Welcome to the ORIX Corporation Interim Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions]. I would now like to turn the call over to Mr. Yui Takamatsu. Sir, you may begin.

Thank you. Welcome everyone to ORIX's earnings conference call for the interim period for the fiscal year ended March 31, 2008. My name is Yui Takamatsu. I am joined here today by Mr. Haruyuki Urata, the Director, Corporate Senior Vice President, and Head of the Office of the President; and Tadao Tsuya who is the Executive Officer in charge of Accounting. We will assume that everyone has a copy of the document entitled the ORIX Presentation 0709E dated November 8, 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 interim results earnings announcement today in Tokyo by Mr. Urata and myself. We will then open up the lines to any questions that you may have. Please turn to page four. I will now ask Mr. Urata to give an overview of interim results.

Thank you Mr. Takamatsu. Hello, everyone. My name is Haruyuki Urata. I am in charge of corporate development, corporate planning, and corporate communications. Regarding our interim results, although interest expense, selling, general and administrative expenses, and provisions increased, net income increased 1% or 0.7 million yen year-on-year to 92 billion yen, which is the highest interim growth to date. [inaudible] investment operations in companies and real estate, which ORIX sees as well its core businesses may on occasions will be reported under operating income or income before income taxes. While operating income and income before income taxes decrease, net income increased due mainly to the strong performance of our investment operations, which resulted in an increase in contributions as seen here. Finally, there was no direct impact of the U.S. subprime loan program, the effect on ORIX of the turmoil in the credit and capital market has been limited. Please turn to page five for an explanation of trends in our four major segments. First, starting with trends in the Corporate Financial Services business, while revenues increased, segment profit decreased to 17.3 billion yen. The main cause of the decrease in segment profit is the rising costs, and this can be explained by three factors. Firstly, we have seen an increase in provision. As can be seen from the increasing in SME bankruptcies, the SME markets have seen a polarization between competitive SMEs investing to achieve growth and those negatively impacted by the current environment. In the previous fiscal year, provision levels were lower due to reversals being recorded reflecting an economic recovery. The absence of reversals in the first half of this fiscal year led to higher provision levels. As a whole, provisions have exceeded initial expectations. Secondly, a rise in short-term interest rates and the flattening of the…

Thank you, Mr. Hirotaka. Starting on page nine, I would like to give you an overview of segment results. Looking at segment profits, all segments recorded an increase in profits, while five segments were down year-on-year. The Rental Operations, Real Estate, Other, and Asia, Oceania and Europe segments recorded an increase in profits. On the other hand, the Corporate Financial Services, Automobile Operations, Real Estate-Related Finance, Life Insurance, and the Americas segment recorded a decrease in profits. Now, I would like to explain the year-on-year performance of each of our nine business segments. Please turn to page ten. I will begin with the Corporate Financial Services segment. The following slides will explain each business segments in the same format. We have segment performance on the left hand side and trends in segment, assets, revenues, profits, and ROA on the right hand side. As Mr. Urata explained earlier, in this segment, in addition to increases in credit costs and a flattening of the yield curve, a one-off approximately 3 billion yen write-down of an intangible asset was recorded in the first quarter of this fiscal year. As a result, segment profit decreased 41% year-on-year to 17.3 billion yen. Please turn to the next slide where you will find a graph explaining the trend in asset quality and provision for doubtful receivables and profitable loan losses in the Corporate Financial Services segment. Provisions for the Corporate Financial Services segment for the interim period was at 6.4 billion yen and the annualized ratio of provisions to segment assets is 0.66%, with credit costs rising slightly. With reversals of provisions recorded in the previous fiscal year as well as the fiscal year before that, the current rise can be seen as a rebound from previous low levels. Although provision levels did increase with the…

Okay. Thank you, sir. [Operator Instructions]. [Inaudible]. Please state your company name. Go ahead and state your question, sir.

Yes, regarding your aircraft-related business, I was wondering, what if any, effect delays in shipments by the two main aircraft manufacturers has on your business, one way or the other. Thank you.

