credit Evaluation Group. If the transaction exceeds the limits   
which the Investment and Credit Evaluation Group is authorized to approve, the  

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matter is referred to our Investment and Credit Committee for ultimate          
determination. The Investment and Credit Committee, which consists of at least  
five corporate executive officers, including the heads of the departments       
originating relevant transactions, meets twice or three times per month in      
order to review and approve large domestic and overseas transactions.           

In the initial evaluation process, the salesperson will first obtain  
financial statements and other relevant financial information from the customer 
covering at least the three years prior to the application. We do the           
evaluation of credit on a cumulative basis so that an existing customer seeking 
new credit will be re-evaluated if the new application, when coupled with       
existing, outstanding credit, exceeds the limit granted by the last evaluation. 
The salesperson will then interview senior management from the customer seeking 
credit. If further investigation is necessary, we may retain independent credit 
agencies.                                                                       

  The credit evaluation process is provided in a series of manuals that we
have developed to ensure that the credit evaluation process is adhered to and   
executed in a methodical manner. These manuals provide management risk          
acceptance criteria for:                                                        

o    acceptable maximum credit lines;                                 

o    selected target markets and products;                            

o    the creditworthiness of borrowers, including credit history,     
         financial condition, adequacy of cash flow and quality of management;
and                                                         

o    type and value of underlying collateral and guarantees.          

    These manuals are reviewed by management and staff and amended or improved
as required.                                                                    

We receive credit-related information such as bankruptcies, defaults, 
changes in the repayment terms and deterioration of business operations from    
certain agencies on a daily basis and records such information in the database  
accessed by the sales and marketing business units.                             

Initial evaluation--international                                     

  We operate a number of subsidiaries and affiliates outside Japan. All of
these companies maintain systems and procedure manuals that are similar to      
those we maintain within Japan, with modifications incorporated to take into    
account local business practices and economic conditions and the varying        
natures of the transactions being undertaken. Some of these companies,          
particularly subsidiaries at which the Company's secondees are stationed, use   
systems and procedure manuals that are substantially similar to those used by   
ORIX, while others, particularly affiliates, use their own credit evaluation    
procedures. Substantially all subsidiaries refer transactions exceeding fixed   
limits to our Investment and Credit Evaluation Group, or to the Investment and  
Credit Committee, for ultimate determination. For some of these companies, we   
carry out country and region evaluations on a regular basis to minimize         
exposure to potentially high risk markets.                                      

Monitoring                                                            

We maintain monitoring systems that allow us to evaluate the          
creditworthiness of customers and identify potential problem transactions. In   
particular, management reviews the financial position of lessees and borrowers  
by monitoring the collection of receivables from these lessees and borrowers.   
Coupled with the initial evaluation systems, this kind of monitoring enables us 
to manage our exposure to particular industries, countries or regions,          
customers and products within our portfolio. For each industry segment we carry 
out periodic, industry sector evaluations to reduce exposure to potentially     
high risk market segments.                                                      

   We review delinquencies or other transactions which are not in compliance
with our accepted practices daily in the case of domestic transactions. Our     
management reviews accounts that are three months or more overdue. We classify  
accounts six months overdue as non-accrual. However, some exceptions to these   
time limits apply when composition of more stringent requirements is necessary  
due to the nature of the transaction, such as transactions for                  

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big ticket aircraft, real property or ship leasing and financing transactions.  
Under current procedures, we are not aware of any potential problem accounts    
which are likely to impact future operations.                                   

  The Investment Credit Evaluation Group monitors the customers' repayment
status on-line and reports any delinquencies to the business units.             

Under internally established rules, the management of each overseas   
subsidiary and affiliate prepares reports on delinquent transactions on a       
monthly basis, which are forwarded to our International Credit Group. The       
International Credit Group then compiles these into a report that is sent to    
our management. We monitor overseas transactions by product, region, country    
and currency and the executive management reviews the information semi-annually 
or more frequently, if necessary. The ratings for country risks are also        
evaluated semi-annually.                                                        

Remedial measures                                                     

As part of the credit management process, we maintain systems that    
establish procedures for the handling of problem transactions, from consulting  
measures that help customers rehabilitate their activities, to repossession,    
legal adjudication, and obtaining further guarantees or collateral as required. 
Repossession is also integrated, to the extent that it may be, with our         
secondary market operations.                                                    

Exchange-rate risk management                                             

    We enter into foreign exchange forward contracts and foreign currency swap
agreements to hedge foreign currency risks. In principle, we hedge foreign      
currency risk related to our foreign currency denominated transactions and      
overseas investments, and overseas group companies procure funds locally.       
However, certain positions involving foreign currency risk are managed          
individually.                                                                   

Derivatives risk management                                               

We establish market risk management regulations determined by the     
Investment and Credit Committee, and each group company that engages in         
derivatives transactions has established market risk management parameters.     
Based on those parameters, the object of the risks which should be managed and  
the types of hedging methods are clarified, while an internal check system has  
been established to separate the functions of departments responsible for       
execution, hedging efficacy evaluation, and related administration tasks. We    
prepare quarterly reports on each group company's transactions that include     
compilations of such information as the national principal, fair market value,  
hedging method, and hedging efficacy associated with each type of transaction   
and each counterparty.                                                          

Credit evaluation by industry segment                                     

Direct financing leases and operating leases                          

We carry out lease financing credit procedures in accordance with the 
credit evaluation process. However, in lease transactions, generally the only   
collateral is the leased item itself, and we generally assume that there is     
little or no residual value in case of default. Therefore, we place particular  
emphasis on the creditworthiness of the customer and the soundness of all       
aspects of the customer's business to minimize any risk of default.             

Installment loans                                                     

   In installment loan operations, managing credit risk and controlling loan
charge-offs depends on the evaluation of each corporate borrower's              
creditworthiness and the underlying collateral.                                 

  Except for a range of low-limit personal card loans, all of our consumer
lending is done only after interviewing the applicant and receiving all         
relevant financial data. In order to reduce default and other risks, we only    
target some borrower profiles, and we always obtain third party credit reports. 
Our domestic installment loans are mostly secured by real estate collateral,    
except for card loans which are mostly unsecured because the maximum amount of  
each loan transaction is relatively small. We use a collateral evaluation       
manual, issued by our Investment and Credit Evaluation Group, to determine the  
value of each item of collateral and ascertain the appropriate loan amount for  
the relevant transaction by considering a loan to value ratio. The value of     
collateral is derived after considering factors                                 

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such as the type of collateral and risk factors inherent in each type. In       
domestic residential home loans, we generally obtain a registered first         
mortgage, and use the specialized staff from the Real Estate Appraisal          
Department to assess collateral and other risks. If collateral is a traded      
security, the value of collateral is determined by referring to our current     
market value. Separate manuals set out lending principles for loan staff to use 
in making credit determinations.                                                

  Most overseas loans are also secured by various forms of collateral. Our
overseas subsidiaries which conduct installment loan operations have similar    
systems and procedures in place to evaluate and monitor the adequacy of         
collateral in support of a loan. For example, in the case of overseas           
commercial and home mortgage lending, our subsidiaries employ independent       
property valuation professionals to assess collateral and other risks.          

    The assessed value of collateral is reviewed periodically, at least once a
year, and we generally request the borrower to provide additional collateral    
where the value is no longer sufficient to support the loan.                    

Other operations                                                      

In addition to Investment and Credit Evaluation Group staff, the      
specialized Real Estate Appraisal Group has approximately 40 employees that are 
experienced in the valuation of real property collateral and development        
proposals.                                                                      

   Separate manuals set out more stringent procedures for transactions where
the size or nature of the transaction require greater care, such as             
transactions for ship leasing and financing, aircraft leasing, investment in    
securities and transactions involving complex financial products such as        
commodities funds. The evaluation of credit and collateral is handled by        
specially trained staff with experience in evaluating the property-, client-,   
country- and other related risks inherent in these transactions. Our staff      
promptly report delinquencies and other issues and take any necessary remedial  
action.                                                                         

Loan loss reserves and credit losses                                  

We maintain a consolidated reserve for credit losses on finance       
receivables at an amount which we believe is sufficient to provide adequate     
protection against potential credit losses in our portfolios. We determine the  
level of the allowance for doubtful receivables on direct financing leases and  
possible loan losses in the manner described in Note 1(f) of the notes to the   
consolidated financial statements.                                              

We review commercial and consumer finance receivables to determine the
probability of loss. We take provisions after considering various factors. If   
an unrecovered balance remains due, we take a final charge-off from provisions  
at the time we decide collection efforts are no longer useful.                  

Asset/liability management and interest rate risks                        

  We annually prepare a performance target report on a consolidated basis.
This report is based on the analysis of previous performance and information of 
each business segment. It projects the value of new business volumes, interest  
rate trends, and various other factors that may affect performance. The         
performance target report includes new financial asset marketing targets, a     
profit projection, balance sheet projections, and medium-term and               
fiscal-year-based funding plans. The report is reviewed and approved by the     
Board of Directors, which is responsible for decisions on the execution of      
operational measures. A semi-annual funding plan, which sets out a planned      
funding mix as well as required funding volumes and proposed sources, is        
prepared with the goal of matching fixed-rate liabilities to fixed-rate assets. 
The Board of Directors also reviews and approves these funding plans.           

After the approval of these plans, each division operates on a basis  
consistent with the performance target report. Asset-liability management has   
become an important element of managing the execution of these operations.      
Under our asset-liability management system, the relationship between actual    
performance and the performance target report is compared and analyzed, and     
asset-liability management charts, gap reports and cash-flow maps are prepared  
and used to analyze mismatches between existing assets and liabilities. These   
charts show the contractual maturity, interest rates, and balances of           
fixed-rate assets and liabilities and also project future trends in these       
balances. In addition, through profit-loss simulations and asset maturity       
ladder analysis, we try to ascertain the influence of future market movements   
on our performance and, based on interest rate forecasts, determine marketing   

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divisions' internal costs and treasury departments' procurement policies. This  
allows us to maximize our spreads and return on assets and engage in efficient  
funding activities.                                                             

In addition, we use an asset-liability management system that enables 
prompt access to quantitative indicators of interest rate risks. We continue to 
expand the coverage of this system to monitor our group companies.              

Changes in market interest rates or in the relationships between      
short-term and long-term market interest rates or between different interest    
rate indices (i.e., basis risk) can affect the interest rates charged on        
interest-earning assets more than they affect the interest rates paid on        
interest-bearing liabilities, which can result in an increase in interest       
expense relative to finance income.                                             

We manage interest rate risk by changing the proportions of fixed- and
floating-rate debt and by utilizing primarily interest rate swaps and, to a     
lesser extent, other derivative instruments to modify the repricing             
characteristics of existing interest-bearing liabilities. For example, a        
fixed-rate, fixed-term loan transaction may initially be funded by short-term   
floating rate liabilities, resulting in interest rate risk; however, this may   
later be hedged by way of an interest rate swap, thus eliminating the risk      
initially created.                                                              

   We seek to limit the impact on profitability of interest rate trends that
are contrary to our projections. For example, our typical financing lease       
contracts call for both principal and interest to be paid in equal lease        
payments over periods averaging only five years. Thus, even when these leases   
are financed with short-term funds, we do not require much time to change our   
asset-liability and interest rate structures through strategic changes in new   
funding operations, the use of derivatives, and other methods. In addition to   
the Board of Directors, our management organization includes a committee        
composed of the Chief Executive Officer and other top managers as well as       
departmental managers that is capable of rapid decision making with regard to   
interest rate risks.                                                            

Most overseas subsidiaries also adhere to a basic policy of matching  
future cash flows due with assets and liabilities, periodically producing       
asset-liability management charts and working to reduce any mismatching.        

Life insurance                                                            

Our life insurance operations are subject to a number of risks and    
uncertainties that may be broadly categorized as follows:                       

   o    insurance risk: the risk that a greater number of policy claims than
     anticipated will arise resulting in greater levels of expense and
reduced earnings, or in some cases, losses;                 

    o    portfolio management risk: the risk that the return on assets managed
      will substantially fall short of the rates of return guaranteed to
    policy holders and the risk that the actual value of assets that
      policy liability reserves have been invested in will fall, in each
        case leading to additional provisioning that would negatively impact
our earnings; and                                           

o    overall managerial risk: as with any business, the risk that     
      strategies adopted with regard to new products, marketing or other
initiatives will not accurately respond to market needs.    

   In order to cope with these risks we have adopted the following policies:

o    we employ an in-house actuary to closely monitor micro- and      
        macro-economic and social trends and adopt standards that reduce the
chance of unforeseen numbers of policy claims;              

o    while diversifying policy liability reserves in order to avoid a 
       disproportionate exposure to one asset segment, we invest in stable
 instruments that tend not to be affected by short-term market
   movements, such as fixed-return corporate debt instruments; and

o    we monitor the returns we achieve on assets under management and 
        lower guaranteed policy returns (if required) in order to reduce the
risk of a shortfall in return on assets under management.   

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Operational and legal risks                                               

Like all large financial institutions, we are exposed to many types of
operational risk, including the potential for loss caused by a breakdown in     
information, communication or transaction processing systems or by fraud by     
employees or outsiders or unauthorized transactions by employees. We attempt to 
mitigate operational risks by maintaining a system of internal controls         
designed to keep operational risk at appropriate levels. In so doing, we take   
into account our consolidated financial position, the characteristics of the    
businesses and markets in which it operates, competitive circumstances and      
regulatory considerations. We cannot assure the investors that we will not      
incur material losses from operational risks in the future.                     

    Legal risk arises from the uncertainty of enforceability, through legal or
judicial process, of obligations of our customers and counterparties. It also   
arises from the possibility that changes in law or regulation could adversely   
affect our businesses. We seek to minimize legal risk through consultation with 
internal and external legal counsel.                                            

    In order to enhance our compliance function, we have established the Legal
Affairs Group by combining the compliance functions previously performed by the 
Investment and Credit Evaluation Group and Office of Corporate Auditors. This   
department is in charge of checking the legality of contracts and business      
activities of our operations and evaluating legal risk relating to new          
financial products. In February 2002, we created a compliance manual to guide   
our employees and began training programs to foster a deeper awareness of       
compliance issues as part of continued efforts to minimize legal and            
operational risk.                                                               

Results of Operations                                                           

Year Ended March 31, 2002 Compared to Year Ended March 31, 2001           

Overview                                                                  

Our consolidated operating assets increased by 9.9%, or yen498,594    
million, to yen5,528,149 million as of March 31, 2002 from yen5,029,555 million 
as of March 31, 2001. This reflected increases in nearly all categories of      
operating assets, principally installment loans, other operating assets and     
investment in operating leases, partially offset by a decrease in investment in 
securities. The other operating assets increased primarily as a result of       
purchases of properties which were subsequently transferred to a real estate    
investment corporation sponsored by ORIX (the "JREIT"). Upon completion of the  
offering of the JREIT units, these assets will be removed from the balance      
sheet and any portion of the units retained by us will be included in           
investment in affiliates.                                                       

  Our total revenues for the year ended March 31, 2002 increased by 12.3%,
or yen72,313 million, to yen658,462 million from yen586,149 million in the year 
ended March 31, 2001, reflecting principally an increase of yen53,374 million   
in other operating revenues.                                                    

 Total expenses for the year ended March 31, 2002 increased by 10.6%, or
yen56,092 million, to yen585,093 million.                                       

   Income before income taxes for the year ended March 31, 2002 increased by
23.3%, to yen73,039 million. Net income increased by 17.9%, or yen6,112         
million, to yen40,269 million. The table below contains income statement data   
for the years ended March 31, 2001 and 2002, as well as the selected amounts    
and percentages of the changes between the years ended March 31, 2001 and 2002. 

