Japan Finance Corporation
FINANCIAL ACCOUNT RELATED TO THE FINANCIAL OPERATIONS FOR FACILITATING REALIGNMENT OF
UNITED STATES FORCES IN JAPANBalance Sheet (as of March 31, 2012)(Millions of yen)
2012

2012

AssetsLiabilities

Cash and due from banks

180

Other liabilities

1

Due from banks

180

Accrued expenses

1

Other assets

0

Other

0

Prepaid expenses

0Provision for bonuses

4

Other0

Provision for directors’ bonuses0

Property, plant and equipment

0Provision for retirement benefits

116

Other0Provision for directors’ retirement

0benefits
Total liabilities

123

Net assets

Total assets

181

Retained earnings

57

Legal retained earnings

0

Other retained earnings

57

Retained earnings brought forward

57

Total shareholders’ equity

57

Total net assets

57

Total liabilities and net assets

181

Japan Finance Corporation
FINANCIAL ACCOUNT RELATED TO THE FINANCIAL OPERATIONS FOR FACILITATING REALIGNMENT OF
UNITED STATES FORCES IN JAPANStatement of Operations （Year ended March 31, 2012）(Millions of yen)
2012
Ordinary income

271

Receipts from the national budget

271

Receipts from the general account of the national budget

271

Other income

0

Other

0

Ordinary expenses214Fees and commissions payments

45

Other fees and commissions

45

General and administrative expenses

168

Ordinary profit

57

Net income

57

Japan Finance Corporation
FINANCIAL ACCOUNT RELATED TO THE FINANCIAL OPERATIONS FOR FACILITATING REALIGNMENT OF
UNITED STATES FORCES IN JAPANStatement of Changes in Net Assets （Year ended March 31, 2012）(Millions of yen)

Shareholders’ equity
Retained earnings
Legal retained earnings
Balance at the beginning of current period—Changes of items during the period
Provision of legal retained earnings

0Total changes of items during the period

0Balance at the end of current period

0

Other retained earnings
Retained earnings brought forward
Balance at the beginning of current period

241

Changes of items during the period
Provision of legal retained earnings(0)

Payment to the national treasury(240)

Net income (loss)
Total changes of items during the period
Balance at the end of current period

57
(183)
57

Total retained earnings
Balance at the beginning of current period

241

Changes of items during the period
Payment to the national treasury
Net income (loss)
Total changes of items during the period
Balance at the end of current period(240)
57(183)57

Total shareholders’ equity
Balance at the beginning of current period

241

Changes of items during the period
Payment to the national treasury
Net income (loss)
Total changes of items during the period
Balance at the end of current period

(240)
57
(183)
57

Total net assets
Balance at the beginning of current period
Changes of items during the period

241

Japan Finance Corporation
FINANCIAL ACCOUNT RELATED TO THE FINANCIAL OPERATIONS FOR FACILITATING REALIGNMENT OF
UNITED STATES FORCES IN JAPAN

Payment to the national treasury
Net income (loss)
Total changes of items during the period
Balance at the end of current period(240)
57(183)57

Japan Finance Corporation
FINANCIAL ACCOUNT RELATED TO THE FINANCIAL OPERATIONS FOR FACILITATING REALIGNMENTOF UNITED STATES FORCES IN JAPANNotes to Financial Statements
FINANCIAL ACCOUNT RELATED TO THE FINANCIAL OPERATIONS FOR FACILITATINGREALIGNMENT OF UNITED STATES FORCES IN JAPANAmounts presented are rounded down to the nearest million yen.

