Financial Condition

DBJ Disclosure 200636

•Compliance with Corporate Accounting Standards
The consolidated financial statements of the preceding
consolidated accounting period (April 1, 2004 to March
31, 2005) and the current consolidated accounting period(April 1, 2005 to March 31, 2006) have been audited andcertified by ChuoAoyama Pricewaterhouse Coopers.
The financial statements of the preceding accounting
period (April 1, 2004 to March 31, 2005) and the current
accounting period (April 1, 2005 to March 31, 2006)
have been audited and certified by ChuoAoyama
Pricewaterhouse Coopers.
•Compliance with Accounting Standards for Special
Agencies, etc.
The financial statements of the preceding accounting
period (April 1, 2004 to March 31, 2005) and the current
accounting period (April 1, 2005 to March 31, 2006)
have been audited and certified by ChuoAoyama
Pricewaterhouse Coopers.

37

DBJ Disclosure 2006

Accounts Based on
Corporate AccountingStandards

DBJ Disclosure 2006

38

39

DBJ Disclosure 2006

CONSOLIDATED BALANCE SHEETSMillions of yen
2006

At March 31

Thousands of U.S. dollars
2005

2006

AssetsCash and Due from banks
Reverse Repurchase Agreements¥

Money Held in Trust (Note 26)
Securities (Notes 4, 13 and 26)
Loans (Note 5)
Other Assets (Note 6)
Premises and Equipment (Note 7)
Deferred Charges on Bonds and Notes
Customers' Liabilities for Acceptances and Guarantees
Allowance for Loan Losses (Note 8)
Allowance for Investment Losses
Total Assets¥

28,187

20,556¥$

239,954

150,003107,999

1,276,955

28,422433,0214,136
394,840

241,957
3,686,229

12,873,226
203,485

13,860,747
245,399

109,587,354
1,732,230

36,583
2,610

37,6382,594

311,426
22,221

161,567

98,757

1,375,392(199,702)(31,462)(280,284)(20,767)(1,700,026)(267,830)

13,685,943¥

14,471,618

116,505,862

Thousands of U.S. dollars

Millions of yen
2006

$

2006

2005

Liabilities, Minority Interests and Equity
Liabilities
Bonds and Notes (Note 9)
Borrowings (Note 10)¥2,261,799¥

1,994,801$

19,254,271

9,004,474

10,214,800

76,653,401

Other Liabilities (Notes 11 and 23)
Allowance for Bonus Payments

211,104
1,658

249,472
1,651

1,797,096
14,115

Allowance for Employee Retirement Benefits (Note 21)

30,887
161,567

32,21898,757

262,942
1,375,392

Acceptances and Guarantees (Note 12)
Total Liabilities¥

11,671,492¥

12,591,701$

99,357,217

Minority Interests
Equity

¥

4,111

¥

4,498

$

35,004

Capital¥1,272,286
734,637¥

1,215,461
653,043$

10,830,731
6,253,834

Total Equity¥

2,010,339¥

1,875,419$

17,113,641

Total Liabilities, Minority Interests and Equity¥

13,685,943¥

14,471,618$

116,505,862

Retained Earnings
Net Unrealized Gain on Available-for-sale Securities,
Net of Taxes (Note 26)

3,415

6,915

29,076

Accompanying notes are an integral part of these financial statements.

DBJ Disclosure 200640

CONSOLIDATED STATEMENTS OF OPERATIONS
Thousands of U.S. dollars

Millions of yen
For the Fiscal Years ended March 31

2005

2006

2006

Revenue
Interest Income
Interest on Loans¥

Interest and Dividends on Securities
Interest on Reverse Repurchase Agreements
Interest on Due from banks
Other Interest Income
Fees and Commissions (Note 15)
Other Operating Income (Note 16)
Other Ordinary Income (Note 17)
Collection of Written-off Claims¥

426,271$

3,129,315

365,949424,615

3,115,257

1,640
6

1,648
5

13,962
53

4
0

2
0

41
2

2,430
4

2,211
16

20,68840

33,78257,304

287,580

7,414
653

1,864
14

63,116
5,565

Gains on Sales of Premises and Equipment
Total Revenue¥

411,885¥

487,684$

3,506,304

Expenses
Interest Expense¥

271,421¥317,814$

2,310,556

Interest on Bonds and Notes
Interest on Borrowings

30,920221,070

31,466
271,583

263,222
1,881,929

Other Interest Expense

19,43054

14,76557

165,405
467

Fees and Commissions (Note 18)
Other Operating Expenses (Note 19)

1,737

2,737

14,787

General and Administrative Expenses
Other Ordinary Expenses (Note 20)

25,82520,36827,14026,036

219,847
173,395

Losses on Impairment of Fixed Assets

337
12

−
35

2,871
108

Losses on Sales of Premises and Equipment
Total Expenses¥

319,757¥

373,821$2,722,031

Earnings before Income Taxes
Income Taxes¥¥

92,12823¥¥

113,863638$$

784,273
199

Current

2
20

Deferred
Minority Interests in Net Earnings
Net Earnings
Accompanying notes are an integral part of these financial statements.

41

367,600

DBJ Disclosure 2006

¥

(125)
92,231

638
(0)
¥

584
112,63925
174$(1,072)785,146

CONSOLIDATED STATEMENTS OF EQUITY
Millions of yen

For the Fiscal Year ended March 31, 2005
Balance at March 31, 2004¥

1,194,286

Net Change in Unrealized Gain(Loss) on
Available-for-sale Securities, Net of Taxes

Net Unrealized Gain(Loss)on Available-for-sale
Securities, Net of Taxes

Retained
Earnings

Capital¥

540,403¥

18,956

Total Equity¥

1,753,646−−(12,041)

21,175−−

21,175−1,215,461¥

112,639
653,043

¥

−
6,915

¥

112,639
1,875,419¥

10,636
10,636

¥

−
−

¥

¥

642,406¥−¥(12,041)

Capital Contribution fromthe Japanese Government
Net Earnings
Balance at March 31, 2005
Appropriations: (Note 14)¥

Payments to National Treasury
Total
Unappropriated Retained Earnings

−
¥

−
−

¥

−
−
−

Millions of yen
Retained
Earnings

CapitalFor the Fiscal Year ended March 31, 2006
Balance at March 31, 2005
Net Change in Unrealized Gain(Loss) on¥

1,215,461

Net Earnings
Balance at March 31, 2006

Unappropriated Retained Earnings

6,915

¥

1,875,419(3,499)(3,499)56,825−92,231−−

56,825

1,272,286

Appropriations: (Note 14)
Payments to National Treasury
Total

¥

−

−
¥

653,043

Total Equity−

Available-for-sale Securities, Net of Taxes
Capital Contribution fromthe Japanese Government¥

Net Unrealized Gain(Loss)on Available-for- sale
Securities, Net of Taxes

¥

−
−

¥

3,415

¥
¥

10,636734,637

92,231¥−

10,636−¥¥745,274

−
−

¥
¥

¥
¥

2,020,976−−−

Thousands of U.S. dollars
CapitalFor the Fiscal Year ended March 31, 2006
Balance at March 31, 2005

$ 10,346,991

Net Change in Unrealized Gain(Loss) on
Available-for-sale Securities, Net of Taxes−$

Retained
Earnings

Net Unrealized Gain(Loss)on Available-for- sale
Securities, Net of Taxes

5,559,234$

58,867

Total Equity$

15,965,092−(29,791)(29,791)

483,740−−

483,740−$ 10,830,731

785,146

Capital Contribution fromthe Japanese Government
Net Earnings
Balance at March 31, 2006
Appropriations: (Note 14)
Payments to National Treasury
Total
Unappropriated Retained Earnings$

6,344,380$−$

90,54590,545$−$

6,253,834

$

−
$
$

−
29,076$−785,146
17,204,187
−

−

$

−

−

$

−

Accompanying notes are an integral part of these financial statements.

DBJ Disclosure 2006

42

CONSOLIDATED STATEMENTS OF CASH FLOWS
Thousands of U.S. dollars

Millions of yen
For the Fiscal Years ended March 31
Cash Flows from Operating Activities
Earnings before Income Taxes

2006¥

Depreciation and Amortization
Losses of Impairment of Fixed Assets

92,128851¥

113,863910$

784,273
7,246

337

−

2,871

Amortization of Goodwill
Change in Allowance for Loan Losses(1)(17,699)596(50,998)(13)(150,676)

Change in Allowance for Investment Losses

10,847
6

6,985
(8)

92,33956

Change in Allowance for Bonus Payments
Change in Allowance for Employee Retirement Benefits
Interest Income-Accrual BasisInterest Expense-Accrual Basis
Net Gains and Losses on Securities
Net Gains and Losses on Money Held in Trust
Net Gains and Losses on Foreign Exchanges
Net Gains and Losses on Sale of Premises and Equipment
Net Change in Loans
Net Change in Bonds and Notes
Net Change in Borrowings
Net Change in Reverse Repurchase Agreements
Interest Income-Cash BasisInterest Expense-Cash BasisOther
Sub-total
Refund of (Payments for) Income Taxes
Net Cash Provided by (used in) Operating Activities
Cash Flows from Investing Activities
Payments for Purchases of Securities
Proceeds from Redemption of Securities¥¥

Payments for Money Held in Trust
Proceeds from Money Held in Trust
Payments for Purchases of Premises and Equipment
Proceeds from Sale of Premises and Equipment
Payments for Purchases of Subsidiaries (affecting theCapital Contribution from the Japanese Government
Payment to National Treasury

Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents at the Beginning of the Fiscal Year46

(11,327)(426,271)
317,814(3,129,315)
2,310,556(1,411)(965)(3,175)846(12,012)(8,219)

(0)
(641)

(1)
20

(0)
(5,458)918,698

845,506

7,820,707

266,582(1,210,325)

213,500(1,188,650)

2,269,371(10,303,269)(42,004)
375,742(30,832)
424,042(357,578)
3,198,629(274,817)(330,978)(2,339,466)(1,011)18,80773,976(32,806)(8,609)160,106(795)
18,012(89,980)
50,349¥¥1(32,804)(334,168)
353,023$$(6,772)
153,333(765,985)
428,619(25,525)
2,205(5,926)
5,836(217,297)
18,776

(188)

(517)

(1,604)

700

60

5,964

7
(62,431)¥−
18,307$62(531,465)¥

56,825¥

21,175$

483,740(2,836)(7,799)¥(129)
53,858¥−13,375$(1,099)458,491

¥
¥

0
9,439

¥
¥

1
(1,119)$$(1)
80,358¥18,429¥19,251$

156,887

Dividends Paid to Minority Interests
Net Cash provided by Financing Activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents(1,330)(367,600)
271,421¥

scope of consolidation)
Net Cash (used in) provided by Investing Activities
Cash Flows from Financing Activities(24,150)Net Increase in Cash and Cash Equivalents Resulted from the
newly Consolidation of Subsidiary

¥

−

¥

297

$

−

Cash and Cash Equivalents at the End of the Fiscal Year¥

27,869¥18,429$237,245

Accompanying notes are an integral part of these financial statements.

43

2006

2005

DBJ Disclosure 2006

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying consolidated financial statements have been prepared from the accounts maintained by Development Bank ofJapan (“DBJ”) and its consolidated subsidiaries in accordance with accounting principles and practices generally accepted in Japan, which
are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
The consolidated financial statements are not intended to present the financial position and the result of operations in accordance withaccounting principles and practices generally accepted in countries and jurisdictions other than Japan.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen. Accordingly, the sum of eachamount appearing in the accompanying financial statements and the notes thereto may not be equal to the sum of the individual accountbalances. Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥117.47=$1.00, the effective
exchange rate prevailing as of March 31, 2006, has been used in conversion. The presentation of such amounts is not intended to imply
that Japanese yen amounts have been or could have been readily translated, realized or settled in U.S. dollars at that rate or any other rate.

2. Basis of Consolidation(a) Scope of Consolidation
The consolidated financial statements include the accounts of DBJ and its consolidated subsidiaries, DBJ Business Investment Co., Ltd(formerly DBJ Business Restructuring Investment Co., Ltd, prior to July, 2005), New Business Investment Co., Ltd and DBJ Corporatemezzanine partners Co., Ltd. DBJ Corporate mezzanine partners Co., Ltd. was newly consolidated in the fiscal year ended March 31, 2006.
DBJ has 2 subsidiaries, Asuka DBJ Investment LPS and GAD financial Service Limited, which are neither consolidated nor accounted
for by the equity method, because underlying interests in their net earnings and retained earnings have no material impact on the
consolidated financial statements of DBJ.
Tomatoh, Inc. and Shin Mutsu-Ogawara, Inc., in which DBJ has over 50% ownership interest are not considered to be
subsidiaries and consequently not consolidated because DBJ made those investments as part of its financing operations, which are
DBJ’s primary business, and did not intend to obtain control over their operating and financing policies.
Though DBJ has 4 affiliates, Technology Alliance Investment, Ltd., Japan Energy Investment Inc. and Asuka DBJ Partners
Co.,Ltd. etc, the equity method is not applied to them, since underlying interests in their net earnings and retained earnings haveno material impact on the consolidated financial statements of DBJ.
As of March 31, 2006, DBJ owns greater than 20% but less than a majority of voting stock of Nihonkai LNG Co., Ltd. and 30
other companies. These companies, however, are not considered to be affiliates because DBJ made these investments as part of its
financing operations, which are DBJ’s primary business, and did not intend to obtain ability to exercise significant influence on theiroperating and financing policies.
On consolidation, significant intercompany accounts and transactions have been eliminated.
(b) Year-end Date of Consolidated Subsidiaries
Fiscal year-end of the consolidated subsidiaries is March 31.
(c) Valuation of Consolidated Subsidiaries’ Assets and Liabilities
Assets and liabilities of newly consolidated subsidiaries are measured at fair value for consolidation.
(d) Amortization of Goodwill
The differences between the fair value of net assets and the cost of the acquired subsidiary is charged to income in the year ofacquisition.

