consolidated financial report for the fiscal year ended

Fuyo General Lease FY10 of 26

Consolidated Financial Report for the Fiscal Year

Ended March 31, 2010 (Fiscal 2010)

(Member of Financial AccountingStandards Foundation)

May 7, 2010 Company Fuyo General Lease Co., Ltd. Stock Exchange Listing First Section, Tokyo Ticker 8424 Head office Tokyo (URL http://www.fgl.co.jp/) President & CEO Takashi Sato Inquiries, Person in Charge Shunzo Yoneda Managing Director Tel: +81-3-5275-8800 Date of Shareholders’ Meeting June 24, 2010 (Planned) Date of payout of dividend June 25, 2010 (Planned)Date of issue of audited financial statement June 28, 2010 (Planned)

(Figures in millions are rounded down to the nearest million yen)

1. Consolidated Operating Results for Fiscal 2010 (April 1, 2009 – March 31, 2010) (1) Consolidated Operating Results (Percentage figures represent comparisons with fiscal 2009 full-year results)

Total Revenues Operating Income Ordinary Income Net Income (¥ millions) ％ (¥ millions) ％ (¥ millions) ％ (¥ millions) ％

FY2010 382,042 2.6 21,742 36.0 23,636 36.0 11,432 14.4FY2009 372,309 (6.7) 15,989 (1.1) 17,377 (3.1) 9,996 (17.2)

Net Income per Share Diluted Net Income per Share

Return on Shareholders’

Equity

Ordinary Income-to-Equity

Ratio

Operating Income-to-Net

Sales Ratio (¥) (¥) ％％％

FY2010 378.98 377.84 12.3 1.4 5.7FY2009 330.56 330.27 11.9 1.2 4.3Reference: Equity in earnings of affiliates FY2010 ¥467 million FY2009 ¥439 million

(2) Consolidated Financial Position Total Assets Net Assets Shareholders’ Equity Ratio Net Assets per Share (¥ millions) (¥ millions) ％ (¥)March 31, 2010 1,670,931 113,089 6.0 3,315.76March 31, 2009 1,693,792 98,012 5.1 2,858.58Reference: Shareholders’ Equity March 31, 2010 ¥100,025 million March 31, 2009 ¥86,234 million

(3) Consolidated Cash Flows Cash Flows From

Operating Activities Cash Flows From

Investing ActivitiesCash Flows From

Financing Activities Period-end Cash and

Cash Equivalents (¥ millions) (¥ millions) (¥ millions) (¥ millions)FY2010 (597) (7,994) (10,333) 78,514FY2009 (69,911) (31,993) 191,832 97,372

2. Cash dividends Dividend per share Dividends

in total (full year)

Dividend payout ratio

(consolidated)

Dividends on net assets

(consolidated)Effective date End of

first quarter

End of second quarter

End of third

quarterYear-end Full year

(¥) (¥) (¥) (¥) (¥) (¥ millions) ％％

FY 2009 － 27.00 － 27.00 54.00 1,632 16.3 1.9FY 2010 － 27.00 － 31.00 58.00 1,749 15.3 1.9FY 2011 (planned) － 29.00 － 29.00 58.00 15.9


3. Forecast for Fiscal 2011 (April 1, 2010 – March 31, 2011) (Percentage figures represent comparisons with fiscal 2010 full-year results; percentage figures for the interim period (year-to-date) represent comparisons with the same period of the prior fiscal year)

Total Revenues Operating Income Ordinary Income Net Income Net Income per Share

(¥ millions) ％ (¥ millions) ％ (¥ millions) ％ (¥ millions) ％ (¥)Consolidated interim period (year-to-date)

200,000 7.8 9,500 11.3 10,500 7.9 5,500 34.0 182.32

Full Year 400,000 4.7 20,000 (8.0) 22,000 (6.9) 11,000 (3.8) 364.64

4. Other Information (1) Changes to the consolidation status of major subsidiaries during the period: No

New: No (Company name: ) Excluded: No (Company name: ) (2) Changes in accounting principles, procedures, and method of presentation used to prepare the consolidated

financial statements (items stated in changes in significant information regarding the preparation of consolidated financial statements)

1) Changes in accord with revisions to accounting standards Yes 2) Changes other than the above Yes

(3) Number of outstanding shares at period-end (common shares) (i) Number of outstanding shares at period-end (including treasury stock) March 31, 2010 30,287,810 shares March 31, 2009 30,287,810 shares(ii) Number of shares of treasury stock March 31, 2010 121,051 shares March 31, 2009 120,951 shares

Reference: Non-Consolidated Results 1. Non-Consolidated Operating Results for Fiscal 2010 (April 1, 2009 – March 31, 2010) (1) Non-Consolidated Operating Results (Percentage figures represent comparisons with fiscal 2009 full-year results)

Total Revenues Operating Income Ordinary Income Net Income (¥ millions) ％ (¥ millions) ％ (¥ millions) ％ (¥ millions) ％

FY2010 315,916 1.8 15,085 44.2 15,820 50.0 8,424 23.6FY2009 310,264 (14.4) 10,459 (0.6) 10,548 (1.7) 6,814 (13.8)

Net Income per Share Diluted Net Income

per Share (¥) (¥)FY2010 279.26 278.42FY2009 225.34 225.15

(2) Non-Consolidated Financial Position Total Assets Net Assets Shareholders’ Equity Ratio Net Assets per Share (¥ millions) (¥ millions) ％ (¥)March 31, 2010 1,098,245 81,059 7.4 2,680.36March 31, 2009 1,113,435 71,626 6.4 2,371.25Reference: Shareholders’ Equity March 31, 2010 ¥80,857 million March 31, 2009 ¥71,533 million

*The above forecasts are current projections and may change due to various factors.


