Notice of Convocation
The 47th Ordinary General Meeting of Shareholders

The following is an English translation of the Notice of Convocation of the 47th
Ordinary General Meeting of Shareholders of SECOM CO., LTD. to be held on June
26, 2008, 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 and convenience only andwithout any warranty as to its accuracy or otherwise.

Table of Contents
Notice of Convocation of The 47th 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. Capital Investments ···························································································
3. Fund Raising ······································································································
4. Issues the Group Has to Cope with ··································································
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
7
7
7
9
9
9
10
15
16
16
17
17
17

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 in a Trading Unit ·································································
Major Shareholders ···························································································

19
19
19
19
19
19

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 ·············································································

21
21
22
22

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 ································

25
25
25
25
25

V.

System under which the Company’s Business is Ensured to be Properly
Executed ··············································································································

27[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 same as thatin the original Japanese documents.

[English Translation]
3

34
35
36
37
52
53
54
56
65
66
67
69

Stock Exchange Code: 9735
June 6, 2008

Notice of Convocation of
The 47th Ordinary General Meeting of Shareholders
Dear Shareholders:
You are cordially invited to attend the 47th 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., Wednesday, June 25,2008 (Tokyo time), by either of the methods stated below:[By mail]
Please indicate on the Voting Right Exercise Form enclosed herewith yourconsent or dissent to the proposals on the agenda, and return the form to theCompany 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 the agenda byfollowing the instructions on the display screen.
Yours very truly,
SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo, Japan
By: KANEMASA HARAGUCHI
President and Representative Director(Note): Please note that shareholders with addresses outside Japan may not themselves
use these voting procedures. For these shareholders please consult their standing agentswithin Japan as to the exercise of voting rights.

[English Translation]
4

PARTICULARS

1.

Date and Time of the Meeting:Thursday, June 26, 2008 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 forthe 47th Fiscal Year (from April 1, 2007 to March 31, 2008) and theResults 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 47th Fiscal
Year (from April 1, 2007 to March 31, 2008).
Matters to be Resolved upon :First Item of Business:

Proposed Distribution of Surplus

Second Item of Business:

Partial Amendment to the Articles ofIncorporation

Third Item of Business:

Election of Eleven (11) Directors

Fourth Item of Business:

Presentation of Retirement Allowance toRetiring Director[English Translation]
5

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 makenon-uniform voting and the reason thereof 3 days before the general meeting ofshareholders.
(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 consider 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 morethan 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 47th Fiscal Year (from April 1, 2007 to
March 31, 2008) , 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 47th Fiscal Year (from April 1, 2007
to March 31, 2008), the Company will announce such change on the Company's
website (http://www.secom.co.jp/).

[English Translation]
6

Attached Documents

Business Report(Fiscal Year Ended March 31, 2008)
I. Outline of the Group’s Business1. The Current Business Development and Results of Operations
The Japanese economy began on a trend of gradual expansion in the fiscal year ended
March 31, 2008. However, it then gradually underwent a slowdown, as concerns about
the effects on the US and world economy grew, due to steep rises in oil and raw
material prices as well as the subprime loan problem.
Meanwhile, the declining public safety levels and increasingly frequent brutal
crimes, seen in recent years, have made the safety and security needs of society morediverse and sophisticated. In view of this situation, the SECOM Group (the “Group”)
is aiming to help build a “Social System Industry” that will realize more secure,convenient and comfortable society by providing security services and other services
in combination based on its corporate philosophy of contributing to society through its
business.
Our Security Services mainly cover centralized systems (on-line security systems)
for business facilities and private residences, static guard services, armored car
services and sales of security products. For business customers, we sought tostrengthen the functions of and increase the variety of our on-line security systems tomeet customer needs. At the same time, we launched the sale of surveillance camera
systems featuring improved capacity and flexibility and worked to increase the sales ofaccess-control systems and other security products. For residential customers, we
focused on boosting subscribers to our SECOM Home Security systems andencouraged sales of security products in an effort to provide better-quality security
services.
In Fire Protection Services, we supplied a wide range of fire protection systems,
including automatic fire alarm systems and fire extinguishing systems for a variety ofenvironments, including office buildings, plants, tunnels, cultural properties, ships, andresidences. During the fiscal year under review, we also endeavored to reform ourexisting businesses, including boosting sales in the housing fire prevention market,
ensuring the thoroughness of organized sales activities for large deals, and establishing
optimal construction and maintenance systems.
Our Medical Services encompass home medical services, remote image diagnosis
support services, electronic medical report (EMR) systems, sales of medical equipment[English Translation]
7

and devices, the operation of nursing homes, personal care services, and real estateleasing for medical institutions. During the fiscal year under review, we continued to
expand our medical services such as home medical services that include home nursing
services and pharmaceutical dispensing and home delivery services.
In the Insurance Services, we concentrated on sales of insurance products that are
unique to the Group, including the Security Discount Fire Policy for businesses, thecomprehensive home insurance policy, SECOM Anshin My Home, the comprehensive
automobile insurance policy, New SECOM Anshin My Car, that includes an on-site
emergency services in the event of an accident by SECOM’s emergency response
personnel, and the MEDCOM, an unrestricted medical treatment policy aimed at
helping patients overcome cancer by giving access to the best treatments.
In Geographic Information Services, we engage in GIS (Geographic Information
System)-based operation support services for the public and private sectors as well as
surveying and measuring, and construction consulting services. During the fiscal year
under review, we focused on providing national geospatial data utilizing advanced
surveying technology, including laser scanners and digital sensors. At the same time,
we supplied products that would meet customer needs, such as the PasCAL series, anintegrated GIS product for regional public organizations, and the MarketPlanner series,
a range of marketing tools for private enterprises. In response to the successful launch
in June 2007 of the German commercial satellite "TerraSAR-X," featuring advanced
photographic capabilities, Pasco Corporation has already acquired exclusive rights tosell the satellite image data from this satellite in Japan. Thus we have laid foundations
to use the satellite image data in a wide range of areas.
Information and Communication Related and Other Services covers informationand communication related services, real estate development and sales, and real estateleasing. Leveraging our strengths in technology and services, we developed
comprehensive information network service businesses that range from consulting
services to specific solutions, focusing on information security and disaster response
support services. In the area of real estate development and sales, we developed andhave been selling the high-security condominium series Glorio and other products.
As a result, consolidated revenue increased by 11.2% to Yen 682.6 billion during
the fiscal year under review, reflecting the contribution of our newly consolidated
subsidiary, Nohmi Bosai Ltd., from the 4th quarter of the previous year. Consolidated
operating profit increased by 7.0% year-on-year to Yen 104.7 billion, consolidated
ordinary profit was up 11.3% year-on-year to Yen 114.2 billion and consolidated net
income rose 5.5% year-on-year to Yen 61.5 billion.
There was a change in the method of amortizing actuarial gains and losses related
to retirement benefit accounting, from the previous method of amortizing the total
amount in the fiscal year incurred to amortizing from the following fiscal year ofoccurrence using the straight-line method over certain years within the average[English Translation]8

remaining service period (mainly 10 years). Therefore, consolidated operating profit,
consolidated ordinary profit and consolidated net income before income taxes
increased by Yen 10.0 billion respectively, in comparison with the previous method. In
other words, actuarial gains and losses due to changes in the asset investment
environment, etc. were previously amortized in the fiscal year incurred. If the actuarial
gains and losses in the fiscal year under review were treated by the previous method,
the result would be an increase of Yen 10.0 billion to operating expenses. As a resultof the change, on the other hand, the fiscal year under review was not affected by theactuarial gains and losses.
2. Capital Investments
Capital investment for the fiscal year totaled Yen 55.0 billion (a breakdown is given
below). A major portion, Yen 34.5 billion, was in system investments (including thosefor security equipment and control stations), etc. in the Security Services segment.
Business segment
Security Services
Fire Protection Services(Millions of yen)

34,565
1,784

Medical Services
Insurance Services
Geographic Information Services
Information and Communication Related
and Other Services

4,062
1,747
2,219
13,703

Subtotal

58,083Eliminations and Corporate items(3,004)

Total

55,0793. Fund Raising
During the fiscal year under review, no funds were raised by the Group in capital
markets through the issuance of corporate bonds or new shares.

4. Issues the Group Has to Cope with
As society undergoes constant change, people's values are changing, which haveresulted in an increase in the social demand for and diversity and sophistication of[English Translation]
9

security and safety in the areas of security, fire protection, medical care, insurance,
geographic information, and information security.
In view of this situation, by providing various services that bring people security
and peace of mind, particularly security services, the Group is aiming to realize a"Social System Industry" that can help realize more secure, convenient, andcomfortable society. To this end, we are striving to provide customer-oriented services
and high-quality systems that can earn the trust of our customers. Moreover, we areworking to provide comprehensive services, maximizing the Group capabilities. We
are also continually improving operations throughout the Group to enhance
management efficiency.
We would like to ask all our shareholders for continued supports as we continue
to strengthen our Group operation.

5. Trends in Earnings and Assets(1) Trends in Earnings and Assets of the GroupThe following table gives the business performance and assets of the Group for thecurrent and the three preceding fiscal years.
(Millions of yen except for net income per share)

44th fiscal

45th fiscal

46th fiscal

47th fiscal year

year

year

year

(current fiscal year)(4/1/2004–(4/1/2005–(4/1/2006–(4/1/2007–

3/31/2005)

3/31/2006)

3/31/2007)

3/31/2008)

Fiscal years
Category

Revenue

547,230

567,315

613,976

682,619

Operating profit

83,043

94,10997,840104,706

Ordinary profit

83,47896,669102,720

114,278

Net income

48,51752,99458,29961,506214.41

234.28259.14273.40Total assets

1,097,548

1,149,377

1,169,182

1,202,840

Net assets

441,927

496,164

601,116

630,274

Net income per share(yen)

A breakdown by business segment reveals that Security Services, centered on thecentralized systems, performed favorably. In addition, sales of products increased
substantially, reflecting major orders for access-control systems. As a result, revenuerose 4.4% year-on-year to a total of Yen 425.9 billion and operating profit increasedby 3.4% to Yen 106.8 billion.

[English Translation]
10

The Fire Protection Services segment was established in the previous fiscal year
due to consolidation of Nohmi Bosai Ltd. Co., Ltd., its subsidiaries and Shanghai
Nohmi SECOM Fire Protection Equipment Co., Ltd., as subsidiaries in the fourth
quarter of the previous fiscal year. As a result, revenues of Fire Protection Services
surged by 200.8% year-on-year to Yen 82.5 billion and operating profit rose by
145.9% year-on-year to Yen 5.0 billion.
In Medical Services, home medical service and nursing home facility-related
sales were brisk and sales of medical equipment and devices increased. Revenue inthis segment increased by 13.0% year-on-year to Yen 34.8 billion, and operating profit
rose 17.9% to Yen 1.5 billion over the previous year.
Revenue of Insurance Services rose 5.9% year-on-year to amount to Yen 28.2
billion. This growth reflected a rise in income from net premiums written and an
improvement in investment income at Secom General Insurance Co., Ltd. Turning tooperating profit and loss, SECOM General Insurance Co., Ltd. posted a operating lossof Yen 2.4 billion (as against a loss of Yen 3.5 billion in the previous fiscal year),reflecting a decline in net claims paid and a decrease in provision for outstanding
claims. On account of the nature of the insurance business, ordinary profit is an
important indicator, and Secom General Insurance Co., Ltd., which is the corecompany in the Insurance Services, recorded an ordinary profit of Yen 0.2 billion.
Revenue of Geographic Information Services rose 8.1% year-on-year to Yen 39.3
billion. This growth reflected the development and conservation of national land forgovernment office markets, the compilation of map data to provide a basis for city anddisaster prevention planning, and orders for the preparation of documentation forproperty tax evaluation and management as well as the growth of overseas sales.
Operating profit grew 181.8% year-on-year to Yen 1.3 billion.
In Information and Communication Related and Other Services, revenue
decreased to Yen 71.6 billion, down 15.2% from the previous fiscal year. Operating
profit declined by 30.3% year-on-year to Yen 5.0 billion. These declines were caused
by decreases in revenue and profit of Secom Home Life Co., Ltd., which is engaged
in development and sales of real estate. The decreases are due to depress in the
newly-built condominium market set in the second half of the fiscal year underreview, incurred by steep rises in condominium prices as a result of higher
construction costs and the chill in consumer psychology caused by disturbances infinancial markets and the uncertain outlook for the economy.