3. Summary of Significant Accounting Policies(a) Cash and Cash Equivalents“Cash and Cash Equivalents” in the consolidated statements of cash flows consist of cash on hand and due from banks.
The reconciliation between “Cash and Cash Equivalents” and “Cash and Due from banks” is as follows:
Millions of yen
2006

At March 31
Cash and Due from BanksTime Deposits with Banks¥

Trust Money to Financial Agencies
Cash and Cash Equivalents¥

28,187

2005¥

20,556(300)(2,000)(18)
27,869(127)
18,429¥Thousands of U.S. dollars
2006$

239,954(2,554)$(155)
237,245
DBJ Disclosure 200644

(b) Securities
Held-to-maturity debt securities are stated at amortized cost on a straight-line basis, computed using the weighted averagemethod. Available-for-sale securities whose current values can be estimated are stated at market value (cost is calculated
principally using the weighted average method), and other non-marketable securities are stated at cost or amortized costcomputed using the weighted average method. Investments in the limited partnerships and other similar partnerships areaccounted for at net amounts of underlying interests in their net earnings based on their most recent financial statements.
Unrealized gain and loss on available-for-sale securities are included in equity, net of income taxes.
Effective in the fiscal year ended March 31, 2006, DBJ applied the accounting treatment for other compound instruments
which do not have the ability to increase paid-in capital (Guidelines on Implementation of Business Accounting Standard No. 12
issued by the Accounting Standards Board of Japan on March 30, 2006).
As a result, net earnings increased by ¥102 million ($871 thousand).
(c) Valuation Method for Derivative Financial Instruments
All derivative financial instruments are carried at market value, except for certain derivatives that are designated as hedging
instruments as discussed below.
(d) Hedge Accounting(¡) Hedge Accounting
DBJ applies the deferral method of hedge accounting. Foreign currency swaps, which are used to hedge the foreign currency
fluctuations are translated not at market values but at contractual rates, as the foreign currency swap contracts meet thehedging criteria under the Accounting Standards for Financial Instruments.
(™) Hedging Instruments and Hedged Items
・Hedging Instruments
Hedged Items
・Hedging Instruments
Hedged Items: Interest Rate Swaps: Bonds and Notes, Borrowings, and Loans: Foreign Currency Swaps: Foreign currency denominated Loans and Bonds and Notes(£) Hedging Policy
DBJ utilizes hedging instruments to hedge interest rate and foreign currency fluctuations on its assets and liabilities.
(¢) Evaluation of Hedge Effectiveness
DBJ evaluates the effectiveness of the hedges by testing whether the derivatives are effective in reducing the risks
associated with the hedged items.
In regard to both of interest rate swap contracts which meet the hedging requirements of accrual method*1 and foreign
currency swap contracts which meet the hedging requirements of assignment method*2 under the Accounting Standards for Financial
Instruments at the inception date, DBJ is not required to evaluate their hedge effectiveness periodically.
*1
If interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or received under theinterest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract was executed.
*2
In cases where forward foreign exchange contracts are used as hedges and meet certain hedging criteria, forward foreignexchange contracts and hedged items are accounted for in the following manner;

1) If a forward foreign exchange contract is executed to hedge an existing foreign currency assets or liabilities, a) the difference, ifany, between the Japanese yen amount of the hedged foreign currency asset or liability translated using the spot rate at the inception
date of the contract and the book value of the asset or liability is recognized in the statement of operations in the period which
includes the inception date, and b) the discount or premium on the contract (that is, the difference between the Japanese yen amountof the contract translated using the contracted forward rate and that translated using the spot rate at the inception date of thecontract) is recognized over the term of the contract.

45

DBJ Disclosure 2006

2) If a forward foreign exchange contract is executed to hedge a future transaction denominated in a foreign currency, thefuture transaction will be recorded using the contracted forward rate, and no gains or losses on the forward foreignexchange contract are recognized.
(e) Premises and Equipment(¡) Depreciation
Premises and equipment are depreciated using the declining-balance method, except for buildings (excluding installedfacilities) that are depreciated on a straight-line basis.
The estimated useful lives are principally as follows:
Buildings: 22 years to 50 years
Equipment: 3 years to 20 years(™) Accounting standard for impairment of fixed assets
On August 9, 2002, the Business Accounting Council in Japan issued "the Accounting Standard for Impairment of Fixed
Assets". The standard requires that fixed assets be reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable. Impairment losses shall be recognized in the income
statement by reducing the carrying amount of impaired assets or a group of assets to the recoverable amount to bemeasured as the higher of net selling price and value in use.
DBJ has applied this standard from the fiscal year beginning April 1, 2005. As a result, net earnings decreased by ¥337 million($2,871 thousand). In the banking industry, fixed assets are stated at cost less accumulated depreciation pursuant to the
Enforcement Ordinance of the Banking Law for long term credit banks and the accumulated impairment losses are also
deducted from the book value of each asset.
(f) Amortization of deferred charges"Discounts on Bonds and Notes" are amortized over the term of bonds and notes, and "Bonds and Notes Issuance Costs" arecharged to income as incurred.
(g) Foreign currency translation and revaluation method
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the market exchange rates prevailing at
the fiscal year end.
(h) Allowance for Loan Losses
DBJ provides for "Allowance for Loan Losses" as detailed below pursuant to the internal policies for self-assessment of credit quality
and loan losses.
The allowance for claims on debtors who are legally bankrupt, in special liquidation or effectively bankrupt is provided for basedon the amount of claims, after the write-off described below, net of amounts expected to be collected through disposal ofcollateral or execution of guarantees.
The allowance for claims on debtors who are not legally bankrupt at the moment, but likely to become bankrupt for which future
cash flows cannot reasonably be estimated is provided for the amount considered to be necessary based on an overall solvency
assessment performed on the claims, net of amounts expected to be collected through disposal of collateral or execution of guarantees.
With respect to the claims on debtors who are likely to become bankrupt or to be closely monitored, and for which future cash flows
can reasonably be estimated, the allowance is provided for the difference between the present value of expected future cash flows
discounted at the contracted interest rate and the carrying value of the claims.
The allowance for claims on debtors other than those described above is provided for based on the historical default rate,
which is calculated based on the actual defaults over a certain historical period (the average financing period for DBJ).
All claims are assessed initially by the investment and lending departments and then by the Credit Risk Management
Department, which is independent from the investment and lending departments based on internal policies for self-assessment ofcredit quality. The allowance is provided based on the results of the self-assessment.
With respect to the claims on debtors who are legally or substantially bankrupt with collateral or guarantees, the amount of claims
exceeding the estimated market values of collateral or guarantees, which are deemed uncollectible, have been written-off, and totaled¥95,546 million ($813,371 thousand) and ¥104,845 million for the years ended March 31, 2006 and 2005, respectively.
(i) Allowance for Investment Losses"Allowance for Investment Losses" is provided for based on the estimated losses on non-marketable securities.
DBJ Disclosure 200646

(j) Allowance for Bonus Payments“Allowance for Bonus Payments” is calculated and provided for based on the estimated amounts of future payment
attributable to the services that have been rendered by employees and executive directors to the date of the balance sheets.
(k) Allowance for Employee Retirement Benefits“Allowance for Employee Retirement Benefits” represents future payments for pension and retirement benefits to employees andexecutive directors, and is accrued based on the projected benefit obligations and estimated pension plan assets at each fiscal year
end. The actuarial gain or loss is recognized during the year it arises.
(l) Equipment Used under Finance Lease Agreements
Equipment used under finance lease agreements is accounted for as equipment leased under operating leases, except for those inwhich the ownership of leased equipment is substantially transferred to the lessee.
(m) Consumption tax
Income and expense subject to consumption tax exclude related consumption taxes paid or received.
(n) Income Taxes
DBJ is exempt from taxes based on income, however, DBJ is subject to parity taxes among local taxes. On the other hand, theconsolidated subsidiaries are subject to income and local taxes.
Deferred income taxes are recorded for income taxes based on differences between the tax bases of assets and liabilities and those
as reported in the consolidated financial statements, using enacted tax rates which will be in effect when the differences are expected
to reverse. The asset and liability method is used to determine deferred income taxes.
(o) Appropriation of Retained Earnings
Consolidated Statements of Equity are presented based on the approved appropriation of retained earnings for the fiscal years ended
March 31, 2006 and 2005, respectively.

4. Securities
Securities as of March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
At March 31
Japanese Government Bonds

2006

Corporate Bonds

189,645
48,961Equities
Other securities

139,591
54,822¥¥47

DBJ Disclosure 2006

433,021

2006

2005
¥

152,925
63,215$

1,188,313
466,703

128,239
50,460¥394,840

1,614,416
416,797$

3,686,229

5. Non-performing Loans
The amounts of Non-Performing Loans included in “Loans” on the consolidated balance sheets as of March 31, 2006 and 2005 are as follows:
Millions of yen
At March 31

2006

Loans to Bankrupt Debtors
Delinquent Loans

¥

2005

4,313

¥

25,762Loans Past Due Three Months or More

111,720−

233,765
466

Restructured Loans

89,301

138,629¥

205,335¥

398,624

Thousands of U.S. dollars
2006
36,720$951,056
760,208
1,747,984$

Notes: 1. The amounts of Loans indicated above are stated at gross amounts, before reduction of allowance for loan losses.
2. “Loans to Bankrupt Debtors” represent non-accrual loans to debtors who are legally bankrupt as defined in Article 96-1-3 and 4 of the Japanese Tax Law
Enforcement Regulation.
3. “Delinquent Loans” represent non-accrual loans other than (¡) Loans to Bankrupt Debtors and (™) Loans whose interest payments are deferred in order to assist or facilitate
the restructuring efforts of borrowers in financial difficulties.
4. "Loans Past Due Three Months or More" are loans whose principal or interest payment is three months or more past due and do not fall under the category of “Loans
to Bankrupt Debtors” or “Delinquent Loans”.
5. "Restructured loans" are loans whose repayment terms have been modified to the advantage of debtors through means such as reduction or exemption of interest rates,
postponement of principal and interest payments, and forgiveness of loans to support or restructure the debtors’ businesses, and do not fall under the category of “Loans
to Bankrupt Debtors”, “Delinquent Loans”, or “Loans Past Due Three Months or More”.

DBJ provides commitment lines under which it lends, upon the borrowers’ request, necessary funds up to the pre-determinedamount that is within the borrowers’ financing needs for the projects and up to the agreed maximum amount to lend, provided that theirrequests meet terms and conditions for disbursement prescribed in the loan agreements. The total balance of unused commitment lines
as of March 31, 2006 and 2005 are ¥214,022 million ($1,821,933 thousand), including ¥53,636 million ($456,593 thousand) being
financed within one year and ¥70,556 million, including ¥41,328 million being financed within one year, respectively.

6. Other Assets
Other Assets as of March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
At March 31
Prepaid Expenses
Accrued Income

2006¥

Derivatives
Deferred Hedge Losses
Other
¥

2006

2005
103

¥

95

52,155
3,083

59,168
5,565

146,698

171,801

1,444
203,485¥

8,767
245,399$880
443,993
26,246
1,248,817
12,294$

1,732,230

Notes: Deferred Hedge Losses are net unrealized losses from hedging instruments. The gross amounts of deferred hedge gains and losses before netting are ¥10,138 million ($86,308 thousand)and ¥156,837 million ($1,335,125 thousand) as of March 31, 2006, respectively. The corresponding amounts as of March 31, 2005 are ¥8,870 million and ¥180,672 million,
respectively.

