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 November 2002.
Total number of pages: 36.
The exhibit index is located on page 2.
 
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-

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Information furnished on this form:
 
EXHIBITS
 
Exhibit Number
   
Page Number
  
4
  
36

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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:    November 27, 2002
      
By:
  
/s/    MASANORI ITATANI        
Masanori Itatani
Director
                 

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LOGO
 
November 26, 2002
 
Interim Report for the six months ended September 30, 2002
 
On November 26, 2002, Nomura Holdings, Inc. filed its Interim Report (“hanki-houkokusho”) for the six months ended September 30, 2002 with the Director of the Kanto Local Finance Bureau of the Ministry of Finance pursuant to the Securities and Exchange Law of Japan. We are pleased to report the following consolidated financial information prepared in accordance with U.S. GAAP, which is included in the Interim Report.
 
For further information, please contact:
Koichi Ikegami
General Manager
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
 
LOGO

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THE CONSOLIDATED FINANCIAL INFORMATION
 
1.
 
Pursuant to the section 81 of “Regulations Concerning the Terminology, Forms and Preparation Methods of Semi-Annual Consolidated Financial Statements” (Ministry of Finance Ordinance No. 24, 1999), the consolidated financial information for the six months ended September 30, 2002 has been prepared in accordance with the accounting principles which are required in order to issue American Depositary Shares (“ADS”), i.e., the accounting principles generally accepted in the United States of America (“U.S. GAAP”).
 
2.
 
The unaudited consolidated financial information for the six months ended September 30, 2001 in accordance with U.S. GAAP, is stated on the last half of the Interim Report solely for the convenience of comparability of the reader.
 
3.
 
A semi-annual audit of the consolidated financial information for the six months ended September 30, 2002 has been carried out by Shin Nihon & Co. in accordance with Semi-annual Audit Standards of Japan.

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THE CONSOLIDATED FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002
 
CONSOLIDATED BALANCE SHEET INFORMATION
 
    
Millions of yen
  
    
September 30, 2002
  
ASSETS
         
Cash and cash deposits:
         
Cash and cash equivalents
   
¥
159,694
 
Time deposits
   
 
416,930
 
Deposits with stock exchanges and other segregated cash
   
 
37,717
 
    
    
 
614,341
 
    
Loans and receivables:
         
Loans receivable from customers
   
 
234,006
 
Loans receivable from other than customers
   
 
275,685
 
Receivables from customers
   
 
173,539
 
Receivables from other than customers
   
 
273,977
 
Receivables under resale agreements and securities borrowed transactions
   
 
6,916,802
 
Securities pledged as collateral
   
 
3,667,215
 
Allowance for doubtful accounts
   
 
(18,812
)
    
    
 
11,522,412
 
    
Trading assets and private equity investments:
         
Securities inventory
   
 
4,794,443
 
Derivative contracts
   
 
417,724
 
Private equity investments
   
 
270,679
 
    
    
 
5,482,846
 
    
Other:
         
Office buildings, land, equipment and facilities (net of accumulated
depreciation and amortization of ¥176,274 million)
   
 
181,359
 
Lease deposits
   
 
77,842
 
Non-trading debt securities
   
 
402,479
 
Investments in equity securities
   
 
170,690
 
Investments in and advances to affiliated companies
   
 
263,892
 
Deferred tax assets
   
 
112,682
 
Other assets
   
 
135,073
 
    
    
 
1,344,017
 
    
Total assets
   
¥
18,963,616
 
    
 

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CONSOLIDATED BALANCE SHEET INFORMATION
 
   
Millions of yen
  
   
September 30, 2002
  
LIABILITIES AND SHAREHOLDERS’ EQUITY
        
Payables, borrowings and deposits:
        
Payables to customers
  
¥
263,265
 
Payables to other than customers
  
 
193,430
 
Payables under repurchase agreements and securities loaned transactions
  
 
9,728,958
 
Short-term borrowings
  
 
1,813,442
 
Time and other deposits received
  
 
196,611
 
   
   
 
12,195,706
 
   
Trading liabilities:
        
Securities sold but not yet purchased
  
 
2,538,738
 
Derivative contracts
  
 
360,001
 
   
   
 
2,898,739
 
   
Other liabilities:
        
Accrued income taxes
  
 
19,024
 
Accrued pension and severance costs
  
 
57,083
 
Other
  
 
236,213
 
   
   
 
312,320
 
   
Long-term borrowings
  
 
1,824,230
 
   
Total liabilities
  
 
17,230,995
 
   
Commitments and contingencies (See note 8.)
        
Shareholders’ equity:
        
Common stock
        
Authorized—6,000,000,000 shares
        
Issued—1,965,919,860 shares
  
 
182,800
 
Additional paid-in capital
  
 
151,066
 
Retained earnings
  
 
1,447,291
 
Accumulated other comprehensive income
        
Minimum pension liability adjustment
  
 
(23,900
)
Cumulative translation adjustments
  
 
(23,766
)
   
   
 
(47,666
)
   
   
 
1,733,491
 
Less—Common stock held in treasury, at cost—510,599 shares
  
 
(870)
 
   
Total shareholders’ equity
  
 
1,732,621
 
   
Total liabilities and shareholders’ equity
  
 
¥18,963,616
 
   

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CONSOLIDATED INCOME STATEMENT INFORMATION
 
   
Millions of yen
   
For the six months ended
September 30, 2002
Revenue:
    
Commissions
  
¥80,776
Fees from investment banking
  
33,913
Asset management and portfolio service fees
  
46,095
Net gain on trading
  
66,149
Interest and dividends
  
206,913
Loss on investments in equity securities
  
(10,419)
Loss on private equity investments
  
(2,892)
Other
  
9,718
   
Total revenue
  
430,253
Interest expense
  
146,838
   
Net revenue
  
283,415
   
Non-interest expenses:
    
Compensation and benefits
  
121,283
Commissions and floor brokerage
  
10,030
Information processing and communications
  
37,409
Occupancy and related depreciation
  
29,100
Business development expenses
  
13,677
Other
  
31,279
   
   
242,778
   
Income before income taxes
  
40,637
   
Income tax expense:
    
Current
  
13,844
Deferred
  
5,522
   
   
19,366
   
Income before cumulative effect of accounting change
  
21,271
Cumulative effect of accounting change
  
109,799
   
Net income
  
¥131,070
   
Per share of common stock:
    
