Notice of Convocation
The 49th Ordinary General Meeting of Shareholders

The following is an English translation of the Notice of Convocation of the 49th
Ordinary General Meeting of Shareholders of SECOM CO., LTD. to be held on
June 25, 2010, except for the translation of the INSTRUCTION ON ONLINE
VOTING and the ACCESS MAP FOR THE PLACE OF THE MEETING in the
Notice. The Company provides this translation for your reference andconvenience only and without any warranty as to its accuracy or otherwise.

Table of Contents
Notice of Convocation of The 49th Ordinary General Meeting of Shareholders ······[Attached Documents]
Business Report ···············································································································I.
Outline of the Group’s Business ·······································································
1. The Current Business Development and Results of Operations ···················
2. Issues the Group Has to Cope with ··································································
3. Capital Investments ···························································································
4. Fund Raising ······································································································
5. Trends in Earnings and Assets ·········································································
6. Matters Concerning Principal Subsidiaries ····················································
7. Principal Business of the Group ·······································································
8. Principal Offices of the Group ·········································································
9. Matters Concerning Employees of the Group and the Company ·················
10. Primary Lenders ································································································
11. Other Important Matters Concerning the Group ··········································

4
8
8
8
12
12
13
13
16
17
17
18
18
18

II.
1.
2.
3.
4.
5.

Matters Concerning the Company’s Shares and Shareholders ····················
Total Number of Shares to be Issued ·······························································
Total Number of Issued Shares ········································································
Number of Shareholders at the End of the Fiscal Year ·································
Number of Shares Constituting a Unit of Shares ···········································
Major Shareholders ···························································································

20
20
20
20
20
20

III.
1.
2.
3.

Directors and Corporate Auditors ···································································
Names and Titles of Directors and Corporate Auditors ································
Remuneration of Directors and Corporate Auditors ·····································
Outside Corporate Auditors ·············································································

22
22
24
26

IV.
1.
2.
3.
4.

Accounting Auditors ·························································································Name of Accounting Auditors ··········································································
Remuneration of Accounting Auditors ···························································
Non-Audit Duties ·································································································
Policy for Decision for Dismissal or Non-reappointment ································

28
28
28
28
28

V.

System under which the Company’s Business is Ensured to be
Properly Executed ····························································································
Basic Policy Regarding Internal Control System ···········································
Organizations, etc. Relating to Internal Control System ·······························

30
30
38

1.
2.

[English Translation]2

Consolidated Balance Sheet ·························································································
Consolidated Statement of Income ·············································································
Consolidated Statement of Changes in Net Assets ····················································
Notes to Consolidated Financial Statements ······························································
Non-Consolidated Balance Sheet ················································································
Non-Consolidated Statement of Income ·····································································
Non-Consolidated Statement of Changes in Net Assets ············································
Notes to Non-Consolidated Financial Statements ·····················································
Certified Copy of the Accounting Auditors’ Report (Consolidated) ·······················
Certified Copy of the Accounting Auditors’ Report (Non-Consolidated) ··············
Certified Copy of the Board of Corporate Auditors’ Report ···································
Reference Document Concerning the General Meeting of Shareholders ··················(Note) This Table of Contents is for this abridged English translation only, and not the sameas that in the original Japanese documents.

[English Translation]
3

41
42
43
44
65
66
67
69
78
79
80
82

Stock Exchange Code: 9735
June 4, 2010

Notice of Convocation of
The 49th Ordinary General Meeting of Shareholders
Dear Shareholders:
You are cordially invited to attend the 49th Ordinary General Meeting of
Shareholders of SECOM CO., LTD. (the “Company”).
If you are unable to attend the aforesaid meeting, you are respectfully
requested to review the “Reference Document Concerning the General Meeting of
Shareholders” below and exercise your voting right on or before 6:00 p.m.,
Thursday, June 24, 2010 (Tokyo time), by either of the methods stated below:[By mail]
Please indicate on the Voting Right Exercise Form enclosed herewith
your consent or dissent to the proposals on the agenda, and return the form to
the Company by mail so as to arrive us before the aforesaid deadline for the
exercise of voting right.
[Via the Internet]
Please access the designated website for exercising voting rights(http://www.evote.jp/) from your personal computers by using the “log in ID”
and “temporary password” stated on the enclosed Voting Right Exercise
Form. Then, please indicate your consent or dissent to the proposals on theagenda by following the instructions on the display screen before theaforesaid deadline for the exercise of voting right.
Yours very truly,
SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo, Japan
By: SHUJI MAEDA
President
andRepresentative
Director[English Translation]
4

(Note): Please note that shareholders with addresses outside Japan may notthemselves use these voting procedures. For these shareholders please consult theirstanding agents within Japan as to the exercise of voting rights.

[English Translation]
5

PARTICULARS

1.

Date and Time of the Meeting:
Friday, June 25, 2010 at 10:00 a.m.

2.

Place of the Meeting:
HARAJUKU QUEST HALL, on the 3rd floor of HARAJUKU QUESTBuilding
13-14, Jingumae 1-chome, Shibuya-ku, Tokyo, Japan

3.

Matters to be dealt with at the Meeting:
Matters to be Reported:
1. Report on the Business Report, the Consolidated Financial Statements
for the 49th Fiscal Year (from April 1, 2009 to March 31, 2010) and
the Results on the Audits of Consolidated Financial Statements by the
Accounting Auditors and the Board of Corporate Auditors.
2. Report on the Non-Consolidated Financial Statements for the 49th
Fiscal Year (from April 1, 2009 to March 31, 2010).
Matters to be Resolved upon :First Item of Business:

Proposed Distribution of Surplus

Second Item of Business:

Election of Eleven (11) Directors[English Translation]
6

4.

Matters related to Exercise of Voting Rights:(i) Non-uniform Exercise of Voting Rights

When the shares are owned by multiple owners but are registered in thename of a sole shareholder, each owner may want to exercise his/her voting
rights independently from other owners. The law permits non-uniform
exercise of voting rights by a registered shareholder in such a situation. In
order to exercise non-uniform voting, the registered shareholder shall notify
the Company to make non-uniform voting and the reason thereof not later than
3 days before the general meeting of shareholders.
(ii) Validity of the voting in the event of exercise of voting rights by a shareholder

both via return mail (Voting Right Exercise Form) and via the Internet:
In the event that a shareholder exercises voting rights both via return mail(Voting Right Exercise Form) and via the Internet, the Company will deem
only the exercise of voting rights via the Internet to be valid.
(iii) Validity of the voting in the event of exercise of voting rights by a shareholder

via the Internet more than once:
In the event that a shareholder exercises voting rights via the Internet
more than once, the Company will consider the last exercise of voting rights to
be valid.

(Notes)If you plan to attend the meeting, please submit the enclosed Voting Right
Exercise Form to the receptionist at the meeting.
(Notice)
If there occurs any changes in the contents of the Reference Document
Concerning the General Meeting of Shareholders, the Business Report, theConsolidated Financial Statements for the 49th Fiscal Year (from April 1, 2009 to
March 31, 2010) , the Results on the Audits of Consolidated Financial Statements
by the Accounting Auditors and the Board of Corporate Auditors, and theNon-Consolidated Financial Statements for the 49th Fiscal Year (from April 1,2009 to March 31, 2010), the Company will announce such change on the
Company's website (http://www.secom.co.jp/).

[English Translation]
7

[Attached Documents]

Business Report (Fiscal Year Ended March 31, 2010)
I. Outline of the Group’s Business1. The Current Business Development and Results of Operations
During the current consolidated fiscal year, Japanese economy has not fully
recovered due to persistent severe unemployment and recession led by overseas
stagnancy and domestic deflation, although some signs of recovery of businessearnings and bottoming out of flagging capital investments in the backdrop of
recovery of overseas economy and Japan’s emergency economic stimulus
packages.
In this environment, we continued to respond to the increasing diverse andsophisticated needs of customers for security and peace of mind with the aim ofestablishing our “Social System Industry” vision, which realizes a society thatprovides “security and peace of mind for people whenever and wherevernecessary.” To this end, we stepped up efforts to provide high-grade services andproducts suited to customer needs in our core security services business, as well as
in our fire protection services, medical services, insurance services, geographic
information services, real estate development and sales, and information andcommunication related and other services businesses.
Despite these efforts, revenue for the current consolidated fiscal year decreased by
3.5% to Yen 654.6 billion, compared with the previous consolidated fiscal year.
However, operating profit increased by 12.4% to Yen 98.5 billion and ordinary
profit increased by 8.1% to Yen 98.3 billion, primarily due to the reduction of
write-down on real estate inventories, to Yen 1.2 billion from Yen 8.3 billion in
the previous fiscal year. Net income increased by 121.4% to Yen 47.6 billion.
This was mainly attributable to Yen 20.6 billion loss on impairment of investment
securities held by SECOM Co., Ltd., Secom General Insurance Co., Ltd. andNohmi Bosai Ltd., etc. and shelving of the recognition of a portion of deferred tax
assets at domestic subsidiaries in the previous fiscal year.

[English Translation]
8

（Millions of Yen）
Revenue

OperatingprofitOrdinary
profit

Net income

Current fiscal
year (FY2009)

654,678

98,53998,32747,611

Previous fiscal
year (FY2008)

678,400

87,63490,92421,502A breakdown by business segments are as follows:
In the security services business, we provided safety and peace of mind to
customers by capitalizing on commercial and residential security services (on-line
security systems), static guard services, armored car services and sales ofmerchandises as comprehensive security services. In the current fiscal year, we
strived to tailor our services to customers’ needs through more intensive visiting
activities, along with enriching our services by improving system capability andusability, enhancing lifestyle support services for Secom Home Security
subscribers. Outside Japan, we amplified our business foundation in People’s
Republic of China, and Southeast Asia, etc., and expanded sales of“SECOM-style” on-line security services by exploiting our accumulated
experiences and expertise in Japan.
Revenue fell by 3.1% to Yen 414.6 billion and operating profit decreased by 3.0%
to Yen 100.3 billion. These results were attributable to a decrease in construction
revenue owing to decreases in large-scale constructions and scale-down ofconstructions, and decrease of sales of merchandise and yen amount of revenue ofoverseas subsidiaries due to foreign currency fluctuations.
In the fire protection services business, we provided a broad range of fire
protection systems such as high-quality fire alarm systems and fire extinguishingsystems to a wide variety of facilities such as office buildings, production
facilities, tunnels, cultural properties, ships and residences. Also, we increased
sales of renovations in fire protection systems with building renovations bymaking the use of solid trust of customers and good track records accumulated
over the years, and strengthened business foundations.
Revenue decreased by 4.8% to Yen 80.1 billion and operating profit decreased by
21.8% to Yen 4.4 billion. These results reflected decreased sales of fire alarmsystems for residences.
In the medical services business, we enhanced our core home medical services,
including home nursing services and pharmaceutical dispensing and homedelivery services, operation of residences for seniors, sales of electronic medical[English Translation]
9

report systems, sales of medical equipments, personal care services, and theleasing of real estate for medical institutions.
Revenue increased by 7.1% to Yen 37.7 billion and operating profit increased by
48.3% to Yen 2.4 billion. These results were attributable to increase of revenue
mainly from home medical services and contribution of a newly-consolidated
subsidiary as well as the opening of residences for seniors, “Comfort Hills
Rokko” in Rokko, Kobe City.
In the insurance services business, we expanded marketing efforts for our uniquenon-life insurance offerings, including Security Discount Fire Policy forcommercial facilities and the comprehensive home fire insurance policy, SECOM
Anshin My Home, that provides discounts on premiums to customers who haveinstalled on-line security systems, recognizing such systems as a risk-mitigating
factor; New SECOM Anshin My Car, a comprehensive automobile insurance
policy that offers on-site support services provided by our emergency response
personnel in the event of an accident; and MEDCOM, an unrestricted cancer
treatment policy aiming at helping patients overcome cancer by giving access tothe best treatments.
Revenue rose by 4.2% to Yen 31.6 billion due to increase in net premiums written
following brisk sales of unrestricted cancer treatment policy MEDCOM and
improvements of investment income. Operating loss was Yen 36 million,
compared to operating loss of Yen 0.3 billion in the previous fiscal year, owing todecrease in provision for reserve for natural disasters and decrease in selling,
general and administrative expenses.
In the geographic information services business, we provided advanced geospatial
data services for domestic national and local governmental agencies, GIS(Geographic Information System) –based operation support services for private
sectors and geospatial data services for foreign governmental agencies, including
developing countries’.
Revenue increased by 4.3% to Yen 41.9 billion and operating profit increased by
34.0% to Yen 2.4 billion owing to strict process management and cost-cutting
efforts.
In the real estate development and sales business, we focused on thecondominiums equipped with advanced security and disaster prevention systems.
Amid a slump in the market for condominiums, we developed well-selectedcondominiums, further devoted sales promotions and reduced real estate
inventories in line with future market projections by making appropriate pricerevisions along the proper market forecast the same as the previous fiscal year.

[English Translation]10

Revenue downed by 39.9% to Yen 13.2 billion. Operating loss was Yen 3.1
billion, compared to operating loss of Yen 16.7 billion due to write-down on realestate inventories of Yen 8.3 billion recorded in the previous fiscal year(comparable in the current fiscal year being Yen 1.2 billion), in addition to salesof condominiums in the current fiscal year whose prices were drastically revisedin the previous fiscal year.
The information and communication related and other services business covers
information and communication related services and real estate leasing, etc. In theinformation and communication related services, we strived to provide
comprehensive information network services, focusing on information security,
development and management of business systems and major-disaster response
services.
Revenue decreased by 7.8% to Yen 35.3 billion and operating profit decreased by
10.3% to Yen 3.9 billion .
Results by Business Segment (49th Fiscal Year – current consolidated fiscal year)(Millions of Yen)
Business segment
Security Services
Fire Protection Services
Medical Services
Insurance Services
Geographic Information
Services
Real Estate Development
and Sales
Information andCommunication Related
and Other Services
Total
Eliminations andCorporate Items
Consolidated revenue

Revenue
Total

Operatingprofit (loss)

9,173
4,297
122
2,982

423,81184,42937,85334,641

100,361
4,460
2,454
(36)

41,917140

42,0582,433

13,267

188

13,456(3,169)35,334

8,124

43,458

3,972

654,678

25,030679,708

110,476-(25,030)(25,030)(11,936)

654,678-654,678

98,539Customers

Inter-segment

414,637
80,132
37,73031,659With respect to the results by geographical segments, in Japan, revenue decreasedby 3.5% to Yen 634.9 billion , and operating profit increased by 10.1% to Yen
108.2 billion . In other regions, revenue decreased by 3.0% to Yen 19.7 billion
and operating profit decreased by 6.0% to Yen 1.0 billion due to the appreciationof yen, although revenue of overseas subsidiaries providing security services
increased at the local currency level as a result of strengthening businessfoundation in countries and regions such as Southeast Asia and China, whose
economies are continuously expanding.

[English Translation]11

2. Issues the Group Has to Cope with
As society undergoes constant change, people's demand for security and safety
increases, and such demand shows diversification and sophistication.
In view of this situation, the Secom Group is aiming to realize a "Social
System Industry" through providing various services and products, mainly in ourcore Security Services, and also in Fire Protection Services, Medical Services,
Insurance Services, Geographic Information Services, Real Estate Development
and Sales, and Information and Communication Related and Other Services, that
can help realize more secured, convenient, and comfortable society. Moreover, by
combining these services and products, the Group endeavors to create and supply
unique services and products, which would not have been able to realize without
such combination. To this end, we are striving to develop and provide
customer-oriented services and high-quality systems that can earn the trust of ourcustomers. Simultaneously we are working to provide comprehensive services by
maximizing the SECOM Group’s capabilities. Furthermore, we will aggressively
develop oversea businesses and seek further growth, taking advantage ofknow-how we have cultivated in Japan. We are also continually improving
operations throughout the Group to enhance management efficiency.
We look forward to the support of our shareholders in these and all of ourendeavor.

3. Capital Investments
Capital investment for the current consolidated fiscal year totaled Yen 45.5 billion(a breakdown is given below). A major portion, Yen 30.8 billion, was in system
investments (including those for security equipment and control stations), etc. in
the Security Services segment.

[English Translation]
12

Business segment(Millions of Yen)

Security Services

30,846

Fire Protection Services

2,197

Medical Services

3,783

Insurance Services

3,342

Geographic Information Services

1,644

Real Estate Development and Sales

3

Information and Communication Related
and Other Services

4,848

Subtotal

46,667

Eliminations and Corporate Items(1,116)

Total

45,5504. Fund Raising
During the current consolidated fiscal year, no funds were raised by the Group in
capital markets through the issuance of corporate bonds or new shares.