DBJ Disclosure 2006

48

7. Premises and Equipment
Premises and Equipment as of March 31, 2006 and 2005 are as follows:
Millions of yen
At March 31
Tangible Fixed Assets
Land

2006
¥

Buildings
Equipment
Construction in Progress¥

20,38633,813

20,39534,467

Thousands of U.S. dollars
2006$

173,548
287,845
16,800

1,973

1,997

¥

−
56,173−56,860¥(20,003)36,169¥37,221$

307,908

¥

412

¥

415

$

3,507

¥

11
423

¥

17
432

$

97
3,604

¥

(10)
413

¥

(16)
416

$

(86)
3,518

Less-Accumulated Depreciation
Net Book Value

2005

¥

$

(19,638)−
478,193(170,285)

Intangible Assets
Guarantee Deposits
Other
Less-Accumulated Amortization
Net Book Value

8. Allowance for Loan Losses
Allowance for Loan Losses as of March 31, 2006 and 2005 are as follows:
Millions of yen
At March 31
General Allowance for Loan Losses

2006

DBJ Disclosure 2006

2006

¥

120,170
79,532¥

149,284
130,999$

1,022,985
677,041¥

199,702¥280,284$

1,700,026

Specific Allowance for Loan Losses

49

Thousands of U.S. dollars
2005

9. Bonds and Notes
Bonds and Notes as of March 31, 2006 and 2005 are as follows:
At March 31
Issue dateCurrency andAmounts
2006(In millions)Japanese Government-

February

JPY

guaranteed Bonds
185-186*1

1996November

10,000Japanese Government-

1996
AugustDescription of Bonds
and Notes

guaranteed Bonds 1-11

2000February

Interest
rate (%)

Maturitydate

2.90 〜
3.10

February

0.80 〜
1.90

JPY
423,000¥

2006November

Millions of yen
2006
2005
20,00010,000¥[10,000][10,000]

2006
August423,000

380,000

75,00075,000Thousands of U.S. dollars
2006$
85,128[85,128]

3,600,919

2010February
2016

2006
Japanese Governmentguaranteed Foreign

December
1996-

Bonds 65,67*2

September
1998

Japanese Government-

November

JPY

guaranteed Foreign
Bonds 1-9

1999June

664,389
USD1,450

Japanese Government-

2005
May

EUR750JPY

underwritten Bonds

1995-

109,410177-211*1

December
1998

FILP Agency Bonds
1-24*3September
2001-

1.81 〜

JPY
75,0002.875

December
2006-

638,461[425,641][50,000]

September
2028
June

5,655,820

664,389

588,6211.10 〜2025
May

109,410

151,180

931,387

3.60

2005-

[36,600][41,770][311,569]

980,000[100,000]

780,000

8,342,556[851,281]

1,994,801$ 19,254,271

1.05 〜
6.875

2010June

December
2008
JPY
980,000

0.40 〜
1.83

September
2006September

October
2005

2020
¥

2,261,799¥

Notes: 1. These bonds are government-guaranteed bonds and government-underwritten bonds issued by the Hokkaido-Tohoku Development Finance Public Corporation prior tothe merger with the Japan Development Bank that formed DBJ.
2. These bonds are government-guaranteed bonds issued by the Japan Development Bank prior to the merger with the Hokkaido-Tohoku Development Finance Public
Corporation that formed DBJ.
3. Fiscal Investment and Loan Program (FILP) Agency Bonds issued in Japanese domestic markets are not government-guaranteed.
4. Figures indicated in brackets [ ] represent the amounts to be redeemed within one year.

Scheduled redemptions of Bonds and Notes for each of the next five years as of March 31, 2006 are as follows:
Fiscal year ending in March 31, 2007¥

196,600 million$ 1,673,619 thousand

2008

183,250

1,559,973

2009

169,560

1,443,432

2010

110,000

936,4092011

370,000

3,149,740

DBJ Disclosure 200650

10. Borrowings
Borrowings as of March 31, 2006 and 2005 are as follows:

At March 31
Borrowings
Long-term Borrowings

Averageinterest
rate (%)

Due date of
repayment

Thousands of U.S. dollars

Millions of yen
2006

2005

2006

December
2.07

from Japanese
Government

2006October
2025¥

9,004,474¥

10,214,800$

76,653,401¥

9,004,474¥

10,214,800$

76,653,401

Borrowings with maturities for each of the next five years as of March 31, 2006 are as follows:
Fiscal year ending in March 31, 2007

¥ 1,323,466 million$ 11,266,421 thousand

2008

1,304,573

11,105,588

2009

1,166,509

9,930,273

2010

1,003,669

8,544,048

2011

864,082

7,355,768

11. Other Liabilities
Other Liabilities as of March 31, 2006 and 2005 are as follows:
Millions of yen
2006
33,049¥At March 31
Accrued Expenses
Unearned Income¥

Deposits from Employees
Derivatives
Other

Thousands of U.S. dollars
2006
281,344$

19,00818,692

161,815150
156,590124
181,951

1,282
1,333,023

2,306
211,104¥

2005
37,332¥

11,370249,472$

19,632
1,797,096

12. Acceptances and Guarantees
Acceptances and Guarantees as of March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
At March 31
Guarantees

2006
161,567¥

161,567

2006
1,375,392

2005
98,757¥98,757$

1,375,392

13. Assets Pledged as Collateral
Securities collateralized in Real Time Gross Settlement for bank deposit at Bank of Japan are ¥119,652 million ($1,018,579
thousand) as of March 31, 2006, and ¥122,928 million as of March 31, 2005.

14. Retained Earnings
A portion of net earnings of the parent company calculated pursuant to Article 4 of the Development Bank of Japan Law (“DBJ Law”)
was appropriated to Statutory Reserve and for payment to the National Treasury as stipulated by Article 41 of the DBJ Law.

51

DBJ Disclosure 2006

15. Fees and Commissions (Income)Fees and Commissions (Income) for the fiscal years ended March 31, 2006 and 2005 are as follows:

For the fiscal years ended March 31
Commissions¥¥

Thousands of U.S. dollars
2006

Millions of yen
2006
2005
2,430
2,211
¥
2,430
2,211
¥

$

20,688$20,688

16. Other Operating Income
Other Operating Income for the fiscal years ended March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
For the fiscal years ended March 31
Foreign Exchange Gains

2006
¥

Other
¥

2006

2005
4
−

¥

4

¥

4

$

40
−

$

40

12
16

17. Other Ordinary Income
Other Ordinary Income for the fiscal years ended March 31, 2006 and 2005 are as follows:
Millions of yen
For the fiscal years ended March 31
Reversal of Allowance for Loan Losses

2006¥

Gains on Sales of Equities and Other Securities
Gains on Money Held in Trust
Other¥

Thousands of U.S. dollars
2005

17,699¥2006

50,998150,676

$

2,979

3,276

25,367966
12,135

110
2,920

8,227
103,31033,782¥$57,304

287,580

18. Fees and Commissions (Expenses)
Fees and Commissions (Expenses) for the fiscal years ended March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
For the fiscal years ended March 31
Wire Transfer Service Charges
Commissions

2006

2005

¥

5

¥

49
54

2006

¥

5

¥

51
57

$

48

$

419
467

19. Other Operating Expenses
Other Operating Expenses for the fiscal years ended March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars
2006

Millions of yen
For the fiscal years ended March 31
Foreign Exchange Losses

2006
¥

2005
3

¥

777
687

Bonds and Notes Issuance Costs
Losses on derivative instruments
Other

1,737

$

¥

2,737

32
6,616
5,851

1,536
319

268
¥

−
881

2,288
$

14,787

DBJ Disclosure 2006

52

20. Other Ordinary Expenses
Other Ordinary Expenses for the fiscal years ended March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars
2006

Millions of yen
For the fiscal years ended March 31

2006

Provision for Investment Losses
Write-off of Loans

¥

2005

10,802

¥

7,099

5,350

91,956$45,547

14,268Losses on Sales of Equities andOther Securities
Write-off of Equities
Losses on Money Held in Trust
Other
¥

−

7

−

1,568
0

92
957

13,357
8

2,646
20,3683,609
26,03622,527
173,395¥$

Notes: Losses on sale of loans included in “Other” are ¥591 million ($5,032 thousand) and ¥607 million for the fiscal years ended March 31, 2006 and 2005, respectively.

21. Employee Retirement Benefits
DBJ has defined benefit pension plans, which consist of welfare pension fund plan and lump-sum severance indemnity plan.
(a) The Funded Status of the Pension Plans
Thousands of U.S. dollars

Millions of yen
At March 31
Projected Benefit Obligation(A)

Fair Value of Plan Assets(B)

Unfunded Pension Obligation
Unrecognized Net Obligation at Transition(C)=(A)+(B)(D)

Unrecognized Net Actuarial Gains/Losses
Unrecognized Prior Service Cost

(E)
(F)

Net Amount Recognized on the Balance(G)=(C)+(D)+(E)+(F)Prepaid Pension Cost
Allowance for Employee Retirement Benefits(H)(G)-(H)¥¥2006(45,000)¥

2005(44,121)2006(383,079)$

14,112(30,887)

11,903(32,218)

120,137(262,942)

−

−

−

−
−

−
−

−
−

(30,887)−(32,218)−(262,942)−(30,887)¥(32,218)(262,942)$

Notes: The above Projected Benefit Obligations include a portion in which the pension fund manages on behalf of the Japanese Government welfare program.

(b) Component of Pension Cost

At March 31
Service Cost¥

Interest Cost
Expected Return on Plan Assets
Amortization of Prior Service Cost
Amortization of Net Actuarial Gains/Losses
Amortization of Net Obligation at Transition
Other Costs
Net Pension Cost¥

Millions of yen
2006
2005
1,417
¥
1,506
880
865

Thousands of U.S. dollars
2006
12,071
$
7,494

(119)
−

(112)
−

(1,013)−(1,315)

121(11,197)

−
−

−
−

−
−

864

¥

2,380

$

7,355

(c) Principal Assumptions Used
At March 31
Discount Rate
Expected Rate of Return on Plan Assets
Method of Attributing the Projected Benefits to Periods of Services
Amortization Period of Actuarial Gains/Losses

53

DBJ Disclosure 2006

2006

2005
2.0%
1.0%

2.0%
1.0%

Straight-line basis

Straight-line basis

Gains/losses are charged toincome immediately

Gains/losses are charged toincome immediately

22. Lease Transactions(a) Finance Lease Transactions(Excluding leases where the ownership of the property is substantially transferred to the lessee)
Millions of yen
2006
At March 31
Acquisition Cost Equivalents¥

Equipment
773¥

Others
277

¥

Total
1,051

¥

Equipment
936¥

Others
230

¥

Total
1,167

¥

(362)
410

¥

(127)
149

¥

(490)
560

¥

(428)
508

¥

(95)
134

¥

(524)
642

Less-Accumulated
Depreciation Equivalents
Book Value Equivalents

2005

Thousands of U.S. dollars
2006
At March 31
Acquisition Cost Equivalents
Less-Accumulated

Equipment$ 6,589

Depreciation Equivalents
Book Value Equivalents$(3,090)
3,499

Others$ 2,359

$

Total
8,948

(1,085)
1,274$(4,175)
4,773$

Future lease payments subsequent to the end of the fiscal years for finance leases (including the interest portion thereon) aresummarized below:
Thousands of U.S. dollars

Millions of yen
At March 31
Due in One Year or Less

¥

2006
227
339

¥

566

Due after One Year

¥

2005
244
415

$

2006
1,935
2,892

¥

659

$

4,827

Lease expense, depreciation equivalents and interest expense equivalents relating to finance leases for the fiscal year ended March 31,
2006 amount to ¥305 million ($2,602 thousand), ¥296 million ($2,521 thousand) and ¥10 million ($86 thousand), respectively. The
corresponding amounts for the fiscal year ended March 31, 2005 are ¥315 million, ¥273 million and ¥53 million, respectively.
Notes: 1. Depreciation equivalents are calculated using the straight-line method, assuming that useful life is equal to the lease term and the residual value at the end of the lease term
is zero.
2. Interest expense equivalents are defined as the difference between total lease payments and acquisition equivalents, which are allocated over the lease term using the effective
interest method.

(b) Operating Lease Transactions
DBJ has no future lease payments subsequent to the end of fiscal year for operating lease transactions as of March 31, 2006 and 2005.

DBJ Disclosure 2006

54

23. Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities as of March 31, 2006 and 2005 consisted of the followings:
Thousands of U.S. dollars
2006

Millions of yen
At March 31
Deferred Tax Assets:
Net Losses Carryforwards

2006¥

Enterprise Tax Payable180¥

Sub Total
Less-Valuation Allowance
¥

−

$

1,540
0
1,215

60
105

0
142

Allowance for Investment Losses
Other

Total Deferred Tax Assets

2005

62

61

536

386
(386)

227
(227)

3,291
(3,291)

0

¥

0

$

0

Deferred Tax Liabilities:
Net Unrealized Gain on
Available-for-sale Securities

(29)

(297)

(251)

Other

(20)

−

(175)

(50)

(297)

(426)

Total Deferred Tax Liabilities
Net Deferred Tax Assets (Liabilities)

¥

(50)

¥

(297)

$

(426)

24. Segment Information(a) Segment Information by Type of Business
DBJ and its consolidated subsidiaries are engaged in business such as private equity investment and fund management and otheractivities as well as banking business. Such segment information, however, is not presented, as the percentages of those
activities are insignificant.
(b) Segment Information by Geographic Area
Segment information classified by geographic area is not presented, as there are no consolidated subsidiaries and offices located incountries or areas other than Japan.
(c) Ordinary Income from Overseas Entities
Ordinary income from overseas entities is omitted because the amount is below 10 percent of the consolidated ordinary
income.