1. Business Results

(1) Analysis of Business Results

i) Business Overview

During the fiscal year ended March 31, 2010, the Japanese economy recovered moderately as the global economy

continued to recover, particularly in Asia, with exports on the rise and corporate earnings showing signs of

improvement amid an accommodative financial environment. Corporate capital expenditure, employment, and

incomes appear to be bottoming out, partly due to the economy rebounding sharply after deteriorating in the wake of

Lehman Brothers’ collapse, but overcapacity remains unresolved, which paints a languid outlook for the foreseeable

future.

Harsh conditions persisted in the leasing industry also, reflected in a year-over-year decline in lease transaction

volume, according to statistics released by the Japan Leasing Association, amid a sizeable drop in private-sector

capital expenditure.

Under these circumstances, the Group implemented various measures pursuant to the basic strategies laid out in

its medium-term management plan for fiscal years 2009 through 2011. These basic strategies are to enhance the

Group’s operating base, reinforce its low-cost operating structure, upgrade risk management, and enhance and

strengthen its management base. Implementation of these measures is guided by the medium-term management

plan’s basic policies: (1) Strengthen Group management capabilities to build a corporate foundation that will

surmount changes in the business environment, (2) Gain appreciation from our stakeholders through stable

performance and business growth, and (3) Stress corporate social responsibility through compliance and the

development of strong human resources.

• Enhance the Operating Base

To meet various customer demands relating to operating leases, we have bolstered cooperation between Group

affiliates to promote customer-specific leasing solutions.

We have worked to expand various products and services that dovetail with customer needs, such as offering

customer-specific solutions for various types of equipment, including IT equipment such as PCs, industrial machine

tools, medical devices, transportation equipment, and mechanical equipment for service industries. We have also

strengthened and expanded our Web-based data supply services, which comply with the new lease accounting

standards.

The entire Group worked in unison to strengthen the operating base. Amid declining capital expenditure, we

actively promoted various solutions in high-growth markets with high equipment investment needs, including the

communication and media industries, energy and environment industries, and semiconductor and liquid crystal

industries. These efforts were driven by collaboration between specialized business divisions and our network of

branch offices, and supported by the corporate sales administration division. Additionally, the consortium-based

ESCO (Energy Service Company) project for Okinawa Hokubu Hospital that we participated in was awarded the

2009 Grand Prize for Excellence in Energy Efficiency and Conservation.

We also worked to strengthen our operating base in the Mizuho market by instituting an even more fine-grained,

flexible approach in the aim of bolstering cooperation with Mizuho Financial Group companies.


We also worked to harness the expertise of affiliates to boost Group earnings power. For example, we continued

to collaborate with Sharp Finance Corporation and Fuyo Auto Lease Co., Ltd.; we worked with local subsidiaries in

the U.S. and Hong Kong to bolster financial services for corporations making inroads into overseas markets; and we

utilized the Tachikawa Reuse Center, run by Fuyo Lease Sales Co., Ltd., to step up sales of used equipment on

which leases have expired.

Despite the market slump, we still secured a number of real estate lease contracts, one of our Group’s fortes, and

we looked at developing new real estate leasing schemes. In our financing operations, we continued carefully

screening prospective deals as a means of limiting our exposure in this area.

• Reinforce Low-cost Operating Structure

In response to financial market stabilization, we worked to improve financing stability and obtain competitive

funding rates on a group-wide basis by increasing the number of financial institutions we deal with, securing an

appropriate level of direct financing, and practicing appropriate asset-liability management (ALM). Sharp Finance

Corporation, a consolidated subsidiary, newly acquired a debt rating and subsequently issued commercial paper for

the first time in December 2009.

We continued to streamline the operations of the Group, including its affiliates. We consolidated sales offices’

back-office operations, expanded the number of organizational units for which back-office operations are insourced,

and took advantage of shared know-how. We also continued transitioning to paperless operations, improved the

operability of our computer systems, and expanded the contracting business of clerical contracting subsidiaries.

• Upgrade Risk Management

Amid sluggish business performance, we worked to upgrade risk management by strengthening various risk

management practices, by adhering faithfully to basic principles when considering deals or making credit decisions,

and by striving to avoid bad debts and minimize bad-debt losses through rigorous credit risk management.

• Enhance and Strengthen Management Base

We maintained and enhanced the framework through which we have thus far ensured reliable financial reporting by

further upgrading and improving our internal control system, which complies with the Financial Instruments and

Exchange Law. We also adapted appropriately to new standards changes, and we enhanced budgetary control by

improving our budgeting and planning processes.

We reinforced compliance on a group-wide basis by ensuring compliance with laws and social standards as well

as by enhancing our training programs on a group-wide basis and periodically holding internal conferences.

We continued to develop a strong human resources base that will support Group management and operations, and

we worked to enhance our personnel development and support system while creating rewarding workplaces.

Additionally, we formulated a new business continuity plan (BCP) to prepare against infectious diseases such as

H1N1 influenza.

We continued to make societal and environmental contributions through our operations. All of our major

consolidated subsidiaries had obtained ISO 14001 certification as of June 2009, when Japan Mortgage Co., Ltd.,


was approved for inclusion in the scope of our ISO 14001 certification. We also donated emissions credits to the

government and promoted the adoption of eco-vehicles into our fleet of company cars.

Consolidated operating results are as follows.

Consolidated total new executed contracts volume in the fiscal year ended March 31, 2010, was ¥525,365 million,

down 4.0% year on year, and consolidated operating assets (after subtracting the deferred profit on installment sales)

at March 31, 2010, stood at ¥1,407,392 million, down ¥16,081 million, or 1.1%, from a year earlier.

Consolidated total revenues increased 2.6% to ¥382,042 million, consolidated operating income increased 36.0%

to ¥21,742 million, consolidated ordinary income increased 36.0% to ¥23,636 million, and consolidated net income

increased 14.4% to ¥11,432 million.

As we announced on December 25, 2009, we booked an extraordinary loss of ¥3,350 million in conjunction with

a settlement reached on that date with regard to a lawsuit from Yagami Co., Ltd., on property sale/purchase

payments and other matters.

ii) Segment information

Consolidated results for each segment for the fiscal year ended March 31, 2010, are as follows. Revenues for each

segment are those from customers, and operating income for each segment is operating income before elimination

and corporate.

