DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERS

Directors

SECOM CO., LTD.

Makoto Iida

Juichi Toda

Founder

Co-Founder

Shohei Kimura

Kanemasa Haraguchi

ChairmanPresident andRepresentative Director

ANNUAL REPORT 2009

SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Shuji Maeda
Executive Vice President

Hiroshi Ito
Executive Director

Koichi Sato

Fumio Obata

Executive Vice President

Senior Executive
Director

Katsuhisa Kuwahara
Executive Director

Tokyo 150-0001, Japan

Yasuo Nakayama
Executive Director

http://www.secom.co.jp/

Takayuki Ito
Director

ANNUAL REPORT 2009
Year ended March 31, 2009
Corporate Auditors

Executive Officers

Teruo Ogino

Kanemasa Haraguchi

Katsuhisa Kuwahara

Shunji Ogahara

Takayuki Ito

Naohide Nakamura

President andRepresentative Director

Executive Director

Executive Officer

Director

Executive Officer

Yasuo Nakayama

Minoru Takaoka

Ryohei Komatsu

Masahiro Takeda

Executive Director

Executive Officer

Executive Officer

Executive Officer

Seiichi Mori

Hideo Morishita

Teruo Kano

Teruhisa Yoshimura

Executive Officer

Executive Officer

Executive Officer

Executive Vice PresidentManaging Executive
Officer

Katsuo Akiyama

Hiroshi Ito

Tsuneo Komatsuzaki

Yukio Tsunoda

Executive Officer

Executive Officer

Senior Managing
Executive Officer

Executive Director

Ken Tsunematsu
Hiroshi Yasuda
Kohei Yamashita

Shuji Maeda

In response to changing customer needs,
SECOM is working to realize its vision for the
future— the Social System Industry—by
providing comprehensive, integrated services
and systems that make life more secure,convenient and comfortable.

Executive Vice President

Koichi Sato

(As of July 31, 2009)

Fumio Obata
Senior Executive Director
79

SECOM CO., LTD.

Annual Report 2009

Printed in Japan

CONTENTS

SECOM’S Vision . .........................................................................................................................................................

2

The Social System Industry: Combining the products and services of the
SECOM Group into distinctive packages to achieve our overarching goal ofproviding safety and security for people whenever and wherever necessary.

A Message to Shareholders . ................................................................................................................................

4

At the general shareholders’ meeting, shareholders
approved a resolution to pay annual cash dividendsof ¥85.00 per share. With the aim of enhancing
returns, we also repurchased ¥30.0 billion worth oftreasury stock during the period under review.

Business Index .............................................................................................................................................................

8

SECOM Today—SECOM’s Core Businesses . ..................................................................................................

9

We have developed a distinctive, integrated approach that allows us to offer
reliable, high-grade security services to customers at appropriate prices. This
has enabled us to create on-line security systems that respond to the diverse
needs of subscribers.

SECOM in the PRC: Firmly Positioned on a Growth Trajectory . ........................................................ 18
In the People’s Republic of China (PRC), we have established a number of
security services companies, focusing particularly on key cities in the country’s
high-growth coastal areas. In the coming years, we will work to broaden ourpresence to include the central and western areas of the PRC, with the aimof offering “SECOM-style” on-line security services to customers throughout
the country.
Financial Review .....................................................................................................
Audited Financial Statements ................................................................................

25

Other Financial Data . .............................................................................................

60

Supplemental Consolidated Financial Data (Based on Japanese GAAP). ............
Supplemental Nonconsolidated Financial Data (Based on Japanese GAAP)......

65

Corporate Information ...........................................................................................
SECOM Group’s Basic Business Areas . ...................................................................

73

Directors, Corporate Auditors and Executive Officers . ........................................

79

Note: Unless specified otherwise, all figures contained in this annual report are based on the financial statements, which have been calculated andare presented in accordance with accounting principles generally accepted in the United States (U.S. GAAP).

29

69
77

PROFILE

S

ince its establishment in 1962, SECOM CO., LTD., a pioneer in Japan’s
security services industry, has sought to contribute to society through its
business activities. In 1966, SECOM developed Japan’s first on-line security
system, which it soon began providing to businesses. In 1981, SECOM developed and marketed a home security system, while two decades later it beganoffering security systems that protect people and property, including vehicles,on the move. These efforts have enabled SECOM to respond to society’s
increasing and evolving security needs, as well as to achieve steady growth.
Today, SECOM—comprising the parent company and the companies of the
SECOM Group—has expanded its focus beyond its core security services toinclude fire protection services, medical services, insurance services, geographic
information services, real estate development and sales, and information andcommunication related and other services.
In line with its overarching goal of providing safety and security for people
whenever and wherever necessary, SECOM continues to work toward realizing
its vision for the future—the Social System Industry—a framework of distinctive
products and services that make life more secure, convenient and comfortable.
Through these efforts, SECOM continues to target further growth.
SECOM has also expanded into overseas markets, establishing a network of
subsidiaries and affiliates in 11 countries and territories, where it provides services of the same high quality as it does in Japan. In particular, SECOM is focusing on the high-growth markets of the People’s Republic of China (PRC) andSoutheast Asia, and is broadening its presence in both areas to respond to­rising demand for security services.

Secom Co., Ltd.

Annual Report 2009

1

HIGHLIGHTS

Pursuant to applicable Japanese law, SECOM is required to publish results in line with accounting principles­generally accepted in Japan (Japanese GAAP). Key financial highlights calculated using Japanese GAAP are shown
below for reference.
			
U.S.
GAAP
		
In millions of yen
SECOM CO., LTD. and Subsidiaries			
Three years ended March 31, 2009		Years ended March 31

Per share of common stock:
Net income...................................
Cash dividends..............................
Shareholders’ equity......................

Year ended
March 31

2009

2008

2007

2009

¥ 688,771
76,69930,5601,143,141
528,721¥ 706,695
105,628
61,7561,265,525
574,554¥ 636,678
94,41855,8891,241,182
551,732$ 7,028,276
782,643
311,836
11,664,704
5,395,113

In yenIn U.S. dollars¥ 248.42
60.00
2,452.47$ 1.40
0.87
24.74

		

Net sales and operating revenue.........
Operating income...............................
Net income.........................................
Total assets.........................................
Total shareholders’ equity....................

In thousandsof U.S. dollars¥ 137.4285.00
2,424.91¥ 274.51
80.00
2,553.97

Notes: 1. Yen amounts have been translated into U.S. dollars, solely for the convenience of the reader, at the rate of¥98=US$1, the rate prevailing on the Tokyo ­Foreign Exchange Market on March 31, 2009.
2. Net income per share of common stock is based on the average number of shares outstanding during each period.
3. Shareholders’ equity per share of common stock is based on the number of shares outstanding at the end ofeach period, minus treasury stock.
4. Cash dividends per share of common stock shown are based on dividends approved and paid in each period.
Subsequent to March 31, 2009, cash dividends of ¥85.00 per share were approved at the general shareholders’­meeting held on June 25, 2009 (see Note 17 of the accompanying Notes to Consolidated Financial Statements).

			JapaneseGAAP		In millions of yen
SECOM CO., LTD. and Subsidiaries			
Three years ended March 31, 2009		Years ended March 31

Per share of common stock:
Net income...................................
Cash dividends..............................
Net assets.....................................

2008

2007

2009

¥ 678,400
87,63490,92421,502
1,090,483
582,608¥ 682,619
104,706
114,278
61,506
1,202,840
630,274¥ 613,976
97,840102,720
58,2991,169,182
601,116$ 6,922,449
894,224
927,796
219,408
11,127,378
5,944,980

In yenIn U.S. dollars¥ 259.14
60.00
2,400.91$ 0.99
0.87
24.29

¥

96.69
85.00
2,380.12¥ 273.40
80.00
2,521.45

Note: Cash dividends per share of common stock shown are based on dividends approved and paid in each period.
Subsequent to March 31, 2009, cash dividends of ¥85.00 per share were approved at the general shareholders’meeting held on June 25, 2009.

Net Income (Japanese GAAP)Net Income (U.S. GAAP)(In billions of yen)

(In billions of yen)

80

80

60

60

40

40

20

20

0

0
04

05

06

07

08

09

Note: Net income in the year ended March 31, 2009, declined ¥31.2 billion, to ¥30.6 billion. This result was due
mainly to an increase in loss on other-than-temporary impairment of investment securities, reflecting a­stagnant stock market, and an operating loss in the real estate sales and development segment, owing toflagging conditions in the condominium market.
		 Net income in the year ended March 31, 2008, rose ¥5.9 billion, to ¥61.8 billion. This result was due
to higher operating income, which reflected increases in the security services segment and a full year ofcontributions from the fire protection services segment, newly established for the operations of Nohmi
Bosai Ltd., which became a consolidated subsidiary in December 2006.
		 Net income in the year ended March 31, 2007, rose ¥5.6 billion, to ¥55.9 billion. This result was due tocontinued growth in net sales and operating revenue, particularly in the security services segment, and a
decline in selling, general and administrative expenses.

Year ended
March 312009		

Revenue..............................................
Operating profit..................................
Ordinary profit....................................
Net income.........................................
Total assets.........................................
Total net assets...................................

In thousandsof U.S. dollars

04

05

06

07

08

09

SECOM’S VISION

Strengthening the Foundationof the Social System Industry
F ire
declared its Social System Industry vision inand communication related and other services.

1989. In this time, SECOM has worked to

We not only provide these products and services
independently to customers, but also combine

packages that make life more secure, convenientthem into unique packages that deliver evenand comfortable, to achieve its overarching goal of

greater added value.

SECOM’s security services, are backed by a nation-

not being content with the status quo and striving

wide network of emergency response depots,

to do what is appropriate. The former means

expert emergency response personnel and out-seeking constantly to provide more innovative andstanding response services, ongoing systemappropriate solutions; the latter means judging theimprovements and effective response capabilities,

legitimacy of our actions based on whether they

which make use of diverse telecommunications

are just and fair and benefit society.

ices

inspire confidence that doing so will help resolve

SECOM Group’s portfolio also encompasses fire

their problems and enhance security a­ nd peace

protection services, medical ­services, insuranceof mind.

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Geo

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need for security and peace of mind. Today, theInnnumber of customers to turn to SECOM, and tocio

products and services that respond to people’s

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our capabilities to encourage an ever-increasingmareas, with the aim of offering a broader range ofora growth trajectory, we will continue building on

Infbeyond security services by diversifying into new

Annual Report 2009

rv

rv i

will continue striving to address the evolving needsof society. Having repositioned ourselves firmly on

Secom Co., Ltd.

Se

By realizing our Social System Industry vision, we

We have also expanded our business domain2ityof our businesses. In such efforts, we adhere to our
original corporate philosophy, which emphasizes

SECOM the trust of its customers.

ur

We continue to push forward with the expansion

The cornerstone of the Social System Industry,­circuits. This integrated approach has earned

Sec

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and ­wherever necessary.

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ti o

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combine its products and services into distinctive

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estate development and sales, and informationvi

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Secom Co., Ltd.