[English Translation]
11

Sales by Business Segment (47th Fiscal Year – current fiscal year under review)(Millions of yen)
Revenue
Business segment

425,958
82,571
34,84828,23139,375

9,975
4,046
126
2,894
321

435,934
86,617
34,97531,12539,697

Profit (loss)
from
operations
106,898
5,080
1,563(2,426)
1,303

71,632

8,968

80,6005,067

682,619-

26,332(26,332)

708,951(26,332)

117,486(12,780)682,619-682,619

104,706

Customers

Security Services
Fire Protection Services
Medical Services
Insurance Services
Geographic Information
Services
Information andCommunication Related
and Other Services
Total
Eliminations and Corporate
items
Consolidated revenue

Inter-segment

Total(2) Trends in Earnings and Assets of the Company(i) The business performance and assets of the Company for the current and the three

preceding fiscal years(Millions of yen except for Net Income per share)

44th fiscal year
(4/1/2004 3/31/2005)

45th fiscal year
(4/1/2005 3/31/2006)

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

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

Revenue

297,782

313,096

326,076

337,611

Operating profit

66,031

72,17273,404

74,155

Ordinary profit

66,21970,96476,58379,187

Net income

37,70443,87947,24550,046167.09194.58210.00Total assets

598,711

643,990654,791

673,043

Net assets

426,288461,646494,154521,529

Fiscal years
Category

Net income per share(yen)

222.46(ii) Revenue and Profit

In the 47th fiscal year, revenue rose 3.5% year-on-year to Yen 337.6 billion,
operating profit grew 1.0% to Yen 74.1 billion, ordinary profit increased 3.4% to
Yen 79.1 billion, and net income increased 5.9% to Yen 50.0 billion. Net income
per share rose from Yen 210.00 for the previous fiscal year to Yen 222.46.

[English Translation]
12

A breakdown reveals that contract revenue accounted for 86.3% of total
revenue, or Yen 291.3 billion, and product and equipment sales accounted for
13.7% of total revenue, or Yen 46.2 billion.
Revenue from centralized system contracts, which is the core of revenue andprofit in contract revenue, grew steadily, totaling Yen 238.5 billion andaccounting for 70.6% of total revenue. Static guard contracts generated revenueof Yen 25.4 billion, and revenue from armored car services came to Yen 16.6
billion. The remaining contract revenue amounted to Yen 10.6 billion, of which
the majority came from fees paid by subsidiaries and other companies foradvisory services.
Product sales totaled Yen 31.9 billion, 9.4% of total revenue, and equipment
sales to subsidiaries and other companies totaled Yen 14.3 billion, 4.3% of total
revenue.
We put cost controls in place to reduce operating expenses in an effort toenhance business efficiency. This led to an operating profit of Yen 74.1 billion.
Non-operating income was Yen 9.6 billion, which included interest anddividends received, while non-operating expenses, made up of expenses such as
interest paid and losses on the sales and disposal of fixed assets, totaled Yen 4.5
billion. Therefore, ordinary profit was Yen 79.1 billion.
In addition, the Company recorded an extraordinary profit of Yen 2.2
billion, including a gain of Yen 1.5 billion from the sale of investment
securities. Extraordinary losses, including loss on impairment of investment
securities, were Yen 0.5 billion. As a result, net income came to Yen 50.0
billion.

[English Translation]
13

(iii) Earnings by Business Category

Fiscal years

Sales

Contract revenue

Category

Total

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

46th fiscal year
(4/1/2006–3/31/2007)

45th fiscal year
(4/1/2005–3/31/2006)
Amount(millionsof yen)%223,527

71.4

21,882

Change(%)

Amount(millionsof yen)%3.2

231,176

70.9

7.0

15.4

22,561

16,423

5.3

5.2

11,043272,876
29,036
11,183

3.5
87.2
9.3
3.5

40,22047th fiscal year
(Current fiscal year)(4/1/2007–3/31/2008)

Change(%)

AmountChange(%)(millionsof yen)%3.4

238,507

70.6

3.2

6.9

3.1

25,4807.6

12.9

17,182

5.3

4.6

16,684

4.9

(2.9)

3.3
4.2
16.7
1.8

11,326282,247
29,533
14,295

3.5
86.6
9.0
4.4

2.6
3.4
1.7
27.8

10,676291,350
31,905
14,355

3.2
86.3
9.4
4.3

(5.7)
3.2
8.0
0.4

12.8

12.1

43,82913.4

9.0

46,26113.7

5.5

313,096 100.0

5.1

326,076 100.0

4.1

337,611 100.0

3.5[English Translation]
14

6. Matters Concerning Principal Subsidiaries

Company name

Issued capital

Percentage ofshareholding(percentage ofPrincipal business activity

voting rights)(Millions of yen)

Secom Joshinetsu Co., Ltd.

3,530
(Millions of yen)

Secom Techno Service Co.,
Ltd.

2,357
(Millions of yen)

Secom Industries Co., Ltd.

499
(Millions of yen)

Nohmi Bosai Ltd.

13,302(Millions of yen)

Secom Medical System Co.,
Ltd.

6,545
(Millions of yen)

Secom General Insurance Co.,
Ltd.

8,093
(Millions of yen)

Pasco Corporation

8,758(Millions of yen)

Secom Trust Systems Co., Ltd.

1,468
(US$)

The Westec Security Group,
Inc.

301
(Thousand of

(%)
50.87
(50.88)(%)
67.79(67.85)(%)
100.00(100.00)(%)
50.36(50.92)

Security, safety
Installation and maintenance of
security systems
Manufacture of security systemequipment
Comprehensive fire protection
services(%)
100.00(100.00)

Remote image diagnosis support
services and home medical
services(%)
89.62(89.71)(%)

Non-life insurance

69.84(73.12)

Surveying, measuring andgeographic information systemservices(%)
100.00(100.00)(%)
100.00(100.00)(%)

Cyber security services andsoftware development
Holding company in the U.S.

UK pounds)

Secom Plc

39,126100.00(100.00)

Security business in the U.K.

(Notes)1.

The percentages of shareholding (percentages of voting rights) are truncated to two decimal
places.

2.

The percentages of shareholding (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.

[English Translation]
15

3.

Secom Medical System Co., Ltd. issued new shares of stock to shareholders (investment inkind) in February 2008, resulting in an increase in capital from Yen 200 million to Yen 6,545
million.

4.

Secom General Insurance Co., Ltd. issued new shares of stock to a third party (monetarycontribution) in March 2008, resulting in an increase in capital from Yen 5,611 million to Yen
8,093 million. (Following the increase in capital, the Company's percentage of shareholdingrose from 83.33% to 89.62%.)

7. Principal Business of the GroupThe 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, including home medical
services and remote image diagnosis support services; Insurance Services consisting
mainly of non-life insurance; Geographic Information Services that mainly entails theprovision of surveying and measurement operations; and Information andCommunication Related and Other Services including security network services andservices for the development and operation of business systems, information security
services, and the development and sales of real estate.

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), Osaka (Osaka City), Kansai Static Guard Service (Osaka City), Kinki(Kyoto City), Hyogo (Kobe City), Chugoku (Hiroshima City), Shikoku(Takamatsu City), Kyushu (Fukuoka City).
(iii) Domestic Subsidiaries
Secom Joshinetsu Co., Ltd. (Niigata City), Secom Techno Service Co., Ltd.
(Nakano-ku, Tokyo), Secom Industries Co., Ltd. (Shiroishi City, Miyagi), Nohmi
Bosai Ltd. (Chiyoda-ku, Tokyo), Secom Medical System Co., Ltd. (Shibuya-ku,[English Translation]
16

Tokyo), Secom General Insurance Co., Ltd. (Chiyoda-ku, Tokyo), Pasco
Corporation (Meguro-ku, Tokyo), Secom Trust Systems Co., Ltd. (Shibuya-ku,
Tokyo), Secom Home Life 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).

9. Matters Concerning Employees of the Group and the Company(1) Matters Concerning Employees of the Group
Number of employees

Increase from the end of the previous fiscal year

32,1951,251(2) Matters Concerning Employees of the Company
Number of
employees
13,391

Increase from the end of
the previous fiscal year
393

Average age

Average years of service

38.1

12.0

Note: The number of employees refers to the number of full-time employees. Part-time or
temporary employees are not included.

10. Primary Lenders
Closing balance at the endof the fiscal year

Lenders(millions of yen)
42,690(millions of yen)
35,763(millions of yen)
30,344(millions of yen)
24,207The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mizuho Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corp.
Sumitomo Mitsui Banking Corp.

11. Other Important Matters Concerning the GroupIn July 2004, Fujitsu Limited filed a lawsuit against Secom General Insurance Co.,
Ltd. in the Tokyo District Court, claiming compensation for costs related to a systems
development order in the amount of Yen 2,500 million. Secom General Insurance Co.,

[English Translation]
17

Ltd. is not only contesting this lawsuit on the grounds that it is without merit, but has
also filed a countersuit claiming damages in the amount of Yen 1,000 million. Bothlawsuits are currently pending.
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 theamount of Yen 2,010 million to Sumitomo Mitsui Banking Corporation with theTokyo 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 the loan, and demanded Pasco Corporation to pay such claim to
Sumitomo Mitsui Banking Corporation. However, upon carefully investigating thecase with counsel, we believe that the alleged transactions are null and void, and ourpleading should be admitted. Furthermore, on December 5, 2005, Sumitomo Mitsui
Banking Corporation brought a cross action against Pasco Corporation in relation to ademand for payment of a transferred receivable. Subsequently, both actions wereconsolidated according to a court procedure. The existence of the debt in theabove-mentioned sum is still being disputed in the court.

[English Translation]18

II. Matters Concerning the Company’s Shares and Shareholders
900,000,000

1. Total Number of Shares to be Issued:

2. Total Number of Issued Shares:
233,288,717(including 8,323,599 shares of treasury stock held by the Company)
3. Number of Shareholders at the End of the Fiscal Year:

28,512100 shares

4. Number of Shares in a Trading Unit:
5. Major Shareholders

No shareholder holds 10% or more of the total issued shares (excluding treasury stock). The major
shareholders and information about their respective shareholdings in the Company are shown in thetable below.
Investment in the Company

Shareholders
Japan Trustee Services Bank, Ltd.
(Trust Account)
The Master Trust Bank of Japan, Ltd.
(Trust Account)
The State Street Bank and Trust Company
BNP PARIBAS Securities (Japan) Limited
Mitsubishi UFJ Trust and Banking Corporation
Trust Account 106
Deutsche Securities Inc.
Makoto Iida
SECOM Science and Technology Foundation
Japan Trustee Services Bank, Ltd. (Trust Account 4)
The State Street Bank and Trust Company 505103

Number of shares held(Thousands of shares)

Percentage ofshareholding(%)

15,287

6.79

15,082

6.70

12,998

5.77

6,727

2.99

6,153

2.73

5,498

2.44

4,320

1.92

4,025

1.78

3,716

1.65

3,488

1.55

(Notes)1. The percentage of shareholding is calculated on the basis of the total number of shares
outstanding after excluding treasury stock (8,323,599 shares). The percentage ofshareholding is truncated to two decimal places.

[English Translation]19

2. In the case of the above trust banks, banking business-related shares and trust
service-related shares are registered under different names. Therefore, the number of shares
held by each trust bank shown above represents the shares regarding trust services.

[English Translation]
20

III. Directors and Corporate Auditors
1.

Names and Titles of Directors and Corporate Auditors

Director

Makoto Iida

Field of responsibility andrepresentation of other companies
Supreme Advisor

Director

Juichi Toda

Supreme Advisor

Chairman and Director

Shohei Kimura

Chairman of the Tokyo Security
Service Association

President andRepresentative Director

Kanemasa Haraguchi

Executive officer

Executive Director

Seiichiro Kobayashi

Executive officer, President andRepresentative Director of Secom
Home Life Co., Ltd.