Lease

In the lease segment, total new executed contracts volume increased 6.0% versus the previous fiscal year to

¥419,393 million, and operating assets increased 1.0% from the end of the previous fiscal year to ¥1,053,616 million.

As a result, segment revenues increased 4.7% year on year to ¥326,682 million, and operating income increased

11.5% to ¥20,344 million.

Installment sales

In the installment sales segment, total new executed contracts volume decreased 6.5% versus the previous fiscal

year to ¥38,249 million, and operating assets decreased 8.0% from the end of the previous fiscal year to ¥75,823

million. As a result, segment revenues declined 9.2% year on year to ¥39,286 million, and operating income

increased 41.4% to ¥1,739 million.

Loans

In the loans segment, total new executed contracts volume decreased 38.3% versus the previous fiscal year to

¥67,329 million, and operating assets decreased 6.6% from the end of the previous fiscal year to ¥272,745 million.

As a result, segment revenues fell 16.0% year on year to ¥7,973 million, and operating income increased 59.2% to

¥2,765 million.


Other

In the “Other” segment, total new executed contracts volume decreased 75.5% versus the previous fiscal year to

¥393 million, and operating assets dipped 5.3% from the end of the previous fiscal year to ¥5,205 million.

Nevertheless, segment revenues rose 7.5% year on year to ¥8,101 million and operating income grew 36.2% to

¥4,008 million.

iii) Outlook for fiscal 2011

Looking ahead, although we anticipate the export-driven economic recovery in Japan to continue for the time

being, we expect the economy to lack strength, and a recovery in capital expenditure is still a way off due to the

yen’s strength and concerns about deflation. The leasing industry’s outlook remains murky amid the inclement

operating environment.

Amid such circumstances, we have steadily implemented measures laid out in our three-year management plan,

which was partly revised in response to the recent changes in economic conditions and various trends in the Group’s

operating environment. We remain fully committed to building a corporate foundation allows us to thrive amid

changes in the business environment.

For fiscal 2011, we expect consolidated revenues of ¥400,000 million, an increase of 4.7% compared with fiscal

2010; consolidated operating income of ¥20,000 million, down 8.0%; consolidated ordinary income of ¥22,000

million, down 6.9%; and consolidated net income of ¥11,000 million, down 3.8%. Despite an upward trend in

revenues on the back of firm levels of new lease contracts through previous fiscal year, the lower income forecasts

reflect conservative projections with regard to bad debt-related expenses.

(2) Financial Position

i) Assets, liabilities, and net assets

Operating assets at the end of fiscal 2010 (March 31, 2010), were down 1.1% from the end of the previous fiscal

year (March 31, 2009) to ¥1,407,392 million, and total assets decreased 1.4% from the end of the previous fiscal

year to ¥1,670,931 million. Interest-bearing debt decreased 3.5% from the end of the previous fiscal year to

¥1,434,033 million.

Total shareholders’ equity increased 11.2% from the end of the previous fiscal year to ¥96,955 million due to the

retention of earnings. Net assets at March 31, 2010, were up ¥15,077 million, or 15.4%, from the end of the previous

fiscal year to ¥113, 089 million.

ii) Cash Flows

Cash and cash equivalents at the end of fiscal 2010 (March 31, 2010) were ¥78,514 million, a decrease of ¥18,858

million from the end of the previous fiscal year (March 31, 2009). The breakdown of cash flows is as follows.

Cash flows from operating activities

Operating activities used net cash of ¥597 million, compared with ¥69,911 million in the previous fiscal year.


Despite income before income taxes of ¥20,605 million, a decrease of ¥25,148 million in lease receivables and

investment assets, and a decrease of ¥22,213 million in operating loans, the net outflow mainly reflects ¥60,820

million used for the purchase of leased assets and a ¥41,929 million decrease in lease obligations.

Cash flows from investing activities

Investing activities used net cash of ¥7,994 million, compared with cash used by investing activities of ¥31,993

million in the previous fiscal year. Outflows included ¥1,029 million in purchases of own-used assets and ¥6,205

million in purchases of investment securities.

Cash flows from financing activities

Financing activities used net cash of ¥10,333 million, compared with cash provided of ¥191,832 million in the

previous fiscal year. Outflows included a ¥17,500 million net decrease in commercial paper, ¥123,141 million in

repayments of long-term loans from banks and other financial institutions, a net decrease of ¥54,400 million in

payables under securitized lease receivables, and ¥54, 736 million in repayments of payables under fluidity lease

receivables and installment sales trade receivables. Cash was mainly provided by ¥144,303 million in proceeds from

long-term loans from banks and other financial institutions and ¥89,929 million in proceeds from payables under

fluidity lease receivables and installment sales trade receivables.

(3) Basic policy on the distribution of earnings and fiscal 2010 and 2011 dividends

The Group’s basic policy is to increase shareholders’ equity to create a resilient management base and a stronger

financial position, while returning profits to shareholders through continuous payment of a stable dividend over the

long term, taking into consideration operating results, targeted performance indicators, and other factors.

Going forward, the Group will use retained earnings to fund the acquisition of quality operating assets and in

other ways to strengthen its management base. While adhering to the aforementioned policy, the Group is

determined to look positively at distributing earnings in line with operating results to reward shareholders for their

support and to meet their expectations.

In accord with the above policy, we have declared a year-end dividend of ¥31 per share for fiscal 2010, up ¥4

from our forecast of ¥27per share. We thus plan to pay an annual dividend (including the interim dividend) of ¥58

per share, up ¥4 from the previous fiscal year.

We plan to pay a total annual dividend for fiscal 2011 of ¥58 per share (comprising an interim dividend of ¥29

and year-end dividend of ¥29 per share).

(4) Risks in Business Operations

Listed below are the main factors that could pose a risk to the development of the Group’s business and have a

significant impact on the decisions of investors.