                                                        [Enlarge/Download Table]
                                                           Year ended March 31,               Change        
                                                         ------------------------      ---------------------
                                                            2001          2002          Amount       Percent
                                                         ----------    ----------      ---------     -------
                                                                         (In millions of yen)               
                                                                                                            
Income statement data                                                                                       
Total revenues.......................................... yen586,149    yen658,462      yen72,313      12.3% 
     Direct financing leases............................    122,003       121,914            (89)     (0.1) 
     Operating leases...................................    113,478       120,807          7,329       6.5  
     Interest on loans and investment securities........    109,448       121,962         12,514      11.4  

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                                                           Year ended March 31,               Change        
                                                         ------------------------      ---------------------
                                                            2001          2002          Amount       Percent
                                                         ----------    ----------      ---------     -------
                                                                         (In millions of yen)               
                                                                                                            
     Brokerage commissions and gains on investment                                                          
       securities.......................................     12,055        18,367          6,312      52.4  
     Life insurance premiums and related investment                                                         
       income...........................................    158,314       152,333         (5,981)     (3.8) 
     Interest income on deposits........................      2,520         1,374         (1,146)    (45.5) 
     Other operating revenues...........................     68,331       121,705         53,374      78.1  
Total expenses..........................................    529,001       585,093         56,092      10.6  
                                                         ----------    ----------      ---------            
Operating income........................................     57,148        73,369         16,221      28.4  
Equity in net income (loss) of and gain (loss) on sales                                                     
   of affiliates........................................      2,088          (330)        (2,418)   (115.8) 
                                                         ----------    ----------      ---------            
Income before income taxes..............................     59,236        73,039         13,803      23.3  
Net income..............................................     34,157        40,269          6,112      17.9  

   The table below contains selected balance sheet data as of March 31, 2001
and 2002, as well as the amounts and percentages of the changes between the two 
dates.                                                                          

                                                        [Enlarge/Download Table]
                                                             Year ended March 31,               Change         
                                                         --------------------------     -----------------------
                                                              2001          2002          Amount       Percent 
                                                         ------------  ------------     -----------     -------
                                                                           (In millions of yen)                
                                                                                                               
Balance sheet data                                                                                             
Investment in direct financing leases................... yen1,657,709  yen1,658,669     yen    960       0.1%  
Investment in operating leases..........................      451,171       474,491         23,320       5.2   
Installment loans.......................................    1,846,511     2,273,280        426,769      23.1   
Investment in securities................................      942,158       861,336       (80,822)      (8.6)  
Other operating assets..................................      132,006       260,373        128,367      97.2   
                                                         ------------  ------------     ----------             
Operating assets........................................    5,029,555     5,528,149        498,594       9.9   
Allowance for doubtful receivables on direct financing                                                         
   leases and possible loan losses......................     (141,077)     (152,887)        11,810       8.4   
Other assets............................................      702,833       974,957        272,124      38.7   
                                                         ------------  ------------     ----------             
Total assets............................................ yen5,591,311  yen6,350,219     yen758,908      13.6%  
                                                         ============  ============     ==========             

  The table below shows the volume of new assets for the years ended March
31, 2001 and 2002, as well as the amounts and percentages of change in these    
data from the year ended March 31, 2001 to the year ended March 31, 2002.       
Figures for new equipment acquisitions for direct financing leases and          
operating leases are based on purchase cost of the equipment.                   

                                                        [Enlarge/Download Table]
                                                            Year ended March 31,             Change        
                                                         ------------------------     ---------------------
                                                           2001           2002         Amount       Percent
                                                         ----------    ----------     ----------    -------
                                                                       (In millions of yen)                
                                                                                                           
Volume of new assets                                                                                       
Direct financing leases: new equipment acquisitions..... yen723,330    yen980,379     yen257,049      35.5%
Operating leases: new equipment acquisitions............    143,158       146,203          3,045       2.1 
Installment loans: new loans added......................    740,639     1,340,400        599,761      81.0 
Investment in securities: new securities added..........    397,218       348,347       (48,871)     (12.3)
Other operating assets: new assets added................    128,984       204,121         75,137      58.3 

Total revenues                                                            

    Our total revenues increased by 12.3%, or yen72,313 million, to yen658,462
million in the year ended March 31, 2002 compared to yen586,149 million in the  
year ended March 31, 2001, reflecting principally an increase of yen53,374      
million in other operating revenues due to increases in revenues from our       
condominium development and fee                                                 

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businesses in Japan and from the sale of real estate in the United States, as   
well as smaller increases in revenues from operating leases, brokerage          
commissions and gains on investment securities and interest on loans and        
investment securities, partially offset by a decrease in revenues from life     
insurance premiums and related investment income and smaller declines in        
revenues from direct financing leases and interest income on deposits.          

Direct financing leases                                                   

  Revenue from direct financing leases was yen121,914 million for the year
ended March 31, 2002 which was essentially unchanged from yen122,003 million    
for the year ended March 31, 2001. Increases in revenues from Japanese          
operations, principally from acquisitions of lease portfolios and from gains on 
the sale of securitized lease receivables, were offset by lower overseas        
revenues due to the shrinkage of our leasing assets in the United States.       

    The average interest rates on domestic direct financing leases, calculated
on the basis of quarterly balances in the year ended March 31, 2002 was 5.98%   
compared to 5.77% in the year ended March 31, 2001, due primarily to the higher 
volume of the auto leasing business, which has higher than average rates        
compared to other leasing businesses. The average interest rates on overseas    
direct financing leases, calculated on the basis of quarterly balances,         
decreased to 8.96% in the year ended March 31, 2002 from 9.92% in the year      
ended March 31, 2001, reflecting decrease in market interest rates.             

The table below shows the balances as of March 31, 2001 and 2002 of   
investment in direct financing leases by category of equipment, together with   
the amounts and percentages of the changes between period-ends.                 

                                                        [Enlarge/Download Table]
                                                                As of March 31,                 Change         
                                                         --------------------------  ------------------------- 
                                                             2001           2002        Amount         Percent 
                                                         ------------  ------------  ------------      ------- 
                                                                         (In millions of yen)                  
                                                                                                               
Investment in direct financing leases                                                                          
Information-related and office equipment................ yen  334,174  yen  262,524  yen  (71,650)      (21.4)%
Industrial equipment....................................      372,542       286,942       (85,600)      (23.0) 
Commercial services equipment...........................      193,624       186,115        (7,509)       (3.9) 
Transportation equipment................................      415,246       603,843       188,597        45.4  
Other...................................................      342,123       319,245       (22,878)       (6.7) 
                                                         ------------  ------------  ------------              
      Total............................................. yen1,657,709  yen1,658,669  yen      960         0.1% 
                                                         ============  ============  ============              

    Investment in direct financing leases of yen1,658,669 million for the year
ended March 31, 2002 was essentially unchanged from yen1,657,709 million from   
the previous fiscal year-end, as an increase in investment in direct financing  
leases of transportation equipment was offset by decreases in investments in    
other categories of direct financing leases. Investment in direct financing     
leases of transportation equipment increased primarily as a result of our       
acquisition in September 2001 of an 80% interest in IFCO, a former subsidiary   
of Isuzu Motors Limited, for yen20 billion. IFCO is a truck leasing company     
with approximately 67,000 vehicles under lease and approximately yen300 billion 
in total assets as of September 2001. However, weak private-sector capital      
investment and our selective approach to new domestic leasing contracts with an 
emphasis on profitability over asset growth caused the overall balance of       
domestic leasing contracts for all other categories of equipment to decline. In 
addition, increases in investment in direct financing leases in the year ended  
March 31, 2002 were partially offset by the securitization of leasing assets.   
The balance of overseas leasing contracts also decreased, reflecting the        
on-going restructuring of our United States subsidiary, ORIX Financial          
Services, Inc. and general economic conditions in the United States.            

    During the year ended March 31, 2002, we securitized yen188,853 million of
domestic and yen13,914 million of overseas leasing assets. Gains from the       
securitization of these assets of yen6,159 million were included in direct      
financing lease revenues. The securitization of these assets, accounted for as  
off balance sheet assets, contributed to the reduction in the balance of direct 
financing leases. The balance of direct financing lease assets which were       
treated as off balance sheet assets amounted to yen375,149 million as of March  
31, 2002. The unpaid principal balance outstanding of securitized receivables   
is excluded from our consolidated balance sheets. In addition, we entered into  
other lease receivable securitization programs that are not accounted for as a  
sale, or not treated as off balance sheet assets. Under these securitization    
programs, we had long-term debt payables of yen40,731 million under securitized 
lease assets as of March 31, 2002.                                              

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Operating leases                                                          

    Revenues from operating leases for the year ended March 31, 2002 increased
by 6.5%, or yen7,329 million, to yen120,807 million, primarily as a result of   
increases in revenues from automobile leasing operations in Japan and overseas. 
Gains from the disposition of operating lease assets included in revenues from  
operating leases were yen3,467 million in the year ended March 31, 2002,        
compared to yen7,883 million in the year ended March 31, 2001.                  

 The table below shows the balances as of March 31, 2001 and 2002 of our
investment in operating leases by category of equipment under lease, together   
with the amounts and percentages of the changes between period-ends.            

                                                        [Enlarge/Download Table]
                                                              As of March 31,                   Change       
                                                         -------------------------      ---------------------
                                                            2001           2002          Amount       Percent
                                                         -----------    ----------      ---------     -------
                                                                        (In millions of yen)                 
                                                                                                             
Investment in operating leases                                                                               
Transportation equipment................................  yen165,218    yen187,605      yen22,387      13.5% 
Measuring equipment and personal computers..............      77,808        71,527        (6,281)      (8.1) 
Real estate and other...................................     208,145       215,359          7,214       3.5  
                                                          ----------    ----------      ---------            
     Total..............................................  yen451,171    yen474,491      yen23,320       5.2% 
                                                          ==========    ==========      =========            

 The balance of our investment in operating leases increased by 5.2%, or
yen23,320 million, from March 31, 2001 to March 31, 2002, primarily as a result 
of the acquisition in April 2001 of the operating assets and employees of Nihon 
Jisho Corporation ("Nihon Jisho"). These assets included office buildings and   
residential rental properties owned and operated by Nihon Jisho and land for    
residential subdivision development. In addition, our investment in operating   
leases increased due to our acquisition of an automobile leasing company in     
Thailand in August 2001 and the acquisition in September 2001 of IFCO, which    
holds a number of transportation equipment operating leases. See "--Direct      
financing leases."                                                              

Interest on loans and investment securities                               

    Interest we earn on installment loans and interest-earning securities held
in connection with operations other than life insurance is reflected in our     
consolidated statements of income as interest on loans and investment           
securities. For the year ended March 31, 2002, revenues from interest on loans  
and investment securities increased by 11.4%, or yen12,514 million compared to  
the year ended March 31, 2001, due primarily to an increase in the balances of  
domestic corporate loans and consumer housing and card loans. An increase in    
the balance of corporate loans and commercial mortgage loans in the United      
States also contributed to the increase. The average interest rates earned on   
domestic loans calculated on the basis of quarterly balances, slightly          
decreased to 4.00% in fiscal 2002 from 4.19% in fiscal 2001 primarily due to    
declines in market interest rates offset by increases in card loans of which    
interest rates are higher than corporate loans. The average interest rates      
earned on overseas loans calculated on the basis of quarterly balances,         
decreased to 7.51% in the year ended March 31, 2002 from 9.29% in the year      
ended March 31, 2001 primarily due to declines in market interest rates in the  
United States. The average interest rate earned on domestic investment          
securities, calculated on the basis of quarterly balances, decreased to 2.31%   
in the year ended March 31, 2002 from 2.68% in the year ended March 31, 2001,   
primarily due to declines in domestic market interest rates. The average        
interest rate earned on overseas investment securities, calculated on the basis 
of quarterly balances, decreased to 9.41% in the year ended March 31, 2002 from 
10.03% in the year ended March 31, 2001 primarily due to declines in the market 
interest rates in the United States.                                            

In the year ended March 31, 2002, we securitized yen46,062 million of 
installment loans. Gains from the securitization of yen3,076 million were       
included in interest on installment loans and investment securities. The        
balance of installment loans treated as off balance sheet assets amounted to    
yen75,962 million as of March 31, 2002.                                         

 The table below shows the balances as of March 31, 2001 and 2002 of our
installment loans to domestic and foreign borrowers, categorized in the case of 
domestic borrowers by type of consumer or commercial loan, together with the    
amounts and percentages of the changes between period-ends. A small portion of  
these installment loans is held in connection with our life insurance           
operations, and income from these loans is reflected in our consolidated        
statements of income as life insurance premiums and related investment income.  

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                                                        [Enlarge/Download Table]
                                                             As of March 31,                   Change        
                                                         --------------------------     ---------------------
                                                            2001           2002          Amount       Percent
                                                         ------------  ------------     ----------    -------
                                                                         (In millions of yen)                
                                                                                                             
Installment loans                                                                                            
Domestic consumer                                                                                            
     Housing loans...................................... yen  392,896  yen  557,461     yen164,565      41.9%
     Card loans.........................................      181,215       230,358         49,143      27.1 
     Other..............................................       43,959        44,829            870       2.0 
         Subtotal.......................................      618,070       832,648        214,578      34.7 
Domestic commercial                                                                                          
     Real estate-related companies......................      222,818       278,367         55,549      24.9 
     Commercial and industrial companies................      627,252       708,031         80,779      12.9 
         Subtotal.......................................      850,070       986,398        136,328      16.0 
Foreign commercial, industrial and other borrowers......      357,446       432,771         75,325      21.1 
Direct loan origination costs, net......................       20,925        21,463            538       2.6 
                                                         ------------  ------------     ----------           
         Total.......................................... yen1,846,511  yen2,273,280     yen426,769      23.1%
                                                         ============  ============     ==========           

    The total balance of installment loans increased by 23.1%, to yen2,273,280
million, from March 31, 2001 to March 31, 2002. In the domestic market, the     
loan balance increased primarily as a result of expansion of our consumer       
housing loan and card loan business as well as increased lending to corporate   
customers. The balance of consumer housing loans increased primarily due to     
acquisitions and the balance of card loans increased as a result of continued   
expansion of new business at the card loan subsidiaries. In the overseas        
market, the loan balance increased primarily as a result of increases in the    
balance of corporate loans and commercial mortgage loans in the United States.  

    The balance of our investments in securities other than in connection with
our life insurance operations decreased to yen404,204 million at March 31, 2002 
from yen405,021 million at March 31, 2001, primarily reflecting declines in the 
Japanese stock market and bond markets in the United States.                    

Brokerage commissions and gains on investment securities                  

All non-interest income and losses (other than foreign currency       
transaction gain or loss) that we recognize on securities held in connection    
with operations other than life insurance are reflected in our consolidated     
statements of income as brokerage commissions and gains on investment           
securities. Brokerage commissions and gains on investment securities increased  
by yen6,312 million, or 52.4%, in the year ended March 31, 2002 to yen18,367    
million compared to the year ended March 31, 2001. The increase resulted        
primarily from strong gains on venture capital investments in Japan, partially  
offset by a decrease in brokerage commissions due primarily to depressed        
conditions in the Japanese stock market.                                        

As of March 31, 2002, gross unrealized gains on available-for-sale    
securities, including those held in connection with our life insurance          
operation, were yen41,992 million, compared to yen68,037 million as of March    
31, 2001. At March 31, 2002, gross unrealized losses on available-for-sale      
securities, including those held in connection with our life insurance          
operations, were yen16,369 million, compared to yen11,018 million as of March   
31, 2001. Such unrealized gains decreased and unrealized losses increased       
primarily due to declines in the Japanese stock market and bond markets in the  
United States.                                                                  

Life insurance premiums and related investment income                     

In the year ended March 31, 2002, life insurance premiums and related 
investment income decreased by yen5,981 million, or 3.8%, to yen152,333         
million, and life insurance costs decreased by yen3,923 million compared to the 
year ended March 31, 2001. These declines were due to our policy of emphasizing 
the marketing of such products as term and whole life insurance that produce    
lower revenues but higher margins and discontinuing the sale of single premium  
endowment insurance in the first half of 2001.                                  

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Interest income on deposits                                               

  Interest income on deposits not included in other categories of revenues
includes principally interest on bank deposits. Interest income on deposits in  
the year ended March 31, 2002 decreased by yen1,146 million, or 45.5%, from the 
year ended March 31, 2001, principally as a result of a lower average balance   
of bank deposits.                                                               

Other operating revenues                                                  

 Other operating revenues are generated from various businesses, such as
the development and sales of residential condominiums and servicing of          
receivables. Other operating revenues increased in the year ended March 31,     
2002 from the year ended March 31, 2001 by yen53,374 million, or 78.1%, to      
yen121,705 million, principally as a result of growth in our condominium        
development business and various fee businesses in Japan and the sale of real   
estate overseas. Revenue from condominium development increased substantially,  
primarily as a result of a sharp increase in condominium sales to third parties 
before certain Japanese tax incentives for home purchases were due to expire in 
June 2001. The deadline for such expiry was subsequently extended.              

Total expenses                                                            

Total expenses in the year ended March 31, 2002 increased by 10.6%, or
yen56,092 million, to yen585,093 million. Corresponding to the change in        
revenue, other operating expenses and operating lease depreciation expense grew 
in the year ended March 31, 2002, but life insurance costs declined in line     
with lower revenue. Selling, general and administrative expenses increased      
primarily as a result of the increase in the number of consolidated companies   
as well as the on-going restructuring of one of our subsidiaries in the United  
States. We also increased write-downs of securities, as well as provisions for  
doubtful receivables and possible loan losses. Interest expense decreased, due  
to declines in market interest rates, our effective use of our asset-liability  
management system and efficient procurement of funding from the capital         
markets. There was also a decrease in write-downs of long-lived assets. We also 
recorded a gain from foreign currency transactions compared to a loss in the    
same period in the previous year.                                               

Interest expense                                                          

    Interest expense amounted to yen90,348 million in the year ended March 31,
2002, a decrease of 17.3% from the year ended March 31, 2001, primarily as the  
result of declines in market interest rates, our effective use of our           
asset-liability management system and efficient procurement of funding from the 
capital markets.                                                                

  The ratio of our funding directly from capital markets to our total debt
and deposits was 52.7% and 56.7% at March 31, 2002 and March 31, 2001,          
respectively. See "--Liquidity and Capital Resources--Diversification of        
Funding Sources". Notes issued under our medium-term notes program decreased by 
yen25,009 million to yen324,369 million at March 31, 2002 from yen349,378       
million at March 31, 2001, while bonds increased by yen67,188 million to        
yen862,688 million. Issued and outstanding commercial paper increased to        
yen1,012,932 million at March 31, 2002 from yen914,611 million at March 31,     
2001. The average interest rate on our domestic short-term and long-term debt,  
calculated on the basis of quarterly balances, was 1.30% in the year ended      
March 31, 2002, compared to 1.64% in the year ended March 31, 2001. The average 
interest rate on our short-term and long-term overseas debt, calculated on the  
basis of quarterly balances, decreased to 5.34% in the year ended March 31,     
2002 from 6.81% in the year ended March 31, 2001.                               