   
Yen
Basic—
    
Income before cumulative effect of accounting change
  
¥10.82
Cumulative effect of accounting change
  
55.86
   
Net income
  
¥66.68
   
Diluted—
    
Income before cumulative effect of accounting change
  
¥10.82
Cumulative effect of accounting change
  
55.86
   
Net income
  
¥66.68
   

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CONSOLIDATED INFORMATION OF
STATEMENT OF SHAREHOLDERS’ EQUITY
 
    
Millions of yen
  
    
For the six months
ended
September 30, 2002
  
Common Stock
         
Balance at beginning of year
   
¥
182,800
 
    
Balance at end of period
   
¥
182,800
 
    
Additional paid-in capital
         
Balance at beginning of year
   
¥
150,979
 
Issuance stock options
   
 
87
 
    
Balance at end of period
   
¥
151,066
 
    
Retained earnings
         
Balance at beginning of year
   
¥
1,316,221
 
Net income
   
 
131,070
 
    
Balance at end of period
   
¥
1,447,291
 
    
Accumulated other comprehensive income
    Minimum pension liability adjustment
         
Balance at beginning of years
   
 
(¥24,972
)
Net change during the period
   
 
1,072
 
    
Balance at end of period
   
 
(¥23,900
)
    
Cumulative translation adjustments
         
Balance at beginning of year
   
 
(¥19,685
)
Net change during the period
   
 
(4,081
)
    
Balance at end of period
   
 
(¥23,766
)
    
Common stock held in treasury
         
Balance at beginning of year
   
 
(¥414
)
Net change in treasury stock
   
 
(456
)
    
Balance at end of period
   
 
(¥870
)
    
Number of shares issued
         
Balance at beginning of year
   
 
1,965,919,860
 
    
Balance at end of period
   
 
1,965,919,860
 
    

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CONSOLIDATED INFORMATION OF
STATEMENT OF COMPREHENSIVE INCOME
 
      
Millions of yen
  
      
For the six months
ended
September 30, 2002
  
Net income
     
¥
131,070
 
Other comprehensive (loss) income
           
Change in cumulative translation adjustments
     
 
(4,081
)
Minimum pension liability adjustment:
           
Minimum pension liability gain arising during the period
     
 
1,848
 
Deferred income taxes
     
 
(776
)
      
Total
     
 
1,072
 
      
Total other comprehensive loss
     
 
(3,009
)
      
Comprehensive income
     
¥
128,061
 
      

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CONSOLIDATED INFORMATION OF CASH FLOWS
 
      
Millions of yen
  
      
For the six months ended September 30, 2002
  
Cash flows from operating activities:
           
Net income
     
¥
131,070
 
Adjustments to reconcile net income to net cash used in operating activities:
           
Cumulative effect of accounting change
     
 
(109,799
)
Depreciation and amortization
     
 
14,920
 
Loss on investments in equity securities
     
 
10,419
 
Loss on private equity investments
     
 
2,892
 
Deferred income tax expense
     
 
5,522
 
Changes in operating assets and liabilities:
           
Time deposits
     
 
(35,009
)
Deposits with stock exchanges and other segregated cash
     
 
(1,880
)
Trading assets and private equity investments
     
 
(694,603
)
Trading liabilities
     
 
235,433
 
Receivables under resale agreements and securities borrowed transactions
     
 
(537,419
)
Payables under repurchase agreements and securities loaned transactions
     
 
1,872,243
 
Loans and other receivables, net of allowance
     
 
(638,909
)
Time and other deposits received and other payables
     
 
(591,554
)
Accrued income taxes
     
 
(18,923
)
Other, net
     
 
(40,758
)
      
Net cash used in operating activities
     
 
(396,355
)
      
Cash flows from investing activities:
           
Payments for purchases of office buildings, land, equipment and facilities
     
 
(20,756
)
Proceeds from sales of office buildings, land, equipment and facilities
     
 
285
 
Payments for purchases of investments in equity securities
     
 
(1,134
)
Proceeds from sales of investments in equity securities
     
 
20,079
 
Decrease in non-trading debt securities, net
     
 
23,033
 
Increase in other investments and other assets
     
 
(4,986
)
      
Net cash provided by investing activities
     
 
16,521
 
      
Cash flows from financing activities:
           
Increase in long-term borrowings
     
 
375,638
 
Decrease in long-term borrowings
     
 
(109,488
)
Increase in short-term borrowings, net
     
 
(43,815
)
Payments of cash dividends
     
 
(29,485
)
      
Net cash provided by financing activities
     
 
192,850
 
      
Effect of exchange rate changes on cash and cash equivalents
     
 
(9,957
)
      
Net decrease in cash and cash equivalents
     
 
(196,941
)
Cash and cash equivalents at beginning of the year
     
 
356,635
 
      
Cash and cash equivalents at end of period
     
¥
159,694
 
      
Supplemental information on cash flows:
           
Cash paid during the year for—
           
Interest
     
 
133,511
 
      
Income tax payments, net
     
 
32,767
 
      

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NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
 
1.    Basis of accounting procedures:
 
In December 2001, Nomura Holdings Inc. (the “Company”) filed a registration statement, in accordance with the Securities Exchange Act of 1934, with the United States Securities and Exchange Commission (“SEC”) in order to list its American Depositary Shares (“ADS”) on the New York Stock Exchange. Since then, the Company has an obligation to file an annual report, Form 20-F, with the SEC in accordance with Securities Exchange Act of 1934.
 
Pursuant to the section 81 of “Regulations Concerning the Terminology, Forms and Preparation Methods of Semi-Annual Consolidated Financial Statements” (Ministry of Finance Ordinance No. 24, 1999), the consolidated financial information for the six months ended September 30, 2002 has been prepared in accordance with the accounting principles which are required in order to issue ADS, i.e., the accounting principles generally accepted in the United States of America (“U.S. GAAP”). The following paragraphs describe the major differences between U.S. GAAP which Nomura adopts and accounting principles generally accepted in Japan (“Japanese GAAP”), and where the significant differences exist, the amount of effect to income before income taxes pursuant to Japanese GAAP.
 
Unrealized gains and losses on investments in equity securities
 
Under U.S. GAAP for broker-dealers, unrealized gains and losses on investments in equity securities are recognized in the income statements. Under Japanese GAAP, unrealized gains and losses on investments in equity securities, net of applicable income taxes, are reported in a separate component of shareholders’ equity. Therefore, under Japanese GAAP, there exist the differences, which have a negative impact of ¥21,675 million on income before income taxes.
 
Unrealized gains and losses on non-trading debt securities
 
Under U.S. GAAP for broker-dealers, unrealized gains and losses on non-trading debt securities are recognized in the income statements. Under Japanese GAAP, unrealized gains and losses on non-trading debt securities, net of applicable income taxes, are reported in a separate component of shareholders’ equity.
 