Forward-looking statements appearing here represent management’s judgment at the time of announcement of this

release. The following is not an exhaustive list of all the risks that could affect an investor’s decision to invest in the

Company’s shares.


i) Impact of Capital Expenditure Trends and Other Changes on Business Results

Lease transactions and installment sales, which are the businesses of the Group, are two means by which

customers finance capital expenditures. While there are temporary discrepancies, the amount of private-sector

capital expenditure and lease capital expenditure are closely correlated. The Group is focusing on expanding its

operating foundation and increasing contracts by making various proposals mindful of customer diversity and latent

needs. Nevertheless, the Group’s business results could be affected by trends in corporate capital expenditures.

ii) Impact of Credit Risk on Business Results

The Group works to maintain and improve the quality of its assets by strictly managing credit risk to minimize

losses caused by counterparty bankruptcy and other occurrences. However, credit is extended to counterparties over

the medium to long term, with lease agreements averaging around five years. Therefore, bankruptcy of

counterparties during the credit period could make it difficult to collect lease rent and other money associated with

some assets that are subject to credit risk.

The Group quantitatively evaluates credit risk and provides adequate reserves in each fiscal period. For this, the

Group conducts self-assessments of its assets in accord with standards applied by banks and other financial

institutions and based on Industry Audit Committee Report No. 19, “Temporary Treatment for Accounting and

Auditing of Application of the Accounting Standards for Financial Instruments in the Leasing Industry,” issued by

the Japanese Institute of Certified Public Accountants (JICPA).

In accord with this self-assessment, the group calculates allowances for doubtful accounts. The Group sets aside a

general allowance for estimated losses based on past bad debt experience as well as specific allowances calculated

based on the ability to collect individual accounts. The entire of the combined total of the general allowance and

specific allowances is recorded in the allowance for doubtful accounts.

However, an increase in the risk of collection due to deterioration in counterparties’ business as a result of the

economic environment and future changes or other developments could necessitate the provision of additional

allowances for doubtful accounts to counter the increase in credit risk. This could adversely affect the Group’s

business results.

iii) Impact of Changes in Interest Rates and Financing on Business Results

The Group procures the funds to purchase properties for leasing or installment sales to customers mainly from

financial institutions and markets, and therefore business results could be affected by future interest-rate

fluctuations.

Because of its sound financial standing, the Company has obtained good ratings from multiple credit rating

agencies. However, if a rating agency downgrades the Company’s rating or announces it is considering a downgrade

due to deterioration in our finances or other factors, it would be difficult for the Company to procure necessary

funds because access to commercial paper and other preferred financing methods would be limited. The Company

would also be forced to borrow from banks at higher interest rates than would normally apply. Ultimately, this could

adversely affect the Company’s business results.


The Company watches interest rate movements and strives to manage such risks appropriately by constantly

monitoring the gap between asset management and financing, controlling risk associated with interest rate

fluctuations (market risk), and holding Asset-Liability Management Committee meetings, where policies on future

funding activities are discussed.

iv) Competition in the Leasing Industry

There has been a decline in recent years in the number of companies engaged in leasing operations as industry

restructuring has progressed. Nevertheless, there are still 265 member companies of the Japan Leasing Association

(as of April 1, 2010), making for a harsh competitive environment in the leasing industry in Japan.

The Company work to improve its price-based competitiveness through stable, low-interest financing and optimal

financing patterns, with a focus on securing strong financing. Concurrently, the Company is focusing on

value-added services that contribute to greater convenience for customers. Through these actions, the Company is

working to set itself apart from other companies and to enhance its competitiveness. However, intensification in

competition could have an adverse effect on the Company’s business results.

v) Impact of Changes in Regulatory Systems on Business Results

The Group operates businesses that are subject to laws, tax regulations, accounting standards, and other

regulatory systems currently in effect. The Group’s business results could be affected by significant changes in these

systems.

vi) Other Business Risks

A number of other business risks could also affect the Group’s business results. Without limitation, these include

administrative risk from inadequate business processing; systems risk such as the risk of breakdown or malfunction

of computer systems used extensively in executing business operations; residual value risk, the risk that the initially

estimated residual value of a leased asset is lower than expected for whatever reason; price fluctuation risk, the risk

of a decline in the value of investment securities holdings; and compliance risks that may result in penalties and/or

loss of social credibility if the laws and standards are not adhered to.


2. Management Policies (1) Basic Management Policies of the Company The Group has four management philosophies, as shown below. Guided by these philosophies, it works to raise its corporate value by striving to generate higher earnings. This is being achieved by tackling various issues, building a stable operating base, creating a sound financial position, and promoting greater efficiency.

Management Philosophy - Support our customers’ business activities and contribute to the community through the leasing business - Always give first priority to the customer and provide the best service - Pursue creativity and innovation, aiming to become a corporation valued by its shareholders and by market participants - Foster self-motivated, energetic employees, and create a rewarding workplace Management Objectives A strong leasing company, generating the best service for its customers - Strong sales capability - Strong administrative capability - Strong financial structure - Strong human resources Management Policies - Strengthen Group management capabilities to build a corporate foundation that surmounts changes in the business environment - Gain appreciation from our stakeholders through stable performance and business growth - Stress corporate social responsibility (CSR) thorough compliance and the development of strong human resources (2) Targeted Performance Indicators Given recent changes in the economic environment and various trends and developments facing the Group, the Company has partially revised measures and management goals laid out in its medium-term management plan for fiscal years 2009 to 2011. Target figures for the final fiscal year of the plan, ending March 31, 2011, and actual results for the fiscal year ended March 31, 2010 are as follows. Consolidated account item FY2010 Actual FY2011 Targets

1 Operating assets ¥1,407.4 billion ¥1,470.0 billion

2 Shareholders’ equity ¥97.0 billion ¥106.0 billion or higher

3 Shareholders’ equity ratio 6.0％ 6.5％or higher 4 ROA 1.4％ 1.4％or higher Note: 1. Consolidated shareholders’ equity = common stock + capital surplus + retained earnings + treasury stock 2. ROA = Ordinary income / Total assets (3) Company Medium-term Management Strategies and Pressing Issues The three-year management plan ending on March 31, 2011 calls for us to focus on the following basic strategies. i) Enhance Our Operating Base Restructure the operating base and create products that respond to changes in the environment The need for leased equipment is firmly embedded in the IT equipment market. While rebuilding our management base in this market, we intend to enhance outsourcing and related services through our unique Internet-based data service, FLOW, develop transaction schemes and products geared to increasingly diverse customer needs and various changes in the environment, and implement other such initiatives to enhance and strengthen our management base.


