Daiwa Securities Group Annual Report 2012 Consolidated Statements of Cash Flows DAIWA SECURITIES GROUP INC. Years ended March 31, 2012 and 2011 65 Millions of yen Thousands of  U.S. dollars  (Note 1) 2012 2011 2012 Cash flows from operating activities: Net loss ¥ (39,435) ¥ (37,332) $ (480,915) Adjustments to reconcile net loss to net cash provided by (used in)  operating activities: Depreciation and amortization 41,114 40,487 501,390 Gains on negative goodwill (35,266) – (430,073) Allowance for doubtful accounts, net 1,987 (705) 24,232 Allowance for retirement benefits, net – 1,916 – Stock subscription rights 1,044 1,144 12,732 Statutory reserves, net (456) (885) (5,561) Losses (gains) related to investment securities 3,362 (155) 41,000 Losses related to fixed assets 25,192 1,011 307,220 Gains on step acquisitions (2,119) – (25,841) Deferred income taxes 16,947 2,807 206,671 Minority interests (1,839) (6,907) (22,427) Changes in operating assets and liabilities: Receivables and payables related to margin transactions 18,337 26,662 223,622 Other receivables and other payables 45,192 (99,532) 551,122 Collateralized short-term financing agreements 2,303,620 1,244,882 28,092,927 Trading assets and liabilities (1,469,538) 482,141 (17,921,195) Private equity and other investments 30,985 56,772 377,866 Deposits for banking business 1,169,916  — 14,267,268  Other, net (76,366) (35,423) (931,293)  Total  adjustments 2,072,112  1,714,215 25,269,660  Net cash flows provided by operating activities 2,032,677  1,676,883 24,788,745  Cash flows from investing activities: Increase in time deposits (43,646) (115,796) (532,268) Decrease in time deposits 61,603 152,934 751,256 Purchase of securities (1,593,335) (50,121) (19,430,915) Proceeds from sales and redemption of securities 610,340 79,229 7,443,171 Payments for purchases of property and equipment (10,064) (6,969) (122,732) Proceeds from sales of property and equipment 516 5,689 6,293 Payments for purchases of intangible fixed assets (21,099) (31,299) (257,305) Payments for purchases of investment securities (8,791) (39,517) (107,207) Proceeds from sales and redemption of investment securities 11,671 20,901 142,329 Payments for acquisition of business – (95,627) – Payments for purchases of investments in subsidiaries resulting in  change in scope of consolidation – (511) – Proceeds from purchase of investments in subsidiaries resulting in  change in scope of consolidation (Note 19) 15,250 – 185,976 Payments of loans receivable (406) (2,869) (4,951) Collection of loans receivable 1,987 3,461 24,232 Other, net 2,481 1,029 30,255 Net cash flows used in investing activities (973,493) (79,466) (11,871,866)