Retirement and severance benefit
 
Under U.S. GAAP, gain or loss resulting from experience different from that assumed or from a change in an actuarial assumption is amortized over the remaining service period of employees when such balance at beginning of year exceeds the “Corridor” which is defined as a 10% of larger of projected benefit obligation or fair value of plan assets, while such gain or loss is amortized for a certain period regardless of the Corridor under Japanese GAAP. Under U.S. GAAP, additional minimum pension liabilities are provided when the accumulated benefit obligation exceeds the fair value of plan assets, while such treatment is not provided under Japanese GAAP.
 
Amortization of goodwill and equity method goodwill
 
Under U.S. GAAP, goodwill and equity method goodwill shall not be amortized and shall be tested for impairment regularly. Under Japanese GAAP, goodwill and equity method goodwill shall be amortized over certain periods within 20 years. Therefore, under Japanese GAAP, there exist the differences, which have a negative impact of ¥11,274 million on income before income taxes. Under U.S. GAAP, negative goodwill and equity method negative goodwill shall be written off at once when negative goodwill arises. Under Japanese GAAP, negative goodwill shall be amortized over certain periods within 20 years based on the straight-line method.
 
Appropriations of retained earnings
 
Under U.S. GAAP, appropriations of retained earnings are reflected and recorded in the consolidated financial statements for the period to which they relate. Also, under U.S. GAAP, bonuses to directors are charged to income. Under Japanese GAAP, a company may select accounting method for appropriations of retained earnings to reflect and record appropriations in the consolidated financial statements for the period to which they relate or in a subsequent period when shareholders’ approval for the appropriations have been obtained.

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Changes in the fair value of derivative contracts
 
Under U.S. GAAP, all derivative contracts, including derivative contracts that have been designated as hedges to specific assets or specific liabilities, are valued at fair value, and changes in the fair value of derivative contracts are recognized in the income statement or other comprehensive income. Under Japanese GAAP, derivative contracts that have been entered into for hedging purpose are valued at fair value and changes in the fair value of derivative contracts are deferred on the balance sheet.
 
Leveraged leases
 
Under U.S. GAAP, fixed income and expenses are recognized for each year over the period of the leveraged leases. Under Japanese GAAP, depreciation expenses arising from leased assets are recognized on a declining balance method and income and expenses are not averaged during the period of leveraged leases.

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2.    Summary of accounting policies:
 
Description of business—
 
Nomura Holding, Inc. and its broker-dealers, banking and other financial services subsidiaries provide investment, financing and related services to individual, institutional and government customers on a global basis. Such services include equity and fixed income brokerage, trading, underwriting, distribution and clearance; trading of foreign exchange and futures contracts and other derivatives in a broad range of asset categories, rates and indices; investment banking, real estate, project finance, private equity finance and other corporate finance advisory activities; international merchant banking and other principal investment activities; and asset management, private banking, trust and custody services. The Company began its operations in Japan in 1925.
 
Basis of presentation—
 
The consolidated financial information includes the accounts of the Company and its majority-owned subsidiaries (collectively, the Company and its majority-owned subsidiaries are referred to as “Nomura”). The Company’s principal subsidiaries include Nomura Securities Co., Ltd., Nomura Holding America Inc. and Nomura International plc. All material intercompany transactions and accounts have been eliminated on consolidation. Investments in 20 to 50 percent owned companies, which are not consolidated, are accounted for using the equity method of accounting and are reported in Investments in and advances to affiliated companies.
 
Use of Estimates—
 
In presenting the consolidated financial information, management makes estimates regarding certain financial instrument valuations, the outcome of litigation, the recovery of the carrying value of goodwill, valuation allowances for loan losses and deferred tax assets, and other matters that affect the reported amounts of assets and liabilities as well as disclosures in the financial information. 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 information, and it is possible that such adjustments could occur in the near term.
 
Fair Value of Financial Instruments—
 
Financial instruments including derivatives, used in Nomura’s trading activities are recorded at fair value with unrealized gains and losses reflected in Net gain on trading. Fair values are based on listed market prices, where possible. If listed market prices are not available or if the liquidation of the Nomura’s positions would reasonably be expected to impact market prices, fair value is determined based on valuation pricing models which take into consideration time value and volatility factors.
 
Pricing models and their underlying assumptions impact the amount and timing of unrealized gains and losses, and the use of different valuation 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 Net gain on trading. 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—
 
Nomura has been actively involved in the private equity business. As a result of a review to determine the optimum structure to run this business going forward in Europe, on March 27, 2002, Nomura restructured its Principal Finance Group (“PFG”) based on the United Kingdom and, as a result, contributed its investments in certain of its remaining investee companies (the “PFG entities”) to Terra Firma Capital Partners I (“TFCP I”), a recently formed limited partnership which is engaged in the private equity business. As a result of Nomura’s contribution of its investments in the PFG entities to TFCP I in exchange for a limited partnership interest, Terra Firma Investments (GP) Limited (“Terra Firma”), the general partner of TFCP I, which is independent of Nomura, assumed control of the investments. Accordingly Nomura ceased consolidating the investments on such date. Terra Firma Capital Partners Limited (“TFCPL”) has been established by former Nomura employees to advise Terra Firma in relation to the management of TFCP I as well as the raising and investing of additional capital. With effect from March 27, 2002, Nomura accounts for its limited partnership interest in TFCP I at fair value in accordance with

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accounting practice for broker-dealers.
 
As stated above the limited partnership interest in TFCP I is carried at fair value. Corresponding changes in the fair value of the limited partnership interest in TFCP I are included in Gain or 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 are in non-publicly listed companies, there are no external quoted prices available. In place of this, Nomura’s Risk Management unit meets with Terra Firma, TFCPL and the management teams of the underlying investments to discuss among other things, Terra Firma’s valuation of the investments, current business performance, actual versus budgeted results, revised full year projections and the status of major initiatives to boost sales, or reduce operating costs. Terra Firma also provides regular performance reports for each investment. The information obtained from these meetings and reports, together with comparisons made to similar quoted businesses and, in the case of any property based investments, input from external advisors allows Nomura to produce its own estimates of the fair value for each underlying investment.
 
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. These projections will reflect the business drivers specific to each investment.
 
Examples of the factors affecting the business valuations are set out in the table below:
 
Sector
   
Valuation Factors
Hotels
   
Room rate achieved and occupancy, which in turn are driven
    
by business and leisure travel.
    
Revenue from conference facilities and food and beverage
    
sales.
    
Staff and other costs and central overheads.
Real Estate
   
Sales values, leaseback and open market rental values
    
achieved, driven by underlying demand for housing in both
    
the homeowner and rental markets.
    