We also intend to boost efficiency at the Tachikawa Reuse Center, run by Fuyo Lease Sales Co., Ltd., and improve earnings power by selling used equipment on which leases have expired and other means. Strengthen business with small and medium-sized companies We will intensify sales efforts in the retail market through collaboration with Sharp Finance Corporation, and we will continue working to increase business from outstanding small and medium-sized companies, with chief emphasis on Mizuho Bank’s corporate customers. Strengthen specialized business divisions and promote greater cooperation with branch offices We will continue stepping up efforts in markets where capital expenditure is anticipated, and we plan to utilize our specialized business divisions’ expertise and our network of branch offices to actively promote solutions geared to market changes. We also aim to expand incoming information flows by strengthening cooperative ties with sales channels in the Mizuho market in pursuit of high-quality deals. Through such means, we aim to more efficiently expand our operating base. Strengthen real estate leasing We will devote even greater effort to real estate leases, one of our strategic products, as well as actively develop new leasing schemes. In our financing operations, we will continue to focus primarily on high-quality deals. Enlarge business domains by developing and bolstering products and services In the aim of boosting consolidated earnings, we will continue bolstering our fee businesses, enhance cooperation with consolidated subsidiaries in Japan, including Fuyo Auto Lease and Sharp Finance Corporation, and work with overseas subsidiaries to provide financing support for corporations making inroads into overseas markets. We also intend to expand the Group’s business domains by continuing to develop new products and investigate possible entries into new businesses, as well as through M&As. ii) Reinforce Low-cost Operations We seek to secure stable financing and cost-competitive funding rates on a consolidated basis. With this objective in mind, we will endeavor to appropriately balance the objectives of maintaining financing stability and obtaining more cost-competitive rates, and we will also enhance and strengthen our asset-liability management (ALM) practices.

We will continue to streamline and lower costs associated with sales-office clerical work, promote paperless operations, and adopt various IT tools. We will also implement various measures in each of our management departments to promote efficiency of internal Group operations. iii) Upgrade Risk Management We intend to upgrade risk management through measures that include the following. We will strengthen credit risk management as a consolidated group to prevent bad debts from arising and minimize bad-debt losses from those that do occur, and we will constantly review and improve operating/management frameworks and procedures related to the various risks that we face, including by enhancing our business continuity plans for disasters and other emergencies. iv) Enhance and Strengthen Management Base In addition to ensuring reliable financial reporting by improving and enhancing our internal control system, we will respond appropriately to standards changes and the introduction of new standards and work to enhance budgetary control.

We take seriously the improper actions that we disclosed on December 25, 2009. Based on investigations into the cause of the incident, we have devised measures to prevent recurrence and will spare no effort in implementing them. To ensure rigorous compliance, we will further intensify efforts to ensure that our actions do not contravene corporate ethical and social standards.

To further enhance and strengthen our management base, we will enhance our personnel and training programs in the aim of developing a strong human resources base that will support Group management and operations, and we will continue striving to make societal and environmental contributions through our operations.


3. Consolidated Financial Statements (1) Consolidated Balance Sheets

Amount (¥ millions)

As of March 31, 2009 As of March 31, 2010

Assets

Current assets

Cash and time deposits 97,418 78,595

Installment sales trade receivables 84,757 78,059

Lease receivables and investment assets 969,859 942,859

Accounts receivable - operating loans 269,049 246,988

Accounts receivable - other loans to customers 21,383 24,157

Operational investment securities 5,498 5,205

Other operating assets 21,586 9,046

Lease and other trade receivables 25,934 31,511

Marketable securities 40 －

Deferred tax assets 3,795 3,815

Other 26,850 24,042

Allowance for doubtful receivables (11,924) (9,375)

Total current assets 1,514,250 1,434,907

Fixed assets

Tangible fixed assets

Leasing assets

Leased assets 69,200 107,512

Advances on purchases of property and equipment for lease 99 2,048

Total leasing assets 69,299 109,560

Own-used assets

Own-used assets 1,124 1,291

Total own-used assets 1,124 1,291

Total tangible fixed assets 70,424 110,852

Intangible fixed assets

Leasing assets

Computer program leased to customers 4,496 3,244

Total leasing assets 4,496 3,244

Other intangible fixed assets

Goodwill 8,365 7,954

Other 1,663 1,741

Total other intangible fixed assets 10,028 9,695

Total intangible fixed assets 14,525 12,940




Investments and other assets

Investment in securities 32,707 45,040

Long-term receivables 20,747 19,468

Prepaid pension cost 762 764

Deferred tax assets 1,644 903

Other 39,616 46,717

Allowance for doubtful receivables (885) (663)

Total investments and other assets 94,592 112,231

Total fixed assets 179,542 236,023

Total assets 1,693,792 1,670,931




Liabilities

Current liabilities

Notes and accounts payable-trade 47,690 50,084

Short-term loans from bank and other financial institutions 362,291 371,101

Current portion of long-term loans from bank and other financial institutions 111,372 139,104

Commercial paper 309,100 291,600

Payables under securitized lease receivables 82,600 28,200

Current portion of payables under fluidity long-term lease receivables and installment sales trade receivables 30,634 50,553