Annual Report 2009d3

A MESSAGE TO SHAREHOLDERS

Consolidated Operating Results
In the fiscal year ended March 31, 2009, a harsh economic environment persisted inJapan as the impact of the financial crisis precipitated by the U.S. subprime loan
debacle spread, triggering sharp declines in the economies of countries around theworld and leading to deteriorating corporate profits and a decline in private-sector
capital investment, as well as by worsening unemployment and falling personal
income, which hampered consumer spending.
In this environment, we continued to respond to customers’ needs with the aimof realizing our Social System Industry vision. To this end, we stepped up efforts toprovide high-grade products and services suited to customer needs in our core
security services business, as well as in our other businesses, namely, fire protection
services, medical services, insurance services, geographic information services, realestate development and sales, and information and communication related andother services.
While net sales and operating revenue increased steadily in the security services,
fire protection services, medical services and geographic information services businesses, declines were reported in the insurance services business, due to an increasein loss on other-than-temporary impairment of investment securities reflecting a stagnant stock market; the real estate development and sales business, owing to flagging
conditions in the condominium market; and the information and communication
related and other services business, a consequence of efforts to scale back lowermargin services. Consolidated net sales and operating revenue slipped 2.5%, or¥17.9 billion, to ¥688.8 billion. The decline in net sales and operating revenue,
together with the write-down on real estate inventories in the real estate development and sales business, pushed operating income down 27.4%, or ¥28.9 billion, to¥76.7 billion. Net income fell 50.5%, or ¥31.2 billion, to ¥30.6 billion, owing mainly
to an increase in loss on other-than-temporary impairment of investment securities.
Having judged the negative turn in our performance to be a transitory phenomenon, we prioritized solid returns to shareholders when determining dividends. At thegeneral shareholders’ meeting on June 25, 2009, shareholders approved a resolution
to pay annual cash dividends of ¥85.00 per share, the same amount as in the previous
fiscal year. With the aim of enhancing returns, we also repurchased ¥30.0 billion
worth of treasury stock during the period under review.

Makoto Iida
Founder

Understanding and Responding to Changes in the Operating Environment
In the security services business, the increasing frequency of malicious and cunning
crimes and changing social imperatives have led to increasingly diverse and sophisticated safety and security needs. As a consequence, demand for security services is
expanding. At the same time, difficult economic conditions have raised customers’
cost consciousness, prompting an increasing need for products and services thatdeliver better quality and cost performance than ever before.

4

SECOM CO., LTD.

Annual Report 2009

In the market for commercial security services, we took steps to reinforce sales
activities with the aim of increasing our market share. While we have always promoted ambitious marketing initiatives, there are still a number of industries andcustomer groups for which our efforts have been insufficient and thus there arepotential customer groups which remain untapped. As always, our basic approach isfor SECOM sales personnel to visit each potential customer in person, thus ensuring
our ability to accurately grasp needs and respond with appropriate product and service proposals, thereby leading to new contracts. For existing customers, we continue
to offer distinctive, comprehensive packages of products and services—including
building facility inspection and maintenance—tailored to customers’ needs. Owing toevolving social conditions and flagging business conditions, shops and building tenants today move location with increasing frequency. In response to this trend, we
continue to capitalize on our nationwide network of offices to enable customers
changing premises to transfer their security services contracts to their new locations,as well as to encourage new tenants to sign contracts.
In the home security market, despite worsening conditions in the housing market
and shrinking sales of built-for-sale single-family dwellings, residential customers continue to seek higher levels of security, prompted by the rising incidence of vicious andcunning crimes targeting homes and the increasing prevalence of home security systems. Here, too, we continue to focus on increasing the number of contracts for
SECOM Home Security systems by strengthening our sales efforts. A recent partial
revision of Japan’s Fire Services Act has made it mandatory for new homes to installfire alarm systems. By 2011, local authorities will enact corresponding ordinances
obliging existing homes to do the same. Taking advantage of this change, we aretaking decisive steps to market Home Fire Sensor, which can be connected to SECOM
Home Security systems, to existing residential customers. We have also marketed fire
insurance to SECOM Home Security subscribers, capitalizing on the fact that suchcustomers are eligible for discounts on fire insurance premiums because security
systems reduce the risk of fire. To accommodate customers’ demand for even greater
security, we have also reinforced the marketing of a variety of security products thatcan be connected to SECOM home security systems, including high-impact, breakage-resistant window glass and our External Image Monitoring System. We are also
expanding and enhancing the popular SECOM Home Service, a suite of lifestyle support services through which we assist SECOM Home Security subscribers in resolving
everyday problems.
We are gradually increasing our presence in overseas security services markets,particularly in other parts of Asia. In the PRC, which continues to see considerable
economic growth, we offer SECOM security services in key coastal cities and surrounding urban areas. With the aim of gaining increased market acceptance, we arealso expanding into inland areas. In Southeast Asia, where demand for security services is increasing in tandem with economic growth, we are working to further bolster
our operations by establishing new bases and expanding our business foundation.

Shohei Kimura
ChairmanKanemasa Haraguchi
President and Representative Director

SECOM CO., LTD.

Annual Report 20095

A MESSAGE TO SHAREHOLDERS

To realize our Social System Industry vision, we are also stepping up efforts to
expand businesses other than security services. In the area of fire protection services,
we continue to see brisk sales of fire protection systems in the renovations market. In
recent years, demand has grown in the renovations market as building owners, anxious to minimize costs, increasingly choose to renovate rather than rebuild. Subsidiary
Nohmi Bosai Ltd., a leading name in the fire protection market, continues to draw on
its outstanding reputation and accumulated expertise to advise building owners on
the most appropriate choices for their needs.
In medical services, we are enhancing our various home medical services, which
include home nursing and pharmaceutical dispensing and home delivery services, aswell as distinctive and highly innovative residences for seniors. In June 2009, we
opened Comfort Hills Rokko, a new residence that capitalizes on our accumulated
expertise and the first such facility in Japan to be linked directly to a general hospital.
In insurance services, we expanded marketing efforts for our unique non-life
insurance offerings. These include fire insurance policies for businesses and homesthat offer discounts on premiums to customers that have installed on-line security
systems, recognizing such systems as a risk-mitigating factor; a comprehensive automobile insurance policy that encompasses support services provided by our emergency response personnel; and MEDCOM, an unrestricted cancer treatment policy.
With the number of contracts for fire insurance and MEDCOM continuing toincrease, we will take further steps to reinforce sales.
In geographic information services, we have built on our accumulated geographic
information system (GIS) surveying capabilities to generate geospatial data, which we
supply to public- and private-sector customers. We have also obtained exclusive rights
in Japan and nonexclusive rights worldwide to sell image data generated by a certain
commercial satellite, and have launched this as a new business in Japan and overseas.
Our real estate development and sales business involves the development and saleof condominiums equipped with advanced security and disaster prevention systems.
In response to flagging demand for condominiums in the period under review, wesought to bolster sales and reduce inventories by restricting our selection of properties
for development and sale and revising sales prices.
Our information and communication related and other services business focuseson comprehensive information and network services, encompassing information
security and disaster response support services. We recently added “new strains ofinfluenza” to the list of applicable situations for the SECOM Safety Confirmation
Service, which is designed to help companies confirm the safety of their employees in
the aftermath of a major disaster.
Realizing the Social System Industry Vision
Having positioned the security services business as our core focus and expanded ourportfolio to include fire protection services, medical services, insurance services, geographic information services, real estate development and sales, and information and

6

SECOM CO., LTD.

Annual Report 2009

communication related and other services, we are developing and providing products
and services that deliver greater added value by promoting close collaboration among
these businesses. Our quest to realize our Social System Industry vision involves thecreation of a comprehensive framework of distinctive products and services that benefit society. To this end, we will continue striving to reinforce our grasp of changing
social imperatives and the needs of customers for security and peace of mind, withthe aim of offering products and services that deliver increased value. Through these
efforts, we will contribute to the creation of a society in which all people feel safe
and at ease.
Overseas, we will leverage expertise accumulated in Japan to provide security
services of the same high quality as we do in the domestic market customized tomeet different national and regional market needs.
In line with our ultimate objective as a corporate entity, which is to contribute tosociety through our business activities, we are guided by our original corporate philosophy, which emphasizes challenging accepted norms to create innovative and better-suited solutions, and striving to do what is appropriate, that is, judging thelegitimacy of our actions based on whether they are just and fair and benefit society.
Our continued growth to date is attributable to our determination, guided by thisphilosophy, to proceed forward boldly, not fearing change but rather capitalizing on
it to cultivate innovative new businesses. Our corporate message—“Providing reliable
peace of mind”—encapsulates our mission to develop and offer products and services that promote a level of safety worthy of the trust of our customers, thereby
enabling us to realize our Social System Industry vision. The management andemployees of SECOM thus pledge to work as one to continue achieving growth.
In these and all of our endeavors, we look forward to the continuous support ofour shareholders.
June 25, 2009

Makoto Iida
Founder

Shohei Kimura
ChairmanKanemasa Haraguchi
President and Representative Director

SECOM CO., LTD.

Annual Report 20097

BUSINESS INDEX

Percentage of consolidated
net sales andoperating revenue*

63.5%

Security Services

12.2%

 Security Services

P 9

 Commercial Security Services

P10

 Home Security Services

P13

 Other Security Services

P15

 Security Services in Overseas Markets

P17

 Fire Protection Services

P19

 Medical Services

P20

 Insurance Services

P22

 Geographic Information Services

P23

 Real Estate Development and Sales

P24

 Information and Communication Related
and Other Services

P24

Fire Protection
rotection Services
Se

7.6%
MedicalServices
Mededical Servic
ed
ervic

3.1%
Insurance
Servicessuranceurance Serv

5.8%
Geographic
Information Services
ic Informati
Informatio

3.2%
Real Estate
Development
state Develo
and
Sales
nd
dS
Sal

4.6%
Information
Communication
on and Commmm
Related andOther Services
nd Oth*Pie charts show percentage of consolidated net sales and operating revenue(Excluding intersegment transactions)
8

SECOM CO., LTD.

Annual Report 2009

SECOM TODAY—SECOM’s Core Security Services Business

Security Services
Our high-grade on-line security systems are supported by our distinctive approach.

S

ECOM began offering on-line security
services in 1966. Rather than simply selling security equipment outright, SECOM
sought to provide a comprehensive service,
which it did by creating an innovative system
encompassing the placement of sensors andother equipment at its subscribers’ premises,around-the-clock monitoring from a SECOM
control center via telecommunications circuits,
the dispatch of emergency response personnel
from the closest emergency depot should anirregularity be detected and, when necessary,alerting the police and/or fire department.
Security services that are supposed to protect
the safety of customers must be deserving of
those customers’ full trust. Such services mustalso accommodate diverse customer needs,
which reflect such factors as regional variations
and business differences, and be priced in amanner that aptly matches the nature of theservices provided.
We have developed a distinctive, integrated
approach that allows us to offer reliable, highgrade security services to customers at appropriate prices. First of all, we rent, rather thansell, our security equipment to subscribers. This
enables us to take responsibility for replacing
equipment promptly in the event of a malfunction, thus ensuring stable and outstanding service quality with only minimal downtime. Rental
contracts also mean initial costs for subscribers
are significantly lower than if they were required
to purchase the systems outright.
The second key difference in our approach isthat we maintain full control over every aspectof our security systems, from research anddevelopment (R&D) to manufacturing, sales,
security planning, installation, monitoring,
emergency response services and equipment
maintenance. Because R&D is conductedin-house, we are able to incorporate customer
feedback swiftly into the development process,as well as update and integrate existing systems
promptly and flexibly. Additionally, we have leveraged our management resources to develop a
reliable communications network, meaning that
subscribers’ premises can be linked with SECOM

control centers not only through the subscribers’
telephone circuits, but also by using the COCOSECOM mobile security systems’ communications
infrastructure. Our ability to leverage management resources has therefore allowed us to build
a portfolio of highly reliable products and services. Our integrated approach also reinforces
the reliability of our systems and aids stringent
cost control, thereby facilitating the optimizationof business processes.
We are particularly well positioned torespond to a broad range of customer requirements. Our expert emergency response team ofhighly trained security professionals and nationwide network of approximately 2,200 emergency depots are available around-the-clock to
respond quickly if and when they are needed.
Accordingly, we are able to provide comprehensive solutions to the security needs of subscribers with branches or shops across the country.
With the aim of accelerating our emergency
response capabilities, we continuously reassess
the locations and distribution of our emergency
depots and branches and are taking steps tofurther enhance the quality of services to subscribers. Additionally, we are capitalizing on thecomprehensive strengths of the SECOM Group.
This includes making use of the vast map database of subsidiary Pasco Corporation to enable
control center staff to respond swiftly anddispatch emergency response personnel fromthe emergency depot nearest the customer inthe event of a problem, thereby substantiallyreducing response times.
On another front, we also offer Web-based
centralized monitoring of employee access,which allows subscribers to keep abreast of
their employees’ movements at every one of
their branches or shops, thus facilitating
effective management of overtime and otherpersonnel-related matters.
Efforts to reinforce our distinctive approachand promote even greater market acceptance of
our high-grade services have made SECOM atrusted brand. Looking ahead, we will continue
to earn this trust by providing improved services
that respond to the needs of our customers.
SECOM CO., LTD.