55

DBJ Disclosure 2006

25. Derivative Transactions
1. Details Related to Transactions(a) Details of Transactions
DBJ utilizes derivative financial instruments, which comprise interest rate swaps, currency swaps and credit default swaps.
(b) Policy for Derivative Transactions
DBJ utilizes interest rate swaps and currency swaps to reduce its exposure to market risks from fluctuations in interest rates andforeign currency exchange rates, and does not hold or issue derivative financial instruments for trading purposes. DBJ also utilizes
credit default swaps as part of its “acceptances and guarantees on customers’ debt” business within the limit of a certain
definite amount of risk.
(c) Purposes of Transaction
DBJ utilizes interest rate swaps to reduce its exposure to the risk of interest rate fluctuations associated with fundingtransactions, and foreign currency swaps to reduce its exposure to the risks of foreign currency exchange rate fluctuations
associated with its loans and bonds denominated in foreign currencies. DBJ also utilizes credit default swaps as part of its“acceptances and guarantees on customers’ debt” business.
DBJ adopted the Japanese accounting standards for hedge accounting to interest rate swaps and foreign currency swaps as described
below:(¡) Hedge Accounting
DBJ applies the deferral method of hedge accounting. Foreign currency swaps, which are used to hedge the foreign
currency fluctuations as the foreign currency swap contracts meet the hedging criteria under the Accounting Standard for
Financial Instruments, are translated not at market but at contractual rates.
(™) Hedging Instruments and Hedged Items
・Hedging Instruments
Hedged Items
・Hedging Instruments
Hedged Items: Interest Rate Swaps: Bonds and Notes, Borrowings, and Loans: Foreign Currency Swaps: Foreign currency denominated Loans and Bonds and Notes(£) Hedging Policy
DBJ utilizes hedging instruments to hedge interest rate and foreign currency fluctuations of the hedged assets andliabilities.
(¢) Evaluation of Hedge Effectiveness
DBJ evaluates the effectiveness of the hedges by testing whether the derivatives are effective in reducing the risks
associated with the hedged items.
In regard to both of interest rate swap contracts which meet the hedging requirements of accrual method*1 and foreign
currency swap contracts which meet the hedging requirements of assignment method*2 under the Accounting Standards for Financial
Instruments at the inception date, DBJ is not required to evaluate their hedge effectiveness periodically.
*1
If interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or received under theinterest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract was
executed.
*2
In cases where forward foreign exchange contracts are used as hedges and meet certain hedging criteria, forward foreign for in thefollowing manner;
1) If a forward foreign exchange contract is executed to hedge an existing foreign currency assets or liabilities,a) thedifference, if any, between the Japanese yen amount of the hedged foreign currency asset or liability translated using the spot rate
at the inception date of the contract and the book value of the asset or liability is recognized in the statement of operations in
the period which includes the inception date, and b) the discount or premium on the contract (that is, the difference between the
DBJ Disclosure 2006

56

Japanese yen amount of the contract translated using the contracted forward rate and that translated using the spot rate at the
inception date of the contract) is recognized over the term of the contract.
2) If a forward foreign exchange contract is executed to hedge a future transaction denominated in a foreign currency, thefuture transaction will be recorded using the contracted forward rate, and no gains or losses on the forward foreignexchange contract are recognized.
(d) Risks Involved in Derivatives Transactions
Derivatives involve the following risks:(¡) Market Risk
Potential loss from changes in the market value of financial products due to fluctuations in interest rates or exchange rates.
(™) Credit Risk
Potential loss from the failure of a counterparty to perform its obligations in accordance with terms and conditions of contract
governing the transactions due to the counterparty’s bankruptcy or deteriorating business conditions.
With regards to derivative transactions for hedging purpose, the market risk on derivatives is offset against the hedgedtransactions. As for credit risk, DBJ limits the counterparty to financial institutions highly rated by the credit rating agencies, andconstantly monitors the cost of restructuring its transactions and creditworthiness of each counterparty. In addition, DBJ
transacts with multiple counterparties to reduce credit risk. With regards to credit derivative transactions, DBJ holds credit riskof target debt itself in the transaction.
(e) Risk Management Policies for Derivatives
The treasury department enters into and monitors derivative transactions in accordance with the internal management policy, which
defines the authorization procedures, including pre-approval by authorized personnel, and limits on derivative transactions. Also,
total contract amount, total amount of risk, market value, and total amount of counterparties’ credit risk in the derivative transactions
are reported to the directors in charge periodically.
(f) Supplementary explanation on Market Value of Derivatives
It should be noted that ‘Contract Value’ represents nominal contract value or notional principal amount used in determining thevalue of receipts or payments of interest, but this does not necessarily reflect the risks of derivative transactions themselves.

57

DBJ Disclosure 2006

2. Information on Market Value of Derivatives
The market values of derivatives at March 31, 2006 and 2005 are as follows:(a) Interest Rate-related Transactions
Millions of yen
2006
Contract ValueAt March 31

Total

Unrealized Gain
(Loss)

Market Value

Over one year

Over-the-Counter
Swaps
Receive Fixed/ Pay Float
Receive Float/ Pay Fixed¥

1,604,155¥

1,504,155
1,504,155¥(44,226)
37,654¥(44,226)
37,654¥

3,008,310¥(6,572)¥(6,572)

1,604,155¥

3,208,310

Millions of yen
2005
At March 31

Total

Contract Value
Over one year

Unrealized Gain
(Loss)

Market Value

Over-the-Counter
Swaps
Receive Fixed/ Pay Float¥

1,163,000
1,163,000¥

1,163,000
1,163,000¥

10,837(17,294)¥

10,837(17,294)¥

2,326,000¥

2,326,000¥(6,456)¥(6,456)

Receive Float/ Pay Fixed

Thousands of U.S. dollars
2006
Contract ValueAt March 31
Over-the-Counter

Total

Unrealized Gain
(Loss)

Market Value

Over one year

Swaps
Receive Fixed/ Pay Float
Receive Float/ Pay Fixed$

13,655,870$

12,804,588$(376,490)$(376,490)$

13,655,870
27,311,740$

12,804,588
25,609,176$

320,542(55,948)$

320,542(55,948)

Notes: 1.The above transactions are marked to market and changes in unrealized gain (loss) are included in the Consolidated Statements of Operations. Derivative transactions qualifying
for hedge accounting are excluded from the tables above.
2.Market values for the over-the-counter transactions are based primarily on discounted present values.

(b) Currency-related Transactions
There is no currency-related derivative transactions whose unrealized gains and losses are recognized currently in income.
(c) Equity-related Transactions
Not applicable(d) Bond-related Transactions
Not applicable(e) Commodity-related Transactions
Not applicable

DBJ Disclosure 2006

58

(f) Credit Derivatives Transactions
Millions of yen
2006
Contract Value
Total
Over one year

At March 31

Unrealized Gain
(Loss)

Market Value

Over-the-Counter
Credit Default Swap
Sold

−
−

¥

Bought

−
−

¥

¥

−
−

¥

−
−

¥

−

¥

−

Millions of yen
2005
Contract ValueAt March 31
Over-the-Counter

Total

Unrealized Gain
(Loss)

Market Value

Over one year

Credit Default Swap
Sold
Bought

¥1,853,901

¥

−

¥

274

¥

(162)
112

−

1,837,501

¥

274

¥

(162)
112

Thousands of U.S. dollars
2006
At March 31

Total

Contract Value
Over one year

Unrealized Gain
(Loss)

Market Value

Over-the-Counter
Credit Default Swap
Sold
Bought

$

−
−

$

−

$

−

−

$

−
$

−

−
$

Notes: 1.The above transactions are marked to market and changes in unrealized gain (loss) are included in the Consolidated Statements of Operations.
2.Market values are based on the counterparties’ tendered price.
3.‘Sold’ means the underwriting of credit risk and ‘Bought’ means the transferring of credit risk.

59

DBJ Disclosure 2006−−

26. Market Value of Securities and Money Held in Trust
Market value of Securities and Money held in Trust as of March 31, 2006 and 2005 are summarized below. The information about
investments in subsidiaries and affiliates with market value is reported in the notes to non-consolidated financial statements.
1. Securities(a) Trading Securities
Not applicable(b) Held-to-maturity Debt Securities with market values
Millions of yen
2006
Book ValueAt March 31
Japanese Government Bonds
Japanese Local Government Bonds¥

Short-term Corporate Bonds
Corporate Bonds

−
−

¥

−
43,089−¥43,230

Net
¥

−
−

−
43,230

Other

Unrealized Gain (Loss)

Market Value

−
(140)

−
¥

Gain
¥

−
−

(Loss)
¥

−
185

−
¥

43,089

−
−

−
(326)

−
¥

(140)

185

−
−

−
¥

(326)

Millions of yen
2005
Book ValueAt March 31
Japanese Government Bonds
Japanese Local Government Bonds¥−−

Unrealized Gain (Loss)

Market Value
¥

Net
¥

−
−

Gain
¥

−
−

−
−

Short-term Corporate Bonds
Corporate Bonds−
48,000−48,609

−
609

−
609

Other

−
48,000−48,609

−
609

−
609

¥

¥

¥

¥

(Loss)
¥

−
−
−
−

¥

−
−

Thousands of U.S. dollars
2006Book ValueAt March 31
Japanese Government Bonds
Japanese Local Government Bonds$

Short-term Corporate Bonds
Corporate Bonds
Other
$

−

Unrealized Gain (Loss)

Market Value
$

−

$

Net
−

$

Gain
−

$

(Loss)
−

−

−

−

−

−

−
368,009−366,810−(1,199)−1,580−(2,779)−366,810−$ (1,199)

−
1,580

−
$ (2,779)−
368,009$$

Notes: Market value is based on the closing price at the respective fiscal year ends.

DBJ Disclosure 2006

60

(c) Available-for-sale Securities with market values
Millions of yen
2006
At March 31
Equities

Acquisition Cost¥

Bonds
Japanese Government Bonds
Japanese Local Government Bonds
Short-term Corporate Bonds
Corporate Bonds
Other
¥

110
194,226

Unrealized Gain (Loss)

Book Value¥

95
192,543

¥

Net
(15)
(1,683)

191,226−

189,645−(1,580)
−

−

−

3,000
−
194,337

¥

Gain
¥

−
32

(Loss)¥(15)(1,715)32(1,613)

−

−
−

−
−

2,897
−

(102)
−

−
−

(102)
−

192,638¥ (1,698)32¥ (1,730)¥

Millions of yen
2005
At March 31
Equities

Acquisition Cost¥

Bonds
Japanese Government Bonds
Japanese Local Government Bonds
Short-term Corporate Bonds
Corporate Bonds
Other¥

Unrealized Gain (Loss)

Book Value(Loss)

151,991

152,925

933

944

(11)
(11)

−
−

−
−

−
−

−
−

−
−

10,000−10,002
−

2
−

2
−

−

¥

163,506

¥

1,339

¥

¥

161,991

162,167

¥

Gain
403
946

579
162,927

175

¥

Net
403
935

¥

1,350

¥

−

−
(11)

Thousands of U.S. dollars
2006
At March 31
Equities
Bonds
Japanese Government Bonds
Japanese Local Government Bonds
Short-term Corporate Bonds
Corporate Bonds
Other

Acquisition Cost$

944
1,653,413
1,627,874−

Book Value$

815
1,639,084

Net
$
(129)
(14,329)

1,614,416−(13,458)−

DBJ Disclosure 2006

277
277

(Loss)(129)(14,606)(13,735)
−

−

−

−

−
−

25,539−24,668
−

(871)
−

−
−

(871)
−

$ 1,654,357$ 1,639,899$ (14,458)

277$ (14,735)

Notes: Book value above represent the market values determined based on the closing price at the respective fiscal year ends.

61

Unrealized Gain (Loss)
Gain
$
$
−

$

−

(d) Held-to-maturity Debt Securities soldMillions of yen
2006
Cost of securities
sold

For the Fiscal Year ended March 31
Corporate Bonds

Net Gain (Loss)on salesProceeds from sales

¥

349

¥

349

¥

−

¥

349

¥

349

¥

−

Millions of yen
2005
For the Fiscal Year ended March 31
Corporate Bonds

Cost of securities
sold
¥
¥

−
−

Net Gain (Loss)on salesProceeds from sales
¥

−
−

¥

¥
¥

−
−

Thousands of U.S. dollars
2006
For the Fiscal Year ended March 31
Corporate Bonds

Cost of securities
sold

Net Gain (Loss)on salesProceeds from sales

$

2,978

$

2,978

$

−

$

2,978

$

2,978

$

−

(e) Available-for-sale Securities soldMillions of yen
2006
For the Fiscal Year ended March 31
Available-for-sale Securities

Total amount ofGain on Sales

Proceeds from Sales

Total amount ofLoss of Sales¥

13,096

¥

2,982

¥

3

¥

13,096

¥

2,982

¥

3

Millions of yen
2005
For the Fiscal Year ended March 31
Available-for-sale Securities

Total amount ofGain on Sales

Proceeds from Sales

Total amount ofLoss of Sales

¥

4,071

¥

3,798

¥

¥

4,071

¥

3,798

¥

−
−

Thousands of U.S. dollars
2006
For the Fiscal Year ended March 31
Available-for-sale Securities

Total amount ofGain on Sales

Proceeds from Sales

Total amount ofLoss of Sales$

111,491$

25,392$

28$

111,491$

25,392$28

DBJ Disclosure 2006

62

(f) Held-to-maturity Debt Securities and Available-for-sale Securities whose market values are not readily determinable
Millions of yen
2006

At March 31
Held-to-maturity Debt Securities
Unlisted Corporate Bonds
Available-for-sale Securities¥

