Good day everyone and welcome to the ORIX First Quarter Conference Call. For the duration of the presentation, all lines will be placed in listen-only mode. A question and answer session will follow the main presentation. [Operator Instructions]. And I would like to hand the call over to Mr. Yui Takamatsu, and I will be standing by for the Q&A session. Please go ahead. Thank you.

Thank you. Welcome everyone to ORIX's earnings conference call for the first quarter of the fiscal year ending March 31, 2008. My name is Yui Takamatsu. I am joined here today by Mr. Yasuhiko Fujiki, who is our President, Chief Operating Officer and Chief Financial Officer and Mr. Haruyuki Urata, who is a Director, Corporate Senior Vice President and Head of the Office of the President as well as Mr. Tadao Tsuya who is the Executive Officer in charge of Accounting. I will assume that everyone has a copy of document entitled the ORIX Presentation 0706E dated August 10, 2007 that has been posted on our IR website. In today's conference call, we would like to first spend about 20 minutes and provide an overview of the presentation made at the first quarter results earnings announcement today in Tokyo by Mr. Urata. We will then open up the lines to any questions that you may have. During the Q&A segment, we ask for your patience as Mr. Fujiki, our President, COO and CFO who will speak in Japanese and I will provide a consecutive English interpretation. Please turn to page 4. I will now ask Mr. Urata to give a brief summary on the first quarter results.

Hello everyone. Thank you very much for your joining for our conference call. My name is Haruyuki Urata and I am a Director and the Corporate Senior Vice President in charge of corporate development, corporate planning and corporate communications. Today, I would like to give a brief statement on our results for the first quarter of the fiscal year ending March 31, 2008. Net income for the three months ended June 30, 2006 decreased 3% or 1.3 billion yen year-on-year to 45.8 billion yen due in part to the occurrence of temporary expenses. Accordingly, the results for the period were within our expectation. Please turn to page 5 for an overview of the segment performance in terms of revenues. Looking at segment revenues, 8 segments out of 9 recorded a increase in revenues year-on-year. The real estate segment recorded a decrease in revenues as it saw an increase in the number of residential condominiums developed through certain joint ventures which are not recorded as segment revenues but as equity net income of affiliates and also due to a decrease in gains on sales of real estate and operating leases. Please turn to page 6. Looking now at segment profits. As can be seen 5 segments recorded an increase in profits while 4 segments were down year-on-year. The Rental Operation, Life Insurance, Other, the Americas and Asia, Oceania and Europe segments recorded an increase in both revenues and profit. On the other hand, the Corporate Financial Services, Automobile Operations and Real Estate-Related Finance segment recorded a decrease in profits despite an increase in revenues. Profits decreased in the Corporate Financial Services segment due to the increase in interest expense and provisions as well as the recognition of write-downs of intangible assets. Profits decreased in the Automobile Operations segment due to the increase in expenses associated with the operating leases and maintenance services. Profits decreased in the Real Estate-Related Finance segment due to the absence of gains from real estate sales which were recorded in the same period over the pervious fiscal year. In the Real Estate segment, although profits in the residential condominium operations were almost flat year-on-year, segment profits decreased due to the decrease in gains on sales of real estate and operating leases. Overall, despite the increasing expenses, the sales and marketing operations for each segment continued to be steady and our business [ph] performance months has been progressing close to our expectations. Therefore, I would like report to you that we do not believe there are any changes in our trend of medium and long-term growth. Furthermore, although net income decreased 3% year-on-year, I would like to reassure you that we have been actively expanding our operations for profit growth in each of our 9 segments and we continue to focus on maintaining a balance between growth, profitability and financial stability in our operations. Now I will ask Mr. Takamatsu to give an overview of the segment results.