Emergency response personnel

Annual Report 2009

9

SECOM TODAY

Commercial Security Services
We continue to draw on a wealth of expertise and an extensive product and service lineup that
responds to customers’ expectations.

Image Technologies: A Unique Solution
to Increasingly Diverse Types of Crime

SECOM AX on-line security system

Criminal acts are growing more and more cunning and malicious, and are often committed injust minutes. SECOM AX—an on-line security
system employing image recognition technologythat promptly records and transmits images
should an irregularity be detected when thesubscriber’s premises are vacant, thus facilitatinga swift and accurate response—continues toearn favorable customer reviews.
The most important feature of SECOM AX isour very own image recognition technology,
which makes use of advanced, on-site sensors.
Even if the premises are in darkness, should thesensors detect an intruder the system immediately transmits a signal and images of the premises to a SECOM control center. This enables
control center staff to swiftly and accurately
evaluate the situation and respond appropriately. Using speakers installed at the subscriber’s
premises, control center staff are also able tobroadcast a warning to the intruder. If thesubscriber has also installed the SECOM Foggy

Protection System, control center staff can activate this system remotely, filling the premises
with a thick—but harmless to people and equipment—chemical mist that significantly reduces
visibility and hinders the intruder’s ability toproceed as planned.
SECOM IX, an on-line remote imaging systemdeveloped for use in convenience stores andother commercial premises that are staffed andopen around-the-clock, also continues to prove
to be a formidable tool. This system enables
store employees to request monitoring from a
SECOM control center, should they feel uneasy
about someone in the store acting suspiciouslyor disruptively, simply by pushing a call button.
In addition to image monitoring, control center
staff can also broadcast a warning throughspeakers mounted in the store, thereby helping
to prevent crimes from occurring. If there is athreat of robbery or physical violence, store
employees can push an emergency button toalert control center staff, allowing control center
staff to accurately assess the situation based onimages and voices transmitted from the

SECOM Control Center

10

SECOM CO., LTD.

Annual Report 2009

premises and respond accordingly. SECOM IX
can also be linked to sensors that detect
intruders and fires to protect facilities that arevacant outside business hours and on holidays
and weekends.
SECOM’s superior image technology is also
advancing the capabilities of surveillance camera
systems. High-resolution imaging enables
the HVR System to detect faces and even the
denominations of banknotes, and delivers crisp,
clear images even when premises are in darkness or the subject is lit from behind. The HVR
System also signals an abnormality if someone
attempts to disable or destroy its cameras,
capitalizing on our proprietary expertise inthis area.
The HVR System also allows for the combined
use of digital and analog cameras. This eliminates the need for customers to remove existing
analog cameras and peripheral equipment, andrequires the installation of digital cameras onlyin certain positions. Therefore, customers canmake effective use of existing equipment while
reinforcing security. In response to risingdemand for surveillance cameras to prevent
information leaks and thwart crime, we are
actively marketing the HVR System not only topotential customers, but also to existing customers who are renovating their premises or seeking
to upgrade system performance and quality.

Leveraging Unique Capabilities andExpertise to Develop New Systems
SECOM FX is an on-line security system developed specifically for unmanned retail facilities
and small offices. It encompasses monitoring forthe prevention of crime and fire, as well as various facility and office control mechanisms, suchas the opening and closing of retail facilities,
contributing to improved services for subscribers, as well as helping to reduce energy andpower use. In addition to assisting with the
management of a facility’s schedule andemployee access control, SECOM FX uses
sensor signals to automatically turn off lights,
air-conditioning and office automation (OA)
equipment when people are not present, thus
reducing power consumption. We are also
stepping up efforts to market SECOM FX as an“environment-friendly” on-line security systemthat helps subscribers not only to cut energy
and power consumption, but also to minimize
CO2 emissions, thereby assisting efforts toaddress environmental concerns.
In recent years, integrated circuit (IC) tag
technology has become as prevalent as IC card
technology in a wide range of fields, anddemand for a variety of applications is expected
to expand significantly. To date, IC tags havebeen used primarily to keep track of goods, but
our newly developed SECOM Active IC Tag

Laundromat equipped with the
SECOM FX on-line security system

Contracts for Centralized Security Systems

Centralized (On-Line) Security Systems(As of March 31, 2009)(2) Alert SECOM Emergency
Response Personnel

SECOM
Emergency
Depot

SECOM
Control Center(1) Alert Using
Telephone
Circuits

Fire Dept.

Police
Dept.

Home
o e

Commercial
Comme
C

Gas
Company

POLICE

Subscriber(3) Dispatch SECOM Emergency
Response Personnel(2) Alert Emergency Services
and Utilities as Necessary

Service industries
Retailing/wholesaling
Financial services
Manufacturing
Government agencies
Other
Home

SECOM CO., LTD.

11.7%
7.4%
7.0%
6.4%
5.2%
22.7%
39.6%

Annual Report 200911

SECOM TODAYSECOM Active IC Tag System

System uses them for people. Because it doesn’t
require an active IC tag to be scanned by areader to detect when an individual has passed,
the system facilitates the smooth movement ofpeople in and out of premises, thereby resolving
many of the difficulties associated with traditional IC card-based systems. For example, ICtags make it possible to thwart unauthorizedaccess through gates that do not have doors.
Hospitals can use IC tags to prevent patientswith cognitive impairments from wanderingaway undetected. Consequently, IC tags allow
for flexible system modification to suit specificneeds. The SECOM Active IC Tag System canalso be used in tandem with our access control
systems so that, for example, employee accessto offices is controlled by IC card-based IDs,
while IC tags may also be used to control accessto warehouses, where individuals entering andexiting often do so with their hands full.

Contributing to Safety, Peace of Mindand Greater Convenience
In Japan, most convenience stores have automated teller machines (ATMs). We supply avariety of services for ATMs, including security
services, emergency equipment repairs and cash
supply replenishment.
We attach sensors to ATMs to deter vandalism. If the sensors detect an irregularity, the system immediately transmits a signal to a SECOM
control center. If a store employee has pressed
the emergency button to indicate a potential
threat, the system will also transmit a signal,

Convenience store ATM operated by E-net Co., Ltd.

12SECOM CO., LTD.

Annual Report 2009alerting the control center to dispatch
emergency response personnel.
Japan has had a serious problem in recent
years with “furikome sagi,” or remittance fraud,
a popular scam whereby con artists dupe their
victims, usually using a cellular phone, into
going to a nearby ATM and transferring funds
into other accounts. Many of the victims are
elderly. Perpetrators usually deceive targets into
believing they are relatives and then say theyneed money in a hurry to get out of some sortof predicament. Thus convinced, the target goesto an ATM and remits the requested amount,following the perpetrator’s instructions overthe phone. In response, we have developed aremittance fraud protection system, which canintercept certain remittances made from ATMs.
This system detects when a customer is making a remittance while using a cellular phone
and, determining this to indicate a high likelihood of remittance fraud, broadcasts an automatic warning to the customer. Linking thesystem to SECOM IX allows images and sounds
from the ATM booth to be transmitted to a
SECOM control center, where staff confirm thesituation and try to get the customer’s attention
using the speaker in the booth. Banks that haveinstalled this system have reported a decline in
the incidence of remittance fraud.
Looking ahead, we will continue to develop
and provide security services that help resolvecauses of unease and prevent the occurrence ofcrimes and unexpected misfortunes.

Remittance fraud protection system

Home Security Services
By capitalizing on our broad range of high-grade home security products and services, we areresponding to the needs of homeowners for security, peace of mind, convenience and comfort.

SECOM Home Security

Capitalizing on Our Unique Strengths toPromote Increased Acceptance of SECOM
Home Security
Building on our capabilities in the provision of
security services for commercial subscribers, in1981 we launched Japan’s first-ever on-line
home security system. Today, SECOM Home
Security is suitable for a wide range of homes,
from condominiums to detached houses andhouses designed for two generations living
under the same roof, and enjoys support from a
broad range of subscribers, from young singles
to couples in their 30s and 40s with young families and families with middle-aged and elderly
members, and continues to find increasing
application.
SECOM Home Security encompasses aroundthe-clock monitoring for intruders, fires, gas
leaks and medical emergencies, among others.

Should an abnormality be detected, a SECOM
control center is alerted to dispatch emergency
response personnel and, if necessary, contacts
the police and/or fire department. By capitalizing
on expertise honed over 28 years, we have continued to modify and enhance the system andits related services, improving both conveniencefor subscribers and our response capabilities.
For example, the system currently not only
monitors the subscriber’s home to deter intruders when the occupants are out, but also protects them when they are at home by ensuring
doors and windows are closed properly and bymonitoring rooms that are not in use.
Subscribers can also take advantage ofoptional cellular phone- and Internet-based services that further enhance convenience. These
services enable the subscriber to check on the
security of his or her home from wherever they

SECOM CO., LTD.

Annual Report 200913

SECOM TODAYSECOM Anshin Glass

Sensor Light Camera

14

SECOM CO., LTD.

may be by using a cellular phone or the Internet,
and switch the system on if they have neglected
to do so. Using a cellular phone, subscribers caneven check whether air-conditioning and homeelectronics appliances have been left on and if
necessary turn them off. Additionally, we offer aservice that picks up emergency earthquake
warnings from the Japan Meteorological Agency
and alerts the subscriber aurally and visuallyusing the system’s home controller, thus further
contributing to peace of mind.
The increasingly malicious and cunning
nature of crimes is responsible for heightened
demand from subscribers anxious to step up
their home security. In response to such needs,
we have introduced a number of security products and systems that can be integrated into
SECOM Home Security to reinforce detection
and prevention.
These include SECOM Anshin Glass, a highimpact, breakage-resistant window glass with abuilt-in sensor that deters break-ins throughwindows—an increasingly popular modus operandi. Made from two panes of glass separated
by a sheet of special, super-strong film, SECOM
Anshin Glass prevents penetration by objects
impacting the window. The sensor also detects
any cracks in the glass the moment they happen
and immediately alerts a SECOM control center
before further breakage occurs. Connected to
SECOM Home Security, SECOM Anshin Glass
offers even greater security. Other offerings
include External Image Monitoring System, which
reinforces exterior security by deterring trespassers; Sensor Light Camera, which detects when aperson approaches the house at night and issues
a warning by turning on a bright light; entrance
security products such as SECURIFACE, whichfeatures a built-in face detection system; SESAMO
IDs, an access-control system that uses fingerprint
recognition technology; and SESAMO Electric
Lock II, an access-control system that uses a
secret code. We also offer HOME PYTHAGORAS,
a high-strength home-use security vault thatboasts superior protection against vandalism
and fire and can also be linked to SECOM
Home Security.
SECOM Home Security is backed by our outstanding and highly rated emergency response
services, which ensure that emergency response
personnel are dispatched promptly should they
Annual Report 2009

be needed. This is yet another reason why
SECOM Home Security continues to be thepreferred choice for home security in Japan.

Highly Rated SECOM Home Security
Peripheral Services
To add further value to SECOM Home Security,
we offer a wide selection of additional services
to subscribers. Of particular note is SECOM
Home Service, which comprises a host of lifestylesupport services. These include Anshin Support
Service, whereby SECOM staff assist in resolving
concerns that arise in everyday life through suchservices as patrolling around subscribers’ homes
when the occupants are away; Troubleshooting
Support Service, which includes assistance inresolving unforeseen problems like lost keys;
Housework Support Service, which includes help
with housekeeping and around-the-house jobs.
Since its launch in 2005, SECOM Home
Service has earned acclaim from customers, anddemand has risen annually. In autumn 2008, we
introduced SECOM Home Service Pack, a yearlong SECOM Home Service plan that allows
subscribers to sign up for popular services—
particularly housework support—for a year,
thereby eliminating the bother of having to
make a reservation each time and ensuring thatthese services are available at busy times, suchas the end of the year. Moving forward, we willcontinue to expand the availability and content
of SECOM Home Service to further improve
convenience for customers.