Lease obligations 269,146 227,347

Mortgage securities under repurchase agreement 49,275 45,359

Income taxes payable 2,228 5,043

Deferred profit on installment sales 2,325 2,235

Accrued bonuses 1,320 1,365

Provision for directors’ bonuses 120 115

Provision for future lease payments － 31

Reserve for loss on guarantees 108 276

Other 17,537 19,529

Total current liabilities 1,285,751 1,231,949

Long-term liabilities

Long-term loans from bank and other financial institutions 212,310 205,794

Payables under fluidity long-term lease receivables and installment sales trade receivables 59,362 74,636

Lease obligations 268 335

Deferred tax liabilities 552 1,697

Accrued retirement benefits for employees 1,212 682

Accrued retirement benefits for directors and corporate auditors 109 133

Provision for automobile maintenance costs 495 549

Reserve for loss on guarantees 2,366 2,089

Other 33,350 39,974

Total long-term liabilities 310,028 325,892

Total liabilities 1,595,780 1,557,841




Net assets

Shareholders’ equity

Common stock 10,532 10,532

Capital surplus 10,416 10,416

Retained earnings 66,413 76,216

Treasury stock, at cost (209) (209)

Total Shareholders’ equity 87,152 96,955

Valuation and translation adjustments

Net unrealized gain on available-for-sale securities 339 4,167

Deferred losses on hedges (295) (201)

Foreign currency translation adjustments (962) (895)

Total valuation and translation adjustments (917) 3,069

Subscription rights to shares 93 201

Minority interests 11,684 12,862

Total net assets 98,012 113,089

Total liabilities and net assets 1,693,792 1,670,931


(2) Consolidated Statements of Incomes Amount (¥ millions)

FY2009 FY2010

(April 1, 2008 – (April 1, 2009 –

March 31, 2009) March 31, 2010)

Total revenues 372,309 382,042

Total costs 327,014 333,488

Gross profit 45,294 48,553

Selling, general and administrative expenses 29,305 26,811

Operating income 15,989 21,742

Other income

Interest income 79 179

Dividend income 640 565

Foreign exchange gains － 57

Income from other investments 262 571

Amortization of negative goodwill 778 778

Equity in earnings of affiliates 439 467

Other 141 126

Total other income 2,341 2,746

Other expenses

Interest expenses 728 671

Loss on investments in partnership 171 153

Losses on other investments 30 6

Other 21 21

Total other expenses 953 852

Ordinary income 17,377 23,636

Extraordinary gains

Gain on transfer of receivables 160 －

Bad debts recovered 431 302

Reversal of provision for loss on guarantees － 91

Gain on sale of marketable and investment securities 4 6

Gain on sales of golf memberships － 4

Gain on revision of retirement benefit plan － 181

Gain on reversal of subscription rights to shares － 32

Gain on adjustment for changes of accounting standard for lease transactions 2,076 －

Gain on change in standard for recording vehicle ownership costs 324 －

Total extraordinary gains 2,997 619



FY2009 FY2010

(April 1, 2008 – (April 1, 2009 –

March 31, 2009) March 31, 2010)

Extraordinary losses

Loss on transfer of receivables － 4

Loss on sale of marketable and investment securities 26 0

Loss on devaluation of marketable and investment securities 2,269 213

Impairment loss － 21

Loss on disposal of own-used assets 10 55

Loss on liquidation of affiliates 2 2

Loss on devaluation of golf club memberships and other 7 3

Settlement package － 3,350

Loss on change in standard for recording automobile maintenance costs 403 －

Total extraordinary losses 2,719 3,650

Income before income taxes and minority interests 17,655 20,605

Income taxes - current 7,015 8,233

Income taxes - deferred (584) (460)

Income taxes 6,430 7,772

Minority interests 1,228 1,399

Net income 9,996 11,432


(3) Consolidated Statements of Shareholders’ Equity Amount (¥ millions)

FY2009 FY2010

(April 1, 2008 – (April 1, 2009 –

March 31, 2009) March 31, 2010)

Shareholders’ equity

Common stock

Balance at beginning of year 10,532 10,532

Changes during the year

Total changes during the year －－

Balance at end of year 10,532 10,532

Capital surplus



Total changes during the year －－


Retained earnings



Cash dividend (1,574) (1,629)

Net income 9,996 11,432

Total changes during the year 8,421 9,803


Treasury stock, at cost

Balance at beginning of year (2) (209)


Purchase of treasury stock (207) (0)

Total changes during the year (207) (0)

Balance at end of year (209) (209)

Total shareholders’ equity




Net income 9,996 11,432






FY2009 FY2010

(April 1, 2008 – (April 1, 2009 –

March 31, 2009) March 31, 2010)

Valuation and translation adjustments

Net unrealized gain on available-for-sale securities

Balance at beginning of year 2,675 339


Changes during year other than shareholders’ equity (net amount) (2,335) 3,827

Total changes during the year (2,335) 3,827

Balance at end of year 339 4,167

Deferred losses on hedges



Changes during year other than shareholders’ equity (net amount) (137) 93

Total changes during the year (137) 93


Foreign currency translation adjustments



Changes during year other than shareholders’ equity (net amount) (882) 66

Total changes during the year (882) 66


Total valuation and translation adjustments

Balance at beginning of year 2,438 (917)


Changes during year other than shareholders’ equity (net amount) (3,356) 3,987

Total changes during the year (3,356) 3,987

Balance at end of year (917) 3,069

Subscription rights to shares

Balance at beginning of year － 93


Changes during year other than shareholders’ equity (net amount) 93 108

Total changes during the year 93 108

Balance at end of year 93 201

Minority interests

51 11,684 Balance at beginning of year

Changes during the year Changes during year other than shareholders’ equity (net amount) 11,632 1,178





FY2009 FY2010

(April 1, 2008 – (April 1, 2009 –

March 31, 2009) March 31, 2010)

Total net assets




Net income 9,996 11,432


Changes during year other than shareholders’ equity (net amount) 8,369 5,274




(4) Consolidated Statements of Cash Flows Amount (¥ millions)