Thank you very much for joining. Regarding your questions, our aircraft related operations… or related business is mainly in the area of the used aircraft businesses. For example, we own or use aircrafts and are leasing to various aircraft companies in the southeast areas. So, our investments, we don't have any problems from the point you expressed.

Thank you very much.

And our next question comes from Julian Wesley [ph]. Please state your company name and proceed with asking your question. Unidentified Analyst – Putnam Investments: Putnam Investments. I understand that you not changing your full-year forecast, but can you give us any more commentary about your expectations for the second half and your comfort around your guidance?

You listened to my previous presentation, right now, say, I want to explain a little bit about our principal investments, for example, although we don't have any fixed idea about the sale of our big investment in, for example, DIJO Alzera [ph], but we have various investments in very different types of corporations. Most probably, from those investments to Japanese companies, we think we'll be able to realize some ideas of sales to the third party. So, through those operations, we think we can enjoy additional profits in addition to our normal operations. Of course, we don't have any schedules above the same level of that big investment, let’s say, like Alzera in the previous year, we think we can find out different areas like real estate development areas or others. So, we've another five months to achieve our sales forecast. So, at this moment, our top management doesn't have an idea to change our forecast. Unidentified Analyst – Putnam Investments: Okay. Thank you.

[Operator Instructions] Okay. And we have a question from Julian Wesley [ph] and please state your company name and proceed with your question. Unidentified Analyst – Putnam Investments: Putnam Investments. ORIX is a mixture of relatively stable businesses with a steady stable profit stream and then kind of one-off businesses with a one-off capital gain, where you have to have one-off capital gains on a fairly regular basis. Can you talk a little bit more about the stable businesses and how they are looking for the second half? So, for example, in the Autos business, you mentioned that profits were down in the first half, probably because of upfront costs for operating leases, but also because of rising interest expense, I mean how will this business do in the second half? To what extent is that kind of profitable due to kind of upfront costs that will reverse itself at the time? So, if you could just talk a little bit more in detail about the ongoing businesses, and how they are doing.

Sure. Yes, as you say, business comprise of two different types of business, one is a very stable or asset-based businesses. Another one is very marketable business. Regarding with Corporate Finance businesses and the Automobile businesses and the Rental businesses, for those areas we think in the last… in the second half of fiscal year… for example. our Corporate Finance segment will show another steady growth in terms of the profits and the asset base because… of course, there are some trends in the Japanese economy… in the downtrend in the Japanese economy, but our main client or SMEs, some of them are very much active in funding the operations. That's why we think we can expand our operations in Corporate Finance segment. And regarding our Automobile businesses, although the recent results cannot be shown in the same way with last couple of years, it is mainly because of the… for example, for the last couple of years Automobile business segment has shown a big profit expansion on… due to a mandate of the different rental businesses or leasing assets. So, right now, in terms of the profit or income, we cannot show any big growth, but in the second half we think continuously this segment will expand. As Mr. Takamatsu mentioned, our competitive strength still works very well in this competitive market. So of course, we cannot show you probably the very weak increase of the profit, but at least steady growth can be expected. In terms of the Rental businesses or Insurance businesses, those segments will also show a very steady growth in the second half of the fiscal year. Unidentified Analyst – Putnam Investments: Okay. Thank you.

[Operator Instructions]. And our next question comes from Fred Barker. Please state your company name.

Mccanna Capital [ph]. Could you shed a little light on what to expect in terms of the Real Estate business in the second half in terms of delivery… or completions of condominiums, etcetera? And also, how the sales in the… I believe you have… in your discontinued operations you have sales from operating leases as opposed to your Real Estate segment. How are these assets different?

Can you give us the second half of your question, it kind of got cut off? Sorry, Fred.

Okay. Under the discontinued operations… profits from discontinued operations, I understand these come from the operating lease business. And so, I was wondering if you could explain to me how the assets are different between those in the operating lease and those in your real estate book?