5. Trends in Earnings and Assets(1) Trends in Earnings and Assets of the Group(Millions of Yen except for net income per share)

Fiscal years
Category

46th fiscal

47th fiscal

48th fiscal

year

year

year

(4/1/2006–(4/1/2007–(4/1/2008–

3/31/2007)

3/31/2008)

3/31/2009)

49th fiscal year
(current consolidated
fiscal year)(4/1/2009–
3/31/2010)

Revenue

613,976

682,619

678,400

654,678

Operating profit

97,840104,706

87,634

98,539Ordinary profit

102,720

114,278

90,924

98,327

Net income

58,29961,506

21,502

47,611

259.14273.4096.69

218.37

Total assets

1,169,182

1,202,840

1,090,483

1,081,679

Net assets

601,116

630,274582,608

625,153

Net income per share(Yen)[English Translation]13

(2) Trends in Earnings and Assets of the Company(Millions of Yen except for net income per share)

46th fiscal year
(4/1/2006 3/31/2007)

47th fiscal year
(4/1/2007 3/31/2008)

48th fiscal year
(4/1/2008 3/31/2009)

49th fiscal year
(current fiscal year)(4/1/2009 3/31/2010)

Revenue

326,076

337,611

336,893

328,773

Operating profit

73,404

74,15572,616

71,527

Ordinary profit

76,58379,18778,346

77,462

Net income

47,24550,04632,41445,806210.00222.46145.76210.09Total assets

654,791

673,043

679,858

668,207

Net assets

494,154521,529504,932

532,931

Fiscal years
Category

Net income per share(Yen)

In the current fiscal year, the Company’s revenue decreased by 2.4% to Yen
328.7 billion, operating profit fell by 1.5% to Yen 71.5 billion, ordinary
profit decreased by 1.1% to Yen 77.4 billion, and net income increased by
41.3% to Yen 45.8 billion. Net income per share increased to Yen 210.09
from Yen 145.76 for the previous fiscal year.
Contract revenue accounted for 88.6% of total revenue, or Yen 291.3
billion, and sale of products and equipment accounted for 11.4% of total
revenue, or Yen 37.4 billion.
Revenue from centralized system contracts, which is the core of revenue
and profit in contract revenue, recorded Yen 240.4 billion and accounted for
73.1% of total revenue. Static guard contracts generated revenue of Yen 24.7
billion, and revenue from armored car services came to Yen 17.0 billion. The
remaining contract revenue amounted to Yen 9.0 billion, of which the
majority came from fees paid by subsidiaries and other companies foradvisory services.
Product sales totaled Yen 26.7 billion, 8.2% of total revenue, andequipment sales to subsidiaries and other companies totaled Yen 10.6 billion,
3.2% of total revenue.
Operating profit was Yen 71.5 billion, which was achieved by putting
cost control measures in place to reduce sales and general administrative
expenses materially. Non-operating income was Yen 9.2 billion, which
included interest and dividends received, while non-operating expenses,
made up of expenses such as interest paid and losses on sales and disposal of
fixed assets, totaled Yen 3.2 billion. As a result, ordinary profit was Yen 77.4
billion.

[English Translation]
14

In the previous fiscal year, the Company recorded extraordinary
losses of Yen 27.0 billion, including loss on impairment of investment
securities in subsidiaries and affiliates of Yen 14.1 billion. In the current
fiscal year, extraordinary losses was Yen 4.6 billion, including Yen 1.2
billion losses related to the Government’s spectrum reallocation (*) andYen 1.1 billion losses on sales of investment securities in subsidiaries
and affiliates. As a result, net income came to Yen 45.8 billion.
(*) “Losses related to spectrum reallocation” relates to the replacement ofequipments due to the spectrum reallocation led by the Government so thatthe existing spectrum system allotted to COCO-Secom, will no longer beavailable for the existing equipment after July 2012.

Revenue by Business Category of the Company

Fiscal years

Sales

Contract revenue

Category

Centralized
systems
Static guard
services
Armored car
services
Other
Subtotal
Products
Equipment
Subtotal

Total

48th fiscal year
(4/1/2008–3/31/2009)

47th fiscal year
(4/1/2007-3/31/2008)

AmountAmount%Change(%)

1.3

240,417

73.1

(0.5)

7.7

1.3

24,781

7.5(4.0)

17,456

5.2

4.6

17,040

5.2

(2.4)

(5.7)
3.2
8.0
0.4

9,502
294,386
30,987
11,518

2.8
87.4
9.2
3.4

(11.0)
1.0(2.9)(19.8)

9,086
291,325
26,78810,659

2.8
88.6
8.2
3.2

(4.4)
(1.0)
(13.6)
(7.5)

13.7

5.5

42,506

12.6

(8.1)

37,447

11.4(11.9)

337,611 100.0

3.5

336,893 100.0(0.2)

328,773 100.0

(2.4)

%

(millionsof Yen)%238,50770.6

3.2

241,618

71.7

25,4807.6

12.9

25,80916,6844.9(2.9)

10,676291,350
31,905
14,355

3.2
86.3
9.4
4.3

46,261[English Translation]
15

Change(%)

Amount(millionsof Yen)(millionsof Yen)Change(%)

49th fiscal year
(Current fiscal year)(4/1/2009–3/31/2010)

6. Matters Concerning Principal Subsidiaries

Company name

Issued capital

Percentage ofownership(percentage ofPrincipal business activities

voting rights)(Millions of Yen)

Secom Joshinetsu Co., Ltd.

Secom Techno Service Co.,
Ltd.

3,530
(Millions of Yen)

2,357
(Millions of Yen)

Nohmi Bosai Ltd.

Secom Medical System Co.,Ltd.
Secom General Insurance Co.,Ltd.

13,302(Millions of Yen)

6,545
(Millions of Yen)

16,808(Millions of Yen)

Pasco Corporation

8,758(Millions of Yen)

Secom Home Life Co., Ltd

3,700(Millions of Yen)

Secom Trust Systems Co., Ltd.

The Westec Security Group,
Inc.

1,468
(US$)
301
(Thousands ofSecom Plc

UK Pounds)

39,126(%)
50.87(50.88)(%)
67.79(67.85)(%)
50.36(50.93)(%)
100.00(100.00)(%)
97.11(97.40)(%)
69.84(73.02)(%)
99.94(99.95)(%)
100.00(100.00)(%)
100.00(100.00)

Security, safety
Installation and maintenance of
security systems
Comprehensive fire protection
services
Home medical services andremote image diagnosis support
services
Non-life insurance
Surveying, measuring andgeographic information systemservices
Development and sales of realestateInformation security services andsoftware development

Holding company in the U.S.

(%)
100.00(100.00)

Security business in the U.K.

(Notes)1. The percentages of ownership (percentages of voting rights) are truncated to two
decimal places.
2. The percentages of ownership (percentages of voting rights) for Secom Joshinetsu
Co., Ltd., Secom Techno Service Co., Ltd. and Nohmi Bosai Ltd. include those
owned by the Company's subsidiaries.

3. Secom General Insurance Co., Ltd. issued new shares of stock to a third party (cashcontribution) in April 2009, resulting in an increase in capital from Yen 14,558
million to Yen 16,808 million. (Following the increase in capital, the Company's
percentage of ownership rose from 95.83% to 97.11%.)[English Translation]
16

7. Principal Business of the GroupThe Secom Group consists of 165 consolidated subsidiaries and 30 affiliates
accounted for under the equity method.
The principal business activities of the Group are as follows: Security Services
centering on contracted security services; Fire Protection Services centering oncomprehensive fire protection services; Medical Services, focusing on home
medical services and management of residence for seniors; Insurance Services
consisting mainly of non-life insurance; Geographic Information Services thatmainly entails the provision of surveying and measuring operations; Real Estate
Development and Sales centering on development and sales of condominiums;
and Information and Communication Related and Other Services, including
security network services, development and operation of business systems andinformation security services.
8. Principal Offices of the Group(i) Headquarters of the Company:
5-1, Jingumae 1-chome, Shibuya-ku, Tokyo(ii) Regional Headquarters:
Hokkaido (Sapporo City), Tohoku (Sendai City), West Kanto (Saitama City),
East Kanto (Chiba City), Tokyo (Bunkyo-ku, Tokyo), Metropolitan Static
Guard Service (Shinjuku-ku, Tokyo), Metropolitan Armored Car Service(Shibuya-ku, Tokyo), Kanagawa (Yokohama City), Shizuoka (Shizuoka
City ), Chubu (Nagoya City), Kinki (Kyoto City),Osaka (Osaka City), Kansai
Static Guard Service (Osaka City), Hyogo (Kobe City), Chugoku (HiroshimaCity), Shikoku (Takamatsu City), Kyushu (Fukuoka City).
(iii) Domestic Subsidiaries
Secom Joshinetsu Co., Ltd. (Niigata City), Secom Techno Service Co., Ltd.
(Nakano-ku, Tokyo), Nohmi Bosai Ltd. (Chiyoda-ku, Tokyo), Secom
Medical System Co., Ltd. (Shibuya-ku, Tokyo), Secom General InsuranceCo., Ltd. (Chiyoda-ku, Tokyo), Pasco Corporation (Meguro-ku, Tokyo),
Secom Home Life Co., Ltd. (Shibuya-ku, Tokyo), Secom Trust Systems Co.,
Ltd. (Shibuya-ku, Tokyo), Arai & Co., Ltd. (Shibuya-ku, Tokyo).
(iv) Overseas Subsidiaries
The Westec Security Group, Inc. (Dover, Delaware, USA), Secom Plc(Kenley, Surrey, UK), Secom (China) Co., Ltd. (Beijing, China).

[English Translation]
17

9. Matters Concerning Employees of the Group and the Company(1) Matters Concerning Employees of the Group
Decrease from the end of the previous

Number of employees

consolidated fiscal year

33,685393(2) Matters Concerning Employees of the Company
Number of
employees
13,765Decrease from the end of
the previous fiscal year
327

Average age

Average years of service

39.6

12.9

Note: The number of employees refers to the number of full-time employees.

10. Primary Lenders(Millions of Yen)
Lenders

Balance

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

16,385

Mizuho Bank, Ltd.

13,598Mitsubishi UFJ Trust and Banking Corp.

8,114

Sumitomo Mitsui Banking Corp.

5,602

11. Other Important Matters Concerning the Group
Pasco Corporation filed a lawsuit against Sumitomo Mitsui Banking Corporation
asking for a confirmatory judgment to the effect that it does not owe an obligationin the amount of Yen 2,010 million to Sumitomo Mitsui Banking Corporation
with the Tokyo District Court on October 31, 2005. Sumitomo Mitsui Banking
Corporation alleged that it made a loan to a third party and acquired from the third
party its claim against Pasco Corporation for an alleged sale of equipment toPasco Corporation, as collateral for the loan, and demanded Pasco Corporation to
pay such claim to Sumitomo Mitsui Banking Corporation. On December 5, 2005,
Sumitomo Mitsui Banking Corporation brought a cross action against Pasco
Corporation in relation to a demand for payment of a transferred receivable.
Subsequently, both actions were consolidated according to a court procedure. The
oral argument was concluded on October 31, 2008, and on March 27, 2009 Tokyo
District Court rendered the following judgment;(Contents of decision)[English Translation]18

1. Pasco Corporation must pay money to Sumitomo Mitsui Banking Corporationin an amount of Yen 2,010 million as well as interest at the rate of 6 percent per
annum on Yen 600 million, from November 1, 2005, and on Yen 1,409 million,
from December 1, 2005, up to the full payment of the respective amounts;
2. Pasco Corporation incurs the cost of lawsuits including the cost caused bysupplementary participation; and3. The judgment can be provisionally executed.
Pasco Corporation appealed the case to the Tokyo High Court on April 6, 2009.
On May 10, 2010, Pasco Corporation and Sumitomo Mitsui Banking Corporation
reached a settlement under which Pasco Corporation will pay to Sumitomo Mitsui
Banking Corporation on amount of Yen 1,750 million, after several oralproceedings and settlement negotiations at the Tokyo High Court.
Pursuant to the settlement, Pasco Corporation accounted Yen 780 million as an
extraordinary profit as a reversal of a part of reserve for litigation loss provided
for the previous fiscal year and provided anew Yen 1,770 million, a sum of theabove settlement amount and related litigation expenses, on the consolidatedbalance sheet for the current fiscal year.

[English Translation]
19

II. Matters Concerning the Company’s Shares and Shareholders
1. Total Number of Shares to be Issued:

900,000,000

2. Total Number of Issued Shares:
233,288,717(including 15,254,334 shares of treasury stock held by the Company)
3. Number of Shareholders at the End of the Fiscal Year:
4. Number of Shares Constituting a Unit of Shares:

31,488100 shares

5. Major Shareholders (Top 10)

Number of shares held(Thousands of shares)

Percentage of ownership(%)

15,808

7.25

12,873

5.90

12,105

5.55

6,153

2.82

Makoto Iida

4,320

1.98

The Nomura Trust and Banking Co., Ltd.
(Trust Account 2052088)

4,148

1.90

SECOM Science and Technology Foundation

4,025

1.84

JPMorgan Securities Japan Co., Ltd.

3,305

1.51

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

3,196

1.46

Juichi Toda

3,152

1.44

Name of Shareholders

The State Street Bank and Trust Company
The Master Trust Bank of Japan, Ltd.
(Trust Account)
Japan Trustee Services Bank, Ltd.
(Trust Account)
The Nomura Trust and Banking Co., Ltd.
(Trust Account 2052098)(Notes)1. The company holds treasury stock of 15,254,334 shares although it is not included in
the table above. The percentage of ownership is calculated on the basis of the total
number of shares outstanding after excluding treasury stock. The percentage ofownership is truncated to two decimal places.
2. In the case of the trust banks listed above, banking business-related shares and trust
service-related shares are registered under different register names. Therefore, the[English Translation]
20

number of shares held under the register name of banking business is registeredseparately.

[English Translation]
21

III. Directors and Corporate Auditors
1.

Names and Titles of Directors and Corporate Auditors(as of March 31, 2010)
Position

Field of responsibility and important
positionof
otherorganization
concurrently assumed

Name

Director

Makoto Iida

Supreme Advisor

Director

Juichi Toda

Supreme Advisor

Chairman and Director
Executive Vice
Chairman and Director
President andRepresentative Director

Shohei Kimura

Kanemasa Haraguchi
Shuji Maeda

Executive Vice President
and Director

Koichi Sato

Senior Executive Director

Fumio Obata

Executive Director

Katsuhisa Kuwahara

Executive Director

Yasuo Nakayama

Executive Director

Hiroshi Ito

Director

Takayuki Ito

Corporate Auditor

Teruo Ogino

Corporate Auditor

Ken Tsunematsu

Corporate Auditor

Hiroshi Yasuda

Corporate Auditor

Kohei Yamashita

Chairman of the Tokyo Security
Service Association, Outside
Corporate Auditor of Secom General
Insurance Co., Ltd.
Outside Director of Secom Joshinetsu
Co., Ltd.
Executive Officer, Outside Director of
Nohmi Bosai Ltd.
Executive Officer (general manager ofsales division), Chairman and Directorof Secom Joshinetsu Co., Ltd.
Executive Officer (in charge ofcorporate planning and medical
services)
Executive Officer (general manager offinance division)
Executive Officer (general manager ofgeneral affairs division)
Executive Officer (general manager ofhuman resources division, in charge of
information systems and liaison),President and Representative Directorof Secom Trust Systems Co., Ltd.
Executive Officer (general manager ofcorporate sales division), Outside
Corporate Auditor of Secom
Joshinetsu Co., Ltd.
Full-time Corporate Auditor
Attorney-at-law, Managing Director of
SECOM Science and Technology
Foundation
President and Director of Yasuda
Gakuen Kyoikukai
President and Representative Directorof Kokyo Tatemono Co., Ltd.

[English Translation]
22

(Notes)
1. Messrs. Ken Tsunematsu, Hiroshi Yasuda and Kohei Yamashita are Outside
Corporate Auditors as stipulated in Article 2 Item 16 of the Companies Act.
2. The Corporate Auditor, Mr. Teruo Ogino had been in charge of the Company's
financial affairs for 11 years and has considerable knowledge of finance andaccounting matters.
3.

The Corporate Auditor, Mr. Ken Tsunematsu, has for many years been involved insecurities issuance businesses for domestic and overseas companies, public
institutions and organizations etc. as an attorney-at-law. He has experienced in theanalysis and evaluation of the financial statements of these issuers, and has
considerable knowledge of finance and accounting matters.

4.

There are no special interests between the Company and other corporations
employing Outside Corporate Auditors Messrs. Ken Tsunematsu, Hiroshi Yasuda
and Kohei Yamashita.

5.

The notice of Outside Corporate Auditor Ken Tsunematsu being an independent
officer was submitted to Tokyo Stock Exchange, Inc. and Osaka Securities
Exchange Co., Ltd.

6.

