FINANCIAL
INFORMATION
02 Management’s Discussion and Analysis
05 Business and Related Risks
14 Consolidated Balance Sheets
16 Consolidated Statements of Income
17 Consolidated Statements of Comprehensive Income
18 Consolidated Statements of Changes in Equity
20 Consolidated Statements of Cash Flows
22 Notes to Consolidated Financial Statements
75 Independent Auditor’s Report

2021
For the year ended March 31, 2021

M AN AGE ME NT’S D IS CU S S ION
A ND ANALYSIS
Effective April 1, 2021, Mitsubishi UFJ Lease & Finance
Company Limited (Mitsubishi UFJ Lease & Finance)changed its trade name to Mitsubishi HC Capital Inc.
following the business integration through merger
with Hitachi Capital Corporation (Hitachi Capital).
The business results presented below for the fiscal
year ended March 31, 2021 are those of the former
Mitsubishi UFJ Lease & Finance.

Business Results
Based on the medium-term management plan
~Sustainable Growth 2030~ launched in March 2020,
the Group (the former Mitsubishi UFJ Lease & FinanceGroup) moved steadily forward with a range of strategies
to strengthen its operating base for the future with theaim of becoming an asset-business platform company.
These initiatives concentrated on its three focus areas:
global assets, social infrastructure, and renewable energy.
The business results of the Group, impacted particularly
by the COVID-19 pandemic, were as detailed below.
In the fiscal year ended March 31, 2021, results were
impacted notably by the pandemic, with reduced levelsof business and restrictions on sales activity. On the sales
front, this was reflected in a decreased volume of newtransactions, which fell by ¥535.4 billion or 34.8%
from the previous fiscal year to ¥1,003.2 billion. Itshould be noted that, starting from the fiscal year

Net Income Attributable to Ownersof the Parent (¥ Billion)
70

68.7

70.7

60

under review, factoring transactions, most of which
are short term, are no longer counted in the volume of
new transactions. These and other changes have been
applied retroactively to the figures presented for theprevious fiscal year. As a result, the figure for thevolume of new transactions for the previous fiscal year
was lowered by ¥343.0 billion in comparison with theperiod before the retroactive application.
Revenues declined by ¥29.4 billion or 3.2% year on
year to ¥894.3 billion. Among the main factors were
the impact of the deconsolidation of a domestic
subsidiary on the Customer Business and reduced lease
revenues in the Aviation Business.
On the profit front, although sales gains increasedin the Real Estate Business, reduced earnings in the
Aviation Business were the main factor determining a
year-on-year fall of ¥21.3 billion or 11.8% in gross profit
to ¥160.5 billion.
Operating income decreased by ¥29.4 billion or
32.1% to ¥62.4 billion. Performance here was impacted
notably by increased credit costs in the Aviation Business
and, mainly overseas, in the Customer Business, andby increased expenses for the business integration with
Hitachi Capital.
Net income attributable to owners of the parent
declined by ¥15.4 billion or 21.8% to ¥55.3 billion
despite the recording of extraordinary income items—
an increase in sales gains on investment securities held

Volume of New Transactions (¥ Billion)

1,600

55.3

50
40

1,538.6

1,200

1,003.2

800

30
20

400

10
0

02

Financial Information

2021

FY3/19FY3/20FY3/210

FY3/20FY3/21

for strategic purposes and compensation received inassociation with a redevelopment project.
In light of the business division system introducedin the previous Medium-term Management Plan, theGroup has launched an initiative whereby each Customer
Business and business division develops its own
management plan and implements a PDCA cycle, andhas set up a system to use financial information basedon these units to evolve strategies; accordingly, we havemade changes to reportable segments, etc.
As a result, effective April 1, 2020, the reportablesegments have been changed from the two segments of“Customer Finance Business” and “Asset FinanceBusiness” to the seven segments of “Customer Business,”“Environment & Energy,” “Healthcare,” “Real Estate,”“Aviation,” “Logistics,” and “Infrastructure & Investment,”and segment profit has been changed from operating
income to net income attributable to owners of the parent.
Operating results by reportable segment arepresented below.
In the Customer Business, although overseas credit
costs increased, segment profit grew by ¥8.6 billion or
51.6% year on year to ¥25.5 billion. The increase wasdue to gains on sales of shares held for strategic purposes
and own-used assets.
In the Environment & Energy Business, despite thedownward rebalancing following the sales gain recordedin the previous fiscal year, segment profit grew year on

year by ¥0.3 billion or 11.4% to ¥3.7 billion, partly due
to growth in electricity sales revenue.
In the Healthcare Business, increased investment profit
from healthcare funds helped the segment to achieve a slight
year-on-year increase in segment profit to ¥0.7 billion.
The Real Estate Business posted a year-on-yearincrease of ¥3.1 billion or 12.6% in segment profit to¥28.0 billion on factors including an increased sales
gain and compensation received in association with aredevelopment project.
In the Aviation Business, segment profit droppedby ¥22.1 billion or 88.7% year on year to ¥2.8 billion.
The main causes of the decrease were a decline in lease
revenues due to bankruptcies among airline companies
and other factors, higher credit costs, and lower sales
gain due to reduced secondary market liquidity.
The Logistics Business saw segment profit increaseby ¥0.8 billion or 91.7% year on year to ¥1.8 billion.
The increase was driven by the improved operating
rate of marine containers and other factors, which
outweighed the reduced revenues from railway freightcars due to deterioration in market conditions.
The Infrastructure & Investment Business recorded
a year-on-year decrease of ¥0.3 billion or 56.4% insegment profit to ¥0.3 billion. Although revenues rosewith the increasing number of investment projects,
profits fell overall, a major factor being the decrease inequity-method investment earnings from certain investees,

Operating Assets (¥ Billion)

Total Equity (¥ Billion) /Equity Ratio (%)

5,248.3
5,000

5,064.7

900

778.5

Total equity
Equity ratio

798.8

20

821.2

16

4,000

720

3,000

540

2,000

360

8

1,000

180

4

0

FY3/20FY3/210

13.0

FY3/1912.4

FY3/2012

13.4

FY3/210

Financial Information

2021

03

M AN AGE ME NT’S D IS CU S S ION
A ND ANALYSISand ¥17.2 billion for increase in operating securities
and investments in private equity securities.
Investing activities provided net cash of ¥1.2 billion
compared to ¥32.9 billion used in the previous period.
Outflows of ¥55.5 billion in payments into time depositsand ¥15.6 billion in purchases of investment securities
and other expenditures were offset by inflows including¥54.2 billion in proceeds from withdrawal of time deposits,¥14.6 billion in proceeds from sales and redemption of
investment securities, and ¥3.2 billion in proceedsfrom sales of own-used assets.
Financing activities used net cash of ¥372.8 billion
compared to net cash provided of ¥552.3 billion in theprevious fiscal year. Net outflows of ¥307.1 billion for
direct funding and ¥36.1 billion for bank loans andother forms of indirect funding were set against items
including ¥22.5 billion in cash dividends paid.
As a result of these movements, cash and cash
equivalents as of March 31, 2021, stood at ¥286.2
billion, a decrease of ¥169.3 billion or 37.1% from theprevious fiscal year-end. The decrease was accounted
for by increases in funds of ¥199.3 billion fromoperating activities and ¥1.2 billion from investing
activities being set against funds of ¥372.8 billion usedin financing activities.

mainly due to the impact of the pandemic.
An adjustment of ¥7.7 billion to segment profit wasrecorded, compared to the previous year’s adjustmentof ¥1.6 billion. This reflected increases in expenses forthe business integration of Hitachi Capital and in
expenses related to funding.

Financial Position
As of March 31, 2021, total assets showed a decrease
from the previous fiscal year-end, mainly due to a reduction
in cash and cash equivalents, falling by ¥276.1 billion
or 4.4% to stand at ¥6,009.8 billion. Total equity stoodat ¥821.2 billion, having risen by ¥22.4 billion or 2.8%
from the previous fiscal year-end due to factors including
the contribution from net income attributable to ownersof the parent. The equity ratio moved up by 1.0 percentage
point to 13.4%. Interest-bearing debt fell by ¥295.7 billion
to ¥4,634.9 billion.
Operating activities provided net cash of ¥199.3 billion
compared to net cash used of ¥252.1 billion in the previous
fiscal year. Here, inflows of ¥83.2 billion in income
before income taxes, ¥45.7 billion in loss on disposals
and sales of leased assets, ¥151.8 billion in depreciation
and amortization, and ¥9.8 billion in provision of allowancefor doubtful receivables were set against outflows
including ¥185.9 billion for purchases of leased assets,¥32.7 billion for purchases of other operating assets,

Increase/Decrease in Net Income* (FY3/2021) (¥ Billion)
Positive factor

Negative factor
Net income*

–15.4

+8.6
+3.1

+0.8

+0.3

+0.0
–0.3

–22.1

–6.1

70.7

FY3/2004

Financial Information

2021

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55.3

FY3/21

B USIN ESS AN D RELAT ED RIS K S

Of the business and related risks of the Mitsubishi HC
Capital Group, the main items with potential for important
impact on investors’ decisions are managed comprehensively
in the framework set out below under 1. Integrated Risk
Management. An outline of the risk and a specific statementof the main efforts to address it are given under 2. Major
Risks Managed within Framework of Integrated Risk
Management. The Group has established an appropriate
system to manage these risks and strives to prevent themfrom emerging or to minimize their impact if they occur.
To manage these potential risk factors, we operate asystem whereby the division responsible for the relevant
area of risk monitors and identifies issues arising fromchanges in the external environment and other factors.
Each of these divisions holds regular discussions to review
appropriate response measures and reports promptly to
the Management Committee*, a consultative anddecision-making body that controls the execution ofbusiness. Specifically, in addition to the Asset Liability
Management (ALM) Committee, Compliance Committee,
Disclosure Committee on J-SOX, and other committees
that discuss the issues surrounding and measures to address
individual risks, the Risk Management Committee meetsquarterly or as necessary to undertake comprehensive andsystematic management of risks affecting all operational
areas. Additionally, important matters at each committee
are reported to and discussed by the Board of Directors.
The forward-looking statements herein are based on
judgments made by the Group as of March 31, 2021.
* Reorganized to become the Management Meeting following the businessintegration of April 1, 2021.

01 Integrated Risk Management
Mitsubishi HC Capital engages in business operations thatincorporate the framework of integrated risk management
in order to work toward sustainable growth by balancing
maintenance of management soundness with improving
profitability. The major risks managed within theframework of integrated risk management include credit
risk, asset risk, investment risk, market risk, liquidity
risk, and operational risk. Risk management is conducted
on a consolidated basis.

Specifically, risk capital is allocated to the respective
risk category based on the Company’s risk capitalmanagement policy after quantifying each risk using risk
assessment methods tailored to the characteristics of theasset or business. Reasonable risk-taking is then carriedout within the scope of risk tolerance.
Within this risk management framework, regularmonitoring is undertaken of the utilization of risk capitaland the status of portfolios, the results of which are reported
to and discussed by the Risk Management Committee,
the Management Committee, and the Board of Directors.
In this way, efforts are made to ensure appropriate
response measures and to promote effective internal
communication about risk. Arrangements are in place toensure that the Board of Directors is fully informed of therisk management system and risk management status andthat it maintains oversight thereof.

Risks Managed within
02 Major
Framework of Integrated Risk
Management

The Mitsubishi HC Capital Group conducts businessactivities globally. The Group provides capital
investments and services necessary for customer
businesses through leases and other means. The assets
it holds for leases and related transactions arediversified, ranging from general movable property
such as office equipment and production equipment toassets, such as aircraft, that are used in particularindustries. Demand for capital investment can decline
considerably if a customer’s business environment
deteriorates with deceleration or slowdown in businessat home or abroad. In that case, a decline in leases andother transactions could impact the Group’s businessresults and financial position. Additionally, losses
arising from inadequacy of internal processes,
personnel, or systems or their failure to function, or
exogenous events could impact the Group’s businessresults and financial position.
The major items among these envisioned risks aremanaged within the framework set out under 1. Integrated
Risk Management.

Financial Information

2021

05

B USIN ESS AN D RELAT ED RIS K S(1) Credit Risk
The Mitsubishi HC Capital Group conducts business that
extends credit over the medium to long term throughleases, installment sales, monetary loans, and otherfinancial services of various forms. Depending on futurebusiness trends and the financial landscape, additional
provisions of allowance for doubtful receivables could benecessary with increasing non-performing loans due todeterioration of a company’s credit status, which could
impact the Group’s business results and financial position.
Furthermore, because the Group is engaged in businessglobally, it is subject to country risk in which losses may
arise depending on the political and economic situationsin the countries and territories where customers andinvestees are located.
Main Efforts to Address Risk
When considering the advisability of each deal, the Group
carefully reviews the customer’s credit standing using its
own rating system and makes a thorough study in light ofthe value of the leased property, country risk, and otherfactors in an effort to ensure a reasonable return for therisk. Additionally, the Group continues to check thecustomer’s credit standing on an ongoing basis even after
entering into business relations and has a system in place
to take the necessary steps in the event that the customer’s
credit standing worsens. Moreover, it engages in credit
management with respect to the portfolio as a whole andconsiders risk diversification to ensure that credit is notconcentrated with a specific customer, industry, country,
territory, and so on, while striving to ensure soundmanagement by regularly measuring the credit risk of its
portfolio and monitoring to ensure that it is within a certain
scope of capital.
(2) Asset Risk
In addition to general movable property, the Mitsubishi
HC Capital Group holds such global assets as aircraft andreal estate, including buildings, and conducts a businessleasing these assets in and outside Japan in the form ofoperating leases and others. In this business, the Group is
exposed to asset risk in addition to the aforementioned
credit risk, so fluctuation in revenue from asset managementand disposal could impact the profitability of the leases.
For this reason, when engaging in operating leases, the06

Financial Information

2021

Group carefully assesses the future value according to asset
type in addition to the customer’s credit standing before
working on each deal. Even after entering into business
relations, the Group continues monitoring the status of
the leasing and secondary markets for said assets alongwith the status of asset use by the leaseholder, striving toprevent risks from emerging or to mitigate their impact ifthey occur.
(i) Global Assets
The Group holds global assets such as aircraft and aircraft
engines, ships, containers, and railway cars and conducts
a business leasing these assets in and outside Japan in theform of operating leases and others. In the business
related to global assets, the Group is exposed to pricefluctuation risk pertaining to said assets in addition to
the aforementioned credit risk. With operating leases, inaddition to lease fee revenue received from the customer,
the Group recovers funds by selling the asset at the endof the lease period. Additionally, in the event of a customer
bankruptcy, the Group takes the asset back and recovers
funds by leasing it to a different customer or selling it. As
for selling assets, in addition to business trends and thefinancial landscape, major incidents arising from technicalproblems, obsolescence due to technological change,
revisions to laws and regulations, increased concern overglobal pandemics or terrorism, natural disasters, or
geopolitical risk may cause the asset selling price to fluctuate.
Furthermore, recording an impairment loss or increased
costs associated with property management could impact
the Group’s business results and financial position.
Main Efforts to Address Risk
When engaging in operating leases with global assets, theGroup conducts a comprehensive review that includes achecklist for deals involving movable property and future
asset liquidity before working on each deal and endeavors
to ensure a reasonable return for the credit risk and asset
value fluctuation risk. Furthermore, the Group has
established internal investment criteria to maintain aportfolio with risk diversification taken into account,
including applicable models, regions, and time of expiration.
Moreover, the Group continues to check the customer’s
credit standing and industry trends on an ongoing basis
even after entering into business relations and has a system

in place to take the necessary steps in the event that thecustomer’s credit standing worsens, such as collecting adeposit from the customer to cover asset wear and tear asnecessary. Additionally, the Group regularly holds warning
sign management meetings at business divisions and risk
management divisions for each major asset category toreview applicable industry trends and signs of problems
that could impact asset value fluctuation. The Groupalso regularly measures customer credit risk and the riskof fluctuations in the value of assets in its portfolio tomonitor whether it is within a certain scope of capital, in
an effort to ensure sound management.
(ii) Real Estate
The Group is engaged in and outside Japan in investment
in and financing of commercial real estate such as offices,
residences, commercial facilities, logistics facilities, andhotels, and in leasing and other business operations basedon its portfolio of owned properties. These assets are subject
to revenue fluctuation risk and price fluctuation risk. In
the real estate-related business, in addition to lease feerevenue from tenants, the Group recovers funds by sellingthose assets that are not long-term holdings at the righttime. Lease fee revenue and revenue from sale of assets
may fluctuate depending on the market environment, suchas business trends, the financial landscape, and the leasemarket in the specific location of the asset, and this could
impact the Group’s business results and financial position.
Main Efforts to Address Risk
The Group makes a careful decision based on acomprehensive review of future asset value and liquidity
before working on each deal and endeavors to ensure areasonable return for the asset value fluctuation risk.
Furthermore, the Group continues to check the status ofasset management, price trends, and industry trends on
an ongoing basis even after entering into business relations
and has a system in place to maximize revenue. Additionally,
the Group regularly holds warning sign management
meetings at business divisions and risk management
divisions to review industry trends and signs of problems
that could impact asset value fluctuation. The Group also
regularly measures the risk of fluctuations in the value of
assets in its portfolio to monitor whether it is within a certain
scope of capital, in an effort to ensure sound management.

(3) Investment Risk
The Mitsubishi HC Capital Group is engaged in investment
in and financing of projects such as solar power generationand other renewable energy businesses and an overseas
infrastructure business as well as various business investing
activities, including loans to operating companies andfunds. These investing activities are subject to such risks
as risk of changes in the business environment including
business fluctuations and declining demand, risk of revenue
falling below the plan due to sluggish performance ofinvestees or partners, risk of diminished recoverability of
the investment amount, risk of investee stock value falling
below a certain level, and risk of investee stock value
staying below a certain level for a considerable period oftime due to sudden changes in the economic or financial
situation or a major disruption of the financial markets
regardless of the investee’s performance. These risks could
result in a total or partial loss of the investment or create
the necessity of additional funding. In addition, there are
the risk that the Group may be unable to exit or restructure
the business at the desired time or using the desired method
due to differences with the partner’s management policy
or low liquidity of the investment asset and the risk that
the Group may be disadvantaged by not being able toobtain relevant information from the investee, and theserisks could impact the Group’s business results andfinancial position.
Main Efforts to Address Risk
The Group holds investment meetings according to theindividual investment amounts and severity of risk to gather
the opinions of the relevant departments and makes acareful decision based on a comprehensive review of future
investment value and liquidity from a broad point of view
when considering each investment, thereby endeavoring
to ensure a reasonable return for the investment value
fluctuation risk. Additionally, the Group continues tocheck the status of investment management and industry
trends on an ongoing basis even after entering into business
relations and has a system in place to maximize revenue.
The Group also regularly measures the risk of fluctuationsin the value of investments in its portfolio to monitor
whether it is within a certain scope of capital, in an effort
to ensure sound management.

Financial Information

2021

07

B USIN ESS AN D RELAT ED RIS K S(4) Market Risk(i) Interest Rate Fluctuation Risk
The fees for leases and installment sales conducted by the
Mitsubishi HC Capital Group are set based on the purchaseprice for the transacted property and the market interest
rates at the time of contract. Most of these basically do
not fluctuate during the contract term. Acquisition funds
for the leased property, on the other hand, are procured
at both fixed and variable interest rates for fundraising
diversification and reduction of funding costs, and thecost of capital is affected by fluctuations in the market
interest rate. As such, a sharp rise in the market interest
rate resulting from sudden changes in the financial
situation could impact the Group’s business results andfinancial position.
(ii) Exchange Rate Fluctuation Risk
The Group actively conducts business outside Japan, andas foreign currency-denominated assets increase, so does
their percentage of consolidated operating assets. The
financial statements of the Group’s consolidated subsidiaries
outside Japan are expressed in the local currency while
the Company’s consolidated financial statements are
expressed in Japanese yen. As such, although fundraising
is, in principle, conducted in the same currency as theasset, should a large fluctuation occur in exchange rates,
it could impact the Group’s business results and financial
position in Japanese yen terms.
Main Efforts to Address Risk
The Group constantly watches movements in the financial
markets and, as needed, monitors through ALM any
imbalances in the form of interest rates or currency
exchange for asset management and for procurement offunds. It then manages interest rate fluctuation risk
through appropriate hedge operations while taking interest
rate movements into account. To address exchange rate
fluctuation risk, in principle, the Group raises funds inthe same currency as the operating asset in an effort tominimize loss on currency valuation of assets. The Groupalso regularly measures the quantitative risk of the positionof portfolio holdings incurring a loss over a certain
period of time at a certain probability and to what extent
in the event that interest or currency exchange rates take adisadvantageous turn based on past statistics, and monitors
08

Financial Information

2021

whether it is within a certain scope of capital in an effort
to ensure sound management. Moreover, the ALM
Committee meets quarterly or as necessary and determines
the ALM policy based on such factors as trends in thefinancial market environment and the risk situation.
(5) Liquidity Risk
When engaging in acquisition of lease properties for leases,
installment sales, and monetary lending, the Mitsubishi
HC Capital Group raises a large amount of funds inJapanese yen and other currencies. The Group attempts
to balance the period of leases and other credit transactions
and investments with the period of fundraising, but should
it experience difficulty securing enough funds because ofheightened risk aversion on the part of financial institutions
and investors due to a free fall in economic and financial
conditions and major confusion in the financial markets
or a decline in the Group’s creditworthiness, it could impact
the Group’s business results and financial position.
Main Efforts to Address Risk
With respect to the procurement of funds, the Group
tries to ensure the liquidity of funds through efforts todiversify by procuring funds directly from the market
including corporate bonds, commercial paper, andsecuritization of lease receivables in addition to borrowing
from financial institutions as well as through procurementwith long- and short-term balance, careful managementof cash flow, and measures to supplement liquidity during
emergencies, such as through the acquisition of commitment
lines. Additionally, the Group conducts stage-by-stage
management of liquidity, checking the status to ensurethat the immediately necessary funds can be secured,
including funds for repayment, even if the fundraising
environment deteriorates, and reporting to the
ALM Committee.
In addition to analyses of credit, interest rate sensitivity(the impact on revenue of interest rate fluctuation) andother items, the ALM Committee carries out comprehensive
investigations of (4) Market Risk and (5) Liquidity Riskin the event of stress developing in the financial markets
or other relevant areas, including the potential impact on
profit. It then decides a fund procurement strategy andrisk response policies as the basis for the rollout of
Companywide strategy. Regarding risk management inparticular, it coordinates with the Risk Management
Committee, which is one arm of the Companywide
integrated risk management system. By strengthening thewarning sign management system and coordinating with
contingency planning, it makes efforts to improve theflexibility and resilience of financial structures in the eventof a crisis situation emerging.
Meanwhile, to support the globalization of its businessover recent years and also to increase its ability to procure
foreign currency, the Group is progressing with thereorganization of its regional financial bases. As part ofthis, it has decided to staff the New York-based local
subsidiary that had fulfilled certain corporate functionsin North America and to equip it with financial functions
to enable it to act as a regional finance base, thus establishinga Group financing system in North America. The basewill offer not only indirect financing but also various formsof fund procurement, including issue of commercial paper
and medium-term notes, thus providing funds to Group
companies expanding into North America. By also
reinforcing its ability to monitor the financial situation,
it will promote sharing of knowledge and information
within the Group. In this way, the Group is working to
put in place an optimal operational support system inNorth America.
(6) Risk Related to Expansion of Operating Base,
Strategic Partnerships, and M&As
In pursuit of continued growth through expansion of
its operating base, the Mitsubishi HC Capital Group
engages, in and outside Japan, in strategic partnerships
with outside entities aimed at the enhancement of various
services and tries to diversify and expand the Group’sbusiness portfolio through M&As in addition to expanding
business on its own.
The Group endeavors to diversify its business andenhance its services through this kind of approach. However,changes in the domestic or international economic andfinancial conditions, intensification of competition,changes in the business environment or strategy of partners,
revision of relevant legislation, and other factors could
cause a failure to achieve expected results or result in theneed to record additional expenses, such as impairment of
goodwill recorded at the time of an M&A. Such a situation

could impact the Group’s business results andfinancial position.
Main Efforts to Address Risk
In addition to review by the relevant departments
according to the individual investment amounts andseverity of risks, the Group brings in outside experts for acomprehensive review of future investment effect from a
broad point of view when considering each M&A or
partnership deal. Even after an M&A deal is executed,
the Group’s rules are applied to establish a system forproper operational management, and monitoring iscarried out on the business plan, results management,
and other aspects so that the necessary actions can betaken in a timely manner.
(7) Operational Risk(i) ‌Risk Related to Earthquakes, Wind and Flood Damage,
Pandemics, Terrorism, etc.
The Mitsubishi HC Capital Group uses facilities,
including sites and systems, in and outside Japan to
conduct its operations. Earthquakes, wind and flood
damage, or other natural disasters as well as pandemics,
terrorism, or other unpredictable circumstances could
cause a reduction of activities or prevent operations at
those sites by damaging the sites themselves or thesystems or by injuring employees or preventing themfrom coming to work, thereby disrupting business
operations. Moreover, depending on the extent of thedamages or how long the event lasts, a large sum ofmoney could be required to restore the systems or otherfacilities, or it may take a long time for business
operations to recover. Such a situation could impact theGroup’s business results and financial position.
Main Efforts to Address Risk
The Group has established responsible departments
depending on the envisioned risk to prepare for suchcircumstances and has a system in place to establish a crisis
response headquarters to respond to a critical situation.
The Group is also working to establish a system for business
continuity by putting together a business continuity plan,
implementing redundancy measures for backbone systems,
establishing a system infrastructure that allows work from
home, and implementing office shifts limited to operations
that must continue.