783

Unlisted Equities
Unlisted Corporate Bonds
Other¥

Thousands of U.S. dollars
2005

2006

5,163

¥

6,670

$

139,495−

127,65950

1,187,498−

56,873
197,152

50,460183,333

484,154
1,678,322¥$(g) Change in Classification of Securities
As one of the consolidated subsidiaries sold a portion of the “Held-to-maturity Debt Securities” portfolio, DBJ has reclassified“Held-to-maturity Debt Securities” amounting to ¥2,049 million to “Available-for-sale Securities” for the year ended March 31, 2006.
(h) Redemption Schedule of Available-for-sale Securities with maturities and Held-to-maturity-Debt Securities
Millions of yen
2006
Maturity
At March 31
Bonds
Japanese Government Bonds¥

Japanese Local Government Bonds
Short-term Corporate Bonds
Corporate Bonds
Other¥

Within 1 year
99,154¥

1 to 5 years
80,340¥5 to 10 years
54,165More than 10 years¥
2,897

90,12050,36049,165

−

−
−

−
−

−
−

−
−

9,033
2,049

29,980
−

5,000
−

2,897
−

101,203¥80,340¥54,165¥

2,897

Millions of yen
2005
Maturity
At March 31
Bonds

¥

Japanese Government Bonds
Japanese Local Government Bonds
Short-term Corporate Bonds
Corporate Bonds
Other

Within 1 year
80,760¥5 to 10 years¥

54,221More than 10 years¥−

50,239−51,094−

51,591−−−
30,521−30,062

−

−
−

−
¥

1 to 5 years
81,15680,760

2,630
−

−
¥

81,156−¥54,221¥−−Thousands of U.S. dollars
2006
Maturity
At March 31
Bonds
Japanese Government Bonds$

Japanese Local Government Bonds
Short-term Corporate Bonds
Corporate Bonds
Other
$
63

DBJ Disclosure 2006

Within 1 year
844,079
767,179$

1 to 5 years
683,919428,705$

5 to 10 years
461,096
418,532

−
−

−
−

−
−

76,900255,21442,564

17,451
861,530$−
683,919$−
461,096

More than 10 years$
24,668−−−24,668$−24,668

2. Money Held in Trust
There is no Money Held in Trust held for the purpose of investment or held-to-maturity. Market value of Other Money Held in Trust(Money Held in Trust other than that stated above) is summarized below:
Millions of yen
2006
At March 31
Other Money Held in Trust

Acquisition Cost¥

Unrealized Gain (Loss)

Book Value

28,422

¥

Gain

Net

28,422¥¥−(Loss)¥−−

Millions of yen
2005
At March 31
Other Money Held in Trust

Acquisition Cost¥

Unrealized Gain (Loss)

Book Value

5,061

¥

Gain

Net

4,136

¥

¥

−

(Loss)¥−−

Thousands of U.S. dollars
2006
At March 31
Other Money Held in Trust

Acquisition Cost$

Unrealized Gain (Loss)

Book Value

241,957$

Net

241,957

$

−

Gain
$

(Loss)$−−

3. Net Unrealized Gain on Available-for-sale Securities
The breakdown of net unrealized gain on Available-for-sale Securities is as follows:
Thousands of U.S. dollars

Millions of yen
At March 31
Net Unrealized Gain
Available-for-sale Securities

2006
¥

3,453
−

¥

3,423

Other Money Held in Trust
Add: Deferred Tax Assets(Less: Deferred Tax Liabilities)

Net Unrealized Gain on Available-for-sale
Securities, Net of Taxes

¥

7,355
−

¥

7,057

(29)

Amount corresponding to Minority Interests

3,415

$

29,397−$

29,146

(297)

(8)
¥

2006

2005

(251)

(142)
−
¥

6,915

(70)
$

29,076

Notes: Net unrealized gain included foreign currency translation adjustments on non-marketable securities denominated in foreign currency.

DBJ Disclosure 2006

64

65

DBJ Disclosure 2006

NON-CONSOLIDATED BALANCE SHEETS
Thousands of U.S. dollars

Millions of yen
At March 31

2006

2006

2005

AssetsCash and Due from banks
Reverse Repurchase Agreements¥

Money Held in Trust
Securities (Notes 3 and 10)
Loans (Note 4)
Other Assets (Note 5)
Premises and Equipment (Note 6)
Deferred Charges on Bonds and Notes
Customers' Liabilities for Acceptances and Guarantees
Allowance for Loan Losses (Note 7)
Allowance for Investment Losses
Total Assets¥

27,80418,189¥$236,694

150,003107,999

1,276,955

28,422429,587

4,136
391,172

241,956
3,656,993

12,873,226
203,165

13,860,747
245,396

109,587,353
1,729,508

36,5432,610

37,601
2,594

311,086
22,221

161,567

98,757

1,375,392(199,702)(31,111)(280,284)(20,508)(1,700,026)(264,845)

13,682,117¥

14,465,803

116,473,287

Thousands of U.S. dollars

Millions of yen
2006

$

2005

2006

Liabilities and Equity
Liabilities
Bonds and Notes
Borrowings¥

2,261,799¥

1,994,801$

19,254,271

9,004,474

10,214,800

76,653,401

Other Liabilities (Note 8)
Allowance for Bonus Payments

211,045
1,658

248,497
1,651

1,796,589
14,115

Allowance for Employee Retirement Benefits

30,887
161,567

32,21898,757

262,942
1,375,392

Acceptances and Guarantees (Note 9)
Total Liabilities¥

11,671,432¥

12,590,725$

99,356,710¥

1,272,286
734,997¥

1,215,461
652,953$

10,830,731
6,256,894

EquityCapitalRetained Earnings (Note 11)
Statutory Reserve

1,068,918(333,921)

Accumulated Deficit
Net Unrealized Gain on Available-for-sale Securities
Total Equity
Total Liabilities and Equity

3,401
¥
¥

2,010,684
13,682,117

9,099,502(2,842,608)

1,027,021(374,067)

28,952

6,662¥¥

1,875,077
14,465,803$$

17,116,577
116,473,287

Accompanying notes are an integral part of these financial statements.

DBJ Disclosure 2006

66

NON-CONSOLIDATED STATEMENTS OF OPERATIONSMillions of yen
2006

For the Fiscal Years ended March 31

Thousands of U.S. dollars
2005

2006

Revenue
Interest Income
Interest on Loans¥

Interest and Dividends on Securities
Interest on Reverse Repurchase Agreements
Interest on Due from banks
Other Interest Income
Fees and Commissions (Note 12)
Other Operating Income (Note 13)
Other Ordinary Income (Note 14)
Collection of Written-off Claims¥

426,264$

3,131,219

365,949424,615

3,115,257

1,864
6

1,642
5

15,869
53

4
0

0
0

38
2

2,430
4

2,211
4

20,68840

33,27754,152283,284

7,414
653

1,864
14

63,116
5,564

Gains on Sales of Premises and Equipment
Total Revenue¥

411,604¥

484,513$3,503,911

Expenses
Interest Expense¥

271,421¥317,814$

2,310,556

Interest on Bonds and Notes
Interest on Borrowings

30,920221,070

31,466
271,583

263,222
1,881,929

Interest on Swaps (net)19,38347

14,7640

165,005
400

Other Interest Expense
Fees and Commissions (Note 15)

54

57

467

Other Operating Expenses (Note 16)
General and Administrative Expenses

1,737
25,602

2,737
26,905

14,787217,953

Other Ordinary Expenses (Note 17)

19,758337

24,413−

168,204
2,871

Losses on Impairment of Fixed Assets
Losses on Sales of Premises and Equipment
Total Expenses
Net Earnings (Loss)
Accompanying notes are an integral part of these financial statements.

67

367,824

DBJ Disclosure 2006

12¥¥

318,924
92,67935¥¥

371,963
112,550108$$

2,714,946
788,965

NON-CONSOLIDATED STATEMENTS OF EQUITY
Millions of yen
CapitalRetained Earnings
Accumulated
Statutory
Reserve
Deficit¥ 1,000,908 ¥ (460,504)

Net Unrealized Gain
(Loss) on Availablefor-sale Securities

Total Equity

For the Fiscal Year ended March 31, 2005
Balance at March 31, 2004

¥ 1,194,286

Net Change in Unrealized Gain (Loss)on Available-for-sale Securities

−

−

−

(12,293)(12,293)−

26,113(26,113)−−

21,175
−

−
−

−

−
−

21,175112,550¥ 1,215,461¥ 1,027,021−

41,896(41,896)−−−−
41,896(10,636)
¥

−
−

¥

−
−

¥

−

¥

−

¥

18,956¥

1,753,646

Transfer from net earnings accounted
under the DBJ Law to Statutory
Reserve (Note 11)
Capital Contribution from the Japanese
Government
Net Earnings
Balance at March 31, 2005
Appropriations: (Note 11)
Provision for Statutory Reserve
Payment to National Treasury
Total
Unappropriated Accumulated Deficit

¥
¥

−

¥
¥

−

¥

¥
¥

112,550(374,067)(52,533)(426,600)

¥

¥

6,662

1,875,077−

Millions of yen
Retained Earnings
Net Unrealized Gain

Balance at March 31, 2005

(Loss) on Availablefor-sale Securities

Total Equity¥¥

CapitalStatutory
Reserve¥ 1,215,461¥ 1,027,021

−

−

−

(3,261)(3,261)−

41,896−(41,896)(10,636)−−−(10,636)

56,825−−−92,679−−¥ 1,272,286¥ 1,068,918

−

7,675

For the Fiscal Year ended March 31, 2006
Net Change in Unrealized Gain (Loss)on Available-for-sale Securities

Accumulated
Deficit¥(374,067)

6,662

1,875,077

Transfer from net earnings accounted
under the DBJ Law to Statutory
Reserve (Note 11)
Payment to National Treasury (Note11)
Capital Contribution from the Japanese
Government
Net Earnings
Balance at March 31, 2006
Appropriations: (Note 11)
Provision for Statutory Reserve
Payment to National Treasury
Total

¥

Unappropriated Accumulated Deficit

¥

−
−
−

¥

¥

7,675
−

56,82592,679

−
¥

3,401

¥

−

¥

(7,675)¥¥(341,597)¥−−

2,010,684−−−(7,675)0−¥(333,921)

−

¥

−

¥

−

Accompanying notes are an integral part of these financial statements.

DBJ Disclosure 2006

68

Thousands of U.S. dollars
Retained Earnings

Net Unrealized Gain
(Loss) on Available-

Total Equity$ (3,184,368)

for-sale Securities$
56,720$ 15,962,186−−(27,768)(27,768)−

356,659(356,659)

−

−

−

−

(90,545)−(90,545)483,740
−

−
−

−

−
−

483,740
788,964$10,830,731$ 9,099,502

788,964$ (2,842,608)

28,952$ 17,116,577−

65,343(65,343)−−

CapitalStatutory
Reserve

Accumulated
Deficit$10,346,991$ 8,742,843−

For the Fiscal Year ended March 31, 2006
Balance at March 31, 2005
Net Change in Unrealized Gain (Loss) on
Available-for-sale Securities
Transfer from net earnings accounted
under the DBJ Law to Statutory
Reserve (Note 11)
Payment to National Treasury (Note11)
Capital Contribution from the Japanese
Government
Net Earnings
Balance at March 31, 2006
Appropriations: (Note 11)
Provision for Statutory Reserve
Payment to National Treasury
Total
Unappropriated Accumulated Deficit$$

Accompanying notes are an integral part of these financial statements.

69

DBJ Disclosure 2006

−
−
−

$
$

−
65,343−$−$(65,343)$ (2,907,951)

$
$

−
−
−

$
$

−
−
−

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying financial statements have been prepared from the accounts maintained by Development Bank of Japan (“DBJ”) in
accordance with accounting principles and practices generally accepted in Japan, which are different in certain respects as toapplication and disclosure requirements of International Financial Reporting Standards.
The financial statements are not intended to present the financial position and the result of operations in accordance withaccounting principles and practices generally accepted in countries and jurisdictions other than Japan.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen. Accordingly, the sum ofeach amount appearing in the accompanying financial statements and the notes thereto may not be equal to the sum of theindividual account balances.
Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥117.47=$1.00, the effective
exchange rate prevailing as of March 31, 2006, has been used in conversion. The presentation of such amounts is not intended to imply
that Japanese yen amounts have been or could have been readily translated, realized or settled in U.S. dollars at that rate or any other rate.