SECOM Home Service

Other Security Services
COCO-SECOM provides real time information on the whereabouts of people and property and thedispatch of emergency response personnel—capabilities that continue to find new applications.

Capitalizing on the Advantages of
COCO-SECOM
Building on our expertise as the company thatlaunched SECOM Home Security—thus essentially creating Japan’s home security services
market—in 2001 we released COCO-SECOM
mobile security system. This system has since
been credited as the starting point of Japan’s
personal security services market.
COCO-SECOM uses signals from Global
Positioning System (GPS) satellites and cellular
telephone base stations to pinpoint the locationof transmitter devices. Initially developed withthe aim of preventing child abductions, locating
wandering elderly people and averting the theftof automobiles and motorcycles, COCO-SECOM
continues to attract attention from customers
for a wider range of applications. Today,
COCO-SECOM transmitter devices are popularfor preventing the loss of handbags and thedestruction and/or theft of ATMs, managing
corporate car fleets, monitoring the movementsof sales staff, thwarting crimes against womenand enabling businesspeople who are frequently
out of the office or away on business to send
emergency messages.
COCO-SECOM’s most important advantage
is its exclusive transmitter device. By pushing thealert button on the device, an individual can
notify a COCO-SECOM operations center operator around-the-clock, which will dispatch emergency response personnel from the nearest
SECOM emergency depot if requested. We willcontinue to further enhance COCO-SECOM inan ever-broader range of fields, thereby helping
subscribers feel a greater sense of security.

Boosting Sales by Capitalizing on
Increasing Demand for COCO-SECOM
Services for Children
Recent years have seen an increase in incidencesof bullying and other crimes committed by children that many attribute to cellular phone e-mailand Internet use. Many elementary and juniorhigh schools have begun regulating the posession of cellular phones at school. However, parents recognize the usefulness of cellular phones
in determining their children’s whereabouts inan emergency. COCO-SECOM offers an equitable solution to this dilemma. We have begun
introducing COCO-SECOM to children and theirparents at elementary and junior high schools
across the country in a bid to promote greaterawareness of COCO-SECOM’s outstanding
performance features and further expand sales.

COCO-SECOM emergency
response personnel

Patrolling Plants and Other Premises
with the SECOM Robot X Outdoor
Surveillance Robot
We continue to promote the development ofservice robots with the aim of creating robots
that play useful roles in society. To date, these
efforts have yielded SECOM Robot X, an outdoor surveillance robot that patrols a set routeat plants, harbor areas and other large sites todetect intruders. SECOM Robot X has positioned
us well to respond to an anticipated increase in
the need for products like this to guard andpatrol huge sites.

COCO-SECOM Operations Center

COCO-SECOM Location and Emergency Response System
GPS
Satellite
Positioning
Information

COCO-SECOM
Operations
CenterNotification of Police (If Warranted)

Cellular Telephone
Base Station

SECOM
Emergency
Depot

Police Dept.,
Emergency
Services

Request for
Search(Telephone/Internet)

POLICEPOLICE

COCO-SECOM Transmitter
Device (Vehicle-Mounted)

Subscriber
COCO-SECOM
Transmitter
Device(Portable)

SECOM CO., LTD.

Dispatch
Emergency
Response
Personnel(If Requested)

Annual Report 200915

Spotlight 1

SECOM AED Package Service: Helping to Save LivesP

rompted by a regulatory change
in Japan that allowed the use of
automated external defibrillators(AEDs)—emergency-use devices thatadminister an electrical pulse to theheart of a person suffering from cardiac arrhythmia to reestablish a normal rhythm—by ordinary individuals,
as well as by medical care professionals and paramedics, in 2004 webegan marketing the SECOM AED
Package Service.
The SECOM AED Package Service
is distinctive because it is a fullservice package. Each time an AED is
used, its battery must be recharged
and expendables—notably the electrode pads—either replenished or
replaced. Even if the AED is not
used, the pads must be replacedwhen they reach their expiry date.
To ensure our AEDs are always inpeak operating order, we offer arental-based service package thatencompasses periodic replacement

SECOM AED Package Service

16

SECOM CO., LTD.

Annual Report 2009

SECOM AED Package Service installed on a shinkansen trainof electrode pads and other expendables. Replacement of depleted or
expired expendables is available
from a dedicated, around-the-clock
help desk at the SECOM Customer
Service Center, along with servicing
in the event of malfunction, damage or theft. This ensures that lives
are not put at risk because the AED
is never missing key parts and is thus
always usable when needed.
In the five years since we firstbegan offering the SECOM AED
Package Service, demand has
expanded to include such facilities
as airports, fitness clubs, shopping
centers, nursing homes, golf courses,

offices, schools and financial institutions. Recently, a significant numberof SECOM AED Package Service units
were installed on the shinkansen,
Japan’s network of high-speed “bullet trains.” This development underscores the outstanding reputation
this service enjoys.
Our central objective as a corporate entity is to contribute to society through our business activities.
Promoting further market acceptance for the SECOM AED Package
Service is yet another way we willcontinue to provide security andpeace of mind.

SECOM TODAY

Security Services in Overseas Markets
Offering “SECOM-style” security services in overseas markets enables us to provide security andpeace of mind to people around the world.

Operations in 11 Countries andTerritories
Since commencing operations overseas in1978, we have accumulated experience inthe provision of on-line security services in 11
countries and territories: Taiwan, the Republicof Korea (ROK), the PRC, Thailand, Malaysia,
Singapore, Indonesia, Vietnam, the United
Kingdom, Australia and the United States.
The most notable characteristic of our overseas
operations is that we offer the same highgrade “SECOM-style” on-line security services
as in Japan, customized to reflect local needs
and sensibilities.
The standard business model for security services companies in Europe and the United States
is to sell security equipment outright. While theequipment is linked to a monitoring center, thestandard response in the event of an emergency
is simply to notify the police. In contrast, withSECOM services, security equipment installed at
the customer’s premises is linked to a control
center that immediately dispatches emergency
response personnel should an irregularity be
detected and, if deemed necessary, also calls
the police.
As our global operations grow, this distinctive approach is attracting growing appreciationand new contracts continue to increase. In particular, our equity-method joint ventures in

Taiwan (Taiwan Secom Co., Ltd.) and the ROK(S1 Corporation) have established themselves as
the leading names in their respective markets
and have both listed on their respective principal
stock exchanges.

Expanding Our Presence in the Growing
Markets of the PRC and Southeast Asia
Recognizing significant latent demand in the
PRC, we commenced operations in the country in 1992. At present, we have security service subsidiaries in key cities in high-growthcoastal areas, namely, Dalian, Shanghai, Beijing,
Qingdao, Shenzhen and Fujian. These companies continue to see steady growth in contract
volume and have broadened their focus beyond
their immediate markets to offer their services
to subscribers in neighboring areas.
In Southeast Asia, sharp economic growth
has spurred an increase in security needs inrecent years. As a result, markets have shiftedfrom a phase of initial development to one
of widespread acceptance. In Thailand andMalaysia, SECOM Group are extending theirefforts beyond the capital cities to include
other urban centers. In Singapore, “SECOMstyle” services have attracted considerable
praise and contract volume is increasing
steadily. Our subsidiary in Indonesia is expanding operations as a leading name in the local
security services market. In Vietnam, our focus iscurrently on security service-related consulting
and proposing solutions, due to restrictions on
foreign investment. We do, however, expect tosee our on-line security services business growin the years ahead.
Looking ahead, we will continue to expand
our operations overseas by offering the“SECOM-style” services of the same high grade
as we offer in the Japanese market.

Emergency response service(S1 Corporation, ROK)

Control center (Secom Plc, United Kingdom)

SECOM CO., LTD.

Annual Report 200917

Spotlight 2

SECOM in the PRC: Firmly Positioned on a Growth Trajectory

Control Center (Beijing Jingdun Secom Electronic
Security Co., Ltd.)
Emergency response personnel (Beijing Jingdun Secom Electronic Security Co., Ltd.)O

ur commercial security services
operations in the PRC began
in 1992 with the establishment ofholding company Secom (China)
Co., Ltd. in Beijing. The following
year, we set up the PRC’s firston-line security services provider in
Dalian. Since then, we have established a number of security services
companies, focusing particularly
on key cities in the country’s
high-growth coastal areas, and78 emergency depots.
While economic growth hasbrought prosperity to the PRC, it has
also led to an increase in awarenessof the need for effective security inurban areas, which has spurredmarket demand for high-grade
security services. Our on-line security
services have earned much acclaim
for responding to these needs,

18

SECOM CO., LTD.

Annual Report 2009

supporting an increase in contract
volume. Our focus has not been
limited to security services, however.
In Shanghai, subsidiary Shanghai
Nohmi Secom Fire Protection
Equipment Co., Ltd., manufacturesand sells fire protection equipmentin the Chinese market, as well as forexport to Japan and Southeast Asia.
Customers for SECOM on-line
security services in the PRC include
companies in a wide range ofindustries. Local companies accountfor the largest proportion of contracts, followed by Japanese andthen other foreign companies—
underscoring the wide acceptanceof the SECOM business model in
the Chinese market.

In the coming years, we will work
to broaden our presence to include
the central and western areas of
the PRC, with the aim of offering“SECOM-style” on-line security services to customers throughout thecountry.

Emergency response personnel (Shenzhen Secom
Security System Co., Ltd.)SECOM TODAY—An Extensive Portfolio of Other Businesses

Fire Protection Services
Sales in the fire protection services business remain robust, reflecting SECOM’s strong presence inthe market for fire protection systems for residential customers and the renovations market. A
partial revision of Japan’s Fire Services Act has bolstered efforts to expand marketing of our Group
Home Sprinkler system.
Promoting Wider Acceptance ofResidential Fire Protection Systems

Responding to Needs for Sprinkler
Systems for Group Homes

Subsidiary Nohmi Bosai Ltd., is one of Japan’s
leading providers of fire extinguishing and otherfire protection systems, with an extensive product lineup that encompasses systems for officebuildings, production facilities, tunnels, culturalproperties, ships and residences.
Nohmi Bosai products marketed under the
SECOM name include Home Fire Sensor, a fire
alarm system for residential applications. Owing
to a partial revision of Japan’s Fire Services Act
in 2006, fire alarm systems are now mandatory
in new homes. By 2011, local governments
throughout Japan will enact related ordinances,
gradually obliging existing homes to install such
systems. We intend to continue promoting market acceptance of Home Fire Sensor to protect
the lives of subscribers.

A tragic 2006 blaze in a group home for elderly
people with cognitive impairments spurred apartial amendment of the Fire Services Act,
which came into effect in April 2009, making it
obligatory for social welfare facilities with a total
floor space in excess of 275 m2 that house individuals who may have difficulty escaping in theevent of a fire to install sprinkler systems. In
response, Nohmi Bosai released the Group
Home Sprinkler System, a new specialized drypipe system for such facilities that is connected
directly to municipal water pipes. Unlike conventional sprinkler systems, the Group Home
Sprinkler System does not have water in its
pipes and so there is no danger of freezing inareas that experience cold weather or of leakage. The system is activated automatically in theevent of a fire, flowing water through the system’s pipes and discharging it onto the flames.
Since the Group Home Sprinkler System can beconnected directly to municipal water pipes,
installation costs are minimal.
Nohmi Bosai’s new Group Home Sprinkler
System is a specialized, highly competitive product that leverages the company’s accumulated
expertise in the provision of home sprinkler
systems. Going forward, the company will
endeavor to enhance security and peace ofmind for residents of group homes by promoting wider market acceptance of the Group
Home Sprinkler System.

