Form 6-K
Table of Contents

 

FORM 6-K

 


 

U.S. SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

Commission File Number: 1-15270

 

Supplement for the month of October 2004.

 


 

NOMURA HOLDINGS, INC.

(Translation of registrant’s name into English)

 


 

9-1, Nihonbashi 1-chome

Chuo-ku, Tokyo 103-8645

Japan

(Address of principal executive offices)

 


 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F       X         Form 40-F              

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):              

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):              

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes                  No      X    

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

 



Table of Contents

Information furnished on this form:

 

EXHIBIT

 

Exhibit Number


   

1.     [Financial Highlights – Six months ended September 2004]

2.     [Notice of Change in the Number of Shares Constituting One Unit]

3.     [Nomura Announces Interim Dividend for Fiscal Year Ending March 31, 2005]

 

2


Table of Contents

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    NOMURA HOLDINGS, INC.
Date: October 28, 2004   By:  

/s/ HIROSHI TANAKA


        Hiroshi Tanaka
        Senior Managing Director

 

3


Table of Contents

LOGO

 

October 28, 2004

 

Financial Highlights – Six months ended September 2004

 

We are pleased to report the following consolidated financial highlights based on

consolidated financial information under US GAAP for the six months ended September 2004.

 

    

For further information, please contact:

    

        Shinji Iwai

    

        Managing Director

    

        Investor Relations Department

    

        Nomura Group Headquarters

    

        Nomura Securities Co., Ltd.

    

        9-1 Nihonbashi 1-chome, Chuo-ku

    

        Tokyo 103-8011, Japan

    

        TEL: +813-3211-1811


Table of Contents

Financial Summary For the Six Months Ended September 30, 2004

 

Date:

  

October 28, 2004

Company name (code number):

   Nomura Holdings, Inc. (8604)

Head office:

  

1-9-1, Nihonbashi, Chuo-ku, Tokyo 103-8011, Japan

Stock exchange listings:

  

(In Japan) Tokyo, Osaka, Nagoya

    

(Overseas) New York, Amsterdam, Singapore

Representative:

  

Nobuyuki Koga

    

President and Chief Executive Officer, Nomura Holdings, Inc.

For inquiries:

  

Shinji Iwai

     Managing Director, Investor Relations Department, Nomura Group Headquarters, Nomura Securities Co., Ltd.
    

Tel: (Country Code 81) 3-3211-1811

    

URL(http://www.nomura.com)

 

(1) Operating Results

 

     For the six months ended September 30

   

For the year ended March 31

2004


 
     2004

    2003

   
     (Yen amounts in millions, except per share data)  

Total revenue

   ¥ 540,170     ¥ 573,378     ¥ 1,099,546  

Change from the six months ended September 30, 2003

     (5.8 )%                

Net revenue

   ¥ 370,769     ¥ 414,774     ¥ 803,103  

Change from the six months ended September 30, 2003

     (10.6 )%                

Income before income taxes

   ¥ 88,673     ¥ 159,251     ¥ 282,676  

Change from the six months ended September 30, 2003

     (44.3 )%                

Net income

   ¥ 44,048     ¥ 86,686     ¥ 172,329  

Change from the six months ended September 30, 2003

     (49.2 )%                

Basic net income per share

   ¥ 22.69     ¥ 44.71     ¥ 88.82  

Diluted net income per share

   ¥ 22.68     ¥ 44.71     ¥ 88.82  

Return on shareholders’ equity (ROE)

     4.9 %     10.4 %     10.1 %

Equity in earnings of affiliates

   ¥ 3,764     ¥ 2,341     ¥ 9,479  

Average number of shares outstanding

     1,941,476,091       1,938,752,238       1,940,116,416  

Difference in recognition method with latest fiscal year: none

                        

* ROE for the six months ended September 30, 2004 and 2003 are calculated as follows:

 

Net income x 2


(Shareholders’ equity at the beginning of period + Shareholders’ equity at the end of period) / 2

 

(2) Financial Position

 

     At September 30

   

At March 31

2004


 
     2004

    2003

   
     (Yen amounts in millions, except per share data)  

Total assets

   ¥ 32,566,870     ¥ 27,238,887     ¥ 29,752,966  

Shareholders’ equity

   ¥ 1,829,788     ¥ 1,705,548     ¥ 1,785,688  

Shareholders’ equity as a percentage of total assets

     5.6 %     6.3 %     6.0 %

Book value per share

   ¥ 942.50     ¥ 878.34     ¥ 919.67  

Number of shares outstanding

     1,941,421,223       1,941,782,171       1,941,656,029  

 

(3) Scope of consolidation and equity method application

 

Number of consolidated subsidiaries and variable interest entities: 139

Number of affiliated companies, which were accounted for by the equity method: 15

 

(4) Movement in the scope of consolidation and equity method application for this period

 

        Number of consolidation

    

Inclusion 13

    

Exclusion 7

        Number of equity method application

    

Inclusion 3

    

Exclusion 1

 

Nomura provides investment, financing and related services in the capital markets on a global basis. In the global capital markets there exist various uncertainties due to, but not limited to, economic and market conditions. Nomura, therefore, releases its results on a more frequent quarterly basis, and does not present earnings forecasts.

 

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Table of Contents

NOMURA HOLDINGS, INC.

FINANCIAL HIGHLIGHTS

(UNAUDITED)

 

                 % Change

   

Translation

into

U.S. dollars


      
     For the six months ended/ as of

  

For the year

ended/ as of


 
    

September 30,

2003 (A)


   

September 30,

2004 (B)


    (B-A)/(A)

   

September 30,

2004


   March 31,
2004


 
     (Yen and dollar amounts in millions, except per share data)  

FOR THE PERIOD ENDED

                                     
                     %                 

Total revenue

   ¥ 573,378     ¥ 540,170     (5.8 )   $ 4,902    ¥ 1,099,546  

Net revenue

     414,774       370,769     (10.6 )     3,365      803,103  

Non-interest expenses

     255,523       282,096     10.4       2,560      520,427  

Income before income taxes

     159,251       88,673     (44.3 )     805      282,676  

Net income

     86,686       44,048     (49.2 )     400      172,329  

Per share data :

                                     

Basic-

                                     

Net income

     44.71       22.69     (49.3 )     0.21      88.82  

Diluted-

                                     

Net income

     44.71       22.68     (49.3 )     0.21      88.82  

Cash dividends

     7.50       10.00     33.3       0.09      15.00  

Return on equity (ROE):

     10.4 %*     4.9 %*                  10.1 %

AT PERIOD-END

                                     

Total assets

   ¥ 27,238,887     ¥ 32,566,870           $ 295,525    ¥ 29,752,966  

Shareholders’ equity

     1,705,548       1,829,788             16,604      1,785,688  

Per share data :

                                     

Shareholders’ equity

     878.34       942.50             8.55      919.67  

* ROE for the six months ended September 30, 2004 and 2003 are calculated as follows:

 

Net income x 2


(Shareholders’ equity at the beginning of period + Shareholders’ equity at the end of period) / 2

 

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Table of Contents

Results of Operations

 

Financial Overview

 

The following table provides selected consolidated income statement information for the six months ended September 30, 2003 and 2004.

 

     Millions of yen

 
     For the six months ended

 
     September 30, 2003

    September 30, 2004

 

Non-interest revenue

   ¥ 355,498     ¥ 321,130  

Net interest revenue

     59,276       49,639  
    


 


Net revenue

     414,774       370,769  

Non-interest expenses

     255,523       282,096  
    


 


Income before income taxes

     159,251       88,673  

Income tax expense

     72,565       44,625  
    


 


Net income

   ¥ 86,686     ¥ 44,048  
    


 


Return on equity (ROE)

     10.4 %     4.9 %

 

Nomura Holdings, Inc. and its consolidated entities (“Nomura”) reported net revenue of ¥ 370.8 billion for the six months ended September 30, 2004, a decrease of 11% from the same period in the prior year. Non-interest expenses were ¥ 282.1 billion for the six months ended September 30, 2004, an increase of 10% from the same period in the prior year.

 

Income before income taxes was ¥ 88.7 billion for the six months ended September 30, 2004, a decrease of 44% from the same period in the prior year. Net income was ¥ 44.0 billion for the six months ended September 30, 2004, a decrease of 49% from the same period in the prior year.

 

Total assets were ¥ 32.6 trillion at September 30, 2004, an increase of ¥ 2.8 trillion from March 31, 2004 and total shareholders’ equity increased by ¥ 44.1 billion from March 31, 2004 to ¥ 1.8 trillion at September 30, 2004. Nomura’s return on equity was 4.9% for the six months ended September 30, 2004.

 

Business Segments

 

Operating Results of Domestic Retail

 

     Millions of yen

     For the six months ended

     September 30, 2003

  September 30, 2004

Non-interest revenue

   ¥ 149,787   ¥ 150,401

Net interest revenue

     775     1,330
    

 

Net revenue

     150,562     151,731

Non-interest expenses

     111,117     108,214
    

 

Income before income taxes

   ¥ 39,445   ¥ 43,517
    

 

 

Domestic Retail has further strengthened its capabilities to provide investment consultation services in order to respond to customers’ investment needs by offering stocks, investment trusts, foreign currency bonds, Japanese government bonds for individuals, and a variety of other financial products. Net revenue increased by 1% from ¥ 150,562 million for the six months ended September 30, 2003 to ¥ 151,731 million for the six months ended September 30, 2004. Non-interest expenses decreased by 3% from ¥ 111,117 million for the six months ended September 30, 2003 to ¥ 108,214 million for the six months ended September 30, 2004. As a result, income before income taxes increased by 10% from ¥ 39,445 million for the six months ended September 30, 2003 to ¥ 43,517 million for the six months ended September 30, 2004.

 

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Table of Contents

Operating Results of Global Wholesale

 

     Millions of yen

     For the six months ended

     September 30, 2003

   September 30, 2004

Non-interest revenue

   ¥ 163,829    ¥ 108,610

Net interest revenue

     45,279      44,305
    

  

Net revenue

     209,108      152,915

Non-interest expenses

     113,756      110,262
    

  

Income before income taxes

   ¥ 95,352    ¥ 42,653
    

  

 

Global Wholesale has made an effort to manage its business portfolio based on global customers’ order-flow. Net revenue decreased by 27% from ¥ 209,108 million for the six months ended September 30, 2003 to ¥ 152,915 million for the six months ended September 30, 2004, due primarily to a decrease in net gain on trading relating to bonds. Non-interest expenses decreased by 3% from ¥ 113,756 million for the six months ended September 30, 2003 to ¥ 110,262 million for the six months ended September 30, 2004. As a result, income before income taxes decreased by 55% from ¥ 95,352 million for the six months ended September 30, 2003 to ¥ 42,653 million for the six months ended September 30, 2004. In April 2004, the Global Wholesale segment was reorganized in order to enhance specialty services and strengthen our global structure. It now consists of three business lines: Global Markets, which is composed of Fixed Income and Equity, Investment Banking, and Merchant Banking.

 

Global Markets

 

Net revenue decreased by 31% from ¥ 169,710 million for the six months ended September 30, 2003 to ¥ 116,685 million for the six months ended September 30, 2004, due primarily to a decrease in net gain on trading relating to bonds. Non-interest expenses decreased by 0.4% from ¥ 83,039 million for the six months ended September 30, 2003 to ¥ 82,688 million for the six months ended September 30, 2004. As a result, income before income taxes decreased by 61% from ¥ 86,671 million for the six months ended September 30, 2003 to ¥ 33,997 million for the six months ended September 30, 2004.

 

Investment Banking

 

Net revenue increased by 7% from ¥ 33,476 million for the six months ended September 30, 2003 to ¥ 35,819 million for the six months ended September 30, 2004, partly due to a revitalization in equity capital markets. Non-interest expenses decreased by 13% from ¥ 25,544 million for the six months ended September 30, 2003 to ¥ 22,140 million for the six months ended September 30, 2004, due primarily to restructuring of business operations. As a result, income before income taxes increased by 72% from ¥ 7,932 million for the six months ended September 30, 2003 to ¥ 13,679 million for the six months ended September 30, 2004.

 

Merchant Banking

 

Net revenue decreased by 93% from ¥ 5,922 million for the six months ended September 30, 2003 to ¥ 411 million for the six months ended September 30, 2004, because funding costs have been charged for its assets in Europe, although there were exit transactions for this period. Non-interest expenses increased by 5% from ¥ 5,173 million for the six months ended September 30, 2003 to ¥ 5,434 million for the six months ended September 30, 2004. As a result, income before income taxes was ¥ 749 million for the six months ended September 30, 2003 and loss before income taxes was ¥ 5,023 million for the six months ended September 30, 2004.

 

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Table of Contents

Operating Results of Asset Management

 

     Millions of yen

     For the six months ended

     September 30, 2003

    September 30, 2004

Non-interest revenue

   ¥ 15,231     ¥ 19,888

Net interest revenue

     1,071       779
    


 

Net revenue

     16,302       20,667

Non-interest expenses

     18,709       17,704
    


 

Income before income taxes

   ¥ (2,407 )   ¥ 2,963
    


 

 

Net revenue increased by 27% from ¥ 16,302 million for the six months ended September 30, 2003 to ¥ 20,667 million for the six months ended September 30, 2004, due primarily to an increase in asset management and portfolio service fees reflecting the rise in the net assets of stock investment trusts. Non-interest expenses decreased by 5% from ¥ 18,709 million for the six months ended September 30, 2003 to ¥ 17,704 million for the six months ended September 30, 2004. As a result, loss before income taxes was ¥ 2,407 million for the six months ended September 30, 2003 and income before income taxes was ¥ 2,963 million for the six months ended September 30, 2004.

 

Other Operating Results

 

Other operating results include gain (loss) on investment securities, equity in earnings (losses) of affiliates and other financial adjustments. Please refer to Note 7 to the consolidated financial information for a reconciliation of segment results to income statement information. Loss before income taxes was ¥ 5,861 million for the six months ended September 30, 2003 and income before income taxes was ¥ 23 million for the six months ended September 30, 2004.