FY2009 FY2010

(April 1, 2008 – (April 1, 2009 –

March 31, 2009) March 31, 2010)

Cash flows from operating activities

Income before income taxes and minority interests 17,655 20,605

Depreciation of leased assets 14,134 20,924

Depreciation on own-used assets 696 845

Impairment loss － 21

Amortization of goodwill and negative goodwill 410 410

Increase (decrease) in allowance for doubtful receivables 2,771 (2,771)

Increase (decrease) in provision for bonuses and directors' bonuses (0) 39

Increase (decrease) in provision for future lease payments － 31

Increase (decrease) in accrued retirement benefits for employees and accrued directors’ and corporate auditors’ 685 (506)

Increase (decrease) in provision for automobile inspection costs 495 54

Increase (decrease) in allowance for loss on guarantees 127 (110)Loss (gain) on devaluation of marketable and investment securities 2,269 213

Interest and dividend income (719) (744)

Interest expenses 13,295 11,168

Loss (gain) on investments in partnership and silent partnership (60) (411)

Equity in earnings of affiliates (439) (467)

Loss (gain) on sales of marketable and investment securities 21 (6)

Loss (gain) on disposal own-used assets 10 －

Loss (gain) on disposal of noncurrent assets － 55

Gain on adjustment for changes of accounting standard for lease transactions (2,076) －

Gain on reversal of subscription rights to shares － (32)Settlement package － 3,350 Decrease (increase) in installment sales trade receivables 14,424 6,616

Decrease (increase) in lease receivables and investment assets 25,127 25,148

Decrease (increase) in lease and other trade receivables (962) (5,576)

Decrease (increase) in accounts receivable-operating loans 60,758 22,213

Decrease (increase) in other operating loans receivable 1,133 (2,774)

Decrease (increase) in investment securities for sale (165) 361

Purchase of leased assets (51,198) (60,820)

Decrease (increase) in prepaid pension cost (191) (1)

Decrease (increase) in long-term receivables (16,236) 1,278

Decrease (increase) in guarantee money (3,054) (5,780)

Increase (decrease) in notes and accounts payable-trade (13,530) 2,393

Increase (decrease) in lease obligations (58,254) (41,929)

Increase (decrease) in mortgage securities under repurchase agreement (55,094) (3,916)



FY2009 FY2010

(April 1, 2008 – (April 1, 2009 –

March 31, 2009) March 31, 2010)

Increase (decrease) in guarantee deposits from customers 4,368 7,022

Other, net (2,605) 21,731

Subtotal (46,202) 18,636

Interest and dividend income received 690 659

Interest expenses paid (13,732) (11,231)

Income taxes paid (10,666) (5,312)

Settlement package paid － (3,350)

Net cash used in operating activities (69,911) (597)

Cash flows from investing activities

Purchases of property and equipment for own use (1,112) (1,029)

Proceeds from the sales and redemption of marketable securities 15 40

Purchases of marketable and investment securities (3,572) (6,205)

Proceeds from the sales and redemption of investment securities 2,127 140

Purchase of investments in subsidiaries resulting in change in scope of consolidation (28,512) －

Payments for investments in capital － (276)

Payments for investments in silent partnership (1,000) (950)

Other, net 61 285

Net cash provided by (used in) investing activities (31,993) (7,994)

Cash flows from financing activities

Increase (decrease) in short-term borrowings, net 93,778 8,696

Increase (decrease) in commercial paper, net (15,500) (17,500)

Proceeds from long-term loans from bank and other financial institutions 146,758 144,303

Repayment of long-term loans from bank and other financial institutions (137,036) (123,141)

Increase (decrease) in payables under securitized lease receivables, net 30,900 (54,400)

Proceeds from payables under fluidity lease receivables and installment sales trade receivables institutions 91,152 89,929

Repayment of payables under fluidity lease receivables and installment sales trade receivables (12,315) (54,736)

Net decrease (increase) in deposits paid (3,500) (1,500)


Cash dividends paid (1,576) (1,629)

Cash dividends paid to minority interests (556) (211)

Other, net (65) (143)

Net cash provided by financing activities 191,832 (10,333)



FY2009 FY2010

(April 1, 2008 – (April 1, 2009 –

March 31, 2009) March 31, 2010)

Effect of exchange rate changes on cash and cash equivalents (318) 72

Net increase (decrease) in cash and cash equivalents 89,609 (18,853)

Cash and cash equivalents at beginning of period 7,833 97,372

Net increase (decrease) resulting from changes in the scope of consolidation (70) (4)

Cash and cash equivalents at end of period 97,372 78,514


Segment Information: 1. Business Segment Information

FY2009 (From April 1, 2008 to March 31, 2009)

Lease (¥ millions)

Installment sales

(¥ millions)

Loans (¥ millions)

Other (¥ millions)

Total (¥ millions)

Eliminations or corporate (¥ millions)

Consolidated(¥ millions)

I Operating revenues (1) Revenue from customers 312,028 43,252 9,489 7,539 372,309 － 372,309(2) Intersegment revenue 459 80 547 739 1,826 (1,826) －

Total revenues 312,487 43,333 10,036 8,278 374,136 (1,826) 372,309Operating expenses 294,241 42,102 8,300 5,335 349,979 6,340 356,320Operating income 18,246 1,230 1,736 2,943 24,156 (8,167) 15,989

II Assets, depreciation and capital expenditures

Total assets 1,148,805 90,197 359,023 17,040 1,615,066 78,725 1,693,792Depreciation 14,200 －－－ 14,200 631 14,831Capital expenditures 51,403 －－－ 51,403 1,380 52,783

Notes: 1. Business segment classifications reflect each segment's major business transactions. 2. Primary products for each business segment:

Lease: Leasing of IT equipment, office equipment, industrial machinery/machine tools and other equipment and machinery. Activities also include sale of property at expiration or termination of leases.

Installment sales: Installment sales of commercial/service equipment, production facilities, medical devices and other equipment.

Loans: Commercial loans Other: Investment in marketable securities for financial gain, formation of tokumei-kumiai (silents partnerships), etc.