Depreciation on operating leases                                          

Depreciation on operating leases increased to yen77,047 million in the
year ended March 31, 2002, an increase of 12.8% from the level in the year      
ended March 31, 2001. This increase primarily reflected the higher average      
asset balance of automobiles, measuring equipment and personal computers, which 
have relatively short periods for depreciation.                                 

Life insurance costs                                                      

   In line with a decrease in life insurance premiums and related investment
income, life insurance costs decreased slightly in the year ended March 31,     
2002 by yen3,923 million, or 2.7%, to yen139,786 million from the year ended    
March 31, 2001.                                                                 

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Other operating expenses                                                  

Other operating expenses principally comprise the cost of sales for   
condominium marketing operations. Other operating expenses increased 81.6%, to  
yen79,131 million, in the year ended March 31, 2002, reflecting increased       
condominium sales.                                                              

Selling, general and administrative expenses                              

Approximately half of our selling, general and administrative expenses
consist of wages and other labor-related costs, while the remaining half        
consists principally of general overhead expenses, such as rent for office      
spaces, communication expenses and travel expenses. Selling, general and        
administrative expenses in the year ended March 31, 2002 were yen126,316        
million, an increase of 24.9% from the year ended March 31, 2001. This increase 
in expenses primarily reflected growth in existing businesses and an increase   
in the number of consolidated companies as well as the costs associated with    
the on-going restructuring of ORIX Financial Services, Inc., one of our         
subsidiaries in the United States.                                              

Provision for doubtful receivables and possible loan losses               

  We make provisions for doubtful receivables and possible loan losses for
direct financing leases and installment loans. Provision for doubtful           
receivables and possible loan losses in the year ended March 31, 2002 was       
yen51,367 million, an increase of 15.2% from the year ended March 31, 2001.     

The table below shows the calculation of the provision for doubtful   
receivables and possible loan losses for the years ended March 31, 2001 and     
2002.                                                                           

                                                        [Enlarge/Download Table]
                                                                  Year ended March 31,            
                                                         ---------------------------------------- 
                                                             2001                         2002    
                                                         ----------                    ---------- 
                                                                  (In millions of yen)            
                                                                                                  
Balance at beginning of period.......................... yen136,939                    yen141,077 
     Provisions charged to income.......................     44,584                        51,367 
     Charge-offs (net):                                                                           
     Gross Charge-offs..................................    (46,845)                      (50,690)
     Recoveries.........................................        539                         1,350 
                                                         ----------                    ---------- 
     Charge-offs (net)..................................    (46,306)                      (49,340)
     Other..............................................      5,860                         9,783 
                                                         ----------                    ---------- 
Balance at end of period................................ yen141,077                    yen152,887 
                                                         ==========                    ========== 

In the year ended March 31, 2002, charge-offs increased by 8.2% to    
yen50,690 million compared to yen46,845 million in the year ended March 31,     
2001 primarily as a result of the on-going restructuring of ORIX Financial      
Services. The increase in the "other" category in the year ended March 31, 2002 
compared to the year ended March 31, 2001 reflected primarily provisions added  
by the consolidation of IFCO which was acquired by ORIX in September 2001. See  
"--Direct financing leases".                                                    

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

 A breakdown of the allowance for doubtful receivables and possible loan
losses as of March 31, 2002 is shown below. The "Other" category includes       
foreign currency translation adjustments and the effect of acquisitions.        

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                                                        [Enlarge/Download Table]
                                                                     Year ended March 31, 2002                  
                                                         ------------------------------------------------------ 
                                                                         Installment Loans                      
                                                         ------------------------------------------------------ 
                                                          Direct                         FASB                   
                                                         financing                   Statement No.              
                                                          leases        General          114           Total    
                                                         ----------     -------      -------------   ---------- 
                                                                       (In millions of yen)                     
                                                                                                                
Balance at beginning of the period......................  yen40,885     yen53,155      yen47,037     yen141,077 
     Provisions charged to income.......................     23,237        21,240          6,890         51,367 
     Charge-offs (net)..................................    (21,364)      (19,501)        (8,475)       (49,340)
     Other..............................................      8,079         1,294            410          9,783 
                                                         ----------     ---------      ---------     ---------- 
Balance at end of the period............................  yen50,837     yen56,188      yen45,862     yen152,887 
                                                          =========     =========      =========     ========== 

For a discussion of past due receivables and allowances for direct    
financing leases as of March 31, 2001 and March 31, 2002, see "Item 4.          
Information on the Company Profile of Business - Direct Finance Leases."        

In the year ended March 31, 2002, provisions charged to income were   
yen51,367 million and direct financing leases and loans totaling yen49,340      
million were written off. As of March 31, 2002, the allowance was yen152,877    
million. The ratio of this figure to the balance of investment in direct        
financing leases and installment loans was 3.9% as of March 31, 2002, compared  
to 4.0% as of March 31, 2001.                                                   

   The recorded investment in loans considered impaired under the definition
contained in FASB Statement 114 was yen120,090 million as of March 31, 2001 and 
yen113,000 million as of March 31, 2002. The principal reason for the decline   
was a charge-off of impaired loans in the amount of yen8,475 million.           

  We determined that a valuation allowance was required for impaired loans
which had outstanding balances of yen73,636 million as of March 31, 2001 and    
yen71,802 million as of March 31, 2002. We recorded a valuation allowance,      
which is the required valuation allowance less the present value of expected    
future cash flows and the value of the collateral from impaired loans,          
calculated under FASB Statement 114, in the amount of yen47,037 million as of   
March 31, 2001 and yen45,862 million as of March 31, 2002. FASB Statement 114   
requires that impaired loans be measured based on the present value of expected 
future cash flows discounted at the loan's original effective interest rate. As 
a practical expedient, impairment may be measured based on the loan's           
observable market price or the fair value of the collateral if the loan is      
collateral dependent. When the measure of the impaired loan is less than the    
recorded investment in the loan, the impairment is recorded through a valuation 
allowance. Some loans, such as large groups of smaller-balance homogeneous      
loans (e.g., individual housing loans and card loans), and lease receivables    
are exempt from the provisions of FASB Statement 114. However, provisions for   
these loans and lease receivables are reflected in the general provisions under 
installment loans and investment in direct financing leases.                    

    The average recorded investments in impaired loans were yen123,715 million
for the year ended March 31, 2001 and yen115,265 million for year ended March   
31, 2002. We recognized interest income on impaired loans of yen1,414 million   
for the year ended March 31, 2001 and yen1,200 million for the year ended March 
31, 2002.                                                                       

For a discussion of delinquencies on installment loans, see "Item 4.  
Information on the Company Profile of Business - Installment Loans and          
Investments Securities."                                                        

Write-downs of long-lived assets                                          

 During the year ended March 31, 2002, in accordance with FASB Statement
121, we wrote down yen2,716 million for some real estate included in investment 
in operating leases, other operating assets and advances in the consolidated    
balance sheet.                                                                  

Write-downs of securities                                                 

    Our current policy for determining whether declines in the market value of
available-for-sale securities are other than temporary places more emphasis on  
the length of time that the market value has been below the carrying value and  
less emphasis on the business reasons for owning the securities.                

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 Under our current policy, we would, in principle, charge against income
losses related to securities:                                                   

o    if the market price for a security has for more than one year    
        remained below our acquisition cost, or below current carrying value
  if the price of the security has been adjusted in the past, or

o    if there has been a significant deterioration in a bond issuer's 
credit rating, an issuer default or similar event.          

  o    in certain other situations where, even though the market value has
        not remained below the carrying value for twelve months, the decline
         in market value of a security is based on economic conditions and not
      just general declines in equity markets and where it is considered
      unlikely that the market value of the security will recover in the
next twelve months.                                         

However, if we have a significant long-term business relationship with
another company, it would also consider the probability of the market value     
recovering within the following twelve months. As part of this review, we would 
consider:                                                                       

o    the other company's operating results,                           

o    the other company's net asset value,                             

o    the other company's future performance forecast, and             

o    general market conditions.                                       

  If we believe, based on this review, that the market value of a security
may realistically be expected to recover, the loss for that security will       
continue to be classified as temporary. Temporary declines in market value are  
recorded in other comprehensive income (loss), net of applicable income taxes.  
If after an additional twelve months, the market value for that security is     
still significantly below the acquisition cost or below current carrying value  
(if the price of the security has been adjusted in the past), we would classify 
the loss for that security as other than temporary and charge the decline in    
market value against income.                                                    

If the financial condition of issuers deteriorates, the forecasted    
performance of an investee is not met or actual market conditions are less      
favorable than those projected by management, we may charge to income           
additional losses on investment in securities. For example, declines in US bond 
market prices due largely to deteriorating market conditions and significant    
deterioration of certain issuers resulted in additional impairment charges      
during the year ended March 31, 2002.                                           

Following this policy, in the years ended March 31, 2001 and 2002, we 
charged yen10,848 million and yen19,742 million, respectively, to income for    
declines in market value classified as other than temporary. The writedowns for 
2002 included approximately yen7,000 million for bond investments in the United 
States and approximately yen3,700 million for equity and bond investments       
related to Enron Corp.                                                          

Foreign currency transaction loss (gain), net                             

We recognized a foreign currency transaction gain in the amount of    
yen1,360 million in the year ended March 31, 2002, compared to a loss of        
yen3,429 million in the year ended March 31, 2001 that resulted primarily from  
the depreciation of the Indonesia Rupiah against the US dollar.                 

Equity in net income (loss) of and gain (loss) on sales of affiliates     

  Equity in net income (loss) of and gain (loss) on sales of affiliates in
the year ended March 31, 2002 was a loss of yen330 million, compared to a gain  
of yen2,088 million in the year ended March 31, 2001. The adverse result in the 
year ended March 31, 2002 primarily reflects losses incurred by Stockton        
Holdings Limited, our 29.4%-owned affiliate.                                    

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Provision for income taxes                                                

   Provision for income taxes in the year ended March 31, 2002 was yen32,903
million, compared to the provision of yen25,079 million in the year ended March 
31, 2001. The increase of yen7,824 million was primarily due to an increase in  
income before income taxes.                                                     

Net income                                                                

  Operating income in the year ended March 31, 2002 was yen73,369 million,
compared to operating income of yen57,148 million in the year ended March 31,   
2001. Income before income taxes increased by 23.3%, to yen73,039 million, in   
the year ended March 31, 2002 from the year ended March 31, 2001. Net income    
increased 17.9%, to yen40,269 million, in the year ended March 31, 2002 from    
the year ended March 31, 2001. Basic and diluted earnings per share in the year 
ended March 31, 2002 were yen489.11 and yen467.11, respectively, compared to    
yen417.77 and yen400.99 in the year ended March 31, 2001.                       

Cash flows                                                                

Net cash provided by operating activities increased 8.7% to yen257,635
million in the year ended March 31, 2002. While our heightened emphasis on      
profitability in its marketing operations in the life insurance business        
resulted in a slowdown in the rate of increase in policy liabilities, an        
increase of interest on loans along with strong condominium sales, led to the   
increase in net cash from operating activities.                                 

   Net cash used in investing activities grew 7.0%, to yen305,711 million in
the year ended March 31, 2002, due to a large rise in installment loans made to 
customers, which offset a rise in proceeds from sales of available-for-sale     
securities.                                                                     

 Net cash provided by financing activities was yen246,116 million in the
year ended March 31, 2002, resulting cash and cash equivalents as of March 31,  
2002 of yen354,748 million, up yen199,337 million from fiscal 2001.             

Business Segments                                                               

The following discussion presents segment financial information on the
basis that is regularly used by management for evaluating performance of        
business segments and deciding how to allocate resources to them. The reporting 
segments are identified based on the nature of services for domestic operations 
and on geographic areas for foreign operations.                                 

  The table below shows the amount of our revenues by business segment for
the years ended March 31, 2001 and 2002, as well as the amounts and percentages 
of the changes from the year ended March 31, 2001 to the year ended March 31,   
2002.                                                                           

                                                        [Enlarge/Download Table]
                                                          Year ended March 31,               Change         
                                                          --------------------       -----------------------
                                                          2001           2002         Amount         Percent
                                                          ----           ----         ------         -------
                                                                        (In millions of yen)                
                                                                                                            
Domestic business segments                                                                                  
     Corporate finance.................................. yen 113,113   yen 118,794      yen 5,681       5.0%
     Equipment operating leases.........................      61,677        67,319          5,642       9.1 
     Real estate-related finance........................      24,262        31,582          7,320      30.2 
     Real estate........................................      48,438        85,516         37,078      76.5 
     Life insurance.....................................     157,636       154,296         (3,340)     (2.1)
     Other..............................................      36,215        49,139         12,924      35.7 
                                                             -------       -------         ------      ---- 
         Subtotal.......................................     441,341       506,646         65,305      14.8 
                                                             -------       -------         ------      ---- 
Overseas business segments                                                                                  
     The Americas.......................................      79,397        75,195         (4,202)     (5.3)
     Asia and Oceania...................................      48,735        56,677          7,942      16.3 
     Europe.............................................      15,151        14,716           (435)     (2.9)
                                                             -------       -------         ------      ---- 
         Subtotal.......................................     143,283       146,588          3,305       2.3 
                                                             -------       -------         ------      ---- 

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                                                        [Enlarge/Download Table]
                                                           Year ended March 31,               Change         
                                                           --------------------       -----------------------
                                                           2001           2002         Amount         Percent
                                                           ----           ----         ------         -------
                                                                         (In millions of yen)                
                                                                                                             
         Total..........................................      584,624       653,234         68,610      11.7 
Reconciliation of segment totals to consolidated amounts        1,525         5,228          3,703     242.8 
                                                              -------       -------         ------      ---- 
         Total consolidated revenues....................  yen 586,149   yen 658,462     yen 72,313      12.3%
                                                              =======       =======         ======      ==== 

 The table below shows the amount of our profits by business segment for
the years ended March 31, 2001 and 2002, as well as the amounts and percentages 
of the changes from the year ended March 31, 2001 to the year ended March 31,   
2002.                                                                           

                                                        [Enlarge/Download Table]
                                                           Year ended March 31,               Change         
                                                           --------------------       -----------------------
                                                           2001           2002         Amount         Percent
                                                           ----           ----         ------         -------
                                                                         (In millions of yen)                
                                                                                                             
Domestic business segments                                                                                   
     Corporate finance..................................  yen  44,427    yen 48,066    yen  3,639        8.2%
     Equipment operating leases.........................       11,165         9,906        (1,259)     (11.3)
     Real estate-related finance........................        1,944         5,654         3,710      190.8 
     Real estate........................................       (4,604)        5,842        10,446         -- 
     Life insurance.....................................        5,982         5,764          (218)      (3.6)
     Other..............................................        1,035         4,941         3,906      377.4 
                                                              -------       -------        ------            
         Subtotal.......................................       59,949        80,173        20,224       33.7 
                                                              -------       -------        ------            
Overseas business segments                                                                                   
     The Americas.......................................        8,896           810        (8,086)     (90.9)
     Asia and Oceania...................................        1,203         5,433         4,230      351.6 
     Europe.............................................          716           600          (116)     (16.2)
                                                              -------       -------        ------            
         Subtotal.......................................       10,815         6,843        (3,972)     (36.7)
                                                              -------       -------        ------            
         Total..........................................       70,764        87,016        16,252       23.0 
Reconciliation of segment totals to consolidated amounts      (11,528)      (13,977)       (2,449)        -- 
                                                              -------       -------        ------            

         Total consolidated income before income taxes..  yen  59,236    yen 73,039    yen 13,803       23.3%
                                                              =======       =======        ======            

 The table below shows the balance of our segment assets as of March 31,
2001 and 2002, as well as the amounts and percentages of the changes from March 
31, 2001 to March 31, 2002.                                                     

                                                        [Enlarge/Download Table]
                                                              As of March 31,                  Change         
                                                            --------------------       -----------------------
                                                            2001           2002         Amount         Percent
                                                            ----           ----         ------         -------
                                                                          (In millions of yen)                
                                                                                                              