 

Financial Position

 

Total assets at September 30, 2004 were ¥32.6 trillion, up ¥2.8 trillion, compared with March 31, 2004, reflecting an increase in trading-related assets. Total liabilities at September 30, 2004 were ¥30.7 trillion, up ¥2.8 trillion, compared with March 31, 2004, reflecting an increase in trading-related liabilities. Trading-related balances (assets/liabilities) include trading assets and private equity investments, collateralized agreements, trading liabilities, collateralized financing and receivables/payables arising from unsettled trades(included in receivables or payables).

 

Cash and cash equivalents at September 30, 2004 decreased by ¥187.8 billion compared with March 31, 2004. Net cash used in operating activities was ¥367.3 billion, mainly due to an increase in net trading-related balances (net of assets and liabilities). Net cash used in investing activities was ¥58.4 billion mainly because of the purchase of affiliated companies equity. Net cash provided by financing activities was ¥224.0 billion mainly due to an increase in borrowings.

 

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Table of Contents

NOMURA HOLDINGS, INC.

CONSOLIDATED INCOME STATEMENT INFORMATION

(UNAUDITED)

 

     Millions of yen

    % Change

   

Translation into
millions of

U.S. dollars


    Millions of
Yen


     For the six months ended

   

For the year
ended

March 31,
2004


     September 30,
2003 (A)


   September 30,
2004 (B)


    (B-A)/(A)

    September 30,
2004


   

Revenue:

                                   

Commissions

   ¥ 89,719    ¥ 115,118     28.3 %   $ 1,045     ¥ 210,216

Fees from investment banking

     34,358      47,773     39.0       434       86,994

Asset management and portfolio service fees

     30,757      38,030     23.6       345       66,193

Net gain on trading

     147,529      76,640     (48.1 )     695       229,042

Gain (Loss) on private equity investments

     6,598      (1,599 )   —         (15 )     13,138

Interest and dividends

     217,880      219,040     0.5       1,988       396,870

Gain (Loss) on investments in equity securities

     31,769      (1,353 )   —         (12 )     55,888

Other

     14,768      46,521     215.0       422       41,205
    

  


 

 


 

Total revenue

     573,378      540,170     (5.8 )     4,902       1,099,546

Interest expense

     158,604      169,401     6.8       1,537       296,443
    

  


 

 


 

Net revenue

     414,774      370,769     (10.6 )     3,365       803,103
    

  


 

 


 

Non-interest expenses :

                                   

Compensation and benefits

     133,589      130,149     (2.6 )     1,181       259,336

Commissions and floor brokerage

     9,529      12,911     35.5       117       19,169

Information processing and communications

     38,410      39,417     2.6       358       80,031

Occupancy and related depreciation

     26,825      26,260     (2.1 )     238       54,221

Business development expenses

     10,411      13,196     26.8       120       23,100

Other

     36,759      60,163     63.7       546       84,570
    

  


 

 


 

       255,523      282,096     10.4       2,560       520,427
    

  


 

 


 

Income before income taxes

     159,251      88,673     (44.3 )     805       282,676
    

  


 

 


 

Income tax expense(benefit):

                                   

Current

     65,511      48,292     (26.3 )     438       108,434

Deferred

     7,054      (3,667 )   —         (33 )     1,913
    

  


 

 


 

       72,565      44,625     (38.5 )     405       110,347
    

  


 

 


 

Net income

   ¥ 86,686    ¥ 44,048     (49.2 )   $ 400     ¥ 172,329
    

  


 

 


 

     Yen

    % Change

   

Translation into

U.S. dollars


    Yen

Per share of common stock:

                                   

Basic-

                                   

Net income

   ¥ 44.71    ¥ 22.69     (49.3 )   $ 0.21     ¥ 88.82
    

  


 

 


 

Diluted-

                                   

Net income

   ¥ 44.71    ¥ 22.68     (49.3 )   $ 0.21     ¥ 88.82
    

  


 

 


 

 

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Table of Contents

NOMURA HOLDINGS, INC.

CONSOLIDATED BALANCE SHEET INFORMATION

(UNAUDITED)

 

     Millions of yen

   

Translation into
millions of

U.S. dollars


 
     September 30,
2003


    March 31,
2004


    September 30,
2004


   

September 30,

2004


 
ASSETS                                 

Cash and cash deposits:

                                

Cash and cash equivalents

   ¥ 654,158     ¥ 637,372     ¥ 449,598     $ 4,080  

Time deposits

     313,608       248,737       276,262       2,507  

Deposits with stock exchanges and other segregated cash

     63,605       44,528       38,421       348  
    


 


 


 


       1,031,371       930,637       764,281       6,935  
    


 


 


 


Loans and receivables:

                                

Loans receivable

     423,216       543,894       552,186       5,011  

Receivables from customers

     42,192       10,744       19,262       175  

Receivables from other than customers

     915,154       464,776       473,050       4,292  

Allowance for doubtful accounts

     (6,789 )     (5,778 )     (3,831 )     (35 )
    


 


 


 


       1,373,773       1,013,636       1,040,667       9,443  
    


 


 


 


Collateralized agreements:

                                

Securities purchased under agreements to resell

     4,221,030       5,701,646       7,411,732       67,257  

Securities borrowed

     7,778,130       7,180,106       6,678,398       60,603  
    


 


 


 


       11,999,160       12,881,752       14,090,130       127,860  
    


 


 


 


Trading assets and private equity investments (include securities pledged as collateral of ¥5,020,151 million at September 30, 2003, ¥5,229,300 million at March 31, 2004, and ¥6,876,678 million ($62,402 million) at September 30, 2004, respectively):

                                

Securities inventory

     10,987,122       13,066,963       14,690,911       133,312  

Derivative contracts

     526,306       479,659       463,301       4,204  

Private equity investments

     277,294       291,774       301,381       2,735  
    


 


 


 


       11,790,722       13,838,396       15,455,593       140,251  
    


 


 


 


Other assets:

                                

Office buildings, land, equipment and facilities (net of accumulated depreciation and amortization of ¥173,713 million at September 30, 2003, ¥182,449 million at March 31, 2004 and ¥187,506 million ($1,702 million) at September 30, 2004, respectively)

     180,891       200,700       278,809       2,530  

Lease deposits

     71,964       64,764       42,801       389  

Non-trading debt securities (include securities pledged as collateteral of ¥nil at September 30, 2003, ¥3,340 million at March 31, 2004, and ¥2,217 million ($20 million) at September 30, 2004)

     201,716       206,236       218,895       1,986  

Investments in equity securities

     150,465       169,459       161,077       1,462  

Investments in and advances to affiliated companies

     203,507       207,668       249,752       2,266  

Deferred tax assets

     99,283       105,901       109,786       996  

Other assets

     136,035       133,817       155,079       1,407  
    


 


 


 


       1,043,861       1,088,545       1,216,199       11,036  
    


 


 


 


Total assets

   ¥ 27,238,887     ¥ 29,752,966     ¥ 32,566,870     $ 295,525  
    


 


 


 


 

7


Table of Contents

NOMURA HOLDINGS, INC.

CONSOLIDATED BALANCE SHEET INFORMATION

(UNAUDITED)

 

    

Millions of yen


   

Translation into
millions of

U.S. dollars


 
    

September 30,

2003


   

March 31,

2004


    September 30,
2004


   

September 30,

2004


 
LIABILITIES AND SHAREHOLDERS’ EQUITY                                 

Short-term borrowings

   ¥ 355,857     ¥ 437,124     ¥ 430,024     $ 3,902  

Payables and deposits:

                                

Payables to customers

     207,540       266,646       214,206       1,944  

Payables to other than customers

     415,765       861,747       755,383       6,855  

Time and other deposits received

     301,516       255,703       261,731       2,375  
    


 


 


 


       924,821       1,384,096       1,231,320       11,174  
    


 


 


 


Collateralized financing:

                                

Securities sold under agreements to repurchase

     8,161,227       9,622,727       11,553,427       104,841  

Securities loaned

     5,534,591       5,157,814       5,234,081       47,496  

Other secured borrowings

     977,418       2,587,217       2,567,341       23,297  
    


 


 


 


       14,673,236       17,367,758       19,354,849       175,634  
    


 


 


 


Trading liabilities:

                                

Securities sold but not yet purchased

     6,427,291       5,559,598       6,201,379       56,274  

Derivative contracts

     530,011       417,368       440,120       3,994  
    


 


 


 


       6,957,302       5,976,966       6,641,499       60,268  
    


 


 


 


Other liabilities:

                                

Accrued income taxes

     58,269       93,538       23,679       215  

Accrued pension and severance costs

     87,157       86,439       86,845       788  

Other

     239,811       235,888       252,632       2,292  
    


 


 


 


       385,237       415,865       363,156       3,295  
    


 


 


 


Long-term borrowings

     2,236,886       2,385,469       2,716,234       24,648  
    


 


 


 


Total liabilities

     25,533,339       27,967,278       30,737,082       278,921  
    


 


 


 


Commitments and contingencies (See Note 3)

                                

Shareholders’ equity:

                                

Common stock
Authorized - 6,000,000,000 shares
Issued - 1,965,919,860 shares at September 30, 2003, March 31, 2004, and September 30, 2004

     182,800       182,800       182,800       1,659  
    


 


 


 


Additional paid-in capital

     153,491       154,063       154,938       1,406  
    


 


 


 


Retained earnings

     1,479,150       1,550,231       1,574,865       14,291  
    


 


 


 


Accumulated other comprehensive (loss) income

                                

Minimum pension liability adjustment

     (39,735 )     (34,221 )     (32,869 )     (298 )

Cumulative translation adjustments

     (37,588 )     (34,380 )     (16,451 )     (150 )
    


 


 


 


       (77,323 )     (68,601 )     (49,320 )     (448 )
    


 


 


 


       1,738,118       1,818,493       1,863,283       16,908  

Less-Common stock held in treasury, at cost - 24,137,689 shares, 24,263,831 shares, and 24,498,637 shares at September 30, 2003, March 31, 2004 and September 30, 2004, respectively

     (32,570 )     (32,805 )     (33,495 )     (304 )
    


 


 


 


Total shareholders’ equity

     1,705,548       1,785,688       1,829,788       16,604  
    


 


 


 


Total liabilities and shareholders’ equity

   ¥ 27,238,887     ¥ 29,752,966     ¥ 32,566,870     $ 295,525  
    


 


 


 


 

8


Table of Contents

NOMURA HOLDINGS, INC.

CONSOLIDATED INFORMATION OF CASH FLOWS

(UNAUDITED)

 

     Millions of yen

   

Translation

into

millions of

U.S. dollars


   

Millions of

Yen


 
     For the six months ended

   

For the Year

ended

March 31, 2004


 
     September 30, 2003

    September 30, 2004

    September 30, 2004

   

Cash flows from operating activities:

                                

Net income

   ¥ 86,686     ¥ 44,048     $ 400     ¥ 172,329  

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

                                

Depreciation and amortization

     16,752       18,273       166       33,706  

(Gain) loss on investments in equity securities

     (31,769 )     1,353       12       (55,888 )

Deferred income tax expense (benefit)

     7,054       (3,667 )     (33 )     1,913  

Changes in operating assets and liabilities :

                                

Time deposits

     102,670       (16,613 )     (151 )     174,331  

Deposits with stock exchanges and other segregated cash

     (25,858 )     8,250       75       (7,485 )

Trading assets and private equity investments

     (2,774,195 )     (1,349,960 )     (12,250 )     (4,808,112 )

Trading liabilities

     3,200,188       552,076       5,010       2,152,243  

Securities purchased under agreements to resell, net of securities sold under agreements to repurchase

     1,286,407       102,164       927       1,297,514  

Securities borrowed, net of securities loaned

     (1,827,488 )     585,938       5,317       (1,576,454 )

Other secured borrowings

     137,720       (19,876 )     (181 )     1,747,519  

Loans and receivables, net of allowance

     (281,936 )     22,994       209       135,821  

Payables and deposits received

     127,899       (213,293 )     (1,936 )     592,779  

Accrued income taxes, net

     53,650       (74,732 )     (678 )     80,273  

Other, net

     29,243       (24,264 )     (220 )     (18,864 )
    


 


 


 


Net cash provided by (used in) operating activities

     107,023       (367,309 )     (3,333 )     (78,375 )
    


 


 


 


Cash flows from investing activities:

                                

Payments for purchases of office buildings, land, equipment and facilities

     (15,610 )     (17,546 )     (159 )     (39,303 )

Proceeds from sales of office buildings, land, equipment and facilities

     921       616       6       1,341  

Payments for purchases of investments in equity securities

     (19 )     (78 )     (1 )     (61 )

Proceeds from sales of investments in equity securities

     19,407       6,992       63       24,309  

Decrease (increase) in non-trading debt securities, net

     68,633       (12,029 )     (109 )     61,705  

Decrease (increase) in other investments and other assets, net

     21,944       (36,324 )     (330 )     (2,520 )
    


 


 


 


Net cash provided by (used in) investing activities

     95,276       (58,369 )     (530 )     45,471  
    


 


 


 


Cash flows from financing activities:

                                

Increase in long-term borrowings

     354,375       379,876       3,447       712,675  

Decrease in long-term borrowings

     (350,624 )     (124,435 )     (1,129 )     (551,897 )

(Decrease) increase in short-term borrowings, net

     (3,700 )     (16,798 )     (152 )     76,982  

Proceeds from sales of common stock

     7,995       65       0       8,027  

Payments for repurchases of common stock

     (3,824 )     (170 )     (2 )     (4,084 )

Payments for cash dividends

     (29,117 )     (14,568 )     (132 )     (43,686 )
    


 


 


 


Net cash (used in) provided by financing activities

     (24,895 )     223,970       2,032       198,017  
    


 


 


 


Effect of exchange rate changes on cash and cash equivalents

     (14,483 )     13,934       127       (18,978 )
    


 


 


 


Net increase (decrease) in cash and cash equivalents

     162,921       (187,774 )     (1,704 )     146,135  

Cash and cash equivalents at beginning of the period

     491,237       637,372       5,784       491,237  
    


 


 


 


Cash and cash equivalents at end of the period

   ¥ 654,158     ¥ 449,598     $ 4,080     ¥ 637,372  
    


 


 


 


 

9


Table of Contents

NOMURA HOLDINGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION

(UNAUDITED)

 

1. Summary of Accounting policies:

 

Description of business—

 

Nomura Holdings, Inc. (the “Company”) and its broker-dealer, banking and other financial services subsidiaries provide investment, financing and related services to individual, institutional and government customers on a global basis. The Company and other entities in which it has a controlling financial interest are collectively referred to as “Nomura.”