2. Summary of Significant Accounting Policies(a) Securities
Held-to-maturity debt securities are stated at amortized cost, on a straight-line basis, computed using the weighted average method.
Investments in subsidiaries are stated at cost computed using the weighted average method. Available-for-sale securities whose current
values can be estimated are stated at market value (cost is calculated principally using the weighted average method), and other nonmarketable securities are stated at cost or amortized cost computed using the weighted average method. Investments in the limited
partnerships and other similar partnerships are accounted for at net amounts of underlying interests in their net earnings based on
their most recent financial statements.
Unrealized gains and losses on available-for-sale securities are included in equity.
Effective in the fiscal year ended March 31, 2006, DBJ applied the accounting treatment for other compound instruments
which do not have the ability to increase paid-in capital (Guidelines on Implementation of Business Accounting Standard No. 12
issued by the Accounting Standards Board of Japan on March 30, 2006).
As a result, net earnings increased by ¥102 million ($871 thousand).
(b) Valuation Method for Derivative Financial Instruments
All derivative financial instruments are carried at market value, except for certain derivatives that are designated as hedging
instruments as discussed below.
(c) Hedge Accounting(¡) Hedge Accounting
DBJ applies the deferral method of hedge accounting. Foreign currency swaps, which are used to hedge the foreign
currency fluctuations are translated not at market values but at contractual rates, as the foreign currency swap contracts meetthe hedging criteria under the Accounting Standards for Financial Instruments.
(™) Hedging Instruments and Hedged Items
・Hedging Instruments
Hedged Items
・Hedging Instruments
Hedged Items: Interest Rate Swaps: Bonds and Notes, Borrowings, and Loans: Foreign Currency Swaps: Foreign currency denominated Loans and Bonds and Notes(£) Hedging Policy
DBJ utilizes hedging instruments to hedge interest rate and foreign currency fluctuations on its assets and liabilities within theoutstanding asset and liability amounts.
(¢) Evaluation of Hedge Effectiveness
DBJ evaluates the effectiveness of the hedges by testing whether the derivatives are effective in reducing the risks
associated with the hedged items.
In regard to both of interest rate swap contracts which meet the hedging requirements of accrual method*1 and foreign currency
swap contracts which meet the hedging requirements of assignment method*2 under the Accounting Standards for
DBJ Disclosure 200670

Financial Instruments at the inception date, DBJ is not required to evaluate their hedge effectiveness periodically.
*1
If interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or received under
the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract
was executed.
*2
In cases where forward foreign exchange contracts are used as hedges and meet certain hedging criteria, forward foreignexchange contracts and hedged items are accounted for in the following manner;
1) If a forward foreign exchange contract is executed to hedge an existing foreign currency assets or liabilities, a) the difference,
if any, between the Japanese yen amount of the hedged foreign currency asset or liability translated using the spot rate at
the inception date of the contract and the book value of the asset or liability is recognized in the statement ofoperations in the period which includes the inception date, and b) the discount or premium on the contract (that is, thedifference between the Japanese yen amount of the contract translated using the contracted forward rate and thattranslated using the spot rate at the inception date of the contract) is recognized over the term of the contract.
2) If a forward foreign exchange contract is executed to hedge a future transaction denominated in a foreign currency, thefuture transaction will be recorded using the contracted forward rate, and no gains or losses on the forward foreign exchange
contract are recognized.
(d) Premises and Equipment(¡) Depreciation
Premises and equipment are depreciated using the declining-balance method, except for buildings (excluding installedfacilities) that are depreciated on a straight-line basis.
The estimated useful lives are principally as follows:
Buildings: 22 years to 50 years
Equipment: 3 years to 20 years(™) Accounting standard for impairment of fixed assets
On August 9, 2002, the Business Accounting Council in Japan issued "the Accounting Standard for Impairment of Fixed Assets".
The standard requires that fixed assets be reviewed for impairment whenever events or changes in circumstances indicate thatthe carrying amount of an asset may not be recoverable. Impairment losses shall be recognized in the income statement by
reducing the carrying amount of impaired assets or a group of assets to the recoverable amount to be measured as the higherof net selling price and value in use.
DBJ has applied this standard from the fiscal year beginning April 1, 2005. As a result, net earnings decreased by ¥337 million($2,871 thousand). In the banking industry, fixed assets are stated at cost less accumulated depreciation pursuant to the
Enforcement Ordinance of the Banking Law for long term credit banks and the accumulated impairment losses are also
deducted from the book value of each asset.
(e) Amortization of deferred charges"Discounts on Bonds and Notes" are amortized over the term of bonds and notes, and "Bonds and Notes Issuance Costs" arecharged to income as incurred.
(f) Foreign currency translation and revaluation method
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the market exchange rates
prevailing at the fiscal year end.
(g) Allowance for Loan Losses
DBJ provides for "Allowance for Loan Losses" as detailed below pursuant to the internal policies for self-assessment of credit quality
and loan losses.
The allowance for claims on debtors who are legally bankrupt, in special liquidation or effectively bankrupt is provided for basedon the amount of claims, after the write-off described below, net of amounts expected to be collected through disposal of collateralor execution of guarantees.
The allowance for claims on debtors who are not legally bankrupt at the moment, but likely to become bankrupt for which future
cash flows cannot reasonably be estimated is provided for the amount considered to be necessary based on an overall solvency
71

DBJ Disclosure 2006

assessment performed on the claims, net of amounts expected to be collected through disposal of collateral or execution ofguarantees.
With respect to the claims on debtors who are likely to become bankrupt or to be closely monitored, and for which future cash
flows can reasonably be estimated, the allowance is provided for the difference between the present value of expected future cash
flows discounted at the contracted interest rate and the carrying value of the claims.
The allowance for claims on debtors other than those described above is provided for based on the historical default rate, whichis calculated based on the actual defaults over a certain historical period (the average financing period for DBJ).
All claims are assessed initially by the investment and lending departments and then by the Credit Risk Management
Department, which is independent from the investment and lending departments based on internal policies for self-assessment ofcredit quality. The allowance is provided based on the results of the self-assessment.
With respect to the claims on debtors who are legally or substantially bankrupt with collateral or guarantees, the amount of claims
exceeding the estimated market values of collateral or guarantees, which are deemed un-collectible, have been written-off, and totaled¥95,546 million ($813,372 thousand) and ¥104,845 million for the years ended March 31, 2006 and 2005, respectively.
(h) Allowance for Investment Losses"Allowance for Investment Losses" is provided for based on the estimated losses on non-marketable securities.
(i) Allowance for Bonus Payments“Allowance for Bonus Payments” is calculated and provided for based on the estimated amounts of future payment
attributable to the services that have been rendered by employees and executive directors to the date of the balance sheets.
(j) Allowance for Employee Retirement Benefits“Allowance for Employee Retirement Benefits” represents future payments for pension and retirement benefits to employees andexecutive directors, and is accrued based on the projected benefit obligations and estimated pension plan assets at each fiscal year
end. The actuarial gain or loss is recognized during the year it arises.
(k) Equipment Used under Finance Lease Agreements
Equipment used under finance lease agreements is accounted for as equipment leased under operating leases, except for those inwhich the ownership of leased equipment is substantially transferred to the lessee, in which case the equipment is capitalized.
(l) Consumption tax
Income and expense subject to consumption tax exclude related consumption taxes paid or received.
(m) Income taxes
DBJ is exempt from taxes based on income, however, DBJ is subject to parity taxes among local taxes.

3. Securities
Securities as of March 31, 2006 and 2005 are as follows:

Millions of yen
At March 31
Japanese Government Bonds¥

Corporate Bonds

2006
189,645¥

46,911
142,553

Equities
Other securities

429,587$

45,760¥391,1722006
1,614,416
399,346
1,213,528

60,816
131,670

50,477¥

Thousands of U.S. dollars
2005
152,925

429,703$3,656,993

Notes:Investments in subsidiaries included in “Equities” as of March 31, 2006 and 2005 are ¥7,612 million ($64,800 thousand) and ¥7,610 million, respectively.

DBJ Disclosure 2006

72

4. Non-performing Loans
The amounts of Non-Performing Loans included in “Loans” on the non-consolidated balance sheets as of March 31, 2006 and 2005
are as follows:
Millions of yen
At March 31
Loans to Bankrupt Debtors
Delinquent Loans¥

Loans Past Due Three Months or More
Restructured Loans
¥

2006
4,313

¥

Thousands of U.S. dollars
2005
25,762$

2006
36,720111,720

233,765

951,056−
89,301

466
138,629760,208

205,335¥

398,624−$

1,747,984

Notes: 1. The amounts of Loans indicated above are stated at gross amounts, before reduction of allowance for loan losses.
2.“Loans to Bankrupt Debtors” represent non-accrual loans to debtors who are legally bankrupt as defined in Article 96-1-3 and 4 of the Japanese Tax Law Enforcement
Regulation.
3.“Delinquent Loans” represent non-accrual loans other than (¡) Loans to Bankrupt Debtors and (™) loans whose interest payments are deferred in order to assist or
facilitate the restructuring efforts of borrowers in financial difficulties.
4."Loans Past Due Three Months or More" are loans whose principal or interest payment is three months or more past due, and do not fall under the category of“Loans to Bankrupt Debtors” or “Delinquent Loans”.
5."Restructured loans" are loans whose repayment terms have been modified to the advantage of debtors through means such as reduction or exemption of interest rates,
postponement of principal and interest payments, and forgiveness of loans to support or restructure the debtors’ businesses, and do not fall under the category of“Loans to Bankrupt Debtors”, “Delinquent Loans”, or “Loans Past Due Three Months or More”.

DBJ provides commitment lines under which it lends, upon the borrowers’ request, necessary funds up to the pre-determinedamount that is within the borrowers’ financing needs for the projects and up to the agreed maximum amount, provided that their requests
meet terms and conditions for disbursement prescribed in the loan agreements. The total balance of unused commitment lines as of March
31, 2006 and 2005 are ¥214,022 million ($1,821,933 thousand), including ¥53,636 million ($456,593 thousand) being financed within
one year and ¥70,556 million, including ¥41,328 million being financed within one year, respectively.

5. Other Assets
Other Assets as of March 31, 2006 and 2005 are as follows:
Millions of yen
At March 31
Prepaid Expenses

2006¥

Accrued Income
Derivatives
Deferred Hedge Losses
Other¥

Thousands of U.S. dollars
2005

99

¥

92

$

2006
851

52,155
3,083

59,1685,565

443,993
26,247

146,698
1,127

171,801
8,767

1,248,817

203,165¥

245,396

9,600$

1,729,508

Notes: Deferred Hedge Losses are net unrealized losses from hedging instruments. The gross amounts of deferred hedge gains and losses before netting are ¥10,138 million ($86,308
thousand) and ¥156,837 million ($1,335,125 thousand) as of March 31, 2006, respectively. The corresponding amounts as of March 31, 2005 are ¥8,870 million and ¥180,672
million, respectively.

73

DBJ Disclosure 2006

6. Premises and Equipment
Premises and Equipment as of March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
At March 31
Tangible Fixed Assets
Land

2006
¥

Buildings
Equipment

20,38633,802¥

1,970

20,39534,459$173,548287,751
16,774

1,995¥−
56,159¥−56,850$−478,072¥(19,997)
36,161¥(19,634)
37,216$(170,236)
307,836

¥

380

¥

383

$

3,240

¥

(11)
391

¥

17
401

$

97
3,336

¥

381

¥

385

$

3,250

Construction in ProgressLess-Accumulated Depreciation
Net Book Value

2006

2005

Intangible Assets
Guarantee Deposits
Other
Less-Accumulated Amortization
Net Book Value

(10)

(16)

(86)

7. Allowance for Loan Losses
Allowance for Loan Losses as of March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
At March 31
General Allowance for Loan Losses

2006¥

120,170¥2005
149,284$

2006
1,022,985¥

79,532
199,702¥130,999
280,284$

677,041
1,700,026

Specific Allowance for Loan Losses

8. Other Liabilities
Other Liabilities as of March 31, 2006 and 2005 are as follows:
Millions of yen
At March 31
Accrued Expenses¥

Unearned Income
Deposits from Employees
Derivatives
Other
¥

2006
33,042
19,008¥

Thousands of U.S. dollars
2005
36,654
18,692$

2006
281,284
161,815

150

124

1,282

156,590
2,253

181,951
11,073

1,333,023
19,185211,045¥

248,497$

1,796,589

9. Acceptances and Guarantees
Acceptances and Guarantees as of March 31, 2006 and 2005 are as follows:

At March 31
Guarantees¥¥

Millions of yen
2006
2005
161,567¥
98,757
161,567¥
98,757

Thousands of U.S. dollars
2006$
1,375,392$
1,375,392

DBJ Disclosure 200674

10. Assets Pledged as Collateral
Securities collateralized in Real Time Gross Settlement for bank deposit at Bank of Japan are ¥119,652 million ($1,018,579
thousand) as of March 31, 2006 and ¥122,928 million as of March 31, 2005, respectively.

11. Retained Earnings
A portion of net earnings calculated pursuant to Article 4 of the Development Bank of Japan Law (“DBJ Law”) was appropriated toprovision of Statutory Reserve and for payment to the National Treasury as stipulated by Article 41 of the DBJ Law.
Unappropriated Accumulated deficit, losses carry forwards to the following fiscal years, are the amounts which are not appropriated under
the DBJ Law for each fiscal year.