Financial Information

2021

09

B USIN ESS AN D RELAT ED RIS K S(ii) System Risk
The Group utilizes e-mail as well as a variety of information
systems to conduct account processing, management ofvarious contracts, customer management, asset managementof leased properties, and other operations. An outage or
failure of these information systems arising from poor
maintenance, poor development, or other such problems
could cause an interruption of contract and collection
operations or services provided to customers, which inturn could cause a suspension of operating activities andeconomic loss, thereby impacting the Group’s businessresults and financial position.
Main Efforts to Address Risk
The Group has a system in place to properly manage andmaintain these systems through internal cooperation andpartnership with other companies in order to ensure theirstable operation. The Group is equipped with an integrated
response system for failures that includes swift action andsharing of information internally and externally where thefailure occurs as well as establishment and implementationof measures to prevent subsequent recurrence. Additionally,
Group-wide IT control is implemented for systemdevelopment at the Group companies in Japan andother countries by using standardized methods as part ofa proprietary process.
(iii) Cybersecurity Risk and Information Security Risk
The Group utilizes e-mail as well as a variety of information
systems to conduct account processing, management ofvarious contracts, customer management, asset
management of leased properties, and other operations.
These information systems are subject to risk of businesse-mail scams, computer virus infections, unauthorizedaccess by outside parties, and other cyberattacks.
Unauthorized access by outside parties, computervirus infections, human error, fraud, scams, and otherproblems could result in system outages or failures,monetary damages, leaks or unauthorized use ofconfidential information or customer information, orother incidents. These could cause an interruption ofcontract and collection operations or services provided tocustomers, which in turn could cause a suspension ofoperating activities, economic loss, or loss of social
confidence from leakage of important information,
10

Financial Information

2021

thereby impacting the Group’s business results andfinancial position.
Main Efforts to Address Risk
The Group has established a cross-organizational Computer
Security Incident Response Team (MUL-CSIRT) to
address these risks and has a system in place to prevent
incidents at the entrance, internal, and exit stages andrespond to them if they occur. Specifically, in preparation
for cyberattacks that exploit vulnerabilities, the Groupkeeps software up to date to detect unauthorized access,computer viruses, and other cyberattacks and maintains
management preparedness to prevent problems. At thesame time, the Group has established an internal andexternal coordination system and conducts drills to prepare
for incidents. Moreover, targeted e-mail training isprovided for all employees, and internal education on
information security is carried out on an ongoing basis.
(iv) Compliance Risk
The Group’s operations are subject to a range of relevant
legislation in and outside Japan. As the primary examples,in Japan its operations must comply with the Companies
Act, tax laws, the Financial Instruments and ExchangeAct, the Anti-Monopoly Act, the Personal Information
Protection Act, the Money Lending Business Act, theInstallment Sales Act, the Act on Prevention of Transfer
of Criminal Proceeds, and laws and regulations related
to the environment. Outside Japan, the Group’s
operations are subject to the legislation of each country
and region as well as to oversight by regulatory authorities.
Should there be a failure of compliance with legislation,social norms, or company rules, it could impact theGroup’s business results and financial position by causing
restriction on or interruption of operations, a claim
for damages from customers or others, and a fall insocial confidence.
Main Efforts to Address Risk
In addition to rigorous compliance with legislation andcompany rules, the Group makes it a practice to carryout operations in accordance with high ethical standards
and social norms. The Group provides continuing training
on compliance and takes measures to prevent money
laundering, funding of terrorism, and fraud in an effort
to further strengthen its compliance system.

(v) System Change Risk
The Group’s operations are subject to a range of relevant
legislation, accounting and tax regulations, and othersystems in and outside Japan. Should there be substantialchanges or revisions to any of the various systems closely
related to the Group’s operations that the Group was
unable to properly address, there could be penalties fornonconformance, suspension of product offering,
restrictions on business activities, sales losses, or othernegative consequences that could impact the Group’sbusiness results and financial position.
Main Efforts to Address Risk
The Group’s corporate centers, business divisions, area
companies, and sites in each country continuously monitor
revisions and changes to the various systems in and outside
Japan, such as legal, accounting, and tax systems, applying
to the relevant country and services. In addition, the Groupgathers information on and implements measures to addresschanges and revisions as quickly as possible while reinforcing
such monitoring by actively utilizing outside experts.
(vi) Administrative Risk
The Group conducts transactions in various forms, andvarious administrative work arises with each transaction.
Improper administrative work, including human error,
fraud, and other irregularities, could cause an interruptionof contract and collection operations or services provided
to customers, which in turn could cause a suspension ofoperating activities or loss of customer trust, thereby
impacting the Group’s business results and financial position.
Main Efforts to Address Risk
The Group has established administrative rules for eachtransaction and conducts business according to these rules
while reviewing them as needed. Additionally, an internalreporting system is in place for internal administrative
incidents. Should such an incident occur, the system includes
internal reporting, swiftly addressing the incident,
identifying the cause, and establishing/implementing
measures to prevent recurrence.

03 Other Major Risks
As described in “2. Major Risks Managed within Frameworkof Integrated Risk Management,” the Mitsubishi HC CapitalGroup manages reasonably envisioned risks within an
integrated risk management framework. The Group also
recognizes major risks that exceed the scope of reasonableassumptions or are difficult to reasonably envision as
below. If the Group recognizes the possibility of such a risk
emerging, it analyzes the status and outlook of the risk,
the impact on each risk managed within the integrated
risk management framework, and combined impact on
multiple risks, and establishes a response policy. In addition,
the Group carries out stress tests envisioning new or multiple
scenarios as necessary and performs a multifacetedverification of risk resilience.
(1) Global Pandemic Risk
Should a global pandemic arise, negative consequencessuch as broad disruption of the supply chain, temporary
restrictions on or suspension of economic activity byeach national government, and damage to industrial
systems or financial functions could impact a wide
range of customers or businesses utilizing the assets of
the Mitsubishi HC Capital Group. This may result incustomer bankruptcies or a drop in the value of theGroup’s asset holdings, which could impact the Group’sbusiness results and financial position.
To create a global response system, the Group set upa Crisis Management Headquarters in February 2020and put in place a business continuity system. Aware
that we are currently in the pandemic phase of COVID-19,
the Group continues to implement preventive measuresagainst infection. At the same time, however, it isensuring continued progress with new initiatives byutilizing IT tools to strengthen internal and external
communication, evolving its business style, and taking
other relevant steps.
Impact of the COVID-19 Pandemic
COVID-19 made its appearance early in 2020 and spread
rapidly worldwide, bringing restrictions on human
movement and measures limiting the operation of storesand other businesses, which together caused a sharp

Financial Information

2021

11

B USIN ESS AN D RELAT ED RIS K S

slowdown in the world economy. While the subsequentvaccination programs and other anti-pandemic measures
are allowing economic activity to recover in some countries,
uncertain factors such as the development of virus variants
and the future rollout and efficacy of the vaccines meanthat the end of the pandemic is not yet in sight, and somelevel of impact is envisioned to persist for the time being.
In terms of the impact of the pandemic on the Group’sbusiness, the stagnation of global economic activity has
resulted in customer capital investment being limited,scaled down, postponed or otherwise affected in waysthat could prevent the Group’s operating assets fromachieving the planned expansion or cause them todecrease, leading to a decline in revenue. Additionally,
the deterioration of customer credit status and theresulting increase in non-performing loans could
necessitate additional provisions of allowance for
doubtful receivables. The resulting impacts are most
likely to affect countries and regions where the pandemic
situation is serious, as well as specific industries such as
the service and retail industries and particularly theaviation, travel, and food service sectors.
Moreover, these impacts could affect the assets held as
operating assets by the Group through price falls,
reduced operating rates for leases and similar assets, andprice falls in shares or similar assets. Such impacts aremost likely to affect certain asset categories such as
aircraft and aircraft engines and certain types of realestate such as hotels, as well as specific countries andregions heavily impacted by the pandemic and the sharesor other assets of severely affected industry sectors.
Meanwhile, if a financial crisis emerges while theimpact of the COVID-19 pandemic persists, it could
become impossible to procure funds as planned.
However, no such situation has yet arisen. This is thanks,
among other factors, to the Group’s measures to ensure
reliable on-hand liquidity and to the smooth supply offunds to the market provided by the central banks of thevarious countries and regions.
It should be noted that the restriction of human
movement and other measures could also limit thebusiness activities of the Mitsubishi HC Capital Group.
In response, the Group is taking steps to adapt its
internal project activities to pandemic and post-pandemic
12

Financial Information

2021

conditions. In addition to putting in place appropriate
measures to prevent infection and revising operational
procedures, this means that the Group is utilizing IT tools
and strengthening information security to enhance theprovision of systems that enable business operations tofunction smoothly on a remote basis.
(2) Climate Change Risk
Should climate change occur that has a major impact onsociety, the scale and frequency of natural disasters
would increase. If the Mitsubishi HC Capital Group andits customers were unable to adapt to the regulatorychanges, technical innovation, or a shift in business models
for preventing the negative effects of climate change, or if
the business model or business infrastructure and toolschanged dramatically resulting in customer bankruptcy
due to a drop in performance or loss of assets or a dropin the value of assets held by the Group or loss ofproperty, it could impact the Group’s business results
and financial position.
(3) Risk Associated with Expansion of Business Domains
The Mitsubishi HC Capital Group is expanding thescope of its operations on a global basis, including new
business domains, within the scope permissible underlaws, regulations, and various other conditions. Shouldrisks emerge within that process that exceed the scope of
reasonable assumptions despite verification of the risks
along with our knowledge and experience in the expandedbusiness domain, or if the expanded business does notdevelop as envisioned, it could impact the Group’s businessresults and financial position.
(4) Intensifying Competition
Competition in the leasing and other businesses of the
Mitsubishi HC Capital Group conducted in and outside
Japan could intensify not only from companies in thesame business but also from financial institutions andothers, or the competitive landscape could change due toa shift in business models of other industries, technicalinnovation, or other factors. The Group makes various
efforts to maintain and strengthen its competitiveness,
including by offering greater added value to its customers
and creating value as an asset holder and through low-costfund procurement. However, should the current competitive
situation intensify further, a fall in market share and decline
in income could impact the Group’s business results andfinancial position.
(5) Risk Related to Personnel Recruitment
The Mitsubishi HC Capital Group must stably secureadequate human resources, in order to maintain andstrengthen its competitiveness in the various businesses it
operates in and outside Japan. The Group strives tocontinuously recruit and train capable personnel, butshould it not be able to adequately secure and train theneeded personnel this could impact the Group’s businessresults and financial position.
(6) Risk Related to Labor and Employment Management
The Group employs a large number of staff in its business
operations. This involves the risk of long working hours
having a negative effect on the mental or physical healthof employees or other negative impacts, making them
unable to fulfill the expected duties, and the risk of legal
infringement due to failure to appropriately monitor legal
requirements relating to employment and related areas.
Additionally, there is the possibility of these risks resulting
in damage to public trust.
To lessen the abovementioned risks, the Group
promotes projects aimed at improved productivity andintroduces systems to enable diverse workstyles (teleworking,flextime, etc.). In this way, it works not only to reduce
long working hours but also to put in place a work
environment that accommodates employees with childcare
or nursing care responsibilities. Additionally, to address
harassment and other personnel issues, the Group has
introduced measures for employees in Japan and overseas,
including internal whistleblowing systems and advice
services. To enable employees to develop their abilities tothe full, the Group is addressing workplace enhancement
as a major focus of initiatives.

04 Stress Tests
In the execution of management strategy, the Group makes
efforts to gauge the degree of impact of stress periods caused
by various risk events with potential impact on its business,such as deterioration in market conditions including
economic downturns and market fluctuation. Specifically,
the Group has posited a number of potential high-stressscenarios, ranging from a deterioration in the overall world
economy to market fluctuation, deterioration of credit,
and the emergence of large-scale concentrations of risk inindividual business fields. Based on these scenarios, it has
undertaken analysis and verification of the potential degreeof impact of stress conditions on profitability and equity
in each fiscal period.
These multifaceted verifications enable the Group to
confirm its risk resilience and to ensure that the riskreturn balance of management plans does not exceed
tolerable levels.

Financial Information

2021

13

Consolidated Balance Sheets
Mitsubishi HC Capital Inc. and Consolidated Subsidiaries
March 31, 2021 and 2020
Thousands of U.S.
dollars (Note 1)

Millions of yen

AssetsCurrent assets:
Cash and cash equivalents (Notes 11 and 24)
Time deposits other than cash equivalents (Notes 11 and 24)
Marketable securities (Notes 4 and 24)
Receivables:
Lease
Installment sales (Notes 11 and 24)
Loans (Notes 11, 12, and 24)
Lease receivables and investments in leases (Notes 7, 11, 21, and 24)
Inventories (Notes 5 and 12)
Prepaid expenses and other (Note 11)
Allowance for doubtful receivables (Note 24)
Total current assets
Property and equipment:
Leased assets — at cost
Accumulated depreciation
Net leased assets
Advances for purchases of leased assets
Total leased assets (Notes 6, 8, 11, and 12)
Other operating assets — at cost
Accumulated depreciation
Net other operating assets (Note 11)
Own-used assets — at cost
Accumulated depreciation
Net own-used assets
Total property and equipment
Investments and other assets:
Investment securities (Notes 4, 11, and 24)：
Unconsolidated subsidiaries and associated companies
Other securities
Goodwill (Note 9)Long-term receivables (Note 24)
Asset for retirement benefits (Note 14)
Deferred tax assets (Note 22)
Other (Note 11)
Allowance for doubtful receivables (Note 24)
Total investments and other assets
Total assets
See notes to consolidated financial statements.

14

Financial Information

2021

2021

2020

2021

¥286,213
8,028
5,469

¥455,588
10,639819$2,578,497
72,32849,27033,083
191,043
1,079,885
1,414,106
27,468120,119(5,794)
3,159,621

23,757227,280
1,136,398
1,583,670
21,21757,086(5,758)3,510,701

298,047
1,721,115
9,728,695
12,739,696
247,460
1,082,154(52,205)
28,465,060

2,709,336(658,254)
2,051,082
59,7502,110,833
165,236(13,097)
152,138
12,537(6,289)6,248
2,269,220

2,625,317(599,721)
2,025,596
73,3082,098,904
129,013(8,515)
120,498
14,005(8,038)5,967
2,225,371

24,408,441(5,930,219)
18,478,221
538,294
19,016,516
1,488,616(117,995)
1,370,620
112,947(56,658)
56,28820,443,425

150,054
207,737
57,27739,26921
8,761
140,369(22,501)
580,989

141,942
172,004
65,58024,69330
14,797
144,676(13,831)549,894

1,351,841
1,871,505
516,017353,778
193
78,931
1,264,590(202,719)
5,234,138¥6,009,831¥6,285,966$54,142,624

Thousands of U.S.
dollars (Note 1)

Millions of yen

Liabilities and Equity
Current liabilities:
Short-term loans from banks and other financial institutions(Notes 11, 13, 21, and 24)
Commercial paper (Notes 13 and 24)
Current maturities of bonds (Notes 13 and 24)
Current maturities of long-term loans (Notes 11, 12, 13, 21, and 24)
Current maturities of loans from the securitizations of theminimum future rentals on lease contracts (Notes 11, 12, 13, and 24)
Current maturities of lease obligations (Note 13)
Notes and accounts payable — trade (Note 24)
Income taxes payable
Deferred profit on installment sales (Note 24)
Other (Note 13)
Total current liabilities
Long-term liabilities:
Bonds, less current maturities (Notes 13 and 24)
Long-term loans from banks and other financial institutions,less current maturities (Notes 11, 12, 13, 21, and 24)
Loans from the securitizations of the minimum future rentals
on lease contracts, less current maturities (Notes 11, 12, 13, and 24)
Lease obligations, less current maturities (Note 13)
Liability for retirement benefits (Note 14)
Asset retirement obligations
Deferred tax liabilities (Note 22)
Other (Notes 11 and 13)
Total long-term liabilities

2021

2020

2021

¥236,730
434,171
244,025
372,344¥454,137
762,100
224,536
329,818$2,132,706
3,911,450
2,198,426
3,354,450

61,995
23,13381,00010,805
10,095108,086
1,582,388

59,10925,21374,918
6,924
12,740100,691
2,050,190

558,521
208,408
729,737
97,34490,953
973,752
14,255,752

980,181945,016

8,830,463

2,261,273

2,079,301

20,371,833

44,234
66,667
3,173
25,05552,816
172,806
3,606,209

76,671
86,203
3,463
21,28853,508
171,501
3,436,955

398,513600,604
28,590225,724475,825
1,556,815
32,488,371

33,19633,196

299,063

167,280
1,552
571,459

167,164
1,507
538,977

1,507,029
13,9905,148,282(1,528)(1,665)(13,767)

30,678(15,519)
22,278(925)
808,472
12,760821,233¥6,009,831

10,752(5,597)36,219(1,333)
779,220
19,599798,820¥6,285,966

276,386(139,814)
200,707(8,338)
7,283,539
114,960
7,398,500$54,142,624

Commitments and contingent liabilities (Notes 15 and 25)
Equity (Notes 16 and 29):
Common stock —authorized, 3,200,000,000 shares in 2021 and 2020;
issued, 895,834,160 shares in 2021 and 2020
Capital surplus
Stock acquisition rights (Note 17)
Retained earnings
Treasury stock — at cost, 4,368,016 shares in 2021 and
4,761,716 shares in 2020
Accumulated other comprehensive income:Net unrealized gain on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Foreign currency translation adjustments
Defined retirement benefit plans
Total
Noncontrolling interests
Total equity
Total liabilities and equity

See notes to consolidated financial statements.

Financial Information

2021

15

Consolidated Statements of Income

Mitsubishi HC Capital Inc. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020

Thousands of U.S.
dollars (Note 1)

Millions of yen
2021

2020

¥894,342¥923,768$8,057,143

Costs (Note 21)
Gross profit

733,761
160,581

741,804
181,964

6,610,465
1,446,677

Selling, general, and administrative expenses (Note 18)
Operating income

98,16662,414

90,11091,853884,386
562,290

3,384

2,803

30,492(3,849)10,029(4,099)1,358(34,678)
90,359

431
1,395
3,488
3,112
2,810
20,803
83,217

237
3,433

3,510
7,244
99,097

3,891
12,56831,42528,03925,322
187,420
749,710

22,457
3,918
26,37556,842
1,512¥55,330

20,642
6,288
26,931
72,166
1,411¥70,754

202,316
35,300237,617
512,093
13,621$498,471

Other income (expenses):Dividend income
Interest expense — net of interest income of¥356 million ($3,270 thousand) in 2021 and¥749 million in 2020 (Note 21)
Gain on sales of investment securities (Note 4)
Gain on sales of shares of subsidiaries and affiliates(Notes 3.a. and 3.b.)Gain on step acquisition (Note 19)
Compensation income (Note 20)
Gain on sales of own-used assets
Other — net
Other income — net
Income before income taxes
Income taxes (Note 22):
Current
Deferred
Total income taxes
Net income
Net income attributable to noncontrolling interests
Net income attributable to owners of the parent

U.S. dollars

Yen

Amounts per share of common stock (Note 28):
Basic net income
Diluted net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

16

2021

Revenues (Note 21)

Financial Information

2021

2021

2020

2021

¥62.0861.85
25.50¥79.44
79.14
25.00

$0.55
0.55
0.22

Consolidated Statements of Comprehensive Income

Mitsubishi HC Capital Inc. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020

Thousands of U.S.
dollars (Note 1)

Millions of yen
2021

2020

2021

Net income¥56,842¥72,166$512,093

Other comprehensive income (Note 26):
Net unrealized gain (loss) on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Foreign currency translation adjustments
Defined retirement benefit plans
Share of other comprehensive income in associates
Total other comprehensive loss
Comprehensive income

19,845(10,516)(14,194)
330
782(3,751)¥53,090(10,321)(8,400)(5,351)(10)
213(23,869)¥48,296

178,791(94,743)(127,877)
2,977
7,051
(33,800)$478,292

Total comprehensive income attributable to:
Owners of the parent
Noncontrolling interests¥51,801
1,288¥47,0151,280$466,680
11,612

See notes to consolidated financial statements.