Domestic business segments                                                                                    
     Corporate finance.................................. yen 1,889,538  yen  1,960,380   yen  70,842      3.7%
     Equipment operating leases.........................       134,270         147,444        13,174      9.8 
     Real estate-related finance........................       606,801       1,012,896       406,095     66.9 
     Real estate........................................       310,340         326,473        16,133      5.2 
     Life insurance.....................................       543,886         543,738          (148)    (0.0)
     Other..............................................       284,835         352,433        67,598     23.7 
                                                             ---------       ---------       -------          
         Subtotal.......................................     3,769,670       4,343,364       573,694     15.2 
                                                             ---------       ---------       -------          
Overseas business segments                                                                                    
     The Americas.......................................       804,118         794,330        (9,788)    (1.2)
     Asia and Oceania...................................       402,707         435,093        32,386      8.0 

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                                                        [Enlarge/Download Table]
                                                              As of March 31,                  Change         
                                                            --------------------       -----------------------
                                                            2001           2002         Amount         Percent
                                                            ----           ----         ------         -------
                                                                          (In millions of yen)                
                                                                                                              
     Europe.............................................       158,646         113,844       (44,802)   (28.2)
                                                             ---------       ---------       -------     ---- 
         Subtotal.......................................     1,365,471       1,343,267       (22,204)    (1.6)
                                                             ---------       ---------       -------     ---- 
         Total..........................................     5,135,141       5,686,631       551,490     10.7 
Reconciliation of segment totals to consolidated                                                              
  amounts ..............................................      (105,586)       (158,482)      (52,896)      -- 
                                                             ---------       ---------       -------     ---- 
         Total consolidated operating assets............ yen 5,029,555  yen  5,528,149   yen 498,594      9.9%
                                                             =========       =========       =======          

Domestic business segments                                                      

Corporate finance                                                     

Our domestic corporate finance segment includes principally direct    
financing leases of equipment, including information-related and office         
equipment, industrial equipment, commercial services equipment, transportation  
equipment, and installment loans to commercial and industrial companies (other  
than for real estate finance). Our domestic corporate finance segment also      
includes investment securities (other than those held by ORIX Life Insurance    
Corporation). The activities of this segment are conducted by the Company, ORIX 
Auto Leasing Corporation, ORIX Alpha Corporation, IFCO Inc. and a few other     
domestic subsidiaries. Segment profits in the year ended March 31, 2002         
increased 8.2%, or yen3,639 million, to yen48,066 million, from the year ended  
March 31, 2001. Despite cautious selection of new execution in the corporate    
finance segment due to continued economic stagnation in Japan, the combination  
of lower interest rates, growth in direct financing leases as a result of       
acquisitions and increased corporate lending contributed to profit growth. The  
balance of segment assets as of March 31, 2002 increased 3.7%, or yen70,842     
million, to yen1,960,380 million from March 31, 2001 primarily as a result of   
the acquisition of IFCO Inc. in September 2001, partially offset by the effects 
of the securitization of approximately yen190 billion of lease receivables in   
Japan during the year ended March 31, 2002.                                     

Equipment operating leases                                            

Our domestic equipment operating lease segment includes primarily     
operating leases of equipment, including measuring equipment, personal          
computers and transportation equipment. The activities of this segment are      
conducted mainly by ORIX Rentec (including direct financing leases extended by  
ORIX Rentec) and ORIX Rent-A-Car Corporation. In the year ended March 31, 2002, 
we recorded segment profits of yen9,906 million, representing a decrease of     
11.3%, or yen1,259 million, from yen11,165 million in the year ended March 31,  
2001, due primarily to the slowdown in IT-related business and the resulting    
lower utilization rates in rentals of measuring and other equipment. However,   
the operating margin (income before income taxes divided by operating assets)   
remained at a relatively high level compared with other segments. The balance   
of segment assets as of March 31, 2002 increased 9.8%, or yen13,174 million, to 
yen147,444 million from March 31, 2001.                                         

Real estate-related finance                                           

Our domestic real estate-related finance business includes principally
construction and other real estate development loans to construction companies  
and real estate developers conducted by our Real Estate Finance Headquarters,   
as well as housing loans to individuals conducted by ORIX Trust and Banking     
Corporation. Loans to most corporate customers not in the real estate business  
are included in the corporate finance segment, even where these loans are       
secured by real estate.                                                         

Segment profit for the year ended March 31, 2002 amounted to yen5,654 
million, representing an increase of yen3,710 million, or 190.8%, compared to   
the year ended March 31, 2001. Real estate-related finance assets as of March   
31, 2002 increased 66.9%, or yen406,095 million, to yen1,012,896 million from   
March 31, 2001. Helped by acquisitions of quality assets, housing loans to      
individuals grew strongly, while non-recourse corporate loans and other         
transactions grew steadily thanks to marketing of products to meet specific     
customer needs. In addition, approximately yen100 billion of real estate assets 
for the JREIT were accumulated in the year ended March 31, 2002 and are         
included in this segment.                                                       

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Real estate                                                           

Our domestic real estate business consists principally of condominium 
development and office rental as well as management of hotels, employee         
dormitories, and training and other facilities. The activities of this segment  
are currently conducted by ORIX Real Estate Corporation. For the year ended     
March 31, 2002, the segment recorded a profit of yen5,842 million compared to a 
loss of yen4,604 million for the year ended March 31, 2001, primarily due to a  
substantial increase of contribution from condominium development projects      
compared with the previous year and lower write-downs of long-lived assets. The 
balance of real estate assets as of March 31, 2002 increased 5.2%, or yen16,133 
million, to yen326,473 million from March 31, 2001.                             

Life insurance business                                               

Our life insurance business includes direct and agency life insurance 
sales and related activities. This segment also includes investment in          
securities in connection with our life insurance operations. The activities in  
this segment are conducted by ORIX Life Insurance Corporation, a wholly-owned   
subsidiary of ORIX.                                                             

   Segment profits in the domestic life insurance business in the year ended
March 31, 2002 decreased 3.6%, or yen218 million, to yen5,764 million from the  
year ended March 31, 2001, roughly the same level as the previous fiscal year,  
as write-downs of securities were required amid deteriorating market            
conditions. The outstanding balance of segment assets as of March 31, 2002 of   
yen543,738 million, was essentially unchanged from yen543,886 million at March  
31, 2001.                                                                       

 Marketable equity securities held in connection with our life insurance
business decreased from yen7,167 million as of March 31, 2001 to yen73 million  
as of March 31, 2002.                                                           

Other                                                                 

Our other segment includes:                                           

o    consumer loans by ORIX Credit Corporation and ORIX Club
Corporation;                                      

o    security brokerage by ORIX Securities Corporation;     

o    commodities trading by ORIX Investment Corporation; and

o    venture capital operations conducted by ORIX Capital   
Corporation.                                      

This segment recorded a strong improvement in profits. Primarily as a 
result of gains from venture capital investments and growth in the card loan    
business, profits in the year ended March 31, 2002 increased by 377.4%, to      
yen4,941 million from yen1,035 million in the year ended March 31, 2001. The    
outstanding balance of segment assets as of March 31, 2002 increased by 23.7%,  
or yen67,598 million, to yen352,433 million from the balance as of March 31,    
2001, primarily due to an increase in card loans.                               

Overseas business segments                                                      

The Americas                                                          

Our activities in the Americas include:                               

o    direct financing leases of transportation equipment and
construction machinery;                           

o    operating leases of real estate;                       

         o    installment loans to customers in the industrial and real estate
sectors;                                          

o    investment securities; and                             

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o    commercial mortgage servicing.                         

We conduct our activities in the Americas mainly through ORIX USA     
Corporation, ORIX Financial Services, Inc., ORIX Real Estate Equities, Inc.,    
and ORIX Capital Markets LLC, our wholly-owned subsidiaries in the United       
States.                                                                         

    Segment profits in the Americas in the year ended March 31, 2002 decreased
by yen8,086 million, to yen810 million from the year ended March 31, 2001. The  
commercial mortgage-backed securities business in the United States and the     
sale of some real estate contributed to income, but profits dropped sharply due 
to write-downs of high-yield securities as corporate profits in the             
telecommunications and other industries worsened, as well as large provisions   
for our transportation and commercial equipment leasing at ORIX Financial       
Services, Inc. and restructuring costs related to this subsidiary. The segment  
assets as of March 31, 2002 amounted to yen794,330 million, a decrease of 1.2%, 
or yen9,788 million, from March 31, 2001.                                       

Asia and Oceania                                                      

Our activities in Asia and Oceania include:                           

    o    direct financing leases of information-related, industrial,
commercial service and other equipment;           

    o    operating leases of measuring and transportation equipment;

o    housing and card loans to individual customers;        

       o    installment loans to real estate and industrial customers; and

o    investment securities.                                 

These activities are conducted in Asia and Oceania mainly through ORIX
Asia Limited, ORIX Australia Corporation Limited, ORIX Leasing Malaysia Berhad  
and PT. ORIX Indonesia Finance.                                                 

In Asia and Oceania, we recorded yen5,433 million in segment profits  
during the year ended March 31, 2002, compared with yen1,203 million during the 
year ended March 31, 2001. While economic conditions throughout the region were 
sluggish, careful selection of business in the financing lease and installment  
loan operations combined with foreign currency exchange gains compared with     
losses of the previous fiscal year to produce the increase in profit. Segment   
assets as of March 31, 2002 amounted to yen435,093 million, an increase of      
8.0%, or yen32,386 million, from March 31, 2001.                                

Europe                                                                

Our activities in Europe include operating leases of transportation   
equipment, installment loans to industrial customers and investment securities. 
These activities are conducted in Europe mainly through ORIX Ireland Limited,   
ORIX Europe Limited and ORIX Aviation Systems Limited. Segment profits for the  
year ended March 31, 2002 amounted to yen600 million, primarily reflecting      
profits from corporate finance services. Segment profits decreased by yen116    
million, or 16.2%, however, primarily due to write-downs of securities. Segment 
assets at March 31, 2002 amounted to yen113,844 million, a decrease of          
yen44,802 million, or 28.2%, from March 31, 2001.                               

Year Ended March 31, 2001 Compared to Year Ended March 31, 2000           

Overview                                                                  

   Despite a decrease in direct financing leases, our consolidated operating
assets surpassed the yen5 trillion mark for the first time, growing 5.6%, or    
yen264.7 billion, from the previous year to yen5,029.6 billion. This reflected  
a sizeable increase in investment securities, as well as increases in           
installment loans, operating leases and other operating assets.                 

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Revenues reflected increases in operating lease revenues, interest on 
loans and investment securities, and other operating revenues, including        
revenues from the condominium development business. However, a substantial      
decline in life insurance premiums and related investment income, together with 
a decrease in direct financing lease revenue, caused total revenues to decrease 
by 4.9%, or yen30,364 million, to yen586,149 million.                           

Corresponding to the change in revenue, operating lease depreciation  
expense and other operating expenses grew, but life insurance costs declined in 
line with lower revenue. An increase in the number of consolidated companies    
produced an increase in selling, general and administrative expenses. However,  
interest expense decreased, due mainly to declines in domestic interest rates.  
Thus total expenses decreased by 6.1%, or yen34,626 million, to yen529,001      
million.                                                                        

 As a result, income before income taxes increased by 13.8% to yen59,236
million. Net income increased for the sixth consecutive fiscal year, rising     
11.5% to a historical high of yen34,157 million. The tables below contain       
selected financial data for the years ended March 31, 2000 and 2001, as well as 
the amounts and percentages of the changes from the year ended March 31, 2000   
to the year ended March 31, 2001.                                               

                                                        [Enlarge/Download Table]
                                                           Year ended March 31,               Change           
                                                           --------------------       -----------------------  
                                                           2000           2001         Amount         Percent  
                                                           ----           ----         ------         -------  
                                                                         (In millions of yen)                  
                                                                                                               
Income statement data                                                                                          
Total revenues......................................... yen 616,513   yen 586,149  yen  (30,364)         (4.9)%
     Direct financing leases...........................     130,798       122,003        (8,795)         (6.7) 
     Operating leases..................................     100,503       113,478        12,975          12.9  
     Interest on loans and investment securities.......      97,390       109,448        12,058          12.4  
     Brokerage commissions and gains on investment                                                             
       securities......................................      19,700        12,055        (7,645)        (38.8) 
     Life insurance premiums and related investment                                                            
       income..........................................     205,829       158,314       (47,515)        (23.1) 
     Interest income on deposits.......................       3,884         2,520        (1,364)        (35.1) 
     Other operating revenues..........................      58,409        68,331         9,922          17.0  
Total expenses.........................................     563,627       529,001       (34,626)         (6.1) 
                                                          ---------      --------     ---------                
Operating income.......................................      52,886        57,148         4,262           8.1  
Equity in net income (loss) of and gain (loss) on                                                              
   sales of affiliates.................................       (838)         2,088         2,926            --  
                                                          ---------      --------     ---------                
Income before income taxes.............................      52,048        59,236         7,188          13.8  
Net income.............................................      30,642        34,157         3,515          11.5  

                                                        [Enlarge/Download Table]
                                                               As of March 31,                  Change           
                                                             --------------------       -----------------------  
                                                             2000           2001         Amount         Percent  
                                                             ----           ----         ------         -------  
                                                                           (In millions of yen)                  
                                                                                                                 
Balance sheet data                                                                                               
Investment in direct financing leases.................. yen 1,744,953 yen 1,657,709  yen  (87,244)         (5.0)%
Investment in operating leases.........................       397,576       451,171        53,595          13.5  
Installment loans......................................     1,791,439     1,846,511        55,072           3.1  
Investment in securities...............................       758,381       942,158       183,777          24.2  
Other operating assets.................................        72,472       132,006        59,534          82.1  
                                                            ---------     ---------     ---------                
Operating assets.......................................     4,764,821     5,029,555       264,734           5.6  
Allowance for doubtful receivables on direct financing                                                           
   leases and possible loan losses.....................     (136,939)      (141,077)       (4,138)         (3.0) 
Other assets...........................................       713,660       702,833       (10,827)         (1.5) 
                                                            ---------     ---------     ---------                
     Total assets...................................... yen 5,341,542 yen 5,591,311  yen  249,769           4.7% 
                                                            =========     =========     =========                

  The table below shows the volume of new assets for the years ended March
31, 2000 and 2001, as well as the amounts and percentages of change in these    
data from the year ended March 31,                                              

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2000 to the year ended March 31, 2001. Figures for new equipment acquisitions   
for direct financing leases and operating leases are based on the purchase cost 
of the equipment.                                                               

                                                        [Enlarge/Download Table]
                                                              Year ended March 31,               Change           
                                                              --------------------       -----------------------  
                                                              2000           2001         Amount         Percent  
                                                              ----           ----         ------         -------  
                                                                            (In millions of yen)                  
                                                                                                                  
Volume of new assets                                                                                              
Direct financing leases: New equipment acquisitions..... yen   905,898 yen   723,330  yen (182,568)        (20.2)%
Operating leases: New equipment acquisitions............       101,020       143,158        42,138          41.7  
Installment loans: New loans added......................       807,477       740,639       (66,838)         (8.3) 
Investment in securities: New securities added..........       333,249       397,218        63,969          19.2  
Other operating assets: New assets added................        70,443       128,984        58,541          83.1  

Total revenues                                                        

Total revenues decreased by 4.9%, or yen30,364 million, to yen586,149 
million in the year ended March 31, 2001 compared to yen616,513 million in the  
year ended March 31, 2000, reflecting principally a decline of yen47,515        
million or 23.1%, in life insurance premiums and related investment income and  
an yen8,795 million decline in revenue from direct financing leases. These      
declines were partially offset by increases of yen12,975 million in revenue     
from operating leases, yen12,058 million in interest on loans and investment    
securities, and yen9,922 million in other operating revenues.                   

Direct financing leases                                                   

Revenue from direct financing leases decreased 6.7%, to yen122,003    
million. This decrease was due to a decline in the balance of investment in     
direct financing leases, which resulted from the securitization of lease assets 
and from a decline in the level of new contract issuance compared with the      
previous fiscal year. The balance of investment in direct financing leases as   
of March 31, 2001 decreased 5.0%, to yen1,657,709 million.                      

    The average interest rates on domestic direct financing leases, calculated
on the basis of quarterly balances, decreased slightly to 5.77% in the year     
ended March 31, 2001 from 5.79% in the year ended March 31, 2000. The average   
interest rates on overseas direct financing leases, calculated on the basis of  
quarterly balances, increased to 9.92% in the year ended March 31, 2001 from    
9.67% in the year ended March 31, 2000, reflecting an increase in the amount of 
high-yield contracts.                                                           

    The table below shows the balances as of the dates indicated of investment
in direct financing leases by category of equipment, together with the amounts  
and percentages of the changes between period-ends.                             