 

Basis of presentation—

 

The consolidated financial information includes the accounts of the Company and other entities in which it has a controlling financial interest. Because the usual condition for a controlling financial interest in an entity is ownership of a majority of the voting interest, the Company consolidates its wholly-owned and majority-owned subsidiaries. In accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”) and the revised Interpretation, the Company also consolidates any variable interest entities for which Nomura is the primary beneficiary. Investments in entities in which Nomura has significant influence over operating and financial decisions (generally defined as 20 to 50 percent of voting interest) are accounted for using the equity method of accounting and are reported in Investments in and advances to affiliated companies. Investments in which Nomura has neither control nor significant influence are carried at fair value.

 

The accounting and financial reporting policies of the Company conform to accounting principles generally accepted in the United States (“U.S. GAAP”) as applicable to broker-dealers.

 

The Company’s principal subsidiaries include Nomura Securities Co., Ltd., Nomura Securities International, Inc. and Nomura International plc.

 

All material intercompany transactions and balances have been eliminated in consolidation.

 

Certain reclassifications of previously reported amounts have been made to conform to the current year presentation (see also Reclassifications of previously reported amounts, described below).

 

Reclassifications of previously reported amounts—

 

Consolidated information of cash flows: Effective with the second quarter ended September 30, 2004, changes in Other secured borrowings which previously included in Cash flows from financing activities are included in Cash flows from operating activities. Such amounts previously reported have been reclassified to conform to the current year presentation.

 

Use of estimates—

 

In presenting the consolidated financial information, management makes estimates regarding certain financial instrument and investment valuations, the outcome of litigation, the recovery of the carrying value of goodwill, the allowance for loan losses, the realization of deferred tax assets and other matters that affect the reported amounts of assets and liabilities as well as the disclosure in the financial statements. Estimates, by their nature, are based on judgment and available information. Therefore, actual results may differ from estimates, which could have a material impact on the consolidated financial statements and, it is possible that such adjustments could occur in the near term.

 

10


Table of Contents

Fair value of financial instruments—

 

Fair value of financial instruments is based on quoted market prices, broker or dealer quotations or an estimation by management of the amounts expected to be realized upon settlement under current market conditions. Fair value of exchange-traded securities and certain exchange-traded derivative contracts are generally based on quoted market prices or broker/dealer quotations. Where quoted market prices or broker/dealer quotations are not available, prices for similar instruments or valuation pricing models are considered in the determination of fair value. Valuation pricing models consider time value, volatility and other statistical measurements for the relevant instruments or for instruments with similar characteristics. These models also incorporate adjustments relating to the administrative costs of servicing future cash flow and market liquidity adjustments. These adjustments are fundamental components of the fair value calculation process.

 

Trading assets and trading liabilities, including derivative contracts, are recorded at fair value, and unrealized gains and losses are reflected in trading revenues. Fair values are based on quoted market prices or broker/dealer quotations where possible. If quoted market prices or broker/dealer quotations are not available or if the liquidation of Nomura’s positions would reasonably be expected to impact quoted market prices, fair value is determined based on valuation pricing models that take into consideration time value and volatility factors underlying the financial instrument.

 

Valuation pricing models and their underlying assumptions impact the amount and timing of unrealized gains and losses recognized, and the use of different valuation pricing models or underlying assumptions could produce different financial results. Changes in the fixed income, equity, foreign exchange and commodity markets will impact Nomura’s estimates of fair value in the future, potentially affecting trading revenues. To the extent financial contracts have extended maturity dates, Nomura’s estimates of fair value may involve greater subjectivity due to the lack of transparent market data available upon which to base underlying modeling assumptions.

 

Private equity investments—

 

Private equity investments primarily are carried at fair value. Corresponding changes in the fair value of these investments are included in Gain (loss) on private equity investments. The determination of fair value is significant to Nomura’s financial condition and results of operations and requires management to make judgments based on complex factors. As the underlying investments generally are in non-publicly listed companies, there are no externally quoted market prices available. In estimating fair value, Nomura estimates the price that would be obtained between a willing buyer and a willing seller dealing at arm’s length. Valuations are typically based on projected future cash flows to be generated from the underlying investment, discounted at a weighted average cost of capital. The cost of capital is estimated, where possible, by reference to quoted comparables with a similar risk profile. Cash flows are derived from bottom up, detailed projections prepared by management of each respective investment.

 

Transfers of financial assets—

 

Nomura accounts for the transfer of financial assets in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” (SFAS 140). This statement requires that Nomura account for the transfer of a financial asset, as a sale when Nomura relinquishes control over the asset. SFAS 140 deems control to be relinquished when the following conditions are met: (a) the assets have been isolated from the transferor (even in bankruptcy or other receivership), (b) the transferee has the right to pledge or exchange the assets received and (c) the transferor has not maintained effective control over the transferred assets.

 

In connection with its securitization activities, Nomura utilizes special purpose entities, or SPEs to securitize commercial and residential mortgage loans, government and corporate bonds and other types of financial assets. Nomura’s involvement with SPEs includes structuring SPEs and acting as an administrator of SPEs and underwriting, distributing and selling debt instruments and beneficial interests issued by SPEs to investors. Nomura derecognizes financial assets transferred in securitizations provided that Nomura has relinquished control over such assets. Nomura may obtain an interest in the financial assets, including residual interests in the SPEs subject to prevailing market conditions. Any such interests are accounted for at fair value and included in Securities inventory within Nomura’s consolidated balance sheets, with the change in fair value included in revenues.

 

11


Table of Contents

Foreign currency translation—

 

The financial statements of the Company’s subsidiaries outside Japan are measured using their functional currency. All assets and liabilities of foreign subsidiaries are translated into Japanese yen at exchange rates in effect at the balance sheet date; all revenue and expenses are translated at the average exchange rates for the respective years and the resulting translation adjustments are accumulated and reported as Cumulative translation adjustments in shareholders’ equity.

 

Foreign currency assets and liabilities are translated at exchange rates in effect at the balance sheet date and the resulting translation gains or losses are currently credited or charged to income.

 

Fee revenue—

 

Commissions charged for executing brokerage transactions are accrued on a trade date basis and are included in current period earnings. Fees from investment banking include securities underwriting fees and other corporate financing services fees. Underwriting fees are recorded when services for underwriting are completed. All other fees are recognized when related services are performed. Asset management fees are accrued as earned.

 

Trading assets and trading liabilities—

 

Trading assets and trading liabilities, including contractual commitments arising pursuant to derivative transactions, are recorded on the consolidated balance sheets on a trade date basis at fair value with the related gains and losses recorded in Net gain on trading in the consolidated income statements.

 

Collateralized agreements and collateralized financing—

 

Repurchase and reverse repurchase transactions (“Repo transactions”) principally involve the buying or selling of Government and Government agency securities under agreements with customers to resell or repurchase these securities to or from those customers. Nomura takes possession of securities purchased under agreements to resell while providing collateral to counterparties to collateralize securities sold under agreements to repurchase. Nomura monitors the value of the underlying securities on a daily basis relative to the related receivables and payables, including accrued interest, and requests or returns additional collateral when deemed appropriate. Repo transactions are accounted for as collateralized securities financing transactions and are recorded on the consolidated balance sheets at the amount at which the securities will be repurchased or resold, as appropriate.

 

Repo transactions are presented on the accompanying consolidated balance sheets net-by-counterparty, where net presentation is consistent with Financial Accounting Standards Board Interpretation (“FIN”) No. 41, “Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase Agreements.”

 

Securities borrowed and securities loaned are accounted for as financing transactions. Securities borrowed and securities loaned that are cash collateralized are recorded on the accompanying consolidated balance sheets at the amount of cash collateral advanced or received. Securities borrowed transactions generally require Nomura to provide the counterparty with collateral in the form of cash or other securities. For securities loaned transactions, Nomura generally receives collateral in the form of cash or other securities. Nomura monitors the market value of the securities borrowed or loaned and requires additional cash or securities, as necessary, to ensure that such transactions are adequately collateralized.

 

Historically, Nomura engaged in Gensaki transactions which originated in the Japanese financial markets. Gensaki transactions involved the selling of commercial paper, certificates of deposit, Japanese government bonds and various other debt securities to an institution wishing to make a short-term investment, with Nomura agreeing to reacquire them from the institution on a specified date at a specified price. The repurchase price reflects the current interest rates in the money markets and any interest derived from the securities. There are no margin requirements for Gensaki transactions nor is there any right of security substitution. As such, Gensaki transactions are recorded as sales in the consolidated financial statements and the related securities and obligations to repurchase such Gensaki securities are not reflected in the accompanying consolidated balance sheets.

 

12


Table of Contents

New Gensaki transactions (“Gensaki Repo transactions”) started in the Japanese financial markets in 2001. Gensaki Repo transactions contain margin requirements, rights of security substitution, or restrictions on the customer’s right to sell or repledge the transferred securities. Accordingly, Gensaki Repo transactions are accounted for as collateralized financing transactions and are recorded on the consolidated balance sheets at the amount that the securities will be repurchased or resold, as repurchase and reverse repurchase transactions.

 

Other secured borrowings, which consist primarily of secured borrowings from financial institutions in the inter-bank money market, are recorded at contractual amounts.

 

Secured loans to financial institutions in the inter-bank money market are included in the consolidated balance sheets in Loans receivable.

 

On the consolidated balance sheet, all Nomura-owned securities pledged to counterparties where the counterparty has the right to sell or repledge the securities, including Gensaki Repo transactions, are shown as Securities pledged as collateral in accordance with SFAS 140.

 

Derivatives—

 

Trading

 

Nomura uses a variety of derivative financial instruments, including futures, forwards, swaps and options, in its trading activities and in the management of its interest rate, market price and currency exposures.

 

Those derivative financial instruments used in trading activities are valued at market or estimated fair value with the related gains and losses recorded in Net gain on trading. Unrealized gains and losses arising from Nomura’s dealings in over-the-counter derivative financial instruments are presented in the accompanying consolidated balance sheets on a net-by-counterparty basis where net presentation is consistent with FIN No. 39, “Offsetting of Amounts Related to Certain Contracts.”

 

Non-trading

 

In addition to its trading activities, Nomura, as an end user, uses derivative financial instruments to manage its interest rate and currency exposures or to modify the interest rate characteristics of certain non-trading assets and liabilities.

 

These derivative financial instruments are linked to specific assets or specific liabilities and are designated as hedges as they are effective in reducing the risk associated with the exposure being hedged, and they are highly correlated with changes in the market or fair value of the underlying hedged item, both at inception and throughout the life of the hedge contract. Nomura applies fair value hedge accounting to these hedging transactions, and the relating unrealized profit and losses are recognized together with those of the hedged assets and liabilities as interest revenue or expenses.

 

Derivatives that do not meet these criteria are carried at market or fair value and with changes in value included currently in earnings.

 

Allowance for loan losses—

 

Loans receivable consist primarily of margin transaction loans related to broker dealers (“margin transaction loans”), loans receivable in connection with banking/financing activities (“banking/financing activities loans”) and loans receivable from financial institutions in the inter-bank money market used for short-term financing (“inter-bank money market loans”).

 

Allowances for loan losses on margin transactions loans and inter-bank money market loans are provided for based primarily on historical loss experience.

 

Allowances for loan losses on banking/financing activities loans reflect management’s best estimate of probable losses. The evaluation includes an assessment of the ability of borrowers to pay by considering various factors such as changes in the nature of the loan, volume of the loan, deterioration of pledged collateral, delinquencies and the current financial situation of the borrower.

 

13


Table of Contents

Office buildings, land, equipment and facilities—

 

Office buildings, land, equipment and facilities, which consist mainly of computer installations and software, are stated at cost, net of accumulated depreciation and amortization, except for land, which is stated at cost. Significant renewals and additions are capitalized at cost. Maintenance, repairs and minor renewals are charged currently to income.

 

Depreciation is generally computed by the declining-balance method and at rates based on estimated useful lives of each asset according to general class, type of construction and use. Amortization is generally computed by the straight-line method over the estimated useful lives.

 

Long-lived assets—

 

In August 2001, the FASB released SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 provides guidance on the financial accounting and reporting for the impairment or disposal of long-lived assets.

 

As required by SFAS No. 144, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the estimated future undiscounted cash flow is less than the carrying amount of the assets, a loss would be recognized to the extent the carrying value exceeded its fair value.

 

Investments in equity securities and non-trading debt securities—

 

Nomura’s investments in equity securities consist of marketable and non-marketable equity securities that have been acquired for Nomura’s operating purposes and other than operating purposes. For Nomura’s operating purposes, Nomura holds such investments for the long-term in order to promote existing and potential business relationships. In doing so, Nomura is following customary business practices in Japan which, through cross-shareholdings, provide a way for companies to manage their shareholder relationships. Such investments consist mainly of equity securities of various financial institutions such as Japanese commercial banks, regional banks and insurance companies. Nomura also holds equity securities such as stock exchange memberships for other than operating purposes. In accordance with U.S. GAAP for broker-dealers, investments in equity securities for Nomura’s operating purposes and other than operating purposes are recorded at fair value and unrealized gains and losses are recognized currently in income.