Financial Information

2021

17

Consolidated Statements of Changes in Equity
Mitsubishi HC Capital
Inc. and Consolidated
Subsidiaries
Consolidated
Statementsof Changes
in Equity

Years ended March 31, 2021 and 2020
Mitsubishi HC Capital Inc. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020

Thousands
Thousands

BALANCE, APRIL 1, 2019
BALANCE, APRIL 1, 2019
Net income attributable to owners of the parent
Cash dividends
Net income attributable to owners of the parent
Disposal of treasury stock (576,400 shares)
Cash dividends
Adjustment of retained earnings for newly consolidated
Disposalof treasury stock (576,400 shares)
subsidiaries
Adjustmentof retainedofearnings
forduenewly
consolidated
Change in ownershipthe parent
to transaction
withsubsidiaries
noncontrolling shareholders
Change in ownership of the parent due to transaction withNet change in the year
noncontrolling shareholders
Net change in the year
BALANCE, MARCH 31, 2020
BALANCE, MARCH 31, 2020
Net income attributable to owners of the parent
Cash dividends
Net income attributable to owners of the parent
Disposal of treasury stock (393,700 shares)
Cash dividends
Adjustment of retained earnings for newly consolidated
Disposalof treasury stock (393,700 shares)
subsidiaries
Adjustment
Adjustment ofof retained
retained earnings
earnings forfor newly
newly consolidated
associatedsubsidiaries
companies accounted for by the equity method
Adjustmentof retainedofearnings
forduenewly
associated with
Change in ownershipthe parent
to transaction
companies
accounted
for by the equity method
noncontrollingshareholders
Change in ownership of the parent due to transaction withNet change in the year
noncontrolling shareholders
Net change in the year
BALANCE, MARCH 31, 2021
BALANCE, MARCH 31, 2021

Number ofshares of
Number ofcommon stock
shares ofissuedcommon stock
issued895,834

Commonstock
Commonstock¥33,196

CapitalsurplusCapitalsurplus¥167,147

Stockacquisition
Stockrightsacquisition(Note 17)
rights(Note 17)
¥1,471

895,834¥33,196¥167,147¥1,471

14

e-1

e-1

¥491,963
70,754(23,601)
70,754(23,601)

14

(139)

2

(139)

2

35

895,834

33,196167,16435
1,507

895,834

33,196167,164

1,507

32

m-1

32

m-1

Retainedearnings
Retainedearnings¥491,963

538,977
538,977
55,330(22,501)
55,330(22,501)
(336)
(336)
(10)

83
83

p-1

(10)
45

895,834¥33,196¥167,28045¥1,552¥571,459

895,834¥33,196¥167,280¥1,552¥571,459

Stockacquisition
Stockrightsacquisition(Note 17)
rights(Note 17)

Retainedearnings
Retainedearningsp-1

Commonstock
Commonstock
BALANCE, MARCH 31, 2020

$299,063$1,505,987$13,581$4,855,650

BALANCE, MARCH 31, 2020
Net income attributable to owners of the parent
Cash dividends
Net income attributable to owners of the parent
Disposal of treasury stock (393,700 shares)
Cash dividends
Adjustment of retained earnings for newly consolidated
Disposalof treasury stock (393,700 shares)
subsidiaries
Adjustment
Adjustment ofof retained
retained earnings
earnings forfor newly
newly consolidated
associatedsubsidiaries
companies accounted for by the equity method
Adjustmentof retainedofearnings
forduenewly
associated with
Change in ownershipthe parent
to transaction
companies
accounted
for by the equity method
noncontrollingshareholders
Change in ownership of the parent due to transaction withNet change in the year
noncontrolling shareholders
Net change in the year
BALANCE, MARCH 31, 2021

$299,063$1,505,987$13,581$4,855,650
498,471(202,714)
498,471(202,714)$299,063$1,507,029

408$13,990$5,148,282

BALANCE, MARCH 31, 2021

$299,063$1,507,029$13,990$5,148,282

See notes to consolidated financial statements.
See notes to consolidated financial statements.
18

CapitalsurplusCapitalsurplusFinancial Information

2021

290
290

(3,032)(3,032)
(92)

752
752

(92)
408

Millions of yen
Accumulated other comprehensive income
Millions of yen
Accumulated other comprehensive income

Treasurystock
Treasurystock¥(1,867)¥(1,867)

Net unrealized
gain onNet
unrealized
available-foron
salegainsecurities
available-forsale securities

Deferred loss
on derivatives
Deferredloss
under hedge
onaccounting
derivatives
under hedge
accounting¥2,431

Foreigncurrency
Foreigntranslation
currency
adjustments
translation
adjustments¥41,742

Definedretirement
Definedbenefit plans
retirement
benefit plans¥(1,425)¥21,032¥2,431¥41,742¥(1,425)¥21,032

Total
Total
¥755,692201¥755,692
70,754(23,601)
70,754
216(23,601)
216
(139)
(139)
2
(23,703)2(23,703)779,220201(10,279)(8,028)(5,522)92(1,665)(10,279)
10,752(8,028)(5,597)(5,522)
36,21992(1,333)(1,665)

10,752(5,597)36,219(1,333)

137
137

779,220
55,330(22,501)
55,330169(22,501)169(336)

Noncontrollinginterests
Noncontrollinginterests¥22,890

Total
equityTotalequity¥778,582¥22,890¥778,582
70,754(23,601)
70,754
216(23,601)
216(139)(3,291)(3,291)
19,59919,599(139)
2(26,994)2(26,994)
798,820
798,820
55,330(22,501)
55,330169(22,501)
169
(336)

(336)
(10)

(336)
(10)

(6,838)¥12,760(10)
83(10,322)83(10,322)¥821,233¥12,760¥821,233

19,925(9,922)(13,940)407¥(1,528)

19,925¥30,678(9,922)¥(15,519)(13,940)¥22,278407¥(925)(10)83(3,483)83(3,483)¥808,472¥(1,528)¥30,678¥(15,519)¥22,278¥(925)¥808,472(6,838)

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
Net unrealized
gain onNet
unrealized
available-foron
salegainsecurities
available-forsale securities

Deferred loss
on derivatives
Deferredloss
under hedge
onaccounting
derivatives
under hedge
accounting

Foreigncurrency
Foreigntranslation
currency
adjustments
translation
adjustments

Definedretirement
Definedbenefit plans
retirement
benefit plans$(15,008)$96,873$(50,426)$326,297$(12,011)$7,020,006$176,572$7,196,579$(15,008)$96,873$(50,426)$326,297$(12,011)$7,020,006
498,471(202,714)
498,471
1,531(202,714)
1,531(3,032)$176,572$7,196,579
498,471(202,714)
498,471
1,531(202,714)
1,531(3,032)

Treasurystock
Treasury
stock

1,240
1,240

Total
Total

Noncontrollinginterests
Noncontrollinginterests

Total
equityTotalequity(3,032)(92)(3,032)(92)(61,612)$114,960(92)
752(92,994)752(92,994)$7,398,500$114,960$7,398,500

179,513(89,387)(125,590)

3,673$(13,767)

179,513$276,386(89,387)$(139,814)(125,590)$200,707

3,673$(8,338)(92)
752(31,382)752(31,382)$7,283,539$(13,767)$276,386$(139,814)$200,707$(8,338)$7,283,539(61,612)Financial Information

2021

19

Consolidated Statements of Cash Flows

Mitsubishi HC Capital Inc. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020

Thousands of U.S. dollars(Note 1)Millions of yen

Operating activities:
Income before income taxes
Adjustment for:
Income taxes — paid
Depreciation and amortization
Provision (reversal) of allowance for doubtful receivables
Loss on disposals and sales of leased assets
Gain on sales of own-used assets
Gain on sales of shares of subsidiaries and affiliates
Gain on step acquisition
Changes in assets and liabilities:
Decrease (increase) in receivables
Decrease (increase) in lease receivables and investments in leases
Increase in operating securities and investments in private
equity securities
Increase (decrease) in trade payables
Increase (decrease) in interest payable
Purchases of leased assets
Purchases of other operating assets
Other — net
Total adjustments
Net cash provided by (used in) operating activities
Investing activities:
Purchases of own-used assets
Proceeds from sales of own-used assets
Purchases of investment securities
Proceeds from sales and redemption of investment securities
Payments for acquisition of newly consolidated subsidiaries
Proceeds from sales of consolidated subsidiaries
Payments into time deposits
Proceeds from withdrawal of time deposits
Other — net
Net cash provided by (used in) investing activities
Financing activities:
Net (decrease) increase in short-term loans
Net (decrease) increase in commercial paper
Proceeds from loans from the securitizations of theminimum future rentals on lease contracts
Repayments of loans from the securitizations of theminimum future rentals on lease contracts
Proceeds from long-term loans
Repayments of long-term loans
Proceeds from issuance of bonds
Redemption of bonds
Cash dividends paid
Cash dividends paid to noncontrolling shareholders
Other — net
Net cash (used in) provided by financing activities
Foreign currency translation adjustments on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Increase in cash and cash equivalents resulting from change in the scopeof consolidated subsidiaries
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
See notes to consolidated financial statements.

20

Financial Information

2021

2021

2020

2021

¥83,217¥99,097$749,710(22,335)
151,808
9,810
45,783(3,112)(431)(1,395)(20,590)
139,626(143)
125,152(237)(3,433)(201,220)1,367,643
88,378412,460(28,039)(3,891)(12,568)

75,018
95,110(34,756)(32,523)

675,846856,851(17,293)
7,483
1,337
(185,989)(32,781)(6,915)116,096
199,314(17,516)(14,519)(218)(412,643)(47,073)(32,417)(351,297)(252,199)(155,794)
67,415
12,045(1,675,578)(295,330)(62,299)
1,045,918
1,795,628(2,648)
3,272(15,699)
14,664(23,861)
29,481(141,438)
132,1122,019(55,524)
54,250886
1,220(4,330)9(14,542)
2,924(20,808)
3,871(1,641)
1,648(120)(32,988)(211,716)(328,318)

143,201
19,900(1,907,353)(2,957,819)

103,767

141,750

934,841(132,989)
578,241(402,652)
280,426(230,079)(22,501)(5,530)(1,456)(372,808)
2,818(169,455)(151,353)
579,134(268,898)
351,409(237,137)(23,601)(2,149)65552,320
1,670
268,803(1,198,101)
5,209,381(3,627,501)
2,526,363(2,072,783)(202,714)(49,825)(13,125)(3,358,638)
25,390(1,526,626)

80
455,588¥286,213294
186,489¥455,588

725
4,104,398$2,578,497

18,189(500,216)
488,740
7,983
10,992

Additional information

Transfer of HIROGIN LEASE CO., LTD. (HIROGIN LEASE) (Note 3.a.)Proceeds from sales of consolidated subsidiaries mainly consist of the transfer of HIROGIN LEASE.
On March 1, 2021, the Company transferred entire shares of HIROGIN LEASE according to the share transfer
agreement executed on December 23, 2020.
Reconciliation of the net cash provided by the transfer of HIROGIN LEASE is as follows:
Millions of yen

Current assets
Fixed assets
Current liabilities
Long-term liabilities
Noncontrolling interests
OthersGain on share transfer
Transfer amount
Cash and cash equivalents
Net cash provided by transfer of shares of HIROGIN LEASE

Thousands of U.S.
dollars (Note 1)

2021

2021

¥73,732
2,718(44,681)(26,412)(1,071)
(1)
431
4,716
(3,629)¥1,086$664,257
24,494(402,539)(237,950)(9,652)(13)
3,891
42,487(32,700)$9,787

Transfer of SHINKO LEASE CO., LTD. (SHINKO LEASE) (Note 3.b.)Proceeds from sales of consolidated subsidiaries mainly consist of the transfer of SHINKO LEASE.
On July 1, 2019, the Company transferred entire shares of SHINKO LEASE according to the share transfer
agreement executed on April 23, 2019.
Reconciliation of the net cash provided by the transfer of SHINKO LEASE is as follows:
Millions of yen
2020

Current assets
Fixed assets
Current liabilities
Long-term liabilities
Noncontrolling interests
OthersGain on share transfer
Transfer amount
Cash and cash equivalents
Net cash provided by transfer of shares of SHINKO LEASE¥70,922
25,506(54,098)(39,406)
(584)
(86)
237
2,489
(862)
¥1,627

Financial Information

2021

21

Notes to Consolidated Financial Statements
Mitsubishi HC Capital Inc. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020

1. Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated financial statements of Mitsubishi HC Capital Inc. (formerly: Mitsubishi
UFJ Lease & Finance Company Limited ) (the “Company”) and its consolidated subsidiaries (collectively,
the “Companies”) have been prepared in accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Act and its related accounting regulations and in accordance with accounting
principles generally accepted in Japan, which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards (“IFRS”).
In preparing these consolidated financial statements, certain reclassifications and rearrangements havebeen made to the consolidated financial statements issued domestically in order to present them in a form
that is more familiar to readers outside Japan. In addition, certain reclassifications have been made to the2020 consolidated financial statements to conform to the classifications used in 2021.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which theCompany is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts
are included solely for the convenience of readers outside Japan and have been made at the rate of ¥111 to
USD1, the approximate rate of exchange at March 31, 2021.
Such translations should not be construed as representations that the Japanese yen amounts could be
converted into U.S. dollars at that or any other rate.
Japanese yen figures less than a million yen and U.S. dollar figures less than a thousand dollars arerounded down to the nearest million yen and thousand dollars, except for per share data. As a result, totals in
millions of yen and thousands of U.S. dollars may not add up exactly.
2. Summary of Significant Accounting Policies
a. Consolidation — The consolidated financial statements as of March 31, 2021, include the accounts of theCompany and its 188 (184 in 2020) significant subsidiaries.
Under the control and influence concepts, those companies in which the Company, directly or indirectly, isable to exercise control over operations are fully consolidated and those companies over which the Company
has the ability to exercise significant influence are accounted for by the equity method.
Investments in one (one in 2020) unconsolidated subsidiary and 52 (42 in 2020) associated companies areaccounted for by the equity method.
In September 2006, the Accounting Standards Board of Japan (“ASBJ”) issued Practical Issues Task Force
No. 20, Practical Solution Application of Control Criteria and Influence Criteria to Investment Associations.
The practical solution clarifies how the control and influence concept should be practically applied to theconsolidation scope of collective investment vehicles, such as limited partnerships, silent partnerships, andother entities with similar characteristics. The Company applied this practical solution and consolidated 56
such collective investment vehicles in 2021 (46 in 2020).
Investments in the remaining unconsolidated subsidiaries and associated companies are stated at cost. If
the equity method of accounting had been applied to the investments in these companies, the effect on theaccompanying consolidated financial statements would not be material.
The excess of the cost of acquisition over the fair value of the net assets of an acquired subsidiary at thedate of acquisition is shown as “Goodwill” in “Investments and other assets.” Goodwill is mainly amortizedusing the straight-line method over a period of 20 years.
All significant intercompany balances and transactions have been eliminated in consolidation. All thematerial unrealized profit included in assets resulting from transactions within the Companies is also
eliminated.
The fiscal years of the subsidiaries are not necessarily the same as the Company’s. Accounts of thosesubsidiaries that have different fiscal periods have been adjusted for significant transactions to reflect
properly their financial positions at March 31 of each year and the results of operations for the years then

22

Financial Information2021

ended. Certain subsidiaries have prepared provisional statements of accounts, prepared in the equivalent way
as the year-end closing, as of March 31, 2021.
b. Business Combinations — Business combinations are accounted for using the purchase method.
Acquisition-related costs, such as advisory fees or professional fees, are accounted for as expenses in the
periods in which the costs are incurred. If the initial accounting for a business combination is incomplete by
the end of the reporting period in which the business combination occurs, an acquirer shall report in its
financial statements, provisional amounts for the items for which the accounting is incomplete. During themeasurement period, which shall not exceed one year from the acquisition, the acquirer shall retrospectively
adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about
facts and circumstances that existed as of the acquisition date and that would have affected the measurementof the amounts recognized as of that date. Such adjustments shall be recognized as if the accounting for thebusiness combination had been completed at the acquisition date. A parent's ownership interest in a
subsidiary might change if the parent purchases or sells ownership interests in its subsidiary. The carrying
amount of noncontrolling interest is adjusted to reflect the change in the parent's ownership interest in its
subsidiary, while the parent retains its controlling interest in its subsidiary. Any difference between the fairvalue of the consideration received or paid and the amount by which the noncontrolling interest is adjusted isaccounted for as capital surplus as long as the parent retains control over its subsidiary.
c. Cash Equivalents — Cash equivalents are short-term investments that are readily convertible into cash
and that are exposed to insignificant risk of changes in value.
Cash equivalents include time deposits, all of which mature or become due within three months of the dateof acquisition. Time deposits in trust, restricted for payment of maintenance of leased assets and reserved torefund security deposits under lease contracts to lessees, are not included in cash equivalents.
d. Lease Accounting — In March 2007, the ASBJ issued ASBJ Statement No. 13, Accounting Standard forLease Transactions, which revised the previous accounting standard for lease transactions issued in June
1993. The revised accounting standard for lease transactions was effective for fiscal years beginning on orafter April 1, 2008.
Lessee — Finance leases that are deemed to transfer ownership of the leased property to the lessee arecapitalized. However, under the previous accounting standard, other finance leases were permitted to beaccounted for as operating lease transactions if certain “as-if capitalized” information was disclosed in thenotes to the lessee’s consolidated financial statements. In principle, the revised accounting standard requiresthat all finance lease transactions be capitalized by recognizing lease assets and lease obligations in the
consolidated balance sheets, but it permits leases that existed at the transition date and do not transfer
ownership of the leased property to the lessee to continue to be accounted for as operating lease transactions.
The Company and its consolidated domestic subsidiaries applied the revised accounting standard effective
April 1, 2008.
Lessor — Finance leases that are deemed to transfer ownership of the leased property to the lessee are to betreated as sales. However, under the previous accounting standard, other finance leases were permitted to beaccounted for as operating lease transactions if certain “as-if sold” information was disclosed in the notes tothe lessor’s consolidated financial statements. The revised accounting standard requires that all finance leases
that are deemed to transfer ownership of the leased property to the lessee be recognized as “leasereceivables” and all finance leases that are not deemed to transfer ownership of the leased property to thelessee be recognized as “investments in leases.”
The Company and its consolidated domestic subsidiaries applied the revised accounting standard effective
April 1, 2008. The leased assets are initially recorded at their acquisition cost and depreciated over the termof the lease or estimated useful lives on a straight-line basis to the residual value that is the amount to berealized at the time when the lease contract is terminated.
e. Revenue Recognition
Finance Leases — The Companies recognize lease revenues and related costs over the lease term. Interest
revenues on finance lease contracts are calculated by the interest method after April 1, 2008, and by thestraight-line method prior to April 1, 2008, over the remaining lease period.
Operating Leases — The Companies recognize lease revenues on a straight-line basis over the lease term
based on the minimum rentals on the lease contracts. At disposal of leased assets, disposal value and disposal

Financial Information

2021

23

cost were recognized separately as revenues and costs by the Company and its consolidated domestic
subsidiaries while net of disposal value and disposal cost were included in revenues or costs by consolidated
foreign subsidiaries.
(Additional Information)
Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections (therevised ASBJ Statement No. 24, March 31, 2020) was applied for the consolidated financial statements forthe year ended March 31, 2021, and accounting policies and procedures applied were newly disclosed if
relative accounting standards and guidance are not specified.
Installment Sales — The Companies record revenues and profits from installment sales at the due date ofeach receipt.
The Companies follow the industry practice of including installment receivables due after one year incurrent assets. Receivables due after one year amounted to ¥128,306 million ($1,155,918 thousand) in 2021
and ¥152,536 million in 2020.
f. Marketable and Investment Securities — All securities are classified as available-for-sale securities.
Available-for-sale securities are reported at fair value with unrealized gains and losses, net of applicabletaxes, reported in a separate component of equity. The cost of securities sold is determined based on themoving-average method.
Available-for-sale securities for which the fair value is not readily determinable are stated at cost
determined by the moving-average method.
The Company reviews the fair value of its available-for-sale securities on a regular basis to determine if thefair value of any individual security has declined below its cost and if such decline is other than temporary. If
the decline in value is judged to be other than temporary, the security is written down to fair value. The
resulting realized loss is recorded as Other – net in other income (expenses) included in the consolidated
statements of income in the period in which the decline was deemed to be other than temporary.
Investments in limited partnerships, which are considered securities under Article 2, Clause 2 of theJapanese Financial Instruments and Exchange Act, are recorded under the equity method and based on thelatest consolidated financial statements available on the reportable date ruled by the partnership contracts.
The Companies have operating securities to gain interest or dividend income. The amount of operating
securities included in “Marketable Securities” and “Investment Securities” was ¥5,411 million($48,748 thousand) and ¥123,966 million ($1,116,812 thousand), respectively, as of March 31, 2021, and¥798 million and ¥117,963 million, respectively, as of March 31, 2020. In addition, the Companies record
income from those securities as “Revenues” in the consolidated statements of income.
g. Inventories — Inventories held for sale in the ordinary course of business are stated at the lower of cost,which is determined by the specific identification method, or net selling value, which is defined as the selling
price, less additional estimated manufacturing costs and estimated direct selling expenses. The replacement
cost may be used in place of the net selling value, if appropriate.
h. Property and Equipment
Leased Assets — See Note 2.d.
Other Operating Assets — Property and equipment held for the Companies’ operating use other than leased
assets are stated at cost. Depreciation is computed based on the estimated useful lives of the assets under thestraight-line method.
Own-Used Assets — Property and equipment held for the Companies’ own use are stated at cost.
Depreciation is computed based on the estimated useful lives of the assets under the declining-balancemethod, while the straight-line method is applied to buildings acquired after April 1, 2000, and leasehold
improvements and structures acquired after April 1, 2016, by the Company and its consolidated domestic
subsidiaries.
The range of estimated useful lives of the assets is principally as follows:
Buildings: Three to 40 years (three to 40 years in 2020)
Furniture and equipment: Three to 20 years (three to 20 years in 2020)

24

Financial Information

2021

i. Long-Lived Assets — The Company and its consolidated domestic subsidiaries review their long-lived
assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset
or asset group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset
or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued
use and eventual disposition of the asset or asset group. The impairment loss would be measured as theamount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the
discounted cash flows (DCFs) from the continued use and eventual disposition of the asset or the net selling
price at disposition.
j. Allowance for Doubtful Receivables — The allowance for doubtful receivables is stated at the amountconsidered to be appropriate based on the Companies’ past credit loss experience and an evaluation ofpotential losses in the receivables outstanding. The amounts of long-term receivables considered
uncollectible were directly written off from the accounts. The amounts directly written off were ¥9,671
million ($87,132 thousand) and ¥13,896 million at March 31, 2021 and 2020, respectively.
k. Retirement and Pension Plans
Employees’ Retirement Benefits — The Company and certain consolidated subsidiaries have contract-typedefined benefit corporate pension plans for employees or unfunded retirement benefit plans. The Company
adopted contract-type defined benefit corporate pension plans based on Defined Benefit Corporate Pension
Act on February 1, 2011.
The liability for retirement benefits of the Company and a certain consolidated subsidiary is computed
based on projected benefit obligations and plan assets at the consolidated balance sheets date, while theliability for retirement benefits of the other subsidiaries is provided at 100% of the amount that would be
required if all employees had retired at the consolidated balance sheets date.
Assumptions were set forth as follows:
Method of attributing expected retirement
benefit to periods ............................................
Amortization period of prior service cost ........
Recognition period of actuarial gain/loss .........