                                                        [Enlarge/Download Table]
                                                                As of March 31,                  Change           
                                                              --------------------       -----------------------  
                                                              2000           2001         Amount         Percent  
                                                              ----           ----         ------         -------  
                                                                            (In millions of yen)                  
                                                                                                                  
Investment in direct financing leases                                                                             
Information-related and office equipment................ yen   373,281 yen   334,174  yen  (39,107)        (10.5)%
Industrial equipment....................................       394,581       372,542       (22,039)         (5.6) 
Commercial services equipment...........................       194,809       193,624        (1,185)         (0.6) 
Transportation equipment................................       398,521       415,246        16,725           4.2  
Other...................................................       383,761       342,123       (41,638)        (10.8) 
                                                             ---------     ---------     ---------                
     Total.............................................. yen 1,744,953 yen 1,657,709  yen  (87,244)         (5.0)%
                                                             =========     =========     =========                

Investment in direct financing leases decreased by 5.0% from March 31,
2000 to March 31, 2001. New investment in leased equipment in the year ended    
March 31, 2001 amounted to yen723,330 million, a decrease of 20.2% from the     
year ended March 31, 2000. Robust growth in the automobile leasing business in  
Japan led to an increase in the balance of transportation equipment leases.     
However, weak private-sector capital investment and our selective approach to   
new domestic leasing contracts with emphasis on profitability over asset growth 
caused the                                                                      

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overall balance of domestic leasing contracts to decline. The                   
balance of overseas leasing contracts also decreased owing to the deceleration  
of economic growth in the United States.                                        

    During the year ended March 31, 2001, we securitized yen167,802 million of
domestic and yen17,064 million of overseas leasing assets. Gains from the       
securitization of these assets of yen3,722 million were included in direct      
financing lease revenues. The securitization of these assets, accounted for as  
off balance sheet assets, contributed to the reduction in the balance of direct 
financing leases. The balance of direct financing lease assets which were       
treated as off balance sheet assets amounted to yen311,163 million as of March  
31, 2001. The unpaid principal balance outstanding of securitized receivables   
is excluded from our consolidated balance sheets. See note 9 of the notes to    
the consolidated financial statements. In addition, we entered into other lease 
receivable securitization programs that are not accounted for as sale, or not   
treated as off balance sheet assets. Under these securitization programs, we    
had long-term debt payables of yen72,210 million under securitized lease assets 
as of March 31, 2001.                                                           

Operating leases                                                          

  Revenues from operating leases increased by 12.9%, or yen12,975 million,
to yen113,478 million from the year ended March 31, 2000 to the year ended      
March 31, 2001. The continued strength of IT-related investment in Japan        
supported strong growth in the rental of measuring and information related      
equipment. In our office building and commercial real estate leasing business,  
proactive investments in new properties contributed to overall growth in        
related leasing revenues. Consequently, revenue from operating leases increased 
by 12.9%, to yen113,478 million. Gains from the disposition of operating lease  
assets included in revenues from operating leases were yen7,883 million in the  
year ended March 31, 2001, compared to yen4,144 million in the year ended March 
31, 2000.                                                                       

The table below shows the balances as of the dates indicated of our   
investment in operating leases by category of equipment under lease, together   
with the amounts and percentages of the changes between period-ends.            

                                                        [Enlarge/Download Table]
                                                               As of March 31,                  Change          
                                                             --------------------       ----------------------- 
                                                             2000           2001         Amount         Percent 
                                                             ----           ----         ------         ------- 
                                                                           (In millions of yen)                 
                                                                                                                
Investment in operating leases                                                                                  
Transportation equipment................................ yen  159,548   yen 165,218    yen  5,670           3.6%
Measuring equipment and personal computers..............       58,431        77,808        19,377          33.2 
Real estate and other...................................      179,597       208,145        28,548          15.9 
                                                              -------       -------        ------               
     Total.............................................. yen  397,576   yen 451,171    yen 53,595          13.5%
                                                              =======       =======        ======               

The balance of our total investment in operating leases increased by  
13.5%, or yen53,595 million, from March 31, 2000 to March 31, 2001 due to the   
steady performance of the measuring equipment and office automation equipment   
rental businesses. Regarding our real estate leasing business, we also          
progressively acquired office buildings and commercial use real estate, such as 
in the Minato Mirai Complex in Yokohama. Although the outstanding balance of    
transportation equipment, which includes aircraft, declined on a local currency 
basis due to asset sales and depreciation, the balance increased on a yen basis 
due to the depreciation of the yen.                                             

Interest on loans and investment securities                               

    Interest we earn on installment loans and interest-earning securities held
in connection with operations other than life insurance is reflected in our     
consolidated statements of income as interest on loans and investment           
securities. Revenues from interest on loans and investment securities increased 
by 12.4%, or yen12,058 million, from the year ended March 31, 2000 to the year  
ended March 31, 2001, due to an increase in the balance of high-yield card      
loans. An increase in investment in US corporate bonds also contributed to the  
increase. The average interest rate earned on domestic loans, calculated on the 
basis of quarterly balances, increased to 4.19% in the year ended March 31,     
2001 from 3.97% in the year ended March 31, 2000, primarily due to an increase  
in the balance of high-yield card loans. The average interest rate earned on    
domestic investment securities, calculated on the basis of quarterly balances,  
decreased to 2.68% in the year ended March 31, 2001 from 2.86% in the year      
ended March 31, 2000, reflecting a decline in domestic market interest rates.   
The average interest rate earned on overseas loans,                             

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calculated on the basis of                                                      
quarterly balances, decreased to 9.29% in the year ended March 31, 2001 from    
9.35% in the year ended March 31, 2000, primarily due to a reduction in         
high-yield loans. The average interest rate earned on overseas investment       
securities, calculated on the basis of quarterly balances, increased to 10.03%  
in the year ended March 31, 2001 from 8.84% in the year ended March 31, 2000,   
primarily reflecting increased investment in high-yielding commercial           
mortgage-backed securities and corporate debt securities in the US.             

The table below shows the balances as of the dates indicated of our   
installment loans to domestic and foreign borrowers, categorized in the case of 
domestic borrowers by type of consumer or commercial loan, together with the    
amounts and percentages of the changes between period-ends. A small portion of  
these installment loans is held in connection with our life insurance           
operations, and income from these loans is reflected in our consolidated        
statements of income as life insurance premiums and related investment income.  

                                                        [Enlarge/Download Table]
                                                                As of March 31,                  Change           
                                                              --------------------       -----------------------  
                                                              2000           2001         Amount         Percent  
                                                              ----           ----         ------         -------  
                                                                            (In millions of yen)                  
                                                                                                                  
Installment loans                                                                                                 
Domestic consumer                                                                                                 
   Housing loans........................................ yen   396,748 yen   392,896  yen   (3,852)         (1.0)%
   Card loans...........................................       121,272       181,215        59,943          49.4  
   Other................................................        56,461        43,959       (12,502)        (22.1) 
                                                             ---------     ---------        ------                
     Subtotal...........................................       574,481       618,070        43,589           7.6  
Domestic commercial                                                                                               
   Real estate-related companies........................       203,537       222,818        19,281           9.5  
   Commercial and industrial companies..................       657,355       627,252       (30,103)         (4.6) 
                                                             ---------     ---------        ------                
     Subtotal...........................................       860,892       850,070       (10,822)         (1.3) 
                                                             ---------     ---------        ------                
Foreign commercial, industrial and other borrowers......       337,754       357,446        19,692           5.8  
Direct loan origination costs, net......................        18,312        20,925         2,613          14.3  
                                                             ---------     ---------        ------                
     Total.............................................. yen 1,791,439 yen 1,846,511  yen   55,072           3.1% 
                                                             =========     =========        ======                

   The total balance of installment loans increased by 3.1%, to yen1,846,511
million, from March 31, 2000 to March 31, 2001. In the domestic retail market,  
the loan balance increased as a result of expansion of our card loan business.  

In the year ended March 31, 2001, we securitized yen27,563 million of 
installment loans. Gains from securitization of yen1,006 million were included  
in interest on installment loans and investment securities. The balance of      
installment loans treated as off balance sheet assets amounted to yen41,085     
million as of March 31, 2001.                                                   

    The balance of our investments in securities other than in connection with
our life insurance operations increased from yen341,236 million at March 31,    
2000 to yen405,021 million at March 31, 2001. Fixed income securities increased 
by yen52,825 million, principally reflecting increased investment in commercial 
mortgage-backed securities in the US.                                           

Brokerage commissions and gains on investment securities                  

All non-interest income and losses (other than foreign currency       
transaction gain or loss) which we recognize on securities held in connection   
with operations other than life insurance are reflected in our consolidated     
statements of income as brokerage commissions and gains on investment           
securities. Brokerage commissions and gains on investment securities decreased  
by yen7,645 million, or 38.8%, in the year ended March 31, 2001 to yen12,055    
million. ORIX Securities Corporation generates all of the brokerage commissions 
accounted for in this segment. Although the online trading business of ORIX     
Securities Corporation grew, the weakness of the Japanese stock market          
inhibited growth in the overall level of brokerage commissions. Revenues from   
gains on investment securities decreased in the year ended March 31, 2001,      
reflecting reduced sales of equity securities in Japan and overseas.            

At March 31, 2001, gross unrealized gains on available-for-sale       
securities, including those held in connection with our life insurance          
operations, were yen68,037 million. Gross unrealized gains on equity securities 
decreased by                                                                    

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yen36,932 million from the year ended March 31, 2000 to the year                
ended March 31, 2001. Due to the weakness of the domestic equities market,      
unrealized gains on IT-related equity securities at March 31, 2001 declined.    

At March 31, 2001, gross unrealized losses on available-for-sale      
securities, including those held in connection with our life insurance          
operations, were yen11,018 million.                                             

Life insurance premiums and related investment income                     

Life insurance premiums and related investment income decreased by    
yen47,515 million, or 23.1%, to yen158,314 million and life insurance costs     
fell approximately yen50.0 billion in the year ended March 31, 2001. These      
declines were due to our policy of emphasizing profitability as we devoted      
considerable energy to the marketing of such products as term and whole life    
insurance that produce lower revenues but higher margins.                       

Interest income on deposits                                               

  Interest income on deposits not included in other categories of revenues
includes principally interest on bank deposits. Interest income on deposits in  
the year ended March 31, 2001 decreased by yen1,364 million, or 35.1%, from the 
year ended March 31, 2000, principally as a result of a lower average balance   
of bank deposits.                                                               

Other operating revenues                                                  

 Other operating revenues are generated from various businesses, such as
the development and sales of residential apartments, sales of commodities funds 
and servicing of receivables. Other operating revenues increased by yen9,922    
million, or 17.0%, from the year ended March 31, 2000 to the year ended March   
31, 2001, principally as a result of growth in our condominium development      
business and growth in commission income from our servicer business and other   
businesses.                                                                     

Total expenses                                                            

Total expenses decreased by 6.1%, to yen529,001 million, from the year
ended March 31, 2000 to the year ended March 31, 2001. Interest expense         
decreased in the year ended March 31, 2001 mainly due to a decline in domestic  
market interest rates. Life insurance costs decreased 25.8%, corresponding to   
the decrease in life insurance premium revenue. Other operating expenses        
increased 13.8% from the year ended March 31, 2000 to the year ended March 31,  
2001, corresponding to the increase in revenue from the condominium development 
business. We recognized a write-down of securities in the amount of yen10,848   
million in the year ended March 31, 2001.                                       

Interest expense                                                          

   Interest expense was yen109,289 million in the year ended March 31, 2001,
a decrease of 5.0% from the year ended March 31, 2000. The decrease in interest 
expense principally reflects the decline in domestic interest rates. In         
addition, as a result of effective control of market risks, such as interest    
rate and liquidity risks by using the asset-liability management system, we     
were able to respond quickly to changing market environments.                   

  The ratio of our funding directly from capital markets, interest expense
related to which was significantly lower than traditional bank borrowing, were  
56.8% and 56.7% at March 31, 2000 and 2001, respectively. See "--Funding and    
Liquidity--Diversification of Funding Sources". Notes issued under our          
medium-term note program increased by yen21,157 million from yen328,221 million 
at March 31, 2000 to yen349,378 million at March 31, 2001, the amount of issued 
and outstanding commercial paper decreased from yen977,436 million at March 31, 
2000 to yen914,611 million at March 31, 2001 reflecting the decrease of         
commercial paper issued overseas, and long-term asset backed securities         
increased from yen56,034 million at March 31, 2000 to yen72,210 million at      
March 31, 2001. The average interest rates on our domestic short-term and       
long-term debt, calculated on the basis of quarterly balances, decreased from   
1.81% in the year ended March 31, 2000 to 1.64% in the year ended March 31,     
2001. The average interest rates on our short-term and long-term overseas debt, 
calculated on the basis of quarterly balances, increased from 6.39% in the year 
ended March 31, 2000 to 6.81% in the year ended March 31, 2001.                 

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Depreciation on operating leases                                          

Depreciation on operating leases increased to yen68,316 million in the
year ended March 31, 2001, an increase of 12.5% from the level in the year      
ended March 31, 2000. This increase was principally due to acquisitions of      
assets.                                                                         

Life insurance costs                                                      

  In line with a decrease in life insurance premiums, life insurance costs
decreased by yen49,955 million, or 25.8%, to yen143,709 million from the year   
ended March 31, 2000 to the year ended March 31, 2001.                          

   We use the net level premium method to evaluate our future life insurance
policy liabilities. This method requires the preliminary calculation of fund    
management yields, contract withdrawal/ discontinuance rates, mortality rates,  
and other calculations at the time an insurance contract is signed. The         
projected yield figures used in this calculation were 3.3% in the year ended    
March 31, 2000 and 3.0% in the year ended March 31, 2001.                       

Other operating expenses                                                  

Other operating expenses principally comprise the cost of sales for   
condominium marketing operations. Other operating expenses increased by         
yen5,278 million or 13.8% from the year ended March 31, 2000 to the year ended  
March 31, 2001, reflecting increased condominium sales.                         

Selling, general and administrative expenses                              

    Approximately half of selling, general and administrative expenses consist
of wages and other labor-related costs, while the remaining half consists       
principally of general overhead expenses, such as rent for office spaces,       
communication expenses and travel expenses. Selling, general and administrative 
expenses in the year ended March 31, 2001 were yen101,156 million, an increase  
of 11.2% from the year ended March 31, 2000. This increase in expenses          
primarily reflects advertising and other expenses increased as a result of the  
expansion of the retail card loan business. In addition, as the number of       
consolidated companies increased in the preceding year, these companies         
recognized expenses on a full-year basis.                                       

Provision for doubtful receivables and possible loan losses               

  We make provisions for doubtful receivables and possible loan losses for
direct financing leases and installment loans. Provision for doubtful           
receivables and possible loan losses in fiscal 2001 was yen44,584 million, a    
decrease of 2.2% from the corresponding amount in the year ended March 31,      
2000. The table below shows the calculation of the provision for doubtful       
receivables and possible loan losses for the year ended March 31, 2000 and the  
year ended March 31, 2001. The "Other" category includes foreign currency       
translation adjustments and the effect of an acquisition.                       

                                                      Year ended March 31,
                                                    ----------------------------
                                                       2000           2001
                                                   ------------   ------------
                                                      (In millions of yen)
Balance at beginning of period....................  yen  132,606   yen  136,939 
  Provisions charged to income...................        45,573         44,584
Charge-offs (net)                                                         
   Gross Charge-offs..............................       (37,697)       (46,845)
  Recoveries.....................................           354            539
                                                   ------------   ------------
   Charge-offs (net)..............................       (37,343)       (46,306)
  Other..........................................        (3,897)         5,860
                                                   ------------   ------------
Balance at end of period..........................  yen  136,939   yen  141,077 
                                                   ============   ============

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

 A breakdown of the allowance for doubtful receivables and possible loan
losses as of March 31, 2001 is shown below. The "Other" category includes       
foreign currency translation adjustments and the effect of an acquisition.      

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                                                        [Enlarge/Download Table]

                                                                          Year ended March 31, 2001              
                                                          -------------------------------------------------------
                                                                              Installment Loans                  
                                                          -------------------------------------------------------
                                                             Direct                       FASB                   
                                                            financing                  Statement                 
                                                             leases        General      No. 114           Total  
                                                         ------------   -----------   -----------   ------------ 
                                                                            (In millions of yen)                 
                                                                                                                 
Balance at beginning of the period...................... yen  35,783    yen  49,365   yen  51,791   yen  136,939 
   Provisions charged to income.........................      22,619         16,417         5,548         44,584 
   Charge-offs (net)....................................     (20,679)       (14,442)      (11,185)       (46,306)
   Other................................................       3,162          1,815           883          5,860 
                                                         -----------    -----------   -----------   ------------ 
Balance at end of the period............................ yen  40,885    yen  53,155   yen  47,037   yen  141,077 
                                                         ===========    ===========   ===========   ============ 

In the year ended March 31, 2001, provisions charged to income were   
yen44,584 million and direct financing leases and loans totaling yen46,306      
million were written off. As of March 31, 2001, the allowance was yen141,077    
million. The ratio of this figure to the balance of investment in direct        
financing leases and installment loans was 4.0% as of March 31, 2001, compared  
to 3.9% as of March 31, 2000.                                                   

   The recorded investment in loans considered impaired under the definition
contained in FASB Statement 114 was yen125,921 million as of March 31, 2000 and 
yen120,090 million as of March 31, 2001. The principal reason for the decline   
was a charge-off of impaired loans in the amount of yen11,185 million.          