Thank you, Mr. Urata. I would now like to explain the year-on-year performance across business environments and measures taken for each of our 9 business segments. On page 7, we have a slide explaining the Corporate Financial Services segment. The following 8 slides explain each business segment in the same format. We have segment profits on the left hand side of the slide and year-on-year segment performance, business environment and measures taken on the right hand side. Revenues increased due to the expansion of corporate loans as demand for funding from SMEs continues to be strong. On the other hand, segment profits decreased 38% or 4.4 billion yen year-on-year to 7.1 billion yen due to the increase in provisions in addition to the reorganization of approximately 3 billion yen in write-downs of intangible assets. In our efforts to strengthen our regional sales and marketing base, we have opened new offices and actively hired senior employees who have retired from regional financial institutions and companies for our newly opened branches, and in doing so, expand transactions by utilizing their customer network. We have also strengthened our relationship with financial institutions and partnering accountants. Although segment profits for the first quarter were down year-on-year due to temporary factors, we will continue to expand business opportunities going forward. Please turn to page 8 for the Automobile Operations segment. Segment revenues increased due to the increase in revenues from operating leases and maintenance services in the automobile leasing operation. On the other hand, segment profits decreased 7% to 5.8 billion yen year-on-year due to the increase in expenses accompanying an increase in revenue from operating leases as upfront costs are recorded faster for operating leases than for direct financing leases. This is in addition to the increase in expenses associated with the opening of…

At this time, we'll open the floor for questions. [Operator Instructions]. Our first question will be coming from Will Bojuque [ph]. Please go ahead.

Hi this Will Bojiqe [ph] Partner Investments. Could you please give me some more color on bad debt expense? Was it a specific credit?

Excuse me, can you say that again?

I had a question about bad debt expense. First of all, was it a specific credit and can you comment on general trends?

Okay. What I am going to do now is I am going to translate that into Japanese, so I am going to put you on mute for a second, if you can hold on, okay?

That's fine.

Hello, can you hear me?

Yes, I can hear you. Hello. Yes, please go ahead.

Can you hear me?

I can hear you now.

Okay. In terms of provisions we had reversals of provisions in the previous fiscal year plus we had a reflection of increase in installment loans. And what you are seeing is that assets are increasing, there is about a 12% increase year-on-year and you can see that provisions for the previous fiscal year were very low. So we were approaching more of a normalized level and there is not specifically a trend or a specific sector that we are leaning towards.

So it's not particular-related [ph]?

It does include it, but it's not... we don't lend to one particular sector that doesn't account for more than 10%.

Okay.

And if you'd like more information on that, we have a release regarding the amount of loans on the entertainment industry as well on the news release. And you can download that through our website.

Okay. May I ask a second question?

Sure. Go ahead.

This relates to goodwill write-downs, what was that associated with?

Okay, one moment please. Hello. Can you hear me?

Yes.

Okay. Basically, it's a negative goodwill in our investment in our subsidiary.

And which one?

It's Nittetsu Lease, which changed its name in July to NS Lease. And that's approximately 3 billion yen. So for three months, we are using the name that's the brand name.

Okay.

So the negative goodwill on that.

Okay. Thank you very much.

Okay.

Thank you, sir. Does that complete your question? Thank you. [Operator Instructions]. Our next question will be coming from Mr. Fred Barker from Mccanna Capital [ph]. Please go ahead.

Yes, thank you for doing this conference call, very helpful.

Thank you.

Could you elaborate a little bit more on the liability side of your balance sheet, particularly your short-term financing through commercial paper? Just give us a little more color or some comments as to the stability of this as a funding source given the turbulence we are seeing in the markets today, whether you have back up commitment lines etcetera to support your financing in this market.

Okay. I am going to put you on mute again. One moment please. I think you are referring specifically to the decrease in available credit commitment lines while you are seeing an increase in CP.

Well, if you could just give us a discussion about your circle [ph] liability side, and really what we are looking for is comfort that it's very stable and it's not going to be disrupted by what's going on right now.

Sure. What we are seeing is that we are seeing an increase in acquisition of assets and a decrease in the securitization of assets. And we are seeing that the increase in temporary borrowing from commitment lines in CP issues. However, the increase in CP came from say like an overall increase in assets, and there is significantly no significant change in the composition of our funding and we'll continue to secure liquidity in our funding.

Do you have... in an event that the commercial paper market becomes more difficult, you have... what other sources of funding do you have in mind as of time being?

Okay.

You have other sources lined up?

Okay. In terms of CP we have diversified sources and we have plenty of back up.

Such as?

Do you have the file entitled First Quarter Consolidated Financial Results Supplementary Information?