Benefit formula basis method
13 to 15 years
13 to 20 years

l. Asset Retirement Obligations — An asset retirement obligation is recorded for a legal obligation imposed
either by law or contract that results from the acquisition, construction, development, and normal operationof a tangible fixed asset and is associated with the retirement of such tangible fixed asset. The asset
retirement obligation is recognized as the sum of the DCFs required for the future asset retirement and isrecorded in the period in which the obligation is incurred if a reasonable estimate can be made. If areasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement
obligation is incurred, the liability should be recognized when a reasonable estimate of the asset retirement
obligation can be made. Upon initial recognition of a liability for an asset retirement obligation, an asset
retirement cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of
the liability. The asset retirement cost is subsequently allocated to expense through depreciation over theremaining useful life of the asset. Over time, the liability is accreted to its present value each period. Any
subsequent revisions to the timing or the amount of the original estimate of undiscounted cash flows arereflected as an adjustment to the carrying amount of the liability and the capitalized amount of the related
asset retirement cost.
m. Stock Options — The cost of employee stock options is measured based on the fair value at the date of
grant and recognized as compensation expense over the vesting period as consideration for receiving goods
or services. In the consolidated balance sheets, stock options are presented as stock acquisition rights as aseparate component of equity until exercised.
n. Income Taxes — The provision for income taxes is computed based on the pretax income included in the
consolidated statements of income. The asset and liability approach is used to recognize deferred tax assets
and liabilities for the expected future tax consequences of temporary differences between the carrying

Financial Information

2021

25

amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying the currently
enacted tax laws to the temporary differences.
o. Translation of Foreign Currency Accounts
Foreign Currency Transactions — All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rates at the consolidatedbalance sheets date or, for hedged transactions, the applicable exchange rates. The foreign exchange gains
and losses from translation are recognized in the consolidated statements of income to the extent that they are
not hedged.
However, assets and liabilities denominated in foreign currencies covered by currency swap agreements
and foreign exchange forward contracts are translated into Japanese yen at the contract amounts.
Foreign Currency Financial Statements — The balance sheet accounts of the consolidated foreignsubsidiaries are translated into Japanese yen at the current exchange rate as of the balance sheet date, except
for equity, which is translated at the historical rate. Revenue and expense accounts of the consolidated
foreign subsidiaries are translated into Japanese yen at the average exchange rate during the fiscal year.
Differences arising from such translation are shown as “Foreign currency translation adjustments” underaccumulated other comprehensive income in a separate component of equity.
p. Derivative and Hedging Activities — The Companies enter into foreign exchange forward contracts andcross-currency interest rate swap contracts mainly to hedge foreign exchange risk associated with certain
assets and liabilities denominated in foreign currencies. The Companies also enter into interest rate swap
contracts, interest rate cap contracts, and currency interest rate swaps to manage their interest rate risk andforeign currency exposures on certain assets and liabilities. The Company also utilizes foreign currencydenominated debt to manage its foreign currency exposures associated with the net investments in theforeign subsidiaries and affiliates and available-for-sale securities denominated in foreign currencies.
Almost all derivative transactions are utilized to hedge interest and foreign currency exposuresincorporated within the Companies’ businesses. Accordingly, market risk in these derivatives is basicallyoffset by opposite movements in the value of the hedged assets or liabilities. The Companies do not hold or
issue derivatives for trading or speculative purposes. Because the counterparties to these derivatives arelimited to major international financial institutions, the Companies do not anticipate any losses arising fromcredit risk. Derivative transactions entered into by the Companies have been made in accordance withinternal policies, which regulate the authorization and credit limit amounts. Derivative financial instruments
are classified and accounted for as follows: (a) all derivatives are recognized as either assets or liabilities andmeasured at fair value and gains or losses on the derivative transactions are recognized in the consolidated
statements of income and (b) for derivatives used for hedging purposes, if such derivatives qualify for hedge
accounting because of high correlation and effectiveness between the hedging instruments and the hedged
items, gains or losses on derivatives are deferred until maturity of the hedged transactions.
All derivative transactions, except for interest rate swaps and currency interest rate swaps that qualify forhedge accounting and meet specific matching criteria, are assessed for their hedging effectiveness to verify
whether hedge instruments offset interest rate risk or foreign exchange risk of hedged items in application ofhedge accounting.
Foreign exchange forward contracts, currency interest rate swap contracts and foreign currencydenominated debt are utilized to hedge foreign exchange risk. Certain assets and liabilities denominated inforeign currencies are translated at the contracted rates if the contracts qualify for hedge accounting.
Interest rate swaps and currency interest rate swaps that qualify for hedge accounting and meet specificmatching criteria are not remeasured at fair value. Instead, the differential paid or received under the swap
contracts is recognized and included in interest expense or income. Other interest rate swaps and currencyinterest rate swaps that qualify for hedge accounting are measured at fair value at the consolidated balance
sheet date, and the unrealized gains or losses are deferred until maturity in a separate component of equity.
q. Per Share Information — Basic net income per share is computed by dividing net income available tocommon shareholders by the weighted-average number of common shares outstanding for the period.
Diluted net income per share reflects the potential dilution that could occur if the stock options were
exercised. Diluted net income per share of common stock assumes full exercise of the outstanding stock
options.
26

Financial Information

2021

Cash dividends per share presented in the accompanying consolidated statements of income are dividends
applicable to the respective years, including dividends to be paid after the end of the year.
r. Accounting Change
Certain foreign consolidated subsidiaries applied Leases (IFRS No. 16, issued by International AccountingStandards Board (“IASB”)) for the year ended March 31, 2020. The effects of this change on the
consolidated financial statements for the year ended March 31, 2020, were immaterial.
s. New Accounting Pronouncements
Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and
Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30, March
31, 2020)
Implementation Guidance on Disclosure about Fair Value of Financial Instruments (ASBJ Guidance No. 19,
March 31, 2020)(1) Outline
The IASB and Financial Accounting Standards Board (“FASB”) jointly developed a comprehensive
accounting standard for revenue recognition and issued Revenue from Contracts with Customers (IFRS No.
15, issued by IASB and Topic 606 issued by FASB) in May 2014. Considering the situation that IFRS No. 15
has become applicable from the fiscal year beginning on or after January 1, 2018, and Topic 606 from thefiscal year beginning on or after December 15, 2017, ASBJ developed a comprehensive accounting standard
for revenue recognition and issued it together with implementation guidance.
ASBJ’s basic policy in developing the accounting standard for revenue recognition was to establish
accounting standards as a starting point to adopt basic principles of IFRS No. 15 from the viewpoint ofcomparability of financial statements, which is one of the benefits of maintaining consistency with IFRS No.
15, and to add alternative treatments to the extent not to impair comparability in cases where previous
practices and others in Japan should be considered.
(2) Date of application
The accounting standard and guidance are effective for annual periods beginning on or after April 1, 2021.
(3) Effect of adopting the revised accounting standards
The Company expects to apply the accounting standard and guidance for annual periods beginning on orafter April 1, 2021, and is in the process of measuring the effects of applying the accounting standard andguidance in future applicable periods.
Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019), AccountingStandard for Measurement of Inventories (ASBJ Statement No. 9, July 4, 2019), Accounting Standard for
Financial Instruments (ASBJ Statement No. 10, July 4, 2019), and Implementation Guidance on AccountingStandard for Fair Value Measurement (ASBJ Guidance No. 31, July 4, 2019)
Implementation Guidance on Disclosure about Fair Value of Financial Instruments (ASBJ Guidance No. 19,
March 31, 2020)(1) Outline
The ASBJ promoted an initiative to enhance comparability of the requirements between accounting
principles generally accepted in Japan and international accounting standards, primarily in the areas of
guidance on the fair values of financial instruments and their disclosures, and issued Accounting Standard for
Fair Value Measurement, Accounting Standard for Measurement of Inventories, Accounting Standard for
Financial Instruments, and Implementation Guidance on Accounting Standard for Fair Value Measurement
considering the circumstance where the IASB and the FASB have prescribed almost the similar detailed
guidance (Fair Value Measurement (IFRS No. 13, issued by IASB) and Fair Value Measurement(Accounting Standard Codification Topic 820, issued by FASB)).
The ASBJ’s fundamental policies adopted for developing the Accounting Standard for Fair Value
Measurement, Accounting Standard for Measurement of Inventories, Accounting Standard for Financial
Instruments, and Implementation Guidance on Accounting Standard for Fair Value Measurement are, in
principle, to implement all the requirements of IFRS No. 13 from the viewpoint of enhancing the

Financial Information

2021

27

comparability of the financial statements of domestic and overseas companies by prescribing unified
measurement methods, and also to prescribe exceptional treatments for individual matters so thatcomparability would not be impaired while the accounting practices that have conventionally been adopted
in Japan are taken into account.
(2) Date of application
The accounting standard and guidance are effective for annual periods beginning on or after April 1, 2021.
(3) Effect of adopting the revised accounting standards
The Company expects to apply the accounting standard and guidance for annual periods beginning on orafter April 1, 2021, and is in the process of measuring the effects of applying the accounting standards andguidance in future applicable periods.
t. Significant Accounting Estimates
Accounting Standard for Disclosure of Accounting Estimates（ASBJ Statement No. 31, March 31, 2020）
was applied for the year ended March 31, 2021, and the significant accounting estimates used in preparationof the consolidated financial statements were disclosed in notes to the consolidated financial statements.
Disclosure for the year ended March 31, 2020 was omitted as permitted by the transitional clause of
Paragraph 11 of the Statement No. 31.
Effect of COVID-19
The global spread of COVID-19 has affected the Companies business operation. Accounting estimates usedin preparation of the consolidated financial statements for the year ended March 31, 2021 includes
assumptions regarding future effects of COVID-19 on each business of the Companies.
Impairment of Leased Assets
The Companies review leased assets for impairment whenever events or changes in circumstances indicate
the carrying amount of an asset or asset group may not be recoverable. When the Companies identified
impairment indicators for leased assets, the carrying amounts of leased assets is reduced to their respective
recoverable amounts and the differences between the carrying amounts and recoverable amounts is recorded
as impairment losses.
Future cash flows used in determining recoverable amounts are estimated mainly based on future leaserents, lease terms, residual values at maturity and other information. The Companies believe that theseestimates are reasonable, however, changes in assumptions used and business environment may have amaterial impact on the future consolidated financial statements.
As to the aircraft held by JSA International Holdings, L.P. group, which engaged in aircraft leasing
business in the United States of America with leased assets of ¥832,416 million ($7,499,243 thousand) at
March 31, 2021, the Companies regularly reviewed future cash flows and performs impairment evaluation inaccordance with the accounting principles generally accepted in the United States of America. The
Companies compared the carrying amounts to the sum of the undiscounted future cash flows, and the amountby which the carrying value exceeded the fair value was recorded as an impairment loss for the assets where
the carrying amount of aircraft exceeded the sum of the undiscounted future cash flows. Future cash flows
were comprised of current lease rents, future lease rents, residual values at maturity, disposal costs, leaseterms, off lease periods, renewal lease term, and other factors. Future lease rents and residual values atmaturity were based on appraisal results by appraisal companies and disposal costs, lease terms, off lease
periods and renewal periods were estimated based on historical experience and other information. The effectof COVID-19 was also considered for the estimates for the year ended March 31, 2021.
Impairment losses on aircraft of ¥ 1,691 million ($15,240 thousand) were included in costs in theaccompanying consolidated statement of income for the year ended March 31, 2021.
Valuation of Goodwill
The Companies review goodwill for impairment whenever events or changes in circumstances indicate thecarrying amount of goodwill may not be recoverable. If the Companies identified impairment indicators forgoodwill, the carrying amount of goodwill is reduced to its recoverable amount and the difference between
the carrying amount and the recoverable amount is recorded as an impairment loss.

28

Financial Information

2021

Future cash flows for the remaining amortization period of goodwill used in determining recoverable
amounts are estimated mainly based on historical business results, business plans, which is developed byconsidering the outlook for the business environment and other information of the company related togoodwill under review. The Companies believe that these estimates are reasonable, however, changes inassumptions used and business environment may have a material impact on the future consolidated financial
statements.
For the year ended March 31, 2021, the Companies assessed impairment for goodwill recognized related
to the acquisition of ENGS Holdings Inc. (“ENGS”) (¥11,261 million ($101,459 thousand) at March 31,2021), which engages in vendor financing in U.S. because ENGS was affected by COVID-19, and theCompanies identified impairment indicators for goodwill on ENGS. The Companies determined not torecognize an impairment loss as a result of comparing the total of the undiscounted future cash flows andcarrying amounts of the asset group including the goodwill since the total of the undiscounted future cash
flows exceeded the carrying amounts.
Allowance for Doubtful Receivables
The allowance for doubtful receivables is stated at amounts considered to be appropriate based on the
Companies’ past credit loss experience and based on an evaluation of potential losses in the receivables
outstanding.
The potential losses are measured based on financial condition of customers, estimated recoverable
amount of collaterals and other information. The Companies believe that these estimates are reasonable,
however, changes in assumptions used and business environment may have a material impact on the future
consolidated financial statements.
The Companies recorded allowance for doubtful receivables of ¥28,296 million ($254,925 thousand) for
the year ended March 31, 2021.
u. Additional Information (applied only for the year ended March 31, 2020)
The Japanese Government declared State of Emergency on April 7, 2020 due to the spread of COVID-19,
which affected the Companies’ business operation.
The Companies assessed the impairment of goodwill for the year ended March 31, 2020 based on theassumption that COVID-19 would have an impact on the impairment of goodwill for the year ending March
31, 2021. Further, an additional amount of allowance for doubtful receivables was recorded in order toprepare for potential credit losses to be recognized due to the COVID-19 situation after March 31, 2020.
3. Business Combinations
Business Divestitures
a. Transfer of HIROGIN LEASE CO., LTD. (“HIROGIN LEASE”)
At the meeting of the Board of Directors held on December 23, 2020, the Company resolved to sell all sharesof HIROGIN LEASE, a consolidated subsidiary of the Company, by way of HIROGIN LEASE acquiring its
treasury stock, and signed a share transfer agreement on the same day. The share transfer was completed on
March 1, 2021.
(1) Outline of the share transfer(a) Name and business of the subsidiaryName:
HIROGIN LEASE CO., LTD.
Business: Lease, installment sales and financing(b) Name of the counterparty of the share transfer
HIROGIN LEASE CO., LTD.

Financial Information

2021

29

(c) Reason for the share transfer
The Company has been operating finance business through HIROGIN LEASE as a joint venturebusiness with The Hiroshima Bank Group mainly in Chugoku region. The Company decided to enter
into the share transfer agreement because operating under the umbrella of Hirogin Holdings Inc.
would provide HIROGIN LEASE an opportunity to expand its strength and further development.
The Company aims for further growth and pursue the Companies’ own vision from the viewpoint ofasset efficiency.
(d) Date of the share transfer
March 1, 2021(e) Method of the share transfer
Share transfer agreement in exchange for cash(2) Outline of accounting treatment(a) Amount of gain on sales of shares¥431 million ($3,891 thousand)(b) Appropriate book value of the assets and liabilities related to the transferred business and its breakdown
Current assets .....................................................................................
Property and equipment, Investments and other assets ..........................
Total assets ...........................................................................................
Current liabilities ................................................................................
Long-term liabilities ...........................................................................
Total liabilities......................................................................................

Millions of yen

Thousands of
U.S. dollars¥44,681
26,412¥71,094$402,539
237,950$640,490¥73,732
2,718¥76,451$664,257
24,494$688,752(c) Accounting treatment
The Company presented the difference between the book value and the transfer price of HIROGIN
LEASE as a gain on sales of shares of subsidiaries and affiliates in Other income (expenses) in the
consolidated financial statement for the year ended March 31, 2021.
(3) Name of the main segment in which the subsidiary’s business was included in the Company’s segment
information
Customer Business(4) Estimated amount of profits and losses related to the business included in the consolidated statement ofincome for the year ended March 31, 2021
Revenues ............................................................................................
Operating income .................................................................................

30

Financial Information

2021

Millions of yen¥19,016
1,077

Thousands of
U.S. dollars$171,316
9,709

b. Transfer of SHINKO LEASE CO., LTD. (“SHINKO LEASE”)
The Company resolved at the meeting of the Board of Directors held on April 18, 2019, to sell all shares of
SHINKO LEASE, a consolidated subsidiary, and signed a share transfer agreement with Showa Leasing Co.,
Ltd. (“Showa Leasing”) on April 23, 2019. The share transfer was completed on July 1, 2019.
(1) Outline of the share transfer(a) Name and business of the subsidiaryName:
SHINKO LEASE CO., LTD.
Business: Lease, rental, purchase and sales and installment sales of various movable assets(b) Name of the counterparty of the share transfer
Showa Leasing Co., Ltd.
(c) Reason for the share transfer
Since the Company acquired shares of SHINKO LEASE from Kobe Steel, Ltd. (“Kobe Steel”) in
2000, the Company has been operating finance businesses through SHINKO LEASE as a joint
venture business with Kobe Steel, which has been providing finance function to Kobe Steel Group as
well as conducting operating lease and installment sales business of construction machinery. The
Company decided to enter into the share transfer agreement because the transfer of all shares of
SHINKO LEASE held by the Company to Showa Leasing will provide SHINKO LEASE an
opportunity to expand its strength through synergy with Showa Leasing and contribute to further
development. The Company aims for further growth by improving asset efficiency through this sharetransfer and allocating business resources to main target industries, such as global assets and social
infrastructures.
(d) Date of the share transfer
July 1, 2019(e) Method of the share transfer
Share transfer agreement in exchange for cash(2) Outline of accounting treatment(a) Amount of gain on sales of shares¥237 million(b) Appropriate book value of the assets and liabilities related to the transferred business and its breakdown
Current assets .....................................................................................
Property and equipment, Investments and other assets ..........................
Total assets ...........................................................................................
Current liabilities ................................................................................
Long-term liabilities ...........................................................................
Total liabilities......................................................................................

Millions of yen¥70,922
25,506¥96,428¥54,098
39,406¥93,505

Financial Information

2021

31

(c) Accounting treatment
The Company presented the difference between the book value and the transfer price of SHINKOLEASE as a gain on sales of shares of subsidiaries and affiliates in Other income (expenses) in the
consolidated financial statement for the year ended March 31, 2020.
(3) Name of the main segment in which the subsidiary’s business was included in the Company’s segment
information
Customer Finance(4) Estimated amount of profits and losses related to the business included in the consolidated statement ofincome for the year ended March 31, 2020
Revenues ............................................................................................
Operating income .................................................................................

Millions of yen¥7,348154

4. Marketable and Investment Securities
The carrying amounts of marketable and investment securities recognized in the consolidated balance sheets
as of March 31, 2021 and 2020, were as follows:

Marketable securities ...............................................................
Investment securities:
Unconsolidated subsidiaries and associated companies ...........
Other securities ....................................................................
Total ......................................................................................

¥5,469¥819

2020

Thousands of
U.S. dollars
2021

150,054
207,737¥363,260

141,942
172,004¥314,767

1,351,841
1,871,505$3,272,617

Millions of yen
2021$49,270

Marketable and investment securities as of March 31, 2021 and 2020, consisted of the following:

Equity securities ......................................................................
Debt securities .........................................................................
Trust fund investments and other..............................................
Total ....................................................................................

32

Financial Information

2021

Millions of yen
2021¥185,657
10,610166,993¥363,260

2020¥145,066
10,578159,123¥314,767

Thousands of
U.S. dollars
2021$1,672,586
95,5891,504,442$3,272,617

The carrying amounts and aggregate fair values of marketable and investment securities as of March 31,
2021 and 2020, were as follows:

March 31, 2021

Securities classified as:
Available for sale:
Equity securities ................................................
Debt securities ...................................................
Trust fund investments and other........................
Total ..............................................................

March 31, 2020

Securities classified as:
Available for sale:
Equity securities ................................................
Debt securities ...................................................
Trust fund investments and other........................
Total ..............................................................

March 31, 2021

Securities classified as:
Available for sale:
Equity securities ................................................
Debt securities ...................................................
Trust fund investments and other........................
Total ..............................................................

Cost¥29,179
10,48950¥39,719

Cost¥32,025
10,491
50¥42,567

Cost$262,879
94,500450$357,831

Millions of yen
Unrealized
Unrealized
gains
losses¥43,491120¥(1,216)¥43,611¥(1,216)

Millions of yen
Unrealized
Unrealized
gains
losses¥27,12387¥(7,619)¥27,210¥(7,619)

Thousands of U.S. dollars
Unrealized
Unrealized
gains
losses$391,811
1,088$(10,961)$392,899$(10,961)

Fair value¥71,453
10,61050¥82,114

Fair value¥51,529
10,57850¥62,157

Fair value$643,729
95,589450$739,768

Marketable and investment securities whose fair value is not readily determinable as of March 31, 2021 and2020, were as follows:
Carrying amount

Investments in unconsolidated subsidiaries and associatedcompanies................................................................................
Available for sale:
Equity securities ......................................................................
Trust beneficiary interests ..........................................................
Silent partnership and other........................................................
Total ....................................................................................

2020

Thousands of
U.S. dollars
2021¥148,169¥140,624$1,334,856

28,6082,068
102,299¥281,146

25,9091,634
84,441¥252,609

257,737
18,634
921,619$2,532,848

Millions of yen
2021

The proceeds from realized gains and losses of the available-for-sale securities, which were sold during
the years ended March 31, 2021 and 2020, were as follows:

Proceeds ......................................................................................
Realized gains .............................................................................
Realized losses ............................................................................