 

Investments in equity securities for Nomura’s operating purposes are recorded as Investments in equity securities in the consolidated balance sheets, and investments in equity securities for other than operating purposes are included in the consolidated balance sheets in Other assets—Other.

 

Non-trading debt securities are recorded at market or fair value together with the related hedges and the related gains and losses are recorded in Revenue—Other in the consolidated income statements.

 

Income taxes—

 

In accordance with SFAS No. 109, “Accounting for Income Taxes,” deferred tax assets and liabilities are recorded for the expected future tax consequences of tax loss carryforwards and temporary differences between the carrying amounts and the tax bases of the assets and liabilities based upon enacted tax laws and rates. Nomura recognizes deferred tax assets to the extent it believes that it is more likely than not that a benefit will be realized. A valuation allowance is provided for tax benefits available to Nomura that are not deemed more likely than not to be realized.

 

Stock-based compensation—

 

Effective April 1, 2002, Nomura adopted the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” and applied the modified prospective method under the provisions of SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure”. SFAS No. 123 requires that compensation cost for all stock awards be calculated and recognized over the service period, generally equal to the vesting period. The compensation cost is determined using option pricing models intended to estimate the fair value of the awards at the grant date.

 

14


Table of Contents

Earnings per share—

 

In accordance with SFAS No. 128, “Earnings per Share,” the computation of basic earnings per share is based on the average number of shares outstanding during the year. Diluted earnings per share reflect the potential dilutive effect of warrants and stock acquisition rights.

 

Cash and cash equivalents—

 

For purposes of reporting cash flows, cash and cash equivalents include cash on hand and demand deposits with banks.

 

Goodwill, intangible assets and negative goodwill—

 

In June 2001, the FASB issued SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 no longer permits the amortization of goodwill and intangible assets with indefinite lives. Instead these assets must be reviewed annually, or more frequently in certain circumstance, for impairment. Intangible assets that have determinable lives will continue to be amortized over their useful lives and reviewed for impairment.

 

Goodwill is recognized as the excess of acquisition cost over the fair value of net assets acquired. Goodwill, upon adoption of SFAS No. 142, is not amortized. Nomura periodically assesses the recoverability of goodwill by comparing the fair value of the businesses to which goodwill relates to the carrying amount of the businesses including goodwill. If such assessment indicates that the fair value is less than the related carrying amount, a goodwill impairment determination is made.

 

New Accounting Pronouncements—

 

In June 2004, the Emerging Issue Task Force (“EITF”) reached a consensus on EITF Issue 02-14 (“EITF 02-14”), “Whether the Equity Method of Accounting Applies When an Investor Does Not Have an Investment in Voting Stock of an Investee but Exercises Significant Influence through Other Means.” The consensus reached indicates that in situations where an investor has the ability to exercise significant influence over the investee, an investor should apply the equity method of accounting only when it has either common stock or “in-substance” common stock of a corporation. The consensus would be effective for reporting periods beginning after September 15, 2004. Nomura is currently assessing the potential impact of EITF 02-14 on the consolidated financial statements.

 

In July 2004, EITF reached a consensus on EITF Issue No. 04-8 (“EITF 04-8”), “The Effect of Contingently Convertible Debt on Diluted Earnings per Share.” The consensus reached indicates that contingently convertible debt instruments (“Co-Cos”) should be included in diluted earnings per share computations regardless of whether the market price trigger or other contingent features have been met. This will be effective for reporting periods ending after December 15, 2004 and will require restatement of prior period earnings per share amounts. Nomura currently does not have Co-Cos outstanding.

 

2. U.S. dollar amounts:

 

The U.S. dollar amounts are included solely for the convenience of the reader and have been translated at the rate of ¥110.20 = US$1, the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York on September 30, 2004. This translation should not be construed to imply that the yen amounts actually represent, or have been or could be converted into, equivalent amounts in U.S. dollars.

 

15


Table of Contents
3. Credit and investment commitments and guarantees:

 

Commitments–

 

In connection with its banking/financing activities, Nomura has provided to counterparties through subsidiaries, commitments to extend credit, which generally have a fixed expiration date. In connection with its investment banking activities, Nomura has entered into agreements with customers under which Nomura has committed to underwrite notes that may be issued by the customers. The outstanding commitments under these agreements are included in commitments to extend credit.

 

Nomura has commitments to invest in various partnerships, primarily in connection with its merchant banking activities, and also has commitments to provide financing for investments related to these partnerships. The outstanding commitments under these agreements are included in commitments to invest in partnerships.

 

Contractual amounts of these commitments were as follows:

 

     Millions of yen

  

Translation into
millions of

U.S. dollars


   Millions of yen

     September 30,
2004


   September 30,
2004


   March 31,
2004


Commitments to extend credit and to invest in partnerships

   ¥ 153,158    $ 1,390    ¥ 160,089

 

Guarantees–

 

Nomura enters into, in the normal course of its subsidiaries’ banking/financing activities, various guarantee arrangements with counterparties in the form of standby letters of credit and other guarantees, which generally have a fixed expiration date. In addition, Nomura enters into certain derivative contracts that meet the accounting definition of a guarantee under FIN No. 45. Contractual amounts of these guarantees, other than derivative contracts, for which the fair values are recorded on the consolidated balance sheets at fair value, were as follows:

 

     Millions of yen

  

Translation into
millions of

U.S. dollars


   Millions of yen

     September 30,
2004


   September 30,
2004


  

March 31,

2004


Standby letters of credit and other guarantees

   ¥ 7,280    $ 66    ¥ 29,424

 

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Table of Contents
4. Private equity investments:

 

Nomura operates a private equity business through a wholly owned subsidiary, Nomura Principal Finance Co., Ltd. (“NPF”). As of September 30, 2004, NPF has agreements to acquire new shares to be issued in Millenium Retailing, Inc. (“MR”), a significant private equity investee. NPF acquired ¥20 billion of new shares issued by MR in July 2004, and will acquire an additional ¥30 billion around the end of January 2005, giving NPF a majority stake.

 

5. Change in additional paid-in capital and retained earnings:

 

     Millions of yen

   

Translation into
millions of

U.S. dollars


    Millions of yen

 
     For the six months ended

    For the year ended

 
     September 30,
2003


    September 30,
2004


    September 30,
2004


   

March 31,

2004


 

Additional paid-in capital

                                

Balance at beginning of period

   ¥ 151,328     ¥ 154,063     $ 1,398     ¥ 151,328  

Gain on sales of treasury stock

     1,800       10       0       1,807  

Issuance of common stock options

     363       865       8       928  
    


 


 


 


Balance at end of period

   ¥ 153,491     ¥ 154,938     $ 1,406     ¥ 154,063  
    


 


 


 


Retained earnings

                                

Balance at beginning of period

   ¥ 1,407,028     ¥ 1,550,231     $ 14,067     ¥ 1,407,028  

Net income

     86,686       44,048       400       172,329  

Dividends

     (14,564 )     (19,414 )     (176 )     (29,126 )
    


 


 


 


Balance at end of period

   ¥ 1,479,150     ¥ 1,574,865     $ 14,291     ¥ 1,550,231  
    


 


 


 


 

6. Comprehensive income:

 

     Millions of yen

  

Translation into

millions of

U.S. dollars


   Millions of yen

 
     For the six months ended

   For the year ended

 
     September 30,
2003


    September 30,
2004


  

September 30,

2004


  

March 31,

2004


 

Net income

   ¥ 86,686     ¥ 44,048    $ 400    ¥ 172,329  
    


 

  

  


Other comprehensive (loss) income, net of tax:

                              

Change in cumulative translation adjustments

     (15,259 )     17,929      163      (12,051 )

Minimum pension liability adjustment during the period

     1,823       1,352      12      7,337  
    


 

  

  


Total other comprehensive (loss) income, net of tax

     (13,436 )     19,281      175      (4,714 )
    


 

  

  


Comprehensive income

   ¥ 73,250     ¥ 63,329    $ 575    ¥ 167,615  
    


 

  

  


 

17


Table of Contents
7. Segment Information-Operating segment:

 

Business segments’ results are shown in the following table:

 

     Millions of yen

 
    

Domestic

Retail


  

Global

Wholesale


   

Asset

Management


   

Other

(Inc. elimination)


    Total

 

Six months ended September 30, 2003

                                       

Non-interest revenue

   ¥ 149,787    ¥ 163,829     ¥ 15,231     ¥ (10,637 )   ¥ 318,210  

Net interest revenue

     775      45,279       1,071       12,151       59,276  
    

  


 


 


 


Net revenue

     150,562      209,108       16,302       1,514       377,486  

Non-interest expenses

     111,117      113,756       18,709       7,375       250,957  
    

  


 


 


 


Income (loss) before income taxes

   ¥ 39,445    ¥ 95,352     ¥ (2,407 )   ¥ (5,861 )   ¥ 126,529  
    

  


 


 


 


Six months ended September 30, 2004

                                       

Non-interest revenue

   ¥ 150,401    ¥ 108,610     ¥ 19,888     ¥ 11,739     ¥ 290,638  

Net interest revenue

     1,330      44,305       779       3,226       49,640  
    

  


 


 


 


Net revenue

     151,731      152,915       20,667       14,965       340,278  

Non-interest expenses

     108,214      110,262       17,704       14,942       251,122  
    

  


 


 


 


Income (loss) before income taxes

   ¥ 43,517    ¥ 42,653     ¥ 2,963     ¥ 23     ¥ 89,156  
    

  


 


 


 


     Change (%)

 

Income (loss) before income taxes

                                       

Six months ended September 30, 2004 vs. 2003

     10.3      (55.3 )     —         —         (29.5 )
    

  


 


 


 


     Translation into millions of U.S. dollars

 

Six months ended September 30, 2004

                                       

Non-interest revenue

   $ 1,365    $ 986     $ 180     $ 107     $ 2,638  

Net interest revenue

     12      402       7       29       450  
    

  


 


 


 


Net revenue

     1,377      1,388       187       136       3,088  

Non-interest expenses

     982      1,001       160       136       2,279  
    

  


 


 


 


Income (loss) before income taxes

   $ 395    $ 387     $ 27     $ 0     $ 809  
    

  


 


 


 


     Millions of yen

 

Year ended March 31, 2004

                                       

Non-interest revenue

   ¥ 304,035    ¥ 290,845     ¥ 34,300     ¥ (83 )   ¥ 629,097  

Net interest revenue

     1,722      74,891       1,657       22,156       100,426  
    

  


 


 


 


Net revenue

     305,757      365,736       35,957       22,073       729,523  

Non-interest expenses

     226,213      227,227       37,004       13,574       504,018  
    

  


 


 


 


Income (loss) before income taxes

   ¥ 79,544    ¥ 138,509     ¥ (1,047 )   ¥ 8,499     ¥ 225,505  
    

  


 


 


 


 

18


Table of Contents

Transactions between operating segments are recorded within segment results on commercial terms and conditions and are eliminated in the “Other” column.

 

The following table presents the major components of income/ (loss) before income taxes in “Other”

 

     Millions of yen

   

Translation into
millions of

U.S. dollars


    Millions of yen

 
     For the six months ended

    For the year ended

 
     September 30,
2003


    September 30,
2004


    September 30,
2004


   

March 31,

2004


 

Loss on undesignated hedging instruments included in Net gain on trading

   ¥ (11,680 )   ¥ (7,669 )   $ (70 )   ¥ (12,544 )

(Loss) gain on investment securities

     (556 )     5,589       51       1,590  

Equity in income of affiliates

     2,394       2,933       27       8,514  

Corporate items

     (8,461 )     (1,860 )     (17 )     (10,666 )

Others

     12,442       1,030       9       21,605  
    


 


 


 


Total

   ¥ (5,861 )   ¥ 23     $ 0     ¥ 8,499  
    


 


 


 


 

The table below presents a reconciliation of the combined segment information included in the table on the previous page to reported net revenue and income before income taxes in the consolidated income statement information.

 

     Millions of yen

   

Translation into
millions of

U.S. dollars


    Millions of yen

     For the six months ended

    For the year ended

     September 30,
2003


    September 30,
2004


    September 30,
2004


   

March 31,

2004


Net revenue

   ¥ 377,486     ¥ 340,278     $ 3,088     ¥ 729,523

Unrealized gain (loss) on investments in equity securities held for relationship purposes

     33,039       (5,557 )     (50 )     54,729

Effect of consolidation/deconsolidation of certain private equity investee companies

     4,249       36,048       327       18,851
    


 


 


 

Consolidated net revenue

   ¥ 414,774     ¥ 370,769     $ 3,365     ¥ 803,103
    


 


 


 

Income before income taxes

   ¥ 126,529     ¥ 89,156     $ 809     ¥ 225,505

Unrealized gain (loss) on investments in equity securities held for relationship purposes

     33,039       (5,557 )     (50 )     54,729

Effect of consolidation/deconsolidation of certain private equity investee companies

     (317 )     5,074       46       2,442
    


 


 


 

Consolidated income before income taxes

   ¥ 159,251     ¥ 88,673     $ 805     ¥ 282,676
    


 


 


 

 

8. Other:

 

Other notes to the consolidated financial information will be disclosed when those are available.

 

19


Table of Contents

NOMURA HOLDINGS, INC.