3. Operating expenses appearing in the “Eliminations or corporate” column include unallocable operating expenses in the amount of ¥8,186 million, which represented expenses incurred at the administrative department.

4. Total assets appearing in the “Eliminations or corporate” column include corporate assets in the amount of ¥115,376 million, which is mainly composed of excess funds (cash and time deposits and other), long-term investment funds (investment and marketable securities), and assets related to the administrative department.

FY2010 (From April 1, 2009 to March 31, 2010)

Lease (¥ millions)

Installment sales

(¥ millions)

Loans (¥ millions)

Other (¥ millions)

Total (¥ millions)

Eliminations or corporate (¥ millions)

Consolidated(¥ millions)

I Operating revenues (1) Revenue from customers 326,682 39,286 7,973 8,101 382,042 － 382,042(2) Intersegment revenue 484 119 230 706 1,540 (1,540) －

Total revenues 327,166 39,405 8,203 8,807 383,582 (1,540) 382,042Operating expenses 306,821 37,665 5,438 4,798 354,724 5,575 360,300Operating income 20,344 1,739 2,765 4,008 28,858 (7,115) 21,742

II Assets, depreciation and capital expenditures

Total assets 1,166,651 80,599 347,466 13,152 1,607,869 63,061 1,670,931Depreciation 20,982 －－－ 20,982 787 21,770Capital expenditures 58,872 －－－ 58,872 1,053 59,925

Notes: 1. Business segment classifications reflect each segment's major business transactions. 2. Primary products for each business segment:

Lease: Leasing of IT equipment, office equipment, industrial machinery/machine tools and other equipment and machinery. Activities also include sale of property at expiration or termination of leases.

Installment sales: Installment sales of commercial/service equipment, production facilities, medical devices and other equipment.

Loans: Commercial loans


Other: Investment in marketable securities for financial gain, formation of tokumei-kumiai (silents partnerships), etc. 3. Operating expenses appearing in the “Eliminations or corporate” column include unallocable operating expenses in the amount

of ¥7,108 million, which represented expenses incurred at the administrative department. 4. Total assets appearing in the “Eliminations or corporate” column include corporate assets in the amount of ¥91,637 million,

which is mainly composed of excess funds (cash and time deposits and other), long-term investment funds (investment and marketable securities), and assets related to the administrative department.

5. Additional Information Valuation standard and valuation method for securities

Of other investment securities previously recorded as “securities with fair values” based on information obtained from financial institutions, some have been reclassified as “securities without fair values” because fair value information became unavailable from the fiscal year ended March 31, 2010, and it was not practicable for the Company to reasonably estimate those securities’ fair values.

Bonds and other such securities without fair values are accounted for pursuant to calculation methods used for balance sheet obligations.

As a result, operating income for the “Other” segment decreased by ¥112 million.

2. Geographic Segment Information FY2009 (From April 1, 2008 to March 31, 2009) Geographic segment information is not presented herein, as over 90% of the amount of total assets of all segments were associated with domestic operations. FY2010 (From April 1, 2009 to March 31, 2010) Geographic segment information is not presented herein, as over 90% of the amount of total assets of all segments were associated with domestic operations. 3. Sales to Overseas Customers FY2009 (From April 1, 2008 to March 31, 2009) The amounts of sales to overseas customers are not presented herein, as they constituted less than 10% of the consolidated revenues. FY2010 (From April 1, 2009 to March 31, 2010) The amounts of sales to overseas customers are not presented herein, as they constituted less than 10% of the consolidated revenues.


4. Executed new contracts, Operating Assets

(1) Executed contracts volume

Segment by Business

FY2009 (April 1, 2008 – March 31, 2009)

FY2010 (April 1, 2009 – March 31, 2010) Net Change

Executed contracts volume

CompositionExecuted contracts volume

Composition Amount Pct.

(¥ millions) (%) (¥ millions) (%) (¥ millions) (%)

Lease

Finance leases 340,157 62.2 302,668 57.6 (37,488) (11.0)

Operating leases 55,465 10.1 116,724 22.2 61,258 110.4 Total leases 395,623 72.3 419,393 79.8 23,769 6.0

Installment sales 40,907 7.5 38,249 7.3 (2,657) (6.5)Loans 109,053 19.9 67,329 12.8 (41,724) (38.3)

Other 1,607 0.3 393 0.1 (1,213) (75.5)

Total 547,191 100.0 525,365 100.0 (21,826) (4.0)Note: 1. Operating leases are recorded at the acquisition costs of lease assets. The executed volume of re-lease transactions is not included. 2. The figures for the lease segment are the purchase prices of lease assets acquired during each respective fiscal year. The figures for

the installment sales segment are the installment-sales receivables net of the deferred profit on installment sales on an execution basis.

(2) Operating assets

Segment by Business

As of March 31, 2009 As of March 31, 2010 Net Change

Balance Composition Balance Composition Amount Pct. (¥ millions) (%) (¥ millions) (%) (¥ millions) (%)

Lease

Finance leases 969,859 68.1 942,859 67.0 (26,999) (2.8)

Operating leases 73,696 5.2 110,757 7.8 37,060 50.3Total leases 1,043,556 73.3 1,053,616 74.8 10,060 1.0

Installment sales 82,431 5.8 75,823 5.4 (6,607) (8.0)Loans 291,987 20.5 272,745 19.4 (19,241) (6.6)Other 5,498 0.4 5,205 0.4 (293) (5.3)

Total 1,423,473 100.0 1,407,392 100.0 (16,081) (1.1)

Notes: 1. The figures for the installment sales segment are the receivables on installment sales net of the deferred profit on installment sales. 2. The balance of operating assets in the loans segment includes the balance of long-term loans receivable to affiliated companies

shown as “Other ” under “Investments and other assets” on the balance sheets.

As of March 31, 2009 ¥1,554 million As of March 31, 2010 ¥1,599 million

consolidated financial report for the fiscal year ended

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