Executive Director

Katsuhisa Kuwahara

Executive officer

Executive Director

Shuji Maeda

Executive officer

Executive Director

Shinobu Iida

Executive officer

Executive Director

Yasuo Nakayama

Executive officer

Executive Director

Koichi Sato

Executive officer

Director

Fumio Obata

Executive officer, President andRepresentative Director of Secom
Medical System Co., Ltd.

Director

Takayuki Ito

Executive officer

Corporate Auditor

Teruo Ogino

Corporate Auditor

Ken Tsunematsu

Corporate Auditor

Hiroshi Yasuda

Corporate Auditor

Kohei Yamashita

Full-time auditor
Managing Director of SECOM Scienceand Technology Foundation
President and Director of Yasuda
Shoko Kyoikukai
Advisor and Director of JPMorgan
Asset Management (Japan) Ltd.
President and Representative Directorof Kokyo Tatemono Co., Ltd.
Chairman and Representative Directorof International Ceramic, Inc.

Position

Name(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 has been in charge of the Company's financial
affairs for 11 years and is considerably knowledgeable concerning finance and accounting
matters.
3. The corporate auditor, Mr. Ken Tsunematsu, has for many years been involved insecurities issuance businesses as a lawyer both domestically and overseas. He has[English Translation]
21

experienced in the analysis and evaluation of the financial statements of these issuers, andhas considerable knowledge of finance and accounting matters.

2. Remuneration of Directors and Corporate Auditors

Directors

12

Combined total of
remuneration(millions of yen)592

Corporate Auditors

4

44

Total

16

637

Number of
officers(Notes)1. Of the above, the remuneration for the 3 outside corporate auditors' total combined
remuneration is Yen 24 million.
2. Included in the above total remuneration amount are the directors' bonuses of Yen
98 million awarded for the fiscal year under review.
3. The total amount of Remuneration of Directors and Corporate Auditors shown
above includes Yen 98 million (Yen 97 million to Directors and Yen 1 million to
Corporate Auditors (including Yen 0 to outside Corporate Auditors), respectively)
as accrued retirement benefits for Directors and Corporate Auditors, which wereappropriated in the fiscal year under review.

3. Outside Corporate Auditors
1. Mr. Ken Tsunematsu, Corporate Auditor(i) Concurrently holds position as an executive director of another company
Not applicable(ii) Concurrently holds the position of an outside director or an outside
corporate auditor of another company
Not applicable(iii)Has affiliations with executive officers of the Company or its major
customers or other specially related business partners
Not applicable(iv) Primary activities carried out during the current fiscal year under review
Attended all 13 Board of Directors meetings held in the fiscal year underreview, primarily offering advice and suggestions in order to ascertain thevalidity or appropriateness of the Board of Directors' decision from theperspective of complying with laws and ordinances and the articles ofincorporation.

[English Translation]
22

Attended all 11 Board of Corporate Auditors meetings convened during
the fiscal year to deliberate critical auditing issues.
2. Mr. Hiroshi Yasuda, Corporate Auditor(i) Concurrently holds position as an executive director of another company
Not applicable(ii) Concurrently holds the position of an outside director or an outside
corporate auditor of another company
Not applicable(iii)Has affiliations with executive officers of the Company or its major
customers or other specially related business partners
Not applicable(iv) Primary activities carried out during this fiscal year
Attended 12 out of the 13 Board of Directors meetings held during the
fiscal year under review, while offering advice and suggestions based on
his ample experience of company management and directorships gained
from previously held positions. He also asked questions and statedopinions in order to clarify unclear issues.
Attended 10 out of the 11 Board of Corporate Auditors meetings
convened during the fiscal year to deliberate critical auditing issues.
In addition, for the meetings for which he was absent, he received fromthe full-time corporate auditor detailed reports on the resolutions of themeetings so as to remain fully informed.
3. Mr. Kohei Yamashita, Corporate Auditor(i) Concurrently holds position as an executive director of another company
President and Representative Director of Kokyo Tatemono Co., Ltd. andChairman and Representative Director of International Ceramic, Inc.
However, there is no significant business relationship between thesecompanies and the Company.
(ii) Concurrently holds the position of an outside director or an outside
corporate auditor of another company
Not applicable(iii)Has affiliations with executive officers of the Company or its major
customers or other specially related business partners
Not applicable(iv) Primary activities carried out during this fiscal year
Attended 12 out of the 13 Board of Directors meetings held during the
fiscal year under review, while offering advice and suggestions based on[English Translation]23

his ample experience of managing a global corporation. He also asked
questions and stated opinions in order to clarify unclear issues.
Attended 10 out of the 11 Board of Corporate Auditors meetings
convened during the fiscal year to deliberate critical auditing issues.
In addition, for the meetings for which he was absent, he received fromthe full-time corporate auditor detailed reports on the resolutions of themeetings so as to remain fully informed.

[English Translation]
24

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 ofCertified Public Accountants Law

Yen 92 million(2) Total cash and other remuneration to be paid by the Company
and subsidiaries

Yen 346 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 the Financial Instruments andExchange Act, and furthermore cannot in fact be distinguished, and therefore theamount given in (1) 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
The Accounting Auditors engaged internal control-related advisory tasks
related to financial reporting, which are non-audit tasks not covered by Article
2 Paragraph 1 of the Certified Public Accountants Law, to the accounting
auditors and compensates for such tasks.

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 financial auditing of the Company, such as a case when it
is deemed that the accounting auditors have come to fall within the purview of
Article 340 Paragraph 1 of the Companies Act or the accounting auditors or thefirm of accounting auditors is subjected to the disposition of suspension ofbusiness by the supervisory authorities, the Board of Corporate Auditors will
examine the situation, and, when all the corporate auditors have consented
thereto, the corporate auditor will take procedures for the dismissal of the[English Translation]25

subject accounting auditors or the subject firm of accounting auditors. In suchcase, the Corporate Auditor selected by the Board of Corporate Auditors willreport the reasons for the dismissal at the general meeting of shareholders
convened for the first time after such dismissal.
In any other case, when there exits any situation where it is acknowledgedthat the 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 thegeneral meeting of shareholders for the dismissal or non re-appointment ofaccounting auditors.

[English Translation]
26

V. System under which the Company’s Business is Ensured to be Properly
Executed
The Company, at the meeting of its Board of Directors held on August 30, 2007,
resolved upon changes to its basic policy regarding the internal control system, i.e. the“system under which execution of duties by Directors is ensured to comply with laws
and regulations and the Articles of Incorporation, and the system under which theCompany’s business is ensured to be properly executed” as provided for in Article 362,
Paragraph 4, Item 6 of the Companies Act and Article 100, Paragraphs 1 and 3 of the
Enforcement Order of the Companies Act. The contents of the resolution are set out
below.
PARTICULAR
1.

GeneralThis resolution manifests the basic policy regarding the internal control
system of the Company to be specifically established by the President andRepresentative Director based on Article 362, Paragraph 5 of the Companies
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, thecompany has integrated its compliance manual with SECOM Group Code of
Employee Conduct, which sets key ethical standards to be followed, and at
the same time, it has conducted a review of manuals on critical laws.
SECOM Group Code of Employee Conduct is based on the philosophy of
SECOM, which we have followed since the establishment of the business.
These ethical guidelines prescribe ideals covering the official and private
affairs of all executives and employees and action standards (including theblocking relationships with anti-social forces) to be followed in theexecution of specific daily duties. As such, these guidelines provide the basisof all actions. The compliance management system is as follows.

[English Translation]
27

(Ensuring compliance)
From the start, the compliance of laws and ordinances has been an
indispensable requirement of our business, and we have always sought tooperate in strict adherence to this spirit. Therefore, compliance is a part ofthe company's daily routines, which should not require a system in which a
specific section or manager is responsible for implementation. Each andevery employee is at the front line of promoting the code of conduct,
including legal compliance. The implementation of guidelines is carried out
by the line 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 for having
thorough knowledge particularly of regulations related to their duties andthe 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, theAudit and Compliance Department provides cross-organizational
inspection in a timely manner, indicating how to improve morale throughobservance and at the same time pointing out matters that need correction.
The findings of the inspection are reported promptly to the President andRepresentative Director.
(Internal Report System)
When executives and employees of the company become aware ofunethical actions, they have the obligation to report such actions to theproper superior without hesitation. A "Hot Helpline" has been establishedto facilitate contact with the Audit and Compliance Department if
corrective actions are not taken even after reporting to superiors or it isdifficult to report. Such reports will remain strictly confidential, preventing
any harm to the reporter, and any necessary investigation and appropriate
measures will be taken promptly.
(Organizational Culture Committee)[English Translation]
28

The Company establishes a standing, active Organizational Culture
Committee, chaired by the President and representative Director. The
Organizational Culture Committee examines important organizational
culture-related issues (including compliance-related items), which are thecornerstone of developing and maintaining the corporate organization, anddetermines 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 the Boardof Directors after obtaining opinions of the Corporate Auditors.
(iii) Basic plans and policies concerning internal controls related to financial
reports are determined in accordance with the standards of the BusinessAccounting Council. Furthermore, an internal control system is being
developed by reinforcing information security and through other steps.
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.
(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 and Representative Director, theBoard of Directors, and the Board of Corporate Auditors.

[English Translation]
29

(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 Corporate Auditors.
4.

Regulation regarding control of risk of loss and other system(i) We will review the Company’s risk control regulations, and eachorganization corresponding to each risk shall constantly monitor the risks to
the full extent and, in addition, an officer in charge of each specified risk
shall be appointed. The officer in charge shall, pursuant to the risk control
regulations, be responsible to: (1) forecast and classify the risk, (2) develop asystem for emergency by which appropriate information shall be transmitted
promptly and appropriately in case of emergency, and (3) in cooperation
with the Audit and Compliance Department, audit the conditions of daily
control of risks.
(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 regulations shall be subject toapproval of the Board of Directors after obtaining opinions of Corporate
Auditors.
The Company’s risks shall be classified as follows:z Large scale calamity risk (System risk)z Security accident riskz Accounting treatment and clerical work riskz Compliance riskz Others

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.

[English Translation]
30

(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 an
information to be immediately disseminated to the entire Company to thefullest 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, andfor the purpose of accomplishment thereof, the Board of Directors will
design an annual business plan and deliberate progress of the plan in eachmonth.
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," thecompanies of the SECOM Group share SECOM Group Code of Employee
Conduct, which applies to all executives and employees. United by theseguidelines, 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 criticaldecision-making by the companies, these basic rules clarify the coordinationof items to be approved in prior consultation with the parent company andensure the acknowledgement of such important items.
(iii)The companies of the SECOM Group carry out IT controls covering
administration and management information in conformance with the "Basic
Policy of the SECOM Group for Information Security." The Company's IT
executive officers conduct timely inspections covering the IT managementof major subsidiaries.

[English Translation]
31

(iv) The "SECOM Group Management Committee," which is chaired by theCompany's President and Representative Director and whose members arecomposed of the presidents of subsidiaries and other parties appointed by thechairperson, works to ensure that appropriate operations are carried out. It
accomplishes this goal by conducting discussions of issues related to theGroup's internal controls in an effort to share Group information andoperating philosophy. The President and Representative Director reports theresults of the Group Management Committee to the Board of Directors andBoard 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 theinspection by the Company, which is the parent company, and at the sametime promote the understanding of compliance-related issues by exchanging
information with the Company.
(vi) The Corporate Auditors of the Company visit significant subsidiaries
and conduct 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
Corporate Auditors Office 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 toapproval 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.

[English Translation]
32

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 shallbe established upon discussion with the Board of Corporate Auditors, andDirectors shall make reports with respect to the following matters: (1) matters
resolved by the Organization Culture Committee; (2) matters likely to bematerially harming the Company; (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 andRepresentative Director through such means as the Hot Help Line shall bearranged and the President and Representative Director shall report toCorporate 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, to exchange
opinions so that audit shall be performed efficiently.
(ii) The Company ensures that the Board of Corporate Auditors may retain
lawyers at its discretion and, if necessary, have opportunities to retain andconsult professional accountants with respect to their audit duties.