Reinforcing the Marketing of Fire Protection
Systems in the Renovations Market
As a leading name in Japan’s fire protectionindustry, Nohmi Bosai boasts an illustrious
record and the solid trust of its customers. The
company is drawing on these advantages toexpand services in the renovations market by
actively marketing itself to companies undertaking building renovations. To further promote its
business in the renovations market, Nohmi Bosai
established a Fire Protection Solutions
Department, which is charged with proposing
effective solutions to the fire protection worriesof customers, thereby bolstering orders fromthe renovations market.

Test of sprinkler system

Test of foam fire extinguishing system

SECOM CO., LTD.

Annual Report 200919

SECOM TODAY

Medical Services
We are gradually expanding our home medical services and leveraging Group capabilities todevelop and manage new residences for seniors.

Steadily Expanding Our Home Medical
Services
Our medical services business reflects our conviction that effective medical care is crucial tosecurity and peace of mind. Today, our medical
services business is spearheaded by subsidiary
Secom Medical Services Co., Ltd., and encompasses a wide range of services in the fields of
medical, health and personal care.
Home nursing—one of the mainstays of our
medical services business—involves regular visits
by nurses to patients in their homes to provide
highly skilled nursing services and treatment inline with the instructions of those patients’ physicians, as well as pharmaceutical dispensing
and home delivery services. As the first privatesector firm in the home nursing field in Japan,
we began providing services in 1991. Since
then, our rigorous training program and theadvanced skills of our visiting nurses haveearned us a solid reputation for service quality.
During this time, we have also established a network of 35 visiting nurse stations nationwide,
including in the Tokyo Metropolitan Area, theKansai area, Nagoya and Sendai, which dispatch

Home nurse training

Home nursing service

Home Medical Services
Medical Care
Institution

Prescription

Physician Guidance
Nurse Report

Home Nursing
Services(SECOM Visiting
Nurse Station)

Consulting
Prescription
Pharmaceutical Delivery

20

Secom Co., Ltd.

Patient

Annual Report 2009

Leveraging Distinctive Capabilities toManage Residences for Senior Citizens
In an effort to cope with the rapid aging ofJapan’s population, we have developed andoperate a range of innovative residences forseniors through Group companies. These
include residences designed for healthy individuals who do not require assisted living: Sacravia
Seijo, which offers services comparable with thefinest hotels; Royal Life Tama, which is situatedin a lush green area; and the SECOMFORT
series, including Comfort Garden Azamino andComfort Hills Rokko, the latter of which opened
in June 2009. Based on the concept of “comfortable aging,” the SECOMFORT series brings
together our expertise in security services andmedical services to provide peace of mind bypromoting aging without apprehension.
We also operate the Alive Care Home series,
designed for seniors requiring personal carefrom the outset. Situated primarily in the Tokyo
Metropolitan Area, Alive Care Home series’
facilities are small in scale, with only about 40
rooms, thereby ensuring high-quality attentive
services. Alive Care Home facilities are also highly
rated because they respond to the desire of many
seniors to remain close to home and family.

Associated Hospitals: Providing Security
and Peace of Mind through Better
Regional Medical Care

Coordination

Pharmaceutical
Dispensing andHome Delivery
Service(SECOM Pharmacy)

nurses to patients’ homes and are on callaround-the-clock to assist them or their families.

Nurse Visit
Outpatient Care

We have established affiliations with 17 local
hospitals to ensure effective support for­customers of our home medical services andpromote medical care that is firmly rooted in
the local community, thus contributing to amore effective regional medical care system.
We endeavor to assist these institutions toimprove management efficiency and enhanceservice quality.

Spotlight 3

Comfort Hills Rokko: Giving New Form to Our Ideals of Peace ofMind and Comfortable AgingC

omfort Hills Rokko, in Kobe, isthe newest in our SECOMFORT
series of residences for seniors. The
SECOMFORT series is based on theconcept of “comfortable aging,” oraging with grace and serenity, rather
than with apprehension. Designed
by world-renowned architect Tadao
Ando, Comfort Hills Rokko is a 111room facility that blends harmoniously with the surrounding naturalenvironment.
Comfort Hills Rokko boasts two
uniquely SECOM features. First, it isdirectly attached to Kobe Kaisei
Hospital, a SECOM-affiliated facility.
Kobe Kaisei Hospital staff doctors
serve as residents’ home doctors,
ensuring attentive, high-quality
medical services. This also makes it
easy to schedule routine and generalcheckups, physicals and rehabilitation sessions for residents, thereby
enhancing their peace of mind.
Second, Comfort Hills Rokko emphasizes flexibility, enabling residents tochoose certain personal care services
if they feel the need. Residences forseniors generally require individuals
to choose either standard rooms or
rooms with full personal care services.
To accommodate residents in thetransitional phase between independent and assisted living, wherechoosing between the two can bedifficult, Comfort Hills Rokko has
established what it calls CAREA(an acronym for “comfortable aging
area”), which allows residents to

Comfort Hills Rokko

take advantage of certain personalcare services—for example, bathing
and meal services—while continuing
to live in standard rooms. Should theresident eventually require full-time
personal care, he or she can move toa special room with full-time, expert
personal care.
Comfort Hills Rokko also features
the very latest SECOM security
system, further putting residents atease. Care has been taken to ensure
residents enjoy active and fulfilling
lives. For example, staff members
include a professional chef, who
ensures healthy and tasty meals.
Residents also have access to a wide
range of hobbies and activities. The
facility, which embodies SECOM’s
distinctive approach to security, peaceof mind and comfort, continues toattract critical acclaim.

Dining area of standard room

SECOM CO., LTD.

Annual Report 200921

SECOM TODAY

Insurance Services
Our non-life insurance policies look after customers in the event of misfortune.

Increasing Contract Volume with
Distinctive Non-Life Insurance Policies

Head office ofSecom General Insurance Co., Ltd.

The rationale behind our decision to expand
into the non-life insurance business was ourconviction that augmenting our security services, which provide prior protection, with insurance, which looks after customers in the eventof misfortune, would reinforce security andpeace of mind. Today, we continue to expand
our lineup of distinctive policies and bolster
contract volume.
SECOM Anshin My Home, for example, is apolicy designed for households which takes into
account the risk-mitigating factor of installinghome security systems to offer a discount of up
to 60% off the regular premium rate, depending on building structure and choice of policy
content. The same concept underlies the
Security Discount Fire Policy, which offers a discount of up to 30% to offices and retail facilities that have installed on-line commercial
security systems, recognizing this as an effort to
reduce risk. We also benefit from other synergies. In many instances, the conclusion of asecurity system contract leads subscribers topurchase insurance, while on occasion the decision to purchase insurance prompts a customer
to sign up for our security systems.
Another uniquely SECOM offering is New
SECOM Anshin My Car, a comprehensive automobile insurance policy that includes aroundthe-clock on-site support services by emergency
response personnel, if requested, in the eventof an accident, a significant factor in ensuring
security and peace of mind for vehicle owners.

those that are not and for which the patient
normally bears the full cost. This highly rated
policy therefore enables subscribers to takeadvantage of advanced treatment options. In
response to feedback from subscribers, in April
2009 we enhanced the content of MEDCOM toreflect the changing face of cancer treatment
and reinforce the policy’s competitiveness. For
example, we recognized that in the past cancer
treatment required patients to be hospitalized.
However, since current treatment is increasingly
on an outpatient basis, we became the first
insurance company in Japan to abolish restrictions on the number of days of outpatient
treatment covered and added coverage for outpatient treatment up to ¥10 million for eachfive-year period. Furthermore, while postoperative care and advanced treatments were previously the only types of outpatient treatment
covered, MEDCOM now covers all outpatient
visits, even if they are only to collect anticancer
drugs or other medications. As a consequenceof these modifications, MEDCOM subscribers
are now even better positioned to take advantage of the most appropriate treatment options
available without having to worry about costs.
We will continue to maximize the capabilitiesof the SECOM Group to develop distinctive nonlife insurance policies that stand out against thecompetition.

MEDCOM: Enhancing the Content of ourUnrestricted Cancer Treatment Policy to
Cover Outpatient Treatment
We also offer MEDCOM, an unrestricted cancer
treatment policy that provides coverage for all
hospitalization and medical treatment costs,
both those that are covered under Japan’s
National Health Insurance (NHI) scheme and
New SECOM Anshin My Car
on-site emergency service
22

SECOM CO., LTD.

MEDCOM provides coverage for advanced treatment options

Annual Report 2009

Geographic Information Services
Subsidiary Pasco Corporation makes use of geospatial information to cultivate customers in a
broad range of fields. Having obtained the rights to sell image data offered by the operator of acommercial satellite worldwide, Pasco is steadily expanding this business globally.

Expanding Services Using Geospatial
Information
Pasco is leveraging its measuring and geographic information system (GIS) technologies
to develop a wide range of geospatial information services. For national and local governments,
Pasco capitalizes on its wealth of experience andexpertise to provide consulting services andsolutions designed to support urban planningand road engineering, as well as geospatial
information services, which help local governments improve the effectiveness of administrative services. For corporate customers, Pasco
provides marketing support services, designed
to help companies analyze target business areas
and formulate branch and shop scrap-and-build
plans; logistics support services, which aid
efforts to develop effective plans for the use oftrucks and other forms of transport; and risk
management services, which include the support for the formulation of business continuity
plans (BCPs).

Satellite Information-Based Geographic
Information Services for Global Markets
Pasco has obtained exclusive rights in Japan andnonexclusive rights worldwide to sell image data
generated by Terra SAR-X, a German commercial satellite that delivers a resolution higher
than any other commercial satellite. This satellite
is unique in that it can capture high-frequency,
high-resolution images regardless of theweather or the time of day. Pasco is capitalizingon this capability to gather and analyze datathat will support efforts to minimize the impactof natural disasters and monitor environmental
issues, including woodland degradation,
thereby contributing to efforts to track thedecline of forests.
Pasco plans to establish a new satellite receiving station at Chitose, Hokkaido. Together with
its existing station at Itoman, Okinawa, the newstation will be part of a receiving station networkwith nationwide coverage. This will position

Pasco to aid efforts to prevent natural disasters
and address environmental issues, thereby
contributing to greater security and peace ofmind for society in general.
Recently, Pasco established a joint venture in
the United States. The new company is engaged
in developing new processing technologies
designed to facilitate the creation of highly
accurate three-dimensional satellite images.

Addressing the Need for Geospatial
Information in International Projects
Pasco is assisting in the making and revising of
national land maps, as well as in the preparationof mapping data necessary for urban planningand road engineering projects in countries
where such data is not readily available but theneeds for urban planning and proper land-use
programs are high. Building on extensive expertise, accumulated over its many years in business, as well as its technological and consulting
capabilities, Pasco is also directly securing orders
for the creation of databases for national land
maps for other countries, accepting orders as partof Japan’s official development assistance (ODA)
program, and is promoting sales of productsthat incorporate advanced technologies.
The expansion of Pasco’s overseas operations
is also proceeding steadily. Currently, thecompany has subsidiaries in the Philippines,
Thailand, the PRC, Indonesia, Europe and theUnited States, and is stepping up efforts tosecure orders in these markets. In Brazil, Pasco
is involved in efforts to protect the Amazon
rainforest, and has taken advantage of this tolaunch operations in Brazil and its surrounding
countries. Pasco will continue to expand its
satellite image-based geospatial informationcollection and processing capabilities overseas,
supplying quality images equal to those it
provides in Japan, thereby enabling it tocultivate new markets.

SECOM CO., LTD.

Digital elevation model (DEM)of a wide area made using two
images generated by the Terra
SAR-X commercial satellite

Extracted image of flooded
area after Nepal’s Kosi Riverbreached its embankments©Infoterra GmbH
Distribution: PASCO

Annual Report 200923

SECOM TODAYReal Estate Development and Sales
This business encompasses the development and sale of condominiums with advanced security features.