I don't have it open in front of me, but it's --

Okay, yes. If you look on page 4 of that file, it shows the amount of commitment line.

Okay.

And that shows pretty much in detail as well as our funding how it's diversified.

And are you seeing any changes in either availability or pricing or anything in this... any changes to this area?

No, not that we know of. We haven't seen it.

Okay.

In terms of what I just said earlier is that the available credit for commitment line is decreasing, but the CP is increasing. But we have been continuing to secure liquidity in our funding, so we don't see a problem there at all.

Okay. Can I ask another question on that?

Sure, go ahead.

You show the yield on your installment loans declining, and if you go back the past year, up until now the spread between the yield and your interest cost has been fairly well maintained. I think it was the first quarter that you showed a decline. Could you explains to us why the yield on installments are declining?

Okay. One moment please. In terms of the yield for installment, what we are seeing is that we recorded profit from securitization in the fourth quarter and we also saw a higher contribution to revenues from the loan servicing operation in the fourth quarter. Therefore, we see a slight dip quarter-on-quarter. But if you see it on a year-on-year basis, you are seeing that it has increased.

Okay. So it's securitization-related --?

Yes.

Issue. I see. All right, thank you.

Thank you.

Thank you, sir. Our next question will be coming from Miles Wickses [ph]. Please go ahead.

Thank you for the call.

Thank you.

Can you just walk through briefly what drove the large increase in equity and net income of affiliates and also the gains on discontinued businesses? Thank you.

Okay, one moment please. Hello.

Yes.

In terms of the first question you had, that was from... what you are seeing is that there was an increase in equity net income of affiliate as we saw the JV, joint venture due to the increasing number of residential condominiums developed through certain venture. So you see a big spike there such as DAIKYO.

Okay.

Okay. That's not included in a segment per se. It goes in... it's recorded as equity and net income of affiliates. That's why you saw a spike in the equity and net income of affiliates whereas the real estate segment, it looks on paper that it didn't do so well because it's not reflected there. But it's actually reflected in equity and net income of affiliates.

Okay.

That's why you are seeing an increase there.

And the gain on --?

It was part of joint ventures, JV projects.

And the gain on discontinued businesses?

Okay. The second one is we had gains on sales of real estate under operating leases and related revenues. That would be --

Can you hear me? Can I ask another question?

Sure, go ahead.

I know they are very lumpy businesses, but in the past you have highlighted your pipeline is very strong for the next year or two in terms of real estate for the gains that you should be harvesting.

Okay.

Should we expect the first quarter to be a run rate for the rest of the year or would you characterize the first quarter as being weak in those areas?

In terms of real estate, that's what you are saying?

Yes. In terms of revenue of real estate sales and gains on sales of rental real estate.

Okay. One moment please. Hello?

Yes.

If you look at the Real Estate segment profit year-on-year; actually, if you look on slide 11, you see that in fiscal '07 segment profits in the first quarter were 20.7 billion yen. And for the first fiscal year... first quarter of this fiscal year it was 18.3 billion yet, and it looks on paper that it went down 12%. However, you see that the first quarter last fiscal year was phenomenal. It was very strong. So it did go down, but if you look at it on a quarter and if you compare it to the other three quarters, it's still very strong. And we expect the segment to be up going forward and also we might see that the JV that I just mentioned earlier might be very strong this year as well.

So the first quarter you think is too low?

No, no, we are not saying it's too low. The first quarter is strong. But if you compare it to last... first quarter of last year, that was very strong. So if you look at it and compare it side by side to 20.7, 18.3 is down. But we think it's a very good quarter and we feel it will continue going forward, and it will be a strong --

You seeing it level or it should grow off the 18.3 base?

One moment please. Okay, for the full fiscal year, we expect the segment to be better than last year.

Thank you.

Thank you.

Thank you, sir. [Operator Instructions].

Okay. Well, if you don't have any other questions, we'll call it a night here. Thanks for joining us and if you have any additional questions, please feel free to contact me. My contact information is at the very end of the presentation. So thank you for joining us everybody. Have a great day and goodnight. Thank you.

Thank you. And that concludes today's conference call. We would like to thank everyone for participating. All lines may now disconnect and good day to you all. Thank you.