SUPPLEMENTARY INFORMATION

(UNAUDITED)

 

“Commissions/fees received” and “Net gain on trading” consist of the following:

 

Commissions/fees received

 

     Millions of yen

   % Change

  

Translation into
millions of

U.S. dollars


   Millions of yen

     For the six months ended

   For the year ended

     September 30,
2003 (A)


   September 30,
2004 (B)


   (B-A)/(A)

   September 30,
2004


  

March 31,

2004


Commissions

   ¥ 89,719    ¥ 115,118    28.3    $ 1,045    ¥ 210,216
    

  

  
  

  

Brokerage Commissions

     64,258      84,169    31.0      764      149,667

Commissions for Distribution of Investment Trust

     15,341      19,457    26.8      177      37,345

Fees from Investment Banking

     34,358      47,773    39.0      434      86,994
    

  

  
  

  

Underwriting and Distribution

     27,865      37,004    32.8      336      71,091

M&A / Financial Advisory Fees

     6,424      10,752    67.4      98      15,772

Asset Management and Portfolio Service Fees

     30,757      38,030    23.6      345      66,193
    

  

  
  

  

Asset Management Fees

     25,759      32,569    26.4      296      56,268

Total

   ¥ 154,834    ¥ 200,921    29.8    $ 1,824    ¥ 363,403
    

  

  
  

  

 

Net gain on trading

 

     Millions of yen

   % Change

   

Translation into

millions of

U.S. dollars


   Millions of yen

     For the six months ended

   For the year ended

     September 30,
2003 (A)


   September 30,
2004 (B)


   (B-A)/(A)

    September 30,
2004


  

March 31,

2004


Merchant Banking

   ¥ 1,155    ¥ 3,247    181.1     $ 29    ¥ 1,548

Equity Trading

     52,866      28,324    (46.4 )     257      75,232

Fixed Income and Other Trading

     93,508      45,069    (51.8 )     409      152,262
    

  

  

 

  

Total

   ¥ 147,529    ¥ 76,640    (48.1 )   $ 695    ¥ 229,042
    

  

  

 

  

 

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Table of Contents

NOMURA HOLDINGS, INC.

CONSOLIDATED INCOME STATEMENT INFORMATION

(UNAUDITED)

 

     Millions of yen

 
     For the three months ended

 
     June 30,
2003


    September 30,
2003


   December 31,
2003


    March 31,
2004


    June 30,
2004


   September 30,
2004


 

Revenue:

                                              

Commissions

   ¥ 33,752     ¥ 55,967    ¥ 57,590     ¥ 62,907     ¥ 69,533    ¥ 45,585  

Fees from investment banking

     14,498       19,860      24,408       28,228       15,434      32,339  

Asset management and portfolio service fees

     13,735       17,022      16,792       18,644       18,185      19,845  

Net gain on trading

     80,432       67,097      33,800       47,713       53,567      23,073  

(Loss) gain on private equity investments

     (669 )     7,267      (2,105 )     8,645       498      (2,097 )

Interest and dividends

     113,844       104,036      78,333       100,657       99,192      119,848  

Gain (loss) on investments in equity securities

     16,168       15,601      2,788       21,331       10,271      (11,624 )

Other

     8,030       6,738      5,845       20,592       25,916      20,605  
    


 

  


 


 

  


Total revenue

     279,790       293,588      217,451       308,717       292,596      247,574  

Interest expense

     79,703       78,901      67,220       70,619       78,668      90,733  
    


 

  


 


 

  


Net revenue

     200,087       214,687      150,231       238,098       213,928      156,841  
    


 

  


 


 

  


Non-interest expenses:

                                              

Compensation and benefits

     65,903       67,686      61,823       63,924       65,943      64,206  

Commissions and floor brokerage

     4,904       4,625      3,482       6,158       6,409      6,502  

Information processing and communications

     18,890       19,520      19,155       22,466       19,281      20,136  

Occupancy and related depreciation

     13,319       13,506      12,929       14,467       13,274      12,986  

Business development expenses

     4,983       5,428      5,495       7,194       5,429      7,767  

Other

     20,788       15,971      17,416       30,395       31,126      29,037  
    


 

  


 


 

  


       128,787       126,736      120,300       144,604       141,462      140,634  
    


 

  


 


 

  


Income before income taxes

     71,300       87,951      29,931       93,494       72,466      16,207  
    


 

  


 


 

  


Income tax expense (benefit):

                                              

Current

     27,093       38,418      15,265       27,658       26,001      22,291  

Deferred

     5,159       1,895      (1,065 )     (4,076 )     5,633      (9,300 )
    


 

  


 


 

  


       32,252       40,313      14,200       23,582       31,634      12,991  
    


 

  


 


 

  


Net income

   ¥ 39,048     ¥ 47,638    ¥ 15,731     ¥ 69,912     ¥ 40,832    ¥ 3,216  
    


 

  


 


 

  


     Yen

 

Per share of common stock:

                                              

Basic-

                                              

Net income

   ¥ 20.14     ¥ 24.58    ¥ 8.10     ¥ 36.01     ¥ 21.03    ¥ 1.66  
    


 

  


 


 

  


Diluted-

                                              

Net income

   ¥ 20.14     ¥ 24.58    ¥ 8.10     ¥ 36.01     ¥ 21.03    ¥ 1.66  
    


 

  


 


 

  


 

21


Table of Contents

Organizational Structure

 

The following table lists Nomura Holdings, Inc. and its significant subsidiaries and affiliates.

 

Nomura Holdings, Inc.

 

Domestic Subsidiaries

 

Nomura Securities Co., Ltd.

Nomura Asset Management Co., Ltd.

The Nomura Trust & Banking Co., Ltd.

Nomura Babcock & Brown Co., Ltd.

Nomura Capital Investment Co., Ltd.

Nomura Investor Relations Co., Ltd.

Nomura Principal Finance Co., Ltd.

Nomura Funds Research and Technologies Co., Ltd.

Nomura Pension Support & Service Co., Ltd.

Nomura Research & Advisory Co., Ltd.

Nomura Business Services Co., Ltd.

Nomura Satellite Communications Co., Ltd.

Nomura Facilities, Inc.

Nomura Institute of Capital Markets Research

 

Overseas Subsidiaries

 

Nomura Holding America Inc.

Nomura Securities International, Inc.

Nomura Corporate Research and Asset Management Inc.

Nomura Asset Capital Corporation

The Capital Company of America, LLC

Nomura Derivative Products, Inc.

Nomura Global Financial Products, Inc.

Nomura Securities (Bermuda) Ltd.

 

Nomura Europe Holdings plc

Nomura International plc

Nomura Bank International plc

Banque Nomura France

Nomura Bank (Luxembourg) S.A.

Nomura Bank (Deutschland) GmbH

Nomura Bank (Switzerland) Ltd.

Nomura Italia S.I.M. p.A.

 

Nomura Funding Facility Corporation Limited

Nomura Global Funding plc

Nomura Europe Finance N.V.

Nomura Principal Investment plc

 

Nomura Asia Holding N.V.

Nomura Investment Banking (Middle East) E.C.

Nomura International (Hong Kong) Limited

Nomura Singapore Limited

Nomura Advisory Services (Malaysia) Sdn. Bhd.

Nomura Australia Limited

 

PT Nomura Indonesia

 

Affiliates

 

Nomura Research Institute, Ltd.

JAFCO Co., Ltd.

Nomura Land and Building Co., Ltd.

Capital Nomura Securities Public Company Limited

 

22


Table of Contents

Corporate Goals and Principles

 

Management Policy and Structure of Business Operations

 

The vision of the Nomura Group (the “Company”) is to strengthen its position as a “globally competitive Japanese financial services group.” The Company will seek to realize this vision by continuing to strengthen its core securities and securities related businesses, and by building a solid, diversified business portfolio.

 

The Company believes its core securities business offers growth potential. The Company intends to expand its customer base through its competitive strengths in product distribution and proactive efforts to broaden participation in the securities markets.

 

The Company intends to maintain an average consolidated return on equity of 10 to 15% over the medium- to long-term.

 

The Company has an integrated global approach to managing its business. Nomura Group’s business segments include Domestic Retail, Global Wholesale and Asset Management. Within Global Wholesale there are three businesses: Global Markets, Investment Banking, and Merchant Banking. Global Markets includes Fixed Income and Equity.

 

The Company delegates appropriate executive authority to each of the respective business lines. The Company’s competitive position is enhanced by the professional skills of personnel within each of these business lines and an the Company’s integrated approach to delivering the Nomura Group’s comprehensive capabilities to the market.

 

Dividend Policy

 

When determining the amount of any cash dividend, the Company will first consider the maintenance of capital sufficient to capture business opportunities as they may develop. The Company will then decide the target dividend amounts, taking into account the firm’s dividend-on-equity ratio (DOE). Lastly, when the Company achieves a sufficient level of profit, it will decide the amount of the cash dividend taking into consideration the pay-out ratio. As for retained profits, the Company intends to invest in business areas where high profitability and growth may reasonably be expected, including development and expansion of infrastructure, to maximize value for shareholders.

 

Reduction of the Size of Trading Units

 

At the Board of Directors meeting held on October 28, 2004, it was decided to change the trading unit of the Company’s stock from 1,000 shares to 100 shares. Plans call for this change to be implemented on January 4, 2005.

 

Current Challenges

 

Japan’s economy and securities markets are recovering steadily, due to the fact that the real economic growth rate has increased in five consecutive quarters ended June 30, 2004. Trading volumes remain at a high level in the First Section of the Tokyo Stock Exchange. There seems to be progress in the reconstruction of the economy through resolution of the nonperforming loan problem. In this enviroment, the Company will actively build a solid business foundation by enhancing the capacities of new product development and origination, demonstrating the importance of risk diversification to market participants, and making effective use of its global business lines.

 

With regards to Domestic Retail, the Company will strengthen expanding its capabilities with a focus on meeting customer needs and expanding its customer base. The Company seeks to expand its distribution channels with the recent changes in regulations. In addition, the Company will continue its efforts to broaden individual investors’ participation in the securities markets by supporting capital market lectures at colleges and universities and investor education programs in local communities.

 

Regarding Global Wholesale, as the financial results of Japanese companies gradually recover, the number of companies seeking the Company’s services is on the rise. In order to respond to these companies, the Company will flexibly provide high value-added solutions such as M&A business solutions for corporate reoraganization and equity financing for investment in plant and equipment. The Group will also enhance capacities of product distribution and trading activities through promoting a globalization strategy and try to establish new business area.

 

23


Table of Contents

With regards to Asset Management, the Company continues to enhance performance by offering value-added management services that address customer needs. The Company’s goal is increase assets under management by developing innovative products and providing prompt service that is valued by customers. In addition, the Company continues to enhance marketing functions for various types of sales channels. The Company is also focused on devloping its defined contribution pension plan business.

 

The Nomura Group is committed to coping with the changes in society and the market, strengthening its base in an expanding securities business, and to increasing the Group’s corporate value.

 

Basic concept of corporate governance, and the status of its implementation

 

(Basic concept of corporate governance)

 

The Company in conjunction with the domestic companies of the Nomura Group has adopted the Committee System since June 2003.

 

Under the Committee System, management oversight functions are separated from business operation functions and many of the powers to execute business activities are delegated to executive officers. The Company can make quicker management decisions on a consolidated basis. Under this corporate governance structure, the Company has maintained three committees: a Nomination Committee, an Audit Committee and a Compensation Committee, each of which has a majority of outside directors, aimed at strengthening management oversight and further improving transparency.

 

The Company has adopted procedures under which the Audit Committee shall discuss and approve proposals by the Chief Financial Officer regarding fees for the Company’s independent accountant and the type of services to be provided.

 

(The status of corporate governance policy implementation)

 

1) The status of corporate governance regarding management decision-making, implementation and oversight, etc. in administrative organization

 

(1) The Committee System or the Statutory Auditor System

 

As described above, the Company has adopted the Committee System since June 2003.

 

(2) Appointment of outside directors

 

Board of Directors of the Company is comprised of eleven directors including four outside directors as defined under the Commercial Code of Japan.

 

(3) Overview of the committees

 

(i) Nomination Committee

 

The Nomination Committee is authorized to determine the particulars of proposals concerning the election and dismissal of directors to be submitted to a general meeting of shareholders. This committee’s current members are Junichi Ujiie (Chairman of the Board), Masaharu Shibata (outside director) and Hideaki Kubori (outside director). Junichi Ujiie is the Chairman of this committee.

 

(ii) Audit Committee

 

The Audit Committee is authorized to audit the execution by directors and executive officers of their duties and determine the particulars of proposals concerning the election and dismissal of the independent auditor to be submitted to a general meeting of shareholders. This committee’s current members are Haruo Tsuji (outside director), Koji Tajika (outside director) and Fumihide Nomura (non-executive director). Haruo Tsuji is the Chairman of this committee. All of the members are independent under the standards set forth in the Sarbanes-Oxley Act and Koji Tajika satisfies the requirements of “audit committee financial expert” under the Sarbanes-Oxley Act.

 

(iii) Compensation Committee

 

The Compensation Committee is authorized to determine the particulars of the compensation for each director and executive officer. This committee’s current members are Junichi Ujiie (Chairman of the Board), Masaharu Shibata (outside director) and Hideaki Kubori (outside director). Junichi Ujiie is the Chairman of this committee.

 

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Table of Contents

(4) Allocation of full-time staff for the outside directors

 

Secretariat and Office of Audit Committee assist directors, including the outside directors, in execution of their operations.

 

(5) Framework for operational execution

 

Thirty-one executive officers determine the matters delegated by resolutions of the Board of Directors and execute the business of the Company. Important matters of those delegated to executive officers are determined by the Board of Executive Officers or the Executive Management Board, each of which comprises the executive officers. The Board of Executive Officers composed of all thirty-one executive officers is authorized to determine the annual business plan and budget and the allocation of the management resources of the Nomura Group. The Executive Management Board consisting of ten executive officers including all representative executive officers is authorized to determine important matters concerning the management of the Nomura Group.

 

(6) Internal control and procedures

 

The Audit Committee is composed entirely of non-executive part-time directors and has central responsibilities for management audit functions. In order to facilitate audit functions, the following measures have been undertaken:

 

  1. Two non-executive but full-time directors (Audit Mission Directors) who are familiar with the business and organization of the Nomura Group, are assigned by the Board of Directors. They thus supplement the audit conducted by the Audit Committee, maintain the merits of the previous statutory audit system. The duty of an Audit Mission Director is to conduct operational supervision including daily inspections and investigations, such as attending important committee meetings.