Safe and Secure Glorio Series
Condominiums
In line with our emphasis on peace of mind andcomfortable living, we have developed theGlorio series of condominiums, which areequipped with advanced SECOM security systems. Owners of Glorio series condominiums

also benefit from Glorio Support 24, a condominium management service that not only provides access to around-the-clock maintenanceservices, but also responds to inquiries aboutsuch subjects as non-life insurance and medical
and personal care.

Glorio Roka Park

Information and Communication Related and Other Services
The information and communication related services business centers on information security anddisaster response services.

SECOM Safety Confirmation Service
Continues to Register Robust Results

Disaster monitoring center ofSecom Trust Systems

Our information and communication related
services originated with the call for better security for computers and networks in the information age. Today, subsidiary Secom Trust Systems
Co., Ltd., provides comprehensive services that
center on information security and disaster
response services. Among these, the SECOM
Safety Confirmation Service continues to attractacclaim. This service helps subscribers promptly
assess structural damage and confirm thewhereabouts and safety of employees in theaftermath of an earthquake or other majordisaster, thus relieving concern and assisting
companies in restarting operations as soon as
possible. Anpikun, an optional feature, enables
employees and their families to confirm one
another’s safety.
Key features of SECOM Safety Confirmation
Service include Secom Trust Systems’ disastermonitoring center, which provides around-theclock human support services, collects disaster
information and assists subscribers in setting up
a disaster response headquarters in the immediate aftermath of a disaster, using IT technologies. Since it was built and is operated in-house,
SECOM Safety Confirmation Service is constantly
evolving and is able to respond flexibly to the

Secure Data Center

24

SECOM CO., LTD.

Annual Report 2009changing needs of subscribers. For example, inorder to promptly determine the whereaboutsof client employees, we linked the service to
COCO-SECOM for swift and precise tracking.
We also expanded our lineup of related services,
launching SECOM Safety Confirmation Service
SCM, which enables companies to confirm thesafety of key suppliers and the extent of damage
where they are located; and SECOM Safety
Confirmation Service GS, which confirms
the safety of employees abroad in the eventof a disaster.

SECOM Safety Confirmation Service:
Protecting Against the Spread of H1N1
Influenza
In 2008, a new standard function of SECOM
Safety Confirmation Service was created to help
companies manage exposure to the newly identified H1N1 strain of influenza. This new function
enables the individuals in charge of risk management to assess the extent of transmission
among employees and their families swiftly andaccurately. They can then issue the appropriate
instructions to their employees and minimize
the likelihood that operations will be affected.
Going forward, we will continue to enhance the
SECOM Safety Confirmation Service to better
address the needs of customers.

FINANCIAL REVIEW
Operating Results

Overview
In the year ended March 31, 2009, the­parent company, SECOM Co., Ltd., and its
consolidated subsidiaries (collectively “theCompany”) sought to provide high-quality
products and services that respond to theneeds of customers in its core security services business, as well as in its fire protection services, medical services, insurance
services, geographic information services,
real estate development and sales, andinformation and communication related
and other services businesses. While net sales
and operating revenue increased steadily inthe security services, fire protection services, medical services and geographic
information services businesses, net sales
and operating revenue declined in theinsurance services business, due to anincrease in loss on other-than-temporary
impairment of investment securities,
reflecting a stagnant stock market; the realestate development and sales business,owing to flagging conditions in the condominium market; and the information andcommunication related and other services
business, a consequence of efforts to scaleback lower-margin services. Consolidated
net sales and operating revenue slipped
2.5%, or ¥17.9 billion, to ¥688.8 billion.
	The decline in net sales and operating
revenue, together with the write-down onreal estate inventories in the real estatedevelopment and sales business, pushed
operating income down 27.4%, or ¥28.9
billion, to ¥76.7 billion. Net income fell
50.5%, or ¥31.2 billion, to ¥30.6 billion,
owing mainly to an increase in loss onother-than-temporary impairment ofinvestment securities.
	During the year ended March 31, 2009,
the Company decided to separately disclose real estate development and sales,
which was previously included in information and communication related and otherservices, due to the fact that the reporting
loss exceeded the quantitative threshold.
Accordingly, segment information of allprior periods has been restated to conformto the presentation used for the year
ended March 31, 2009.
Net Sales and Operating Revenue
Despite increases in the security services,
fire protection services, medical services
and geographic information services businesses, net sales and operating revenue
slipped 2.5%, or ¥17.9 billion, to ¥688.8

billion, owing to decreases in the insurance
services, real estate development and sales
and information and communication
related and other services businesses.
(For more details, please see Segment
Information below.)
Costs and Expenses
Total costs and expenses were up 1.8%,
or ¥11.0 billion, to ¥612.1 billion. Costof sales rose 2.2%, or ¥10.0 billion, to¥464.2 billion, equivalent to 67.4% of
net sales and operating revenue, up from
64.3% in the previous period. This increase
was due mainly to the write-down onreal estate inventories in the real estate­development and sales business.
Selling, general and administrative(SG&A) expense edged down 0.4%, or¥512 million, to ¥144.3 billion. SG&A
expense was equivalent to 20.9% of
net sales and operating revenue, up from
20.5% in the previous period, owing
mainly to the decline in net sales and­operating revenue.
Loss on sales and disposal of property,
plant and equipment, net, rose ¥1.0 billion,to ¥2.0 billion. Impairment loss on goodwill,at ¥1.6 billion, was up ¥450 million.
Operating Income
Operating income, at ¥76.7 billion, wasdown 27.4%, or ¥28.9 billion, and wasequivalent to 11.1% of net sales and operating revenue, down from 14.9% in theprevious period. This was due largely tothe decline in net sales and operating revenue, and to increases in cost of sales andloss on sales and disposal of property,
plant and equipment, net. Segments contributing to operating income were—in
order of size of contribution—security services, fire protection services, informationand communication related and other services, geographic information services andmedical services. (For more details, pleasesee Segment Information below.)with a net gain in the previous period, bothowing to a stagnant stock market; a decline
in gain on private equity investments and aprovision for loss on litigation.
Income before Income Taxes
Income before income taxes fell 42.6%, or¥46.9 billion, to ¥63.3 billion, reflecting
the decrease in operating income, as well
as net other expenses, compared with net
other income in the previous period.
Income Taxes
Income taxes amounted to ¥36.6 billion,
down ¥10.5 billion, and were equivalent to57.8% of income before income taxes, up
from 42.7% in the previous period. This
was largely attributable to an increase inunrecognized tax benefits from subsidiaries
in loss positions.
Minority Interests in Subsidiaries andEquity in Net Income of AffiliatedCompanies
Minority interests in subsidiaries were
down ¥1.7 billion, to ¥4.9 billion, owing to
a decline in income in the insurance services business. Equity in net income ofaffiliated companies advanced ¥3.5 billion,to ¥8.7 billion, owing to a reversal of longterm deferred tax liabilities related toundistributed earnings of overseas affiliated companies, resulting from the revisionof Japanese tax regulations.
Net Income
As a consequence of the aforementioned
factors, net income fell 50.5%, or ¥31.2
billion, to ¥ 30.6 billion, and was equivalent to 4.4% of net sales and operating
revenue, down from 8.7% in the previous
period. Net income per share was ¥137.42.
A proposal to leave annual cash dividends
unchanged at ¥85.00 per share wasapproved at the general shareholders’meeting on June 25, 2009.

Other Income and Expenses
Other income fell ¥7.2 billion, to ¥5.8 billion, while other expenses rose ¥10.8 billion, to ¥19.2 billion, resulting in net otherexpenses of ¥13.4 billion, down from netother income of ¥4.6 billion in the previous
period. This result was due primarily to anincrease in loss on other-than-temporary
impairment of investment securities and a
net loss on sales of securities, compared

Secom Co., Ltd.

Annual Report 200925

FINANCIAL REVIEW

Segment Information

For detailed information, please see note 26 of the accompanying Notes to the Consolidated Financial Statements.

Security Services
The security services segment encompasses
electronic security services, other security
services, and merchandise and other. In
the period under review, net sales andoperating revenue in the segment edged
up 0.4%, or ¥1.8 billion, to ¥438.4 billion.
Excluding intersegment transactions, net
sales and operating revenue in the segment amounted to ¥436.9 billion, equivalent to 63.5% of overall net sales andoperating revenue, up from 61.6% in theprevious period.
	Electronic security services include­centralized systems (on-line commercial
and home security systems) and large-scale
proprietary security systems, which centeron surveillance services at the subscriber’s
premises. On-line commercial and home
security systems, the core of our electronic
security services business, use sensors
installed at the subscriber’s premises todetect events, such as intrusions, fires andequipment malfunctions. Sensors arelinked to a SECOM control center via telecommunications circuits to enable remotemonitoring around-the-clock. Should anirregularity be detected at the subscriber’s
premises, the relevant information isrelayed to the control center, where staff
dispatch emergency response personnel.
Control center staff also notify the police
or fire department if required while theemergency response personnel take otherappropriate measures. To ensure our ability
to deliver the level of quality subscribers
expect, we have established an integrated
approach, whereby we take full responsibility for maintaining control over every
aspect of our electronic security services,from R&D to manufacturing, sales, security
planning, installation, monitoring, emergency response services and equipment
maintenance. In the period under review,
net sales and operating revenue from­electronic security services amounted to¥303.5 billion, an increase of 2.5%, or¥7.3 billion, owing to efforts to reinforce
the Company’s sales activities, which
included making visits to potential
customers.
	Other security services include static
guard services—which are staffed byhighly trained professionals—for security
situations that require human judgment
and flexible responses, and armored car
services, for the transport of cash and valuables by specially fitted armored cars and26

Secom Co., Ltd.

Annual Report 2009security professionals. In the period underreview, net sales and operating revenue
from static guard services advanced 2.9%,
or ¥1.4 billion, to ¥48.0 billion, and thatfrom armored car services rose 3.9%, or¥763 million, to ¥20.3 billion.
	The merchandise and other category
encompasses a wide range of security
products, including access-control systems,
CCTV surveillance systems, fire extinguishing systems and external monitoring­systems, which can be free-standing or
connected to on-line security systems. Net
sales and operating revenue in this category decreased 10.7%, or ¥7.8 billion, to¥65.1 billion, owing to the absence of onetime orders received in the previous period.
	Operating income in the security services segment edged down 0.6%, or ¥662
million, to ¥102.5 billion. The operating
margin slipped to 23.4%, from 23.6% in
the previous period, owing to an increasein costs aimed at improving service quality.

Net sales and operating revenue in the
medical services segment increased 2.9%,
or ¥1.5 billion, to ¥52.3 billion. This
increase was primarily due to higher net
sales and operating revenue from home
medical services and the operation of­residences for seniors. Operating income
amounted to ¥11 million, up from an
operating loss of ¥1.1 billion in the previous period. This was attributable largely to
improved results from the operation of­residences for seniors.

Fire Protection Services
The fire protection services segment
includes automatic fire alarm systems, fire
extinguishing systems and other fire protection systems for a wide range of applications, including office buildings, plants,
tunnels, cultural properties, ships and residences. In the period under review, segment net sales and operating revenue
amounted to ¥89.8 billion, up 3.7%, or¥3.2 billion, from the previous period, asa partial revision of Japan’s Fire Services
Act boosted sales of fire alarm systems for­residential applications, while orders
remained firm for the replacement of fire
protection systems from the office renovations market. Operating income rose 8.2%,
or ¥405 million, from the previous period,to ¥5.4 billion, reflecting higher net sales
and operating revenue, while the operating
margin was 6.0%, up from 5.7% in theprevious period.