Okay. Regarding with your first question about the Real Estate businesses for the second half of the current fiscal year, for example, in the areas over the condominium businesses, as I said little bit, especially in the fourth quarter, we have a very big project, which would be completed and delivered to the client. So, in that sense for the first half year, we experienced the same level… almost the same level of the profit compared with previous fiscal year. But for the full year, we think in the area of condominium business project, we’ve regained more profits than the previous year. And for the area of the… for example, the sale of the real estate [inaudible], we don't have any fixed figure for all types of the buildings. But for some areas, we have already started to prepare the sale of the existing offices, which we are now leasing. So, in that sense… at this moment we can't say any fixed figures about the profit from the sale of the office buildings others. But most probably, through the full year… you can most probably see at the end of the fiscal year the highest profit from this segment. Regarding with the second question, in the case of the… for example, after the sale of the office buildings, still we have some relationship with the client, in this case, which is recorded as a--.

Gain on the sale of real estate and offerings.

And on the other hand, in the case of the no relationship after the sale of the buildings or offices, those profits is recorded in the area of the bottom line after the pre-tax profits. Can you understand?

Yes. Can you give us some color as to… in terms of your real estate business, what is the trend between third quarter and fourth quarter? Condominiums I know are… is a seasonal business that tends to concentrate in the fourth quarter, but in the third quarter what should we be the expecting? Is it going to be fairly consistent year-over-year with last third quarter, or more, or less, what can we expect?

At this moment, we can't say any ideas, but most probably I think for the third quarter, you will be able to see a very big profit from this segment. For the fourth quarter, you can see more profit from this segment.

Okay. All right, thank you.

Thank you.

[Operator Instructions]. And we have a question from Huzuki Suzuki [ph]. Please state your company name.

Kylin Management [ph]. Hi, thank you very much for having this opportunity. I have a question about your credit cost. I think you raised… increased the credit cost guideline to 30 billion yen from 20 billion yen this year. And I am wondering if there was any big borrowers who was in tough situations, or is generally SMEs’ credit costs is increasing. Could you explain in a little bit more detail, for example, any… was there any big borrowers for any specific products like a loan or finance lease or operating lease? I would like to know the details of this increase.

Okay. Let me explain a little bit about our credit cost for the first half. We didn't realize any big losses for a certain company, but in general, as you probably know, in Japan, recently some of the SMEs have become a little bit difficult in funding the operations or continuing their businesses. So, as you know, our main clients are the SMEs, and as our assets increased our client base has expanded. And so, we have some new provisions for credit costs. And so, of course in general, the pachinko industry or consumer finance industries, we have experienced some losses and… or we have some difficulties. So, we have recorded some additional provisions compared to the same period over the last fiscal year. But as I said, as a whole, we think we can manage our credit risk properly. And although we will have another non-performing loan, but as you know, while full year mostly has been very well characterized rare assets or some securities. So, in that sense, at the final base, we don't think we will have some big losses from those areas. So, investments… in general, as you know Japanese economy right now is struggling from new figures and our client base or SMEs have some difficulties. But our main target is the upper level of our SMEs in Japan. In that sense, compared with other financial institutions we think we can limit or reduce our risk.

Do you think this 10 billion additional credit cost is mainly from loan business?

Yes. In the area of the Corporate Finance segment, at this moment, we don't have any big differences between the loan businesses and the leasing businesses.

Yes, I am just wondering if your corporate loan balance is only 2.2 trillion yen, a 10 billion yen increase of credit cost is not small.

You're saying about the increase of the full-year provisions?

Yes.

Compared with our initial expectations about provisions for the full year, the economy and some limited industries, the season has changed we think. In that sense, we think we should more carefully monitor the market or industries.

I see. So, then, do you think your balance of this loan business is not growing so fast as before or do you think you can charge higher interest rate?

Well, of course as the Japanese economy or market conditions have changed we think we should increase our spread to the client and judging from the past experience we think we can do that.

Thank you.

And as a whole, this segment, as you know will not show any substantial increase in terms of the profit to our assets, but we believe this segment will show a steady growth in terms of the assets to our profit.

Okay. Thank you very much.

Thank you, Suzanne.