Changes in Directors during the current fiscal year
1) Director Mr. Seiichiro Kobayashi resigned at the expiration of his term ofoffice at the conclusion of the 48th ordinary general meeting of shareholders
held on June 25, 2009.
2) Mr. Hiroshi Ito was elected director at the 48th ordinary general meeting ofshareholders held on June 25, 2009, and assumed the position of Executive
Director on the same day.

7.

Changes in positions of directors during the current fiscal year
1) Director Mr. Fumio Obata assumed the position of Senior Executive Director
as of June 25, 2009.
2) President and Representative Director Mr. Kanemasa Haraguchi assumed theposition of Executive Vice Chairman and Director as of January 1, 2010.
3) Executive Vice President and Director Mr. Shuji Maeda assumed the positionof President and Representative Director as of January 1, 2010.

8.

Chairman and Director Mr. Shohei Kimura resigned Chairman of the Tokyo
Security Service Association as of March 31, 2010.

[English Translation]23

9.

As of April 1, 2010, the responsibilities of Directors have changed as follows:

Title

Name

Previous

Current responsibilities

responsibilities
General manager of
Executive Vice
President and Director

Koichi Sato

General manager ofsales division, in charge

sales divisionof management ofoverall sales activities

In charge of corporate

Senior Executive

Fumio Obata

Directorplanning and medical
services

In charge of overseas
businesses〈Reference〉Executive Officers who are not Directors are as follows:(as of May 1, 2010)
Title

Name

Senior Managing

Katsuo Akiyama

Executive Officer
Managing Executive

Seiichi Mori, Shunji Ogahara

Officer
Executive Officer

Minoru Takaoka, Hideo Morishita, Tsuneo Komatsuzaki,
Ryohei Komatsu, Teruo Kano, Yukio Tsunoda, Naohide
Nakamura, Masahiro Takeda, Teruhisa Yoshimura, Keitaro
Arai, Yasuyuki Yoshida, Tatsuro Fuse

(Notes)
1. Executive Officer Mr. Shunji Ogahara was appointed to Managing Executive
Officer as of April 1, 2010.
2. Messrs. Keitaro Arai, Yasuyuki Yoshida, and Tatsuro Fuse were appointed as
Executive Officers as of April 1, 2010.

2. Remuneration of Directors and Corporate Auditors

Directors

12

Combined total of
remuneration(Millions of Yen)
483

Corporate Auditors

4

44

Total

16

528

Number of
Recipients(Notes)1. Of the above, the total combined remuneration for the 3 outside Corporate
Auditors is Yen 24 million.

[English Translation]24

2. The Directors' bonuses of Yen 64 million paid for the current fiscal year isincluded in the above total amount of remunerations of Directors.
3. The total amount of Remuneration of Directors and Corporate Auditors
shown above includes Yen 75 million (Yen 74 million to Directors and Yen 1
million to Corporate Auditors (including Yen 0 to Outside Corporate
Auditors), respectively) which are accrued to retirement benefits for
Directors and Corporate Auditors, which were appropriated in the current
fiscal year.
4. The total amount of Remuneration of Directors shown above includes
amount paid to one Director who retired at the conclusion of the 48th
ordinary general meeting of shareholders held on June 25, 2009.
5. In addition to the above, retirement benefits of Yen 53 million (alreadyapproved at general meeting of shareholders, and included an amountdisclosed as provisions to accrued retirement benefits for Directors andCorporate Auditors in past fiscal years) have been paid to one Director who
retired at the conclusion of the 48th ordinary general meeting of shareholders
held on June 25, 2009, and two Directors who retired at the conclusion of the
43rd ordinary general meeting of shareholders held on June 29, 2004
(appointed as Executive Officers when retiring as Directors and retired as
Executive Officers on June 25, 2009).

[English Translation]25

3. Outside Corporate Auditors

Name

Ken Tsunematsu

Hiroshi Yasuda

Attendanceof theMeetings ofthe Boardof Directors

Attendance ofthe Meetingsof the Boardof Corporate
Auditors

12

11(out of 12)(out of 11)

12

11(out of 12)(out of 11)[English Translation]
26

Main Activities

He has high level of insight tocorporate legal matters andknowledge about interests between
management and stakeholders
through many domestic andinternational securities issuing
projects and abundance ofexperience in the area of financeand accounting, which were
cultivated in many years as
attorney-at-law. He primarily
offered advice and suggestions at
the Board of Directors Meeting inorder to ascertain the validity
and/or appropriateness ofoperations and management.
He offered advice and suggestions
at the Board of Directors Meeting
based on his ample experience andinsights of company managementand directorships gained frompreviously held positions. He also
asked questions and stated opinions
in order to clarify unclear issues.

Name

Kohei Yamashita

Attendance

Attendance ofof thethe Meetings

Meetings ofof the Board

the Boardof Corporateof Directors

Auditors

11

10(out of 12)(out of 11)[English Translation]
27

Main Activities

He offered advice and suggestions
at the Board of Directors Meeting
based on his ample experience andinsights of managing a global
corporation. He also asked
questions and stated opinions inorder to clarify unclear issues.
In addition, with respect to themeetings for which he was absent,
he received from the full-time
Corporate Auditor detailed reportson the resolutions of the meetings
so as to remain fully informed.

IV. Accounting Auditors
1. Name of Accounting Auditors
KPMG AZSA & Co.

2. Remuneration of Accounting Auditors(1) Remuneration for duties relating to Article 2 Paragraph 1 ofCertificated Public Accountants Act to be paid by the Company

Yen 174 million(2) Total cash and other remuneration to be paid by the Company
and subsidiaries to the accounting auditors

Yen 518 million(Notes)1. Based on the audit contract between the Company and the accounting auditors, theremuneration paid to auditors is not distinguished between those as the auditors
under the Companies Act and those as the auditors under Financial Instruments
and Exchange Act and furthermore they cannot in fact be distinguished, andtherefore the amount given in (1) above is the combined total of these amounts.
2. Of the major subsidiaries of the Company, The Westec Security Group Inc. isaudited by PricewaterhouseCoopers LLP and Secom Plc by KPMG LLP.

3. Non-Audit Duties
A subsidiary of the Company mainly engages the Accounting Auditors to provide
verification of the design and operating effectiveness of internal control systems,
as defined in the Auditing Standards Committee Report No. 18 (Evaluation ofeffectiveness over internal control of service organizations), as services other thanthose stipulated in Article 2, Paragraph 1 of Certificated Public Accountants Act(non-audit services).

4. Policy for Decision for Dismissal or Non-reappointment
Whenever there occurs any material event which could be a substantial hazard to
the performance of audit duties of the Company, such as a case when it is deemedthat the accounting auditors have come to fall within the purview of Article 340
Paragraph 1 of the Companies Act or the accounting auditors or the firm ofaccounting auditors is subjected to the disposition of suspension of business by[English Translation]
28

the supervisory authorities, the Board of Corporate Auditors will examine thesituation, and, when all Corporate Auditors have consented thereto, the Corporate
Auditor will take action for the dismissal of the subject accounting auditors or the
subject firm of accounting auditors. In such case, the Corporate Auditor selectedby the Board of Corporate Auditors will report the reasons for the dismissal at thegeneral meeting of shareholders convened for the first time after such dismissal.
In any other case, when there exists any situation where it is acknowledged thatthe accounting auditors are not fit to act as accounting auditors, a proposal will,with the consent of the Board of Corporate Auditors, be submitted to the general
meeting of shareholders for the dismissal or non-reappointment of the accounting
auditors.

[English Translation]
29

V. System under which the Company’s Business is Ensured to be Properly
Executed
1. Basic Policy Regarding Internal Control System
The Company’s basic policy regarding the internal control system, i.e. the “system
under which execution of duties by Directors is ensured to comply with laws andregulations and the Articles of Incorporation, and the system under which theCompany’s business is ensured to be properly executed” resolved on andapproved by the Board of Directors is set out below. (Last revised on April 7,
2010)
(1)

GeneralThis resolution manifests the basic policy regarding the internal control
system of the Company to be specifically established by the President
and Representative Director based on Article 362, Paragraph 5 of theCompanies Act.
The internal control system based on this resolution shall be establishedurgently by officers in charge, and shall be constantly reviewed andimproved.

(2)

System under which execution of duties by Directors and employees is
ensured to comply with laws and regulations and the Articles ofIncorporation(i) In order to ensure even more thorough compliance with laws andordinances and the Articles of Incorporation in the execution of duties,
the Company has integrated its compliance manual with SECOM Group
Code of Employee Conduct, which sets key ethical standards to befollowed, and at the same time, it has conducted a review of manuals on
critical laws. SECOM Group Code of Employee Conduct is based on thephilosophy of SECOM, which we have followed since the establishmentof the business. These ethical guidelines prescribe ideals covering theofficial and private affairs of all executives and employees and action
standards (including the blocking relationships with anti-social forces) tobe followed in the execution of specific daily duties. As such, theseguidelines provide the basis of all actions. The compliance management
system is as follows.

[English Translation]
30

(Ensuring compliance)
From the start, the compliance of laws and ordinances has been an
indispensable requirement of our business, and we have always
sought to operate in strict adherence to this spirit. Therefore,
compliance is a part of the company's daily routines, which should
not require a system in which a specific section or manager is
responsible for implementation. Each and every employee is at thefront line of promoting the code of conduct, including legal
compliance. The implementation of guidelines is carried out by theline managers of the organization. Further control is provided by the
executive officers in charge of departments under their control, with
the President and Representative Director providing companywide
control.
(Executive officers in charge)
The executive officers in charge of each area are responsible forhaving thorough knowledge particularly of regulations related totheir duties and the relationships of such regulations with their own
operations. They are responsible for proposing responses to any
revisions of laws to the President and Representative Director. The
Legal Affairs Department supports them, providing
cross-organizational coordination.
(Inspection)
Following the orders of the President and Representative Director,
the Audit and Compliance Department provides cross-organizational
inspection in a timely manner, indicating how to improve morale
through observance and at the same time pointing out matters thatneed correction. The findings of the inspection are reported promptly
to the President and Representative Director.
(Internal Report System)
When executives and employees of the Company become aware ofunethical actions, they have the obligation to report such actions to
the proper superior without hesitation. A "Hot Helpline" has been
established to facilitate contact with the Audit and ComplianceDepartment if corrective actions are not taken even after reporting tosuperiors or it is difficult to report. Such reports will remain strictly[English Translation]31

confidential, preventing any harm to the reporter, and any necessary
investigation and appropriate measures will be taken promptly.

(Organizational Culture Committee)
The Company establishes a standing, active Organizational Culture
Committee, chaired by the President and Representative Director.
The Organizational Culture Committee examines importantorganizational culture-related issues (including compliance-related
matters), which are the cornerstone of developing and maintaining
the corporate organization, and determines important official
commendations and punishments.
(ii) Revisions of SECOM Group Code of Employee Conduct and/or criticalcompliance-related matters are undertaken after discussion with theOrganizational Culture Committee and subject to the approval of theBoard of Directors after obtaining opinions of the Corporate Auditors.
(iii)Basic plans and policies concerning internal controls related to financial
reporting are determined in accordance with the standards of theBusiness Accounting Council. Furthermore, an internal control system isbeing developed by reinforcing information security and through othersteps.
(3)

System under which information regarding execution of business byDirectors shall be maintained and controlled(i) Documents and other information regarding execution of duties such as
those concerned with decision making (hereinafter referred to as the“information on executing duties”) shall be properly maintained,
administered (including destruction) pursuant to the Document
Administration Regulation of the Company, which will be amended
upon reviewing the operating conditions if necessary.
(ii) Information on executing duties shall be recorded on database withnecessary information protection measure so that a search system can beestablished to enable quick search as to whether or not the particular
document exists or the condition of storage of the particular document.

[English Translation]
32

(iii)Any business related to the preceding two paragraphs shall be
undertaken by officers in charge, and in particular the status of
examination and review of (i) above, and operation and management of
the database of (ii) above shall be reported to the President andRepresentative Director, the Board of Directors, and the Board of
Corporate Auditors.
(iv) Establishment and important amendments of the Regulation regarding (i)above shall be subject to approval of the Board of Directors after
obtaining opinions of the Corporate Auditors.
(4)

Regulation regarding control of risk of loss and other system(i) The Company's approach to risk management is embedded in day-to-day
business activities, with acknowledgement that risk management itself is
the Company's business.
Executive officers in charge, under the direction of the President andRepresentative Director, analyze and assess business risk and fraud riskin the operational areas for which they are responsible, and revise
established rules and manuals as conditions change.
Rules and manuals are based on risk analysis and assessment, andstipulate preventive measures, prompt and appropriate communicationand emergency preparedness when incidents occur, daily risk monitoringand other systems.
(ii) The officer in charge shall report the President and Representative
Director, the Board of Directors and the Board of Corporate Auditors on
matters related to control of risk.
(iii)Any important changes of the risk control system shall be subject toapproval of the Board of Directors after obtaining opinions of the
Corporate Auditors.

[English Translation]
33

Risk Category

ExampleLarge scale(1)Large scale calamity

Earthquake, wind, flood, volcanic

calamityrisk

disasters, radiation leakage, etc.

(2)Compliance risk

Noncompliance with “SECOM’s
Business and Operation”, “SECOM

Ordinary times

Group Code of Employee Conduct” orother internal rules and guidelines, etc.,
risk accompanied by establishment orchanges in regulations (in the area oftax system, medical system, etc.),
breach of law, etc.
(3)System risk

Information system shut down,
electronic data extinguishment, large
scale blackout, wide area circuit
disturbance, ICT (information andcommunication technology) relatedrisk, etc.

(4)Service providing risk

Risk incurred when providing services(Accidents related security, fire alarmor equipment maintenance businesses,etc,)(5)Administrative work

Input error or input omission in

and accounting treatment

administrative or account processing,risk

estimation error for allowance amount,etc.

(6)Others

Offence from outsiders (groundlessrumor, calumniation, theft, terror, etc.),
risk related to M&A, risk related to
new system development, other risk
related to business infrastructure (fireon the Company’s premises, pandemic
influenza, disease epidemic, etc.), etc.

[English Translation]
34

(5)

System by which efficient execution of duties of Directors shall beensured(i) All Directors of the Company shall carry out operation and execution ofbusiness on the basis of the “Constitution of SECOM’s Business andOperation” so that they may share the idea essential to execution of theduties such as decision making for management by the Board of
Directors, decision making for execution of duties by the Directors.
(ii) On the basis of the preceding, to implement execution of duties
efficiently, the system of executive officers has been introduced so thatdecision making and execution of business shall be further facilitated.
(iii)In executing duties, in order to unify the power of the entire Company, asystem utilizing IT should be established and thereby, enabling
information to be immediately disseminated to the entire Company tothe fullest extent.
(iv) With respect to particular decision making or execution of duties, asystem utilizing IT should be established to carry out the decision
making and execution immediately and definitely.
(v) The Company will share the medium- and long-term business vision,and for the purpose of accomplishment thereof, the Board of Directors
will design an annual business plan and deliberate progress of the planeach month.

(6)

System under which the Company and the Company Group consistingof the parent company and subsidiaries is ensured to properly executeits business(i) Abiding by the "Constitution of SECOM's Business and Operation,"each of the companies of the SECOM Group shares SECOM Group
Code of Employee Conduct, which applies to all executives andemployees. United by these guidelines, the executives and employees
work to accomplish the corporate goals in an appropriate manner.
(ii) The "Basic Rules for SECOM Group Corporate Management" provide
guidelines to enhance Group synergy, leading to the achievement of thebusiness vision by the entire SECOM Group. Covering critical[English Translation]
35

decision-making by the companies, these basic rules clarify thecoordination of items to be approved in prior consultation with theparent company and ensure the acknowledgement of such important
items.
(iii)Each of the companies of the SECOM Group carries out IT controls
covering administration and management information in conformancewith the "Basic Policy of the SECOM Group for Information Security."
The Company's IT executive officers conduct timely inspections
covering the IT management of major subsidiaries.
(iv) The "SECOM Group Management Committee," which is chaired by theCompany's President and Representative Director and whose members
are composed of the presidents of subsidiaries and other parties
appointed by the chairperson, works to ensure that appropriate
operations are carried out. It accomplishes this goal by conducting
discussions of issues related to the Group's internal controls in an effort
to share Group information and operating philosophy. The President andRepresentative Director reports the results of the Group Management
Committee to the Board of Directors and the Board of Corporate
Auditors.
(v) The President and Representative Director issues orders to the Audit andCompliance Department and the supervising executive officers at Group
companies to inspect subsidiaries, if necessary. The subsidiaries accept
the inspection by the Company, which is the parent company, and at thesame time promote the understanding of compliance-related issues byexchanging information with the Company.
(vi) The Corporate Auditors of the Company visit important subsidiaries andconduct audits regarding internal controls.
(vii) A liaison meeting with Group Corporate Auditors is established after
discussion with the Board of Corporate Auditors in an attempt to share
information.
(7)

Matters related to employees to assist duties of Corporate Auditors
when Corporate Auditors requests to do so[English Translation]
36

The Office of Corporate Auditors will be established and at least two
employees will be manned to assist audit duties of the Corporate Auditors.
(8)

Matters related to independence of the employees in the preceding item
concerned from Directors
Transfer and evaluation of assistants in the preceding item shall be subject tothe approval of the Board of Corporate Auditors.
The assistants who received necessary instruction on audit duties by
Corporate Auditors shall not be subject to any instruction or order from
Directors, executive officers or employees with respect to the subject audit
duties, nor be obligated to report to them.