Insurance Services
In addition to security services, which arepreventative by nature, we offer non-life
insurance, which looks after customers in
the event of misfortune. We have developed and marketed a broad range of distinctive non-life insurance policies, including
Security Discount Fire Policy, a commercial
fire insurance policy, and SECOM Anshin
My Home, a comprehensive fire insurance
policy for households—both of which offer
discounts on premiums to customers who
have installed home security systems, recognizing this as a risk-mitigating factor.
Other offerings include New SECOM
Anshin My Car, a comprehensive automobile insurance policy that offers on-site
support services—provided by our on-line
emergency response personnel—should
the subscriber be involved in an accident,
and MEDCOM, an unrestricted cancer
treatment policy that covers the entire costof medical treatment for cancer.
Segment net sales and operating­revenue were ¥24.4 billion, down 32.3%,
or ¥11.7 billion. The segment generated
an operating loss of ¥8.2 billion, comparedwith operating income of ¥3.8 billion in
the previous period. These results werelargely attributable to a decline in net gainon sales of investment securities and anincrease in loss on other-than-temporary
impairment of investment securities.

Medical Services
The medical services segment includes
home medical services, comprising pharmaceutical dispensing and delivery andhome nursing services, remote image­diagnosis support services, electronic­medical report systems, sales of medical
equipment, the operation of residences forseniors, personal care services, the ­leasingof real estate for medical institutions,and others.

Geographic Information Services
This segment comprises a variety of GISbased services tailored to the needs of the
public and private sectors, as well as surveying and measuring, and construction
consulting services.
Net sales and operating revenue in thegeographic information services segmentrose 1.6%, or ¥627 million, to ¥40.3 b­ illion.
This result reflected steadily expanding
sales of geospatial data-based services andFinancial Position

merchandise to public- and private-sector
customers and contributions from our newsatellite image data business.
	Operating income amounted to ¥2.0
billion, up 42.1%, or ¥606 million, lifting
the operating margin to 5.1%, from 3.6%in the previous period. This improvement
was due primarily to the increase in thesegment’s net sales and operating revenue, as well to improvements in, andexhaustive efforts to improve managementof, production processes, which reduced
cost of sales.
Real Estate Development and Sales
This segment comprises the development
and sales of condominiums that are
equipped with advanced security and­contingency planning features. Net sales
and operating revenue in the real estatedevelopment and sales segment declined
18.4%, or ¥5.5 billion, to ¥24.4 billion, as
we have carefully selected our properties
for development and sales in order to correspond with the flagging conditions in
the condominium market. Sales price revisions, implemented to counter flagging
market conditions, together with the selling off of units to reduce inventories andthe write-down on real estate inventories,
triggered an operating loss of ¥17.6 billion, down from operating income of ¥673
million in the previous period.
Information and Communication Related
and Other Services
This segment consists primarily of information and communication related services—
including information security systems andnetwork system operations services, which
protect subscribers’ information security inthe event of a major disaster—and realestate leasing.
Segment net sales and operating revenue amounted to ¥40.5 billion, a declineof 8.6%, or ¥3.8 billion. Nevertheless,operating income increased 4.2%, or ¥200
million, to ¥4.9 billion, and the operating
margin rose to 12.1%, from 10.6% in theprevious period. These results reflected
efforts to scale back lower-margin s­ ervices
and expand high-margin, highly competitive
services.

Total assets as of March 31, 2009,amounted to ¥1,143.1 billion, 9.7%, or¥122.4 billion, lower than at the end of
the previous fiscal year.
	Total current assets, at ¥492.5 billion,
were down 15.2%, or ¥88.0 billion. This
was attributable largely to decreases incash and cash equivalents (for more details,
please see Cash Flows, which follows thissection), as well as to decreases in inventories in the real estate development andsales business and notes and accounts
receivable, trade. Despite a decrease intotal current assets, the current ratio
remained level at 1.7 times, as current­liabilities also decreased (see below).
Investments and long-term receivables
declined 11.7%, or ¥38.7 billion, to ¥290.9
billion, reflecting an increase in loss onother-than-temporary impairment of investment securities—owing to a stagnant stock
market—and a decrease in foreign currencytranslation adjustments relating to investments in overseas affiliated companies,
owing to the appreciation of the yen.
Property, plant and equipment, lessaccumulated depreciation, rose 3.1%, or¥7.8 billion, to ¥259.3 billion. This was due
primarily to an increase in land resulting
from the purchase of land for the realestate leasing business. An increase in thenumber of security services subscribers
also necessitated an increase in security
equipment and control stations, but
this was offset by an increase in accumulated depreciation resulting from thedepreciation of assets.
	Other assets were down 3.3%, or¥3.5 billion, to ¥100.4 billion. This

reflected decreases in prepaid pension
and severance costs, a consequence of adeteriorating asset-management environment, and other intangible assets, bothof which were partially countered by anincrease in deferred income taxes promptedby increases in loss carryforwards and loss
on other-than-temporary impairment ofinvestment securities.
	Total liabilities fell 12.0%, or ¥75.1­billion, to ¥553.4 billion. Total current­liabilities amounted to ¥283.4 billion,
down 18.4%, or ¥63.8 billion, owing toefforts to reinforce cash management,
which resulted in a decrease in bank loans,
as well as to a decrease in accrued income
taxes. The decrease in total liabilities also
reflected decreases in accrued pension andseverance costs, and in deferred income
taxes—the latter due to a reversal of longterm deferred tax liabilities related toundis­tributed earnings of overseas affiliated ­companies resulting from the revisionof Japanese tax regulations.
	Total shareholders’ equity amounted to¥528.7 billion, down 8.0%, or ¥45.8 billion. This primarily reflected a ¥30.0 billion
increase in common stock in treasury, atcost, and a higher accumulated other comprehensive loss, which were partially offset
by an increase in retained earnings. The
increase in the accumulated other comprehensive loss was largely attributable to adecrease in foreign currency translation
adjustments—a consequence of the strong
yen—and an increase of losses in pension
liability adjustments, owing to a deteriorating asset-management environment. The
equity ratio rose to 46.3%, from 45.4%.

Total Assets

Shareholders’Equity per Share(In billions of yen)

(In yen)

3,000

1,500

2,400

1,200

1,800

900

1,200

600

600

300

0

05 06 07 08 09

0

05 06 07 08 09

Secom Co., Ltd.

Annual Report 200927

FINANCIAL REVIEWCash Flows

SECOM is committed to maintaining­sufficient liquidity to allow flexibility in its
operations and ensure a solid financial
foundation. To the best of our ability, we
are also firmly committed to financing
related strategic investments with cash
generated by our operating activities.
In the period under review, net cash
provided by operating activities amounted
to ¥107.4 billion. The principal items contributing to this total were net income of¥30.6 billion, depreciation and amortization of ¥54.6 billion, loss on other-thantemporary impairment of investment
securities of ¥19.5 billion, write-down
on real estate inventories of ¥8.4 billion,
and decrease in inventories of ¥10.1 billion
accounted for largely by the reduction ofreal estate inventories. Cash used in operating activities included an increase indeferred charges of ¥16.0 billion. Operating
activities provided ¥14.8 billion more cashthan in the previous period. Despite thedecline in net income, increases in noncash expenses—including loss on otherthan-temporary impairment of investment
securities and write-down on real estate
inventories—and decrease in inventories,
due largely to the reduction of real estate
inventories, contributed to the increase in
net cash provided by operating activities.
Net cash used in investing activities was¥49.9 billion. Significant factors included
payments for purchases of property, plantand equipment of ¥44.8 billion, a result of
the purchase of security equipment andcontrol stations, necessitated by anincrease in the number of security services
subscribers, and payments for long-term
receivables of ¥6.8 billion. Cash provided
by investment activities included proceedsfrom long-term receivables of ¥7.2 billion.
Investing activities in the period underreview used ¥2.2 billion less cash than in
the previous period, as net payments forsales and purchases of short-term

Depreciation andAmortization

investments and investment securities
decreased, despite the decrease in proceeds from sales of property, plant andequipment.
Net cash used in financing activities
amounted to ¥109.9 billion. Contributing
to this were a decrease in bank loans of¥55.2 billion, an increase of treasury stock,net, of ¥30.0 billion, and dividends paid of¥19.1 billion. Financing activities used
¥90.6 billion more cash than in the previous period, owing to a decrease in bankloans of ¥55.2 billion—compared with a¥6.0 billion increase in bank loans in theprevious period—and an increase in­treasury stock, net, of ¥30.0 billion.
As a result of operating, investing andfinancing activities during the period underreview, cash and cash equivalents at endof year totaled ¥159.4 billion, down ¥55.2
billion from ¥214.6 billion at the end of
the previous period.

Capital Expenditures

Cash Flows(In billions of yen)

(In billions of yen)

(In billions of yen)

150

60

60

100

48

45

50

36

0

30
24

–50
15

12
0

0
05 06 07 08 09

–100
–150
05 06 07 08 09

07

08

Cash flows fromoperating activities
Cash flows frominvesting activities
Cash flows fromfinancing activities

28

Secom Co., Ltd.

Annual Report 200909

AUDITED FINANCIAL STATEMENTSCONTENTSCONSOLIDATED FINANCIAL STATEMENTS .................................................................. 30
CONSOLIDATED BALANCE SHEETS.......................................................................... 30
CONSOLIDATED STATEMENTS OF INCOME............................................................. 32
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY............... 33
CONSOLIDATED STATEMENTS OF CASH FLOWS .................................................... 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.............................................. 35
INDEPENDENT AUDITORS’ REPORT............................................................................... 59

SECOM CO., LTD.

Annual Report 200929

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETSSECOM CO., LTD. and Subsidiaries
March 31, 2009 and 2008

In millions of yen

Translation into thousandsof U.S. dollars (Note 3)

March 31

March 31

2008

2009

Current assets:
Cash and cash equivalents (Notes 5 and 22).......................................................... ¥ 159,393 ¥ 214,577
Time deposits (Note 12)............................................................................................
8,775
8,820
Cash deposits (Note 6)..............................................................................................
56,66863,697
Short-term investments (Notes 7 and 22)...............................................................
13,8306,540
Notes and accounts receivable, trade.....................................................................
80,45788,411
Due from subscribers...............................................................................................
29,38429,947
Inventories (Note 8)..................................................................................................
96,071
118,442
Short-term receivables (Notes 12 and 20)..............................................................
15,00917,871
Allowance for doubtful accounts.............................................................................
(2,782)(1,827)
Deferred insurance acquisition costs (Note 13)......................................................
6,559
6,624
Deferred income taxes (Note 16).............................................................................
16,245
17,395
Other current assets..................................................................................................
12,932
10,041
			 Total current assets............................................................................................
492,541
580,538$ 1,626,459
89,541
578,245
141,122820,990299,837
980,316
153,153(28,388)
66,929165,765
131,960
5,025,929

ASSETS

2009

Investments and long-term receivables:
Investment securities (Notes 2 (7), 7, 12 and 22) ..................................................
Investments in affiliated companies (Note 9).........................................................
Long-term receivables (Notes 12 and 20)...............................................................
Lease deposits...........................................................................................................
Other investments.....................................................................................................
Allowance for doubtful accounts.............................................................................
			

161,668
40,072
74,962
13,213
9,943(8,940)290,918

196,688
46,81470,265
13,37011,290(8,826)329,601

1,649,673
408,898
764,918
134,827
101,459(91,224)
2,968,551

Property, plant and equipment (Notes 10, 12, 19 and 20):
Land............................................................................................................................
Buildings and improvements...................................................................................
Security equipment and control stations................................................................
Machinery, equipment and automobiles................................................................
Construction in progress..........................................................................................
			Accumulated depreciation.......................................................................................
			

86,699147,881251,01366,8286,817
559,238(299,956)
259,282

78,818143,661
244,933
71,945
5,977
545,334(293,823)
251,511884,684
1,508,990
2,561,357
681,918
69,561
5,706,510(3,060,776)
2,645,734

Other assets:
Deferred charges (Note 2 (12)).................................................................................
46,196
Goodwill (Note 11)....................................................................................................
15,440
Other intangible assets (Notes 11 and 12)..............................................................
18,921
Prepaid pension and severance costs (Note 14)....................................................
823
Deferred income taxes (Note 16).............................................................................
19,020			
100,400
			 Total assets......................................................................................................... ¥1,143,141

46,151
16,141
21,127
9,135
11,321
103,875¥1,265,525

471,388
157,551
193,071
8,398
194,082
1,024,490$11,664,704

See accompanying notes to consolidated financial statements.