 

  2. The Nomura Group has established an Internal Audit Division that is independent from other business and business support lines. The Head of Internal Audit supervises internal audit operations of the Company and its subsidiaries. The Internal Audit Division is directed by the Internal Controls Committee, members of which include a director belonging to the Audit Committee and an Audit Mission Director. Further, internal audit results are reported not only to the executive management but also to the Audit Committee and Audit Mission Directors.

 

(7) Attorneys, accountants and other third parties

 

Outside attorneys provide, as necessary, advice in regard to important matters related to operations, finance, compliance and others. Ernst & Young Shin Nihon (member firm in Japan of Ernst Young), the Company’s independent accountant, makes substantive recommendations, as appropriate, on internal control and procedures over financial reporting in relation to audits of the Company’s financial statements.

 

2) Summary of personal, capital, dealing and other conflicts of interest between the Company and its outside directors.

 

None.

 

3) Implementation to expand company corporate governance in the recent year

 

The Company provides a forum for its outside directors where they discuss its corporate governance practices or procedures. Such forum was held three times this year. The Chairman of the Board of Directors participated in two of the three forums.

 

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Table of Contents

Unconsolidated Financial Information of Major Consolidated Entities

(UNAUDITED)

 

The unconsolidated financial information, prepared under Japanese GAAP, is presented for the following entities;

 

  Nomura Holdings, Inc. Financial Information (Parent Company Only)

 

  Nomura Securities Co., Ltd. Financial Information

 


* The amounts presented for September 30, 2004 are rounded whereas the amounts for March 31, 2004 and September 30, 2003 are truncated.

 

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Table of Contents

Financial Summary For the Six Months Ended September 30, 2004

(Unconsolidated)

 

Date:   October 28, 2004
Company name (code number):   Nomura Holdings, Inc. (8604)
    URL (http://www.nomura.com/)
Head office:   1-9-1, Nihonbashi, Chuo-ku, Tokyo 103-8011, Japan
Stock exchange listings:   (In Japan) Tokyo, Osaka, Nagoya
    (Overseas) New York, Amsterdam, Singapore
Representative:   Nobuyuki Koga
    President and Chief Executive Officer, Nomura Holdings, Inc.
For inquiries:   Shinji Iwai
    Managing Director, Investor Relations Department,
    Nomura Group Headquarters, Nomura Securities Co., Ltd.
    Tel: (Country Code 81) 3-3211-1811
Number of shares in unit share system:   1,000 shares
Date of interim dividend payment:   December 1, 2004

 

(1) Operating Results

 

(Million yen except percentages)

 

    

Operating

Revenue


  (Comparison)

    Operating
Income


  (Comparison)

    Ordinary
Income


  (Comparison)

 

Six Months Ended September 30, 2004

   214,995   (222.4 )%*3   169,952   (724.8 )%*3   171,105   (686.6 )%*3

Six Months Ended September 30, 2003

   66,694         20,605         21,751      
    
       
       
     

Year Ended March 31, 2004

   135,341         39,446         39,448      
    
       
       
     

 

     Net
Profit


  (Comparison)

    Net Profit
per share (Yen)


Six Months Ended September 30, 2004

   171,055   (790.5 )%*3   88.06

Six Months Ended September 30, 2003

   19,207         9.90
    
       

Year Ended March 31, 2004

   33,374         17.19
    
       

Notes:   1. Average number of shares issued and outstanding during   Six months ended September 30, 2004:   1,942,378,559
        Six months ended September 30, 2003:   1,939,507,639
        The year ended March 31, 2004:   1,940,871,819
    2. Change in accounting method: None        
    3. Comparison shows increase from the six months ended September 30, 2003.

 

(2) Dividend

 

     Dividend Per Share

     Interim

   Annual

     Yen    Yen

Six months ended:

         

September 30, 2004

   10.00    —  

September 30, 2003

   7.50    —  
    
  

Year ended March 31, 2004

   —      15.00
    
  

 

(3) Financial Position

 

(in millions of yen except per share data and percentages)

 

     Total Assets

   Shareholders’ Equity

   Shareholders’ Equity/
Total Liabilities and
Shareholders’ Equity (%)


  

Shareholders’
Equity

Per Share (Yen)


September 30, 2004

   2,969,025    1,519,731    51.2    782.42

September 30, 2003

   2,321,921    1,355,565    58.4    697.83
    
  
  
  

March 31, 2004

   2,469,719    1,367,005    55.4    703.76
    
  
  
  

1. Number of shares issued and outstanding at   September 30, 2004:   1,942,348,200    
    September 30, 2003:   1,942,537,572    
    March 31, 2004:   1,942,411,447    
2. Number of treasury stock issued and outstanding at   September 30, 2004:   23,571,660    
    September 30, 2003:   23,382,288    
    March 31, 2004:   23,508,413    

 

27


Table of Contents

Nomura Holdings, Inc.

 

Unconsolidated Balance Sheet Information

 

(Unaudited)

 

28


Table of Contents

Nomura Holdings, Inc.

 

Unconsolidated Balance Sheet Information

 

(Millions of yen)

 

    

September 30,

2004


   

March 31,

2004


   

Increase/

(Decrease)


   

September 30,

2003


 
ASSETS                         

Current Assets

   1,110,293     792,874     317,418     842,903  
    

 

 

 

Cash and time deposits

   5,992     1,973     4,018     4,815  

Short-term loans receivable

   1,058,260     708,516     349,744     772,846  

Deferred tax assets

   2,991     1,957     1,033     8,924  

Other current assets

   43,051     80,428     (37,377 )   56,320  

Allowance for doubtful accounts

   (2 )   (1 )   (0 )   (3 )

Fixed Assets

   1,858,732     1,676,844     181,886     1,479,018  
    

 

 

 

Tangible fixed assets

   39,120     40,512     (1,392 )   40,739  

Intangible assets

   64,559     68,861     (4,303 )   66,545  

Investments and others

   1,755,053     1,567,470     187,582     1,371,732  

Investment securities

   164,282     170,928     (6,646 )   144,724  

Investments in subsidiaries and affiliates (at cost)

   1,166,514     1,106,513     60,000     1,107,838  

Long-term loans receivable

   306,712     173,178     133,534     31  

Long-term guarantee deposits

   51,505     51,718     (213 )   54,145  

Deferred tax assets

   40,889     41,313     (424 )   45,372  

Other investments

   25,184     23,852     1,331     19,655  

Allowance for doubtful accounts

   (34 )   (34 )   0     (34 )
    

 

 

 

TOTAL ASSETS

   2,969,025     2,469,719     499,305     2,321,921  
    

 

 

 

LIABILITIES                         

Current liabilities

   766,904     469,835     297,068     445,827  
    

 

 

 

Short-term borrowings

   691,000     276,000     415,000     202,000  

Bond with maturity of less than one year

   —       2,631     (2,631 )   2,631  

Payables to customers and others

   63,553     107,838     (44,285 )   189,792  

Accrued income taxes

   1     63,304     (63,304 )   32,090  

Other current liabilities

   12,351     20,061     (7,710 )   19,313  

Long-term liabilities

   682,390     632,878     49,511     520,528  
    

 

 

 

Bonds payable

   240,000     190,000     50,000     120,000  

Long-term borrowings

   439,500     439,500     —       399,500  

Other long-term liabilities

   2,890     3,378     (488 )   1,028  
    

 

 

 

TOTAL LIABILITIES

   1,449,294     1,102,713     346,580     966,356  
    

 

 

 

SHAREHOLDERS’ EQUITY                         

Common stock

   182,800     182,799     —       182,799  

Capital reserves

   114,322     114,311     10     114,303  

Additional paid-in capital

   112,504     112,504     —       112,504  

Other capital reserves

   1,817     1,807     10     1,799  

Earned surplus

   1,211,795     1,055,308     156,486     1,055,710  

Earned surplus reserve

   81,858     81,858     —       81,858  

Voluntary reserve

   950,033     950,038     (5 )   950,038  

Unappropriated retained earnings

   179,904     23,412     156,491     23,814  

Net unrealized gain on investments

   42,203     45,859     (3,655 )   33,788  

Treasury stock

   (31,389 )   (31,273 )   (115 )   (31,037 )
    

 

 

 

TOTAL SHAREHOLDERS’ EQUITY

   1,519,731     1,367,005     152,725     1,355,565  
    

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

   2,969,025     2,469,719     499,305     2,321,921  
    

 

 

 

 

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Nomura Holdings, Inc.

 

Unconsolidated Income Statement Information

 

(Unaudited)

 

(Millions of yen)

 

     Six Months Ended
September 30, 2004 (A)


   Six Months Ended
September 30, 2003 (B)


    Comparison
(A-B)/(B)


   

Fiscal Year Ended

March 31, 2004


                %      

Operating revenue

   214,995    66,694     222.4     135,341
    
  

 

 

Property and equipment fee revenue

   26,934    29,456     (8.6 )   63,006

Rent revenue

   14,657    14,793     (0.9 )   29,971

Royalty on trademark

   7,737    2,926     164.4     6,998

Dividend from subsidiaries and affiliates

   162,153    16,420     887.5     29,533

Others

   3,513    3,097     13.4     5,831

Operating expenses

   45,043    46,089     (2.3 )   95,895
    
  

 

 

Compensation and benefits

   586    332     76.2     1,650

Rental and maintenance

   15,173    15,956     (4.9 )   34,302

Data processing and office supplies

   9,731    10,352     (6.0 )   20,567

Depreciation and amortization

   13,904    12,999     7.0     26,480

Others

   3,087    4,274     (27.8 )   8,417

Interest expenses

   2,562    2,174     17.8     4,476
    
  

 

 

Operating income

   169,952    20,605     724.8     39,446
    
  

 

 

Non-operating income

   1,863    1,285     44.9     2,644

Non-operating expenses

   710    139     409.0     2,642
    
  

 

 

Ordinary income

   171,105    21,751     686.6     39,448
    
  

 

 

Special profits

   5,693    3,033     87.7     5,773

Special losses

   1,554    3,187     (51.3 )   5,067
    
  

 

 

Profit before income taxes

   175,244    21,597     711.4     40,155
    
  

 

 

Income taxes - current

   2,257    (848 )   —       1,859
    
  

 

 

Income taxes - deferred

   1,932    3,238     (40.4 )   4,920
    
  

 

 

Net profit

   171,055    19,207     790.5     33,374
    
  

 

 

Unappropriated retained earnings brought forward

   8,849    4,606     92.1     4,606
    
  

 

 

Interim dividend

   —      —       —       14,569
    
  

 

 

Unappropriated retained earnings

   179,904    23,814     655.4     23,412
    
  

 

 

 

30


Table of Contents

Notes to Financial Information

 

The financial information for the six months ended September 30, 2004 were prepared under Japanese GAAP in accordance with “Regulations Concerning the Terminology, Forms and Preparation Methods of Semi-Annual Financial Statements” (Ministry of Finance Ordinance No. 38, 1977).

 

Significant Accounting Policies

 

1. Basis and Methods of Valuation for Financial Instruments

 

(1)    Other securities

    
    

    a. Securities with market value

   Recorded at market value.
          The difference between the cost using the moving average method or amortized cost and market value less deferred taxes is recorded as “Net unrealized gain on investments” in “shareholders’ equity” on the balance sheet.
    

    b. Securities with no market value

   Recorded at cost using the moving average method or amortized cost.

(2) Stocks of subsidiaries and affiliates

   Recorded at cost using the moving average method.

 

2. Depreciation and Amortization

 

  (1) Depreciation of tangible fixed assets

 

Tangible fixed assets are depreciated primarily on the declining balance method. However buildings (except leasehold improvements) acquired after March 31, 1998 are depreciated on the straight-line method.

 

  (2) Amortization of intangible assets, investments and others

 

Intangible assets, investments and others are amortized over their estimated useful lives primarily on the straight-line method.

 

3. Provisions

 

To provide for bad loans, the Company made provisions for doubtful accounts based on an estimate of the uncollectible amount calculated using historical loss ratios or a reasonable estimate based on financial condition of individual borrowers.

 

4. Translation of Accounts Denominated in Foreign Currencies

 

Financial assets and liabilities denominated in foreign currencies are translated into Japanese yen using exchange rates as of the balance sheet date. Gains and losses resulting from translation are reflected in the statement of income.

 

5. Leasing Transactions

 

Financing leases other than those for which the ownership of the leased property are deemed as transfers to the lessee are accounted for primarily as ordinary rental transactions.

 

6. Hedging Activities

 

Mark-to-market profits and losses on hedging instruments are deferred as assets or liabilities until the profits or losses on the underlying hedged securities are realized. Certain eligible foreign currencies denominated monetary items are translated at forward exchange rates and the difference is depreciated over the remaining period.

 

7. Accounting for Consumption Taxes

 

Consumption taxes are accounted for based on the tax exclusion method.

 

8. Application of Consolidated Tax Return System

 

The Company applies the consolidated tax return system.

 

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Table of Contents

Notes to Unconsolidated Balance Sheet Information

 

1. Financial Guarantees

 

               (Millions of yen )
     September 30, 2004

   March 31, 2004

   September 30, 2003

 

Financial guarantees outstanding

   1,791,935    1,599,086    1,533,362  

 

* In accordance with Report No. 61 of the Audit Committee of the Japanese Institute of Certified Public Accountants, contracts which are financial guarantees in substance are included above.

 

2. Accumulated Depreciation on Tangible Fixed Assets

 

               (Millions of yen )
     September 30, 2004

   March 31, 2004

   September 30, 2003

 
     66,413    64,439    65,368  

 

3. Stocks of Subsidiaries and Affiliates with Market Values

 

               (Millions of yen )
     Book value

   Market Value

   Difference

 

Investments in affiliates

   45,785    81,504    35,718  

 

Notes to Unconsolidated Income Statement Information

 

1. “Property and equipment fee revenue” is revenue from the leasing of furniture and fixtures, and software to subsidiaries, including Nomura Securities Co., Ltd.