12. Fees and Commissions (Income)Fees and Commissions (Income) for the fiscal years ended March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
For the fiscal years ended March 31
Commissions

¥

2006
2,430

¥

2,430

¥

2005
2,211

$

2006
20,688

¥

2,211

$

20,688

13. Other Operating Income
Other Operating Income for the fiscal years ended March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
For the fiscal years ended March 31
Foreign Exchange Gains

2006

2006

2005

¥

4

¥

¥

4

¥

4
4

$

40

$

40

14. Other Ordinary Income
Other Ordinary Income for the fiscal years ended March 31, 2006 and 2005 are as follows:
Millions of yen
For the fiscal years ended March 31
Reversal of Allowance for Loan Losses¥

Gains on Sales of Equities andOther Securities
Gains on Money Held in Trust
Other
¥

2006
17,699¥Thousands of U.S. dollars
2005
50,998$

2006
150,676

2,718

257

23,143966
11,892

110
2,786

8,227
101,238

33,277¥54,152$283,284

15. Fees and Commissions (Expenses)
Fees and Commissions (Expenses) for the fiscal years ended March 31, 2006 and 2005 are as follows:
Millions of yen
For the fiscal years ended March 31
Wire Transfer Service Charges

2006

75

DBJ Disclosure 2006

2006

2005

¥

5

¥

49
54

Commissions

Thousands of U.S. dollars

¥

5

¥

51
57

$

48

$

419
467

16. Other Operating Expenses
Other Operating Expenses for the fiscal years ended March 31, 2006 and 2005 are as follows:
Millions of yen
For the fiscal years ended March 31
Foreign Exchange Losses
Bonds and Notes Issuance Costs

2006
¥

3

¥

777
687

Losses on derivative instruments
Other

2006

1,737

−

$

1,536
319
¥

2,737

32
6,616
5,851

881

268
¥

Thousands of U.S. dollars
2005

2,288
$

14,787

17. Other Ordinary Expenses
Other Ordinary Expenses for the fiscal years ended March 31, 2006 and 2005 are as follows:
Millions of yen
For the fiscal years ended March 31
Provision for Investment Losses
Write-off of Loans¥

2006
10,710¥Thousands of U.S. dollars
2005
6,620

$

2006
91,177

Losses on Sales of Equities and Other Securities

5,350
−

14,268
745,547−

Write-off of Equities
Losses on Money Held in Trust

1,568
−

92
957

13,357
8

Other
¥

2,127
19,758¥2,466
24,413$

18,115
168,204

DBJ Disclosure 200676

18. Lease Transactions(a) Finance Lease Transactions(Excluding leases where the ownership of the property is substantially transferred to the lessee)
Millions of yen
2006
At March 31
Acquisition Cost Equivalents
Less-Accumulated Depreciation
Equivalents
Book Value Equivalents

Equipment
¥
765
(361)
¥

2005

Other
¥
273

¥

(126)

404

¥

Total
1,039

Equipment
¥
931

(487)

147

¥

551

Others
¥
226

(428)
¥

¥

(95)

503

¥

130

Total
1,158
(524)

¥

634

Thousands of U.S. dollars
2006
At March 31
Acquisition Cost Equivalents
Less-Accumulated Depreciation
Equivalents
Book Value Equivalents$

Equipment
6,519$

Others
2,328

$

Total
8,847

(3,077)(1,076)(4,153)$ 3,442$ 1,252$ 4,694

Future lease payments subsequent to the end of the fiscal year for finance leases (including the interest portion thereon) are summarized below:
Millions of yen
At March 31
Due in One Year or Less

¥

2006
224
332

¥

2005
242
409

¥

557

¥

651

Due after One Year

Thousands of U.S. dollars
2006
1,913
$
2,834
$

4,747

Lease expense, depreciation equivalents and interest expense equivalents relating to finance leases for the fiscal year ended
March 31, 2006 amount to ¥303 million ($2,582 thousand), ¥293 million ($2,500 thousand) and ¥10 million ($85 thousand),
respectively. The corresponding amounts for the fiscal year ended March 31, 2005 are ¥312 million, ¥270 million and ¥53 million,
respectively.
Notes: 1.Depreciation equivalents are calculated using the straight-line method, assuming that useful life is equal to the lease term and the residual value at the end of the leaseterm is zero.
2.Interest expenses are defined as the difference between total lease payments and acquisition equivalents, which are allocated over the lease term using theeffective interest method.

(b) Operating Lease Transactions
DBJ has no future lease payments subsequent to the end of fiscal year for operating lease transactions as of March 31, 2006 and 2005.

19. Market Value of Securities
Market value of Securities, excluding investments in subsidiaries and affiliates, are reported in the notes to consolidated financial statements.
DBJ holds no investments in subsidiaries with market value as of March 31, 2006 and 2005.

77

DBJ Disclosure 2006

Accounts Based on
Accounting Standards forSpecial Agencies, etc.

DBJ Disclosure 2006

78

79

DBJ Disclosure 2006

NON-CONSOLIDATED BALANCE SHEETSMillions of yen
At March 31

2006

Thousands of U.S. dollars
2005

2006

AssetsCash and Due from banks (Note 3)¥

27,572¥

18,035$

234,717388,254

320,825

3,305,137

12,968,029(38,904)
12,929,124

13,965,566(41,896)
13,923,669

110,394,390(331,183)
110,063,207

Equity Investments

235,250

200,132

2,002,642

Premises and Equipment (Note 6)
Less-Accumulated depreciation

56,380(20,074)
36,30657,064(19,704)
37,359479,961(170,888)
309,073

Accrued Income Receivable (Note 7)

52,74560,633449,011

454

9,208

3,868

2,618

2,618

22,290161,605

98,757

1,375,718

Securities (Note 4)Loans (Note 5)
Less-Allowance for Loan Losses

Other Assets (Note 8)
Unamortized discount on Bonds and Notes
Customers' Liabilities for Acceptances and Guarantees
Total Assets¥

13,833,932¥

14,671,241

Millions of yen
2006$

117,765,663

2005

Thousands of U.S. dollars
2006

1,994,801$

Liabilities, Capital and Statutory Reserve
Liabilities
Bonds and Notes¥

Long-term Borrowings (Note 9)

2,261,799¥

19,254,271

9,004,474

10,214,800

76,653,401

Accrued Expenses Payable (Note 10)35,96738,155306,182

Other Liabilities (Note 11)21,20529,711

180,515

Acceptances and Guarantees

161,605

98,757

1,375,718

11,485,051

12,376,225

97,770,087

Capital (Note 12)

1,272,286

1,215,461

10,830,731

Statutory Reserve (Note 2 (j))

1,076,594

1,079,554

9,164,845

Total Liabilities
Capital and Statutory Reserve

Total Capital and Statutory Reserve
Total Liabilities, Capital and Statutory Reserve¥

2,348,880
13,833,932¥

2,295,015
14,671,241$

19,995,576
117,765,663

Accompanying notes are an integral part of these financial statements.
DBJ Disclosure 2006

80

NON-CONSOLIDATED STATEMENTS OF EARNINGS
Millions of yen
For the Fiscal Years ended March 31
Interest Income
Interest on Loans
Interest on Securities
Other Interest Income

2006¥

Interest Expenses
Interest on Bonds and Notes
Interest on Borrowings

81

DBJ Disclosure 2006$

3,135,583
12,3524,000
3,151,935

334,772
1,971,899
2,306,671

99,293111,231

845,264

2,494
8,527
11,021

2,250
5,522
7,772

21,23372,591
93,824

16,5239,825
864
40
72,061
6,315
105,631

16,6289,603
924
5435,837
6,047
69,096140,665
83,642
7,363
341
613,447
53,763
899,221

¥

4,683
2,992
7,675

¥

49,907
2,625
52,533$39,86725,476
65,343

¥

7,675
−
7,675

¥

41,896
10,63652,533$65,343−65,343Administrative and Other Expenses
Salaries and related expenses
Other administrative expenses
Depreciation
Fees and Commissions (Note 15)
Write-off of Claims (Note 16)
Other (Note 17)

Accompanying notes are an integral part of these financial statements.

427,0271,425
242
428,695

38,613278,851
317,464

Other Income
Fees and Commissions (Note 13)
Other (Note 14)

Appropriation of Net Earnings (Note 2(j))
Statutory reserve
Payment to National Treasury
Total Appropriation of Net Earnings

¥

2006

39,325
231,639
270,964

Net Interest Income

Earnings before Provision for Loan Losses
Reversal of Allowance for Loan Losses
Net Earnings (Note 2(i))

368,3361,451
469
370,257

Thousands of U.S. dollars
2005

NON-CONSOLIDATED LIST OF ASSETSMarch 31, 2006
Cash and Due from banks
Cash
Due from banks

Securities
Japanese Government Bonds

Millionsof yen27,572¥
3
27,569388,254341,230

Thousands of
U.S. dollars
234,717$27
234,690

3,305,137
2,904,829

Remarks(Millions of yen/ Thousands of U.S. dollars)

Current deposits: 24 banks,including
Bank of Japan
Ordinary deposits: 2 banks, including
Sumitomo Mitsui Banking Corporation

IssuesFinancing bills: 7 holdings
Coupon-bearing government bonds(2,5,10,15,20 years): 29 holdings
Treasury bills: 3 holding

Corporate Bonds
Other securities

44,0133,010

374,679
25,629Accrued Income Receivable
Accrued Interest on Loans
Accrued Interest on Securities
Accrued Guarantee Fees
Other Assets
Suspense payments
Guarantee deposits
Other
Unamortized discount on Bonds and Notes
Customers' Liabilities for Acceptancesand Guarantees
Total Assets$50,813¥21,600$183,877

Face value¥80,000$681,025¥252,500$2,149,485¥10,000$85,128

Book value¥79,994$680,975¥251,257$2,138,912¥9,978$84,94224 holdingsBook value
Collateralized debt obligations: 1 holdings
Equity acquired by excising the warrant,etc.:
2 holdings

Loans
Yen loans
Direct loans
Agency loans
Foreign currency loans
Allowance for Loan Losses
Equity Investments
Premises and Equipment
Premises and Equipment for Business¥5,969¥3,000¥10$25,538$91

14,244 holdings
14,209 holdings
14,201 holdings
8 holdings
35 holdings

12,968,029
12,887,481
12,886,406
1,074
80,547(38,904)
235,250
36,30636,306110,394,390
109,708,705
109,699,555
9,150
685,685(331,183)
2,002,642
309,073
309,073

52,74552,276451
17449,011445,020
3,844
147

454
51
380

3,868
439
3,240

39 holdings
76 holdings

22
2,618

189
22,290104 holdings
Difference between face value and proceeds from bonds

161,605¥ 13,833,932

1,375,718$ 117,765,663

591 holdingsBook value$173,786(1) Land: 88 properties /65% of 43,966g, ¥20,414
and 131,600g
132,505
15,565(2) Buildings: 204 buildings/ 95% of
2,244g,65% of 846g, and 106,188g(Gross floor area)
324
2,763
(3) Equipment: 1,959 items
08(4) Petty sum depreciable assets: 113 items(depreciated over three years asprescribed by tax code)111(5) Key money and other: 2 holding*Accumulated depreciation amounted to ¥20,074 million ($170,888 thousand).
Interest accrued on loans but not yet received at the end of the fiscal year
Interest accrued on securities but not yet received at the end of the fiscal year
Fees accrued on guarantees but not yet received at the end of the fiscal year

Deposits and guarantees relating to land andbuildings leased for business use

55 cases

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥117.47=$1.00, the effective exchange rate prevailing as of March 31,
2006, has been used in conversion. The presentation of such amounts is not intended to imply that Japanese yen amounts have been or could have been readily translated, realized
or settled in U.S. dollars at that rate or any other rate.

DBJ Disclosure 2006

82

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Development Bank of Japan (“DBJ”) maintains its records and prepares its statutory financial statements in accordance with
Development Bank of Japan Law (“DBJ Law”) and the regulations thereunder and in accordance with accounting principles generally
accepted in Japan, which are different in certain respects as to the application and disclosure requirements from the International Financial
Reporting Standards. The financial statements are not intended to present the financial position and results of operations inaccordance with accounting principles and procedures generally accepted in countries and jurisdictions other than Japan.
Consolidated financial statements are not prepared because DBJ has no subsidiaries under the DBJ Law.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen. Accordingly, the sum ofeach amount appearing in the accompanying financial statements and the notes thereto may not be equal to the sum of theindividual account balances.
Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥117.47=$1.00, the effective
exchange rate prevailing as of March 31, 2006, has been used in conversion. The presentation of such amounts is not intended to imply
that Japanese yen amounts have been or could have been readily translated, realized or settled in U.S. dollars at that rate or any other rate.

2. Summary of Significant Accounting Policies(a) Securities
Securities are stated at cost, which is determined by the moving average method.
Under the DBJ Law, DBJ cannot invest surplus funds except in Japanese Government Bonds or other bonds permitted by the DBJ
Law, or in deposits at the Fiscal Loan Fund, Bank of Japan or the financial institutions specified by the Ministry of Finance.
(b) Derivatives
Derivative transactions are not recorded on the non-consolidated balance sheets. Income and expenses from derivativetransactions are recognized in the non-consolidated statements of earnings on a cash basis.
(c) Translation of accounts denominated in foreign currencies
DBJ holds foreign currency swap to hedge exchange rate risks on its loans, bonds and notes that are denominated in foreign
currencies. These foreign currency swaps are not recognized in the non-consolidated balance sheets. The foreign currency
denominated loans, bonds and notes that are being hedged are measured at the contract rates of the respective foreign currency swaps
designated as hedging instruments.
(d) Depreciation method for Premises and Equipment
In accordance with certain provisions set forth the Corporation Tax Law, depreciation is provided based on the decliningbalance method for all Premises and Equipment except for buildings and key money, which are depreciated based on thestraight-line method.
(e) Unamortized discounts on Bonds and Notes
Discounts on bonds and notes are amortized using the straight-line method over the average period of redemption inaccordance with an ordinance defined by the Ministry of Finance.
(f) Bonds and Notes issuance costs
Bonds and Notes issuance costs are recorded as expenses in the period they are incurred in accordance with a provision defined by
the Ministry of Finance.
(g) Allowance for Loan Losses
A provision for loan losses is established in accordance with the requirements set forth by the Ministry of Finance pursuant to the
DBJ Law. Under the provision, the allowance for loan losses is limited to 0.3% of loans outstanding at the end of each fiscal year.
(h) Employee retirement benefits
In accordance with the DBJ Law and regulations thereunder, employee retirement benefits to employees (including payment toemployees reaching retirement age) are included in DBJ’s budget of revenues and expenditures on the basis of anticipatedpayments to be made during the relevant year and are included in “Salaries and related expenses” in the non-consolidated statementsof earnings when paid.
(i) Income taxes
DBJ is exempt from taxes based on income, however DBJ is subject to parity taxes of the inhabitants’ taxes among local taxes.

