Revisions to Forecasts of Financial Results and Dividends for the Fiscal Year
Ending March 31, 2008
Ending March 31, 2008
January 25, 2008
Nomura Research Institute, Ltd.
Nomura Research Institute, Ltd.
Nomura Research Institute, Ltd., (NRI) has announced revisions to its financial results forecasts and dividends for the fiscal year ended March 31, 2008 (April 1, 2007 to March 31, 2008), as described below.
| 1. | Revisions to financial results forecasts (1) Reasons for revisions Accumulated amount of Earnings in this third quarter period (April 1 to December 31, 2007) have been steady, and NRI is making no change to its previous forecasts (released October 25, 2007) for sales, operating profit. However, NRI anticipates an extraordinary loss resulting from revisions to the company’s pension system (transition from the previous system, which consisted primarily of a defined benefits pension plan, to a system consisting primarily of a defined contribution pension plan) and has revised net income as follows (for details, please refer to the “Reference” section at the end of this press release). |
(2) Revised forecasts of consolidated financial results for the fiscal year ending March 31, 2008 (April 1, 2007 to March 31, 2008)
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(3) Revised forecasts of non-consolidated financial results for the fiscal year ending March 31, 2008 (April 1, 2007 to March 31, 2008)
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| 2. | Revisions to dividend forecasts (1) Reasons for increase in dividend payment NRI’s basic policy on profit distribution is to provide appropriate and stable dividends, taking into consideration the enhancement of internal reserves to ensure long-term business growth. The target dividend payout ratio is 30%, taking into account business profit levels and the status of cash flow. Taking forecasts of financial results for the fiscal year and the status of cash flows into account, NRI now expects to increase its previous forecasts for year-end dividends by ¥2 per share to ¥26 per share. Together with first-half dividends paid, this brings the forecast of total dividends for the fiscal year to ¥50 per share. A formal decision on dividend payments will be made at the meeting of the Board of Directors to be held in May 2008 after financial documents for this fiscal year have been audited as mandated. (2) Dividends per share for the fiscal year ending March 31, 2008
Notes:
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Reference: Overview of Pension Plan Revisions
NRI plans to overhaul its employee pension system, effective April 1, 2008 (application to Ministry of Health, Labor and Welfare as well as employee agreements to follow), and as a result the company expects to incur an extraordinary loss due to the accounting related to the change.
NRI plans to overhaul its employee pension system, effective April 1, 2008 (application to Ministry of Health, Labor and Welfare as well as employee agreements to follow), and as a result the company expects to incur an extraordinary loss due to the accounting related to the change.
| 1. | Overview of changes to pension system NRI’s pension system until now has mainly consisted of a defined benefit (DB) pension plan, but the revised system will significantly augment the defined contribution (DC) pension plan element of the system. In principle, these revisions to the pension system will keep the level and cost of benefits unchanged. As a result, the company will have two pension plans, as described below. (1) NRI Basic Pension The NRI Basic Pension is a DB pension plan that guarantees an allowance to employees to ensure a minimum standard of living in their old age. This plan is essentially unchanged from the current system, but the company has extended the period for which payment of the pension is guaranteed and has revised the discount rate. (2) NRI Flexible Pension This is a DC pension plan that gives employees a more comfortable old age. The past balance in the NRI Flexible Pension will be contributed in a lump sum to the DC when the system is changed. After the system is changed, that portion of the future amount in the NRI Flexible Pension that exceeds the legally mandated contribution limit and cannot be contributed to the DC will remain in the DB. These revisions will decrease the risk of investing pension assets, which could increase in the future, and the risk that retirement benefit obligations would increase. Employees will bear some of the risk of investing pension assets, and will also be the sole beneficiaries of these investments. |
| 2. | Main factors behind extraordinary loss Although the revised pension plan will keep benefit levels and costs unchanged, NRI anticipates an extraordinary loss due to the following two factors. (1) Accounting practices regulating the treatment of the portion of the NRI Flexible Pension remaining as DB When the system is changed, the DB portion of the NRI Flexible Pension, assuming the retirement of all employees, goes down to zero because the full amount of the past portion is distributed (lump-sum contribution to DC) to all applicable employees. However, accounting standards stipulate that the portion to be paid as DB in the future must be recognized as a retirement benefit liability, which results in a discrepancy. The full amount, including the amount transferred to DC, must be posted as an extraordinary loss. (2) Accounting standards require that the two pension plans, which will be revised together, be treated separately in accounting terms The aforementioned impact on the loss side must be posted as an extraordinary loss in this fiscal period. However, the impact on the profit side resulting from the revisions to the NRI Basic Pension carried out at the same time will be booked in the fiscal year ending March 2009 and beyond in accordance with accounting standards The impact resulting from underperforming investment of pension assets in this fiscal period has been reflected in these forecasts of financial results. Notice: Sales and profit figures forecast in this release are based on information available to management at the present time. As such, this forecast contains risk and uncertainty. Readers should be aware that actual sales and profits may differ from this forecast. |
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Shin Ueoka, Investor Relations Department
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Shin Ueoka, Investor Relations Department
Tel: +81-3-5533-3910
E-mail:
To List of Press Releases
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No reproduction or republication without written permission.