1. Significant accounting policies(a) Depreciation basis for fixed assets
Property, plant and equipment
Tangible fixed assets are depreciated under the declining-balance method over their useful economiclives.
Amortization is based on the following range of estimated useful lives:
Other: 2 years to 20 years(b) Accounting policy for reserves(i) Provision for bonuses
The “provision for bonuses” is calculated and provided for based on the estimated amounts of future
payments attributable to the services that have been rendered by employees to the date of thebalance sheet.
(ii) Provision for directors’ bonuses
The “provision for directors’ bonuses” is calculated and provided for based on the estimatedamounts of future payments attributable to the services that have been rendered by directors to thedate of the balance sheet.
(iii) Provision for retirement benefits
The “provision for retirement benefits” represents the future payment for pension and retirement
benefits to employees, and is accrued based on the projected benefit obligations and the estimatedpension plan assets at the fiscal period end.
Unrecognized prior service costs are recognized as income or expense by the straight-line method
over a certain number of years; 10 years within the average remaining work period of employees at
the year of occurrence.
Unrecognized actuarial differences are recognized as income or expense from the following fiscal
year by the straightline method over a period up to a maximum of 10 years within the averageremaining service period of employees of the respective fiscal year.
(iv) Provision for directors’ retirement benefits
The “provision for directors’ retirement benefits,” which provides for future retirement pension
payments to directors, corporate auditors and executive officers, is recognized at the amountaccrued at the end of the fiscal year.
(c) Consumption and other taxes
Consumption taxes and local consumption taxes (“consumption taxes”) are excluded fromtransaction amounts. Amounts of nondeductible consumption taxes related to property, plant andJapan Finance Corporation
FINANCIAL ACCOUNT RELATED TO THE FINANCIAL OPERATIONS FOR FACILITATING REALIGNMENTOF UNITED STATES FORCES IN JAPANequipment are expensed as incurred.

Additional information(The Accounting Standard for Accounting Changes and Error Corrections)
JFC has applied “the Accounting Standard for Accounting Changes and Error Corrections”, (ASBJ
Statement No. 24, December 4, 2009) and “Guidance on the Accounting Standard for Accounting
Changes and Error Corrections”, (ASBJ Guidance No. 24, December 4, 2009) beginning with thetreatment of accounting changes and corrections of prior period errors that are made after the beginningof this fiscal year.

2. Assets pledged as collateral
Pursuant to Article 52 of the JFC Act, assets of JFC are pledged as general collateral for all bonds issued
by JFC. There is no issued bond in Financial Account Related to the Financial Operations for Facilitating
Realignment of United States Forces in Japan.

3. Accumulated depreciation of fixed assets
Accumulated depreciation of fixed assets amounted to ¥0 million.

4. Restriction in dividend distribution
JFC is restricted in its dividend distribution pursuant to Article 47 of the JFC Act*1. In the event that theamount of the retained earnings brought forward in the balance sheet exceeds zero in each accountrelated to the operations*2 listed in each Item of Article 41 hereof, JFC shall accumulate, as a reserve, theamount calculated in accordance with the standards prescribed by a Cabinet Order to the extent that itreaches the certain amount, and if there is still a surplus, JFC shall pay such surplus into the nationaltreasury within 3 months after closing date.
In the event that the amount of the retained earnings brought forward falls below zero in each accountset forth in the preceding paragraph, legal capital surplus and legal retained earnings shall be transferred
to retained earnings brought forward to the extent that the amount of retained earnings brought forward
becomes zero.

*1 Including instances deemed applicable by the replacement of terms pursuant to the provisions of Article 22 (1) of the Acton Special Measures Concerning Smooth Implementation of Realignment of United States Forces in Japan (Act No. 67;2007) and instances deemed applicable by the replacement of terms pursuant to the provisions of Article 17 of the Act on
the Promotion of Businesses to Develop and Manufacture Energy and Environmentally Friendly Products (Act No. 38;
2010).

*2 Including instances deemed applicable by the replacement of terms pursuant to the provisions of Article 17 of the Act on
the Promotion of Businesses to Develop and Manufacture Energy and Environmentally Friendly Products (Act No. 38;2010) and operations listed in Article 16 of the Act on Special Measures Concerning Smooth Implementation ofJapan Finance Corporation
FINANCIAL ACCOUNT RELATED TO THE FINANCIAL OPERATIONS FOR FACILITATING REALIGNMENTOF UNITED STATES FORCES IN JAPANRealignment of United States Forces in Japan [hereafter referred to as “operations listed under each section of Article 41of the same law.”]