  We determined that a valuation allowance was required for impaired loans
which had outstanding balances of yen83,408 million as of March 31, 2000 and    
yen73,636 million as of March 31, 2001. We recorded a valuation allowance,      
which is the required valuation allowance less the value of the collateral from 
impaired loans, calculated under FASB Statement 114, in the amount of yen51,791 
million as of March 31, 2000 and yen47,037 million as of March 31, 2001. FASB   
Statement 114 requires that impaired loans be measured based on the present     
value of expected future cash flows discounted at the loan's original effective 
interest rate. As a practical expedient, impairment may be measured based on    
the loan's observable market price or the fair value of the collateral if the   
loan is collateral dependent. When the measure of the impaired loan is less     
than the recorded investment in the loan, the impairment is recorded through a  
valuation allowance. Some loans, such as large groups of smaller-balance        
homogeneous loans (e.g., individual housing loans), and lease receivables are   
exempt from the provisions of FASB Statement 114. However, provisions for these 
loans and lease receivables are reflected in the general provisions under       
installment loans and investment in direct financing leases.                    

    The average recorded investments in impaired loans were yen128,658 million
for the year ended March 31, 2000 and yen123,715 million for the year ended     
March 31, 2001. We recognized interest income on impaired loans of yen1,429     
million for the year ended March 31, 2000 and yen1,414 million for the year     
ended March 31, 2001.                                                           

Write-downs of long-lived assets                                          

 During the year ended March 31, 2001, in accordance with FASB Statement
121, we wrote down yen4,090 million for some real estate development projects   
included in "investment in operating leases", "other operating assets" and      
"advances" in the consolidated balance sheets.                                  

Write-downs of securities                                                 

    Our current policy for determining whether declines in the market value of
available-for-sale securities are other than temporary places more emphasis on  
the length of time that the market value has been below the carrying value and  
less emphasis on the business reasons for owning the securities.                

  Our policy primarily reflects the continued poor performance of Japanese
equity markets and decreasing cross-shareholdings by Japanese companies in      
general. Predictions in prior years that market conditions would improve have   
proved to be inaccurate and market prices of some of our stocks continued to be 
below their acquisition costs for the year ended March 31, 2001. We view this   
as a strong indication that the declines in the market value of these           
available-for-sale securities are other than temporary. Although we have not    
abandoned our practice of holding                                               

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securities for business relationship purposes, Japanese companies in general    
are increasingly willing to sell securities previously held for business        
relationship purposes.                                                          

 Under our current policy, we would, in principle, charge against income
losses related to securities if                                                 

    o    the market price for a security has for more than one year been below
         our acquisition cost, or below current carrying value if the price of
the security has been adjusted in the past; or              

o    there has been an issuer default or similar event.               

   However, if we have a significant long-term business relationship with an
entity, we would also consider the probability of the market value recovering   
within the following twelve months. As part of this review, we would consider:  

o    the entity's operating results;                                  

o    the entity's net asset value;                                    

o    the entity's future performance forecast; and                    

o    general market conditions.                                       

  If we believe, based on this review, that the market value of a security
may realistically be expected to recover, the loss for that security will       
continue to be classified as temporary. Temporary declines in market value are  
recorded in other comprehensive income (loss), net of applicable income taxes.  
If after an additional twelve months, the market value for that security is     
still significantly below the acquisition cost, we would classify the loss for  
that security as other than temporary and charge the decline in market value    
against income.                                                                 

Following this policy, in the year ended March 31, 2001, we charged   
yen10,848 million to income for declines in market value classified as other    
than temporary. In the year ended March 31, 2000, we charged yen12,297 million  
to income for declines in market value classified as other than temporary.      

Foreign currency transaction loss (gain), net                             

We recognized a foreign currency transaction loss in the amount of    
yen3,429 million in the year ended March 31, 2001, compared to a gain of yen839 
million in the year ended March 31, 2000. This loss principally resulted from   
the depreciation of the Indonesia Rupiah against the US dollar, as a subsidiary 
procured a portion of our funding through dollar-denominated loans.             

Equity in net income (loss) of and gain (loss) on sales of affiliates     

  Equity in net income (loss) of and gain (loss) on sales of affiliates in
the year ended March 31, 2001 was a profit of yen2,088 million compared to a    
loss of yen838 million in fiscal 2000. The gain in the year ended March 31,     
2001 was improved from the loss in the year ended March 31, 2000, because loss  
from the sale of unprofitable affiliates was recognized in the previous year.   
The income in the year ended March 31, 2001 also reflects favorable financial   
performance of most domestic and foreign affiliates.                            

Provision for income taxes                                                

   Provision for income taxes in the year ended March 31, 2001 was yen25,079
million, compared to the provision of yen21,406 million in the year ended March 
31, 2000. The increase of yen3,673 million was primarily due to an increase in  
income before income taxes.                                                     

Net income                                                                

  Operating income was yen57,148 million, compared to the operating income
of yen52,886 million in the year ended March 31, 2000. Income before income     
taxes increased by 13.8% to yen59,236 million in the year ended March 31,       

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2001. Net income increased 11.5%, to yen34,157 million from the year ended      
March 31, 2000 to the year ended March 31, 2001. Basic and diluted earnings per 
share in the year ended March 31, 2001 were yen418 and yen401 respectively,     
compared to yen385 and yen377 in the year ended March 31, 2000.                 

Cash flows                                                                

   Net cash provided by operating activities decreased by yen81,509 million,
or 25.6%, from the year ended March 31, 2000 to the year ended March 31, 2001,  
to a total of yen237,122 million. This decrease was substantially due to our    
life insurance operations where most of the premiums are received in cash,      
while the largest related expense, policy benefit payments, requires cash       
outlays that are spread over a number of years.                                 

  Net cash used in investing activities was yen285,652 million in the year
ended March 31, 2001, approximately the same level as in the previous fiscal    
year. While the rise in investment in lease equipment assets was less than in   
the previous fiscal year, greater funds were required for insurance             
business-related securities investments as well as for the JREIT-related and    
other real estate acquisitions.                                                 

 Net cash used in financing activities was yen64,620 million in the year
ended March 31, 2001, compared to net cash used in financing activities of      
yen6,053 million in the year ended March 31, 2000.                              

    Cash and cash equivalents decreased 41.6% from March 31, 2000 to March 31,
2001.                                                                           

Business Segments                                                               

The following discussion presents segment financial information on the
basis that is regularly used by management for evaluating performance of        
business segments and deciding how to allocate resources to them. The reporting 
segments are identified based on the nature of services for domestic operations 
and on geographic areas for foreign operations.                                 

  The table below shows the amount of our revenues by business segment for
the years ended March 31, 2000 and 2001, as well as the amounts and percentages 
of the changes from the year ended March 31, 2000 to the year ended March 31,   
2001.                                                                           

                                                        [Enlarge/Download Table]
                                                              Year ended March 31,                 Change          
                                                          --------------------------   --------------------------  
                                                               2000           2001         Amount         Percent  
                                                          -----------    -----------   -----------    -----------  
                                                                             (In millions of yen)                  
                                                                                                                   
Domestic business segments                                                                                         
   Corporate finance....................................  yen 121,415    yen 113,113   yen (8,302)          (6.8)% 
   Equipment operating leases...........................       53,000         61,677         8,677           16.4  
   Real estate-related finance..........................       17,294         24,262         6,968           40.3  
   Real estate..........................................       44,873         48,438         3,565            7.9  
   Life insurance.......................................      204,746        157,636       (47,110)         (23.0) 
   Other................................................       30,882         36,215         5,333           17.3  
                                                          -----------    -----------   -----------                 
     Subtotal...........................................      472,210        441,341       (30,869)          (6.5) 
                                                          -----------    -----------   -----------                 
Overseas business segments                                                                                         
   The Americas.........................................       74,525         79,397         4,872            6.5  
   Asia and Oceania.....................................       49,739         48,735        (1,004)          (2.0) 
   Europe...............................................       18,260         15,151        (3,109)         (17.0) 
                                                          -----------    -----------   -----------                 
     Subtotal...........................................      142,524        143,283           759            0.5  
                                                          -----------    -----------   -----------                 
     Total..............................................      614,734        584,624       (30,110)          (4.9) 
Reconciliation of segment totals to consolidated amounts.       1,779          1,525          (254)         (14.3) 
                                                          -----------    -----------   -----------                 
     Total consolidated revenues........................  yen 616,513    yen 586,149   yen (30,364)          (4.9)%
                                                          ===========    ===========   ===========                 

 The table below shows the amount of our profits by business segment for
the years ended March 31, 2000 and 2001, as well as the amounts and percentages 
of the changes from the year ended March 31, 2000 to the year ended March 31,   
2001.                                                                           

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                                                        [Enlarge/Download Table]
                                                               Year ended March 31,                 Change         
                                                           --------------------------   -------------------------- 
                                                                2000           2001         Amount         Percent 
                                                           -----------    -----------   -----------    ----------- 
                                                                              (In millions of yen)                 
                                                                                                                   
Domestic business segments                                                                                         
   Corporate finance...................................... yen  40,918    yen  44,427   yen   3,509            8.6%
   Equipment operating leases.............................       7,823         11,165         3,342           42.7 
   Real estate-related finance............................      (3,415)         1,944         5,359             -- 
   Real estate............................................      (8,241)        (4,604)        3,637             -- 
   Life insurance.........................................       5,455          5,982           527            9.7 
   Other..................................................      (1,036)         1,035         2,071             -- 
                                                           -----------    -----------   -----------                
     Subtotal.............................................      41,504         59,949        18,445           44.4 
                                                           -----------    -----------   -----------                
Overseas business segments                                                                                         
   The Americas...........................................      18,775          8,896        (9,879)         (52.6)
   Asia and Oceania.......................................       3,371          1,203        (2,168)         (64.3)
   Europe.................................................         278            716           438          157.6 
                                                           -----------    -----------   -----------                
     Subtotal.............................................      22,424         10,815       (11,609)         (51.8)
                                                           -----------    -----------   -----------                
     Total................................................      63,928         70,764         6,836           10.7 
Reconciliation of segment totals to consolidated amounts.      (11,880)       (11,528)          352             -- 
                                                           -----------    -----------   -----------                
     Total consolidated income before income taxes........ yen  52,048    yen  59,236   yen   7,188           13.8%
                                                           ===========    ===========   ===========                

  The table below shows the amount as of the dates indicated of our assets
by business segment, as well as the amounts and percentages of the changes      
between period-ends.                                                            

                                                        [Enlarge/Download Table]
                                                             Year ended March 31,                 Change            
                                                         --------------------------   --------------------------    
                                                              2001           2002         Amount         Percent    
                                                         -----------    -----------   -----------    -----------    
                                                                            (In millions of yen)                    
                                                                                                                    
Domestic business segments                                                                                          
   Corporate finance.................................... yen 1,968,590  yen 1,889,538  yen  (79,052)          (4.0)%
   Equipment operating leases...........................       113,389        134,270        20,881           18.4  
   Real estate-related finance..........................       597,274        606,801         9,527            1.6  
   Real estate..........................................       276,494        310,340        33,846           12.2  
   Life insurance.......................................       425,335        543,886       118,551           27.9  
   Other................................................       242,280        284,835        42,555           17.6  
                                                           -----------    -----------   -----------                 
     Subtotal...........................................     3,623,362      3,769,670       146,308            4.0  
                                                           -----------    -----------   -----------                 
Overseas business segments                                                                                          
   The Americas.........................................       691,403        804,118       112,715           16.3  
   Asia and Oceania.....................................       369,540        402,707        33,167            9.0  
   Europe...............................................       159,608        158,646          (962)          (0.6) 
                                                           -----------    -----------   -----------                 
     Subtotal...........................................     1,220,551      1,365,471       144,920           11.9  
                                                           -----------    -----------   -----------                 
     Total..............................................     4,843,913      5,135,141       291,228            6.0  
Reconciliation of segment totals to consolidated                                                                    
  amounts ..............................................       (79,092)      (105,586)      (26,494)            --  
                                                           -----------    -----------   -----------                 
     Total consolidated operating assets................ yen 4,764,821  yen 5,029,555  yen  264,734            5.6% 
                                                           ===========    ===========   ===========                 

Domestic business segments                                                      

Corporate finance                                                     

   In the domestic corporate finance segment, segment profit increased 8.6%,
or yen3,509 million, from the year ended March 31, 2000 to yen44,427 million in 
the year ended March 31, 2001. The balance of segment assets declined 4.0%, or  
yen79,052 million, from March 31, 2000 to yen1,889.5 billion as of March 31,    
2001.                                                                           

   The increase in segment profits principally reflects a rise in automobile
leasing revenue and a decline in interest expense and provision for doubtful    
receivables and possible loan losses.                                           

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The balance of domestic direct financing leases declined due to the   
effects of the securitization in direct finance lease assets initiated during   
the year ended March 31, 2001 of yen167,802 million and a decline in the level  
of new contracts.                                                               

 The balance of domestic loans included in our corporate finance segment
decreased in the period due to the impact of the recession in Japan. We have    
introduced more stringent screening and is more selective in new loan           
transactions.                                                                   

Equipment operating leases                                            

   In the year ended March 31, 2001, we recorded yen11,165 million of profit
in this segment. This represents an increase of 42.7% from segment profit of    
yen7,823 million in the year ended March 31, 2000. The balance of segment       
assets increased by 18.4%, or yen20,881 million, from March 31, 2000 to         
yen134,270 million as of March 31, 2001. Continued strength in IT-related       
investment in Japan supported strong growth in demand for measuring instrument  
leasing and information-related equipment and higher utilization rates. Our     
rent-a-car business also continued our steady growth.                           

Real estate-related finance                                           

In the year ended March 31, 2001, segment profit amounted to yen1,944 
million, compared to a loss of yen3,415 million in the year ended March 31,     
2000. Real estate-related finance assets increased 1.6%, or yen9,527 million,   
from March 31, 2000 to yen606,801 million as of March 31, 2001. Steady growth   
in investment in and resale of real estate-related distressed assets and the    
development of new corporate sector business such as non-recourse loans led to  
a significant increase in earnings. ORIX Trust and Banking recorded strong      
performance providing individuals with housing loans.                           

Real estate                                                           

In the year ended March 31, 2001, the real estate segment loss was    
yen4,604 million compared to a loss of yen8,241 million in the year ended March 
31, 2000. Because of the continuing decline in land prices in Japan, we         
proceeded with sales of old properties and consequently recorded losses on such 
sales as well as recorded valuation losses on long-lived assets. For a          
discussion of write-downs of long lived real estate, see "--Write-downs of long 
lived assets". However, such losses were offset by steady growth of the         
condominium development business related to the "Sanctus" series of             
condominiums and other developments. Owing to our active acquisition of         
profitable rental properties, the balance of real estate assets increased       
12.2%, or yen33,846 million, from March 31, 2000 to yen310,340 million as of    
March 31, 2001.                                                                 

Life insurance business                                               

    Segment profits in the domestic life insurance business increased 9.7%, or
yen527 million, from the year ended March 31, 2000 to yen5,982 million in       
fiscal 2001. Due to our shift in strategy from emphasizing volume to            
profitability, the weight of term, life-long insurance and other relatively     
profitable products has increased. The outstanding balance of segment assets    
increased 27.9%, or yen118,551 million, from March 31, 2000 to yen543,886       
million as of March 31, 2001. The growth in segment assets reflected strong     
demand for our "ORIX Direct" policies.                                          

 Marketable equity securities held in connection with our life insurance
business decreased from yen13,243 million as of March 31, 2000 to yen7,167      
million as of March 31, 2001.                                                   

Other                                                                 

The other segment's results improved from a segment loss of yen1,036  
million in the year ended March 31, 2000 to a gain of yen1,035 million in the   
year ended March 31, 2001. The other segment has increased due to such          
businesses as the card loan business and futures investments. The outstanding   
balance of segment assets increased 17.6%, or yen42,555 million, from March 31, 
2000 to yen284,835 million as of March 31, 2001.                                