Millions of yen
2021¥15,435
11,149(242)

2020¥9,113
5,031(6)

Thousands of
U.S. dollars
2021$139,059
100,449(2,181)

Financial Information

2021

33

The impairment losses on marketable and investment securities recognized for the years ended March 31,
2021 and 2020, were as follows:
Millions of yen
2021

¥106
1
¥108

Equity securities ..........................................................................
Trust fund investments and other .................................................
Total ....................................................................................

2020

Thousands of
U.S. dollars
2021

2020

Thousands of
U.S. dollars
2021

¥322
632
¥954

$959
13
$973

5. Inventories
Inventories as of March 31, 2021 and 2020, consisted of the following:

Merchandise ................................................................................
Real estate for resale ....................................................................
Total.................................................................................

Millions of yen
2021¥12,664
14,803¥27,468¥11,140
10,076¥21,217$114,096
133,363$247,460

6. Investment Property
The Companies own certain rental properties, such as office buildings, commercial facilities, and rental
residential properties, in major cities throughout Japan. The net of rental income and operating expenses for
those properties was ¥12,369 million ($111,436 thousand) and ¥11,795 million for the fiscal years ended
March 31, 2021 and 2020, respectively. The net gain from sales of those properties was ¥9,031 million($81,369 thousand) and ¥7,050 million for the fiscal years ended March 31, 2021 and 2020, respectively.
The carrying amounts, changes in such balances, and fair value of those properties as of March 31, 2021 and2020, were as follows:
Millions of yen
Beginning of year

¥348,744

Carrying amount (1)2021

Net change (2)End of year¥(30,123)¥318,620

Fair value (3)End of year

¥370,177

Millions of yen
Beginning of year

¥322,831

Carrying amount (1)2020

Net change (2)End of year

¥25,912¥348,744

Fair value (3)End of year

¥414,532

Thousands of U.S. dollars
Beginning of year

$3,141,838

Carrying amount (1)Net change (2)$(271,383)

2021

End of year

$2,870,455

Fair value (3)End of year

$3,334,935

Notes:(1) Carrying amounts recognized in the consolidated balance sheets are net of accumulated depreciation andaccumulated impairment losses, if any.
(2) Net change during the fiscal year ended March 31, 2021, was primarily attributable to a ¥22,151 million ($199,562
thousand) decrease from the sales of real estate. Net change during the fiscal year ended March 31, 2020, wasprimarily attributable to a ¥40,932 million increase from the acquisition of real estate.

34

Financial Information

2021

(3) For fair value disclosure related to major properties, the Company obtains the fair values using third-party realestate appraisers or by the DCF method. When changes in facts or circumstances indicate that there is no significant
change in indices from the latest appraisal, the Companies use the fair value of these properties based on suchappraisal. For fair value disclosure on other properties, the Company obtains fair value using the DCF rationallycalculated by the Companies, amounts calculated by using market price indices, or appropriate book value forcertain depreciable assets or properties newly acquired in this fiscal year.

7. Lease Receivables and Investments in Leases
The aggregate annual maturities of the future rentals on lease receivables as of March 31, 2021, were as
follows:

Years Ending March 312022 ..................................................................................
2023 ..................................................................................
2024 ..................................................................................
2025 ..................................................................................
2026 ..................................................................................
Thereafter ..........................................................................
Total.......................................................................

Millions of yen
2021¥139,540
115,91186,74955,64836,064
100,081¥533,996

Thousands of
U.S. dollars
2021$1,257,124
1,044,246
781,531501,333
324,908
901,632$4,810,776

Investments in leases as of March 31, 2021 and 2020, consisted of the following:

Gross investments in leases ................................................
Residual values..................................................................
Unearned interest income...................................................
Total.......................................................................

Millions of yen
2021¥1,172,438
39,094(270,595)¥940,9372020¥1,303,719
42,225(273,477)¥1,072,468

Thousands of
U.S. dollars
2021$10,562,507
352,200(2,437,796)$8,476,912

The aggregate annual maturities of the future rentals on investments in leases as of March 31, 2021, wereas follows:

Years Ending March 312022 ..................................................................................
2023 ..................................................................................
2024 ..................................................................................
2025 ..................................................................................
2026 ..................................................................................
Thereafter ..........................................................................
Total ..........................................................................

Millions of yen
2021¥276,228
229,453
178,266
127,294
82,563
278,630¥1,172,438

Thousands of
U.S. dollars
2021$2,488,547
2,067,151
1,606,007
1,146,800
743,8172,510,183$10,562,507

The consolidated balance sheets’ amounts of sublease contracts, including those that aim to disperse credit
risks, including interest as of March 31, 2021 and 2020, were as follows:

Lease receivables ...............................................................
Investments in leases .........................................................
Lease obligations ...............................................................

Millions of yen
2021¥26,938
56,52086,4442020¥28,926
77,225
109,186

Thousands of
U.S. dollars
2021$242,689
509,189
778,783

Financial Information

2021

35

8. Leased Assets
The minimum future rentals on lease contracts as of March 31, 2021 and 2020, were as follows:

Due within one year ...........................................................
Due after one year .............................................................
Total ..........................................................................

Millions of yen
2021¥174,287
767,278¥941,566

2020

Thousands of
U.S. dollars
2021

2020

Thousands of
U.S. dollars
2021¥185,307
817,293¥1,002,601$1,570,157
6,912,420$8,482,578

9. Goodwill
Goodwill as of March 31, 2021 and 2020, consisted of the following:

Goodwill in connection with acquisition ............................
Consolidation goodwill ......................................................
Total ..........................................................................

Millions of yen
2021¥12,704
44,573¥57,277¥14,82150,758¥65,580$114,455
401,561$516,017

Goodwill in connection with acquisition is related to the merger of the Company with UFJ Central
Leasing Company Limited, effective April 1, 2007. Consolidation goodwill is related to the acquisition of theconsolidated subsidiaries.
10. Long-Lived Assets
The Companies reviewed their long-lived assets for impairment as of March 31, 2021 and 2020. As a result,
the Companies recognized impairment losses of ¥2,578 million ($23,230 thousand) on the following longlived assets in costs in the accompanying consolidated statement of income for the year ended March 31,
2021.
Use

Leased assets
Leased assets

Type of assets

Aircraft
Aircraft engine

Millions of yen¥1,691
886

Thousands of
U.S. dollars$15,240
7,989

Certain consolidated subsidiaries of the Company have reduced the carrying amount of leased assets
whose profitability has declined due to a decrease in future cash flows that are expected to occur in the future
to the recoverable amount, and the reduced amount was recorded in costs as impairment losses.
The recoverable value of the assets is mainly calculated based on the net selling price, and the net selling
price is evaluated based on the valuation reasonably calculated by a third party.
For the year ended March 31, 2020, no impairment loss was recognized.

36

Financial Information

2021

11. Pledged Assets
As of March 31, 2021, the following assets were pledged as collateral for long-term debt, other current
liabilities, and other long-term liabilities:

Cash, cash equivalents and time deposits other than cash
equivalents.....................................................................
Receivables — loans..........................................................
Receivables — installment sales ........................................
Lease receivables and investments in leases .......................
Current assets — other.......................................................
Leased assets .....................................................................
Other operating assets ........................................................
Investment securities .........................................................
Investments and other assets — other.................................
Future rentals on operating lease contracts .........................
Total ..........................................................................

Millions of yen
2021

Thousands of
U.S. dollars
2021¥14,708
21,257
5
96,533
652
588,411
115,446
16,5414,546
2,043¥860,147$132,511
191,50552
869,674
5,875
5,301,004
1,040,056
149,022
40,95918,413$7,749,077

The liabilities secured by the foregoing assets were as follows:

Short-term loans from banks and other financial
institutions .....................................................................
Long-term loans from banks and other financial
institutions .....................................................................
Loans from the securitizations of the minimum future
rentals on lease contracts ................................................
Long-term liabilities — other .............................................
Total ..........................................................................

Millions of yen
2021

Thousands of
U.S. dollars
2021

¥669

$6,033528,904

4,764,901

75,106
1,689¥606,370

676,638
15,222$5,462,795

12. Nonrecourse Loans
Nonrecourse loans as of March 31, 2021 and 2020, were as follows:

Current maturities of nonrecourse long-term loans .............
Current maturities of nonrecourse loans from thesecuritization of the minimum future rentals on lease
contracts ........................................................................
Nonrecourse bond ..............................................................
Nonrecourse long-term loans, less current maturities..........
Total ..........................................................................

Millions of yen
2021¥10,916100
53,354¥64,371

2020

¥558

4,240
5,532
¥10,331

Thousands of
U.S. dollars
2021$98,351900
480,675$579,927

Pledged assets for nonrecourse loans as of March 31, 2021 and 2020, were as follows:

Receivables — loans..........................................................
Inventories.........................................................................
Leased assets .....................................................................
Total ..........................................................................

Millions of yen
2021¥6,722
6,664
74,396¥87,7832020¥12,688¥12,688

Thousands of
U.S. dollars
2021$60,559
60,044670,242$790,846

Financial Information

2021

37

13. Short-Term Borrowings and Long-Term Debt
Short-term borrowings and long-term debt as of March 31, 2021 and 2020, were as follows:

Short-term loans from banks and other financial
institutions:
0.49% ..........................................................................
0.82% ..........................................................................
Commercial paper:
0.02% ..........................................................................
0.01% ..........................................................................

38

Financial Information

2021

Millions of yen
2021¥236,730¥434,1712020¥454,137¥762,100Thousands of
U.S. dollars
2021$2,132,706$3,911,450

Millions of yen
2021

Bonds:
Bonds without collateral:Due 2021-2036, 0.001%-0.890%..................................
Due 2020-2036, 0.001%-0.890%..................................
U.S. dollar bonds without collateral:Due 2022-2030, 2.652%-3.967%..................................
Due 2022-2024, 2.652%-3.960%..................................
U.S. dollar bonds issued under the MTN program:Due 2021, 2.250%........................................................
Due 2020-2021, 2.250%-2.750%..................................
Euroyen bonds issued under the MTN program:Due 2021-2024, 0.010%-0.180%..................................
Due 2020-2024, 0.015%-0.180%..................................
Bonds without collateral issued by Hirogin Lease Co.,
Ltd.*:
Due 2020-2022, 0.050%-0.078%..................................
Bond without collateral issued by Shutoken Lease Co.,Ltd.:
Due 2022, 0.480%........................................................
Due 2022, 0.480%........................................................
Bond without collateral issued by DFL Lease Co., Ltd.:Due 2024, 0.320%........................................................
Due 2024, 0.320%........................................................
Bonds without collateral issued by Bangkok Mitsubishi
UFJ Lease Co., Ltd.:Due 2023-2024, 0.130% - 0.260% ................................
Due 2023-2024, 0.130% - 0.260% ................................
U.S. dollar bonds without collateral issued by Bangkok
Mitsubishi UFJ Lease Co., Ltd.:Due 2022, 0.217% - 0.221%.........................................
Due 2022, 1.894% - 1.904%.........................................
Thai baht bond without collateral issued by Bangkok
Mitsubishi UFJ Lease Co., Ltd.:Due 2021, 2.420%........................................................
Due 2021, 2.420%........................................................
U.S. dollar bonds without collateral issued by Jackson
Square Aviation Ireland Ltd.:Due 2024-2028, 3.520%-3.990%..................................
Due 2024-2028, 3.520%-3.990%..................................
U.S. dollar bonds without collateral issued by Engine
Lease Finance Corporation:Due 2026-2031, 4.480%-4.730%..................................
Due 2026-2031, 4.480%-4.730%..................................
U.S. dollar bonds issued under the MTN program by
MUL Asset Finance Corporation:Due 2022-2030, 0.952 % -3.097% ................................
Due 2022-2030, 1.822 % -2.889% ................................
Bond with collateral— other:Due 2028, 0.706%........................................................
Total ..........................................................................

¥682,000
287,846
55,34871,0002020¥655,000
195,894
108,805
98,100Thousands of
U.S. dollars
2021$6,144,144
2,593,207
498,634
639,639

7,000
40
100

3,039

3,117

3,440

31,05020,70066,426100¥1,224,206

64
100

3,044

3,303

3,630

32,86821,912

39,831¥1,169,553

360
900

27,37928,08430,990279,729

186,486

598,432900$11,028,890* Balance as of March 31, 2021 is not listed as Hirogin Lease Co., Ltd. was excluded from consolidation(Note 3.a.).

Financial Information

2021

39

Millions of yen
2021

Long-term loans from banks and other financial
institutions, partially collateralized:
Due within one year, 0.83%..........................................
Due 2022-2037, 1.44%.................................................
Due within one year, 1.41%..........................................
Due 2021-2039, 1.67%.................................................
Total ..........................................................................
Nonrecourse loans:
Due within one year, 1.07%..........................................
Due 2027-2032, 1.13%.................................................
Due within one year, 2.82% .........................................
Due 2021, 2.82%..........................................................
Total ..........................................................................

¥361,427
2,207,918¥2,569,345¥10,916
53,354¥64,271

Nonrecourse loans from the securitization of the minimum
future rentals on lease contracts:
Due within one year, 3.50%..........................................
Lease obligations, including fixed interests:
Due within one year .....................................................
Due 2022-2037 ............................................................
Due within one year .....................................................
Due 2021-2037 ............................................................
Total ..........................................................................
Loans from the securitizations of the minimum future
rentals on lease contracts:
Due within one year, 0.30%..........................................
Due 2022-2029, 0.64%.................................................
Due within one year, 0.18%..........................................
Due 2021-2029, 0.52%.................................................
Total ..........................................................................
Other current liabilities and other long-term liabilities:
Due within one year .....................................................
Due 2022-2035 ............................................................
Due within one year .....................................................
Due 2021-2035 ............................................................
Total ..........................................................................

2020¥329,259
2,073,769¥2,403,029

¥558
5,532
¥6,090Thousands of
U.S. dollars
2021$3,256,099
19,891,158$23,147,257$98,351
480,675$579,026¥4,240¥23,133
66,667¥89,800¥61,995
44,234¥106,230¥52
1,395¥1,448¥25,213
86,203¥111,417¥54,868
76,671¥131,540¥52
1,426¥1,479$208,408
600,604$809,012$558,521
398,513$957,035$475
12,572$13,047

The interest rates of loans from banks and other financial institutions, commercial paper, and loans fromthe securitizations of the minimum future rentals on lease contracts represent weighted-average rates on
outstanding balances at March 31, 2021 and 2020.
Substantially all of the Company’s short-term bank loans are made under agreements, as is customary inJapan, which provide that, at the request of such banks, the Company will provide additional collateral or
guarantors with respect to the loan. As of March 31, 2021, the Company has not received any such request.

40

Financial Information

2021

Annual maturities of long-term debt as of March 31, 2021, for the next five years were as follows:
Millions of yen
Due after
Due after one Due after two
three years
Due after four
Due in one
year throughyears throughthrough four
years throughyear or lesstwo years
three years
years
five years
March 31, 2021
Short-term loans frombanks and otherfinancial institutions .
¥236,730
Commercial paper......
434,171
Bonds ........................
244,025¥157,309¥217,093¥133,597¥170,890
Long-term loans frombanks and otherfinancial institutions .
361,427449,661
420,797
386,539
274,333
Nonrecourse loans .....
10,916
4,195
5,311
5,420
5,533
Lease obligations .......
23,133
19,497
15,55011,653
6,877
Loans from thesecuritizations of theminimum future
rentals on lease
contracts and other ...
62,04826,357
17,167960
216
Total.....................
¥1,372,452¥657,019¥675,921¥538,171¥457,851

March 31, 2021

Due in one
year or lessThousands of U.S. dollars
Due after
Due after one Due after two
three years
year throughyears throughthrough four
two years
three years
years

Due after four
years throughfive years

Short-term loans frombanks and otherfinancial institutions .
$2,132,706
Commercial paper......
3,911,450
Bonds ........................
2,198,426$1,417,198$1,955,797$1,203,582$1,539,554
Long-term loans frombanks and otherfinancial institutions .
3,256,099
4,051,002
3,790,971
3,482,334
2,471,470
Nonrecourse loans .....
98,35137,79347,85548,83249,854
Lease obligations .......
208,408
175,649
140,092
104,989
61,958Loans from thesecuritizations of theminimum future
rentals on lease
contracts and other ...
558,996
237,452
154,6628,654
1,952
Total.....................
$12,364,439$5,919,096$6,089,379$4,848,393$4,124,788
The Company and certain consolidated subsidiaries had loan commitment agreements as of March 31,
2021 and 2020, amounting to ¥447,248 million ($4,029,269 thousand) and ¥525,150 million, respectively, of
which ¥447,248 million ($4,029,269 thousand) and ¥497,400 million, respectively, were unused. Of theunused portion of the loan commitment agreements, ¥446,690 million ($4,024,240 thousand) and ¥487,731
million was for the Company and MUL Asset Finance Corporation, which engages in funding operation for
the Company and the Group in the United States of America, as of March 31, 2021 and 2020, respectively.

Financial Information

2021

41

14. Retirement and Pension Plans
The Company and certain consolidated subsidiaries have contract-type defined benefit corporate pension
plans for employees or unfunded retirement benefit plans and defined contribution pension plans. The
Company adopted contract-type defined benefit corporate pension plans based on Defined Benefit Corporate
Pension Act on February 1, 2011. In addition, the Company adopted a defined contribution pension plan on
October 1, 2016.
Under most circumstances, employees terminating their employment are entitled to retirement benefits
that are determined based on the rate of pay at the time of termination, years of service, and certain otherfactors. Such retirement benefits are made in the form of a lump-sum severance payment from the Company
or from its domestic subsidiaries and annuity payments from a trustee. If the termination is involuntary, suchas when caused by retirement at the mandatory retirement age or caused by death, the employee is entitled toa larger payment than in the case of a voluntary termination.
The liabilities for retirement benefits for directors and Audit and Supervisory Board members of theconsolidated domestic subsidiaries at March 31, 2021 and 2020, were ¥112 million ($1,015 thousand) and¥119 million, respectively. The retirement benefits for directors and Audit and Supervisory Board members
are paid subject to the approval of the shareholders.
(1) The changes in defined benefit obligation for the years ended March 31, 2021 and 2020, were as
follows:

Balance at beginning of year ............................................
Current service cost ......................................................
Interest cost .................................................................
Actuarial gains (losses)...............................................
Benefits paid ...............................................................
Change in the scope of consolidation ............................
Balance at end of year ......................................................

Millions of yen
2021¥25,269
1,407
130
360
(718)
(127)
¥26,3222020¥24,665
1,523
126
(273)
(579)
(194)
¥25,269

Thousands of
U.S. dollars
2021$227,650
12,6781,175
3,249(6,471)(1,146)$237,136(2) The changes in plan assets for the years ended March 31, 2021 and 2020, were as follows:
Thousands of
U.S. dollars

Millions of yen

Balance at beginning of year ............................................
Expected return on plan asset .......................................
Actuarial gains (losses) ................................................
Contributions from the employer ..................................
Benefits paid ................................................................
Balance at end of year ......................................................

2021¥21,954
363
360
1,124
(520)
¥23,282

2020¥21,432
354
(762)
1,249
(318)
¥21,9542021$197,792
3,271
3,249
10,129(4,688)$209,754(3) Reconciliation between the liability recorded in the consolidated balance sheets and the balances ofdefined benefit obligation and plan assets was as follows:
2020

Unfunded defined benefit obligation ................................
Net liability arising from defined benefit obligation .........

¥25,436(23,282)
2,153
885¥3,039¥24,355(21,954)
2,400
913¥3,314

Thousands of
U.S. dollars
2021

Liability for retirement benefits........................................
Asset for retirement benefits ............................................

¥3,060(21)¥3,344(30)$27,575(193)

Net liability arising from defined benefit obligation .........

¥3,039¥3,314$27,381

Funded defined benefit obligation ....................................
Plan assets .......................................................................

42

Financial Information

2021

Millions of yen
2021$229,154(209,754)
19,400
7,981$27,381(4) The components of net periodic benefit costs for the years ended March 31, 2021 and 2020, were as
follows:

Service cost......................................................................
Interest cost......................................................................
Expected return on plan assets ..........................................
Recognized actuarial losses ..............................................
Amortization of prior service cost ....................................
Others ..............................................................................
Net periodic benefit costs .................................................

Millions of yen
2021¥1,407
130
(363)
403
87
5
¥1,6712020¥1,523
126
(354)
343
87
9
¥1,735

Thousands of
U.S. dollars
2021$12,678
1,175(3,271)
3,631
788
52
$15,055(5) Amounts recognized in other comprehensive income (before income tax effect) in respect of defined
retirement benefit plans for the years ended March 31, 2021 and 2020, were as follows:

Prior service cost .............................................................
Actuarial gains (losses) ....................................................
Total ................................................................................

Millions of yen
2021

¥87
393
¥480

2020

¥87
(115)
¥(28)

Thousands of
U.S. dollars
2021

$788
3,542
$4,330(6) Amounts recognized in accumulated other comprehensive income (before income tax effect) in respectof defined retirement benefit plans as of March 31, 2021 and 2020, were as follows:

Unrecognized prior service cost .......................................
Unrecognized actuarial losses ..........................................
Total ................................................................................

Millions of yen
2021

2020

¥(459)
1,737¥1,278¥(372)
2,140¥1,7682021

2020

Thousands of
U.S. dollars
2021$(4,143)
15,656$11,513(7) Plan assets
a. Components of plan assets
Plan assets consisted of the following:
General account ..............................................................
44%
47%
Debt investments ............................................................
23
23
Equity investments .........................................................
16
15
Alternative investments* .................................................
16
13
Others .............................................................................
1
2
Total ...............................................................................
100%
100%
* Alternative investments are invested for the purpose of diversifying risks and primarily invested in hedge
funds.
b.

Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return,which are expected currently and in the future from the various components of the plan assets.

Financial Information

2021

43

(8) Assumptions used for the years ended March 31, 2021 and 2020, were set forth as follows:
Discount rate ..................................................................
Expected rate of return on plan assets .............................