Property holding and refurbishment and head office costs.
    
Availability and cost of finance.
Consumer Finance
   
Number of rental agreements outstanding, average revenue per
    
rental agreement (taking into account arrears), rental
    
acquisition costs, rental maintenance costs, as well as
    
overheads and head office costs.
Retail
   
Market share, changes in market size, underlying trends in
    
consumer behavior.
    
Gross margin and operating costs, including outlet overheads and head office costs.
Services
   
Contract terms negotiated at beginning of contract.
    
Initial contract set up costs and capital expenditure.
    
Ongoing servicing costs, including staff costs and central
    
overheads.
    
Additional contracts and additional non-contracted works.
    
Availability and cost of finance.
 
Where possible these valuations are compared with price/earnings data for comparable quoted companies or recent market price data for comparable transactions. Any significant differences are analysed and consideration given to whether this analysis indicates an adjustment to the Discounted Cash Flow valuation is required. While it is likely that certain potential purchasers may have special interests in the relevant investments that would allow them to justify a premium price, such as synergy or strategic benefits, no such premium has been included within the valuation models. Conversely, no discounts have been taken for the fact that there may only be a limited number of potential purchasers of the investments. These valuations are then stress tested to assess the impact of particular risk factors. Examples of such stress tests include:

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•
 
Stressing exit assumptions, either by altering the timing or the exit multiple used. In particular, using exit multiples in line with 5-year lows of trading multiples for similar companies are considered
 
 
•
 
Stressing growth assumptions, to assume lower growth. Where possible, the impact of a mild recession is considered
 
 
•
 
Removing or curtailing any assumptions about increases in operating margins.
 
An assessment of the results of the fair value exercise and the stress tests allows the final estimated valuation to be established. The fair value of Nomura’s investment in TFCP I is then the sum of the fair values of the individual investments less any performance bonuses that may be payable, either to the management team of a particular business or under the TFCPL documentation.
 
For recently acquired investments (i.e., those acquired within 12 months), fair value is equal to acquisition cost unless there has been a material change to the operating performance of the specific investment or a significant event has occurred in the marketplace.
 
The use of different valuation models, methodologies or assumptions could produce materially different estimates of fair value, which could materially affect the results of operations or statement of financial condition.
 
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 financial assets, occurring after March 31, 2001, 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 either 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 these securitization activities, Nomura utilizes special purposes entities principally for (but not limited to) the securitization of commercial and residential mortgages, home equity loans, government and corporate bonds, and lease and trade receivables. Nomura derecognizes financial assets transferred in securitizations provided that Nomura has relinquished control over such assets.
 
Nomura has historically used special purpose entity or, SPE vehicles as a conduit and has not retained a financial interest in the asset securitizations. In conduit transactions, Nomura serves as the administrator and provides contingency liquidity support for the commercial paper. Conduits provide clients with a way to access liquidity in the commercial paper markets by allowing clients to sell assets to the conduit, which in return issues commercial paper to fund the purchases. The commercial paper issued by the conduits is supported with sufficient collateral, other credit enhancement, and liquidity support to receive at least an A-1 or P-1 rating. Nomura may retain an interest in the financial assets securities (“Retained Interests”) in the future, which may include assets in the form of residual interests in the special purpose entities established to facilitate the securitization. Any Retained Interests would be included in Securities inventory within the Nomura’s balance sheet. Nomura records its Securities inventory, including Retained Interests, at fair value with any changes in fair value included in revenues.
 
Translation of accounts denominated in foreign currencies and of foreign currency financial statements—
 
The financial statements of the Company’s subsidiaries outside Japan are measured using their functional currency. Generally, all assets and liabilities of foreign subsidiaries are translated into Japanese yen at exchange rates in effect at the respective period ends; all revenue and expenses are translated at the average exchange rates for the respective periods and the resulting translation adjustments are accumulated and reported as Cumulative translation adjustments in other comprehensive income.
 
Foreign currency assets and liabilities are translated at exchange rates in effect at the respective period ends and the resulting translation gains or losses are currently credited or charged to income.

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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.
 
Securities inventory, non-trading debt securities and securities sold but not yet purchased—
 
Trading assets owned and trading liabilities sold but not yet purchased, including contractual commitments arising pursuant to derivatives transactions, are recorded on the consolidated balance sheet on a trade date basis at market or fair value with the related gains and losses recorded in Net gain on trading in the consolidated statement of income. Fair value is generally based on quoted market prices, broker or dealer quotations or an estimation by management of the amounts expected to be realized upon settlement in current market conditions. Where quoted market prices or broker or 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 flows and market liquidity adjustments. These adjustments are fundamental components of the fair value calculation process.
 
Securities inventory and Securities sold but not yet purchased include options on securities purchased and written, respectively.
 
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 statement of income.
 
Securities financing transactions—
 
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. The subsidiaries take possession of securities purchased under Repo agreements, value the securities on a daily basis and obtain additional collateral if the value of the securities is not sufficient to protect them in the event of default by the customer. Repo transactions are accounted for as collateralized 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 consolidated balance sheet 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 consolidated balance sheet as 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.
 
On the consolidated balance sheet, all Nomura-owned securities pledged to counterparties where the counterparty has the right to sell or repledge the securities are classified as Securities pledged as collateral in accordance with SFAS 140.

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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.
 
These 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 sheet 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 loans receivable from customers and from other than customers. Loans receivable from customers consist of commercial loans and margin transaction loans. Loans receivable from other than customers mainly represent loans receivable from institutional counter parties in the money markets used for short-term financing.
 
Allowances for loan losses on loans for margin transactions and loans receivable from other than customers are provided for based primarily on historical loss experience.
 
Allowances for loan losses on commercial 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 current financial situation of the borrower.

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Office buildings, land, equipment and facilities—
 
Office buildings, land, equipment and, facilities which consist mainly of installations and software are 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 the 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. The estimated useful lives are generally as follows:
 
Office buildings
  
15 to 50 years
Equipment and installations
  
3 to 6 years
Software
  
5 years
 
Depreciation and amortization for the six months ended September 30, 2002 were included in Information processing and communication in the amount of ¥12,095 million, and were included in Occupancy and related depreciation in the amount of ¥2,825 million.
 
Investments in equity securities—
 
Nomura’s Investments in equity securities include marketable and non-marketable equity securities which have been acquired for Nomura’s operating purposes. Nomura makes such operating investments and holds them 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. In accordance with accounting principles generally accepted in the United States of America for broker-dealers, investments in equity securities are recorded at market or fair value and unrealized gains and losses are recognized currently in income.
 