(9)

System under which Directors and employees report to Corporate
Auditors and system under which any report is made to Corporate
Auditors(i) Regulation providing for matters to be reported to Corporate Auditors
shall be established upon discussion with the Board of Corporate
Auditors, and Directors shall make reports with respect to the following
matters: (1) matters resolved by the Organization Culture Committee andother committees; (2) matters likely to be materially harming theCompany; (3) important matters relating to monthly business conditions;(4) important matters relating to internal audit and risk control; (5)material violation of laws and regulations or the Articles ofIncorporation; (6) condition of usage and content of the Hot Help Line;and (7) in addition, important matters from viewpoint of compliance.
(ii) If an employee finds a fact falling within the preceding paragraph, asystem by which the fact may be transmitted directly to the President
and Representative Director through such means as the Hot Help Lineshall be arranged and the President and Representative Director shallreport to Corporate Auditors pursuant to the preceding paragraph.

(10) System under which audit by Corporate Auditors is ensured to be
performed efficiently(i) The Board of Corporate Auditors shall regularly hold the meetings with
the President and Representative Director and Accounting Auditors, toexchange opinions so that audit shall be performed efficiently.

[English Translation]37

(ii) The Company ensures that the Board of Corporate Auditors may retain
attorneys-at-law at its discretion and, if necessary, have opportunities toretain and consult professional accountants with respect to their audit
duties.
Note:"(4) Regulation regarding control of risk of loss and other system" wasrevised as of April 7, 2010. The fact that the Company's risk management isembedded in day-to-day business activities themselves was noted andspecific examples for each category of the Company's risk were added,
among other revisions.

2.

Organizations, etc. Relating to Internal Control System (as of May 1,
2010)

The Company's governance system is as follows: The Board of Directors makes
decisions on business execution and other company matters; executive officers
led by President and Representative Director execute business; and Corporate
Auditors, including three Outside Corporate Auditors, and the Board of
Directors, coordinating with internal audit departments, etc. audit and oversee
Directors and executive officers in the execution of their duties. More details areprovided below.
(1)

Organizations, etc. involved in business execution, auditing andsupervision of the Company(i)Directors and Board of Directors
The Board of Directors consists of 11 Directors and is attended by 4
Corporate Auditors (including 3 outside Corporate Auditors). It isconvened once a month as a general rule. The Board of Directors
determines management policies and business execution policies inrelation to business in general, oversees the execution of duties byDirectors, actively exchanges opinions and endeavors to make decisions in
a precise and speedy fashion.
Seven out of 11 Directors are involved in business execution, and 4
Directors (2 Supreme Advisors, Chairman and Executive Vice Chairman)
do not engage in business execution.
(ii) Executive Officers[English Translation]
38

The Company has an executive officer system by which decisions are
made by the President and Representative Director or the Board of
Directors, and business is executed by the Executive Officers. The systemstrengthens field divisions and enhances the service system for customers
by expediting business execution and clarifying responsibilities andauthority.
There are 22 Executive Officers, including 7 Directors.
(iii) Corporate Auditors and Board of Corporate Auditors
The Board of Corporate Auditors consists of 4 Corporate Auditors,
consisting of 1 full-time Corporate Auditor and 3 outside Corporate
Auditors. It is convened once a month as a general rule.
For the office of full-time Corporate Auditor, the Company appoints
persons who are well versed in the Company's business, internal affairs
and finance. For the office of Outside Corporate Auditors, the Company
appoints persons who are independent from the management, haveconsiderable knowledge of management, legal matters, finance and otherfields and are capable of providing appropriate oversight and supervisionof management.
Corporate Auditors attend each meeting of the Board of Directors in
addition to other important conferences, exchange opinions relating tocorporate management in general, receive reports on the status ofexecution of duties from Directors, etc. and conduct audits focusing onwhether there are any facts of violations of laws, regulations, the Articles
of Incorporation or shareholders’ interests.
The Board of Corporate Auditors also conducts audits on operations ingeneral within the Company as well as its subsidiaries and affiliates
according to the audit plan.
Major Activities in the current fiscal year(i) Corporate Auditors’ attendance rate at meetings of the Board of
Directors: 97.9%(ii) Corporate Auditors’ attendance rate at meetings of the Board of
Corporate Auditors: 97.7%(iii) Conducted interviews with Directors, etc. of the Company andits subsidiaries and affiliates: 48 times(iv) Conducted on-site audits at business locations of the Company
and its subsidiaries and affiliates, etc.: 157 locations[English Translation]
39

(2)

Coordination among Organizations and Business Units(i) Periodic Meetings among Representative Director, etc. and Corporate
Auditors:
Corporate Auditors hold meetings with the President &Representative Director with the presence of Chairman & Directorand Executive Vice Chairman & Director periodically (once amonth). At the meeting, Corporate Auditors report the results ofaudits, etc. and exchange opinions on important issues regarding
management, to share mutual recognition.
(ii) Conferences, etc. among Corporate Auditors and Accounting
Auditors:
Corporate Auditors hold periodical meetings with Accounting
Auditors 6 times a year and have ones additionally as necessary, andexchange opinions and information. Corporate Auditors and theBoard of Corporate Auditors receive explanation and exchange
opinions regarding the audit plan and audit results* from the
Accounting Auditors. In addition, Corporate Auditors present as awitness during visiting audits and audit review conducted by the
Accounting Auditors as necessary. (Witness frequency: 34 times in
the current fiscal year)* including the results of quarterly reviews and the result of annual
audit, etc.
(iii) Cooperation with Internal Audit Division, etc.:
Corporate Auditors hold conferences with the Audit and ComplianceDepartment periodically (once a month), are reported audit results
and exchange opinions with them. And Corporate Auditors endeavor
to conduct audits in an efficient manner such as requesting theinternal audit division, etc. to conduct an investigation as necessary.

[English Translation]
40

Consolidated Balance Sheet(As of March 31, 2010)(Millions of Yen)ITEM

AMOUNTASSETS
Current assets:
Cash on hand and in banks
Cash deposits for armored car services
Call loans
Notes and accounts receivable, trade
Due from subscribers
Short-term investments
Lease receivables and investment in leased assets
Inventories
Real estate inventories
Deferred income taxes
Short-term loans receivable

483,600
146,929
48,86136,50073,844
20,824
15,98914,742
23,65974,409
11,684
3,088
15,275

Allowance for doubtful accounts(2,207)

Fixed assets:
Tangible assets:
Buildings and improvements
Security equipment and control stations
Land
Other

597,864
273,020
97,692
63,03493,424
18,869Intangible assets:
Software
Goodwill
Other

21,885
15,7692,295
3,820

Deferred assets:
Other

302,959
187,777
50,48818,136
18,618
19,84826,493(18,403)

213
213

TOTAL ASSETSAMOUNT

LIABILITIESOtherInvestments and others:
Investment securities
Long-term loans receivable
Long-term prepaid expenses
Prepaid pension and severance costs
Deferred income taxes
Other
Allowance for doubtful accounts

ITEM

1,081,679[English Translation]
41

Current liabilities:
Notes and accounts payable, trade
Bank loans
Current portion of straight bonds
Lease obligations
Payables - otherAccrued income taxes
Accrued consumption taxes
Accrued expenses
Deferred revenue
Accrued bonuses
Reserve for litigation losses
Reserve for losses on construction
contracts
Other

210,353
24,77448,094
1,761
247
23,35920,907
3,302
3,633
33,554
12,1391,770Long-term liabilities:
Straight bonds
Long-term loans
Lease obligations
Guarantee deposits received
Deferred income taxes
Accrued pension and severance costs
Accrued retirement benefits for
Directors and Corporate Auditors
Investment deposits by policyholders,
unearned premiums and otherinsurance liabilities
Other

246,171
17,006
16,085501
36,777
8,399
13,264

Total liabilities

145
36,6602,398
150,180
1,557
456,525

NET ASSETS
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Common stock in treasury, at cost
Valuation, translation adjustments andothers:
Unrealized gains on securities
Deferred losses on hedges

581,959
66,377
83,054507,434(74,907)(23,367)
4,521
(17)

Foreign currency translation
adjustments(27,871)

Minority interests in subsidiaries:

66,562

Total net assets

625,153

TOTAL LIABILITIES AND
NET ASSETS

1,081,679

Consolidated Statement of Income(Fiscal Year from April 1, 2009 to March 31, 2010)(Millions of Yen)ITEM

AMOUNT

Revenue
Costs of revenue
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income:Interest income
Dividends income
Gain on sales of investment securities
Net gains from investment in affiliated companies
accounted for under the equity method
Other
Non-operating expenses:
Interest expenses
Loss on sales and disposal of fixed assets
Write-off of long-term prepaid expenses
Loss on private equity investments
Other
Ordinary profit
Extraordinary profit:
Gain on sales of investment securities in subsidiaries andaffiliates
Reversal of reserve for litigation loss
Penalty charge income
Gain on sales of investment securities
Gain on sales of fixed assets
Other
Extraordinary losses:
Loss on impairment of investment securities
Losses related to spectrum reallocation
Loss on disposal of software
Impairment losses on fixed assets
Loss on sales of investment securities in subsidiaries andaffiliates
Loss on sales of fixed assets
Other
Income before income taxes
Income taxes – current
Income taxes – deferred
Minority interests in subsidiaries
Net income[English Translation]
42654,678
415,390239,288
140,749
98,539
1,083
274
1,526
2,977
3,296
1,331
1,483
989
3,063
2,503

9,158

9,371
98,327

2,225
780
240
8
6
108

3,370

2,653
1,253
586
291
60
14
602
38,172
4,944

5,463
96,233
43,116
5,505
47,611

Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2009 to March 31, 2010)(Millions of Yen)
Shareholders’ equity
Common stock

Total

in treasury, atshareholders’costequityRetained
Common stock

Capital surplus
earnings

Balance as of March 31, 2009

66,377

83,054478,355(74,896)

552,891

Changes during the period:
Cash dividends(18,533)(18,533)

Net income

47,611

47,611

Purchase of treasury stock
Disposal of treasury stock

(0)

(12)

(12)

0

0

Transfer of losses on disposal of
－

0

(0)

－

－

29,078(11)

29,067

66,377

83,054507,434(74,907)581,959

treasury stock
Net changes of items other thanshareholders’ equity
Total changes during the period
Balance as of March 31, 2010

Valuation, translation adjustments and others
Foreign

Unrealized

Deferred

gains (losses)

gains (losses)

on securities

on hedges

Balance as of March 31, 2009

(3,901)currencytranslation
adjustments(27)(30,008)

Total
valuation,translation
adjustments

Minority
interests in
subsidiaries

Total net
assetsand others(33,937)

63,654

582,608

Changes during the period:
Cash dividends(18,533)

Net income

47,611

Purchase of treasury stock(12)

Disposal of treasury stock0

Transfer of losses on disposal of－treasury stock
Net changes of items other thanshareholders’ equity

8,423

9

2,137

10,5692,908

13,477

Total changes during the period

8,423

9

2,137

10,5692,908

42,545

Balance as of March 31, 2010

4,521

(17)

(27,871)(23,367)

66,562625,153[English Translation]
43

Notes to Consolidated Financial Statements
Notes to Significant Items for Preparation of Consolidated Financial Statements

1. Scope of Consolidation(1)

Number of Consolidated Subsidiaries: 165
Names of major consolidated subsidiaries:
Secom Joshinetsu Co., Ltd., Nohmi Bosai Ltd., Secom Medical System
Co., Ltd., Secom General Insurance Co., Ltd., Secom Techno Service
Co., Ltd., Secom Industries Co., Ltd., Secom Trust Systems Co., Ltd.,
Pasco Corporation, Secom Home Life Co., Ltd., Arai & Co., Ltd., The
Westec Security Group, Inc.

(2)

Descriptions of Non-consolidated Subsidiaries
FM-International Laos Co., Ltd., Nohmi Kosaku Co., Ltd., Nohmi
Facilities Co., Ltd., Eishin Denshi Co., Ltd., Nohmi Baoli (Beijing)Intelligent Fire Protection Co., Ltd., and 2 other companies(The reason for exclusion from consolidation)
All of these 7 non-consolidated subsidiaries are of a small size, so thatthe aggregate amounts of total assets, revenue, net income/loss (anamount prorated to ownership) and retained earnings (an amount prorated
to ownership) and others do not have a significant effect on the
consolidated financial statements.

(3)

Names of other companies owing majority of voting rights not regarded as
subsidiaries
US Collections, Inc., Switchcraft Holdco, Inc., Global Sales Training,Inc., CLP Auto Interior Corp., US Juice Partners, LLC, Gold Canyon
Mining & Construction, LLC, US Water, LLC(The reason for not regarded as subsidiaries)
These companies were acquired by subsidiaries of The Westec Security
Group, Inc. through normal course of business with the objective ofinvestment, not with the objective of control.

2. Equity Method(1)

Number of equity method affiliates: 30
Names of major affiliated companies accounted for under the equity
method:Japan Nuclear Security System Co., Ltd., S1 Corporation, Toyo Tec Co.,
Ltd., Tokyo Biso Kogyo Corporation, Taiwan Secom Co., Ltd.

(2)

Number of non-equity method affiliates: 5(The reason for not applying the equity method)
These 5 companies are not accounted for under the equity method
because their effect on net income/loss (an amount prorated to[English Translation]
44

ownership) and retained earnings (an amount prorated to ownership)
during the current fiscal year is insignificant.
(3)

Names of other companies owing between 20% and 50% of voting rights
not regarded as affiliates
Global T&M Holdings, LLC(The reason for not regarded as an affiliate)This company was acquired by a subsidiary of The Westec Security
Group, Inc. through normal course of business with the objective ofinvestment, not with the objective of control.

3. Changes in Scope of Consolidation and Companies Accounted for under the
Equity Method
Consolidation
Newly consolidated subsidiaries: 7
Sichuan Secom Security Co., Ltd and 5 other companies: (Newly
establishment)
MAC International Co., Ltd: (Acquisition)
Excluded from consolidation: 6
MAC International Co., Ltd and 1 other company: (Merger)
Seisho Corporation: (Liquidation)
Japan Image Communications Co., Ltd. and 2 other companies:(Divestiture)
Equity Method
Exclusion from affiliates accounted for under the equity method: 1
Ibaraki Network Inc.: (Liquidation)
4. Closing Dates of Consolidated Subsidiaries and Equity Method Affiliates
With respect to overseas consolidated subsidiaries, etc., 9 U.S.
subsidiaries such as The Westec Security Group Inc., 4 U.K. subsidiaries
such as Secom Plc, 15 Chinese subsidiaries such as Secom (China) Co.,
Ltd., 5 Australian subsidiaries such as Secom Australia Pty. Ltd., P.T.
Nusantara Secom Infotech, P.T. Secom Indopratama, Pasco Thailand
Co., Ltd., Thaisecom Pitakkij Co., Ltd., Pasco Philippines Corp., Secom
Vietnam Co.,Ltd., FM-International Oy, Nohmi Taiwan Ltd., Base
Aerofotogrametria E Projetos S.A. and Pasco Do Brasil Participacoes
Ltda. close their book as of December 31 each year, and the financial
statements as of this date are used for preparation of the consolidated
financial statements.
With respect to domestic consolidated subsidiaries, etc., while 15companies such as Ena Urbane Properties, Co., Ltd. close their book as
of December 31 each year, the financial statements prepared pursuant to
the provisional closing of books conducted as of March 31 are used for
preparation of the consolidated financial statements.
With respect to equity method affiliates, 12 companies such as S1
Corporation and Taiwan Secom Co., Ltd. close their book as ofDecember 31 each year, and the financial statements as of this date areused for preparation of the consolidated financial statements. While
Koatsu Co. Ltd. closes its book as of September 30 each year, thefinancial statements prepared pursuant to the provisional closing of books
conducted as of March 31 are used for preparation of the consolidated
financial statements.