2021
0.56%
1.7

2020
0.56%
1.7

Other than the above, an expected rate of salary increase is used for the assumption. The Company haveadopted a point system. Salaries as the base for benefits consist of points by function and points byservice. Salary increase index by age is used for points by function.
(9) Defined contribution pension plans
Contributions to defined contribution pension plans for the years ended March 31, 2021 and 2020, were¥811 million ($7,313 thousand) and ¥754 million, respectively.
15. Commitments and Contingent Liabilities
The Companies, as lenders, have loan commitment agreements as of March 31, 2021, totaling ¥133,112
million ($1,199,207 thousand), where the used portion is ¥34,325 million ($309,237 thousand), and theunused portion is ¥98,786 million ($889,969 thousand). This amount includes unused portions of the
facilities of ¥88,513 million ($797,420 thousand), which will not necessarily be utilized in full because thesefacilities are subject to periodic reviews of the borrower’s purpose for the loan, credit standing, etc.
The Companies are contingently liable as of March 31, 2021, as guarantor or co-guarantor for operatingtransactions of ¥14,505 million ($130,681 thousand), and borrowings and others of ¥596 million ($5,376
thousand) for their unconsolidated subsidiaries and others.
The Companies have entered into various interest rate swap contracts, interest rate cap contracts, crosscurrency interest rate swap contracts, and foreign exchange forward contracts in the ordinary course ofbusiness (see Note 25).
16. Equity
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant
provisions in the Companies Act that affect financial and accounting matters are summarized below:(a) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to
the year-end dividend upon resolution at the shareholders’ meeting. Additionally, for companies that meetcertain criteria including (1) having a Board of Directors, (2) having independent auditors, (3) having an
Audit and Supervisory Board, and (4) the term of service of the directors being prescribed as one year
rather than the normal two-year term by its articles of incorporation, the Board of Directors may declare
dividends (except for dividends-in-kind) at any time during the fiscal year if the company has prescribed soin its articles of incorporation. With respect to the third condition above, the Board of Directors ofcompanies with (a) board committees (namely, appointment committee, compensation committee and audit
committee) or (b) an audit and supervisory committee (as implemented under the Companies Act effective
May 1, 2015) may also declare dividends at any time because such companies, by nature, meet the criteria
under the Companies Act. The Company is organized as a company with an audit and supervisorycommittee, effective April 1, 2021. The Company meets all the above criteria and, accordingly, the Boardof Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) to shareholders
subject to a certain limitation and additional requirements. Semiannual interim dividends may also be paid
once a year upon resolution by the Board of Directors if the articles of incorporation of the company sostipulate. The Companies Act provides certain limitations on the amounts available for dividends or the

44

Financial Information2021

purchase of treasury stock. The limitation is defined as the amount available for distribution to theshareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.
Moreover, the additional dividend restriction based upon the consolidated retained earnings is applicableto the Company.
(b) Increases/decreases and transfer of common stock, reserve, and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal
reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus),depending on the equity account charged upon the payment of such dividends, until the aggregate amountof the legal reserve and additional paid-in capital equals 25% of the common stock. Under the Companies
Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation.
The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capitalsurplus and retained earnings can be transferred among the accounts within equity under certain conditions
upon resolution of the shareholders.
(c) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury
stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed theamount available for distribution to the shareholders, which is determined by a specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of equity. The
Companies Act also provides that companies can purchase both treasury stock acquisition rights andtreasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or
deducted directly from stock acquisition rights.
On April 1, 2013, the Company completed a ten-for-one stock split by way of a free share distribution basedon the resolution of the Board of Directors’ meeting held on December 20, 2012.

Financial Information

2021

45

17. Stock-Based Compensation
The Company has a stock option plan for certain directors and executive officers. Under the plan, the right topurchase the common shares of the Company is granted at an exercise price of ¥1 per share. The contractual
term of the stock options is 30 years. The stock option holders may exercise their stock acquisition rights
during the five-year period starting the day one year after leaving their position as either director, Audit andSupervisory Board member, or executive officer of the Company.
The stock options outstanding as of March 31, 2021, were as follows:

Persons granted................................................................
Number of options granted* .............................................
Date of grant ....................................................................
The fair value of options granted under the plan at the
grant dates*..................................................................

Persons granted................................................................
Number of options granted* .............................................
Date of grant ....................................................................
The fair value of options granted under the plan at the
grant dates*..................................................................

Persons granted................................................................
Number of options granted* .............................................
Date of grant ....................................................................
The fair value of options granted under the plan at the
grant dates*..................................................................

Persons granted................................................................
Number of options granted* .............................................
Date of grant ....................................................................
The fair value of options granted under the plan at the
grant dates*..................................................................

2011 stock
option9 directors
17 executive
officers
651,600
October 15,
2010¥250.1($2.25)2012 stock
option10 directors
17 executive
officers
721,700
October 14,
2011¥283.1($2.55)2013 stock
option10 directors
17 executive
officers
583,100
October 15,
2012¥312.8($2.81)2014 stock
option10 directors
19 executive
officers
419,000
October 15,
2013
¥502
($4.52)2015 stock
option10 directors
18 executive
officers
350,300
October 15,
2014
¥490
($4.41)2016 stock
option9 directors
20 executive
officers
368,800
October 15,
2015
¥546
($4.91)2017 stock
option9 directors
20 executive
officers
451,700
October 14,
2016
¥436
($3.92)2018 stock
option9 directors
27 executive
officers
493,000
October 13,
2017
¥566
($5.09)2019 stock
option6 directors
33 executive
officers
422,400
July 13,2018¥590($5.31)2020 stock
option5 directors
30 executive
officers
490,400
July 12,2019¥513($4.62)2021 stock
option5 directors
31 executive
officers
507,000
July 15,2020¥424($3.81)

The total stock-based compensation costs recognized for the years ended March 31, 2021 and 2020, were¥214 million ($1,936 thousand) and ¥251 million, respectively.

46

Financial Information

2021

The fair value of 2021 stock option is estimated using the Black-Scholes option-pricing model with theassumptions noted as follows in the table:

Volatility of stock price ....................................................
Estimated remaining outstanding period ...........................
Estimated dividend ..........................................................
Risk-free interest rate .......................................................

2021 stock
option32.69%
3.3 years
5.01%(0.15)%The volatility of the stock price is based on the historical volatility of the Company’s stock for the period
equal to the option’s estimated remaining outstanding period from the grant date. The estimated remaining
outstanding period is based on the average term period and the average age as of retirement. The estimateddividend is based on the per share dividends of ¥25 ($0.22) made in the preceding year for the year ended
March 31, 2021. The risk-free interest rate is based on the yield of government bonds having a remaining life
equal to the option’s estimated remaining outstanding period.
The stock option activity for the fiscal years ended March 31, 2021 and 2020, was as follows:

For the year ended March 31, 2020
Outstanding at beginning of fiscal year ..
Granted ..............................................
Canceled or expired............................
Exercised ...........................................
Outstanding at end of fiscal year ...........
Vested at end of fiscal year ....................
For the year ended March 31, 2021
Outstanding at beginning of fiscal year ..
Granted ..............................................
Canceled or expired............................
Exercised ...........................................
Outstanding at end of fiscal year ...........
Vested at end of fiscal year ....................

For the year ended March 31, 2020
Outstanding at beginning of fiscal year ..
Granted ..............................................
Canceled or expired............................
Exercised ...........................................
Outstanding at end of fiscal year ...........
Vested at end of fiscal year ....................
For the year ended March 31, 2021
Outstanding at beginning of fiscal year ..
Granted ..............................................
Canceled or expired............................
Exercised ...........................................
Outstanding at end of fiscal year ...........
Vested at end of fiscal year ....................

2011 stock
option2012 stock2013 stock
optionoptionNumber of shares*

2014 stock
option153,700

247,100

449,000

330,800

83,80069,90069,90068,700178,400
178,400

166,000
283,000
283,000

102,100
228,700
228,700

69,900178,400

283,000

228,700

17,80052,10052,10068,700109,700
109,700

43,200239,800
239,800

40,200188,500
188,5002015 stock
option2016 stock2017 stock
optionoptionNumber of shares*

2018 stock
option302,800

332,700

451,700

493,000

53,600249,200
249,200

25,700307,000
307,000

27,100424,600
424,600

24,100468,900
468,900

249,200

307,000

424,600

468,900

34,800214,400
214,400

65,400241,600
241,600

84,600340,000
340,000

27,800441,100
441,100

Financial Information

2021

47

2019 stock
optionFor the year ended March 31, 2020
Outstanding at beginning of fiscal year ..
Granted ..............................................
Canceled or expired............................
Exercised ...........................................
Outstanding at end of fiscal year ...........
Vested at end of fiscal year ....................

414,200

414,200
414,200

2020 stock
2021 stock
optionoptionNumber of shares*
490,400
490,400
490,400

For the year ended March 31, 2021
Outstanding at beginning of fiscal year ..
414,200
490,400
Granted ..............................................
507,000
Canceled or expired............................
Exercised ...........................................
11,200
Outstanding at end of fiscal year ...........
403,000
490,400
507,000
Vested at end of fiscal year ....................
403,000
490,400
507,000* On April 1, 2013, the Company split each share of its common stock, which was held by shareholders
stated or recorded in the register of shareholders as of March 31, 2013, into ten (10) shares. Number of
options, the fair value of options, and per share dividends have been retrospectively adjusted to reflect thestock split for all periods presented.
18. Selling, General, and Administrative Expenses
Selling, general, and administrative expenses for the years ended March 31, 2021 and 2020, consisted of thefollowing:

Provision for doubtful receivables .....................................................
Employees’ salaries, bonuses, and allowances ...................................
Other ................................................................................................
Total .........................................................................................

Millions of yen
2021
2020

¥15,095
25,05358,018¥98,166¥8,04323,76758,299¥90,110

Thousands of
U.S. dollars
2021$135,991
225,707522,688$884,386

19. Gain on Step Acquisition
The Company recognized a step acquisition gain on its existing holdings of IP Fukushima Onomachi Solar
Power Generation LLC (“IP”) and Bangchak Solar yield-co LLC (“Bangchak”), which engages in solar
power generation, when IP and Bangchak became consolidated subsidiaries due to the additional silent
partnership shares purchased by the Company for the year ended March 31, 2021.
The Company recognized a step acquisition gain on its existing holdings of Godo Kaisha White Rise
Investment Inc. (“White Rise”), which engages in real estate leasing, and KMT Solar LLC (“KMT”), which
engages in solar power generation, when White Rise and KMT became consolidated subsidiaries due to theadditional silent partnership shares purchased by the Company for the year ended March 31, 2020.
20. Compensation Income
The Companies recognized a compensation income in association with a real estate redevelopment project
for the year ended March 31, 2021.
The Companies recognized no compensation income for the year ended March 31, 2020.

48

Financial Information

2021

21. Related-Party Transactions (As restated*)* Refer to *3

The transactions with subsidiaries of Mitsubishi UFJ Financial Group, Inc. or Mitsubishi Corporation, which
has significant influence over the Company, for the years ended March 31, 2021 and 2020, were as follows:

Interest expense*1 ...............................................................................
Interest expense (U.S. dollars)*1.........................................................
Lease revenue ......................................................................................
*1 Interest expense recorded in costs and other income (expenses).

Millions of yen
2021
2020

¥7,630N/A
17,511¥8,769N/A
18,421Thousands of
U.S. dollars
2021$68,739
52,376
157,758

Amounts due from and to subsidiaries of Mitsubishi UFJ Financial Group, Inc. or Mitsubishi Corporation,
which has significant influence over the Company, as of March 31, 2021 and 2020, were as follows:
Millions of yen
2021
2020

Thousands of
U.S. dollars
2021

Lease receivables and investments in leases*2 ................................... ¥117,140 ¥142,070 $1,055,319
Short-term loans ..................................................................................
33,000 101,090
297,297
Short-term loans (U.S. dollars) ............................................................
N/A
N/A
100,000
Long-term loans, including current maturities ....................................
331,321 276,790
2,984,874
Long-term loans, including current maturities (U.S. dollars)*3..........
N/A
N/A
2,402,604*2 Lease receivables and investments in leases include the amounts of lease contracts, which aim to disperse
credit risk, including interest, presented in consolidated balance sheets.
*3 The balance of long-term loans (U.S. dollars) secured by the foregoing assets as of March 31, 2021 and2020, were $1,302,604 thousand and $1,567,225 thousand, respectively. (This information was notpreviously disclosed)
22. Income Taxes
The Company and its domestic subsidiaries are subject to Japanese national and local income taxes, which,in the aggregate, resulted in a normal effective statutory tax rate of approximately 30.6% for the years ended
March 31, 2021 and 2020.
The tax effects of significant temporary differences, which resulted in deferred tax assets and liabilities, asof March 31, 2021 and 2020, were as follows:

Deferred tax assets:
Tax loss carryforwards...................................................................
Allowance for doubtful receivables...............................................
Advances received — leases .........................................................
 Asset retirement obligations ..........................................................
Other ..............................................................................................
  Total of tax loss carryforwards and temporary differences .......
Less valuation allowance for tax loss carryforwards .....................
Less valuation allowance for temporary differences .....................
  Total valuation allowance ..........................................................
Less deferred tax liabilities ............................................................
  Net deferred tax assets ...............................................................

Millions of yen
2021
2020

¥61,441
10,9085,744
5,783
28,614112,491(2,801)(3,194)(5,996)(97,733)¥8,761¥52,648
7,889
6,391
5,016
27,033
98,978(2,307)(2,427)(4,735)(79,446)¥14,797

Thousands of
U.S. dollars
2021$553,524
98,27451,75052,099257,789
1,013,438(25,239)(28,782)(54,022)(880,484)$78,931

Financial Information

2021

49

Deferred tax liabilities:
Depreciation of leased assets of foreign subsidiaries .......................
Difference in assets and liabilities of newly consolidated
subsidiaries between fair value and tax basis ..............................
Net unrealized gain on available-for-sale securities ........................
Deferred revenues from certain finance lease transactions ..............
Other .............................................................................................
Total deferred tax liabilities .......................................................
Less deferred tax assets ..................................................................
Net deferred tax liabilities .........................................................

Millions of yen
2021
2020

Thousands of
U.S. dollars
2021¥115,678 ¥108,609$1,042,149

7,490
13,602
6,263
7,515
150,550(97,733)¥52,816

67,482
122,543
56,42867,706
1,356,309(880,484)$475,825

8,287
7,473
6,255
2,328
132,954(79,446)¥53,508

The expiration of tax loss carryforwards, the related valuation allowances and the resulting net deferred
tax assets as of March 31, 2021 and 2020, were as follows:

March 31, 2021

Deferred tax assets relating to tax
loss carryforwards*1 ...............
Less valuation allowances for tax
loss carryforwards ..................
Net deferred tax assets relating to
tax loss carryforwards*2 ..........

March 31, 2020

Deferred tax assets relating to tax
loss carryforwards*1 ...............
Less valuation allowances for tax
loss carryforwards ..................
Net deferred tax assets relating to
tax loss carryforwards*2 ..........

March 31, 2021

Deferred tax assets relating to tax
loss carryforwards*1 ...............
Less valuation allowances for tax
loss carryforwards ..................
Net deferred tax assets relating to
tax loss carryforwards*2 ..........

1 year or less

After 1 year
through 5
years

Millions of yen
After 5 years
through 10
years

¥348

¥2,224¥2,641¥56,226¥61,441(1,011)(1,532)(257)(2,801)

348

1,212

1,109

55,96858,6391 year or less

After 1 year
through 5
years

Millions of yen
After 5 years
through 10
years

¥14

¥1,777¥2,578¥48,277¥52,648(688)(1,293)(325)(2,307)

1,088

1,284

47,95250,34114

1 year or less

$3,1403,140After 10years

After 10years

Thousands of U.S. dollars
After 1 year
After 5 years
through 5
through 10
After 10
years
years
years

Total

Total

Total

$20,043$23,799$506,541$553,524(9,116)(13,803)(2,318)(25,239)

10,927

9,995

504,222528,284*1 Tax loss carryforwards were calculated by applying the normal effective statutory tax rate.
*2 Net deferred tax assets are recognized primarily for tax loss carryforwards (calculated by applying the normal effective statutory
tax rate) of consolidated subsidiaries of the Company. The tax loss carryforwards of these foreign consolidated subsidiaries arose
by applying the accelerated depreciation for leased assets. Valuation allowances have not been recognized for these tax loss
carryforwards because they are expected to be collectible considering future taxable income.

50

Financial Information

2021

Certain subsidiaries of the Company have tax loss carryforwards as stated above and those will mainly
begin to expire in 2023.
The difference between the normal effective statutory tax rate and the actual effective tax rate reflected in
the accompanying consolidated statements of income for the year ended March 31, 2021 was not disclosed
because the difference was less than 5% of the normal effective statutory tax rate.
A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in
the accompanying consolidated statements of income for the year ended March 31, 2020 was as follows:
Normal effective statutory tax rate .......................................................
Difference in tax rate related to foreign subsidiaries .........................
Effect of changes in companies subject to the Controlled Foreign
Company (CFC) rules* .................................................................
Amortization of goodwill .................................................................
Other — net .....................................................................................
Actual effective tax rate .......................................................................

2020

30.6%
(4.6)
(2.4)
1.8
1.8
27.2%

* Features of an income tax system designed to limit artificial deferral of tax by using offshore low taxed entities.

23. Leases
The future minimum payments under noncancelable operating leases as lessee as of March 31, 2021 and2020, were as follows:

Due within one year ..........................................................................
Due after one year ............................................................................
Total .........................................................................................

Millions of yen
2021
2020

¥2,848
4,267¥7,115¥3,182
5,317¥8,499Thousands of
U.S. dollars
2021$25,658
38,449$64,108

24. Financial Instruments and Related Disclosures(1) Policy for financial instruments
The Companies mainly conduct business of lease transactions, installment sales, and financialtransactions.
In order to finance these businesses, the Companies utilize indirect financing, primarily bank loans, aswell as direct financing, issuance of bonds, commercial paper, and securitization receivables.
So as to properly manage the interest rate risk that arises from the mismatch of interest conditions andthat of duration between invested assets and financing liabilities, the Companies utilize asset liability
management (ALM).
Derivatives are used, not for speculative and trading purposes, but mainly to hedge interest and foreign
currency exposures as described in Note 25.
(2) Nature and extent of risks arising from financial instruments
Major financial assets of the Companies are receivables relating to leases, installment sales, and loans,which are exposed to customer credit risk.
Marketable and investment securities, mainly composed of equity securities, debt securities, andothers, which are held for maintaining business relationships with customers and investment income
purposes, are exposed to issuer credit risk, interest rate risk, and market price fluctuation risk.
The Companies are exposed to liquidity risk, namely the risk that, under certain conditions, they may
not be able to procure the funds needed from the market to meet payment obligations for loans, bonds,
commercial paper, and so on, on their maturity dates. The Companies are also exposed to interest rate
fluctuation risk on floating interest rate liabilities.
The Companies mainly conduct business of lease transactions, installment sales, and financialtransactions. Some receivables related to leases, installment sales, and loans have fixed interest rates.

Financial Information

2021

51

However, the Companies use some floating interest rate financing instruments, which expose them tointerest rate risk.
In order to comprehensively manage these interest rate risks, or to secure stable earnings by fixing a
profit margin for individual business projects, the Companies utilize interest rate-related derivativetransactions.
In order to manage foreign exchange risk for individual foreign currency-denominated assets andliabilities, the Companies also utilize currency-related derivative transactions and foreign currencydenominated debt.
Please see Note 25 for more details about derivatives.
(3) Risk management for financial instruments(a) Credit risk management
The Companies manage the credit risk of individual customers based on their overall strategy,
financial position, credit rating portfolio characteristics, and other factors in accordance with theinternal credit management rules. This credit management process is conducted by the businessdepartments and the credit department, with regular reporting to the Risk Management Committee,
the Management Committee, and the Board of Directors. In addition, the Internal Audit department
monitors and audits credit administration and management status.
(b) Market risk management (foreign exchange risk and interest rate fluctuation risk)
The Companies manage exposure to interest rate fluctuation risk, foreign exchange risk, and pricefluctuation risk according to internal rules for market risk management.
(i) Interest rate fluctuation risk management
In order to properly manage interest rate fluctuation risk, the Companies not only constantly
monitor interest rate movements, but also monitor any mismatches of interest conditions and thatof duration between invested assets and financing liabilities. With respect to interest rate
fluctuation risk, the Company convenes the ALM Committee quarterly, attended by officers andthe managers of related departments, to review market conditions and asset/liability portfolio
analysis. The ALM Committee deliberates and decides on policies with regard to current risk
management and new financing. In addition, the Company reports quarterly to the Risk
Management Committee.
(ii) Quantitative information of market risk
The Companies have financial instruments exposed to market risk, which are composed mainly of
installment sales receivables, lease receivables, and investments in leases, loans, marketable andinvestment securities, short-term borrowings, and long-term debt. The Companies adopt ALM tothese financial instruments and use indices, such as 10 BPV (*1) and VaR (*2) to measure market
risks.
In calculating the market risk and the VaR, the Companies adopt a historical simulation model(holding period, one year; confidence interval, 99.9%; and observation period, ten years). Fromthe year ended March 31, 2021, the Companies tightened the confidence interval from 99% to99.9% and observation period from five years to ten years. In addition, for the year ended March
31, 2021, the variance effect between interest rates and equity security prices is not considered
and market risk VaR only reflects variance effects among interest rates as the equity securities are
independently managed as price fluctuation risk, while the variance effect between interest rates
and equity security prices were considered in market risk VaR for the year ended March 31, 2020.
The 10 BPV at March 31, 2021 and 2020, was ¥2,463 million ($22,198 thousand) and ¥2,840
million, respectively. The market risk VaR at March 31, 2021 and the aggregate VaR at March 31,
2020, was ¥35,845 million ($322,928 thousand) and ¥18,536 million, respectively.
(*1) 10 BPV: One of the interest rate indices, which estimates changes in the market value of subject assets andliabilities assuming a 10 basis-point (0.10%) upward shift of underlying interest rates.
(*2) VaR:
Quantitatively measured amount which estimates potential loss of portfolios over a certain period andaccording to a certain probability based on the past statistics

The Companies measure and manage market risks, including the risks of the future rentals on
and residual values of operating lease transactions, since they are also exposed to market risks

52

Financial Information

2021similar to lease receivables and investments in leases (which are related to finance leasetransactions).
The Companies have adopted a historical simulation model, which calculates a VaR as astatistically possible amount of losses in a fixed confidence interval based on historical market
volatility. However, this model is not designed to capture certain abnormal market fluctuations.
(c) Foreign exchange risk management
The Companies reduce foreign exchange risk of foreign currency-denominated assets individuallyby financing commensurate foreign currency-denominated debt and by using foreign currencyrelated derivative transactions. Reports regarding foreign exchange risk status are made to the Risk
Management Committee.
(d) Price fluctuation risk management
Price fluctuation risk for marketable and investment securities with quoted market prices inparticular are reported to the Risk Management Committee. Most equity securities held by theCompanies are for the purpose of maintaining business relationships with customers, and theCompanies perform an annual review on whether to maintain these shares by monitoring thefinancial condition of the issuers (customers) and transaction status with customers as well as
evaluating the cost of capital.
(e) Liquidity risk management on financing
The Companies monitor their cash management status as a whole and control the duration mixtureof financing. Through maintaining commitment lines with multiple financial institutions anddiversification of financing methods, the Companies endeavor to secure liquidity. Liquidity risk
management related to financing is conducted based on the Companies’ internal liquidity risk
management rule monitoring the probability of realization of the risk under the current financing
environment and monthly reports on liquidity risk status to the executive officer in charge. The
executive officer in charge decides the stage of liquidity risk and reports the decision to the Risk
Management Committee. The Company has also prepared a contingency plan for each stage ofliquidity risk and has been prepared for appropriate action addressing any such contingency.
(f) Derivative transactions
The financial department of the Company utilizes derivative transactions in accordance withinternal rules. Interest rate fluctuation risk is managed comprehensively through ALM with interest
rate fluctuation risk of assets and liabilities in the consolidated balance sheets. Foreign currency
fluctuation risk is managed on an individual project basis. The status of these derivative transactions
is reported to the ALM Committee every quarter. Credit risk due to nonfulfillment of contracts bycounterparties is managed by setting individual credit limits according to the financing credit ratingof the customer.
(4) Supplementary information on fair value of financial instruments
Quoted market prices, when available, are used to estimate fair values of financial instruments.
However, when quoted market prices are not available for financial instruments, fair values for suchfinancial instruments are estimated using DCF models or other valuation techniques. Considerable
judgment is required in determining methodologies and assumptions used in estimating fair values offinancial instruments; therefore, the effect of using different methodologies and assumptions may have amaterial impact to the estimated fair value amounts.