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Overseas business segments                                                      

The Americas                                                          

   Segment profit in the Americas decreased 52.6%, or yen9,879 million, from
the year ended March 31, 2000 to yen8,896 million in the year ended March 31,   
2001. Commercial mortgage-backed loan securitization operations continued to    
make a major contribution to performances in the Americas. However, the         
economic slowdown in the United States adversely affected demand for finance    
leasing of transportation construction and other equipment, and also gave rise  
to a large increase in provisions for doubtful receivables. In addition, a      
decline in market prices for certain debt securities in the United States       
resulted in a loss on the revaluation of such securities. The segment assets    
amounted to yen804,118 million as of March 31, 2001, an increase of 16.3% or    
yen112,715 million, from March 31, 2000 reflecting the influence of the         
depreciation of the yen.                                                        

Asia and Oceania                                                      

   In Asia and Oceania, we recorded a yen1,203 million segment profit during
fiscal 2001, compared with a yen3,371 million profit in the year ended March    
31, 2000. Segment assets amounted to yen402,707 million as of March 31, 2001,   
an increase of 9.0%, or yen33,167 million, from March 31, 2000. The foreign     
exchange loss incurred as a result of the sharp depreciation of the Indonesian  
Rupiah contributed to a decline in segment earnings.                            

    Of segment assets, yen325,364 million as of March 31, 2001 was invested in
Asia. These assets included yen171,484 million of shipping loans secured by     
first mortgages. Substantially all non-shipping assets in Asia are denominated  
in local currencies.                                                            

Europe                                                                

Segment profit amounted to yen716 million in the year ended March 31, 
2001, an increase of yen438 million, or 157.6%, from fiscal 2000. Earnings grew 
as a result of strong performance of investment in securities. Segment assets   
amounted to yen158,646 million at March 31, 2001, a decrease of yen962 million, 
or 0.6%, from March 31, 2000. Fewer new contracts caused a decline in the       
outstanding balance.                                                            

Liquidity and Capital Resources                                                 

Overview                                                                  

    We continually require funds for working capital and to grow our business.
We manage our funding and liquidity by monitoring the relative maturities of    
assets and liabilities and by borrowing funds, primarily in the Japanese        
financial and capital markets but also in significant amounts overseas. Funds   
raised are used to fund asset growth and to meet debt obligations and other     
commitments, on a timely and cost-effective basis. We place a priority on the   
ready and rapid access to funding in order to be able to respond rapidly to     
client and transactional requirements. By monitoring cash flow requirements     
from sales and marketing activities, and the funding supply and demand balance, 
we seek to ensure timely and ample access to funding. Our primary sources of    
funding are borrowings from commercial banks and other institutional lenders,   
commercial paper, medium term notes, straight bonds, asset-backed               
securitizations and other term debt. A downgrade in our credit ratings could    
result in an increase in our interest expense and could have an adverse impact  
on our ability to access the commercial paper market or the public and private  
debt markets, which could have an adverse effect on our financial position and  
liquidity. Even if we are unable to access these markets on acceptable terms,   
we have access to other sources of liquidity, including bank borrowings, cash   
flows from our operations and sales of our assets. We cannot be sure, however,  
that these other sources will be adequate if our credit ratings are downgraded  
or other adverse conditions arise.                                              

  The tables below show the maturities of contractual cash obligations and
other commercial commitments.                                                   

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                                                        [Enlarge/Download Table]
                                                           Payments due by period                           
                                                            (In millions of yen)                            
                                ----------------------------------------------------------------------------
                                                Less than 1                                                 
                                  Total            year           1-3 years     4-5 years    After 5 years  
                                  -----        ------------       ---------     ---------    -------------  

                                                                                                            
Contractual cash obligations                                                                                
Long-term debt                yen 2,809,861     yen 677,095  yen  1,223,075    yen 767,506    yen  142,185  
Operating leases                      5,642           1,192           2,006          1,631             813  
Unconditional purchase                                                                                      
   obligations                        6,032           6,032              --             --              --  
                                  ---------         -------       ---------        -------         -------  
Total contractual cash                                                                                      
   obligations                yen 2,821,535     yen 684,319  yen  1,225,081    yen 769,137    yen  142,998  
                                  =========         =======       =========        =======         =======  


                                                        [Enlarge/Download Table]
                                                 Amount of commitment expiration per period                 
                                                           (In millions of yen)                             
                                ----------------------------------------------------------------------------
                                               Less than 1                                                  
                                  Total            year            1-3 years     4-5 years   After 5 years  
                                  -----        ------------        ---------     ---------   -------------  

                                                                                                            
Other commercial commitments                                                                                
Guarantees                    yen    42,775     yen  11,632  yen     18,760    yen   6,902    yen    5,481  
Committed credit lines and                                                                                  
   other                            142,771          19,403          32,350         28,370          62,648  
                                    -------          ------          ------         ------          ------  
Total commercial commitments  yen   185,546     yen  31,035  yen     51,110    yen  35,272    yen   68,129  
                                    =======          ======          ======         ======          ======  

We continue to rely significantly on short-term funding from Japanese 
commercial banks. Only a portion of this funding is provided under committed    
facilities. We also rely on the capital markets as a funding source, including  
the commercial paper and corporate bond markets. We are taking steps to reduce  
refinancing risks by diversifying our funding sources and increasing committed  
credit facilities from Japanese banks and foreign banks. Despite these efforts, 
committed credit facilities are subject to financial and other covenants and    
conditions to drawdown, including minimum net worth requirements, and the risk  
that we will be unable to roll over other short-term funding remains.           

   We have securitized and sold to investors certain lease receivables, loan
receivables and investment securities. In the securitization process, the       
assets to be securitized are sold to special purpose entities ("SPEs"), which   
issue asset-backed securities to the investors. SPEs may be organized as        
trusts, partnerships, or corporations. We use SPEs in a manner consistent with  
conventional practices in the securitization industry, the purpose of which is  
to isolate the receivables for the benefit of investors. The use of SPEs        
enables us to access the highly liquid and efficient markets for the sale of    
these types of financial assets when they are packaged in securitized forms.    
For the assets that are securitized and removed from our consolidated balance   
sheets, the investors and SPEs have no recourse to our other assets for failure 
of debtors to pay. In addition, we do not make any guarantees to investors for  
payment in such transactions. Therefore, when securitizing assets in this       
manner, we do not have any exposed assets or contingent liabilities other than  
those recognized on our consolidated balance sheets.                            

Diversification of funding sources                                        

    We are improving our funding costs and diversifying our funding sources by
taking advantage of the opportunities afforded by financial deregulation and    
the development of new financial markets in Japan. We have increased the share  
of our direct funding from the capital markets in recent years through debt     
offerings and reduced our reliance on borrowings from banks in recent periods.  
The balance of capital market instruments as a percentage of our total debt was 
52.7% at March 31, 2002 and 56.7% at March 31, 2001.                            

Japanese finance companies were allowed for the first time to issue   
commercial paper in the domestic market in June 1993. In the following month,   
we became the first finance company to issue domestic commercial paper. From    
April 1, 1998, we have been able to issue commercial paper directly to          
investors without the use of dealers. While the proceeds from the issuance of   
commercial paper and bonds previously were not permitted to be used for any     

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loan operations, in May 1999 new legislation eliminated this restriction for    
some qualifying lenders. Because we are a qualifying lender, we are able to     
issue commercial paper and bonds and use the proceeds without restriction.      

Prior to the establishment of the current regulatory regime for       
asset-backed securities, we issued Japan's first asset-backed securities of     
leasing assets in January 1992. Then, in June 1992, Japan took a significant    
deregulatory step in enacting the so-called Business Asset Securitization Law,  
which came into effect in June 1993 and facilitated the securitization of       
leasing and installment sale assets. Since the Act was revised to allow         
asset-backed commercial paper to be issued in the domestic market in 1996 we    
have issued asset-backed commercial paper, backed by lease receivables.         

As of March 31, 2002, our outstanding balance of unsecured bonds was  
yen862,688 million.                                                             

    We have also sought to diversify our funding sources by developing overall
financial relationships with a number of banks overseas and through securities  
issuances overseas, principally to fund overseas operations. Since 1992, we     
have established several euro medium-term note programs for various ORIX        
entities. These programs have been integrated into one multi-issuer program     
which includes as issuers ORIX Corporation and a number of our overseas         
subsidiaries. This multi-issuer program has a limit of US$5 billion, and allows 
these ORIX entities direct access to capital markets. The issuance of notes is  
determined by the funding requirements of the overseas subsidiaries and is      
controlled by our Treasury Department. ORIX Financial Services has also issued  
medium-term notes under a separate program within the United States and Canada. 
As of March 31, 2002, the balance of notes issued under these medium-term note  
programs stood at yen324,369 million.                                           

In September 1998, we listed our shares on the New York Stock Exchange
("NYSE"), which has facilitated raising funds through the issuance of stock     
outside Japan since that time. In October 1999, we became the first Japan-based 
company to make a global offering involving the simultaneous issue of new       
shares and convertible notes registered with the SEC and listed on the NYSE,    
issuing 3.3 million new shares and yen40 billion (principal amount) in          
convertible bonds due 2005. In December 2001, we made another dual offering of  
new shares and convertible bonds, issuing 1.8 million new shares and yen28      
billion (principal amount) in convertible bonds due 2007.                       

On June 14, 2002, we issued $1,022 million of zero coupon-senior notes
with stock acquisition rights due on June 14, 2022 and received proceeds of     
approximately $400 million. We intend to use the proceeds for general corporate 
purposes, including financing the activity of our subsidiaries, working capital 
and repayment of existing debt.                                                 

Short-term debt                                                           

   In order to promote stability in borrowings, we shifted a greater portion
of our debt from short-term to long-term. The balance of our short-term debt at 
March 31, 2002 was yen1,644,462 million, representing 36.9% of total debt,      
i.e., the sum of long-term debt and short-term debt, at March 31, 2002,         
compared to the level of 40.1% at March 31, 2001. The balance of short-term     
debt increased by yen82,390 million, or by 5.3%, from March 31, 2001 to March   
31, 2002; however, the percentage of short-term debt to total debt declined by  
3.2 percentage points in the same period. Commercial paper at March 31, 2002    
increased by yen98,321 million, or 10.8%, from March 31, 2001. Other short-term 
debt, consisted principally of borrowings from commercial banks, decreased by   
yen15,931 million, or 2.5%, from March 31, 2001 to March 31, 2002.              

Long-term debt                                                            

 Long-term debt at March 31, 2002 was yen2,809,861 million, representing
63.1% of total debt, i.e., the sum of long-term debt and short-term debt,       
compared to the level of 59.9% at March 31, 2001, reflecting a shift to the     
long-term funding of our liquidity requirements. The balance of long-term debt  
increased by yen479,702 million, or 20.6%, from March 31, 2001 to March 31,     
2002. Most of this long-term debt consisted of borrowings from Japanese banks   
as well as insurance companies and other institutional lenders in Japan.        
Long-term debt also included borrowings from foreign institutional lenders,     
unsecured bonds of yen862,688 million and medium-term notes of yen324,369       
million. The balance of asset-backed securities was yen40,731 million at March  
31, 2002. Some bank loan agreements provide that we are required to obtain the  
consent of lenders before effecting any merger or any increase or decrease of   
our capital, issuing any bonds or selling or transferring any part of our       
business. As is typical in the Japanese                                         

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market, loan agreements relating to short-term and long-term debt from Japanese 
banks and some insurance companies provide that we may be required to pledge    
our assets as collateral against these borrowings upon request by our lenders   
if it is reasonably necessary for them to secure their claims. To date, we have 
not received any requests of this kind from our lenders. In addition, our debt  
agreements with some banks provide that these banks have the right to offset    
cash deposited against any short-term or long-term debt that becomes due, and   
in case of default and some other specified events, against all other debt      
payable to the bank. Whether these provisions can be enforced will depend upon  
the factual circumstances. As of March 31, 2002, we paid interest at fixed      
rates on approximately 61.3% of our long-term debt. The rest of our long-term   
debt incurred interest at floating rates, principally based on LIBOR.           

   We have entered into various types of interest rate contracts in managing
our interest rate risk. Under interest rate swap agreements, we agree with      
other parties to exchange, at specified intervals, the difference between       
fixed-rate and floating-rate interest amounts calculated by reference to an     
agreed notional amount. Interest rate swaps with notional principal amounts of  
yen482,130 million at March 31, 2002 were used for hedging purposes as part of  
our asset-liability management. We have also entered into foreign exchange      
forward contracts and foreign currency swap agreements in managing foreign      
exchange risk. At March 31, 2002, we used foreign exchange forward contracts    
and foreign currency swap agreements with notional principal amounts of         
yen481,169 million which were principally used to hedge the risk of change in   
foreign currency exchange rates. Some foreign currency swap agreements include  
a requirement to maintain a certain credit rating.                              

Credit facilities                                                         

To enhance our liquidity, we have secured committed credit lines with 
financial institutions. In the year ended March 31, 2002, we established an     
additional yen39,975 million multicurrency global commitment line for ORIX      
Corporation and major overseas subsidiaries and the total committed credit      
lines were yen118,275 million as of March 31, 2002. Total committed lines       
including global lines as above for ORIX and our subsidiaries were yen795,489   
million and yen933,640 million at March 31, 2001 and March 31, 2002,            
respectively, and of these lines, yen726,888 million and yen849,876 million     
were available at March 31, 2001 and March 31, 2002, respectively. These        
committed credit facilities are subject to financial and other covenants and    
conditions prior to drawdown including, in some credit facilities, a            
requirement to maintain a certain credit rating.                                

   ORIX and other Japanese companies traditionally relied for liquidity upon
relationships with institutional lenders, particularly Japanese commercial      
banks. In order to reduce funding costs and diversify funding sources, we have  
been cultivating borrowing relationships with a variety of institutional        
lenders in Japan and with a number of banks overseas, and increasing our        
capital markets funding both domestically and overseas. Our new capital raising 
operations overseas are used principally to fund our overseas operations.       

Use of Special Purpose Entities                                           

 As one method of raising funds to finance our operations and investment
activities, we periodically securitize certain lease receivables, loan          
receivables and investment securities. These securitizations allow us to access 
highly liquid and efficient markets, provide us with alternative source of      
funding, and diversify our investor base to enhance our liquidity position. For 
the past three fiscal years, securitization averaged approximately 10% of our   
total funding. Securitization involves the creation of special purpose entities 
("SPEs") to hold the pooled assets. Our use of SPEs in securitizations is       
consistent with conventional practices in the securitization markets. Certain   
of the SPEs are designed to place the pooled assets beyond the reach of ORIX    
and its creditors in the event of any bankruptcy of ORIX, and if structured in  
this manner (and subject to certain other conditions) the pooled assets are     
removed from our consolidated balance sheets. These SPEs are also designed so   
that investors have no recourse to ORIX in the event of any failure of payment  
on the pooled assets. Therefore, when securitizing assets in this manner, we do 
not have any exposed assets or contingent liabilities other than those          
recognized as subordinated residual interests on our consolidated balance       
sheets. From time to time, we may act as an investor, servicer or administrator 
in SPE transactions. The effects of these transactions are fully reflected in   
our consolidated financial statements.                                          

We do not dispose of troubled leases, loans or other problem assets by
means of unconsolidated SPEs. None of our officers, directors or employees      
holds any equity interests in our SPEs or receives any direct or indirect       

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compensation from the SPEs. The SPEs do not own shares or equity interests of   
ORIX or any of ORIX's affiliates and there are no contracts to do so.           

Investment products                                                   

  We provide investment products to our customers that employ a structure,
referred to as a kumiai in Japan, which is a type of SPE. As a means to finance 
the purchase of aircraft or other large-ticket items to be leased to third      
parties, we arrange and market kumiai products to investors, who invest a       
portion of the funds necessary into the kumiai. The remainder of the purchase   
funds are borrowed by the kumiai in the form of a non-recourse loan from one or 
more financial institutions. The kumiai investors (and any lenders to the       
kumiai) retain all of the economic risks and rewards in connection with         
purchase and leasing activities of the kumiai, and all related gains or losses  
are recorded on the financial statements of investors in the kumiai. We are     
responsible for the arrangement and marketing of these products, and may act as 
servicer or administrator in kumiai transactions. The fee income for the        
arrangement and administration of these transactions is recognized in our       
consolidated financial statements. We do not guarantee or otherwise have any    
financial commitments or exposure with respect to the kumiai.                   

Other financial transactions                                          

We occasionally make loans, leases or equity investments in SPEs in   
connection with transactions involving aircraft leasing, ship finance,          
non-recourse loans for real-estate and investment funds. In the event that we   
retain substantive economic risks and rewards associated with such              
transactions, the SPEs are fully consolidated into our financial statements,    
and in any other circumstances our investments such as loans, leases or equity  
investments are recorded on our consolidated balance sheets.                    

We have adopted the requirements of SFAS No. 140, "Accounting for     
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities  
- a replacement of FASB Statement No. 125", which applies prospectively to all  
securitization transactions occurring after March 31, 2001. Adoption of SFAS    
No. 140 did not have a material impact on our operations or financial position. 