Investments in equity securities as of September 30, 2002 are comprised of listed equity securities and unlisted equity securities of ¥131,180 million and ¥39,510 million, respectively.
 
Long-lived assets—
 
As required by SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, 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 undiscounted cash flow is less than the carrying amount of the assets, a loss is recognized based on the market or fair value.
 
These charges were incurred as a result of Nomura’s updated analysis to determine if there were any impairment of long-lived assets and certain assets, which identified a significant decrease in the market or fair value of the assets. The revised carrying values of these assets were based on the market or fair value of the assets.
 
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 is believed more likely than not that a benefit will be realized. A valuation allowance is provided, as deemed appropriate, for tax benefits available to Nomura but when it is more likely than not that a tax benefit will not be realized.
 
Nomura has adopted consolidated return system for the payment of Japanese corporate tax effective from the six months ended September 30, 2002.

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Change in Method of Accounting for Stock Options—
 
Effective April 1, 2002 Nomura changed its method of accounting for stock-based compensation plans. Nomura has adopted the fair-value-based method of accounting for company stock options as outlined in SFAS No. 123, “Accounting for Stock-Based Compensation”. Stock options awarded prior to April 1, 2002 will continue to be accounted for under the intrinsic value method of accounting under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”. The effect of this change in accounting was to increase compensation and benefits expense and decrease income before income taxes by ¥87 million for the six months ended September 30, 2002.
 
Net income per share—
 
The computation of basic net income per share is based on the average number of shares outstanding during the period. Diluted net income per share reflects the potential dilutive effect of convertible bonds, warrants, and stock options.
 
Cash and cash equivalents—
 
For purposes of reporting cash flows, cash and cash equivalents include cash on hand and demand deposits with banks.
 
Goodwill and negative goodwill—
 
Nomura has adopted SFAS No. 141, “Business Combinations”, and SFAS No. 142, “Goodwill and Other Intangible Assets” regarding goodwill and negative goodwill. The impairment test shall be performed without amortizing regarding goodwill. Negative goodwill, which is recognized as the excess of acquired net assets at their market or fair value over the acquisition cost, must be written off immediately. In accordance with SFAS No. 141, Nomura has recognized ¥109,799 million in writing off negative goodwill arising from a previous business combination as cumulative accounting change for the six months ended September 30, 2002.
 
New accounting pronouncements—
 
In June 2001, the FASB issued SFAS No. 143 “Accounting for Asset Retirement Obligations”. This standard is applicable to the financial statements issued for the fiscal years starting after June 16, 2002. This standard requires companies to recognize and report a liability for an asset retirement obligation of a tangible long-lived asset and the associated asset retirement cost. Nomura has to adopt this standard on April 1, 2003.
 
In May 2002, the FASB issued SFAS No. 145 “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.”
 
In June 2002, the FASB issued SFAS No. 146 “Accounting for Costs Associated with Exit or Disposal Activities”. This standard requires companies to recognize costs associated with the exit or disposal of activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS No. 146 will replace the existing guidance provided in Emerging Issues Task Force Issue No. 94-3 “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”. SFAS No.146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002.
 
In October 2002, the FASB issued SFAS No. 147 “Acquisition of Certain Financial Institutions”. This standard requires the acquisitions of financial institutions to be accounted for under SFAS No. 141 “Business Combinations” and SFAS 142 “Goodwill and Other Intangible Assets” and removes the acquisition of financial institutions from the scope of SFAS No. 72 “ Accounting for Certain Acquisitions of Banking or Thrift Institutions” and FASB Interpretation No. 9 “Applying APB Opinion No.16 and 17 When a Savings and Loan Association or a Similar Institution Is Acquired in a Business Combination Accounted for by the Purchase Method”.
 
Nomura does not believe that the adoption of these four new standards will have a material effect on the Nomura’s consolidated financial information.

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3.    Securities inventory and securities sold but not yet purchased:
 
Securities inventory and Securities sold but not yet purchased at September 30, 2002 consist of trading securities at market or fair value classified as follows:
 
    
Millions of yen
    
September 30, 2002
    
Securities inventory
   
Securities sold but not yet purchased
Stocks
   
160,409
   
709,121
Government and government agency bonds
   
1,738,121
   
1,539,073
Bank and corporation bonds
   
1,253,634
   
240,878
Commercial paper and certificates of deposit
   
75,956
   
—  
Options and warrants
   
68,872
   
48,396
Mortgage and mortgage-backed securities
   
771,295
   
1,270
Beneficiary certificates and other
   
726,156
   
—  
    
  
    
4,794,443
   
2,538,738
    
  
 
4.    Derivatives utilized for trading purposes:
 
The table below discloses breakdown of the fair values at September 30, 2002 of derivative financial instruments for trading purposes held or issued by Nomura. These amounts are not reported net of collateral, which Nomura obtains to reduce credit risk exposure.
 
      
Millions of yen
      
September 30, 2002
Assets:
       
Foreign exchange forwards
     
20,771
FRA(1) and other OTC(2) forwards
     
953
Swap agreements
     
261,026
Options other than securities options—purchased
     
134,974
      
Sub-total
     
417,724
Securities options—purchased
     
64,414
      
Total
     
482,138
      
Liabilities:
       
Foreign exchange forwards
     
18,908
FRA(1) and other OTC(2) forwards
     
1,392
Swap agreements
     
235,447
Options other than securities options-written
     
104,254
      
Sub-total
     
360,001
Securities options-written
     
44,582
      
Total
     
404,583
      
 
(1)
 
“FRA” is Forward Rate Agreements.
(2)
 
“OTC” is Over The Counter.

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5.    The balance of receivables and payables under securities financing transactions:
 
Nomura enters into secured borrowing and lending transactions mainly to meet customers’ needs and finance trading inventory positions. The balance of receivables and payables under resale and repurchase agreements and securities borrowed and loaned transactions at September 30, 2002 are as follows:
 
      
Millions of yen
      
September 30, 2002
Receivables under:
       
Resale agreements
     
3,368,744
Securities borrowed transactions
     
3,548,058
      
Total
     
6,916,802
      
Payables under:
       
Repurchase agreements
     
5,985,258
Securities loaned transactions
     
3,743,700
      
Total
     
9,728,958
      
 
6.    Assets pledged:
 
In many cases, Nomura is permitted to sell or repledge the securities held as collateral and use the securities to secure repurchase agreements, enter into securities lending transactions or deliver to counterparties to cover short positions. The related balances at September 30, 2002 are as follows:
 
      
Billions of yen
      
September 30, 2002
The fair value of securities received as collateral where
    Nomura is permitted to sell or repledge the securities
     
11,251
The portion of the above that has been sold (included in
    Securities sold but not yet purchased on the consolidated
    balance sheet) or repledged
     
9,765
 
Nomura pledges firm-owned securities to collateralize repurchase agreements and other secured financings. Pledged securities that can be sold or repledged by the secured party are classified as Securities pledged as collateral on the consolidated balance sheet respectively.
 