Financial Information

2021

53

Regarding the fair value of financial instruments other than derivatives as of March 31, 2021 and2020, see Note 25 for fair value information on derivatives.
Millions of yen
March 31, 2021

Cash and cash equivalents .............................
Time deposits other than cash equivalents .....
Receivables:
Installment sales ........................................
Deferred profit on installment sales ...........
Allowance for doubtful receivables ...........
Sub-total ...............................................
Receivables:
Loans ........................................................
Allowance for doubtful receivables ...........
Sub-total ...............................................
Lease receivables and investments in leases ..
Residual values of investments in leases ....
Allowance for doubtful receivables ...........
Sub-total ...............................................
Marketable and investment securities ............
Long-term receivables ..................................
Allowance for doubtful receivables ...........
Sub-total ...............................................
Total .............................................................

Short-term loans from banks and otherfinancial institutions .................................
Commercial paper........................................
Notes and accounts payable — trade ............
Bonds ..........................................................
Loans from the securitizations of theminimum future rentals on lease contracts
Long-term loans from banks and otherfinancial institutions .................................
Total ............................................................

54

Financial Information

2021

Carrying
amount¥286,213
8,028

Unrealized
gain (loss)

Fair value¥286,213
8,028

191,043(10,095)(428)
180,519

188,039¥7,519

1,113,317

35,3501,469,197
82,114

96,1181,079,885(1,918)1,077,967
1,414,106(39,094)(1,933)
1,373,078
82,11439,269(22,479)
16,789¥3,024,710

16,789¥3,163,700¥138,989¥236,730
434,171
81,0001,224,206¥236,730
434,171
81,0001,239,403¥15,196

2,633,617

2,653,168

19,550106,230¥4,715,957

106,331¥4,750,805

100¥34,847

Millions of yen
March 31, 2020

Cash and cash equivalents .............................
Time deposits other than cash equivalents .....
Receivables:
Installment sales ........................................
Deferred profit on installment sales ...........
Allowance for doubtful receivables ...........
Sub-total ...............................................
Receivables:
Loans ........................................................
Allowance for doubtful receivables ...........
Sub-total ...............................................
Lease receivables and investments in leases ..
Residual values of investments in leases ....
Allowance for doubtful receivables ...........
Sub-total ...............................................
Marketable and investment securities ............
Long-term receivables ..................................
Allowance for doubtful receivables ...........
Sub-total ...............................................
Total .............................................................

Short-term loans from banks and otherfinancial institutions .................................
Commercial paper........................................
Notes and accounts payable — trade ............
Bonds ..........................................................
Loans from the securitizations of theminimum future rentals on lease contracts
Long-term loans from banks and otherfinancial institutions .................................
Total ............................................................

Carrying
amount¥455,588
10,639Fair value¥455,588
10,639Unrealized
gain (loss)

227,280(12,740)(562)
213,978

223,888¥9,9101,166,589

32,876

1,633,318
62,157

94,3301,136,398(2,685)
1,133,713
1,583,670(42,225)(2,456)
1,538,988
62,157
24,693(13,806)
10,887¥3,425,953

10,887¥3,563,069¥137,116¥454,137
762,100
74,9181,169,553¥454,137
762,100
74,9181,185,824¥16,270

135,781

136,014233

2,409,120¥5,005,610

2,447,863¥5,060,858

38,743¥55,247

Financial Information

2021

55

Thousands of U.S. dollars
March 31, 2021

Cash and cash equivalents .............................
Time deposits other than cash equivalents .....
Receivables:
Installment sales ........................................
Deferred profit on installment sales ...........
Allowance for doubtful receivables ...........
Sub-total ...............................................
Receivables:
Loans ........................................................
Allowance for doubtful receivables ...........
Sub-total ...............................................
Lease receivables and investments in leases ..
Residual values of investments in leases ....
Allowance for doubtful receivables ...........
Sub-total ...............................................
Marketable and investment securities ............
Long-term receivables ..................................
Allowance for doubtful receivables ...........
Sub-total ...............................................
Total .............................................................
Short-term loans from banks and otherfinancial institutions ..................................
Commercial paper.........................................
Notes and accounts payable — trade .............
Bonds ...........................................................
Loans from the securitizations of theminimum future rentals on lease contracts
Long-term loans from banks and otherfinancial institutions ..................................
Total .............................................................

Carrying
amount$2,578,497
72,328Fair value$2,578,497
72,328

Unrealized
gain (loss)

1,721,115(90,953)(3,859)1,626,302

1,694,049$67,747

10,029,891

318,476

13,236,012
739,768

865,933

9,728,695(17,281)
9,711,414
12,739,696(352,200)(17,416)
12,370,078
739,768
353,778(202,521)
151,256$27,249,647

151,256$28,501,805$1,252,157$2,132,706
3,911,450
729,737
11,028,890$2,132,706
3,911,450
729,737
11,165,798$136,907

23,726,283

23,902,416

176,132

957,035$42,486,103

957,937$42,800,047

902$313,943

The methodologies and assumptions used to estimate the fair values of financial instruments are
summarized below:
Cash and cash equivalents and time deposits other than cash equivalents
The carrying values of cash and cash equivalents and time deposits other than cash equivalents
approximate fair value because of their short maturities.
Receivables — Installment sales
The fair values of receivables — installment sales are measured by discounting the amounts to bereceived based on the collection schedule at the interest rate assumed when similar and new installment
sales are made and based on the same internal rating and periods.
Receivables — Loans
The carrying values of loan receivables with floating interest rates approximate fair value because thefloating rates will be determined by the market interest rate in the short term as long as there are no
significant fluctuations in the credit standing after lending.

56

Financial Information

2021

The fair values of loan receivables with fixed interest rates are measured by discounting the amounts tobe received, including principal and interest at the interest rates assumed when similar and new lending ismade, based on the same internal rating and periods.
Lease receivables and investments in leases
The fair values of lease receivables and investments in leases are measured by discounting the amount tobe received (*) based on the collection schedule reduced by the amount of the estimate for theadministrative and maintenance expenses at the interest rates assumed when similar and new leasedealings are made based on the same internal rating and periods.
(*) As to the lease receivables and investments in leases involved in the foreign exchange forward contracts that qualify forhedge accounting and meet specific matching criteria, the amount to be received is exchanged at the contract rate (see Note 25).

Marketable and investment securities
The fair values of equity securities are measured at the quoted market price of the stock exchanges, ordetermined by discounting the future cash flows at a certain discount rate. The carrying values of debt
securities and trust beneficiary with floating interest rates approximate fair value because the floating
rates will be determined by the market interest rate in the short term as long as there are no significant
fluctuations in the credit standing. The fair values of debt securities and trust beneficiary interests with
fixed interest rates are determined by discounting the cash flows at a certain discount rate. Informationon the fair value of the marketable and investment securities by classification is included in Note 4.
Long-term receivables
The fair values of long-term receivables, which are composed of receivables to customers in distress, aremeasured at carrying value reduced by the estimated uncollectible amount based on the estimatedamount of the collateral value and the recoverable amount by guarantee.
Short-term loans from banks and other financial institutions
The carrying values of short-term loans from banks and other financial institutions approximate fairvalue because of their short-term settlement period.
Commercial paper
The carrying values of commercial paper approximate fair value because of its short-term settlement period.
Notes and accounts payable — trade
The carrying values of notes and accounts payable — trade approximate fair value because of their shortterm settlement period.
Bonds
The carrying values of bonds settled in the short-term approximate fair value. The carrying values ofbonds settled in the long term with floating interest rates approximate fair value because the floating
rates will be determined by the market interest rate in the short term and there were no significant
fluctuations in the credit standing of the Companies after issuance. The fair values of other bonds aremeasured by discounting the total amount to be paid, including principal and interest based on thespecific periods at the interest rates assumed when issuing a new bond with similar terms.
Loans from the securitizations of the minimum future rentals on lease contracts
The carrying values of loans from the securitizations of the minimum future rentals on lease contracts
settled in the short-term approximate fair value.
The carrying values of loans from the securitizations of the minimum future rentals on leases settled
in the long term with floating interest rates approximate fair value because the floating interest rate will
be determined by the market interest rate in the short term and there are no significant fluctuations in thecredit standing of the Companies after securitizing. The fair values of other loans from the securitizationsof the minimum future rentals on lease contracts are measured by discounting the cash flows to be paid,
including principal and interest based on specific period, at interest rates assumed when a similar andnew securitization is made.

Financial Information

2021

57

Long-term loans from banks and other financial institutions
The carrying values of long-term loans with floating interest rates approximate fair value because thefloating rates will be determined by the market interest rate in the short term and there are no significant
fluctuations in the credit standing of the Companies after borrowing. The fair values of long-term loans
with fixed interest rates are measured by discounting the total amount to be paid, including principal andinterest (*) based on specific period, at interest rates assumed when a similar and new borrowing is
made.
(*) Regarding the long-term loans involved in the interest rate swap contracts that qualify for hedge accounting and meet
specific matching criteria, the total amount of principal and interest at the post-swap rate is applied.
Regarding the long-term loans involved in the cross-currency interest rate swap contracts that qualify for hedge
accounting and meet specific matching criteria, the total amount of principal and interest is considered as borrowings of yen
currency at a fixed rate (see Note 25).

Derivatives
Information regarding the fair value of derivatives is included in Note 25.
Financial instruments whose fair value is not readily determinableNonmarketable securities as of March 31, 2021 and 2020, were summarized as follows:

Shares of subsidiaries and associated companies .............................
Unlisted shares .............................................................................
Trust beneficiary interests ...............................................................
Silent partnership interests and other ...............................................
Total .......................................................................................

Millions of yen
2021¥85,594
28,6082,068
164,874¥281,146

2020

Thousands of
U.S. dollars
2021¥67,627
25,9091,634
157,438¥252,609$771,119257,737
18,634
1,485,357$2,532,848

Due after
four years
throughfive years

Due after
five years(5) Maturity analysis for receivables and securities with contractual maturities

March 31, 2021

Due in one
year or less

Cash and cash
equivalents ................ ¥286,213
Time deposits otherthan cash equivalents
8,028
Receivables
Installment sales (1) ..
62,736Loans ........................
266,664
Lease receivables andinvestments in leases(2) .............................
415,769
Investment securities
Available-for-salesecurities with
contractual
maturities
Debt securities ......
1
Other ....................
5,467
Total ............................. ¥1,044,881

58

Financial Information

2021

Due after
one yearthrough
two years

Millions of yen
Due after
Due after
two years
three years
throughthroughthree years
four years¥47,034
162,365¥35,091
133,563¥21,420
121,203¥11,463
96,904¥13,296
299,183

345,365

265,016

182,942

118,628

378,711

101
23,200¥578,067

607
13,394¥447,673

9,544
24,495¥359,606

355
6,983¥234,336

56,930¥748,122

March 31, 2020

Cash and cash
equivalents ................
Time deposits otherthan cash equivalents
Receivables
Installment sales (1) ..
Loans ........................
Lease receivables andinvestments in leases(2) .............................
Investment securities
Available-for-salesecurities with
contractual
maturities
Debt securities .......
Other .....................
Total .............................

March 31, 2021

Due in one
year or lessDue after
one yearthrough
two years

Millions of yen
Due after
Due after
two years three years
throughthroughthree years four years

Due after
four years
throughfive years

Due after
five years¥455,588
10,63974,744
264,371¥54,266
190,458¥39,901138,315¥27,916
119,386¥14,338
103,116¥16,113
320,750

469,597375,224

296,909214,738

137,936

380,668101
718¥1,275,761

1
15,655¥635,605

101
25,405¥500,634

609
6,195¥368,846

9,406
14,411¥279,210

357
49,510¥767,400

Due in one
year or lessDue after
one yearthrough
two years

Thousands of U.S. dollars
Due after
Due after
two years
three years
throughthroughthree years
four years

Due after
four years
throughfive years

Due after
five years

Cash and cash
equivalents ................ $2,578,497
Time deposits otherthan cash equivalents
72,328
Receivables
Installment sales (1) ..
565,197$423,734$316,142$192,975$103,278$119,787
Loans ........................
2,402,378 1,462,754
1,203,274
1,091,927
873,0122,695,348
Lease receivables andinvestments in leases(2) .............................
3,745,671
3,111,397
2,387,538
1,648,134
1,068,726
3,411,815
Investment securities
Available-for-salesecurities with
contractual
maturities
Debt securities ......
14
915
5,471
85,983
3,203
Other ....................
49,256
209,015
120,672
220,676
62,915
512,886
Total ............................. $9,413,343 $5,207,817 $4,033,099 $3,239,697 $2,111,136 $6,739,838(1) Including unrealized profit of installment sales.
(2) Including unearned interest income.
(3) Long-term receivables to customers in distress, whose repayment schedule cannot be expected, are notpresented in the above table.
(4) Please see Note 13 for information on the maturity of short-term borrowings and long-term debt.

Financial Information

2021

59

25. Derivatives
Derivative transactions to which hedge accounting is not applied as of March 31, 2021 and 2020, were as
follows:
Millions of yen

2021
Contract
amountContract due after
Fairamount one year
value

Currency interest rate swap
contracts:
U.S. dollars payment, Japanese
yen receipt ................................ ¥80,000
Indonesia rupiah payment,
Japanese yen receipt ..................
1,100
Chinese yuan payment, U.S.
dollars receipt ...........................
734
Interest rate swap contracts:
Fixed-rate payment,
floating-rate receipt ....................
330¥70,000

2020
Contract
amountUnrealized Contract due afterFairgain (loss) amount one yearvalue

¥ (2,046) ¥ (2,046) ¥50,000
100

100

375

9

9

198

(10)

(10)

Thousands of U.S. dollars
2021
Contract
amountContract due after
Fair
Unrealized
amount one year
value
gain (loss)

Currency interest rate swap
contracts:
U.S. dollars payment, Japanese
yen receipt ................................ $720,720 $630,630 $(18,436) $(18,436)
Indonesia rupiah payment,
Japanese yen receipt .................. 9,909
907
907
Chinese yuan payment, U.S.
dollars receipt ........................... 6,620
3,383
84
84
Interest rate swap contracts:
Fixed-rate payment,
floating-rate receipt ................... 2,972
1,783
(94)
(94)

60

Financial Information

2021

Unrealized
gain (loss)¥50,000

¥419

¥419

1,524

1,100

77

77

462

330

(20)

(20)

Derivative transactions to which hedge accounting is applied as of March 31, 2021 and 2020, were as
follows:

Hedged item

Currency interest rate swap contracts:
Thai baht payment, Japanese yen receipt ...... Long-term loans, bonds
Thai baht payment, U.S. dollars receipt ........ Long-term loans, bonds
Indonesia rupiah payment, Japanese yen
receipt ...................................................... Long-term loans
Indonesia rupiah payment, U.S. dollars
receipt ...................................................... Long-term loans
Cross-currency interest rate swap contracts:
Thai baht payment, U.S. dollars receipt ........ Long-term loans
Euro payment, Thai baht receipt ................... Long-term loans
Foreign exchange forward contracts:
Selling U.S. dollars .................................. Lease receivables
Interest rate swap contracts:
Fixed-rate payment, floating-rate receipt ...... Short-term loans, longterm loans
Interest rate swap contracts:
Floating-rate payment, fixed-rate receipt ...... Long-term loans
Fixed-rate payment, floating-rate receipt ...... Long-term loans

Hedged item

Currency interest rate swap contracts:
Thai baht payment, Japanese yen receipt ...... Bonds
Thai baht payment, U.S. dollars receipt ........ Long-term loans, bonds
Indonesia rupiah payment, Japanese yen
receipt ...................................................... Long-term loans
Indonesia rupiah payment, U.S. dollars
receipt ...................................................... Long-term loans
Foreign exchange forward contracts:
Selling U.S. dollars ...................................... Payables — trade
Cross-currency interest rate swap contracts:
Thai baht payment, U.S. dollars receipt ........ Long-term loans
Euro payment, Thai baht receipt ................... Long-term loans
Foreign exchange forward contracts:
Selling U.S. dollars .................................. Lease receivables
Selling U.S. dollars .................................. Time deposits
Interest rate swap contracts:
Fixed-rate payment, floating-rate receipt ...... Short-term loans, longterm loans
Interest rate swap contracts:
Floating-rate payment, fixed-rate receipt ...... Long-term loans
Fixed-rate payment, floating-rate receipt ...... Long-term loans

Contract
amount¥5,50015,675

Millions of yen
2021
Contract
amountdue after
one year¥5,50010,473

Fairvalue¥(216)(1,656)1,000

41

11,031

6,809

240
274

4
216

(650)

201
321,946

266,937

5,000
199,657

171,330

Contract
amountMillions of yen
2020
Contract
amountdue after
one year(16,778)

Fair
value

¥3,00020,847¥3,00012,798¥(253)(2,138)

1,000

1,000

(30)

15,674

10,675

(624)

16
3,340
417

(0)
377
290

1,094
15,350367,400

310,433

5,000
265,5225,000
211,160(5,833)Financial Information

2021

61

Hedged item

Currency interest rate swap contracts:
Thai baht payment, Japanese yen receipt ...... Long-term loans, bonds
Thai baht payment, U.S. dollars receipt ........ Long-term loans, bonds
Indonesia rupiah payment, Japanese yen
receipt ...................................................... Long-term loans
Indonesia rupiah payment, U.S. dollars
receipt ...................................................... Long-term loans
Cross-currency interest rate swap contracts:
Thai baht payment, U.S. dollars receipt ........ Long-term loans
Euro payment, Thai baht receipt ................... Long-term loans
Foreign exchange forward contracts:
Selling U.S. dollars .................................. Lease receivables
Interest rate swap contracts:
Fixed-rate payment, floating-rate receipt ...... Short-term loans, longterm loans
Interest rate swap contracts:
Floating-rate payment, fixed-rate receipt ...... Long-term loans
Fixed-rate payment, floating-rate receipt ...... Long-term loans

Thousands of U.S. dollars
2021
Contract
amountContract
Fair
due after
amountone yearvalue$49,549
141,219$49,549
94,3589,009$(1,951)(14,923)
372

99,382

61,348

2,163
2,476

43
1,950

(5,861)

1,816
2,900,418 2,404,839(151,159)

45,045
1,798,715 1,543,515

The fair values of derivative transactions are measured at the forward foreign exchange quotation, theoffered price by financial institutions, or the price calculated according to the present discounted value,and so on.
The contract amounts of derivatives, which are shown in the above tables, do not represent the amounts
exchanged by the parties and do not measure the Companies’ exposure to credit or market risk.
The cross-currency interest rate swap contracts, interest rate swap contracts, and foreign currency
exchange contracts that qualify for hedge accounting and meet specific matching criteria are assigned tothe associated long-term loans from banks and other financial institutions, bonds, lease receivables, andpayables — trade, recorded in the consolidated balance sheets at March 31, 2021 and 2020, and includedin the fair value of hedged items.

62

Financial Information

2021

26. Other Comprehensive Income (Loss)
The components of other comprehensive income (loss) for the years ended March 31, 2021 and 2020, wereas follows:

Net unrealized gain (loss) on available-for-sale securities:
Gains (losses) arising during the year ................................
Reclassification adjustments to loss...................................
Amount before income tax effect ......................................
Income tax effect ..............................................................
Total .............................................................................
Deferred loss on derivatives under hedge accounting:Losses arising during the year ...........................................
Reclassification adjustments to profit ................................
Amount before income tax effect ......................................
Income tax effect ..............................................................
Total .............................................................................
Foreign currency translation adjustments:
Adjustments arising during the year ..................................
Reclassification adjustments .............................................
Amount before income tax effect ......................................
Income tax effect ..............................................................
Total .............................................................................
Defined retirement benefit plans:
Adjustments arising during the year ..................................
Reclassification adjustments to profit ................................
Amount before income tax effect ......................................
Income tax effect ..............................................................
Total .............................................................................
Share of other comprehensive income in associates:
Gains arising during the year .............................................
Reclassification adjustments to profit ................................
Total .............................................................................
Total other comprehensive loss......................................

2020

Thousands of
U.S. dollars
2021¥35,633(9,659)25,974(6,128)
19,845¥(13,729)(1)(13,730)
3,409(10,321)$321,022(87,018)
234,003(55,212)
178,791(17,849)
4,458(13,390)
2,874(10,516)(10,691)261(10,430)
2,029(8,400)(160,803)
40,166(120,637)
25,893(94,743)(14,067)(126)(14,194)(5,351)(5,351)(126,736)(1,140)(127,877)(14,194)(5,351)(127,877)

(9)
490
480
(150)
330

(458)
430
(28)
17
(10)

(89)
4,419
4,330
(1,353)
2,977

327
455
782
¥(3,751)

114
98
213
¥(23,869)

2,946
4,104
7,051
$(33,800)

Millions of yen
2021

Financial Information

2021

63

27. Segment Information
Under ASBJ Statement No. 17, Accounting Standard for Segment Information Disclosures, and ASBJ
Guidance No. 20, Guidance on Accounting Standard for Segment Information Disclosures, an entity isrequired to report financial and descriptive information about its reportable segments. Reportable segments
are operating segments or aggregations of operating segments that meet specified criteria. Operating
segments are components of an entity about which separate financial information is available and suchinformation is evaluated regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performance. Generally, segment information is required to be reported on thesame basis as is used internally for evaluating operating segment performance and deciding how to allocate
resources to operating segments.
1. Description of reportable segments
In light of the business division system introduced in the previous Medium-term Management Plan, theCompanies has launched an initiative whereby each Customer Business and business division develops its
own management plan and implements a PDCA cycle, and has set up a system to use financial information
by such unit to evolve strategies; and accordingly, the Companies made changes in reportable segments, etc.
As a result, effective April 1, 2020, the reportable segments have been changed from two segments of“Customer Finance” and “Asset Finance” to seven segments of “Customer Business,” “Environment &Energy,” “Healthcare,” “Real Estate,” “Aviation,” “Logistics,” and “Infrastructure & Investment,” andsegment profit was changed from operating income to net income attributable to owners of the parent.
Description of new reportable segments are as follows:
1

Reportable segment
Customer Business

2

Environment & Energy

3

Healthcare

4Real Estate

5

Aviation

6

Logistics

7

Infrastructure & Investment*

Description of services and business
Equipment leasing and financeSale and purchase of used equipment
Power generation by renewable energy
Environment-related equipment leasing and finance
Energy Service Company (ESCO) business
Medical equipment leasing and financeSale and purchase of used medical equipment
Consulting services for new medical equipment installationand management support
Real estate leasing and financeReal estate securitization,
Real estate revitalization investment
Aircraft leasing
Aircraft engine leasing
Marine container leasing
Railway freight car leasing
Ship finance
Auto leasing
Investment and financing to social infrastructure
Private Finance Initiative (PFI)* businessCorporate investment businessA procurement method which uses private sector investment in order to deliver public sector infrastructure and/or
services according to a specification defined by the public sector.