[English Translation]
45

The necessary adjustments related to the consolidation are made forany major transactions which arise between the consolidated closing
dates. The closing dates of other consolidated subsidiaries and equity
method affiliates are the same as the consolidated closing date.
5. Significant Accounting Policies(1)

Valuation policies and methods for significant assets
1) Securities
a. Held-to-maturity debt securities are carried at amortized cost.
b. Available-for-sale
Securities with fair value
Stock and beneficiary securities: At fair value based on the average
market price one month prior to the fiscal year-end
Others: At fair value based on market price at fiscal year-end
Net unrealized gains and losses of securities are primarily reported,
net of applicable income taxes, directly in net assets. The cost of
securities sold is primarily calculated by the moving averagemethod.
Securities with no fair value
At cost, principally based on the moving average method
2) Derivatives
Derivatives are stated at fair value.
3) Inventories
Inventories are principally stated at cost based on the moving
average method (or at the net realizable value (NRV) calculated bywriting down the book value to reflect a decrease in the NRV).
4) Real estate for saleStated at cost by the specific cost method (or at the net realizablevalue calculated by writing down the book value to reflect a
decrease in the NRV).

(2)

Depreciation and Amortization of Depreciable and Amortizable Fixed
Assets1) Tangible Assets (except for leased assets)a. Security equipment and control stations
Security equipment and control stations are depreciated over theiraverage estimated useful service lives (5–8 years) by the
declining-balance method.
b. Other tangible fixed assets
Other tangible fixed assets are depreciated by the straight-line
method.
Their main useful service lives are as follows:
Buildings and improvements: 22–50 years
Tools and equipments: 2–20 years
2) Intangible Assets (except for leased assets)
Intangible fixed assets are amortized by the straight-line method.

[English Translation]
46

The software used in the Company is amortized by the straight-line
method based on the useful service lives within the Company (5years).
3) Leased Assets
a. Leased assets related to ownership-transfer finance leasetransactions
Depreciated, using the same depreciation method applied to fixed
assets in possession.
b. Leased assets related to non-ownership-transfer finance leasetransactions
Depreciated, using the straight-line method over a useful life equal
to the lease period with a residual value of zero.
In addition, non-ownership-transfer finance leases entered into on
or before March 31, 2008 are treated using the method applicable
to operating lease transactions.
4) Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by the straight-line
method. With respect to the installation costs related to security
equipment at the customer premises, any portion exceeding theamount received from the customer is included in “long-term prepaid
expenses” and amortized by the straight-line method over the contract
period (5 years).
(3)

Basis for Significant Allowances
1) Allowance for Doubtful Accounts
To prepare for losses from bad debts such as losses on tradereceivables and loans, the allowance for doubtful accounts provides anestimated amount of uncollectables. It is determined based on thehistorical loss rate with respect to ordinary accounts, plus an estimateof uncollectable amounts respectively determined by reference tospecific doubtful accounts from customers who are experiencing
financial difficulties.
2) Accrued Bonuses
The accrued bonuses are provided for the bonus payments toemployees, at an amount incurred during the current fiscal year.
3) Reserve for losses on construction contracts
To prepare for future losses on construction contracts, etc., an accrualis provided based on the estimated losses on construction contracts,
etc. that are undelivered at the end of the current fiscal year.
4) Accrued Pension and Severance Costs
To prepare for the retirement benefits of employees, the Company andits domestic consolidated subsidiaries, etc. provide an amount of
accrued pension and severance costs and prepaid pension andseverance costs at the end of the current fiscal year, based on theestimated amount of projected retirement benefit obligations and plan
assets as of the end of the current fiscal year.
Prior service liability is recognized as profit or loss in the year ofoccurrence.
Actuarial gains and losses are amortized from the following fiscal yearof occurrence, using the straight-line method over certain years within
the average remaining service period (mainly 10 years).
(Change to the accounting policy)[English Translation]47

In the current fiscal year, the Company applied the “Partial
Amendments to Accounting Standard for Retirement Benefits (Part3)” (ASBJ Statement No.19, issued on July 31, 2008).
Because actuarial gains and losses are amortized from the following
fiscal year, this change does not impact operating profit, ordinary
profit and income before income taxes in the current fiscal year.
The balance of unrecognized retirement benefit obligations with theapplication of this accounting standard is negative Yen 623 million.
5) Accrued Retirement Benefits for Directors and Corporate Auditors
To prepare for outlays for retirement benefits of Directors andCorporate Auditors of the Company and certain domestic consolidated
subsidiaries, a necessary amount at the end of the current fiscal year isappropriated based on the rules of the Directors and Corporate
Auditors’ retirement benefits
6) Reserve for Litigation Losses
To prepare for litigation losses, an accrual is provided based on theestimated potential losses.
(4)

Revenue and Cost Recognition Policies
1) Revenue Recognition Policies for Construction Contracts
The Company applies the percentage-of-completion method toconstruction contracts whose outcomes are deemed certain forprogress until the end of the current fiscal year, and applies thecompleted-contract method to other construction contracts. The
percentage of costs incurred to the estimated total cost is used for
estimating the percentage of completion.
(Change to the accounting policy)
Regarding the revenue recognition policies for construction contracts,
the percentage-of-completion method was applied for contracts in
Pasco Corporation and its subsidiaries, and constructions with contract
amount of more than 0.5 billion yen or greater in Secom Techno
Service Co., Ltd. and its subsidiaries, while the completed-contract
method was applied for other constructions. According to the adoptionof “Accounting Standard for Construction Contracts” (ASBJ
Statement No.15, issued on December 27, 2007) and “Guidance on
Accounting Standard for Construction Contracts” (ASBJ Guidance
No.18, issued on December 27, 2007) from the current fiscal year, forconstruction contracts engaged on or after April 1, 2009, thepercentage-of-completion method is applied for construction contracts
whose outcomes are deemed certain for progress until the end of thecurrent fiscal year, otherwise the completed-contract method isapplied. The percentage of costs incurred to the estimated total cost is
used for estimating the percentage of completion. The effect of thischange on revenue, operating profit, ordinary profit and income before
income taxes is insignificant.
2) Recognition Policies for Revenue and Costs of Finance Leases
The Company applies the method to recognize revenue and cost uponreceipt of lease payments.

(5)

Accounting for Major Hedges
1) Hedge Accounting Policy
The Company principally applies deferred hedging accounting. Theinterest rate swaps that fulfill requirements for exceptional treatments[English Translation]48

permitted for interest rate swaps are accounted for using exceptional
treatments.
2) Hedging Instruments and Hedged Items
Hedging instruments: Interest rate swaps
Hedged items:
Loans payable3) Hedging Policy
The risks for forward interest rate fluctuation are to be hedged
principally pursuant to the risk management policy of the Company.
4) Assessment of Hedge EffectivenessHedge effectiveness is assessed by comparing the cumulative totals of
price fluctuations of the hedging items and hedging instruments fromthe beginning of hedging to the effective point of assessment, taking
the changes of both the hedging items and hedging instruments into
account. However, when an item is judged to fulfill requirements for
exceptional treatments, the assessment of hedge effectiveness isomitted.
(6)

Accounting for Consumption Tax, etc.
The Company has adopted the tax-exclusive method.

6. Valuation of Assets and Liabilities of Consolidated Subsidiaries
Assets and liabilities of consolidated subsidiaries, etc. are fullymeasured at fair value at acquisitions.
7. Amortization of Goodwill and Negative Goodwill
Goodwill and negative goodwill are amortized by the straight-line
method over a 5–10 year period.
8. Changes of Presentations(Consolidated Balance Sheet)“Reserve for losses on construction contracts” was included in “Other”
of current liabilities in the previous fiscal year. However, it is listed
separately from the current fiscal year for better clarification.
Reserve for losses on construction contracts included in “Other” ofcurrent liabilities in the previous fiscal year was Yen 258 million.
(Consolidated Statement of Income)“Exchange losses” which was listed separately until the previous fiscal
year, amounted to an exchange gain of Yen 533 million in the current
fiscal year. Because this amount is less than 10% of non-operating
income, it has been included in “Other” of non-operating income.

[English Translation]
49

Notes to Consolidated Balance Sheet
1. Cash Deposits for Armored Car Services, Short-term Bank Loans
For financial institutions, the Company and some of the domestic
consolidated subsidiaries provide cash collection from and cash filling tocash dispensers located outside of financial institution facilities. The balanceof cash deposits for armored car services includes cash on hand and cash inbanks representing a total of Yen 26,592 million connected with suchservices, which is restricted as to use by the Company group. The short-termbank loan balance includes Yen 6,310 million financed for the cash
collection and filling services.
Furthermore, the balance of cash deposits for armored car services includes
Yen 22,269 million connected with cash collection administration services,which is also restricted as to use by the Group. Also, the short-term bankloan balance includes Yen 18,181 million financed in connection with thesame services.
2. Accumulated Depreciation of Assets
Accumulated Depreciation of Tangible Assets: Yen 304,337 million
3. Assets Pledged as Collateral and Collateral-related Liabilities:(1) Assets Pledged as Collateral
Cash on hand and in banks (time deposit)
Short-term loans receivables
Other current assets (receivable -other)
Buildings and improvements
Land
Intangible assets (leasehold)Investment securities
Long-term loans receivable
Other fixed assets (long-term deposit)
Total(Millions of Yen)
1,541
14
670
30,00529,548
818
645
610
200
64,054(2) Collateral-related Liabilities(Millions of Yen)
14,314
1,761
17,00615,00548,088Bank loans
Current portion of straight bonds
Straight bonds
Long-term loans
Total

In addition to the above liabilities, investment securities and long-termloans are pledged as collateral for the debts of affiliated companies andother debts.
4. Investment in Non-consolidated Subsidiaries and Affiliated Companies:(Fixed assets)
Investment in securities (shares) amounted to Yen 40,662 million.
5. Contingent Liabilities:(1) The company guarantees loans payable and amounts payable held for lease,etc. of the affiliated companies, etc. amounted to Yen 4,607 million.

[English Translation]50

(2) Lawsuits
Pasco Corporation filed a lawsuit against Sumitomo Mitsui Banking
Corporation for a confirmatory judgment to the effect that it does not owe
an obligation in the amount of Yen 2,010 million to Sumitomo Mitsui
Banking Corporation with the Tokyo District Court on October 31, 2005.
Sumitomo Mitsui Banking Corporation alleged that it made a loan to a third
party and acquired from the third party its claim against Pasco Corporation
for an alleged sale of equipment to Pasco Corporation, as collateral for theloan, and demanded Pasco Corporation to pay such claim to Sumitomo
Mitsui Banking Corporation. Furthermore, on December 5, 2005, Sumitomo
Mitsui Banking Corporation brought a cross action against Pasco
Corporation in relation to a demand for payment of a transferred receivable.
Subsequently, both actions were consolidated according to a court
procedure. The oral argument was concluded on October 31, 2008, and on
March 27, 2009 Tokyo District Court rendered the following judgment;(Contents of decision)
1. Pasco Corporation must pay money for Sumitomo Mitsui Banking
Corporation in an amount of Yen 2,010 million as well as interest of therate of 6 percent per annum on Yen 600 million, from November 1,
2005, and on Yen 1,409 million, from December 1, 2005, up to the full
payment of the respective amounts;
2. Pasco Corporation incurs the cost of lawsuits including the cost caused bysupplementary participation; and3. The judgment can be provisionally executed.
Pasco Corporation appealed the case to the Tokyo High Court on April 6,2009.
And on May 10, 2010, Pasco Corporation reached a Yen 1,750 million cash
settlement with Sumitomo Mitsui Banking Corporation at the Tokyo High
Court after several oral proceedings and settlements negotiation.
As reserve for litigation loss, Yen 1,770 million, including the above cash
settlement and related litigation expenses, is recognized.
6. Presentation of Goodwill and Negative Goodwill
Goodwill and negative goodwill are presented in netted amount. Listed
below are the amounts before offset.
Goodwill
Yen 4,170 million
Negative goodwill
1,875
Net amount
2,295

Notes to Consolidated Statement of Income
1. Write-down on real estate inventories included in cost of revenue
Yen 1,285 million[English Translation]
51

Notes to Consolidated Statement of Changes in Net Assets
1. Classes and Total Number of Issued Shares and Treasury Stocks(Unit：1 share)
Number of sharesat the end of theprevious
consolidated fiscal
year

Increase in thenumber of shares in
the current
consolidated fiscal
year

Decrease in thenumber of sharesin the current
consolidated fiscal
year

Number of sharesat the end of thecurrent
consolidated
fiscal year

233,288,717－－

233,288,717

Issued shares
CommonstocksTreasury stocks
Common15,251,520
2,998
184
15,254,334
stocks(Outline of reasons for change)
The increase of 2,998 in the number of common stocks is due to thepurchase of shares constituting less than one unit.
The decrease of 184 in the number of common stocks is due torequests to sell such number of shares as will constitute, together with theshares constituting less than one unit of shares already held, one full unit.
2. Items Related to Dividends(1) Amount of Dividend Paid
Resolution
Ordinary General
Meeting of
Shareholders on
June 25, 2009Classes ofSharesCommonstock

Total amountof dividend

Cash dividend
per share(Millions of Yen)

(Yen)

18,53385

Record date

Effective
date

March 31,2009

June 26,
2009(2) Of the dividends whose record date belongs to the current fiscal year, thefollowing are those dividends of which the effective date belongs to the next
fiscal year.
The matters to be resolved on the general meeting of shareholders are as
follows.
Resolution

Ordinary General
Meeting of
Shareholders on
June 25, 2010

Classesof Shares

Commonstock

Source ofdividend

Total amountof cashdividend

Cashdividend
per share(Millions of Yen)

(Yen)

18,53285

Retainedearnings[English Translation]
52

Record date

Effective
date

March 31,2010

June 28,2010

Notes to Financial Instruments
1. Items Related to Status of Financial Instruments
The SECOM Group (excluding its insurance services business) raises
necessary funds to establish a “Social System Industry” by such means as
procuring funds from markets and borrowing money from financial
institutions. The Group also holds financial instruments for promoting its
business and investment. Derivatives are primarily used for averting interest
rate fluctuation risks associated with loans, etc., and it is the Group’s policy not
to perform speculative transactions.
The Group's Insurance Services business manages funds using financial
instruments for the purpose of safely and carefully holding and managing
insurance premiums received from policyholders for underwriting insurance
policies as a source of funds for paying future insurance benefits. As thefinancial instruments in which the Group invests are exposed to market risks
such as interest rate fluctuation risks, the Group performs asset-liability
management (ALM) to prevent any adverse impact of such risks from arising.

[English Translation]53

2. Items Related to Fair Values of Financial Instruments
The amounts recognized on the consolidated balance sheet, fair values andcorresponding differences as of March 31, 2010 are listed below. Items forwhich identifying the fair value has been deemed extremely difficult are notincluded in the table below. (See Note 2)(Millions of Yen)
AmountFair value
Difference
recognized ontheconsolidatedbalance sheet(1)Cash on hand and in banks
146,929
146,929(2)Cash deposits for armored car
48,861
48,861
services(3)Call loans
36,50036,500(4)Notes and accounts receivable,
73,84473,844
trade(5)Due from subscribers
20,824
20,824(6)Short-term investments andinvestment securities(i)Held-to-maturity debt
6,650
6,133
(516)
securities(ii)Available-for-sale securities
145,886
145,886(7)Lease receivables and
14,742
15,461718
investment in leased assets(8)Short-term loans receivable
3,088
Allowance for doubtful(50)
accounts (*1)
3,038
3,038
(9)Long-term loans receivable
50,488
Allowance for doubtful(17,136)
accounts (*1)
33,351
33,925573
Total assets
530,628
531,404776(1)Notes and accounts payable,
24,774
24,774
trade(2)Bank loans
48,09448,094(3)Payables - other
23,35923,359(4)Accrued income taxes
20,907
20,907(5)Straight bonds
18,76818,837
69(6)Long-term loans
16,085
16,146
60(7)Guarantee deposits received
5,625
5,491
(133)
Total liabilities
157,616
157,612(4)
Derivative transactions (* 2)(i)Hedge accounting applied
(31)
(31)
(ii)Hedge accounting not
(24)
(169)
(144)
appliedTotal derivative transactions
(56)
(200)
(144)
*1 Excludes allowance for doubtful accounts for loans receivable.
*2 Net claims and obligations arising from derivative transactions are shown as
net values. Items for which the total is a net obligation are shown in parentheses.
(Note 1) Calculation method of fair value of financial instruments and mattersconcerning securities and derivative transactions[English Translation]
54

Assets(1) Cash on hand and in banks, (2) Cash deposits for armored car services, (3)Call loans, (4) Notes and accounts receivable, trade, (5) Due from subscribers and(8) Short-term loans receivable
These items are stated at their book value, as these items are mainly settled in ashort period of time, and their fair value approximates their book value.
(6) Short-term investments and investment securities
The fair value of stocks is based on the price quoted on the exchange whereas thefair value of straight bonds, etc. is based on the price quoted on the exchange or
the price presented by the corresponding financial institution.
(7) Lease receivables and investment in leased assets
These items are stated at present value calculated by discounting the sum of theprincipal and interest at the interest rate assumed when a new similar leasetransaction is performed.
(9) Long-term loans receivable
These items are stated at present value calculated by discounting the sum of theprincipal and interest at the interest rate assumed when a new similar loantransaction is performed with respect to each category based on type, internalrating and period of the loans receivable. The fair value of doubtful accounts isapproximately the same as the value on the balance sheet as of the fiscal year-end
less the current estimated loan loss, as the estimated loan loss is calculated basedon the discounted present value of estimated cash flow or the expected
recoverable amount with collateral and guarantee, etc.; therefore, the said value isstated as fair value. Certain consolidated subsidiaries calculate the present valueof future cash flow by discounting the future cash flow at an interest rate equal toan appropriate index such as the yield of government bonds plus the credit spreadaccording to the residual period.
Liabilities(1) Notes and accounts payable, trade, (2) Bank loans, (3) Other payables and (4)Accrued income taxes
These items are stated at their book value, as these items are mainly settled in ashort period of time, and their fair value approximates their book value.
(5) Straight bonds
These items are stated at present value calculated by discounting the sum of theprincipal and interest at the interest rate assumed when new similar straight bonds
are issued, according to the residual period of the straight bonds.
(6) Long-term loans
These items are stated at present value calculated by discounting the sum of theprincipal and interest at the interest rate assumed when a new similar debt is takenon.
(7) Guarantee deposits received
Guarantee deposits received are stated at present value calculated by discounting
the future cash flow at risk-free interest rate.
Derivative transactions
Derivatives are stated at the price presented by the financial institution with which
the Group has concluded an agreement.