The securities owned by Nomura which have been pledged as collateral, primarily to stock exchanges and clearing organizations, without allowing the secured party the right to sell or repledge them as at September 30, 2002 are summarized in the table below:
 
      
Millions of yen
      
September 30, 2002
Trading assets:
       
Stocks
     
430
Government and government agency bonds
     
370,152
Bank and corporation bonds
     
452,111
Warrants
     
8,645
Mortgage and mortgage-backed securities
     
701,584
      
      
1,532,922
      
Investments:
       
Non-trading debt securities
     
111,218
      
      
111,218
      

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In the normal course of business, certain of Nomura’s assets are pledged to collateralize borrowing transactions, securities financing transactions, derivative transactions and other purposes. At September 30, 2002 the carrying value of assets pledged other than presented in the table above are as follows:
 
      
Millions of yen
      
September 30, 2002
Trading securities
     
994,779
Non-trading debt securities
     
1,030
Land and buildings
     
8,628
      
      
1,004,437
      
 
Assets in the above table were mainly pledged to financial institutions for loans payable and derivative transactions.
 
In addition, Nomura repledged ¥133,774 million of securities borrowed at September 30, 2002 as collateral for bank loans and other loans.

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7.    Earnings per share:
 
The reconciliation of the amounts and the numbers used in the basic and diluted earnings per share (“EPS”) computations is as follows:
 
 
      
(Yen amounts in millions except per share data presented in yen)
      
For the six months
Ended September 30, 2002
Basic—
       
Income before cumulative effect of accounting change applicable to common stock
     
21,271
Cumulative effect of accounting change applicable to common stock
     
109,799
      
Net income applicable to common stock
     
131,070
      
Weighted average number of shares outstanding (in thousand)
     
1,965,537
      
Basic EPS:
       
Income before cumulative effect of accounting change
     
10.82
Cumulative effect of accounting change
     
55.86
      
Net income
     
66.68
      
Diluted—  
       
Income before cumulative effect of accounting change applicable to common stock
     
21,271
Cumulative effect of accounting change applicable to common stock
     
109,799
      
Net income applicable to common stock
     
131,070
      
Weighted average number of shares outstanding used in diluted EPS computations (in thousand)
     
1,965,537
      
Diluted EPS:
       
Income before cumulative effect of accounting change
     
10.82
Cumulative effect of accounting change
     
55.86
      
Net income
     
66.68
      
 
Upon the conversion of convertible bonds, 6,647 thousand shares of potential common stock were not included in the computation of diluted EPS due to their antidilutive effect for the six months ended September 30, 2002. Warrants to purchase 1,095 thousand shares of common stock and stock options to purchase 2,227 thousand shares of common stock were not included in the computation of diluted EPS because the warrants’ and stock options’ exercise prices were greater than the average market price of common shares during the six months ended September 30, 2002.
 

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8.    Commitments and contingencies:
 
Nomura enters into, in the normal course of its subsidiaries’ banking/financing activities, contractual commitments to extend credit, standby letters of credit, underwriting commitments and issuance of financial guarantees, which generally have a fixed expiration date.
 
Contractual amounts of these commitments at September 30, 2002 were as follows:
 
      
Millions of yen
      
September 30, 2002
Commitments to extend credit and note issuance facility
     
135,172
Standby letters of credit and financial guarantees
     
44,618
 
9.
 
Segment Information:
 
Operating segment—
 
Nomura operates securities businesses, which consist of Domestic Retail and Global Wholesale, and Asset Management businesses as its core businesses. Nomura structures its business segments based upon the nature of products and services as well as main customers base and also the management structure. Nomura reports its operating results in three business segments: Domestic Retail, Global wholesale and Asset Management.
 
The accounting policies for segment information materially follow U.S.GAAP, except as described below:
 
 
•
 
The impact of unrealized gains/losses on long-term investments in equity securities held for relationship purposes, which under U.S.GAAP is included in net income, is excluded from segment information.
 
 
•
 
Management views that investments in private-equity-entities are held for ultimate sale and the realization of a capital gain. Investments in private-equity-entities are treated as only private equity positions for management reporting purposes. They are not viewed as operating subsidiaries. Any changes in management’s estimate of fair value of these investments are shown in the non-interest revenue line under Global Wholesale.
 
Revenues and expenses directly associated with each business segment are included in determining their operating results. Revenues and expenses that are not directly attributable to a particular segment are allocated to each business segment or included in “Other” based upon Nomura’s allocation methodologies as used by the management to assess each segment’s performance.

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Table of Contents
 
Business segments’ results for the six months ended September 30, 2002 are shown in the following table. Business segments’ information on total assets is not disclosed, because management does not utilize information on total assets for its operating decisions and therefore, it is not reported to management.
 
    
Millions of yen
    
Domestic
Retail
   
Global
Wholesale
   
Asset
Management
       
Other
(Inc. elimination)
     
Total
                  
Six months ended September 30, 2002
                                         
Non-interest revenue
   
¥
122,573
   
¥
97,645
   
¥
20,138
 
     
¥
2,956
 
   
¥
243,312
Net interest revenue
   
 
1,204
   
 
47,510
   
 
(32
)
     
 
11,393
 
   
 
60,075
    
  
  
    
  
Net revenue
   
 
123,777
   
 
145,155
   
 
20,106
 
     
 
14,349
 
   
 
303,387
Non-interest expenses
   
 
108,429
   
 
99,707
   
 
17,677
 
     
 
15,936
 
   
 
241,749
    
  
  
    
  
Income (loss) before income taxes
   
¥
15,348
   
¥
45,448
   
¥
2,429
 
     
 
(¥1,587
)
   
¥
61,638
    
  
  
    
  
 
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
  
      
For the six months ended
September 30, 2002
  
Loss on not designated hedging instruments
     
(¥1,753
)
Gain on investment securities
     
10,892
 
Equity in earnings of affiliates
     
353
 
Corporate items
     
(678
)
Others
     
(10,401
)
      
Total
     
(¥1,587
)
      

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The table below presents a reconciliation of the combined segment information included in the table above to reported net revenue and income before income taxes in the consolidated income statement information.
 