83

DBJ Disclosure 2006

(j) Appropriation of net earnings
In accordance with provisions of the DBJ Law and a related law, DBJ is required to set aside out of net earnings as a statutory reserve,
the larger of (¡) an amount equivalent to 20% of net earnings or (™) an amount equivalent to 0.3% of loans outstanding at theend of each fiscal year (if this amount is in excess of the amount of net earnings for the year, then the amount of such net earnings).
The reserve provided may only be used to cover net losses. The balance of net earnings remaining each year, after providing for thisreserve, is to be paid to the National Treasury by May 31 of the following fiscal year. Interim payments are provided for under the
Cabinet Order.
As for the fiscal year ended March 31, 2006, the payment to the National Treasury was not made, because the amount of net
earnings was not in excess of such required amounts.
(k) Consumption tax
Income and expense subject to consumption tax include related consumption taxes paid or received.

3. Cash and Due from banks
Cash and Due from banks as of March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
2006

At March 31
Cash

2005

2006

¥

3
27,569¥2¥

27,572¥

18,035Due from banks$

27
234,690$234,717

18,033

4. Securities
Securities as of March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
2006

At March 31
Japanese Government Bonds
Corporate Bonds¥

341,230

2005
259,990¥44,013
3,010

Other securities¥

388,254$374,679
25,62950,814
10,020¥320,825

2006
2,904,829$

3,305,137

5. Loans
Loans as of March 31, 2006 and 2005 are as follows:
Millions of yen
2006

At March 31
Yen loans
Direct loans¥

Agency loans

12,887,481
12,886,406¥

2005
13,874,500
13,873,289
1,210

1,074
80,547

Foreign currency loans¥

12,968,029

Thousands of U.S. dollars
2006$ 109,708,705
109,699,555
9,150
685,685

91,066¥

13,965,566$

110,394,390

Pursuant to the DBJ Law and regulations thereunder, loans in arrears are defined as the loans for which the principal payments are overdueby six months or more. This categorization is different from the categorization of non-performing loans as defined under the
Banking Law and the Financial Revitalization Law. The amounts of the loans in arrears included in “Loans” on the nonconsolidated balance sheets as of March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
2006

At March 31
Loan past-due for six months or more as toprincipal payments¥¥

43,84543,845

2005¥¥

74,634
74,634

2006$$

373,247
373,247
DBJ Disclosure 2006

84

6. Premises and Equipment
Premises and Equipment as of March 31, 2006 and 2005 are as follows:
Millions of yen
At March 31
Premises and Equipment for BusinessLess- Accumulated Depreciation
Net Book Value

2006

Thousands of U.S. dollars
2005

2006

¥
¥

56,38056,380¥¥57,06457,064$$479,961
479,961¥(20,074)
36,306¥(19,704)
37,359$(170,888)
309,073

7. Accrued Income Receivable
Accrued Income Receivable as of March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
At March 31
Accrued Interest on Loans

2006¥

52,276

Accrued Interest on Securities
Accrued Guarantee Fees

2005
59,976

¥

451
17
¥

52,745

$

643
13
¥

60,633

2006
445,020
3,844
147

$

449,011

8. Other Assets
Other Assets as of March 31, 2006 and 2005 are as follows:
Millions of yen
At March 31
Suspense payments

2006¥

Guarantee deposits

51

¥

¥

22
454

$

384
7,799

380
−

Estimated Payments
Other

Thousands of U.S. dollars
2005
910

113
9,208

¥

2006
439
3,240
−

$

189
3,868

9. Long-term Borrowings
DBJ borrows funds from the Japanese Government in order to meet funding requirements for the conduct of operations specified in the DBJ
Law. DBJ also accepts other funds received from government sources in order to apply them to the sources of funds necessary tofinancially contribute to a particular government policy with respect to the operations provided in the DBJ Law, as provided in the
Cabinet Order.
Long-term Borrowings as of March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
At March 31
Fiscal Loan Fund

2006¥

8,566,149¥

2005
9,676,259$

2006
72,922,022

Reserve Funds of the Postal Life Insurance
Special AccountIndustrial Investment Special AccountFunds entrusted¥

85

DBJ Disclosure 2006

98,464

150,728

838,206

321,384
18,476366,149

2,735,884
157,289

9,004,474

21,663¥

10,214,800$

76,653,401

10. Accrued Expenses Payable
Accrued Expenses Payable as of March 31, 2006 and 2005 are as follows:
Millions of yen
2006

At March 31
Accrued interest on Bonds and Notes
Accrued interest on Long-term Borrowings¥

Other accrued expenses
¥

6,299

¥

Thousands of U.S. dollars
2005
5,943

29,66532,2092
35,9672
38,155¥$

2006
53,631
252,53417$

306,182

11. Other Liabilities
Other Liabilities as of March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
2006

At March 31
Loan Redemption
Suspense receipts¥

Unearned income
Other
¥

1,687

¥

2005
7,939

$

2006
14,368

442

2,962

3,766

19,00866

18,692
117

161,815566

21,205¥29,711$

180,515

12. Capital
The Japanese Government is the sole owner of the equity interest, which is not evidenced by documents such as stock certificates, but
is evidenced at the Registration Office of the Legal Affairs Bureau of Japan.

13. Fees and Commissions (Income)Fees and Commissions (Income) for the fiscal years ended March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
2006

For the fiscal year ended March 31
Commissions received¥

Guarantee Fees
¥

2,218
275

¥

2,494

¥

2005
2,102

$

2006
18,887
2,346$

21,233147
2,250

14. Other (Income)
Other (Income) for the fiscal years ended March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
For the fiscal year ended March 31
Miscellaneous Interest received

2006¥

Collection of written-off claims

736

¥

5,912
¥

8,527

$

32
103

144
1,733

Income from Equity Investments
Other

2005
3,014

1,234
14,754

2,371
¥

5,522

2006
6,268

50,335$72,591

DBJ Disclosure 2006

86

15. Fees and Commissions (Expenses)
Fees and Commissions (Expenses) for the fiscal years ended March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
For the fiscal year ended March 31
Commissions paid

2005

2006
¥

40

¥

40

¥
¥

54
54

$
$

2006
341
341

16. Write-off of Claims
DBJ writes-off loans past-due, equity investments and securities declined in value drastically, only after exhausting all available
remedies including realization on any collateral and disposal by sale of claims. Write-offs are recorded at fiscal year end only with theapproval of the Ministry of Finance. The amounts of Loans, Equity Investments and Securities written off for the fiscal years ended March
31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
For the fiscal year ended March 31
Securities written off

2005

2006
¥

Loans written off
Equity Investments written off

18¥

68,612
3,429¥

72,061−$

584,089
29,19929,0686,769¥

35,837

2006
159

$

613,447

17. Other (Expenses)
Other (Expenses) for the fiscal years ended March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen
For the fiscal year ended March 31
Miscellaneous Interest paid

2006¥

Amortization of Discount on Bonds and Notes
Bonds and Notes issuance cost

652

¥

415
777

Other
¥

4,470
6,315

2005
2,598

$

371
881
¥

2,195
6,047

2006
5,558
3,537
6,615

$

38,05353,763＊“Miscellaneous Interest paid” is mainly composed of payment for credit derivative transactions.

18. Credit Derivative Transactions
DBJ utilizes credit default swap as part of its “acceptances and guarantees on customers’ debt” business within the limit of a certain definite
amount of risk. Contract value as of March 31, 2006 and 2005 are as follows:
Thousands of U.S. dollars

Millions of yen

87

At March 31
Sold¥

Bought¥DBJ Disclosure 2006

−

¥

2005
1,853,901$−

20,000¥1,837,501$

170,256

2006

2006

BOARD OF DIRECTORS (as of September 13, 2006)

Sumihito Okawa

Takeshi Komura

Kimio Yamaguchi

GovernorTakeshi Komura
Deputy Governor

Deputy Governor

Kimio Yamaguchi

Sumihito Okawa

Senior Executive Director

Senior Executive Director

Mikio Araki

Keiji Taga

Senior Executive Director

Senior Executive Director

Kenichi Fukaya

Hirokazu Horinouchi

Senior Executive Director

Senior Executive Director

Hisato Nagaoka

Hisao Ochi

Senior Executive Director

Senior Executive Director

Atsushi Oi

Hiroyuki Hoshi

Senior Executive Director

Senior Executive Director

Takeshi Abe

Yo Takeuchi

Senior Executive Director

Akiyoshi Horiuchi
Auditor

AuditorTsuyoshi Inoue

Hideki Ogata

DBJ Disclosure 2006

88

ORGANIZATION CHART (as of September 13, 2006)
Internal Audit Department
Office of Secretariat
Human Resources Management Department
Corporate Strategy Department

Operations Evaluation Office

Corporate Planning Department
Finance Planning & Coordination Department
Credit Analysis Department

Office of Financial Planning &Risk Management

Legal Department
Information Resources Department
Treasury Department
General Affairs Department[ Community Revitalization Support Division ]Governor

SeniorExecutive
Director

Planning Department for Regional Development
Department for Urban Development

Office of Planning & Researchfor Metropolitan Area

Department for Regional Development[ Environment and Infrastructure Support Division ]DeputyGovernor

Policy Planning Department
Environment & Energy Department
Commerce & Logistics Department
Transportation Department

Auditor[ Technology and Industry Creation Division ]Department for Technology & Growth Business
Manufacturing & Technology Department
Information & Telecommunications Department[ Financial Solution Division ]Planning Department for Investment Banking
Project Finance Department
Strategic Finance Department
Department for Business Development
Department for International Affairs

6 Overseas Representative Offices ＊ 3

Economic & Industrial Research Department＊ 1 Branches : Hokkaido

Research Institute of Capital Formation

Research Center for Regional Policy

10 Branches ＊ 1

8 Representative Offices ＊ 2

Tohoku Niigata Hokuriku Tokai Kansai Chugoku Shikoku Kyushu Minami-Kyushu＊ 2 Representative Offices : Hakodate

Kushiro Aomori Toyama Matsue Okayama Matsuyama Oita

＊ 3 Overseas Representative Offices : Washington, D.C.

89

DBJ Disclosure 2006

New York Los Angeles London Frankfurt Singapore

Location of Head and Branch Offices and Directory
Hokkaido Branch

Hakodate office

Aomori office
Kushiro Office

HEAD OFFICE
Domestic Branches
Representative Offices

Niigata Branch

Toyama Office
Hokuriku Branch
Tohoku Branch
Okayama Office
Matsue Offce
Chugoku Branch

HEAD OFFICE

Kyushu Branch
Tokai Branch
Kansai Branch

LondonRepresentative OfficeFrankfurt
Representative Office

Shikoku Branch
Matsuyama Office

New York
Representative Office

Oita Office

Minami-Kyushu Branch

Los Angeles
Representative Office

Washington, D.C.
Representative Office

Singapore
Representative Office

Head Office

Overseas Representative Offices

9-1, Otemachi 1-chome, Chiyoda-ku,
Tokyo 100-0004, Japan
Tel: +81-3-3244-1900
http://www.dbj.go.jp/english/index.html• Washington, D.C. Representative Office1101-17th Street, N.W., Suite 1001,
Washington, D.C. 20036, U.S.A.
Tel: +1-202-331-8696

To Kanda

Shuto Expressway• Los Angeles Representative Office
601 South Figueroa Street, Suite 2190,
Los Angeles, CA 90017-5748, U.S.A.
Tel: +1-213-362-2980

Development Bank of Japan
Japan Business
Federation (Keidanren)
Nikkei Bldg.
Koko Bldg.
NTT
JA Bldg.

KDDI• New York Representative Office1251 Avenue of the Americas, Suite 830,
New York, N.Y. 10020, U.S.A.
Tel: +1-212-221-0708

Mitsui MutualLife Insurance• London Representative Office
Level 12, City Tower, 40 Basinghall Street,
London, EC2V 5DE,
United Kingdom
Tel:+44-20-7638-6210• Frankfurt Representative OfficeFrankfurter Buero Center,
Mainzer Landstrasse 46,60325 Frankfurt am Main,
Federal Republic of Germany
Tel: +49-69-7191760• Singapore Representative Office
36 Robinson Road, #07-04 City House,
Singapore 068877
Tel: +65-6221-1779

Marunouchi Line
Otemachi Sta.
(Exit A1)

Sankei Bldg.
Yomiuri Bldg.

JR LineHibiya Dori (St.)

Chiyoda Line
Otemachi Sta.
(Exit C1)

Hanzoumon Line
Otemachi Sta.
Otemachi Bldg.

Otemachi First
Square Bldg.
To TokyoTozai Line
Otemachi Sta.

DBJ Disclosure 200690

Development Bank of Japan Annual Report

http: //www.dbj.go.jp/

Printed in Japan20
06