[English Translation]
33

Consolidated Balance Sheet(As of March 31, 2008)(Millions of yen)ITEM
ASSETSAMOUNTITEM
LIABILITIESAMOUNT

Current Assets:
Cash on hand and in banks
Cash deposits for armored car services
Call loan
Notes and accounts receivable, trade
Due from subscribers
Short-term investments
Inventories
Real estate for sale
Deferred income taxes
Short-term loans receivable
Other
Allowance for doubtful accounts

547,538
200,403
63,69619,00085,595
21,1259,306
27,08090,23011,8407,246
13,827(1,813)Current Liabilities:
Notes and accounts payable, trade
Bank loans
Current portion of straight bonds
Payables - otherAccrued income taxes
Accrued consumption taxes
Accrued expenses
Deferred revenue
Accrued bonuses
Other319,737
30,459136,034
1,936
28,98824,6103,456
3,641
32,061
12,21046,337

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

654,936
265,348
84,54565,45081,71633,636

252,828
13,52420,02432,532
5,042

Intangible Assets:

22,332Long-term Liabilities:
Straight bonds
Long-term loans
Guarantee deposits received
Deferred income taxes
Accrued pension and severance
costs
Accrued retirement benefits for
directors and corporate
auditors
Investment deposits bypolicyholders, unearned
premiums and otherinsurance liabilities
Other

Software14,407

Goodwill

4,820

Other

3,105

Investments 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
Deferred Assets:
Other

TOTAL ASSETS

16,0962,220

162,3291,057

367,255

Total Liabilities
NET ASSETS

572,565

241,957
54,59918,421
17,83422,74029,157(17,455)

580,543
66,377
83,056475,987

365

Shareholders’ Equity:
Common Stock
Capital Surplus
Retained Earnings
Common Stock in treasury, at
cost
Valuation, Translation Adjustments
and Others:
Unrealized losses on securities

365

Deferred losses on hedges(90)

Foreign currency translation
adjustments(9,907)

Minority Interests in Subsidiaries:

63,035

Total Net Assets

630,274

TOTAL LIABILITIES AND NET
ASSETS

1,202,840

1,202,840[English Translation]
34(44,877)(13,304)(3,306)

Consolidated Statement of Income(Fiscal Year from April 1, 2007 to March 31, 2008)(Millions of yen)

ITEM

AMOUNT

Revenue

682,619

Costs of revenue

433,030

Gross profit

249,589

Selling, general and administrative expenses

144,883

Operating profit

104,706

Non-operating income:Interest income

3,018

Dividends income

627

Gain on sales of investment securities
Net gains from investment in affiliatedcompanies accounted for under the equity
methodGain on investment in business limited partnership

3,395

Other

3,257

6,146
3,679
20,125Non-operating expenses:
Interest expenses

2,351

Loss on sales and disposal of fixed assets

1,765

Other

6,436

Ordinary profit

10,552
114,278

Extraordinary profit:
Gain on sales of investment securities

1,549

Gain on refund of lease deposits

669

Gain on sales of fixed assets

520

Other

9

2,748

Extraordinary loss:
Provision for allowance for doubtful accounts

2,739

Loss on impairment of investment securities

1,421

Loss on liquidation of subsidiaries

485

Impairment loss on fixed assets

20

Other

317

4,984

Income before income taxes:

112,043

Income taxes – current

42,602

Income taxes – deferred

2,656

Minority interest in subsidiaries

5,278

Net income

61,506[English Translation]
35

Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2007 to March 31, 2008)(Millions of yen)
Shareholders’ equity
Common stock

Total

in treasury, atshareholders’costequityRetained
Common stock

Capital surplus
earnings

Balance as of March 31, 2007

66,377

83,056432,696(44,850)

537,279

Changes during the period:
Cash dividends(17,997)(17,997)

Changes in scope of consolidation

(217)

(217)

Net income

61,506

61,506

Purchase of treasury stock
Disposal of treasury stock

0

(31)

(31)

5

5

Net changes of items other thanshareholders’ equity
Total changes during the period
Balance as of March 31, 2008-

043,291(26)

43,264

66,377

83,056475,987(44,877)

580,543

Valuation, translation adjustments and others

Balance as of March 31, 2007

Unrealized

Deferred

gains (losses)

gains (losses)

on securities

on hedges

10,157(51)

Foreigncurrencytranslation
adjustments(7,253)

Totalvaluation,translation
adjustments

Minority
interests in
subsidiaries

Total net
assetsand others
2,853

60,983

601,116

Changes during the period:
Cash dividends(17,997)

Changes in scope of consolidation(217)

Net income

61,506

Purchase of treasury stock(31)

Disposal of treasury stock5

Net changes of items other than

(13,464)(39)(2,654)(16,158)

2,051(14,107)

Total changes during the period(13,464)(39)(2,654)(16,158)

2,051

29,157

Balance as of March 31, 2008

(3,306)(90)(9,907)(13,304)

63,035630,274

shareholders’ equity[English Translation]
36

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

1. Scope of Consolidation(1) Number of Consolidated Subsidiaries: 163
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
Names of major 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 one other company(The reason for exclusion from consolidation)
All of these 6 non-consolidated subsidiaries are of a small size, so that theaggregate amounts of total assets, revenue, net income/loss (an amountprorated to the equity ratio) and retained earnings (an amount prorated to theequity ratio) and others do not have a significant effect on the consolidated
financial statements.
(3) Names of other companies owing majority of voting rights not determined as
subsidiaries
US Collections, Inc., Switchcraft Holdco, Inc., Global Sales Training, Inc.,
CLP Auto Interior Corp., US Juice Partners, LLC(The reason for not determined as subsidiaries)
These companies were acquired by a subsidiary of The Westec Security
Group, Inc. through normal course of business with the objective ofinvestment support, not with the objective of controlling them.
2. Equity Method(1) Number of equity method affiliates: 31
Names of major affiliated companies accounted for by 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: 8(The reason for not applying the equity method)
These companies are not accounted for by the equity method because theireffect on net income/loss (an amount prorated to the equity ratio) and[English Translation]37

retained earnings (an amount prorated to the equity ratio) during the year
under review is slight and is immaterial in general.
(3) Names of other companies owing between 20% and 50% of voting rights
not determined as affiliates
U.S. Education Corporation, Global T&M Holdings, LLC(The reason we did not make these companies affiliates)
These companies were acquired by a subsidiary of The Westec Security
Group, Inc. through normal course of business with the objective ofinvestment support, not with the objective of controlling them.
3. Changes in Scope of Consolidation and Companies Accounted for under Equity
MethodConsolidation
Newly consolidated companies:9
Social Rehabilitation Support Kitsuregawa Co., Ltd. and 5 othercompanies: (Establishment)
Security Direct Limited and 1 other company: (Acquisition)
Nohmi Taiwan Ltd. (Moved from equity method affiliates throughacquisition of additional stock)
Excluded from consolidation: 7
Kyokushin Shoji Co., Ltd. (Merger)
Secominter (Australia) Pty. Ltd., Gold Stone Investment Inc. and 3 othercompanies: (Liquidation)
Peace Map Corporation: (Reduction through equity transfer)
Equity Method
New companies accounted for under equity method: 1
Tokyo Biso Kogyo Corporation: (Acquisition)
Exclusion from companies accounted for under equity method: 1
Nohmi Taiwan Ltd.: (Moved to consolidated subsidiary)
4. Closing Dates of Consolidated Subsidiaries and Equity Method Affiliates
With respect to overseas consolidated subsidiaries, etc., 8 U.S. subsidiaries
such as The Westec Security Group Inc., 4 U.K. subsidiaries such as SecomPlc, 14 Chinese subsidiaries such as Secom (China) Co., Ltd., 3 Australiansubsidiaries such as Secom Australia Pty. Ltd., P.T. Nusantara Secom
Infotech, P.T. Secom IndoPratama, Pasco Thailand Co., Ltd., Thaisecom
Pitakkij Co., Ltd., Pasco-Certeza Computer Mapping Corporation, Pasco
Geomatics India Private Limited, Secom Vietnam Joint Venture Co.,
FM-International Oy, and Nohmi Taiwan Ltd. settle their accounting as ofDecember 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. settle their accounting
as of December 31 each year, the financial statements prepared pursuant to
the provisional settlement of accounts conducted as of March 31 are used for
preparation of the consolidated financial statements. Moreover, GIS Tohoku
Co., Ltd., GIS Kanto Co., Ltd., and GIS Kansai Co., Ltd settle accounting asof December 31 each year, and the financial statements as of that date areused for preparation of the consolidated financial statements.

[English Translation]
38

With respect to domestic equity method affiliates, etc., while Koatsu
Co. Ltd. settles its accounting as of September 30 each year, the financial
statements prepared pursuant to the provisional settlement of accounts
conducted as of March 31 are used for preparation of the consolidated
financial statements.
The necessary adjustments related to the consolidation are made forany major transactions which arise between the consolidated settlement
dates. The settlement dates of other consolidated subsidiaries and equity
method affiliates are the same as the consolidated settlement 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
With respect to investments classified as available-for-sale securities,
among investment with fair value, stock and beneficiary certificates arecarried at fair value based on the average stock prices during one monthprior to the balance sheet date, and others are carried at fair value as of
the balance sheet date, with changes in unrealized holding gains orlosses, net of the applicable income taxes, included directly in net assets.
The cost of securities sold is principally calculated by the moving
average method. Compound financial instruments that cannot bemeasured by discriminating between the fair values of embedded
derivatives are evaluated at overall fair value and treated as unrealized
gains and losses in profit and loss.
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 stated principally at cost based on the moving averagemethod.
4) Real estate for sale
Real estate for sale is stated at the lower of cost or market method basedon specific identification method.
(2) Depreciation and Amortization of Depreciable and Amortizable Fixed Assets
1) Tangible Assets
Tangible fixed assets
declining-balance method

aredepreciatedprincipally

by

the

a. Security equipment and control stations
Security equipment and control stations are depreciated over theiraverage estimated useful service lives (5–8 years).
b. Other tangible fixed assets
Buildings (except facilities attached to buildings) that were acquired
after April 1, 1998 are depreciated by the straight-line method.
Their main useful service lives are as follows:
Buildings and improvements: 22–50 years
Tools and equipment: 2–20 years[English Translation]
39