5. Financial instruments and related disclosure
1. Status of financial instruments(1) Initiatives for financial instruments
Based on the JFC Act, we are a governmental financial institution founded for the purpose ofsupplementing the financing conducted by general financial institutions and contributing to thedevelopment of the Japanese and global economic society and the improvement of the lifestyle ofcitizens.
The budget required for governmental financial operations is decided on by the Diet of Japan,
and business plans and financial plans (funds through borrowing from the fiscal investment funds
and loans, bonds, investments from the general account, and loans, etc.) are appended to thebudget and submitted to the Diet of Japan.
These operations are classified into Micro Business and Individual Operations, Agriculture,Forestry, Fisheries and Food Business Operations, SME Loan Programs and Securitization
Support Programs (Guarantee-type Operation), Securitization Support Programs (Purchase-typeOperation), Credit Insurance Programs, JBIC Operations, Financial Operations for Facilitating
Realignment of United States Forces in Japan, Operations to Facilitate Crisis Responses, andOperations to Facilitate Specific Businesses Promotion, etc. Accounts are made for eachclassification (“operation account”) for accounting treatment.
The funds procured by JFC through borrowing from the fiscal investment funds and loans,bonds and investments from the general account are managed separately by each operational
account. In principle, it is assumed that funds intended for one operation account will not be used
for another operation account. Accordingly, ALM (asset and liability management) is conducted
for the risks associated with financial assets and liabilities for each operation account. Note that
financial instruments that can be used for the management of surplus funds are limited to
extremely safe instruments such as Japanese government bonds, etc., as stipulated by the JFC Act.
In the Financial Account Related to the Financial Operations for Facilitating Realignment ofUnited States Forces in Japan, this account conducts in this fiscal year necessary operations related
to making equity investments, loans and other operations necessary for the projects to facilitate
realignment of United States Forces in Japan. However, in this account there is no loan or funds
for loan raised in this fiscal year.
(2) Types of financial instruments and risks
The financial assets and liabilities owned by JFC are managed in separate operation accounts.
The only financial assets held in this account are cash deposits and since there are no financial
liabilities present, accordingly the following risks are considered to be limited.

Japan Finance Corporation
FINANCIAL ACCOUNT RELATED TO THE FINANCIAL OPERATIONS FOR FACILITATING REALIGNMENTOF UNITED STATES FORCES IN JAPAN(a) Market risk
Market risk is the risk that the value of assets and liabilities (including off -balance sheetassets) will fluctuate and losses will be suffered, or profits derived from assets and liabilities(including off -balance sheet assets) will fluctuate and losses will be suffered due to thefluctuation of various market risk factors such as interest rates, exchange rates, etc.
In the fiscal year the only financial assets or liabilities held in this account are cash deposits,
and therefore market risk is considered to be limited.
(b) Liquidity risk
The liquidity risk of this account is considered to be limited because it does not accept deposits,
it secures stable funds from government grants only, and it has yet to provide a loan as of theend of the current fiscal year.
(3) Risk management structure for financial instruments
JFC has a Corporate Governance Committee established to properly conduct management in order
to comprehensively handle risks faced, including risks associated with financial instruments, toensure the sustained and stable realization of the financing policies of the function.
For each type of risk, management policies and procedures have been created to handle theSpecific types of credit risks, market risks, and liquidity risks for financing associated with each
operation, and a structure has been established to smoothly handle these tasks in each operation.
The risk management structure for these operations is described below.
(a) Market risk management
The main type of market risk associated with these operations is interest-rate risk.
These operations strive to undertake appropriate risk management practices by managing
funds procured from government grants through current deposits.
In addition, this financial instrument doesn’t have material sensitivity to interest rate
fluctuations since funds are managed using current deposits.
(b) Liquidity risk management related to fund procurement
Funding for these operations is procured by government grants only. Efforts are made forproper risk management through the assessment of the cash flows.
(4) Supplementary explanation concerning fair value of financial instruments
The fair value of financial instruments includes amounts based on market value and amounts thathave been reasonably estimated when no market value is available. Set valuation inputs are used
for the calculation of this amount, and if different valuation inputs are used the resulting amount
could vary.