[English Translation]
55

For hybrid instruments which do not separate the fair value of the embedded
derivatives, the fair value of the hybrid instruments is calculated as a whole, andincluded in “(i) held-to-maturity debt securities” in “(6) Short-term investments
and investment securities”.
(Note 2) Financial instruments whose fair value is deemed extremely difficult to
identify(Millions of Yen)
Amount recognizedItemon the consolidatedbalance sheet
Unlisted stock (*1)
5,053
Investments in limited partnerships for
5,513
investment
Deposit from business activities (*2)
31,152*1 Not included in “(6) Short-term investments and investment securities”
due to lack of market price, and because fair value is deemed extremely
difficult to identify.
*2 Not included in “(7) Guarantee deposits received” because reasonableestimation of cash flow is deemed extremely difficult due to lack ofmarket price and difficulty in calculating the effective depositing period.
(Additional Information)
Starting in the current fiscal year, the Company has applied “AccountingStandard for Financial Instruments” (ASBJ Statement No. 10, March 10,2008) and “Implementation Guidance on Disclosures about Fair Value of
Financial Instruments” (ASBJ Guidance No. 19, March 10, 2008).

Notes to Rental Property and Other Real Estate
The Company and some of its consolidated subsidiaries own rental officebuildings and medical facilities such as hospitals, in addition to rental housing,
etc. mainly in Tokyo and other major cities across the country.
The amount recognized on the consolidated balance sheet, the amount of
increase/decrease during the current fiscal year and the fair value of such rental
properties are as follows.
(Millions of Yen)
Fair value at
Amount recognized on the consolidated balanceend of the
sheet
current
consolidated
Balance atIncrease/decrease Balance at
fiscal year
end of theduring theend of thepreviouscurrent
current
consolidated
consolidated
consolidated
fiscal year
fiscal year
fiscal year
Office36,620(341)
36,27948,540buildings
Medical34,96010,87145,83140,229facilities
Other
8,094
801
8,896
8,361
Total
79,676
11,33191,007
97,131[English Translation]
56

(Note 1) The amount recognized on the consolidated balance sheet equals theacquisition cost less accumulated depreciation and accumulated
impairment loss.
(Note 2) Of the amount of increase/decrease for medical facilities during thecurrent consolidated fiscal year, the main component of the increase
was the acquisition of MAC International Co., Ltd.(increase of Yen
12,229 million).
(Note 3) The fair value as at the current consolidated fiscal year end is, in thecase of major properties, the amount based on real-estate appraisal by
an external real-estate appraiser, and in the case of other properties, theamount calculated in-house based on the Real Estate Appraisal
Standard. However, if no significant fluctuations have occurred in acertain valuation or an index that is deemed to properly reflect themarket price since the acquisition of the property from a third party or
the most recent external valuation, the fair value is based on thevaluation during the current fiscal year or the amount adjusted byusing the index.
Profit or loss on rental properties and other real estate in the fiscal year
ended March 2010 is as follows.
(Millions of Yen)
RentalRentalDifference
Other
incomeexpenses(gain/loss on
sale, etc.)
Office
3,285
1,536
1,749
246
buildings
Medical
3,805
1,677
2,127
facilities
Other
529
293
235
(6)
Total
7,619
3,506
4,113
239
(Additional Information)
Starting in the current fiscal year under review, the Company has applied the“Accounting Standard for Disclosures about Fair Value of Investment and Rental
Property” (ASBJ Statement No. 20, November 28, 2008) and “Guidance on
Accounting Standard for Disclosures about Fair Value of Investment and Rental
Property”(ASBJ Guidance No. 23, November 28, 2008).

[English Translation]
57

Notes to Deferred Tax Accounting
1. The Significant Components of Deferred Tax Assets and Deferred Tax
Liabilities:
Deferred tax assets:(Millions of Yen)
Operating loss carryforwards
15,061Eliminations of unrealized gain
10,441
Allowance for doubtful accounts
8,004
Adjustment of book value of land and buildings of subsidiaries,
etc. at fair value at the date of consolidation
7,032
Accrued bonuses
4,886
Accrued pension and severance costs
4,843
Investment deposits by policyholders, unearned premiums and
4,750
other insurance liabilities and provision for outstanding claims
Write-down on fixed assets
4,423
Impairment loss
2,831
Loss on impairment of investment securities
1,986
Write-down on real estate inventories
1,466
Other
10,138Gross deferred tax assets
75,866
Valuation allowance(33,216)
Total deferred tax assets
42,649Deferred tax liabilities:
Adjustment of book value of other fixed assets of subsidiaries,
etc. at fair value at the date of consolidation (land andbuildings)
Prepaid pension and severance costs
Adjustment of book value of other fixed assets of subsidiaries,
etc. at fair value at the date of consolidation (Other fixed
assets)
Unrealized gains on securities
Other
Total deferred tax liabilities
Net deferred tax assets[English Translation]
58(7,768)(7,108)(2,522)(1,745)(370)(19,516)
23,133

2. Summary of the Reconciliation between the Effective Tax Rate Reflected in theConsolidated Financial Statements and the Statutory Tax Rate :Statutory tax rate
(Reconciliation)
Unrecognized tax benefits fromsubsidiaries in deficit
Increase in valuation allowance
Adjustment of gain/loss on sales ofinvestments in subsidiaries andaffiliates
Net gains from investment inaffiliated companies accounted forunder the equity method
Utilization of tax loss carryforwards
Per capita levy of corporate
inhabitant tax
Permanently nondeductible expenses
such as entertainment expenses
Amortization of goodwill
Research and development tax
credits
Other
Effective tax rate after theapplication of deferred tax
accounting

40.5 (%)
3.7
2.6
(1.4)
(1.2)
(1.0)
0.8
0.7
0.6
(0.4)
(0.1)
44.8 (%)

Notes to Fixed Assets Used under Leases
1. Finance lease transactions commencing on or before March 31, 2008 other thanthose deemed to transfer the ownership of the leased assets to the lessees(1) As a Lessee
Besides the ones booked as fixed assets on the balance sheet of the Company,
some of buildings, automobiles, machinery and equipment, tools, furniture andfixtures and software are used based on the finance lease contracts other thanthose deemed to transfer the ownership of the leased assets to the lessees.

[English Translation]591) The Amount Equivalent to Acquisition Cost, the Amount Equivalent to
Accumulated Depreciation, and the Amount Equivalent to Year-End
Balance of Leased Properties(Millions of Yen)
Amount equivalent to acquisition cost
Buildings and improvements
5,184
Tangible assets (other)
8,105
Intangible assets (software)
989
Total
14,278Amount equivalent to accumulated depreciation
Buildings and improvements
Tangible assets (other)
Intangible assets (software)
Total

2,453
5,988
627
9,069

Amount equivalent to year-end balance
Buildings and improvements
Tangible assets (other)
Intangible assets (software)
Total

2,731
2,116
361
5,209

2) The Amount Equivalent to Year-End Balance of Future Minimum Lease
Payments(Millions of Yen)
Within 1 year
1,579
Over 1 year
4,710
Total
6,290
3) Lease Payment Expenses, the Amount Equivalent to Depreciation
Expenses, and the Amount Equivalent to Interest Expenses
Lease payment expenses
Amount equivalent to depreciation expenses
Amount equivalent to interest expenses(Millions of Yen)
2,703
2,399
290

4) Calculation Method of the Amount Equivalent to Depreciation Expenses
and the Amount Equivalent to Interest Expenses
Calculation Method of the amount equivalent to depreciation expenses
Depreciation expenses are calculated using the straight-line method
which assumes that the period of the lease is the useful service life of theasset and sets the residual value to zero.
Calculation Method of the amount equivalent to interest expenses
The amount equivalent to interest expenses is calculated as thedifference between total lease payments and the amount equivalent to theacquisition cost of leased properties, and the interest method is used as
the allocation method for each fiscal period.

[English Translation]60

(2) As a Lessor
1) The Acquisition Cost, Accumulated Depreciation, and Year-End Balance
for Leased Properties Included in Fixed Assets(Millions of Yen)
Acquisition cost
Buildings and improvements
Tangible assets (other)
Total

21,3686,443
27,812

Accumulated depreciation
Buildings and improvements
Tangible assets (other)
Total

4,201
4,200
8,402

Year-end balance
Buildings and improvements
Tangible assets (other)
Total

17,167
2,242
19,4102) The Amount Equivalent to the Year-End Balance of Future Minimum
Lease Payments to be received(Millions of Yen)
Within 1 year
1,128
Over 1 year
18,321
Total
19,4503) Received Lease Payments, Depreciation Expenses, and the Amount
Equivalent to Received Interest(Millions of Yen)
Received lease payments
3,433
Depreciation expenses
2,095
Amount equivalent to received interest
1,9674) Calculation Method of the Amount Equivalent to Interest
The amount equivalent to interest is calculated as total lease payments plus
total estimated residual value minus the purchase price of the leased
properties, and the interest method is used as the allocation method foreach fiscal period.
2. Finance Leases(As a Lessor)
1) Investment in Leased Assets(Current assets)
Gross lease receivables
Amount equivalent to received interest
Investment in leased assets(Millions of Yen)
23,851(9,692)
14,1592) Estimated collection schedule for gross lease payments to be received forlease receivables and leased investment assets[English Translation]
61

(Millions of Yen)
(Current assets)
Lease receivables
Within 1 year

56

Investment inleased assets
8,413

1 year to 2 year

56

6,417

2 year to 3 year

56

4,583

3 year to 4 year

56

2,701

4 year to 5 year

56

931

Over 5 year
397
804
(Note) With regard to non-ownership transfer finance lease transaction
for which the lease transaction commenced on or before March 31,
2008 among the lease transactions of consolidated subsidiary,
Secom Credit Co., Ltd., whose principal business is leasing, it hasrecorded the appropriate book value of fixed assets (after deducting
accumulated depreciation) as of the end of the fiscal year
immediately preceding to the application of the accounting
standard as of the beginning balance of investment in leased assetsof the current fiscal year. The book value is included in the balanceof investment in leased assets above.
3. Operating Leases
1) As a Lessee(Millions of Yen)

Future minimum lease payments
Within 1 year
Over 1 year
Total

2,355
26,07628,431

2) As a Lessor(Millions of Yen)
Future minimum lease payments to be received
Within 1 year
Over 1 year
Total

[English Translation]
62

3,503
24,26827,771

Notes to Retirement Benefits
1. Outline of the Retirement Benefit Plan Adopted by the Company:
Employees of the Company and its consolidated domestic subsidiaries
whose services are terminated are, under most circumstances, eligible forlump-sum severance indemnities and/or eligible for pension benefits.
The Company and those of its domestic consolidated subsidiaries with thesame retirement benefit plan have adopted a severance indemnity plan and adefined contribution pension plan. The method of calculating the severance
indemnity under the severance indemnity plan is to pay out to the employees
an amount equal to a certain percentage of their annual income over theirperiod of service, plus interest which is calculated as the 3-year average yieldof applicants for 10-year government bonds (though subject to transitional
measure). The defined contribution pension plan was established in April 2003,
a portion equivalent to 20 percent of the severance indemnity plan so far
accumulated was transferred to the new plan, and a specified percentage ofannual income is contributed thereto. The Company transferred an additional
portion of the severance indemnity plan funds to the defined contribution
pension plan in April 2005, and accordingly, the ratio of the accumulated
amount in the severance indemnity plan and the amount of contributions to thedefined contribution pension plan, including the past reserve, changed to 70
percent and 30 percent, respectively.
The majority of the consolidated overseas subsidiaries have adopted avariety of pension plans that essentially cover all employees. Most of theseplans are defined contribution pension plans.
2. Items Concerning the Retirement Benefit Obligation (As of March 31, 2010):(Millions of Yen)
(1) Projected benefit obligation(72,600)(2) Plan assets *1
60,341(3) Unfunded projected benefit obligation(12,259)((1)+(2))(4) Unappropriated difference at the time ofchange in accounting standard(5) Unrecognized actuarial gains or losses
17,613(6) Unrecognized prior service liability(7) Net retirement benefit obligation
recognized in the consolidated balance
5,353
sheet
((3)+(4)+(5)+(6))(8) Prepaid pension and severance costs
18,618(9) Accrued pension and severance costs(13,264)((7)-(8))(Note) *1. Plan assets include the asset of Yen 234 million of the retirement
benefit trust.

[English Translation]63

3. Components of Pension and Severance Costs (from April 1, 2009 to March 31,
2010)(Millions of Yen)
(1) Service cost *1
4,245(2) Interest cost
1,475(3) Expected return on plan assets(1,589)(4) Amortization of actuarial gains or losses
2,239(5) Pension and severance costs
6,371((1)+(2)+(3)+(4))(6) Other *2
1,467
Total
7,839
(Notes) *1. Pension and severance costs for consolidated subsidiaries, etc.
adopting the simplified method are included in (1) “Service cost.”*2.“Other” represents the amount payable as premiums to the defined
contribution pension plan.

4. Assumptions Used in Accounting for Retirement Benefits(1) Attribution of projected
benefit obligation(2) Discount rates(3) Expected rates of return onplan assets(4) Amortization period of priorservice liability(5) Amortization period of
actuarial gains or losses

Straight-line method over the estimatedyears of services of the eligible employees
Principally 2.1% at beginning of fiscal year
Principally 2.2% at end of fiscal year
Principally 3.0% for plan assets
0.0% for retirement benefit trust
Prior service liability is amortized in theyear incurred.
Amortizing actuarial gains and losses fromthe following fiscal year of occurrence,using the straight-line method over certain
years within the average remaining service
period (mainly 10 years).