(Change to the accounting policy)
Due to the amendment of the Corporation Tax Law (Law Partially
Amending the Income Tax Law, etc., March 30, 2007, Law No. 6) and(Cabinet Order Partially Amending the Corporation Tax Law
Enforcement Regulations, March 30, 2007, Cabinet Order No. 83), theaccounting method for tangible fixed assets (excluding security
equipment and control stations) that were acquired after April 1, 2007
has been changed to the method based on the post-amendment
Corporation Tax Law.
The resulting impact on operating profit, ordinary profit, and net
income before taxes is immaterial.
(Additional Information)
Due to the fiscal year 2007 amendment to the Corporation Tax Law,
beginning from the fiscal year following the fiscal year in which theacquisition cost resulting from application of the method of depreciation
and amortization based on the pre-amendment Corporation Tax Law totangible fixed assets (excluding security equipment and control stations)acquired on or before March 31, 2007 reached 5%, the difference
between the amount representing 5% of the acquisition cost and thememorandum value is to be amortized by the straight-line method overa period of 5 years and included in depreciation expenses.
The resulting impact on operating profit, ordinary profit, and net income
before taxes is immaterial.
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) 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 thecustomer premises, any portion exceeding the amount received from thecustomer is stated as “long-term prepaid expenses” and amortized by thestraight-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 trade receivables
and loans, the allowance for doubtful accounts provides an estimatedamount of uncollectables. It is determined based on the historical loss ratewith respect to ordinary accounts, plus an estimate of uncollectableamounts respectively determined by reference to specific doubtful
accounts from customers who are experiencing financial difficulties.
2) Accrued Bonuses
The accrued bonuses is provided for the bonus payments to employees, at
an amount to be paid during the fiscal year under review.
3) Accrued Pension and Severance Costs
To prepare for the retirement benefits of employees, the Company and its
domestic consolidated subsidiaries, etc. appropriate an amount of accrued
pension and severance costs and prepaid pension and severance costs thatis recognized to be paid at the end of the fiscal year under review, basedon the estimated amount of projected retirement benefit obligations and[English Translation]
40

plan assets as of the end of the fiscal year under review. Actuarial gains
and losses are amortized from the following year of occurrence, using thestraight-line method over certain years within the average remaining
service period (mainly 10 years).
(Change to the accounting policy)
Previously the Company and its domestic subsidiaries adopted the methodof amortizing actuarial gains and losses related to pension and severance
cost accounting in the fiscal year incurred.
The background to our adoption of this accounting method was thedecision to make major revisions to the Retirement Benefit Plan. The
main features of these revisions are the joint adoption of the defined
benefit pension plan and the defined contribution pension plan, andtransfer of substitutional portion managed under the contract with thegovernment for the employees’ pension fund. This was done predicated on
the assumption that our long-term policy is to switch entirely from thedefined benefit pension plan to the defined contribution pension plan.
Regarding our policy of switching entirely from the defined benefit
pension plan to the defined contribution pension plan, partly due to theprovisions, etc. in related laws and regulations, we have currently only
switched a portion of 30% to the defined contribution pension plan, which
is well short of switching entirely (100%). Moreover, amendments to therelated laws and regulations are uncertain. Therefore, at the board of
directors meeting held in March 2008 a resolution was passed to abandon
the policy of switching entirely to the defined contribution pension plan
involuntarily.
Due to the abandonment of the policy to switch entirely to thedefined contribution pension plan, it is no longer as necessary as before toeliminate actuarial gains and losses as early as possible, as the objective of
this was to make the switch as smooth as possible. In this situation, if theformer accounting method is followed, the actuarial gains and losses could
cause major fluctuations in operating profit in the fiscal year in which theyoccur, and given that inherently the Retirement Benefit Plan, including
management of pension assets, has to be carried out from a medium- tolong-term perspective, the former accounting method under which theactuarial gains and losses in a single fiscal year directly cause fluctuations
in business performance in the fiscal year in which they occur is no longer
appropriate.
Given this situation, the Company changed to the method ofamortizing actuarial gains and losses from the following fiscal year ofoccurrence, using the straight-line method over certain years within the
average remaining service period (mainly 10 years).
Due to this change, operating profit, ordinary profit, and income
before income taxes increase by Yen 10,096 million, respectively,
compared to using the former method.
4) Accrued Retirement Benefits for Directors and Corporate Auditors
To prepare for outlays for retirement benefits of directors and corporate
auditors of the Company and one portion of domestic consolidated
subsidiaries, a necessary payment at the end of the fiscal year isappropriated based on the rules of the directors and corporate auditors’
retirement benefits.
(4) Revenue Recognition
Revenue from the contract business of Pasco Corporation and its
subsidiaries, etc. is recognized under the percentage of completion method.
Revenue from the contract business of Secom Techno Service Co., Ltd. and[English Translation]41

its subsidiaries for which the construction price per transaction exceeds Yen
500 million is recognized under the percentage of completion method.
(5) Major Lease Transactions
Finance leases other than those deemed to transfer the ownership of theleased assets to lessees, are accounted for by a method that is applicable toordinary operating leases.
(6) Accounting for Major Hedges
1) Hedge Accounting Method
The Company principally applies deferred hedging accounting. Theinterest rate swaps that fulfill requirements for exceptional treatments
permitted for interest rate swaps are accounted for using exceptional
treatments.
2) Hedging Instruments and Hedged Items
Hedging instruments: Interest rate swaps
Hedged items:
Bonds and loans payables
3) 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 thechanges 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 is omitted.
(7) Accounting for Consumption Tax
In relation to consumption tax and regional consumption tax, 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 fully carried at fairvalue.
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 Presentation Methods(Consolidated Statements of Income)Gain on investment in business limited partnership was included in Other of
non-operating income. However, it is listed separately from the fiscal year underreview from the view point of further significance. The Gain on investment inbusiness limited partnership included in Other of non-operating income in theprevious fiscal year was Yen 482 million.

[English Translation]
42

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 to cash dispensers
located outside of financial institution facilities. The balance of cash deposits forarmored car services includes cash on hand and cash in banks representing a totalof Yen 39,473 million connected with such services, which is restricted as to useby the Company group.
The short-term bank loan balance includes Yen 9,229 million financed forthe cash collection and filling services. Furthermore, the balance of cash deposits
for armored car services includes Yen 24,223 million connected with cash
collection administration services, which is also restricted as to use by theCompany group. Moreover, the short-term bank loan balance includes Yen
21,172 million financed in connection with the same services.
2. Accumulated Depreciation of Assets
Accumulated Depreciation of Tangible Assets: Yen 291,057 million
3. Assets Pledged as Collateral and Collateral-related Liabilities:(1) Assets Pledged as Collateral
Cash on hand and in banks (time deposit)
Real estate for sale
Other (accounts due)
Buildings and improvements
Land
Intangible assets (leasehold)Investment securities
Long-term loans receivable
Others (long-term deposits)
Total(2) Collateral-related Liabilities(Millions of yen)
990
71,524667
28,23522,618
1,593
869
326
200
127,026(Millions of yen)
83,817
1,936
13,524
16,995116,274

Bank loans
Current portion of straight bonds
Straight Bonds
Long-term loans
Total

In addition to the above liabilities, investment securities and long-term loans arepledged as collateral for the debts of affiliated companies and other debts.
4. Shares of Non-consolidated Subsidiaries and Affiliated Companies:(Fixed assets)
Investment in securities (shares) amounted to Yen 45,685 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 5,407 million.
(2) Lawsuits:
In July 2004, Fujitsu Limited filed a lawsuit against Secom General
Insurance Co., Ltd. in the Tokyo District Court, claiming compensation for[English Translation]
43

costs related to a systems development order in the amount of Yen 2,500
million. Secom General Insurance Co., Ltd. is not only contesting this law
suit on the grounds that it is without merit, but has also filed a countersuit
claiming damages in the amount of Yen 1,000 million, which are currently
pending.
Pasco Corporation filed a lawsuit against Sumitomo Mitsui Banking
Corporation for obtaining a confirmation 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 athird party and acquired from the third party its claim against Pasco
Corporation for an alleged sale of equipment to Pasco Corporation as
collateral for the loan, and demanded Pasco Corporation to pay such claim to
Sumitomo Mitsui Banking Corporation. However, upon carefully
investigating the case with counsel, we believe that the alleged transactions
are null and void, and our pleading should be admitted. Furthermore, on
December 5, 2005, Sumitomo Mitsui Banking Corporation brought a crossaction against Pasco Corporation in relation to a demand for payment of atransferred receivable. Subsequently, both actions were consolidated
according to a court procedure. The existence of the debt in theabove-mentioned sum is still being disputed in the court.

6. Presentation of Goodwill and Negative Goodwill
Goodwill and negative goodwill are presented in netted amount. Listed below
are the amounts before offset.
Goodwill
6,012 million yen
Negative goodwill
1,192
Net amount
4,820

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
previous
consolidated fiscal
year

Increase in thenumber of shares in
the consolidated
fiscal year underreview

Decrease in thenumber of sharesin the consolidated
fiscal year underreview

Number of sharesat the end of
consolidated
fiscal year underreview

233,288,717――

233,288,717

Issued shares
Common stock
Treasury stock
8,318,910
5,617
928
8,323,599
Common stock(Outline of reasons for change)
The increase of 5,617 in the number of common stocks is due to the purchase ofshares constituting less than one unit.
The decrease of 928 in the number of common stocks is due to requests tosell such number of shares as will constitute, together with the sharesconstituting less than one unit of shares already held, one full unit.

[English Translation]44

2. Items Related to Dividends(1) Amount of Dividend Paid
Resolution
Classes ofSharesOrdinary General
Meeting of
Shareholders on
June 27, 2007

Commonstock

Total amountof dividend

Cash dividend
per share(Millions of yen)

(yen)

17,99780

Record date

Effective
date

March 31,2007

June 28,
2007(2) Of the dividends whose record date belongs to the fiscal year under review, thefollowing are those dividends of which the effective date belongs to the next
fiscal year.
Resolution
Classes of Source of
Total
Cash
Record date
Sharesdividend amount of dividend per
cash
share
dividend
Ordinary General
Meeting of
Shareholders on
June 26, 2008

Commonstock

Retainedearnings[English Translation]
45(millions of
yen)

(yen)

19,12285

March 31,2008

Effective
date

June 27,2008

Notes to Deferred Tax Accounting
1. The Significant Components of Deferred Tax Assets and Deferred Tax Liabilities
Deferred tax assets:
Eliminations of unrealized gain
Accrued pension and severance costs
Operating loss carryforwards
Allowance for doubtful accounts
Write-down on fixed assets
Adjustment of book value of land and buildings of subsidiaries,
etc. at fair value at the date of consolidation
Accrued bonuses
Underwriting funds and funds for outstanding claims
Impairment loss
Adjustment of book value of other fixed assets of subsidiaries,
etc. at fair value at the date of consolidation
Loss on impairment of investment securities
Unrealized losses on securities
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets(Millions of yen)
10,391
6,356
5,759
5,401
5,128
4,895
4,878
3,897
2,970
2,580
1,640
1,133
7,515
62,549(15,430)
47,118Deferred tax liabilities:
Adjustment of book value of land and buildings of subsidiaries,
etc. at fair value at the date of consolidation
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
Total deferred tax liabilities
Net deferred tax assets(7,052)(6,654)(2,522)(1,349)(17,580)
29,538

2. Summary of the Reconciliation between the Effective Tax Rate Reflected in theConsolidated Financial Statements and the Statutory Tax Rate :Statutory tax rate
(Reconciliation)
Net gains from investment in affiliatedcompanies accounted for under theequity method
Increase in valuation allowance
Utilization of tax loss carryforwards
Permanently nondeductible expenses
such as entertainment expenses
Per capita levy of corporate inhabitanttax
Impairment loss on the investments andloans of subsidiaries and affiliatedcompanies
Amortization of goodwill
Research and development tax credits[English Translation]
46

40.5 (%)

(2.2)
1.5
(1.1)
0.9
0.9
(0.5)
0.5
(0.4)

Unrecognized tax benefits fromsubsidiaries, etc. in deficit
Tax rate difference with consolidated
subsidiaries
Adjustment of gain or loss on sales ofsubsidiaries and affiliated companies
Other
Effective tax rate after the adoption ofdeferred tax accounting

0.4
(0.3)
0.2
0.0
40.4 (%)

Notes to Fixed Assets Used under Leases
1. Finance lease transactions other than those deemed to transfer the ownership of theleased assets to the lessees(1) Lessee1) The Amount Equivalent to Acquisition Cost, the Amount Equivalent to
Accumulated Depreciation, and the Amount Equivalent to Year-End Balanceof Leased Properties(Millions of yen)Amount equivalent to acquisition cost
Buildings and improvements
5,207
Tangible assets (other)
15,378Intangible assets (software)
1,268
Total
21,854
Amount equivalent to accumulated depreciation
Buildings and improvements
Tangible assets (other)
Intangible assets (software)
Total

2,113
8,472
477
11,063

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

3,094
6,905
790
10,791

2) The Amount Equivalent to Year-End Balance of Future Minimum Lease
Payments(Millions of yen)
Within 1 year
Over 1 year
Total

3,224
8,677
11,901

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[English Translation]
47(Millions of yen)
4,428
4,012
458

4) Calculation Method of the Amount Equivalent to Depreciation Expenses andthe 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 andsets 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 costof leased properties, and the interest method is used as the allocation method
for each fiscal period.
(2) Lessor
1) The Acquisition Cost, Accumulated Depreciation, and Year-End Balance forLeased Properties Included in Fixed Assets(Millions of yen)

Acquisition cost
Buildings and improvements
Tangible assets (other)
Total

11,37731,06142,439

Accumulated depreciation
Buildings and improvements
Tangible assets (other)
Total

1,414
14,532
15,946Year-End balance
Buildings and improvements
Tangible assets (other)
Total

9,963
16,52926,4922) The Amount Equivalent to the Year-End Balance of Future Minimum Lease
Payments to be received(Millions of yen)
Within 1 year
7,326
Over 1 year
26,524
Total
33,851
3) Received Lease Payments, Depreciation Expenses, and the Amount Equivalent
to Received Interest(Millions of yen)
Received lease payments
9,740
Depreciation expenses
5,671
Amount equivalent to received interest
2,652[English Translation]484) 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 for each fiscal period.
2. Operating Leases
1) Lessee
Future lease payments
Within 1 year
Over 1 year
Total

(Millions of yen)
2,488
30,67333,162

2) Lessor
Future lease payments to be received
Within 1 year
Over 1 year
Total

(Millions of yen)
2,950
25,32528,275

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 for lump-sum
severance indemnities and/or eligible for pension benefits.
The Company and those of its domestic consolidated subsidiaries with the sameretirement benefit plan have adopted a severance indemnity plan and a defined
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 their period of service, plus
interest which is calculated as the 3-year average yield of applicants for 10-year
government bonds. 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 of annual
income is contributed thereto. The Company transferred an additional portion of theseverance 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 the defined contribution pension
plan, including the past reserve, changed to 70 percent and 30 percent, respectively.
The majority of the consolidated overseas subsidiaries have adopted a variety ofpension plans that essentially cover all employees. Most of these plans are defined
contribution pension plans.