Reclassifications have been made to the segment information for the year March 31, 2020 to conform to the
new reportable segments.
2. Methods of measurement for the amounts of revenues, profit or loss, assets, and other items for eachreportable segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summaryof Significant Accounting Policies.”

64

Financial Information

2021

Certain foreign consolidated subsidiaries applied Leases (IFRS No. 16, issued by IASB) for the year ended
March 31, 2020, as discussed in Note 2.r. The effect of this change on segment profit was immaterial.
3. Information about revenues, profit or loss, assets, and other items

Year Ended
March 31,
Customer
Environment
2021
Business& Energy
Revenues:
Revenue fromexternalcustomers .... ¥ 506,566 ¥17,902
Intersegment
revenue ortransfers .......
386
Total .... 506,952
17,902
Segment
profit........... 25,567
3,734
Segment
assets ........... 2,127,064 198,592
Other items:
Depreciation .. 48,823
6,115
Amortizationof goodwill ..
645
Cost of funds
and interest
expense........ 17,643
2,643
Equity inearnings ofaffiliates.......
684
590
Other income . 13,496
1,395(Gain on salesof investment
securities) ....
9,952
(Gain on salesof shares ofsubsidiaries
andaffiliates) .....
431(Gain on step
acquisition) ..
1,395(Compensation income).
(Gain on salesof own-usedassets)..........
3,112
Other
expenses ......
86(Loss on salesof investment
securities) ....
86
Taxes .............
9,575
873
Investments inequitymethodaffiliates....... 15,044
11,292
Increase inproperty andequipment
andintangible
assets ........... 31,806
22,597

Millions of yen
Reportable segment
Healthcare

Real Estate

Aviation

Logistics

Infrastructure& Investment

Total

Adjustments(1) (2)

Consolidated¥39,157 ¥155,537 ¥ 127,493¥41,431¥3,447 ¥ 891,535¥2,806 ¥894,342

39,157

176
155,713

127,493

41,431

3,447

562
892,098(562)
2,244 894,342

741

28,037

2,807

1,878

304

63,072(7,741)

955,654 1,203,858

545,525

157,373
932

8,808

64,933

17,411

500

2,546

56

414

6,889

28,864

13,337

15

(54)
3,544

159

1,822

15

56

111,688 5,299,758
46

1,448

148,520

3,749

2,117

5,866

2,330

72,122(5,498)66,62359

3,261
18,451

6

3,261
18,457

10,023

6

10,029156

4,132

710,072 6,009,831

147,072

3,488

388

55,330

431

431

1,395

1,395

3,488

3,488

3,112

3,112

242

242

12,551

156
4,484

192

246

242
28,311

22,1082,484

21,96743,181116,078

19,180102,278

56,853236,848(1,936)242
26,375116,078

2,951

239,799

Financial Information

2021

65

Year Ended
March 31,
Customer
Environment
2020
Business& Energy
Revenues:
Revenue fromexternalcustomers .... ¥ 552,043 ¥15,702
Intersegment
revenue ortransfers .......
203
Total .... 552,246
15,702
Segment
profit ........... 16,869
3,351
Segment
assets ........... 2,362,937 185,035
Other items:
Depreciation .. 49,476
4,212
Amortizationof goodwill ..
659
Cost of funds
and interest
expense........ 20,985
1,967
Equity inearnings ofaffiliates.......
587
407
Other income .
1,355
48(Gain on salesof investment
securities) ....
1,353
(Gain on salesof shares ofsubsidiaries
andaffiliates) .....
(Gain on step
acquisition) ..
48
Otherexpenses ......
320(Loss onvaluation of
investment
securities) ....
301
Taxes .............
8,720
1,456
Investments inequitymethodaffiliates....... 10,524
7,022
Increase inproperty andequipment
andintangible
assets ........... 53,091
13,202

66

Financial Information

2021

Millions of yen
Reportable segment
Healthcare

Real Estate

Aviation

Logistics

Infrastructure& Investment

Total¥39,105 ¥136,578 ¥135,471¥ 40,211

39,105

208
136,787

135,47142
40,253661

24,902

24,932980

980,124 1,162,335

522,304

95,485 5,460,876

152,654
899

Adjustments(1) (2)

Consolidated¥ 1,949 ¥921,063¥2,705 ¥923,768

1,949

454
921,517(454)
2,251 923,768

698

72,396(1,641)70,754

825,090 6,285,966

8,532

52,06815,883131,074

2,620

133,694

500

2,595

58

3,813

2,117

5,931

367

5,782

27,868

13,9701,552

72,494(7,779)64,714

1

86
3,385

163

1,164

857

3,269
4,789

240

3,269
5,030

1,353

5

1,358

237

237

3,385

389

597

3,433

3,433

320

(11)

308

7
(3,870)308
26,931

11,906

8,665

(204)

(132)

301
30,802

18,176

2,631

20,78430,822

89,962

74,135201,372

100,639443,038

89,962

4,363

447,402

Year Ended
March 31,
Customer
Environment
2021
Business& Energy
Revenues:
Revenue fromexternalcustomers .... $4,563,660 $161,279
Intersegment
revenue ortransfers .......
3,483
Total .... 4,567,143
161,279
Segment
profit ........... 230,335
33,642
Segment
assets ........... 19,162,743 1,789,118
Other items:
Depreciation .. 439,852
55,096
Amortizationof goodwill ..
5,817
Cost of funds
and interest
expense........ 158,952
23,810Equity inearnings ofaffiliates.......
6,167
5,315
Other income . 121,590
12,568(Gain on salesof investment
securities) .... 89,660(Gain on salesof shares ofsubsidiaries
andaffiliates) .....
3,891(Gain on step
acquisition) ..
12,568(Compensation income).
(Gain on salesof own-usedassets).......... 28,039
Other
expenses ......
776(Loss on salesof investment
securities) ....
776
Taxes .............
86,263
7,866
Investments inequitymethodaffiliates....... 135,536
101,730
Increase inproperty andequipment
andintangible
assets ........... 286,548
203,578

Thousands of U.S. dollars
Reportable segment
Healthcare

Real Estate

Aviation

Logistics

Infrastructure& Investment

Total

Adjustments(1) (2)

Consolidated$352,767 $1,401,241 $1,148,593$373,256$31,056 $8,031,855$25,287 $8,057,143

352,767

1,585
1,402,827

1,148,593

373,256

31,056

5,069
8,036,925(5,069)20,217 8,057,143

6,683

252,593

25,291

16,9252,746

568,219

8,609,504 10,845,576

4,914,645

1,417,780
8,403

79,355584,982

156,863

4,508

22,941509

3,737

62,064260,036

120,156135(490)
31,932

1,433

16,418135507

1,006,201 47,745,570
420

37,225

6,397,053 54,142,624
13,045

1,338,020

33,776

19,07552,852

20,993649,751(49,537)

600,214537

29,380166,227

56

29,380166,283

90,302

56

90,359

1,405

1,405

498,471

1,324,975

31,425

3,498(69,747)

3,891

3,891

12,56812,56831,42531,42528,03928,039

2,181

2,181

2,181

113,073

40,403

1,737

2,216

255,059

199,173

22,385

197,906

389,018

1,045,750

172,794

921,428

512,190

2,133,767(17,442)2,181

237,617

1,045,750

26,5872,160,354

Notes:(1) “Adjustments” in revenues contain mainly revenues from system development contract, which are not attributed toeach reportable segment.
“Adjustments” in segment profit contain mainly Company-wide expenses included in selling, general andadministrative expenses, which are not attributed to each reportable segment.
“Adjustments” in segment assets contain mainly the assets other than which are attributed to each reportablesegment, such as cash and cash equivalents, own-used assets and goodwill when Diamond Lease Company

Financial Information

2021

67

Limited and UFJ Central Leasing Company Limited merged and became Mitsubishi UFJ Lease & Finance
Company Limited in 2007.
(2) “Adjustments” for segment profit are adjusted to reach net income attributable to owners of the parent in the
consolidated statements of income.
(3) Segment assets include operating assets, investments in the affiliates accounted for by the equity method, goodwill
and investment securities, which are attributed to each reportable segment.

4. Information about products and services

Installment
sales

Lease

Revenue from external customers¥722,328¥740,085

Loans

Other

Total

¥37,487¥66,620¥894,342

Loans

Other

Total

¥40,356¥68,227¥923,768

Millions of yen
2020¥75,099

Thousands of U.S. dollars
2021
Installment
sales
Loans
Other

Lease

Revenue from external customers¥67,906

Installment
sales

Lease

Revenue from external customers

Millions of yen
2021$6,507,466$611,768$337,727$600,180

5. Information about geographical areas(1) Revenues

Japan¥692,011

North
America¥58,592

Millions of yen
2021
Europe/Middle andNear East
Asia/Oceania¥60,615¥69,934

Other

Total

¥13,188¥894,342

Revenues are classified by country or region based on the location of customers.

Japan¥713,082

North
America¥55,392

Millions of yen
2020
Europe/Middle andNear East
Asia/Oceania¥58,190¥79,932

Other

Total

¥17,170¥923,768

Revenues are classified by country or region based on the location of customers.

Japan$6,234,337

68

Financial Information

2021

North
America$527,859

Thousands of U.S. dollars
2021
Europe/Middle andNear East
Asia/Oceania$546,087$630,040

Other$118,818

Total$8,057,143

Total$8,057,143

(2) Property and equipment
Millions of yen
2021
Europe/Middle andNear East
Asia/Oceania

North AmericaJapan¥658,345

United States¥386,630

Other¥96,601

North AmericaJapan¥669,708

United States¥343,687

Other¥503,980¥470,895

Millions of yen
2020
Europe/Middle andNear East

Asia/Oceania¥447,444¥509,538¥100,701

North America

Other

United States

Other$5,931,039$3,483,155$870,282$4,540,366¥152,766

Other

Thousands of U.S. dollars
2021
Europe/Middle andNear East
Asia/Oceania

Japan

Total

Total

¥154,290

Other$4,242,305¥2,269,220¥2,225,371

Total$1,376,276 $20,443,425

6. Information about impairment loss for long-lived assets

Impairment
loss ............

Impairment
loss ............

CustomerBusiness

Environment& Energy

Millions of yen
2021
Healthcare

Real Estate

Aviation

Logistics

Infrastructure& Investment¥2,578CustomerBusiness

Environment& Energy

Total

Adjustments¥2,578

Consolidated¥2,578

Thousands of U.S. dollars
2021
Healthcare

Real Estate

Aviation

Logistics

Infrastructure& Investment$23,230

Impairment loss is recorded in costs.

Total

Adjustments$23,230

Consolidated$23,230

No impairment loss was recognized in 2020.
7. Information about amortization and unamortized balance of goodwill by reportable segment

Amortization of
goodwill.........
Unamortizedbalance of
goodwill.........

Amortization of
goodwill.........
Unamortizedbalance of
goodwill.........

CustomerBusiness

Environment& Energy

Millions of yen
2021
Healthcare

Real Estate

Aviation

Logistics

Infrastructure& Investment

Total

Adjustments(1) (2)

Consolidated

¥645

¥500

¥2,546¥56¥3,749¥2,117¥5,866

11,261

2,669

29,907734¥44,573

12,70457,277

Adjustments(1) (2)

Consolidated

CustomerBusiness

Environment& Energy

Millions of yen
2020
Healthcare

Real Estate

Aviation

Logistics

Infrastructure& Investment

Total

¥659

¥500

¥2,595¥58¥3,813¥2,117¥5,931

12,583

3,169

34,161844

50,75814,821

65,580Financial Information

2021

69

Customer
Business

Amortization of
goodwill......... $5,817
Unamortizedbalance of
goodwill......... 101,459

Environment& Energy

Thousands of U.S. dollars
2021
Healthcare

Real Estate

Aviation

Logistics

Infrastructure& Investment

Total

Adjustments(1) (2)

Consolidated$4,508$22,941$509$33,776$19,075$52,852

24,045

269,4396,618

401,561

114,455

516,017

28. Net Income per Share
Reconciliation of the differences between basic and diluted net income per share (EPS) for the years ended
March 31, 2021 and 2020, was as follows:

For the year ended March 31, 2021

Basic EPS
Net income available to commonshareholders ...........................
Effect of dilutive securities:
Warrants ....................................
Diluted EPS
Net income for computation .......

For the year ended March 31, 2020

Basic EPS
Net income available to commonshareholders ...........................
Effect of dilutive securities:
Warrants ....................................
Diluted EPS
Net income for computation .......

Thousands ofsharesMillions of yen
Net income
attributable toowners of the parent

Weighted-average
shares¥55,330

891,207

Yen

U.S. dollars
EPS¥62.08$0.55¥61.85

$0.55

3,334
¥55,330

894,541

Millions of yen
Net income
attributable toowners of the parent

Thousands ofsharesYen

Weighted-average
shares

EPS¥70,754890,713¥79.44

3,333¥70,754894,046¥79.14

29. Subsequent Events
a. On May 17, 2021, the Board of Directors declared the appropriation of retained earnings as follows:

Appropriations:
Cash dividends of ¥12.75 ($0.11) per share ...................................................

Millions of yen

Thousands of
U.S. dollars¥11,366$102,398

b. Business integration with Hitachi Capital Corporation
Effective April 1, 2021, Mitsubishi UFJ Lease & Finance Company Limited (“Mitsubishi UFJ Lease”) and
Hitachi Capital Corporation (“Hitachi Capital”) integrated their businesses (the “Business Integration”) andchanged the company name to Mitsubishi HC Capital Inc.

70

Financial Information

2021

1. Outline of the business combination(1) Name and business description and size of the acquired company
Name: Hitachi Capital Corporation
Business description: Leasing service, installment sales, other financial services, and service businessSize: Year ended March 31, 2021 (reference information)
Consolidated basis (IFRS)Millions of yen
Revenues ............................................................................................
¥467,176
Net income .........................................................................................
33,195
Total assets ...........................................................................................
3,811,002
Total equity ..........................................................................................
439,338
Number of employees...........................................................................

$4,208,795
299,056
34,333,356
3,958,000

5,563

Non-consolidated basis (JGAAP)
Millions of yen
Net sales .............................................................................................
¥36,007
Net income .........................................................................................
14,657
Total assets ...........................................................................................
1,615,518
Total net asset .......................................................................................
240,676
Number of employees...........................................................................

Thousands of
U.S. dollars

Thousands of
U.S. dollars$324,387
132,051
14,554,224
2,168,255

930(2) Reason and objective of the business combination(Background of the Business Integration)(a) Changes in social situation
In recent years, there have been drastic changes in the external environment as well as the accelerating trends
and megatrends influencing domestic and international economies in the long term, such as climate change
and shortages of resources, de-carbonization to break dependence on resources and fossil fuels, demographic
changes, technological innovation, urbanization, the shifting of power of the global economy, and global
multi-polarization.
Further, the COVID-19 pandemic has caused a paradigm shift in economy and society at large, which is
expected to promote qualitative restructuring of supply chains, digitalization to adapt to a data economy, andshifts from mass production and consumption to a circular economy in corporate activities.
(b) Perception of challenges
In connection with these changes in the external environment, the roles required for leasing companies arechanging to solve social issues through business investments and operations in addition to conventional
leases and finances.
Moreover, in both during and after the COVID-19 pandemic, business models at an industry level are
expected to change rapidly at a speed exceeding all expectations. In such circumstances where all companies
need to adapt to the environmental changes, the prominence of leasing companies, holding various assetrelated functions and offering flexible services that are not limited to financial functions, will increase
further.
As both companies have been closely cooperating with various industries, they have reached a conclusion
that, while regarding these drastic environmental changes in society and the relevant industries as new
business opportunities, it is necessary to further expand the operational bases and to strengthen the financial
bases of both companies to contribute to various customers and local communities and to create social value.
(Purposes of the Business Integration)
Until the integration, the two companies have aimed to create social value for the realization of a rich societythat can adapt to environment change and to sustainably enhance corporate value through such value
creation, as stated in the medium- to long-term corporate vision statements of their respective medium-term
management plans. With the Business Integration, the two companies will realize (i) complementing eachother’s business domains, (ii) strengthening their management bases, and (iii) creating new value based on (i)Financial Information

2021

71

and (ii) and grow stronger, by developing the business as an integrated entity under a unified vision andphilosophy.
(i) Complementing each other’s business domains
By building ideal, mutually complementary relationships, the new integrated company will establish an
extensive and comprehensive lineup of businesses, and achieve diversification in its portfolios in terms ofboth business domains and geographical areas. This will help the new integrated company not only toestablish a solid and stable revenue structure that will be less susceptible to the external environment but also
to increase profitability by expanding investment activities utilizing its enhanced capabilities.
(ii) Strengthening the management base
The new integrated company aims to build strong management base which will support sustainable growthby concentrating the management resources and expertise, which are sources of corporate competitiveness,
via utilization and enhancement of human resources, utilization of partner networks, reinforcement offinancial bases, advancement of risk management, and promotion of digitalization.
(iii) Creating new value
The new integrated company is intended to offer new value beyond the framework of traditional leasing
companies to customers by entering into new business domains and geographical areas, as well as
strengthening and expanding the focal business domains.
Due to the Business Integration, the Company will be one of the largest global players in the industry interms of both its size and business domains. The Company will utilize its expanding scale and accumulating
capital and accurately capture the changing needs of its customers and local communities around the world,
to develop into a company that can provide solutions to modern social issues.
(3) Date of the business combination
April 1, 2021
(4) Legal form of the business combination
An absorption-type merger in which Mitsubishi UFJ Lease will be the surviving company, and Hitachi
Capital will be the merged company(5) Company name after the business combination
Mitsubishi HC Capital Inc.
2. Details of acquisition cost and consideration by type
Consideration
Consideration
Acquisition cost

Fair value on the business combination date ofcommon stock held immediately before thebusiness combination
Fair value of common stock of the Company issued
on the business combination dateMillions of yen

Thousands of
U.S. dollars¥16,725$150,676

381,480
398,205

3,436,758
3,587,435

3. Exchange ratio by share class and its calculation method and the number of shares issued(1) Exchanged ratio by share classCompany name
Merger ratio
Number of sharesissued in relation to
the Business
Integration

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Mitsubishi UFJ Lease(the surviving company)1

Hitachi Capital(the merged company)
5.10

Common stock: 571,078,084 shares(2) Method to calculate share exchange ratio
In order to ensure fairness of the merger ratio, both companies individually appointed a third party
valuation institute to calculate the merger ratio, and Mitsubishi UFJ Lease has appointed Mitsubishi UFJ
Morgan Stanley Securities Co., Ltd. and Hitachi Capital has appointed Goldman Sachs Japan Co., Ltd.
After careful and repeated negotiations and discussions about the merger ratio considering financial
situations and recent trends of performance and stock prices, etc. of both companies, by reference to thecalculation results provided by their respective valuation institutes, Mitsubishi UFJ Lease and Hitachi
Capital have eventually determined that the above merger ratio was appropriate and would contribute to
the benefit of their respective shareholders, and agreed on the ratio.
4. Details and amount of major acquisition-related costFees and commissions for advisory services, etc.

Millions of yen¥6,494

Thousands of
U.S. dollars$58,510

5. The amount of goodwill recognized, reason for recognition, amortization method and the period or theamount of negative goodwill recognized and reason for recognition
It is not yet determined as the Company is currently calculating it.
c. Sale of Investment Securities
The Company decided to transfer a part of investment securities held under the cross-shareholding system toimprove asset efficiency and sold the investment securities (One stock) on June 18, 2021.
The gain on sale of investment securities of ¥26,754 million ($241,027 thousand) is expected to berecorded as other income in the first quarter of the fiscal year ending March 31, 2022.
d. Execution of Merger Agreement concerning Acquisition of CAI International, Inc.
At the Board of Director’s meeting held on June 18, 2021, the Company resolved to acquire all theoutstanding shares of CAI International, Inc. (“CAI”) by a “reverse triangular merger”, where Cattleya
Acquisition Corp. (Delaware, “Cattleya Acquisition”), the Company’s wholly-owned subsidiary establishedin the U.S. for the acquisition, merges with CAI. The Company, Cattleya Acquisition and CAI executed amerger agreement.
1. Outline of business combination(1) Name and business of the acquired company
Name:
CAI International, Inc.
Business: Marine container leasing business(2) Reason for acquisition
The Company decided to acquire CAI to boost “global assets”, which is the business domain that theCompany emphasizes as a growth driver under the medium- to long-term corporate vision. CAI is one of
the world’s leading marine container leasing companies with fifth in the global share (TEU* base) andhas an advantage in worldwide sites of marketing and operating, and global platform of container depots.
Together with Beacon Intermodal Leasing, LLC, a subsidiary of the Company in marine container
leasing business, the Company and its group reach the second largest in numbers of containers held in theworld. The Company plans to increase revenue and accelerate the growth by utilizing the platforms andintegrating experience, expertise and knowledge of both companies. The Company will aim to enhance
the global competitiveness in the marine container leasing business, seize growth opportunities, and will
strengthen it as the driver of the medium- to long-term growth of the entire group.
*TEU: one twenty-foot equivalent unit

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(3) Scheduled date of the business combination
In the second quarter or third quarter of the fiscal year ending March 31, 2022
(4) Legal form of the business combination
Acquisition by “reverse triangular merger” in exchange for cash(5) Company name after the business combination
CAI International, Inc. (remain the same)(6) The percentage of voting rights acquired
100%(7) Background for determining the acquiring company
The reason is because the Company will acquire the majority of voting rights of CAI by merger
agreement.
2. Details of acquisition cost of the acquired company
Total acquisition cost, including consideration, fees and commissions for advisory services, is expected
to be $1,108 million.

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