Notes to Business Combination
Not applicable

Notes to Per-Share Information
Net assets per share:
Net income per share:

Yen 2,561.94
Yen 218.37[English Translation]64

Non-Consolidated Balance Sheet(As of March 31, 2010)(Millions of Yen)ITEM
ASSETSAMOUNT

Current assets:
Cash on hand and in banks
Cash deposits for armored car services
Notes receivable
Due from subscribers
Accounts receivable, trade
Receivables – other
Short-term investments
Merchandise
Supplies
Prepaid expenses
Deferred income taxes
Short-term loans receivable
Other
Allowance for doubtful accounts

134,634
44,607
46,957248
11,434
6,484
2,556
2,429
6,574
1,082
2,016
4,720
3,943
2,026
(450)

Current liabilities:
Accounts payable
Bank loans
Lease obligations
Payables – otherAccrued income taxes
Accrued consumption taxes
Accrued expenses
Deposits received
Deferred revenue
Payables – construction
Accrued bonuses
Other

111,287
2,009
24,49251
10,811
14,637
1,491
555
23,62522,558
3,425
5,493
2,133

Fixed assets:
Tangible assets:
Buildings and improvements
Automobiles
Security equipment and control
stations
Machinery and equipment
Tools, furniture and fixtures
Land
Construction in progress
Other
Intangible assets:
Software
Other
Investments and others:
Investment securities
Investment securities and investments
in subsidiaries and affiliates
Long-term loans receivable
Lease deposits
Long-term prepaid expense
Prepaid pension and severance costs
Deferred income taxes
Insurance funds
Other
Allowance for doubtful accounts

533,572
118,147
22,360368

Long-term liabilities:
Lease obligations
Guarantee deposits received
Accrued pension and severance costs
Accrued retirement benefits for
Directors and Corporate Auditors
Other
Total liabilities
NET ASSETS

23,989182
17,965
4,394

TOTAL ASSETS

60,860828
3,519
28,352
1,203
654
8,555
7,580
975
406,869
21,769195,773
133,871
8,583
25,816
14,364
14,0994,334
800(12,544)668,207[English Translation]
65

ITEM
LIABILITIESShareholders’ equity:
Common stock
Capital surplus:
Additional paid-in capital
Retained earnings:
Legal reserve
Other retained earnings
Reserve for system developments
General reserve
Accumulated earnings carried forward
Common stock in treasury, at cost
Valuation, translation adjustments andothers:Net unrealized gains on securities

Total net assets
TOTAL LIABILITIES AND
NET ASSETSAMOUNT

1,174
272
135,276

532,145
66,377
83,054
83,054
457,620
9,028
448,591
800
2,212
445,579(74,907)786
786

532,931668,207Non-Consolidated Statement of Income(Fiscal Year from April 1, 2009 to March 31, 2010)(Millions of Yen)ITEM

AMOUNT

Revenue

328,773

Costs of revenue

188,701

Gross profit

140,072

Selling, general and administrative expenses

68,544

Operating profit

71,527

Non-operating income:Interest income

2,131

Dividends income

6,260

Other

832

9,225

Non-operating expenses:
Interest expenses

427

Loss on sales and disposal of fixed assets

1,143

Write-off of long-term prepaid expenses

910

Other

809

Ordinary profit

3,290
77,462Extraordinary profit:
Reversal of allowance for doubtful accounts

312

Penalty charge income

240

Other

8

561

Extraordinary loss:
Losses related to spectrum reallocation
Loss on sales of investment securities in subsidiaries
and affiliates
Loss on impairment of investment securities insubsidiaries and affiliates
Loss on impairment of investment securities
Other

1,253
1,172
1,165
704
342

Income before income taxes

4,639
73,384

Income taxes – current

27,688

Income taxes – deferred(110)

Net income

27,57845,806[English Translation]
66

Non-Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2009 to March 31, 2010)(Millions of Yen)
Shareholders’ equity
Capital surplus
CommonAdditional

Other capital

Total capital

paid-in capitalsurplussurplusstock

Balance as of March 31, 2009

66,377

83,054－

83,054

(0)

(0)

0

0

Changes during the period:
Cash dividends
Net income
Purchase of treasury stock
Disposal of treasury stock
Transfer of loss on disposal oftreasury stock
Net changes of items other thanshareholders’ equity
Total changes during the period
Balance as of March 31, 2010

－

－

－

－

66,377

83,054－

83,054(Millions of Yen)
Shareholders’ equity
Retained earnings
Other retained earnings
Legal

Reserve forreservesystemdevelopments

Balance as of March 31, 2009

9,028

800

Generalreserve
2,212

Total

Accumulated

retainedearnings carriedearnings

forward418,306

430,347

Cash dividends(18,533)(18,533)

Net income

45,80645,806(0)(0)

Changes during the period:

Purchase of treasury stock
Disposal of treasury stock
Transfer of loss on disposal oftreasury stock
Net changes of items other thanshareholders’ equity
Total changes during the period

－

－

－

27,27327,273

Balance as of March 31, 2010

9,028

800

2,212

445,579

457,620[English Translation]
67

(Millions of Yen)
Valuation, translation

Shareholders’ equity

Total

Commonstock intreasury, atcost
Balance as of March 31, 2009

adjustments and others

Total

Unrealized

valuation,

shareholders’gains (losses)

translation

equityon securities

adjustments

Total net
assetsand others(74,896)504,88348

48

504,932

Changes during the period:
Cash dividends(18,533)(18,533)

Net income

45,80645,806

Purchase of treasury stock

(12)

(12)

(12)

Disposal of treasury stock

0

0

0

－

－

Transfer of loss on disposalof treasury stock
Net changes of items otherthan shareholders’ equity

737

737

737

Total changes during the(11)27,261

737

737

27,999(74,907)532,145786

786

532,931

periodBalance as of March 31, 2010[English Translation]
68Notes to Non-Consolidated Financial Statements
Notes to Significant Accounting Policies
1. Valuation Policies and Methods for Securities(1) Held-to-maturity debt securities
Amortized cost method(2) Investment Securities in Subsidiaries and Affiliates
Valued at cost, based on the moving average method(3) Available-for-sale Securities
Securities with fair value
Stock and beneficiary securities: At fair value based on the average
market price one month prior to the fiscal year-end.
Others: At fair value based on market price at fiscal year-end
Net unrealized gains and losses of securities are reported, net of
applicable income taxes, directly in net assets. The cost of securities
sold is primarily calculated by the moving average method.
Securities with no fair value
At cost, based on the moving average method
2. Valuation Policies and Methods for Inventories
Merchandise and supplies are stated at cost determined by the moving averagemethod (or at the net realizable value (NRV) calculated by writing down thebook value to reflect a decrease in the NRV).
3. Depreciation and Amortization of Depreciable and Amortizable Fixed Assets(1) Tangible Assets: (except for leased assets)
1) Security equipment and control stations
Security equipment and control stations are depreciated over theiraverage estimated useful service lives (5–8 years) by the
declining-balance method.
2) Other tangible fixed assets
Other tangible fixed assets are depreciated by the straight-line method.
Their main useful service lives are as follows:
Buildings and improvements: 22–50 years(2) Intangible Assets
Intangible fixed assets are amortized by the straight-line method.
The software used in the Company is amortized by the straight-line
method based on the useful service lives within the Company (5 years).
(3) Leased Assets
1) Leased assets related to ownership-transfer finance lease transactions[English Translation]69

Depreciated, using the same depreciation method applied to fixed assets
in possession.
2) Leased assets related to non-ownership-transfer finance leasetransactions
Depreciated, using the straight-line method over a useful life equal to
the lease period with a residual value of zero.
In addition, non-ownership-transfer finance leases entered into on or
before March 31, 2008 are treated using the method applicable tooperating lease transactions.
(4) Long-term Prepaid Expenses: Straight-line method
Long-term prepaid expenses are amortized by the straight-line method.
With respect to the installation costs related to security equipment at thecustomer premises, any portion exceeding the amount received from thecustomer is included in “long-term prepaid expenses” and amortized by
the straight-line method over the contract period (5 years).
4. Basis for Significant Allowances(1) Allowance for Doubtful Accounts
To prepare for losses from bad debts such as losses on trade receivables
and loans, the allowance for doubtful accounts provides an estimatedamount of uncollectables. It is determined based on historical loss ratewith respect to ordinary accounts, and an estimate of uncollectableamounts, respectively determined by reference to specific doubtful
accounts from customers who are experiencing financial difficulties.
(2) Accrued Bonuses
Accrued bonuses are provided for the bonus payments to employees, at an
amount incurred during the current fiscal year.
(3) Accrued Pension and Severance Costs
To prepare for the retirement benefits of employees, the Company
provides an amount of accrued pension and severance costs and prepaid
pension and severance costs at the end of the current fiscal year, based on
the estimated amount of projected benefit obligation and plan assets as ofthe end of the current fiscal year.
Prior service liability is recognized as profit or loss in the year ofoccurrence.
Actuarial gains and losses are amortized from the following fiscal year ofoccurrence, using the straight-line method over certain years within the
average remaining service period (mainly 10 years).
(Change to the accounting policy)
In the current fiscal year, the Company applied the “Partial Amendments
to Accounting Standard for Retirement Benefits (Part 3)” (ASBJ
Statement No.19, issued on July 31, 2008).
Because actuarial gains and losses are amortized from the following fiscal
year, this change does not impact operating profit, ordinary profit andincome before income taxes in the current fiscal year.
The balance of unrecognized retirement benefit obligations with theapplication of this accounting standard is negative Yen 477 million.
(4) Accrued Retirement Benefits for Directors and Corporate Auditors[English Translation]70

To prepare for outlays for retirement benefits of Directors and Corporate
Auditors of the Company, a necessary amount at the end of the current
fiscal year is appropriated based on the rules of the Directors andCorporate Auditors’ retirement benefits.
5. Revenue and Cost Recognition Policies
Revenue Recognition Policies for Construction Contracts
The Company applies the percentage-of-completion method to construction
contracts whose outcomes are deemed certain for progress until the end of thecurrent fiscal year, and applies the completed-contract method to otherconstruction contracts. The percentage of costs incurred to the estimated total
cost is used for estimating the percentage of completion.
(Change to the accounting policy)
Regarding the revenue recognition policies for construction contracts, thecompleted-contract method was applied in the past. According to the adoptionof “Accounting Standard for Construction Contracts” (ASBJ Statement No.15,
issued on December 27, 2007) and “Guidance on Accounting Standard forConstruction Contracts” (ASBJ Guidance No.18, issued on December 27,2007) from the current fiscal year, for construction contracts engaged on orafter April 1, 2009, the percentage-of-completion method is applied forconstruction contracts whose outcomes are deemed certain for progress until
the end of the current fiscal year, otherwise the completed-contract method isapplied. The percentage of costs incurred to the estimated total cost is used for
estimating the percentage of completion. The effect of this change on revenue,
operating profit, ordinary profit and income before income taxes isinsignificant.
6. Other Significant Accounting Policies(Consumption Tax)In relation to consumption tax and regional consumption tax, the Company
has adopted the tax-exclusive method.
7. Changes of Presentation Methods
Not applicable

Notes to the Non-Consolidated Balance Sheet
1. Cash and Deposits for Armored Car Services, Short-term Bank Loans
For financial institutions, the Company provides cash collection from and cash
filling to cash dispensers located outside of financial institution facilities.
The balance of cash and deposits for armored car services includes cash on
hand and cash in banks of representing a total of Yen 24,688 million
connected with such services, which is restricted as to use by the Company.
The short-term bank loan balance includes Yen 6,310 million financed for the
cash collection and filling services.
The balance of cash deposits for armored car services includes Yen 22,269
million connected with cash collection administration services, which is also
restricted as to use by the Company. Also, the short-term bank loan balance
includes Yen 18,181 million financed in connection with the same services.

[English Translation]71

2. Assets Pledged as Collateral and Collateral-related Liabilities
Assets pledged as collateral(Millions of Yen)
Short-term loans receivable
14
Investment securities
277
Investment securities in subsidiaries and45
affiliates
Long-term loans receivable
610
Total
947
Collateral-related liabilities
Nil
Short-term loans receivables, investment securities, investment securities
in subsidiaries and affiliates, and long-term loans receivable are pledged ascollateral for the debts of subsidiaries and affiliated companies and otherdebts.
3. Accumulated Depreciation of Assets
Accumulated depreciation of tangible asset:

Yen 227,249 million

4. Contingent Liabilities(1) Guarantees
Liabilities for the below entities and employees are guaranteed.
(Millions of Yen)
Alive Medicare Co., Ltd.
1,775
Secom Home Life Co., Ltd.
555
Secom Fort West Co., Ltd.
305
Seikeikai (Medical institution)
286
Sanwakai (Medical institution)
237
Other
151
Employees
221
Purchaser of merchandises by leasing
447
transactions, etc.
Total
3,981
(2) Net Assets Maintaining Agreement
The Company entered into a net assets maintaining agreement with Secom
General Insurance Co., Ltd., under which the Company is obligated toprovide funds to Secom General Insurance Co., Ltd. if and when the net
assets of Secom General Insurance Co., Ltd. become lower than thespecified amount or its current assets necessary for the payment of its
liabilities are insufficient. The total liabilities of Secom General InsuranceCo., Ltd. at the end of the current fiscal year are Yen 159,240 million,
including Yen 154,287 million of investment deposits by policyholders,
unearned premiums and other insurance liabilities, and the total assets are
Yen 181,985 million.
However, this agreement is not construed as the Company’s guaranteewith respect to payment obligations of Secom General Insurance Co., Ltd.,and Secom General Insurance Co., Ltd. maintained net assets above the[English Translation]72

required level and its current assets were not insufficient at the end of thecurrent fiscal year.
5. Financial Receivables/Payables to Subsidiaries and Affiliated Companies(excluding those separately presented)(Millions of Yen)
7,570
Short-term receivables
Long-term receivables
Short-term payables
Long-term payables

132,717
8,374
184

Notes to Non-Consolidated Statement of Income
Transactions with Subsidiaries and Affiliated Companies
Operating transactions(Millions of Yen)
Revenue
13,986
Amount of purchased costs and sub-contract costs
63,913Non-operating transactions
8,106

Notes to Non-Consolidated Statements of Changes in Net Assets
Classes and Total Number of Treasury Stocks
Classes of
Number of
Increase insharesshares at the
number ofend of theshares in theprevious fiscal current fiscal
year
year
Common15,251,520
2,998
stock

(Unit: 1 share)
Decrease in
Number of
number ofshares at theshares in theend of thecurrent fiscal current fiscal
year
year
184
15,254,334(Outline of reasons for change)
The increase of 2,998 in the number of common stocks is due to the purchase ofshares constituting less than one unit.
The decrease of 184 in the number of common stocks is due to requests to sellsuch number of shares as will constitute, together with the shares constituting lessthan one unit of shares already held, one full unit.

[English Translation]73

Notes to Deferred Tax Accounting
1. The Significant Components of Deferred Tax Assets and Deferred Tax
Liabilities:
Deferred tax assets:(Millions of Yen)
Loss on impairment of investment securities in subsidiaries and affiliates
7,090
Allowance for doubtful accounts
5,172
Impairment loss
2,245
Accrued bonuses
2,224
Write-down on fixed assets
2,066
Accrued pension and severance costs
1,875
Other
4,497
Total deferred tax assets
25,172
Deferred tax liabilities:
Prepaid pension and severance costs
Other
Total deferred tax liabilities(Millions of Yen)
(5,817)(535)(6,352)

Net deferred tax assets(Millions of Yen)
18,819

2. Summary of the Reconciliation between the Effective Tax Rate Reflected in
the Financial Statements and the Statutory Tax Rate:
Statutory tax rate
(Reconciliation)
Permanently non-taxable income, such as dividends income
Per capita levy of corporate inhabitant tax
Research and development tax credits
Other
Effective tax rate after the application of deferred tax accounting

40.5%
(3.0)
0.5
(0.5)
0.1
37.6%

Notes to Fixed Assets under Leases
1.

Finance lease transactions commencing on or before March 31, 2008 otherthan those deemed to transfer the ownership of the leased assets to the lessees
Besides the ones booked as fixed assets on the balance sheet of the Company,
some of buildings, automobiles and tools, furniture and fixtures are usedbased on the finance lease contracts other than those deemed to transfer theownership of the leased assets to the lessees.

[English Translation]741) The Amount Equivalent to Acquisition Cost, the Amount Equivalent to
Accumulated Depreciation, and the Amount Equivalent to Year-End
Balance of Leased Assets(Millions of Yen)
Amount equivalent to acquisition cost
Buildings
5,184
Automobiles
1,148
Tools, furniture and fixtures
591
Total
6,924
(Millions of Yen)
Amount equivalent to accumulated depreciation
Buildings
Automobiles
Tools, furniture and fixtures
Total

2,453
869
494
3,817
(Millions of Yen)

Amount equivalent to year-end balance
Buildings
Automobiles
Tools furniture and fixtures
Total

2,731
279
96
3,106

2) The Amount Equivalent to Year-End Balance of Future Minimum Lease
Payments(Millions of Yen)
Within 1 year
420
Over 1 year
3,689
Total
4,109
3) Lease Payment Expenses, the Amount Equivalent to Depreciation
Expenses, and the Amount Equivalent to Interest Expenses
Lease payment expenses
Amount equivalent to depreciation expenses
Amount equivalent to interest expenses(Millions of Yen)
857
655
216

4) Calculation Method of the Amount Equivalent to Depreciation Expenses
and the Amount Equivalent to Interest Expenses
Calculation Method of the amount equivalent to depreciation expenses
Depreciation expenses are calculated using the straight-line method whichassumes that the period of the lease is the useful service life of the asset
and sets the residual value to zero.
Calculation Method of the amount equivalent to interest expenses
The amount equivalent to interest expenses is calculated as the difference
between total lease payments and the amount equivalent to the acquisition
cost of leased properties, and the interest method is used as the allocation
method for each fiscal period.

[English Translation]75

2.

Operating Leases
1) As a Lessee(Millions of Yen)
Future minimum lease payments
Within 1 year
Over 1 year
Total

2,171
24,941
27,113

2) As a Lessor(Millions of Yen)
Future minimum lease payments to be received
Within 1 year
Over 1 year
Total

769
7,624
8,393

Notes to Transactions with Related Parties
Type

Name ofCompany

Address

Capital(Millionsof
Yen)

Business
content

VotingRights HeldbyCompany(Indirect)(%)

Subsidiary

Secom
TechnoService Co.,
Ltd.
Secom
Home Life
Co., Ltd.