[English Translation]49

2. Items Concerning the Retirement Benefit Obligation (As of March 31, 2008):(Millions of yen)
(1) Projected benefit obligation(71,061)(2) Plan assets *1
62,660(3) Unfunded projected benefit obligation (1)+(2)(8,401)(4) Unappropriated difference at the time of changein accounting standard(5) Unrecognized actuarial gain or loss
10,139(6) Unrecognized prior service liability(7) Net retirement benefit obligation recognized in
1,737
the consolidated balance sheet((3)+(4)+(5)+(6))(8) Prepaid pension and severance costs
17,834(9) Accrued pension and severance costs ((7)-(8))(16,096)(Note) *1. Plan assets include the asset of 235 million yen of the retirement benefit
trust.

3. Components of Pension and Severance Costs (April 1, 2007–March 31, 2008)(Millions of yen)
(1) Service cost *1
4,302(2) Interest cost
1,423(3) Expected return on plan assets(1,991)(4) Amortization of actuarial gain or loss
(5) Pension and Severance Costs ((1)+(2)+(3)+(4))3,734(6) Other *2
1,413
Total
5,147
(Notes) *1. Pension and severance costs for consolidated subsidiaries, etc. adopting thesimplified 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 Straight-line method over the estimated years
obligationof services of the eligible employees(2) Discount rates
Principally 2.0% at beginning of fiscal year
Principally 2.0% at end of fiscal year(3) Expected rates of return on
Principally 3.0% for plan assets
plan assets
0.0% for retirement benefit trust(4) Amortization period of priorPrior service liability is amortized in the year
service liability
in which the gain or loss is incurred.
(5) Amortization period of
Amortizing actuarial gains and losses from theactuarial gain or loss
following fiscal year of occurrence, using thestraight-line method over certain years within
the average remaining service period (mainly
10 years).

[English Translation]50Notes to Business Combination
Transactions, etc. under common control
1. Name and Business Domain of the Corporate Party to the Combination, Legal Formof the Business Combination, Overview of the Transaction, including the Objectiveof the Transaction(1) Name and Business Domain of the Corporate Party to the Combination
Secom Medical System Co., Ltd. ･･･ medical services(2) Legal Form of the Business Combination
The Company made an investment in kind of land and long-term loans to Secom
Medical System Co., Ltd.
(3) Overview of the Transaction, including the Objective of the Transaction
The Company made an investment in kind with the objective of further
strengthening our business foundation through efficient allocation of medical
assets.
2. Overview of the Accounting Treatment
Based on the "Accounting Standard for Business Combinations" (BusinessAccounting Council October 31, 2003) and the "Guidance on Accounting Standard
for Business Combinations and Accounting Standard for Business Divestitures"(Accounting Standards Board of Japan Guidance No. 10, final revision December
22, 2006), the Company has processed the business combinations with anappropriate book value as a transaction under common control.
Notes to Per-Share Information
Net assets per share:
Yen 2,521.45
Net income per share:
Yen 273.40
Diluted net income per share is not listed since no outstanding stocks withdilutive effect.
(Note) Basis of the calculation is as follows.
1.Net assets per share
Total of net assets
Net assets related to common stock
Breakdown of the difference
Minority interests
Number of shares outstanding of common stock
Number of treasury shares of common stock
Number of common stocks used to
calculate net assets per share
2.Net income per share
Net income
Amounts not belonging to common shareholders
Net income related to common stocks
Average number of shares outstanding
in the fiscal year under review[English Translation]
51

Yen 630,274 million
Yen 567,238 million
Yen 63,035 million
233,288,717 shares
8,323,599 shares
224,965,118 sharesYen 61,506 million
Nil
Yen 61,506 million
224,967,166 sharesNon-Consolidated Balance Sheet(As of March 31, 2008)(Millions of yen)ITEM
ASSETSAMOUNTITEM
LIABILITIESAMOUNT

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

194,333
77,13060,821
534
11,661
6,760
2,921
454
6,298
952
1,913
4,714
18,172
2,567(568)

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

127,180
2,757
30,401
10,83815,8341,566
640
31,29922,903
3,607
5,372
1,958

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

478,710
116,906
21,969122
62,4191,267
3,239
25,913
1,961
14
7,700
7,184
516
354,102
28,668Long-term Liabilities:
Guarantee deposits received
Accrued pension and severance costs
Accrued retirement benefits for
directors and corporate auditors

24,333
18,174
5,087

195,984
74,838

Lease deposits

8,859Long-term prepaid expense
Prepaid pension and severance costs
Deferred income taxes

26,165
13,7696,760

Fund for insurance

4,893

Other
Allowance for doubtful accounts

975(6,812)TOTAL ASSETS

673,043

Total Liabilities
NET ASSETS
Shareholders’ Equity:
Common Stock
Capital Surplus:
Additional paid-in capital
Other capital surplus
Retained Earnings:
Legal reserve
Other retained earnings
Reserve for systems development
General reserve
Accumulated earnings carriedforwardCommon Stock in treasury, at cost
Valuation, Translation Adjustments andOthers:Net Unrealized Losses on Securities
Total Net Assets
TOTAL LIABILITIES AND NET ASSETS[English Translation]
52

1,070
151,513521,61266,377
83,056
83,0541
417,055
9,028
408,027800
2,212
405,015(44,877)(82)(82)
521,529
673,043

Non-Consolidated Statement of Income(Fiscal Year from April 1, 2007 to March 31, 2008)(Millions of yen)

ITEM

AMOUNT

Revenue

337,611

Costs of revenue

192,417Gross profit

145,193

Selling, general and administrative expenses

71,038Operating profit

74,155Non-operating income:Interest income

1,749

Dividends income

7,042

Other

815

9,607

Non-operating expenses:
Interest expenses

431

Loss on disposal of inventories

899

Loss on sales and disposal of fixed assets
Loss from write-off of prepaid installation cost
Other

1,202
863
1,179

Ordinary profit

4,575
79,187Extraordinary profit:
Gain on sales of investment securities
Gain on refund of lease deposits

1,547
669

Other

4

2,221

Extraordinary loss:
Loss on impairment of investment securities
Other

558
8

566

Income before income taxes

80,842

Income taxes – current

29,217

Income taxes – deferred

1,578

Net income

50,046[English Translation]
53

Non-Consolidated Statement of Changes in Net Assets(Fiscal Year from April 1, 2007 to March 31, 2008)(Millions of yen)
Shareholders’ equity
Retained
Capital surplus
earnings
Common stock

Balance as of March 31,
2007

Additional

Other capital

Total capitalLegalpaid-in capitalsurplussurplusreserve

66,377

83,054

1

83,056

0

0

9,028

Changes during the period:
Cash dividends
Net income
Purchaseoftreasurystock
Disposal of treasury stock
Net changes of items
other than shareholders’equityTotal changes during the

-

-

0

0

-

66,377

83,054

1

83,056

9,028

periodBalance as of March 31,
2008(Millions of yen)
Shareholders’ equity
Retained earnings
Other retained earnings
Reserve forsystems

General reserve

development
Balance as of March 31, 2007

Accumulated

Total retained

earnings carriedearnings

forward

800

2,212

372,966

385,006

Cash dividends(17,997)(17,997)

Net income

50,04650,046

Changes during the period:

Purchase of treasury stock
Disposal of treasury stock
Net changes of items other thanshareholders’ equity
Total changes during the period--

32,04832,048

Balance as of March 31, 2008

800

2,212

405,015

417,055[English Translation]
54

(Millions of yen)
Valuation, translation

Shareholders’ equity

adjustments and others
Total

Common stock

Total

Unrealized

valuation,in treasury, atshareholders’gains (losses)

translation

cost

equityon securities

adjustments

Total net
assetsand others
Balance as of March 31, 2007

(44,850)

489,590

4,564

4,564

494,154

Changes during the period:
Cash dividends(17,997)(17,997)

Net income

50,04650,046

Purchase of treasury stock

(31)

(31)

(31)

Disposal of treasury stock

5

5

5

Net changes of items other thanshareholders’ equity
Total changes during the period
Balance as of March 31, 2008

(4,647)(4,647)(4,647)(26)

32,022(4,647)(4,647)

27,375(44,877)

521,612

(82)

(82)

521,529[English Translation]
55

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.
3. Depreciation of Fixed Assets(1) Tangible Assets: Declining-balance method
a. Security Equipment and Control Stations
Depreciating over the average estimated service lives (5–8 years)b. Other Tangible Assets
Buildings (excluding auxiliary facilities attached to buildings) acquired on
and after April 1, 1998 are depreciated by the straight-line method.
Main useful service life is as follows:
Buildings and improvements: 22–50 years(Change to the accounting policy)
Due to the amendment of the Corporation Tax Law (Law Partially Amending
the Income Tax Law, etc., March 30, 2007, Law No. 6) and (Cabinet Order
Partially Amending the Corporation Tax Law Enforcement Regulations,
March 30, 2007, Cabinet Order No. 83), the accounting method for tangible
fixed assets (excluding security equipment and control stations) that wereacquired after April 1, 2007 has been changed to the method based on the
post-amendment Corporation Tax Law.
The resulting impact on operating profit, ordinary profit, and net income
before income taxes is immaterial.

[English Translation]
56

(Additional Information)
Due to the fiscal year 2007 amendment to the Corporation Tax Law,
beginning from the fiscal year following the fiscal year in which theacquisition cost resulting from application of the method of depreciation andamortization based on the pre-amendment Corporation Tax Law to tangible
fixed assets (excluding security equipment and control stations) acquired onor before March 31, 2007 reached 5%, the difference between the amountrepresenting 5% of the acquisition cost and the memorandum value is to beamortized by the straight-line method over a period of 5 years and included
in depreciation expenses.
The resulting impact on operating profit, ordinary profit, and net income
before income taxes is immaterial.
(2) Intangible Assets: Straight-line method
The software used in the Company amortized by the straight-line method isbased on the useful service lives within the Company (5 years).
(3) 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 the customer
premises, any portion exceeding the amount received from the customer isstated as “long-term prepaid expenses” and amortized by the straight-line
method over the contract period (5 years).
4. Basis for Allowances(1) Allowance for Doubtful Accounts
To prepare for losses from bad debts such as losses on trade receivables andloans, the allowance for doubtful accounts provides an estimated amount of
uncollectables. It is determined based on historical loss rate with respect toordinary accounts, and an estimate of uncollectable amounts, respectively
determined by reference to specific doubtful accounts from customers who areexperiencing financial difficulties.
(2) Accrued Bonuses
Accrued bonuses are provided for the bonus payments to employees, at an
amount to be paid during the fiscal year under review.
(3) Accrued Pension and Severance Costs
To prepare for the retirement benefits of employees, the Company appropriates
an amount of accrued pension and severance costs and prepaid pension andseverance costs that is recognized to be paid at the end of the fiscal year underreview, based on the estimated amount of projected benefit obligation and plan
assets as of the end of the fiscal year under review. Actuarial gains and losses
are amortized from the following year of occurrence, using the straight-line
method over certain years within the average remaining service period (mainly
10 years).