2. Fair value of financial instruments
The amount in the balance sheet at March 31, 2012, and the related fair value, and difference is asfollows.

Japan Finance Corporation
FINANCIAL ACCOUNT RELATED TO THE FINANCIAL OPERATIONS FOR FACILITATING REALIGNMENTOF UNITED STATES FORCES IN JAPAN(Millions of yen)Amount on Balance Sheet
Cash and due from banks

Fair value

180

Difference—180(Note 1) Valuation methodologies used for estimating fair values for financial instruments

AssetsCash and due from banks
For due from banks that do not mature or have a maturity under 3 months, the carrying amount is usedas fair value because fair value resembles the carrying amount.

(Note 2) Redemption schedule for receivables and redeemable securities with future redemption dates(Millions of yen)

Maturities

Maturities

Maturities

Maturities

Maturities

after oneafter three

after fiveafter seven

Maturities

within one

year but

years but

years but

years butafter tenyear

within three

within five

withinwithin ten

years

years

years

seven years

years

Due from banks

180

—————

6. Deferred tax accounting
JFC does not apply deferred tax accounting since JFC is a nontaxable entity classified in the Article 2 (5)of the Corporation Tax Act (Act No. 34; 1965).

7. Retirement benefits
JFC has a defined benefit pension plan comprising of a welfare pension fund plan and a lump-sum
severance indemnity plan.
(a) The funded status of the pension plans
March 31, 2012 (Millions of yen)
Projected benefit obligations (A)Fair value of plan assets (B)Unfunded pension obligations (C)=(A)+(B)

(161)
38
(122)

Unrecognized prior service costs (D)0Actuarial unrecognized difference (E)5Net amount recognized on the balance sheet (F)=(C)+(D)+(E)Prepaid pension cost (G)Provision for retirement benefits (H)=(F)–(G)(116)—(116)

Japan Finance Corporation
FINANCIAL ACCOUNT RELATED TO THE FINANCIAL OPERATIONS FOR FACILITATING REALIGNMENTOF UNITED STATES FORCES IN JAPAN(b) Component of pension cost
March 31, 2012 (Millions of yen)
Service cost

5Interest cost

3Expected return on plan assets(0)

Amortization of prior service cost accounted for as expense

0

Actuarial differences accounted for as expense

0

Other costs—Net pensions cost

8(Note) Employee contributions to pension funds have been deducted from the service cost.

(c) Principal assumptions
March 31, 2012Discount rate

2.0%

Expected rate of return on plan assets

2.0%

Method of attributing the projected benefits to periods of services

Straight-line basis

Terms to amortize unrecognized prior service costs

10 years

Terms to amortize actuarial unrecognized differences

10 years

8. Related party transaction
No capital stock, but Receipts from the national budget (subsidy from the government) ¥271 million

9. Subsequent events
Based on the Japan Bank for International Cooperation Act (hereafter, the “New JBIC Act”), the Japan
Bank for International Cooperation (hereinafter “New JBIC”) was established on April 1, 2012. JFC’sJBIC Operations and Financial Operations for Facilitating Realignment of United States Forces in Japan
were handed over to the New JBIC as of the same date.

JFC underwrote the shares of the New JBIC, and transferred these shares without compensation to thegovernment of Japan at the time the New JBIC was established on April 1, 2012. Effective the same day,in accordance with the New JBIC Act, assets and liabilities that belong to JFC’s JBIC operations andFinancial Operations for Facilitating Realignment of United States Forces in Japan were succeeded bythe New JBIC. The amount of such assets and liabilities are determined by an evaluation committee
pursuant to the New JBIC Act. After the establishment of the New JBIC, profit and loss that belong toJFC’s JBIC Operations and Financial Operations for Facilitating Realignment of United States Forces inJapan are no longer recognized as profit and loss of JFC. The status of JFC’s Account for JBIC
Operations and Financial Account Related to the Financial Operations for Facilitating Realignment ofUnited States Forces in Japan is founded in the financial statements and notes of each account.