Nakano
-ku,
Tokyo

2,357

Installationof security
systems

67.8
(0.0)

Relationship
Concurrent Businessposts ofrelationshipDirectors
andCorporate
Auditors
Construction
subcontractor

Shibuya
-ku,
Tokyo

3,700

Real estatedevelopment
and sales

99.9

1 person

Loan andinvestmentof funds

Subsidiary

SecomCredit Co.,Ltd.

Shibuya
-ku,
Tokyo

400

Lease

100.0

2 persons

Loan andinvestmentof funds

Subsidiary

Secom
MedicalSystem Co.,Ltd.

Shibuya
-ku,
Tokyo

6,545

Medicalservice100.0

1 person

Loan andinvestmentof funds

Subsidiary[English Translation]76

Transactions

Secom Techno
Service Co.,Ltd.

Installation costs(Note 2)

Secom Home
Life Co., Ltd.

Execution ofloans(Collection ofloans)
Receipt ofinterests (Note 3)
Execution ofloans(Collection ofloans)
Receipt ofinterests (Note 3)
Execution ofloans(Collection ofloans)
Receipt ofinterests (Note 3)

Secom Credit
Co., Ltd.

Secom Medical
System Co.,
Ltd.

Amount ofTransactions(Millions ofYen)
37,03231,000Account

Payables-otherYear-end
Balance(Millions of
Yen)
3,204

Payables-construction

1,041

Long-term loans receivable(Note 4)60,434

Short-term loans receivable

500

Long-term loans receivable

18,400

Short-term loans receivable

2,899

Long-term loans receivable

36,451(34,449)860
10,200(10,900)
421
5,791(8,060)494(Notes)1. Consumption taxes are not included in the transaction amounts listed above. However,consumption taxes are included in the year-end balances.
2. The installation costs are determined by price negotiations, by taking market prices into
consideration.
3. The interest rates for the loans above are determined, by taking market interest rates into
consideration.
4. The amount of Yen 4,893 million has been accrued as allowance for doubtful accounts forthe long-term loans receivable to Secom Home Life Co., Ltd. in the current fiscal year.
And in the current fiscal year, Yen 1,627 million of reversal of allowance for doubtful
account was recognized.

Notes to the Business Combination
Not applicable

Notes to Per-Share Information
Net assets per share:
Net income per share:

Yen 2,444.25
Yen 210.09[English Translation]
77

Certified Copy of the Accounting Auditors’ Report (Consolidated)[English Translation of the Accounting Auditors' Report Originally Issued in theJapanese Language]
Independent Auditors' Report
Date May 18, 2010
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA & Co.
.
Toshiya Mori (Seal)
Designated and Engagement Partner
Certified Public Accountant
Hiroaki Sugiura (Seal)
Designated and Engagement Partner
Certified Public Accountant
Kentaro Maruta (Seal)
Designated and Engagement Partner
Certified Public Accountant
We have audited the consolidated statutory report, comprising the consolidated balance
sheet, the consolidated statement of income, the consolidated statement of changes in net
assets and the related notes of SECOM Co., Ltd. as of March 31, 2010 and for the year
from April 1, 2009 to March 31, 2010 in accordance with Article 444(4) of theCompanies Act. The consolidated statutory report is the responsibility of theCompany’s management. Our responsibility is to express an opinion on the
consolidated statutory report based on our audit as independent auditors.
We conducted our audit in accordance with auditing standards generally accepted inJapan. Those auditing standards require us to obtain reasonable assurance about
whether the consolidated statutory report is free of material misstatement. An audit isperformed on a test basis, and includes assessing the accounting principles used, themethod of their application and estimates made by management, as well as evaluating theoverall presentation of the consolidated statutory report. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated statutory report referred to above presents fairly, in allmaterial respects, the financial position and the results of operations of SECOM Co., Ltd.
and its consolidated subsidiaries for the period, for which the consolidated statutory
report was prepared, in conformity with accounting principles generally accepted inJapan.
Our firm and engagement partners have no interest in the Company which should be
disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

[English Translation]
78

Certified Copy of the Accounting Auditors’ Report(Non-Consolidated)[English Translation of the Accounting Auditors' Report Originally Issued in theJapanese Language]
Independent Auditors' Report
Date May 18, 2010
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA & Co.
.
Toshiya Mori (Seal)
Designated and Engagement Partner
Certified Public Accountant
Hiroaki Sugiura (Seal)
Designated and Engagement Partner
Certified Public Accountant
Kentaro Maruta (Seal)
Designated and Engagement Partner
Certified Public Accountant
We have audited the statutory report, comprising the balance sheet, the statement ofincome, the statement of changes in net assets and the related notes, and its supporting
schedules of SECOM Co., Ltd. as of March 31, 2010 and for the 49th business year from
April 1, 2009 to March 31, 2010 in accordance with Article 436(2)(i)of the Companies
Act. The statutory report and supporting schedules are the responsibility of theCompany’s management. Our responsibility is to express an opinion on the statutory
report and supporting schedules based on our audit as independent auditors.
We conducted our audit in accordance with auditing standards generally accepted inJapan. Those auditing standards require us to obtain reasonable assurance about
whether the statutory report and supporting schedules are free of material misstatement.
An audit is performed on a test basis, and includes assessing the accounting principles
used, the method of their application and estimates made by management, as well as
evaluating the overall presentation of the statutory report and supporting schedules. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statutory report and supporting schedules referred to above present
fairly, in all material respects, the financial position and the results of operations of
SECOM Co., Ltd. for the period, for which the statutory report and supporting schedules
were prepared, in conformity with accounting principles generally accepted in Japan.
Our firm and engagement partners have no interest in the Company which should be
disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

[English Translation]
79

Certified Copy of the Board of Corporate Auditors’ Report[English Translation of the Board of Corporate Auditors’ Report Originally Issued in theJapanese Language]

Audit Report
May 20, 2010

Mr. Shuji Maeda
President and Representative Director
SECOM Co., Ltd.
Board of Corporate Auditors of
SECOM Co., Ltd.
Teruo Ogino (Seal)
Corporate Auditor (full-time)
Ken Tsunematsu (Seal)
Outside Corporate Auditor
Hiroshi Yasuda (Seal)
Outside Corporate Auditor
Kohei Yamashita (Seal)
Outside Corporate Auditor
The Board of Corporate Auditors has received the audit reports of the performanceof duties of the Directors during the 49th business term from April 1, 2009 throughMarch 31, 2010 from each of the Corporate Auditors. After deliberating such reports, wehave prepared this Audit Report and report as follows.
1. Method and Details of Audit Performed by Corporate Auditors and the Board of
Corporate Auditors
The Board of Corporate Auditors has established the audit policy and audit plan forthe current fiscal year, received reports on the status and results of audits from each
Corporate Auditor, received reports on the status of execution of duties from Directors
and accounting auditors, and requested explanations when necessary.
Each of the Corporate Auditors, in accordance with the audit policy of the current
fiscal year and audit plan, etc. set up by the Board of Corporate Auditors, worked tocommunicate with Directors, the internal audit division and other employees, madeefforts to gather information and establish the audit environment, in addition to attending
the meetings of the Board of Directors and other important meetings, receiving reports
from the Directors and other managers on their duties, requesting explanations whennecessary, inspecting documents concerning matters such as important decisions, andinvestigating the conditions of the business and financial conditions at the head office andthe principal offices. Furthermore, to ensure the execution of the duties of Directors
complied with laws and regulations and the Articles of Incorporation and to ensure
appropriate joint-stock company operations, Corporate Auditors also monitored andinvestigated the details of the resolution of the Board of Directors on the establishment ofa system stipulated in Paragraph 1 and Paragraph 3 of Article 100 of the Companies Act
Enforcement Order and the status of the system (internal control system) establishedbased on such resolution. We worked to communicate and exchange information with the
Directors and Corporate Auditors of subsidiaries and received reports on operations fromsubsidiaries when necessary. The above methods were used to examine the business
report and accompanying schedule for the current fiscal year.
The Board of Corporate Auditors received reports on internal control regarding[English Translation]
80

financial reports from Directors and KPMG AZSA & Co. about discussion between
Directors and the accounting auditors, evaluation of internal control of the Company andaudit circumstance, also requested explanations when necessary. With respect tosubsidiaries, Corporate Auditors have endeavored to exchange information and promote
understanding and, obtained reports from Directors and Corporate Auditors ofsubsidiaries.
On the basis of the forgoing procedures, the Board of Corporate Auditors has
considered the Business Report and accompanying schedules.
Furthermore, in addition to monitoring and examining whether the accounting
auditors maintained an independent position and performed auditing appropriately, we
received reports from the accounting auditors on the execution of their duties andrequested explanations when necessary. In addition, we received notice from theaccounting auditors that “The systems for ensuring the proper execution of duties” (setforth in each Item of Article 131 of the Ordinance for Corporate Accounting) is organizedin accordance with the “Standards for Quality Control of Audit” (Business Accounting
Council, October 28, 2005) and other relevant standards, and sought explanations
whenever necessity arose. Based on the above methods, we examined the financial
statements (balance sheet, statement of income, statement of changes in net assets, notes
to financial statements), supporting schedules, and the consolidated financial statements(consolidated balance sheet, consolidated statement of income, consolidated statement ofchanges in net assets, notes to consolidated financial statements) for the current fiscal
year.
2. Result of audit(1) Result of audit of business report, etc.
i) The Business Report and accompanying schedules fairly represent the condition of
the Company in accordance with laws and regulations and the Articles ofIncorporation of the Company.
ii) We have determined that there were no serious occurrences of unjust activity or
violations of any laws or regulations or the Articles of Incorporation of theCompany by any of the Directors in carrying out their duties.
iii) We believe the contents of the resolution of the Board of Directors regarding theinternal control system are appropriate. We found no matters to note regarding theexecution of duties of Directors regarding the internal control system, as well as theinternal control system regarding financial reporting.
(2) Result of audit of financial statements and accompanying schedules
In our opinion, the audit procedures and audit results of the accounting auditors
KPMG AZSA & Co. are appropriate.
(3) Result of audit of consolidated financial statements
In our opinion, the audit procedures and audit results of the accounting auditors
KPMG AZSA & Co. are appropriate.

End[English Translation]81

Reference Document Concerning the General Meeting of Shareholders

Proposals and Reference Items
First Item of Business:

Proposed Distribution of Surplus

The Company considers the return of the Company profits on a long-termbasis to shareholders the most important task of the management. Management
determines the consolidated dividend payout ratio and the level of internal
reserves in overall consideration of the future expansion of the Company’sbusiness and its consolidated results of operations while keeping in line with thebasic policy that ensures the continued and stable dividend payments. Our basic
policy of distribution of surplus in the form of dividend payment is to propose
annual year-end cash dividends to shareholders, and the decision of distribution of
surplus is made by shareholders at the general meeting of the year.
The Company intends to use internal reserves for investments required forincreased new customer contracts, research and development and other strategic
investments so as to ensure to strengthen our corporate structure and expand ourbusiness.
Based on the aforesaid policies, it is proposed that the year-end cash
dividends for the 49th Business Term (from April 1, 2009 through March 31,2010) be Yen 85 per share, to meet shareholders continued support, as set for
below:(1) Kind of dividend: cash(2) Dividend and total amount thereof:
Yen 85 per share of common stock; the total amount: Yen 18,532,922,555(3) Commencement date of distribution of dividend: June 28, 2010[English Translation]
82

Second Item of Business:

Election of Eleven (11) Directors

The term of office of all of the eleven (11) Directors will expire at the closeof this meeting. Therefore, it is proposed to reelect eleven (11) Directors.
The candidates are as follows:

No.
1

2

3

4

5

Name
(Date of Birth)
Makoto Iida
(April 1, 1933)
Juichi Toda
(March 7, 1932)

Shohei Kimura(May 2, 1943)

Kanemasa Haraguchi(August 7, 1950)

Shuji Maeda(September 27,
1952)*

Summary of career, title and responsibility, and important
position of other organization concurrently assumed
Jul 1962
Feb 1976
Jun 1997
Jul 1962
Feb 1976

President and Representative Director (Founder)
Chairman and Representative Director
Supreme Advisor and Director (currently)
Senior Executive Director (Co-founder)
Executive Vice Chairman and Representative
Director
Jun 1997
Supreme Advisor and Director (currently)
Apr 1967
Joined SECOM Co., Ltd.
Feb 1985
Director
Feb 1988
Executive Director
Jun 1995
Senior Executive Director
Apr 2002
President and Representative Director
Jun 2004
President and Representative Director andExecutive Officer
Apr 2005
Chairman and Director (currently)(Important position of other organization concurrently assumed)
Outside Corporate Auditor, Secom General Insurance Co., Ltd.
Apr 1974
Joined SECOM Co., Ltd.
Jun 1990
Director
Jun 1995
Executive Director
Jun 1997
Senior Executive Director
Jun 2002
Director and Executive Vice President
Jun 2004
Director and Executive Vice President andExecutive Officer
Apr 2005
President and Representative Director
Jan 2010
Executive Vice Chairman and Director(currently)(Important position of other organization concurrently assumed)
Outside Director, Secom Joshinetsu Co., Ltd.
Jan 1981
Joined SECOM Co., Ltd.
Jun 1997
Director
Jun 2000
Executive Director
Jun 2004
Director and Managing Executive Officer
Apr 2005
Executive Director
Jun 2009
Executive Vice President and Director
Jan 2010
President and Representative Director (currently)[English Translation]
83

The number of
Shares Held
4,320,500

3,152,216

37,70011,344

5,600

No.
6

7

8

9

10

Name
(Date of Birth)
Koichi Sato
(February 5, 1953)*

Fumio Obata(July 6, 1946)*

Katsuhisa Kuwahara(May 9, 1948)*

Yasuo Nakayama(November 1, 1952)*

Hiroshi Ito(February 7, 1952)*

Summary of career, title and responsibility, and important
position of other organization concurrently assumed
Joined SECOM Co., Ltd.
Executive Officer
Managing Executive Officer
Executive Director
President and Representative Director, SecomJun 2008
Joshinetsu Co., Ltd.
Chairman and Director, Secom Joshinetsu Co.,Jun 2009
Ltd. (currently)
Jun 2009
Executive Vice President and Director (currently)
Apr 1996
General Manager, Business Development
Department, The Mitsubishi Bank, Ltd.
(presently The Bank of Tokyo-Mitsubishi UFJ,Ltd.)
Nov 1998
Senior Executive Director, The Long-Term Credit
Bank of Japan (presently The Shinsei Bank, Ltd.)Mar 2000
Associate Manager, Strategic Planning Division,
SECOM Co., Ltd.
Jun 2000
Director
Mar 2002
President and Representative Director, Secom
Medical System Co., Ltd.
Jun 2004
Executive Officer
Jun 2009
Senior Executive Director (currently)
Apr 1971
Joined SECOM Co., Ltd.
Jun 1990
Director
Jun 1995
Executive Director
Jun 2004
Director and Managing Executive Officer
Apr 2005
Executive Director (currently)
Jul 2003
Branch Manager, Nagoya Branch, The Bank ofJapan
Jul 2005
Director-General, Secretariat of the Policy Board,
The Bank of JapanApr 2007
Personnel and Corporate Affairs Department, The
Bank of JapanMay 2007 Advisor, SECOM Co., Ltd.
Jun 2007
Executive Director (currently)
Feb 1979
Joined SECOM Co., Ltd.
May 1989 Executive Director, Secom Mie Co., Ltd.
Jun 2000
Director (up to Jun 2004)
Jun 2003
President and Representative Director, Secom
Information System Co., Ltd. (presently Secom
Trust Systems Co., Ltd.) (Currently)
Jun 2004
Executive Officer
Jun 2009
Executive Director (currently)(Important position of other organization concurrently assumed)
President and Representative Director, Secom Trust Systems
Co., Ltd.

The number of
Shares HeldApr 1976
Jun 2004
Jun 2005
Jun 2007[English Translation]
84

1,888

2,600

3,600

2,500

3,500

No.
11

Name
(Date of Birth)
Takayuki Ito(January 2, 1954)*

Summary of career, title and responsibility, and important

The number of

position of other organization concurrently assumed

Shares HeldJun 2000

General Manager, Hibiya Branch, The Sanwa
Bank, Ltd. (presently The Bank ofTokyo-Mitsubishi UFJ, Ltd.)Jul 2002
General Manager, Muromachi Branch andCorporate Sales Department, UFJ Bank Limited.
(presently The Bank of Tokyo-Mitsubishi UFJ,Ltd.)
Jun 2005
Advisor, SECOM Co., Ltd.
Jun 2006
Executive Officer
Jun 2007
Director (currently)
General Manager, Corporate Sales DivisionJun 2009(currently)(Important position of other organization concurrently assumed)
Outside Corporate Auditor, Secom Joshinetsu Co., Ltd.

(Notes)1. There is no particular interest between the Company and each of the said candidates.
2. Asterisk marks (*) indicate incumbent Executive Officer of the Company.

-End-[English Translation]
85

1,000