[English Translation]
57

(Change to the accounting policy)
Previously the Company adopted the method of amortizing actuarial gains andlosses related to pension and severance cost accounting in the fiscal year
incurred.
The background to our adoption of this accounting method was thedecision to make major revisions to the Retirement Benefit Plan. The mainfeatures of these revisions are the joint adoption of the defined benefit pension
plan and the defined contribution pension plan, and transfer of substitutional
portion managed under the contract with the government for the employees’
pension fund. This was done predicated on the assumption that our long-term
policy is to switch entirely from the defined benefit pension plan to the defined
contribution pension plan.
Regarding our policy of switching entirely from the defined benefit
pension plan to the defined contribution pension plan, partly due to theprovisions, etc. in related laws and regulations, we have currently only
switched a portion of 30% to the defined contribution pension plan, which iswell short of switching entirely (100%). Moreover, amendments to the related
laws and regulations are uncertain. Therefore, at the board of directors meeting
held in March 2008 a resolution was passed to abandon the policy of switchingentirely to the defined contribution pension plan involuntarily.
Due to the abandonment of the policy to switch entirely to the defined
contribution pension plan, it is no longer as necessary as before to eliminate
actuarial gains and losses as early as possible, as the objective of this was tomake the switch as smooth as possible. In this situation, if the former
accounting method is followed the actuarial gains and losses could cause major
fluctuations in operating profit in the fiscal year in which they occur, and giventhat inherently the Retirement Benefit Plan, including management of pension
assets, has to be carried out from a medium- to long-term perspective, theformer accounting method under which the actuarial gains and losses in asingle fiscal year directly cause fluctuations in business performance in thefiscal year in which they occur is no longer appropriate.
Given this situation, the Company changed the method of amortizing
actuarial gains and losses from the following fiscal year of occurrence, using
the straight-line method over certain years within the average remaining
service period (mainly 10 years).
Due to this change, operating profit, ordinary profit, and income before
income taxes increase by Yen 6,528 million, respectively, compared to using
the former method.
(4) Accrued Retirement Benefits for Directors and Corporate Auditors
To prepare for outlays for retirement benefits of directors and corporate
auditors of the Company, a necessary payment at the end of the fiscal year isappropriated based on the rules of the directors and corporate auditors’
retirement benefits.

5. Other Major Items Concerning Preparation of Non-Consolidated Financial
Statements(1) Accounting for Lease Transactions
Finance leases other than those deemed to transfer the ownership of the leased
assets to lessees are accounted for by a method that is applicable to ordinary
operating leases.
(2) Consumption Tax
In relation to consumption tax and regional consumption tax, the Company has
adopted the tax-exclusive method.

[English Translation]
58

6. Changes of Presentation Methods(Balance Sheets)
Until the previous fiscal year, Telephone and Telegraph Utility Rights (Yen 72
million at the end of the fiscal year under review) was listed separately underintangible assets. However, due to the insignificance of the item, it is included in
Other under intangible assets from the fiscal year under review.
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 36,598 million connectedwith such services, which is restricted as to use by the Company. The short-termbank loan balance includes Yen 9,229 million financed for the cash collection andfilling services.
The balance of cash deposits for armored car services includes Yen 24,223
million connected with cash collection administration services, which is also
restricted as to use by the Company. Moreover, the short-term bank loan balance
includes Yen 21,172 million financed in connection with the same services.
2. Assets Pledged as Collateral and Collateral-related Liabilities(1)Assets pledged as collateral(Millions of yen)
Investment securities
7
Investment securities in subsidiaries and45
affiliates
Long-term loans receivable
323
Total

376

(2)Collateral-related liabilities
Nil
Investment securities, investment securities in subsidiaries and affiliates, andlong-term loans receivable are pledged as collateral for the debts ofsubsidiaries and affiliated companies and other debts.
3. Accumulated depreciation of Assets
Accumulated Depreciation of tangible asset:

Yen 206,644 million

4. Contingent Liabilities(1) Guarantees
Liabilities for the below companies and employees are guaranteed.
(Millions of yen)
Alive Medicare Co., Ltd.
1,720
Seikeikai (Medical institution)
678
Sanwakai (Medical institution)
427
Employees
232[English Translation]
59

Other

330

Total

3,389

(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 to provide
funds to Secom General Insurance Co., Ltd. if and when the net assets ofSecom General Insurance Co., Ltd. become lower than the specified amount or
its current assets necessary for the payment of its liabilities are insufficient. The
total liabilities of Secom General Insurance Co., Ltd. at the end of the fiscal
year under review are Yen 172,113 million, including Yen 166,924 million of
investment deposits by policyholders, unearned premiums and other insurance
liabilities, and the total assets are Yen 183,620 million.
However, this agreement is not construed as the Company’s guaranteewith respect to payment obligations of Secom General Insurance Co., Ltd., andSecom General Insurance Co., Ltd. maintained net assets above the required
level and its current assets were not insufficient at the end of the fiscal year
under review.
5. Financial Receivables/Payables of Subsidiaries and Affiliated Companies(excluding those separately presented)(Millions of yen)
22,186
Short-term receivables
Long-term receivables
Short-term payables
Long-term payables

70,937
9,001
674

Notes to Non-Consolidated Statement of Income
Transactions with Subsidiaries and Affiliated Companies
Operating transactions(Millions of yen)
Revenue
17,263
Amount of purchased costs and sub-contract costs
67,072Non-operating Transactions
7,860

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 previous shares in fiscal
fiscal year
year underreview
Common stock
8,318,910
5,617(Outline of reasons for change)[English Translation]
60(Unit: 1 share)
Decrease in
Number of
number ofshares at theshares in fiscal end of fiscal
year underyear underreview
review
928
8,323,599

The increase of 5,617 in the number of common stocks is due to the purchase of sharesconstituting less than one unit.
The decrease of 928 in the number or common stocks is due to requests to sell such
number of shares as will constitute, together with the shares constituting less than one
unit of shares already held, one full unit.
Notes to Deferred Tax Accounting
1. The Significant Components of Deferred Tax Assets and Deferred Tax Liabilities:
Deferred tax assets:
Impairment loss
Impairment loss on Subsidiaries’ and Affiliates’ securities
Accrued bonuses
Accrued pension and severance costs
Write-down on fixed assets
Accrued business tax
Allowance for doubtful accounts
Other
Total deferred tax assets(Millions of yen)
2,477
2,413
2,175
2,156
1,760
1,290
1,091
3,687
17,050

Deferred tax liabilities:
Prepaid pension and severance costs
Total deferred tax liabilities(Millions of yen)
(5,576)(5,576)

Net deferred tax assets(Millions of yen)
11,474

2. Summary of the Reconciliation between the Effective Tax Rate Reflected in the
Financial Statements and the Statutory Tax Rate.
Statutory tax rate
(Reconciliation)
Dividends income and other items permanently treated as gains
Foreign tax credit
Per capita levy of corporate inhabitant tax
Research and development tax credits
Other
Effective tax rate after the adoption of deferred tax accounting

40.5%
(2.0)
(0.5)
0.5
(0.5)
0.1
38.1%

Notes to Fixed Assets under Leases
1. Finance lease transactions other than those deemed to transfer the ownership of theleased 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 used basedon the finance lease contracts other than those deemed to transfer the ownershipof the leased assets to the lessees.

[English Translation]611) The Amount Equivalent to Acquisition Cost, the Amount Equivalent to
Accumulated Depreciation, and the Amount Equivalent to Year-End Balanceof Leased Properties(Millions of yen)Amount equivalent to acquisition cost
Buildings
5,184
Automobiles
3,064
Tools furniture and fixtures
1,257
Total
9,506
Amount equivalent to accumulated depreciation
Buildings
Automobiles
Tools furniture and fixtures
Total
Amount equivalent to year-end balance
Buildings
Automobiles
Tools furniture and fixtures
Total(Millions of yen)
2,092
1,824
873
4,790
(Millions of yen)
3,092
1,240
383
4,716

2) The Amount Equivalent to Year-End Balance of Future Minimum Lease
Payments(Millions of yen)
928
4,749
5,677

Within 1 year
Over 1 year
Total3) 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)
1,775
1,539
260

4) Calculation Method of the Amount Equivalent to Depreciation Expenses andthe 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 andsets 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 costof leased properties, and the interest method is used as the allocation method
for each fiscal period.

[English Translation]62

2. Operating Leases
1) Lessee
Future lease payments
Within 1 year
Over 1 year
Total

(Millions of yen)
2,171
29,28531,4562) Lessor(Millions of yen)

Future lease payments to be received
Within 1 year
Over 1 year
Total

945
9,434
10,379Notes to Transactions with Related Parties
Type

Name ofCompany

Address

Subsidiary

Secom
TechnoService
Co.,
Ltd.
Secom
MedicalSystemCo.,
Ltd.

Subsidiary

Capital(Millionsofyen)Business
content

VotingRights HeldbyCompany(Indirect)(%)

Nakano-ku, Tokyo

2,357

Installationof security
systems

67.8
(0.0)

Relationship
Concurrent Businessposts ofrelationshipdirectors
andcorporate
auditors
Construction
subcontractor

Shibuya-ku
,
Tokyo

6,545

Medicalservice100.0

3 personsTransactions
Secom Techno
Service Co.,Ltd.

Installation costs(Note 2)

Secom Medical
System Co.,
Ltd.

Execution ofloans(Collection ofloans)
Investment inkind (Note 3)

Amount ofTransactions(Millions of yen)
38,541

Account

Loan andinvestmentof funds

Accounts payable

Year-end
Balance(Millions of yen)
3,395

Payable-construction

1,044

16,051

Short-term loan receivable

3,461(9,919)Long-term loan receivable

33,752

16,108Investment securities andinvestments in subsidiaries
and affiliates

41,174(Notes)1. Consumption taxes are not included in the transaction amounts listed above.
However, consumption taxes are included in the year-end balances.

[English Translation]63

2. The installation costs are determined by price negotiations, taking market prices into
consideration.
3. The Company made an investment in kind of land and long-term loans, and istreated with appropriate book value.
Notes to the Business Combination
Transactions, etc. under common control
1. Name and Business Domain of the Corporate Party to the Combination, Legal Formof the Business Combination, Overview of the Transaction, including the Objectiveof the Transaction(1) Name and Business Domain of the Corporate Party to the Combination
Secom Medical System Co., Ltd. ･･･ medical services(2) Legal Form of the Business Combination
The Company made an investment in kind of land and long-term loans to Secom
Medical System Co., Ltd.
(3) Overview of the Transaction, including the Objective of the Transaction
The Company made an investment in kind with the objective of further
strengthening our business foundation through efficient allocation of medical
assets.
2. Overview of the Accounting Treatment
Based on the "Accounting Standard for Business Combinations" (BusinessAccounting Council October 31, 2003) and the "Guidance on Accounting Standard
for Business Combinations and Accounting Standard for Business Divestitures"(Accounting Standards Board of Japan Guidance No. 10, final revision December
22, 2006), the Company has processed the business combinations with anappropriate book value as a transaction under common control.
Notes to Per-Share Information
Net assets per share:
Net income per share:

Yen 2,318.27
Yen 222.46[English Translation]
64

Certified Copy of the Accounting Auditors’ Report (Consolidated)[English Translation of the Auditors' Report Originally Issued in the Japanese
Language]
Independent Auditors' Report
Date May 20, 2008
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA & Co.
.
Toshiya Mori (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 andthe related notes of SECOM Co., Ltd.as of March 31, 2008 and for the year from April 1,
2007 to March 31, 2008 in accordance with Article 444(4) of the Companies Act. The
consolidated statutory report is the responsibility of the Company’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 in Japan.
Those auditing standards require us to obtain reasonable assurance about whether the
consolidated statutory report is free of material misstatement. An audit is performed on a test
basis, and includes assessing the accounting principles used, the method of their applicationand estimates made by management, as well as evaluating the overall presentation of theconsolidated 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. andits consolidated subsidiaries for the period, for which the consolidated statutory report was
prepared, in conformity with accounting principles generally accepted in Japan.
Note
As discussed in Note5(3)3) of the Notes to Significant Items for Preparation of Consolidated
Financial Statements, the Company changed the method of amortizing actuarial gains andlosses related to pension and severance costs.
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]
65