 

2. “Rent revenue” is revenue from the leasing of properties to subsidiaries, including Nomura Securities Co., Ltd.

 

3. “Royalty on trademark” is fee or patent revenue received on our trademark from Nomura Securities Co., Ltd.

 

4. “Others” (Operating revenue) includes fees from securities lending and interest received on loans from subsidiaries, including Nomura Securities Co., Ltd.

 

5. Special profits and losses consist of the following:

 

               (Millions of yen )
    

Six Months Ended

September 30, 2004


   Six Months Ended
September 30, 2003


   Year Ended
March 31, 2004


 

Special profits

                

Gain on sales of investment securities

   5,497    2,357    5,095  

Reversal of allowance for doubtful accounts

   0    675    678  

Gain on redemption of warrants

   195    —      —    

Special losses

                

Loss on sales of investment securities

   1    1,666    1,926  

Loss on devaluation of investment securities

   1,553    1,521    1,721  

Loss on devaluation of investments in affiliates

   —      —      1,419  

 

Notes on Other Information

 

Information on lease transactions will be disclosed on EDINET.

 

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Table of Contents

Financial Summary For the Six Months Ended September 30, 2004

 

Date:    October 28, 2004
Company name:    Nomura Securities Co., Ltd.
     (URL http://www.nomura.co.jp/)
Head office:    1-9-1, Nihonbashi, Chuo-ku, Tokyo 103-8011, Japan
Representative:    Nobuyuki Koga
     President, Nomura Securities Co., Ltd.
For inquiries:    Shinji Iwai
     Managing Director, Investor Relations Department,
     Nomura Group Headquarters, Nomura Securities Co., Ltd.
     Tel: (Country Code 81) 3-3211-1811

 

(1) Operating Results

 

(Millions of yen except percentages)

 

     Operating
Revenue


   (Comparison)

    Net
Operating
Revenue


   (Comparison)

    Operating
Income


   (Comparison)

 

Six Months Ended September 30, 2004

   291,531    (-9.1 )%*   259,684    (-12.7 )%*   94,953    (-30.3 )%*

Six Months Ended September 30, 2003

   320,797          297,377          136,192       
    
        
        
      

Year Ended March 31, 2004

   598,772          547,765          219,561       
    
        
        
      

 

     Ordinary
Income


   (Comparison)

    Net
Income


   (Comparison)

 

Six Months Ended September 30, 2004

   96,309    (-29.4 )%*   55,082    (-27.5 )%*

Six Months Ended September 30, 2003

   136,444          75,987       
    
        
      

Year Ended March 31, 2004

   219,410          122,063       
    
        
      

 

Note: Comparison shows increase/decrease from the six months ended September 30, 2003.

 

(2) Financial Position

 

(Millions of yen except percentages)

 

     Total Assets

   Shareholder’s Equity

   Shareholder’s Equity/
Total Liabilities and
Shareholder’s Equity (%)


  

Capital
Adequacy

Ratio (%)


September 30, 2004

   13,736,651    713,917    5.2    235.2

September 30, 2003

   14,397,082    708,329    4.9    240.0
    
  
  
  

March 31, 2004

   15,628,170    754,504    4.8    230.2
    
  
  
  

 

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Table of Contents

Nomura Securities Co., Ltd.

Unconsolidated Balance Sheet Information

(Unaudited)

(Millions of yen)

 

     September 30, 2004

    March 31, 2004

    Increase/(Decrease)

    September 30, 2003

 

ASSETS

                        

Current Assets

   13,674,242     15,559,847     (1,885,605 )   14,330,895  
    

 

 

 

Cash and time deposits

   208,525     300,111     (91,586 )   350,860  

Deposits with exchanges and other segregated cash

   760     760     —       760  

Trading assets:

   7,703,061     8,777,900     (1,074,838 )   7,295,683  

Trading securities

   7,431,551     7,851,049     (419,498 )   6,333,396  

Derivative contracts

   271,510     926,850     (655,340 )   962,286  

Net receivables arising from pre-settlement date trades

   —       —       —       399,965  

Margin account assets:

   245,831     301,425     (55,594 )   215,619  

Loans to customers in margin transactions

   192,996     149,113     43,881     100,465  

Cash collateral to securities finance companies

   52,836     152,311     (99,476 )   115,153  

Loans with securities as collateral:

   5,257,439     5,785,461     (528,022 )   5,855,731  

Cash collateral for securities borrowed

   4,626,015     5,051,538     (425,523 )   5,447,383  

Loans in gensaki transactions

   631,424     733,923     (102,499 )   408,348  

Receivables from customers and others

   1,684     2,720     (1,037 )   1,765  

Short-term guarantee deposits

   66,137     101,960     (35,823 )   63,227  

Short-term loans receivable

   133,516     189,889     (56,373 )   94,076  

Deferred tax assets

   20,385     26,235     (5,850 )   22,413  

Other current assets

   36,939     73,736     (36,797 )   30,916  

Allowance for doubtful accounts

   (36 )   (354 )   318     (124 )

Fixed Assets

   62,409     68,323     (5,913 )   66,187  
    

 

 

 

Tangible fixed assets

   816     159     656     174  

Intangible assets

   2,869     1,542     1,326     1,534  

Investments and others

   58,724     66,621     (7,896 )   64,477  

Investment securities

   195     45     150     45  

Deferred tax assets

   35,321     33,675     1,645     29,947  

Other investments

   23,964     33,634     (9,670 )   35,796  

Allowance for doubtful accounts

   (756 )   (733 )   (21 )   (1,311 )
    

 

 

 

TOTAL ASSETS

   13,736,651     15,628,170     (1,891,519 )   14,397,082  
    

 

 

 

 

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(Millions of yen)

 

     September 30, 2004

   March 31, 2004

   Increase/(Decrease)

    September 30, 2003

LIABILITIES

                    

Current Liabilities

   12,436,932    14,389,341    (1,952,408 )   13,246,920
    
  
  

 

Trading liabilities:

   3,000,431    4,462,680    (1,462,249 )   4,741,215

Trading securities

   2,853,760    3,549,976    (696,216 )   3,866,874

Derivative contracts

   146,670    912,703    (766,032 )   874,340

Net payables arising from pre-settlement date trades

   305,959    421,117    (115,158 )   —  

Margin account liabilities:

   29,218    29,153    64     21,627

Borrowings from securities finance companies

   8,041    7,317    724     3,318

Customer margin sale proceeds

   21,176    21,835    (659 )   18,309

Borrowings with securities as collateral:

   5,003,689    5,322,006    (318,318 )   6,098,266

Cash collateral for securities loaned

   2,689,735    3,229,044    (539,309 )   4,042,325

Borrowings in gensaki transactions

   2,313,954    2,092,962    220,991     2,055,941

Payables to customers and others

   184,373    184,998    (625 )   164,297

Guarantee deposits received

   73,016    171,613    (98,597 )   75,886

Short-term borrowings

   3,360,250    3,260,750    99,500     1,772,350

Commercial paper

   215,000    221,000    (6,000 )   251,000

Short-term bonds payable

   69,500    62,000    7,500     —  

Bond due within one year

   100,000    100,000    —       —  

Accrued income taxes

   11,627    24,620    (12,994 )   19,827

Other current liabilities

   83,872    129,401    (45,529 )   102,448

Long-term Liabilities

   584,301    483,066    101,234     441,207
    
  
  

 

Bonds payable

   258,200    258,200    —       358,200

Long-term borrowings

   260,000    160,000    100,000     10,000

Reserve for retirement benefits

   51,379    48,685    2,693     46,151

Other long-term liabilities

   14,723    16,180    (1,458 )   26,856

Statutory Reserves

   1,500    1,258    241     625
    
  
  

 

Reserve for securities transactions

   1,500    1,258    241     625
    
  
  

 

TOTAL LIABILITIES

   13,022,734    14,873,666    (1,850,932 )   13,688,753
    
  
  

 

SHAREHOLDER’S EQUITY

                    

Common stock

   10,000    10,000    —       10,000

Capital reserves

   529,579    529,578    —       529,479

Additional paid-in capital

   529,579    529,578    —       529,479

Earned surplus

   174,338    214,925    (40,587 )   168,850

Voluntary reserve

   63,000    63,000    —       63,000

Unappropriated retained earnings

   111,338    151,925    (40,587 )   105,850
    
  
  

 

TOTAL SHAREHOLDER’S EQUITY

   713,917    754,504    (40,587 )   708,329
    
  
  

 

TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY

   13,736,651    15,628,170    (1,891,519 )   14,397,082
    
  
  

 

 

 

35


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Nomura Securities Co., Ltd.

Unconsolidated Income Statement Information

(Unaudited)

 

(Millions of yen except percentages)

 

    

Six Months Ended

September 30, 2004 (A)


  

Six Months Ended

September 30, 2003 (B)


   Comparison
(A-B)/(B)(%)


   

Year Ended

March 31, 2004


 

Operating revenue

   291,531    320,797    (9.1 )   598,772  
    
  
  

 

Commissions

   154,745    117,058    32.2     279,936  

Net gain on trading

   98,284    171,133    (42.6 )   263,274  

Net gain on other inventories

   2    6    (75.8 )   11  

Interest and dividend income

   38,500    32,599    18.1     55,550  

Interest expenses

   31,848    23,419    36.0     51,007  
    
  
  

 

Net operating revenue

   259,684    297,377    (12.7 )   547,765  
    
  
  

 

Selling, general and administrative expenses

   164,730    161,185    2.2     328,203  
    
  
  

 

Transaction-related expenses

   33,100    26,736    23.8     57,982  

Compensation and benefits

   68,222    71,201    (4.2 )   139,116  

Rental and maintenance

   21,230    21,206    0.1     43,108  

Data processing and office supplies

   37,311    37,457    (0.4 )   78,939  

Others

   4,868    4,583    6.2     9,056  
    
  
  

 

Operating income

   94,953    136,192    (30.3 )   219,561  
    
  
  

 

Non-operating income

   2,035    920    121.2     1,470  

Non-operating expenses

   680    668    1.7     1,621  
    
  
  

 

Ordinary income

   96,309    136,444    (29.4 )   219,410  
    
  
  

 

Special profits

   293    327    (10.5 )   —    

Special losses

   1,087    —      —       407  
    
  
  

 

Income before income taxes

   95,515    136,771    (30.2 )   219,003  
    
  
  

 

Income taxes - current

   36,227    59,535    (39.1 )   103,241  
    
  
  

 

Income taxes - deferred

   4,206    1,248    236.8     (6,301 )
    
  
  

 

Net income

   55,082    75,987    (27.5 )   122,063  
    
  
  

 

Unappropriated retained earnings brought forward

   56,256    29,862    88.4     29,862  
    
  
  

 

Unappropriated retained earnings

   111,338    105,850    5.2     151,925  
    
  
  

 

 

36


Table of Contents

Notes to Financial Information

 

The financial information for the six months ended September 30, 2004 were prepared in accordance with the “Cabinet Office Ordinance Regarding Securities Companies” (Prime Minister’s Office Ordinance and the Ministry of Finance Ordinance, No. 32, 1998) and the “Uniform Accounting Standards of Securities Companies” (Japan Securities Dealers Association, 1974) based on “Regulations Concerning the Terminology, Forms and Preparation Methods of Semi-Annual Financial Statements” (Ministry of Finance Ordinance No. 38, 1977), collectively Japanese GAAP.

 

Significant Accounting Policies

 

1. Basis and Methods of Valuation for Financial Instruments

 

  (1) For trading purposes

 

Securities, derivative contracts, and other financial instruments classified as trading assets and liabilities are accounted for at fair value based on the mark-to-market method.

 

  (2) For non-trading purposes

 

Securities with no market price are recorded at cost using the moving average method.

 

2. Depreciation and Amortization

 

  (1) Depreciation of tangible fixed assets

 

Tangible fixed assets are depreciated primarily on the declining balance method. However buildings (except leasehold improvements) acquired after March 31, 1998 are depreciated on the straight-line method.

 

  (2) Amortization of intangible assets, investments and others

 

Intangible assets, investments and others are amortized primarily over their estimated useful lives on the straight-line method.

 

3. Provisions

 

  (1) Allowance for doubtful accounts

 

To provide for loan losses, Nomura Securities Co., Ltd. (Nomura Securities) made provisions for doubtful accounts based on an estimate of the uncollectible amount calculated using historical loss ratios or a reasonable estimate based on financial condition of individual borrowers.

 

  (2) Accrued bonuses

 

To provide for employee bonus payments, an estimated accrual is recorded in accordance with the prescribed calculation method.

 

  (3) Reserve for retirement benefits

 

To provide for the payment of lump-sum retirement benefits and funding of the qualified retirement pension plan in the future, the estimated future obligations less the estimated fair value of pension assets is recorded as a reserve for employee retirement benefits.

 

4. Translation of Accounts Denominated in Foreign Currencies

 

Financial assets and liabilities denominated in foreign currencies are translated into Japanese yen using exchange rates as of the balance sheet date. Gains and losses resulting from translation are reflected in the statement of income.

 

5. Leasing Transactions

 

Lease contracts for which the title of the leased property has not been transferred are accounted for as operating lease transactions.

 

37


Table of Contents
6. Hedging Activities

 

Mark-to-market profits and losses on hedging instruments are deferred as assets or liabilities until the profits or losses on the underlying hedged securities are realized.

 

7. Accounting for Consumption Taxes

 

Consumption taxes are accounted for based on the tax exclusion method.

 

8. Application of Consolidated Tax Return System

 

Nomura Securities applies the consolidated tax return system.

 

9. Netting Derivative Transactions

 

The amount of swap transactions with counterparties who have concluded a legally effective master netting agreement are presented on netted basis. The netted amount is 681,509 million Yen. Derivative transactions of both assets and liabilities have decreased by the same amount.