Critical Accounting Policies                                                    

Accounting estimates are an integral part of the financial statements 
prepared by management and are based upon management's current judgments. Note  
1 of the notes to the Consolidated Financial Statements includes a summary of   
the significant accounting policies used in the preparation of our Consolidated 
Financial Statements. Certain accounting estimates are particularly sensitive   
because of their significance to the financial statements and because of the    
possibility that future events affecting the estimate may differ significantly  
from management's current judgments. We believe the following represents our    
critical accounting policies.                                                   

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

The allowance for doubtful receivables on direct financing leases and 
possible loan losses represents management's estimate of probable losses        
inherent in the portfolio. This evaluation process is subject to numerous       
estimates and judgments. In developing the allowance for doubtful receivables   
on direct financing leases and possible loan losses, the following factors,     
among other things, are considered:                                             

o    the nature and characteristics of obligors,                      

o    current economic conditions and trends,                          

o    prior charge-off experience,                                     

o    current delinquencies and delinquency trends,                    

  o    future cash flows expected to be received from the direct financing
lease or loan, and                                          

o    the value of underlying collateral and guarantees.               

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   In particular, large balance non-homogeneous loans are evaluated based on
the present value of expected future cash flows and the observable market price 
or the fair value of the collateral securing the loans. Smaller-balance         
homogeneous loans, including individual housing loans and card loans, and lease 
receivables are evaluated considering current economic conditions and trends,   
the value of the collateral underlying the loans and leases, prior charge-off   
experience, delinquencies and non-accruals. If actual future economic           
conditions and trends, actual future value of underlying collateral and         
guarantees, and actual future cash flows are less favorable than those          
projected by the management or the historical data we use to calculate these    
estimates do not reflect future loss experience, additional provisions may be   
required.                                                                       

The allowance is increased by provisions charged to income and is     
decreased by charge-offs, net of recoveries, when we determine that the         
likelihood of any future collection is minimal, receivables are charged off.    

  Our charge-off policy is greatly affected by the Japanese tax law, which
limits the amount of tax-deductible charge-offs. Japanese tax law allows        
companies to charge off doubtful receivables on a tax-deductible basis only     
when specified conditions are met. Japanese tax law does not allow a partial    
charge-off against the total outstanding receivables to an obligor. Japanese    
regulations also do not specify a maximum time period after which charge-offs   
must occur.                                                                     

   It is common in the United States for companies to charge-off loans after
they are past due for a specific arbitrary period, for example, six months or   
one year. However, we are required to keep our primary records in accordance    
with Japanese tax law. Japanese tax law does not allow Japanese companies to    
adopt a policy similar to that in the United States. If we had prepared our     
accounting records as if each charge-off had occurred at an arbitrary date, the 
differences in our financial statements would be a reduction in gross           
receivables, an identical reduction in the allowance for doubtful receivables   
and a change in the timing of charge-offs. We believe that the most significant 
of these differences, when comparing itself to other non-Japanese companies     
(particularly US companies), may be the delay in when it records a charge-off.  
In a period of worsening economic conditions and increasing delinquencies, we   
may reflect a lower charge-off ratio than it would have, had it applied the     
charge-off policies used by some of the other non-Japanese companies.           

Impairment of investment in securities                                    

  When a market decline below cost of an investment in securities is other
than temporary we write down the investment to the market value and record the  
related writedown as an investment loss on our consolidated statement of        
income. We would, in principle, charge against income losses related to         
securities:                                                                     

o    if the market price for a security has for more than one year    
        remained below our acquisition cost, or below current carrying value
  if the price of the security has been adjusted in the past, or

o    if there has been a significant deterioration in a bond issuer's 
credit rating, an issuer default or similar event.          

  o    in certain other situations where, even though the market value has
        not remained below the carrying value for twelve months, the decline
         in market value of a security is based on economic conditions and not
      just general declines in equity markets and where it is considered
      unlikely that the market value of the security will recover in the
next twelve months.                                         

However, if we have a significant long-term business relationship with
another company, it would also consider the probability of market values        
recovering within the following twelve months. As part of this review, we would 
consider:                                                                       

o    the other company's operating results,                           

o    the other company's net asset value,                             

o    the other company's future performance forecast, and             

o    general market conditions.                                       

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  If we believe, based on this review, that the market value of a security
may realistically be expected to recover, the loss for that security will       
continue to be classified as temporary. Temporary declines in market value are  
recorded in other comprehensive income (loss), net of applicable income taxes.  
If after an additional twelve months, the market value for that security is     
still significantly below the acquisition cost or below current carrying value  
(if the price of the security has been adjusted in the past), we would classify 
the loss for that security as other than temporary and charge the decline in    
market value against income. If the financial condition of issuers              
deteriorates, the forecasted performance of an investee is not met or actual    
market conditions are less favorable than those projected by management, we may 
charge to income additional losses on investment in securities. For example,    
declines in US bond market prices due largely to deteriorating market           
conditions and significant deterioration of certain issuers resulted in         
additional impairment charges during the year ended March 31, 2002.             

Impairment of long-lived assets and goodwill                              

We periodically perform an impairment review for long-lived assets,   
certain identifiable intangibles and goodwill related to those assets to be     
held and used by us, whenever events or changes in circumstances indicate that  
the carrying amount of the assets may not be recoverable. Factors we consider   
important which could trigger an impairment review include, but are not limited 
to, the following:                                                              

o    significant decline in the market value of an asset,             

 o    a current period operating cash flow loss, except for the starting
period of the operation,                                    

o    significant underperformance of historical operating cash flows, 

o    significant changes in the manner of the use of an asset, and    

o    significant negative industry or economic trends.                

 When we determine that the value of assets may not be recoverable based
upon the existence of one or more of the above factors or other factors, we     
estimate the future cash flows expected to be generated by the assets. Our      
estimates of the future cash flows are based upon historical trends adjusted to 
reflect our best estimate of future market and operating conditions. Also, our  
estimates include the expected future period in which the future cash flows are 
expected to be generated by the assets that we review for impairment. As a      
result of the impairment review, when the sum of the future cash flows expected 
to be generated by the assets is less than the carrying amount of the assets,   
we recognize impairment losses based on the fair value of those assets. If      
actual market and operating conditions under which assets are operated are less 
favorable than those projected by management, resulting in lower expected       
future cash flows or shorter expected future period to generate such cash       
flows, additional impairment charges for the assets not previously written-off  
may be required.                                                                

  Unguaranteed residual value for direct financing leases and operating leases

We estimate unguaranteed residual values of leased equipment when we  
calculate unearned lease income to be taken into income over the lease term for 
direct financing leases and when we calculate depreciation amount for operating 
leases which carry inherently higher obsolescence and resale risks. Our         
estimates are based upon current market values of used equipment and estimates  
of when and how much equipment will become obsolete. If actual future demand    
for re-lease or actual market conditions of used equipment is less favorable    
than that projected by management, write-downs of unguaranteed residual value   
may be required.                                                                

Insurance policy liabilities and deferred policy acquisition costs        

 A subsidiary of ORIX writes life insurance policies to customers. Those
policies are characterized as long-duration policies and mainly consist of      
endowments, term life insurance and whole life insurance. Insurance policy      
liabilities and reserves are established based on actuarial estimates of the    
amount of future policyholder benefits. Computation of policy liabilities and   
reserves necessarily includes assumptions about mortality, lapse rates and      
future yields on related investments and others factors applicable at the time  
the policies are written. Management continually evaluates the potential for    
changes in the estimates and assumptions applied for determining policy         
liabilities, both positive and negative, and uses the results of these          
evaluations both to adjust recorded liabilities and                             

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to adjust underwriting criteria and product offerings. If actual assumption     
data, such as mortality, lapse rates, investment returns and other factors, do  
not properly reflect future policyholder benefits, we may establish a premium   
deficiency reserve.                                                             

FASB Statement No. 60 ("Accounting and Reporting by Insurance         
Enterprises") requires insurance companies to defer certain costs associated    
with writing insurance ("deferred policy acquisition costs") and amortized over 
the respective policy periods in proportion to anticipated premium revenue.     
Deferred policy acquisition costs, not involving the same level of complexity   
in measurement as those discussed above, are important to an understanding of   
significant accounting policies for insurance business. We are required to      
assess deferred acquisition costs for recoverability. Deferred 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. Periodically, deferred policy acquisition costs are      
reviewed for whether relevant insurance and investment income are expected to   
recover the unamortized balance of the deferred acquisition costs. When such    
costs are expected to be unrecoverable, they are charged to income in that      
period. If the historical data, such as lapse rates, investment returns,        
mortality experience, expense margins and surrender charges, which we use to    
calculate these assumptions do not properly reflect future profitability,       
additional amortization may be required.                                        

Recent Developments                                                             

Economic conditions                                                   

Conditions in the world economy deteriorated in the fiscal year ended 
March 31, 2002. In the United States, the sudden worsening of corporate profits 
and the drop in capital spending in information technology and other sectors of 
the economy brought an end to the country's record-long economic expansion,     
while the terrorist attacks in September 2001 further stifled consumer          
confidence. Against the backdrop of the economic downturn, the Federal Reserve  
Board made a succession of interest-rate cuts and the Bush Administration       
legislated an emergency budget. The combination of these measures appears to    
have helped the economy stabilize and return to growth, however the general     
environment during the fiscal year ended March 31, 2002 was negative.           

  The European economy was expected to take over from the United States as
the driving force of the global economy, but the poor economic conditions in    
other regions of the world and fears of inflationary pressures in Europe worked 
to further the pace of economic slowdown there.                                 

  The Asian economies continued to stagnate in the wake of the weak global
demand in IT-related industries.                                                

Japan was also affected by the sluggishness in the world economy and  
experienced a sharp drop in both exports and industrial production. Corporate   
profits also fell in the wake of this slowdown. The trend in decreasing capital 
spending became even more pronounced, contributing to greater unemployment and  
continued downward pressure on wages. The Japanese government made public our   
strong desire to take measures to prevent Japan from falling into a             
deflationary spiral, however uncertainty and concerns about the future persist. 

New accounting pronouncement                                          

On April 1, 2001, we adopted FASB Statement No. 133 ("Accounting for  
Derivative Instruments and Hedging Activities"), as amended by FASB Statement   
No. 137 ("Accounting for Derivative Instruments and Hedging                     
Activities--Deferral of the Effective Date of FASB Statement No. 133") and FASB 
Statement No. 138 ("Accounting for Certain Derivative Instruments and Certain   
Hedging Activities--an amendment of FASB Statement No. 133") (collectively, the 
"Statement"). This Statement requires that an entity recognize all derivatives  
as either assets or liabilities in the statement of financial position and      
measure those instruments at fair value. If certain conditions are met, a       
derivative may be designated as a hedge. The accounting treatment for changes   
in the fair value of derivatives depends on the character of the transaction.   
The cumulative effect of this accounting change as of April 1, 2001, was a      
charge of yen8,400 million to other comprehensive income, and an increase of    
yen133 million to earnings.                                                     

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  In September 2000, FASB Statement No. 140 ("Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities--a Replacement 
of FASB Statement No. 125") was issued. It revises the standard for accounting  
for securitizations and other transfers of financial assets and collateral, and 
requires certain disclosures, but it carries over most of FASB Statement No.    
125's provisions without reconsideration. We adopted the disclosure provisions  
related to the securitization of financial assets as of March 31, 2001. All     
transactions entered into after March 31, 2001 were accounted for in accordance 
with FASB Statement No. 140. This adoption does not have a significant effect   
on our operations or financial position.                                        

 In July 2001, FASB Statement No. 141 ("Business Combinations") and FASB
Statement No. 142 ("Goodwill and Other Intangible Assets") were issued. FASB    
Statement No. 141 improves the transparency of the accounting and reporting for 
business combinations by requiring that all business combinations be accounted  
for under a single method--the purchase method. Use of the pooling-of-interests 
method is no longer permitted. FASB Statement No. 141 requires that the         
purchase method be used for business combinations initiated after June 30,      
2001. On April 1, 2002, as a result of the adoption of FASB Statement No. 141,  
we will record a transition gain, as an effect of a change in accounting        
principle, due to the write-off of unamortized deferred credits of              
approximately yen1,937 million existing as of March 31, 2002. The deferred      
credits relate to an excess over cost arising from business combinations        
completed and investments accounted for by the equity method acquired before    
July 1, 2001. FASB Statement No. 142 requires that goodwill no longer be        
amortized, but be reviewed at least annually for impairment by applying a       
fair-value-based test. Also, it requires that certain intangible assets be      
recognized separately from goodwill and amortized over their useful lives. FASB 
Statement No. 142 is effective for fiscal years beginning after December 15,    
2001. We are required to perform an initial impairment review of our goodwill   
in the year ending March 31, 2003 and an annual impairment review thereafter.   
We are evaluating but have not yet determined whether the adoption of this      
statement will result in an impairment of goodwill. We will cease to amortize   
goodwill, including equity method goodwill, on April 1, 2002. For the year      
ended March 31, 2002, such goodwill amortization for the Company and its        
subsidiaries amounted to yen728 million.                                        

In August 2001, the FASB issued Statement No. 144 ("Accounting for the
Impairment or Disposal of Long-Lived Assets"), which addresses financial        
accounting and reporting for the impairment or disposal of long-lived assets.   
While FASB Statement No. 144 supersedes FASB Statement No. 121 ("Accounting   
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be         
Disposed Of"), it retains many of the fundamental provisions of that Statement. 
FASB Statement No. 144 also supersedes the accounting and reporting provisions  
of APB Opinion No. 30 ("Reporting the Results of Operations--Reporting the      
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and  
Infrequently Occurring Events and Transactions"), for the disposal of a segment 
of a business. However, it retains the requirement in APB Opinion No. 30 to     
report separately discontinued operations and extends that reporting to a       
component of an entity that either has been disposed of (by sale, abandonment,  
or in a distribution to owners) or is classified as held for sale. This         
Statement is effective for fiscal years beginning after December 15, 2001.      
Management does not expect this adoption to have a significant effect on our    
operations or financial position.                                               

Item 6.  Directors, Senior Management and Employees.                            

Board of Directors                                                              

ORIX's Board of Directors has the ultimate responsibility for the     
administration of our affairs. The Articles of Incorporation of ORIX provide    
for not less than three Directors. Directors are elected at general meetings of 
shareholders. The normal term of office of any Director expires within two      
years after his or her assumption of office, at the close of the ordinary       
general meeting of shareholders held to release the last settlement of          
accounts. The Board of Directors elects from among our members Representative   
Directors.                                                                      

    The Articles of Incorporation of ORIX also provide for not less than three
Corporate Auditors, who are elected at general meetings of shareholders. The    
normal term of office of any Corporate Auditor expires within three years after 
his or her assumption of office, at the close of the ordinary general meeting   
of shareholders held to release the last settlement of accounts. Under the      
Commercial Code of Japan and other related laws, the Corporate Auditors (at     
least one of whom is required to be independent of ORIX) are not required to    
be, and are not, certified public accountants. Corporate Auditors have the      
duties of supervising the administration by the Directors of ORIX's affairs and 
examining the financial statements and business reports that the Board of       
Directors submits to the general                                                

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meeting of shareholders. Corporate Auditors are not entitled to vote. They are  
required to elect from among themselves at least one Standing Corporate         
Auditor.                                                                        

Auditors' Independence                                                

    In addition to Corporate Auditors, ORIX must appoint independent certified
public accountants, who have the statutory duties of examining the financial    
statements prepared in accordance with accounting principles generally accepted 
in Japan that the Board of Directors submits to the general meeting of          
shareholders and reporting on the financial statements to the Corporate         
Auditors and the Directors, and examining the financial statements to be filed  
with the Prime Minister. Presently, ORIX's independent certified public         
accountants are Asahi & Co., a member firm of Andersen Worldwide SC. The        
independence of Asahi & Co. has been considered and confirmed by ORIX's Board   
of Directors. The Board of Directors also confirmed that there were no          
management-level individuals that were seconded to or from Asahi & Co., and     
there are no management-level individuals that previously worked for ORIX or    
Asahi & Co. and presently work for the other party.                             

  In the fiscal year ended March 31, 2002, we paid our auditors (including
domestic and foreign affiliates of Asahi & Co.) yen489 million for direct       
audit fees, yen275 million for audit related services, including M&A due        
diligence and services related to securities offerings, yen297 million for      
financial information system consulting services, and yen295 million for other  
fees which included primarily tax compliance and advisory, and other consulting 
services.                                                                       

   In the opinion of management, the provision of non-audit services did not
in any way influence the independence of the audits conducted by Asahi & Co.    
because management took full responsibility for decisions relating to the       
activities affected by these services and Asahi & Co. and its affiliates did    
not assume any of the management authority and duties.                          

The Directors and Corporate Auditors                                  

 The Directors and Corporate Auditors of ORIX as of June 26, 2002 are as
follows:                                                                        

                                                        [Enlarge/Download Table]
                                                                                                   Share-holdings
                                                                                       Year first      as of     
               Name                                       Title                        appointed   March 31, 2002
               ----                                       -----                        ---------   --------------
                                                                                                   (In thousands)
                                                                                                                 
Yoshihiko Miyauchi............... Chairman and Chief Executive Officer,                   1970            39     
                                  Representative Director                                                        
Yasuhiko Fujiki.................. President and Chief Operating Officer,                  1994             5