      
Millions of yen
  
      
For the six months ended September 30, 2002
  
Net revenue
     
¥
303,387
 
Unrealized loss on investments in equity securities held for relationship purpose
     
 
(21,675
)
Effect of consolidation of the private equity investee companies
     
 
1,703
 
      
Consolidated net revenue
     
¥
283,415
 
      
Income before income taxes
     
¥
61,638
 
Unrealized loss on investments in equity securities held for relationship purpose
     
 
(21,675
)
Effect of consolidation of the private equity investee companies
     
 
674
 
      
Consolidated income before income taxes
     
¥
40,637
 
      

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Table of Contents
Geographic Information
 
In general, Nomura’s identifiable assets, revenues and expenses are allocated based on the country of domicile of the legal entity providing the service. However, because of the integration of the global capital markets and the corresponding globalization of Nomura’s activities and services it is not always possible to make a precise separation by location. As a result, various assumptions, which are consistent among years, have been made in presenting the following geographic data.
 
The table below presents a geographic allocation of net revenue and income (loss) before income taxes from operations by geographic areas, and long-lived assets associated with Nomura’s operations. Net revenue in “Americas” and “Europe” substantially represents Nomura’s operations in the United States and the United Kingdom, respectively.
 
      
Millions of yen
      
For the six months ended
September 30, 2002
Net revenue:
       
Americas
     
25,338
Europe
     
14,229
Asia and Oceania
     
5,824
      
Sub-total
     
45,391
Japan
     
238,024
      
Consolidated
     
283,415
      
 
      
Millions of yen
  
      
For the six months ended
September 30, 2002
  
Income (loss) before income taxes:
         
Americas
     
4,362
 
Europe
     
(20,582
)
Asia and Oceania
     
(3,384
)
      
Sub-total
     
(19,604
)
Japan
     
60,241
 
      
Consolidated
     
40,637
 
      
 
      
Millions of yen
      
September 30, 2002
Long-lived assets:
       
Americas
     
9,758
Europe
     
38,800
Asia and Oceania
     
1,275
      
Sub-total
     
49,833
Japan
     
138,433
      
Consolidated
     
188,266
      
 
There is no revenue derived from transactions with a single major external customer.

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THE CONSOLIDATED FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2001
 
CONSOLIDATED BALANCE SHEET INFORMATION
(UNAUDITED)
 
    
Millions of yen
  
    
September 30, 2001
  
ASSETS
         
Cash and cash deposits:
         
Cash and cash equivalents
   
¥
418,236
 
Time deposits
   
 
169,051
 
Deposits with stock exchanges and other segregated cash
   
 
112,694
 
    
    
 
699,981
 
    
Loans and receivables:
         
Loans receivable from customers
   
 
270,020
 
Loans receivable from other than customers
   
 
272,860
 
Receivables from customers
   
 
117,062
 
Receivables from other than customers
   
 
591,181
 
Receivables under resale agreements and securities borrowed transactions
   
 
4,540,122
 
Securities pledged as collateral
   
 
3,575,948
 
Allowance for doubtful accounts
   
 
(14,299
)
    
    
 
9,352,894
 
    
Trading assets:
         
Securities inventory
   
 
3,980,006
 
Derivative contracts
   
 
286,135
 
    
    
 
4,266,141
 
    
Other:
         
Office buildings, land, equipment and facilities (net of accumulated depreciation and amortization of ¥208,026 million)
   
 
161,064
 
PFG entities land, buildings, equipment and furniture and fixtures (net of accumulated depreciation and amortization of ¥88,360 million)
   
 
810,385
 
Lease deposits
   
 
83,224
 
Non-trading debt securities
   
 
320,846
 
Investments in equity securities
   
 
223,195
 
Investments in and advances to affiliated companies
   
 
258,355
 
Deferred tax assets
   
 
83,827
 
Other assets
   
 
423,562
 
    
    
 
2,364,458
 
    
Total assets
   
¥
16,683,474
 
    

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CONSOLIDATED BALANCE SHEET INFORMATION
(UNAUDITED)
 
    
Millions of yen
  
    
September 30, 2001
  
LIABILITIES AND SHAREHOLDERS’ EQUITY
         
Payables, borrowings and deposits:
         
Payables to customers
   
¥
256,995
 
Payables to other than customers
   
 
510,486
 
Payables under repurchase agreements and securities loaned transactions
   
 
7,589,669
 
Short-term borrowings
   
 
1,550,331
 
Time and other deposits received
   
 
292,233
 
    
    
 
10,199,714
 
    
Trading liabilities:
         
Securities sold but not yet purchased
   
 
1,829,613
 
Derivative contracts
   
 
380,048
 
    
    
 
2,209,661
 
    
Other liabilities:
         
Accrued income taxes
   
 
28,731
 
Accrued pension and severance costs
   
 
43,623
 
Other
   
 
439,977
 
    
    
 
512,331
 
    
Long-term borrowings
   
 
1,478,472
 
    
Non-recourse PFG entities loans and bonds
   
 
923,131
 
    
Total liabilities
   
 
15,323,309
 
    
Commitments and contingencies
         
Shareholders’ equity:
         
Common stock
         
Authorized—6,000,000,000 shares
         
Issued—1,962,980,444 shares
   
 
182,800
 
    
Additional paid-in capital
   
 
146,136
 
    
Retained earnings
   
 
1,099,808
 
    
Accumulated other comprehensive income:
         
Minimum pension liability adjustment
   
 
(18,426
)
Cumulative translation adjustments
   
 
(50,138
)
    
    
 
(68,564
)
    
    
 
1,360,180
 
Less-Common stock held in treasury, at cost—7,525 shares
   
 
(15
)
    
Total shareholders’ equity
   
 
1,360,165
 
    
Total liabilities and shareholders’ equity
   
¥
16,683,474
 
    

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CONSOLIDATED INCOME STATEMENT INFORMATION
(UNAUDITED)
 
      
Millions of yen
  
      
For the six months ended
September 30, 2001
  
Revenue:
           
Commissions
     
¥
70,568
 
Fees from investment banking
     
 
37,029
 
Asset management and portfolio service fees
     
 
57,404
 
Net gain on trading
     
 
82,904
 
Interest and dividends
     
 
312,345
 
Loss on investments in equity securities
     
 
(43,158
)
PFG entities product sales
     
 
154,093
 
PFG entities rental income
     
 
64,853
 
Other
     
 
38,347
 
      
Total revenue
     
 
774,385
 
Interest expense
     
 
313,545
 
      
Net revenue
     
 
460,840
 
      
Non-interest expenses:
           