 

38


Table of Contents

Notes to Balance Sheet Information

 

1. Financial Guarantees

 

(Millions of yen)

 

     September 30, 2004

   March 31, 2004

   September 30, 2003

Financial guarantees outstanding

   1,216,508    1,033,386    971,259

* In accordance with Report No. 61 of the Audit Committee of the Japanese Institute of Certified Public Accountants, contracts which are financial guarantees in substance are included above.

 

2. Accumulated Depreciation on Tangible Fixed Assets

 

(Millions of yen)

 

     September 30, 2004

   March 31, 2004

   September 30, 2003

     399    360    342

 

3. Subordinated Borrowings, Bonds, and Notes

 

(Millions of yen)

 

     September 30, 2004

   March 31, 2004

   September 30, 2003

Short-term borrowings

   —      —      120,000

Long-term borrowings

   260,000    160,000    10,000

Bonds payable

   60,000    60,000    60,000

 

Notes to Income Statement Information

 

1. Breakdown of Special Profits

 

(Millions of yen)

 

     Six Months Ended
September 30, 2004


   Six Months Ended
September 30, 2003


  

Year Ended

March 31, 2004


Special profits

              

Reversal of reserve for securities transactions

   —      226    —  

Reversal of allowance for doubtful accounts

   293    101    —  

 

2. Breakdown of Special Losses

 

(Millions of yen)

 

     Six Months Ended
September 30, 2004


   Six Months Ended
September 30, 2003


  

Year Ended

March 31, 2004


Special losses

              

Loss on devaluation of fixed assets

   845    —      —  

Reserve for securities transactions

   241    —      407

 

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Table of Contents

NOMURA SECURITIES CO., LTD.

SUPPLEMENTARY INFORMATION

(UNAUDITED)

 

1. Commission Revenues

 

  (1) Breakdown by Category

 

(Millions of yen except percentages)

 

     Six Months Ended

   Comparison
(A-B)/(B)(%)


    Year Ended
March 31, 2004


     September 30,
2004 (A)


   September 30,
2003 (B)


    

Brokerage commissions

   72,880    55,431    31.5 %   129,377
    
  
  

 

(Stocks)

   67,755    50,114    35.2     118,033

Underwriting commissions

   21,980    14,215    54.6     41,300
    
  
  

 

(Stocks)

   19,508    11,961    63.1     36,752

(Bonds)

   2,472    2,253    9.7     4,547

Distribution commissions

   23,089    17,032    35.6     43,668
    
  
  

 

(Investment trust certificates)

   19,351    15,251    26.9     37,169

Other commissions

   36,796    30,379    21.1     65,589
    
  
  

 

(Investment trust certificates)

   14,544    11,209    29.8     24,202
    
  
  

 

Total

   154,745    117,058    32.2     279,936
    
  
  

 

 

  (2) Breakdown by Product

 

(Millions of yen except percentages)

 

     Six Months Ended

   Comparison
(A-B)/(B)(%)


    Year Ended
March 31, 2004


     September 30,
2004 (A)


   September 30,
2003 (B)


    

Stocks

   89,357    63,026    41.8 %   158,206

Bonds

   9,623    9,641    (0.2 )   21,401

Investment trust certificates

   38,540    31,146    23.7     71,636

Others

   17,226    13,244    30.1     28,691
    
  
  

 

Total

   154,745    117,058    32.2     279,936
    
  
  

 

 

2. Net Gain on Trading

 

(Millions of yen except percentages)

 

     Six Months Ended

   Comparison
(A-B)/(B)(%)


    Year Ended
March 31, 2004


     September 30,
2004 (A)


   September 30,
2003 (B)


    

Stocks

   32,641    49,967    (34.7 )%   80,757

Bonds and forex

   65,643    121,165    (45.8 )   182,517
    
  
  

 

Total

   98,284    171,133    (42.6 )   263,274
    
  
  

 

 

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Table of Contents

NOMURA SECURITIES CO., LTD.

SUPPLEMENTARY INFORMATION

(UNAUDITED)

 

3. Stock Trading (excluding futures transactions)

 

(Millions of shares or yen except per share data and percentages)

 

     Six Months Ended

                         
    

September 30,

2004 (A)


   

September 30,

2003 (B)


    Comparison
(A-B)/(B)(%)


   

Year Ended

March 31, 2004


 
     Number of
shares


    Amount

    Number of
shares


    Amount

    Number of
shares


    Amount

    Number of
shares


    Amount

 

Total

   30,902     30,048,771     31,109     24,471,100     (0.7 )%   22.8 %   62,667     52,236,699  
    

 

 

 

 

 

 

 

(Brokerage)

   21,707     19,988,347     20,854     14,956,155     4.1     33.6     44,469     33,801,841  

(Proprietary Trading)

   9,196     10,060,424     10,255     9,514,945     (10.3 )   5.7     18,198     18,434,857  
    

 

 

 

 

 

 

 

Brokerage / Total

   70.2 %   66.5 %   67.0 %   61.1 %               71.0 %   64.7 %

TSE Share

   6.5 %   7.0 %   6.7 %   7.2 %               6.7 %   7.1 %

Brokerage Commission per share (yen)

   3.10     2.37                 2.62  

 

4. Underwriting, Subscription, and Distribution

 

(Millions of shares or yen except percentages)

 

     Six Months Ended

  

Comparison

(A-B)/(B)(%)


   

Year Ended

March 31, 2004


    

September 30,

2004 (A)


  

September 30,

2003 (B)


    

Underwriting

                    

Stocks (number of shares)

   119    152    (22.0 )%   652

(yen amount)

   466,381    231,565    101.4     775,448

Bonds (face value)

   4,167,898    3,166,887    31.6     7,388,910

Investment trust certificates (yen amount)

   —      —      —       —  

Commercial paper and others (face value)

   283,600    260,100    9.0     504,200

Subscripition and Distribution*

                    

Stocks (number of shares)

   468    180    159.0     1,014

(yen amount)

   508,630    254,977    99.5     865,546

Bonds (face value)

   1,309,318    832,504    57.3     2,185,971

Investment trust certificates (yen amount)

   7,062,322    6,568,828    7.5     13,661,810

Commercial paper and others (face value)

   281,400    260,100    8.2     504,200

* Includes secondary offerings and private placements.

 

5. Capital Adequacy Ratio

 

(Millions of yen except percentages)

 

          September 30, 2004

    September 30, 2003

    March 31, 2004

 

Tier I (A)

   713,917     708,329     658,834  
         

 

 

Tier II

                  

Statutory reserves

   1,500     625     1,258  

Allowance for doubtful accounts

   35     124     354  

Subordinated debt

   319,800     190,000     219,400  
         

 

 

Total (B)

   321,335     190,749     221,013  
         

 

 

Illiquid Asset (C)

   200,853     92,243     82,343  
         

 

 

Net Capital (A) + (B) - (C) = (D)

   834,399     806,835     797,504  
         

 

 

Risk

                       

Market risk

   134,140     126,009     136,981  

Counterparty risk

   127,407     120,251     114,652  

Basic risk

   93,137     89,892     94,702  
         

 

 

Total (E)

   354,685     336,153     346,336  
         

 

 

Capital Adequacy Ratio (D)/(E)

   235.2 %   240.0 %   230.2 %
         

 

 

 

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Nomura Securities Co., Ltd. Quarterly Income Statement Information

 

(Millions of yen)

 

   

For the Quarter

from April 1, 2003

to June 30, 2003


 

For the Quarter

from July 1, 2003

to September 30, 2003


   

For the Quarter

from October 1, 2003

to December 31, 2003


   

For the Quarter

from January 1, 2004

to March 31, 2004


   

For the Quarter

from April 1, 2004

to June 30, 2004


 

For the Quarter

from July 1, 2004

to September 30, 2004


 

Operating revenue

  151,204   169,592     127,053     150,921     162,977   128,554  
   
 

 

 

 
 

Commissions

  42,204   74,854     77,550     85,326     82,401   72,344  

Net gain on trading

  91,926   79,207     37,774     54,367     62,286   35,999  

Net gain on other inventories

  3   2     2     2     1   1  

Interest and dividend income

  17,070   15,528     11,725     11,225     18,289   20,211  

Interest expenses

  14,467   8,952     16,748     10,839     21,057   10,791  
   
 

 

 

 
 

Net operating revenue

  136,736   160,640     110,305     140,082     141,920   117,763  
   
 

 

 

 
 

Selling, general and administrative expenses

  78,026   83,158     80,049     86,968     80,723   84,008  
   
 

 

 

 
 

Transaction-related
expenses

  11,626   15,109     14,196     17,048     15,084   18,015  

Compensation and benefits

  35,497   35,704     33,933     33,981     35,249   32,974  

Rental and
maintenance

  10,633   10,572     10,705     11,196     10,407   10,822  

Data processing and office supplies

  18,134   19,323     19,488     21,992     17,853   19,459  

Other

  2,134   2,448     1,724     2,748     2,130   2,738  
   
 

 

 

 
 

Operating income

  58,709   77,482     30,256     53,113     61,198   33,756  
   
 

 

 

 
 

Non-operating income

  482   438     262     287     1,647   389  

Non-operating expenses

  506   161     648     304     256   424  
   
 

 

 

 
 

Ordinary income

  58,685   77,758     29,870     53,096     62,588   33,721  
   
 

 

 

 
 

Special profits

  97   229     (242 )   (85 )   130   163  

Special losses

  153   (153 )   64     342     —     1,087  
   
 

 

 

 
 

Income before income taxes

  58,629   78,142     29,563     52,668     62,719   32,797  
   
 

 

 

 
 

Income taxes - current

  23,009   36,526     13,026     30,680     20,143   16,084  
   
 

 

 

 
 

Income taxes - deferred

  2,477   (1,228 )   (1,274 )   (6,275 )   7,537   (3,331 )
   
 

 

 

 
 

Net income

  33,142   42,844     17,812     28,263     35,039   20,043  
   
 

 

 

 
 

 

42


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LOGO

 

Tokyo, October 28, 2004

 

Notice of Change in the Number of Shares Constituting One Unit

 

Nomura Holdings, Inc. (the “Company”) announced today that its Board of Directors approved to change the number of shares constituting one unit of the Company’s stock.

 

1. Reason for change

 

The Company has decided to change the number of shares constituting one unit to make it convenient for more individual investors to trade the Company’s shares, further increase liquidity and expand the number of shareholders.

 

2. Contents of change

 

The number of shares constituting one unit will be changed from 1,000 to 100 shares.

 

3. Effective date

 

Tuesday, January 4, 2005

 

Note:

 

On January 4, 2005, the number of shares constituting one unit on the Tokyo Stock Exchange, Osaka Stock Exchange and Nagoya Stock Exchange will be changed from 1,000 to 100 shares.

 

________________________________________________                Ends                 ________________________________________________

 

For further information please contact:

 

Name


  

Company


   Telephone

Masafumi Yoshino

  

Corporate Communications Dept., Nomura Group Headquarters

   +81-3-3278-0591

Tsukasa Noda

  

Corporate Communications Dept., Nomura Group Headquarters

   +81-3-3278-0591

 

Notes to editors:

 

The Nomura Group

 

Nomura Group, with its core businesses of the securities and related businesses, is dedicated to providing a broad range of financial services for individual, institutional, corporate and government customers. We offer a diverse line of competitive products and value-added financial and advisory services through the 131 domestic branch offices of Nomura Securities Co., Ltd. and our overseas network that combines offices in 28 countries. Our business activities include investment consultation services for domestic retail investors, securities brokerage services, securities underwriting for domestic and foreign governments and corporations, mergers and acquisition and financial advisory services, merchant banking, and asset management for investment trusts and pension funds.


Table of Contents

LOGO

 

Tokyo, October 28, 2004

 

Nomura Announces Interim Dividend for Fiscal Year Ending March 31, 2005

 

Nomura Holdings, Inc. (the “Company”) announced today that the interim dividend per share payable to the Company’s recorded shareholders as of September 30, 2004, is as follows:

 

    

Fiscal Year Ending March 31, 2005


Interim Dividend    Japanese Yen (JPY) 10.00 per share (ordinary dividend)
Payment Date    December 1, 2004

 

Dividends for the fiscal year ended March 31, 2004, and target dividend amounts for the fiscal year ending March 31, 2005, are shown below for reference.

 

Fiscal Year ended

March 31, 2004

Dividend

   Interim Dividend

   Year-end Dividend

   Annual Dividend

   JPY7.50    JPY7.50    JPY15.00

 

Fiscal Year ending

March 31, 2005

Target Dividend

Amount

  

Interim Target

Dividend Amount


  

Year-end Target

Dividend Amount


  

Annual Target

Dividend Amount


   JPY10.00    JPY10.00    JPY20.00

 

Notes:-

(1) All dividends are ordinary dividends.
(2) The Company’s Board of Directors will determine the payment and the amount of the year-end dividend for the Fiscal Year ending March 31, 2005, at a meeting of the Board of Directors expected to be held in May 2005.

 

For further information please contact:

 

Name


  

Company


   Telephone

Masafumi Yoshino

  

Corporate Communications Dept., Nomura Group Headquarters

   +81-3-3278-0591

Tsukasa Noda

  

Corporate Communications Dept., Nomura Group Headquarters

   +81-3-3278-0591

 

Notes to editors:

 

The Nomura Group

 

Nomura Group, with its core businesses of the securities and related businesses, is dedicated to providing a broad range of financial services for individual, institutional, corporate and government customers. We offer a diverse line of competitive products and value-added financial and advisory services through the 131 domestic branch offices of Nomura Securities Co., Ltd. and our overseas network that combines offices in 28 countries. Our business activities include investment consultation services for domestic retail investors, securities brokerage services, securities underwriting for domestic and foreign governments and corporations, mergers and acquisition and financial advisory services, merchant banking, and asset management for investment trusts and pension funds.