Certified Copy of the Accounting Auditors’ Report(Non-Consolidated)[English Translation of the Auditors' Report Originally Issued in the Japanese
Language]
Independent Auditors' Report
Date May 20, 2008
The Board of Directors
SECOM Co., Ltd.
KPMG AZSA & Co.
.
Toshiya Mori (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 of income,the statement of changes in net assets and the related notes, and its supporting schedules of
SECOM Co., Ltd. as of March 31, 2008 and for the 47th business year from April 1, 2007 to
March 31, 2008 in accordance with Article 436(2)①of the Companies Act. The statutory
report and supporting schedules are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the statutory report and supporting schedules basedon our audit as independent auditors.
We conducted our audit in accordance with auditing standards generally accepted in Japan.
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 ona test basis, and includes assessing the accounting principles used, the method of theirapplication and estimates made by management, as well as evaluating the overall presentationof the statutory report and supporting schedules. We believe that our audit provides areasonable 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, inconformity with accounting principles generally accepted in Japan.
Note
As discussed in Note4(3) of the Notes to Significant Accounting Policies, the Company
changed the method of amortizing actuarial gains and losses related to pension and severance
costs.
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]
66

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

Audit Report
May 23, 2008

Mr. Kanemasa Haraguchi
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 performance of
duties of the directors during the 47th business term from April 1, 2007 through March 31,
2008 from each of the corporate auditors. After deliberating such reports, we have preparedthis 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 established the audit policy and audit plan for thecurrent 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 auditors, in accordance with the audit policy of the current fiscal year andaudit plan, etc. set up by the Board of Corporate Auditors, worked to communicate withdirectors, the internal auditing division and other employees, made efforts to gather
information and establish the audit environment, in addition to attending the meetings of theBoard of Directors and other important meetings, receiving reports from the directors andother managers on their duties, requesting explanations when necessary, inspecting documents
concerning matters such as important decisions, and investigating the conditions of thebusiness and financial conditions at the head office and the principal offices. Furthermore, toensure 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 and investigated the details of the resolution of the Board of Directors
on the establishment of a system stipulated in Paragraph 1 and Paragraph 3 of Article 100 of
the Ordinances for Enforcement of the Companies Act and the status of the system (internal
control system) established based on such resolution. We worked to communicate andexchange information with the directors and corporate auditors of subsidiaries and received
reports on operations from subsidiaries when necessary. The above methods were used to
examine the business report and accompanying schedule for the fiscal year under review.
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 and requested explanations when[English Translation]67

necessary. In addition, we received notice from the accounting auditors that “The systems for
ensuring the proper execution of duties” (set forth in each Item of Article 159 of the Ordinancefor Corporate Accounting) is organized in accordance with the “Standers for Quality Controlof Audit” (Business Accounting Council, October 28, 2005) and other relevant standards, andsought explanations whenever necessity arose. Based on the above methods, we examined thefinancial statements (balance sheets, statements of income, statements of changes inshareholder's equity, note to financial statements), accompanying schedules, and theconsolidated financial statements (consolidated balance sheets, consolidated statements ofincome, consolidated statements of changes in shareholder's equity, note to consolidated
financial statements) for the fiscal year under review.
2. Result of audit(1) Result of audit of business report, etc.
i) The Business Report and accompanying schedules fairly represent the condition of thecompany in accordance with laws and regulations and the Articles of Incorporation of theCompany.
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 the Company 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.
(2) Result of audit of financial statements and accompanying schedules
In our opinion, the audit procedures and audit results of the accounting auditor 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 auditor KPMG
AZSA & Co. are appropriate.

[English Translation]
68

Reference Document Concerning the General Meeting of Shareholders

First Item of Business

Proposed Distribution of Surplus

The Company considers the return of profit to shareholders as one of theimportant managerial issues, and the Company has determined a dividend payout ratio
and level of internal reserves after making an overall judgment on the expansion of theCompany’s business and movements for future sales and profits of the Company whileconsidering the Company’s basic policy that ensures the payment of continual andsteady dividends. The Company will utilize internal reserves for investments requiredfor increased new contractors, research and development and an investment and thelike for strategic businesses so that the Company will exert its efforts to strengthen thecorporate structure and to expand its business.
Furthermore, in order to return profits to shareholders to reflect the financial
conditions of the Company more accurately, the Company has changed the basis of thedividend from the non-consolidated basis to the consolidated basis from the previous
fiscal year.
It is proposed that based on the aforesaid basic policy cash dividends for the
fiscal year under review be increased by Yen 5 per share from Yen 80 per share for theprevious fiscal year to Yen 85 per share to reward shareholders’ continued support.
(1) Kind of asset distributed:
Cash(2) Matter related to distribution of cash and total amount:Yen 85 per share of common stock of the Company
The total amount: Yen 19,122,035,030(3) Effective date for distribution of surplus:
June 27, 2008

[English Translation]
69

Second Item of Business:

Partial Amendment to the Articles ofIncorporation

1. Reason of amendment
The Company will add one item of business to its purposes in preparation forpossible launch of banking agent business at its places of business.
2. Details of amendment
The details of amendments are as follows:(The underlined parts are changed parts.)
Current Articles of Incorporation
Proposed changes(Purpose)
Article 2.

The purpose of the Company
shall be to engage in thefollowing business:
1. Business relating tocontracting to provide security
protection and ensuring suchprotection;
2. Business relating to inspection,
guidance, advice and publishingconcerning security protection
and safety;
3. Business relating todevelopment, manufacture,leasing, sales and operation ofequipment, devices and security
systems etc., related toprevention of crimes and fire,
protection from disasters,
emergency aid and safety;
4. Business of escorted
transportation of cash andvaluables, and groundtransportation business for such
purpose;5. Business relating tocontracting for management andsecurity of buildings, facilities
and vehicles, and maintenanceand repair thereof;
6. Business of contracting for
general electric installation work,
telecommunications installation
work and any work appurtenant
to general and maintenancebusiness thereof;
7. Business relating to
information processing, data baseand other information services,and loans;[English Translation]
70(Purpose)
Article 2.

The purpose of the Company
shall be to engage in thefollowing business:

1. to 18. are same as thecurrent provisions

8. Business relating totelecommunications andbroadcasting;
9. Business relating toinvestigation, research,
consulting and guidance inbusiness management;
10. Business relating to life
insurance and non-life insurance
agency services;
11. Business relating todevelopment, manufacture,leasing, and sales of appliancesfor education, medical treatment
and health;12. Business relating to nursing
service and home care service
outside of hospital, andmanagement of pharmacies;
13. Business relating todevelopment, manufacture,leasing, and sales of water
purification and gas exhaust
filtering equipment;
14. Business relating to the
management of hotels, food andbeverage establishments, sports
facilities as well as rest centersand other welfare facilities, andbusiness related to travel;
15. Business relating to sales andpurchasing, rental, brokering, andmanagement of real estate;
16. Business relating to aerial
surveying and mapping services;
17. Business relating to
mail-order;
18. The processing, planning, andsale of agricultural products; and19. Any and all businessincidental or related to theforegoing items.

[English Translation]
71

19. Banking agent business;and
20. Any and all businessincidental or related to theforegoing items.

Third Item of Business:

Election of Eleven (11) Directors

The term of office of all of the twelve (12) Directors will expire at the close ofthis meeting. Therefore, it is proposed to elect eleven (11) Directors.
The candidates are as follows:1

Name(Date of Birth)
Makoto Iida
(April 1, 1933)

2

Juichi Toda
(March 7, 1932)

3

Shohei Kimura(May 2, 1943)

4

Kanemasa Haraguchi(August 7, 1950)*

5

Seiichiro Kobayashi(October 30, 1947)*

6

Katsuhisa Kuwahara(May 9, 1948)*

7

Shuji Maeda(September 27, 1952)*

Profile(Title, Responsibility, and Representatives for Other Companies)

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)(Representatives for other companies, etc.)
Chairman, Tokyo Security Service Association
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 (currently)
Apr 1970
Joined SECOM Co., Ltd.
Feb 1988
Director
Jun 1997
Executive Director (up to Jun 2004)
Jun 2004
Managing Executive Officer (currently)
Jun 2004
President and Representative Director, Secom
Home Life Co., Ltd. (currently)
Jun 2007
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)
Jan 1981
Joined SECOM Co., Ltd.
Jun 1997
Director
Jun 2000
Executive Director
Jun 2004
Director and Managing Executive Officer
Apr 2005
Executive Director (currently)[English Translation]
72

The number of
Shares Held
4,320,500

3,152,216

36,800

9,744

8,328

3,400

4,800

8

Name
(Date of Birth)
Yasuo Nakayama(November 1, 1952)*

Profile(Title, Responsibility, and Representatives for Other Companies)

Jul 1998
Jul 2001
Jul 2003
Jul 2005
Apr 2007

9

10

Koichi Sato
(February 5, 1953)*

Fumio Obata(July 6, 1946)*

May 2007Jun 2007
Apr 1976
Mar 2001
Apr 2004
Jun 2004
Jun 2005
Jun 2007
Apr 1996

Nov 1998

Mar 2000
Jun 2000
Jun 2000
Mar 2002

11

Takayuki Ito(January 2, 1954)*

Jun 2004
Jun 2000

Jul 2002

May 2004
Jun 2005
Jun 2006
Jun 2007(Notes) 1.

Branch Manager, Oita Branch, The Bank of Japan
Advisor to the Governor, Secretariat of the Policy
Board, The Bank of Japan
Branch Manager, Nagoya Branch, The Bank ofJapan
Director-General, Secretariat of the Policy Board,
The Bank of Japan
Personnel and Corporate Affairs Department, The
Bank of Japan
Advisor, SECOM Co., Ltd.
Executive Director (currently)
Joined SECOM Co., Ltd.
General Manager, COCO-SECOM Department
General Manager, Operations Department(currently)
Executive Officer
Managing Executive Officer (currently)
Executive Director (currently)
General Manager, Business Development
Department, The Mitsubishi Bank, Ltd.
(Presently The Bank of Tokyo-Mitsubishi UFJ,Ltd.)
Senior Executive Director, The Long-Term Credit
Bank of Japan (under state control then; presently
The Shinsei Bank, Ltd.)
Associate Manager, Strategic Planning Division,
SECOM Co., Ltd.
General Manager, Medical Services Department
Director (currently)
President and Representative Director, Secom
Medical System Co., Ltd. (currently)
Executive Officer (currently)
General Manager, Hibiya Branch, The Sanwa
Bank, Ltd. (presently The Bank ofTokyo-Mitsubishi UFJ, Ltd)
General Manager, Muromachi Branch andCorporate Sales Department, UFJ Bank, Ltd.
(presently The Bank of Tokyo-Mitsubishi UFJ,Ltd)
Director, The Daiei, Inc.
Advisor, SECOM Co., Ltd.
Executive Officer (currently)
Director (currently)

The number of
Shares Held
2,000

There is no particular interest between the Company and each of the said candidates.

2. Asterisk marks (*) indicate incumbent Executive Officer of the Company.

[English Translation]
73

1,088

2,200

100

Fourth Item of Business:

Presentation of Retirement
Retiring Director

Allowanceto

It is proposed that retirement allowance be paid to Mr. Shinobu Iida who will
resign as a Director upon the expiration of the term at the close of this general meetingof shareholders, in reasonable amount determined in accordance with the specified
standards of the Company to reward his meritorious service to the Company. It is also
proposed that the determination of the amount, the date of payment thereof, themethods and other matters in relation thereto be entrusted to the Board of Directors.
The profile of the retiring Director is as follows:
Name
Shinobu Iida

ProfileJun 1997

Director

Jun 2004

Retired Director

Jun 2005

Executive Director (currently)-End-[English Translation]74