Compensation and benefits
     
 
176,935
 
Commissions and floor brokerage
     
 
10,161
 
Information processing and communications
     
 
40,326
 
Occupancy and related depreciation
     
 
36,530
 
Business development expenses
     
 
13,950
 
PFG entities cost of goods sold
     
 
107,035
 
PFG entities expenses associated with rental income
     
 
33,284
 
Other
     
 
164,687
 
      
      
 
582,908
 
      
Loss before income taxes
     
 
(122,068
)
      
Income tax expense(benefit):
           
Current
     
 
25,392
 
Deferred
     
 
(69,609
)
      
      
 
(44,217
)
      
Net loss
     
 
(¥77,851
)
      
      
Yen
  
Per share of common stock:
           
Net loss—Basic
     
 
(¥39.66
)
      
             —Diluted
     
 
(¥39.66
)
      

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INFORMATION OF
CONSOLIDATED STATEMENT OF SHAREHOLDERS’EQUITY
(UNAUDITED)
 
    
Millions of yen
    
For the six months
ended
September 30, 2001
Common Stock
       
Balance at beginning of year
   
¥
182,797
Exercise of warrants
   
 
3
    
Balance at end of period
   
¥
182,800
    
Additional paid-in capital
       
Balance at beginning of year
   
¥
146,133
Exercise of warrants
   
 
3
    
Balance at end of period
   
¥
146,136
    
Retained earnings
       
Balance at beginning of year
   
¥
1,177,660
Net loss
   
 
(77,851)
    
Balance at end of period
   
¥
1,099,808
    
Accumulated other comprehensive income
Minimum pension liability adjustment
       
Balance at beginning of year
   
(¥
19,083)
Net change during the period
   
 
657
    
Balance at end of period
   
(¥
18,426)
    
Cumulative translation adjustments
       
Balance at beginning of year
   
(¥
51,021)
Net change during the period
   
 
883
    
Balance at end of period
   
(¥
50,138)
    
Common stock held in treasury
       
Balance at beginning of year
   
(¥
58)
Sale of common stock
   
 
387
Net change in treasury stock during the period
   
 
(344)
    
Balance at end of period
   
(¥
15)
    
Number of shares issued
       
Balance at beginning of year
   
 
1,962,977,841
Exercise of warrants
   
 
2,603
    
Balance at end of period
   
 
1,962,980,444
    

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CONSOLIDATED INFORMATION OF
STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
 
      
Millions of yen
  
      
For the six months
ended
September 30, 2001
  
Net loss
     
(¥
77,851)
 
Other comprehensive (loss) income
           
Change in cumulative translation adjustments
     
 
883
 
Minimum pension liability adjustment:
           
Minimum pension liability gain arising during the period
     
 
1,133
 
Deferred income taxes
     
 
(476
)
      
Total
     
 
657
 
      
Total other comprehensive income
     
 
1,540
 
      
Comprehensive loss
     
(¥
76,311)
 
      

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Operating Segment information
 
Operating segments’ results for the six months ended September 30, 2001 are shown in the following table.
 
    
Millions of yen
    
Domestic
Retail
   
Global
Wholesale
   
Asset
Management
   
Other
(Inc. elimination)
   
Total
                
Six months ended September 30, 2001
                                   
Non-interest revenue
   
¥
111,760
   
¥
128,329
   
¥
23,180
   
¥
7,145
   
¥
270,414
Net interest revenue
   
 
1,543
   
 
15,550
   
 
603
   
 
12,343
   
 
30,039
    
  
  
  
  
Net revenue
   
 
113,303
   
 
143,879
   
 
23,783
   
 
19,488
   
 
300,453
Non-interest expenses
   
 
107,211
   
 
96,978
   
 
16,715
   
 
140,265
   
 
361,169
    
  
  
  
  
Income (loss) before income taxes
   
¥
6,092
   
¥
46,901
   
¥
7,068
   
(¥
120,777)
   
(¥
60,716)
    
  
  
  
  
 
The following table presents the major components of income/ (loss) before income taxes in “Other”.
 
    
Millions of yen
  
    
For the six months ended
September 30, 2001
  
    
Gain on not designated hedging instruments
   
¥
3,671
 
Loss on investment securities
   
 
(1,949
)
Equity in losses of affiliates
   
 
(8,608
)
Corporate items
   
 
(17,818
)
Amortization of goodwill and negative goodwill
   
 
6,487
 
Impairment loss on investment in an affiliated company
   
 
(92,441
)
Multi-employer pension plan
   
 
(18,720
)
Others
   
 
8,601
 
    
Total
   
(¥
120,777)
 
    
 

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The table below presents a reconciliation of the combined segment information included in the table above to reported net revenue and loss before income taxes in the consolidated income statement information.
 
      
Millions of yen
  
      
For the six months ended
September 30, 2001
  
Net revenue
     
¥
300,453
 
Unrealized loss on investments in equity securities held for relationship purpose
     
 
(44,968
)
Effect of consolidation of the PFG entities
     
 
205,355
 
      
Consolidated net revenue
     
¥
460,840
 
      
Loss before income taxes
     
(¥
60,716
)
Unrealized loss on investments in equity securities held for relationship purpose
     
 
(44,968
)
Effect of consolidation of the PFG entities
     
 
(16,384
)
      
Consolidated loss before income taxes
     
(¥
122,068
)
      

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November 26, 2002
 
Notice of Stock Repurchase from the Market
 
Tokyo – Today, Nomura Holdings, Inc. (NHI) announced that, pursuant to the provisions of Article 210 of the Commercial Code, NHI has repurchased shares from the market with details as follows:
 
1. Type of shares:
   
NHI common stock
2. Purchase period:
   
November 8, 2002 through November 26, 2002                                                       
3. Number of shares repurchased:
   
6,940,000 shares
4. Aggregate purchase amount:
   
JPY 9,054,390,793
5. Method of repurchase:
   
Purchase at Tokyo Stock Exchange
 
 
Reference:
Details of the stock repurchase program authorized at the 98th Annual General Meeting of Shareholders held on June 26, 2002
1. Type of shares:
   
NHI common stock
2. Total number of shares authorized for repurchase:
   
Up to 100,000,000 shares                                                                              
3. Total value of shares authorized for repurchase:
   
Up to ¥250 billion
Number of stocks repurchased up to November 26, 2002
     
1. Aggregate number of shares repurchased
   
6,940,000 shares
2. Aggregate value of shares repurchased
   
JPY 9,054,390,793
 
For further information:
Toshiyasu Iiyama, Ryugo Matsuo, Tsukasa Noda
Corporate Communications Dept., Nomura Group Headquarters
Tel: 81-3-3278-0591
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 128 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, merger and acquisition and financial advisory services, merchant banking, and asset management for investment trusts and pension funds.
 

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