30

SECOM CO., LTD.

Annual Report 2009

LIABILITIES AND SHAREHOLDERS’ EQUITY

In millions of yen

Translation into thousandsof U.S. dollars (Note 3)

March 31

March 31

2008

2009

2009

Current liabilities:
Bank loans (Notes 6 and 12)..................................................................................... ¥ 78,180 ¥0,133,056
Current portion of long-term debt (Notes 12, 19 and 21)......................................
15,967
9,061
Notes and accounts payable, trade.........................................................................
28,942
30,956
Other payables..........................................................................................................
23,111
29,058Deposits received (Note 6).......................................................................................
33,47536,667
Deferred revenue......................................................................................................
42,64643,496
Accrued income taxes..............................................................................................
19,126
24,693
Accrued payrolls.......................................................................................................
23,526
22,572
Reserve for litigation loss (Note 24)........................................................................
2,415—
Other current liabilities (Notes 16, 21 and 22)........................................................
16,04917,668
			 Total current liabilities.......................................................................................
283,437
347,227$

797,755
162,929295,327
235,826
341,582
435,163
195,163240,061
24,643
163,765
2,892,214

Long-term debt (Notes 12, 19 and 21)........................................................................
Guarantee deposits received.......................................................................................
Accrued pension and severance costs (Note 14).......................................................
Deferred revenue..........................................................................................................
Unearned premiums and other insurance liabilities (Note 13).................................
Investment deposits by policyholders (Notes 13 and 21).........................................
Deferred income taxes (Note 16).................................................................................
Other liabilities..............................................................................................................
			 Total liabilities....................................................................................................

36,40432,25817,81421,30868,86986,064
1,224
5,973
553,351

44,18330,581
18,41922,28363,20587,252
10,075
5,235
628,460

371,469
329,163
181,776
217,429702,745878,204
12,49060,9485,646,438

Minority interests in subsidiaries ..............................................................................

61,06962,511

623,153

Commitments and contingent liabilities (Note 24)

Shareholders’ equity (Note 17):
Common stock:		 Authorized 900,000,000 shares;
66,37866,378		 issued 233,288,717 shares in 2009 and 2008.....................................................
Additional paid-in capital.........................................................................................
79,99579,998Legal reserve.............................................................................................................
10,036
10,020Retained earnings.....................................................................................................
482,488
471,066
Accumulated other comprehensive income (loss):		 Unrealized holding losses on securities (Note 7)...............................................
(3,597)(3,137)
		 Unrealized losses on derivative instruments (Note 23).....................................
(187)
(94)
		 Pension liability adjustments (Note 14)...............................................................
(11,878)(4,726)
		 Foreign currency translation adjustments..........................................................
(19,618)(74)
			
(35,280)(8,031)
Common stock in treasury, at cost:
15,251,520 shares in 2009 and 8,323,599 shares in 2008.....................................
(74,896)(44,877)
			 Total shareholders’ equity.................................................................................
528,721574,554
			 Total liabilities and shareholders’ equity......................................................... ¥1,143,141 ¥1,265,525

SECOM CO., LTD.

677,327
816,276
102,408
4,923,347(36,704)(1,908)(121,204)(200,184)(360,000)(764,245)
5,395,113$11,664,704

Annual Report 200931

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED STATEMENTS OF INCOME
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 20092009

Net sales and operating revenue ................................................................... ¥688,771
Costs and expenses:
Cost of sales (Note 8).................................................................................... 464,154
Selling, general and administrative expense (Notes 2 (19) and 18)......... 144,270
Impairment loss on long-lived assets (Note 10).........................................
76
Impairment loss on goodwill (Note 11).......................................................
1,578
Loss on sales and disposal of property, plant and equipment, net..........
1,994

In millions of yen

Translation into thousandsof U.S. dollars (Note 3)

Years ended March 31

Year ended March 31

2007

2009

¥706,695 ¥636,678$7,028,276

454,165
144,782
16
1,128
976

410,275
127,062
1,176
2,966
781

4,736,265
1,472,143
776
16,102
20,3472008

				

612,072

601,067

542,260

6,245,633				 Operating income...............................................................................

76,699105,628

94,418782,643

Other income:Interest and dividends..................................................................................
Gain on sales of securities, net (Notes 7 and 9).........................................
Gain on private equity investments............................................................
Other (Note 15)..............................................................................................

2,195
—
1,403
2,205

2,969
2,020
4,070
3,952

2,993
1,772
—
3,672

22,398—14,31622,500

				

5,803

13,011

8,437

59,214

Other expenses:
Interest...........................................................................................................
Loss on sales of securities, net (Note 7)......................................................
Loss on other-than-temporary impairment of investment securities.......
Provision for loss on litigation (Note 24)....................................................
Other (Note 15)..............................................................................................

2,019
231
8,831
2,415
5,676

2,094
—
1,912
—
4,370

1,815
—
1,026
—
4,678

20,602
2,357
90,112
24,643
57,919				

19,172

8,376

7,519

195,633				 Income before income taxes.............................................................

63,330110,263

95,336646,224

Income taxes (Note 16):
Current...........................................................................................................
Deferred.........................................................................................................

41,991(5,416)42,7694,337

40,136430

428,480(55,265)

				

36,575

47,10640,566373,215				 Income before minority interests in subsidiaries and equity				 in net income of affiliated companies ...........................................
Minority interests in subsidiaries...................................................................
Equity in net income of affiliated companies ...............................................

26,755(4,928)
8,733

63,157(6,639)5,238

54,770(4,649)5,768

273,009(50,285)
89,112¥ 61,756 ¥055,889$ 311,836

In yenTranslation into
U.S. dollars (Note 3)

Years ended March 31

Year ended March 31				 Net income.......................................................................................... ¥ 30,560

2009

2008

2007

Basic net income per share (Note 2 (21))...................................................... ¥137.42¥274.51¥248.42$1.40

Cash dividends per share................................................................................ ¥ 85.00¥ 80.00¥ 60.00$0.87

See accompanying notes to consolidated financial statements.

32

SECOM CO., LTD.

Annual Report 2009

2009

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYSECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2009
In millions of yen										 Accumulated
Common					
Number of		 Additional			other comstock					sharesCommonpaid-in
Legal
Retainedprehensive
in treasury,					issuedstock
capitalreserveearnings income (loss)
at costBalance, March 31, 2006 .......................................................................
233,288,717¥66,378¥79,996¥ 9,825¥386,558¥10,689(¥44,750)
Comprehensive income:Net income..........................................................................................
————
55,889——Other comprehensive income (loss), net of tax (Note 17):
		 Unrealized holding gains on securities—
			 Unrealized holding gains or losses arising during the period....
—
—
—
—
—
(1,562)—
			 Less: Reclassification adjustment for gains or losses
			
included in net income....................................................
—
—
—
—
—
(1,464)—
		 Unrealized losses on derivative instruments—
			 Unrealized gains or losses arising during the period.................
—
—
—
—
—
(113)
—
			 Less: Reclassification adjustment for gains or losses
			
included in net income....................................................
—
—
—
—
—
30
—
		 Minimum pension liability adjustments..........................................
—
—
—
—
—
(21)
—
—
—
		 Foreign currency translation adjustments......................................
—
—
—
2,193
—
Total comprehensive income............................................................... 								Adjustments for initially applying SFAS No. 158, net of tax.....................
—
—
—
—
—
1,681
—
Cash dividends.........................................................................................
————(13,499)——
Transfer to legal reserve...........................................................................
—
—
—
98
(98)
—
—
Gain on disposal of treasury stock............................................................
—
—
2
—
—
—
—
Net changes in treasury stock..................................................................
—
—
—
—
—
—
(100)
Balance, March 31, 2007 .......................................................................
233,288,717
66,37879,998
9,923
428,850
11,433(44,850)
Cumulative effect of a change in accounting principle-adoption of
EITF 06-2, net of tax (Note 2 (16))..........................................................
————(1,227)——
Comprehensive income:Net income..........................................................................................
————
61,756——
Other comprehensive income (loss), net of tax (Note 17):
		 Unrealized holding losses on securities—
			 Unrealized holding gains or losses arising during the period....
—
—
—
—
—
(11,034)—
			 Less: Reclassification adjustment for gains or losses
			
included in net income....................................................
—
—
—
—
—
(204)
—
		 Unrealized losses on derivative instruments—
			 Unrealized gains or losses arising during the period.................
—
—
—
—
—
(54)
—
			 Less: Reclassification adjustment for gains or losses
			
included in net income....................................................
—
—
—
—
—
13
—
		 Pension liability adjustments—
			 Unrealized gains or losses arising during the period.................
—
—
—
—
—
(5,564)—
			 Less: Reclassification adjustment for gains or losses			realized in net income.....................................................
—
—
—
—
—
(434)
—
		 Foreign currency translation adjustments......................................
—
—
—
—
—
(2,187)—
Total comprehensive income...............................................................
							Cash dividends.........................................................................................
————(17,998)——
Changes in scope of consolidation...........................................................
—
—
—
—
(218)
—
—
Transfer to legal reserve...........................................................................
—
—
—
97
(97)
—
—
Gains and losses on disposal of treasury stock........................................
—
—
0
—
—
—
—
Net changes in treasury stock..................................................................
—
—
—
—
—
—
(27)
Balance, March 31, 2008 .......................................................................
233,288,717
66,37879,99810,020471,066(8,031)(44,877)
Comprehensive income:Net income..........................................................................................
————
30,560——
Other comprehensive income (loss), net of tax (Note 17):
		 Unrealized holding losses on securities—
			 Unrealized holding gains or losses arising during the period....
—
—
—
—
—
(10,522)—
			 Less: Reclassification adjustment for gains or losses
			
included in net income....................................................
—
—
—
—
—
10,062—
		 Unrealized losses on derivative instruments—
			 Unrealized gains or losses arising during the period.................
—
—
—
—
—
(157)
—
			 Less: Reclassification adjustment for gains or losses
			
included in net income....................................................
—
—
—
—
—
64
—
		 Pension liability adjustments—
			 Unrealized gains or losses arising during the period.................
—
—
—
—
—
(7,043)—
			 Less: Reclassification adjustment for gains or losses			realized in net income.....................................................
—
—
—
—
—
(109)
—
		 Foreign currency translation adjustments......................................
—
—
—
—
—
(19,544)—
Total comprehensive income...............................................................
							Cash dividends.........................................................................................
————(19,122)——
Transfer to legal reserve...........................................................................
—
—
—
16
(16)
—
—
Gains and losses on disposal of treasury stock........................................
—
—
(3)
—
—
—
—
Net changes in treasury stock..................................................................
—
—
—
—
—
—
(30,019)
Balance, March 31, 2009 .......................................................................
233,288,717¥66,378¥79,995¥10,036¥482,488(¥35,280)(¥74,896)

Total¥508,696
55,889(1,562)(1,464)
(113)
30
(21)
2,193
54,952
1,681(13,499)—2(100)
551,732(1,227)61,756(11,034)
(204)
(54)
13
(5,564)(434)(2,187)42,292(17,998)
(218)
—
0
(27)
574,554
30,560(10,522)
10,062(157)
64(7,043)(109)(19,544)
3,311(19,122)—(3)(30,019)¥528,721

Translation into thousands of U.S. dollars (Note 3)										 Accumulated
Common							 Additional			other comstock						
Commonpaid-in
Legal
Retainedprehensive
in treasury,						
stock
capitalreserveearnings income (loss)
at costBalance, March 31, 2008....................................................................................................
$677,327$816,306 $102,245$4,806,796($ 81,949)($457,929)
Comprehensive income:Net income......................................................................................................................
———
311,836——
Other comprehensive income (loss), net of tax (Note 17):
		 Unrealized holding losses on securities—
			 Unrealized holding gains or losses arising during the period................................
————(107,367)—
			 Less: Reclassification adjustment for gains or losses
			
included in net income................................................................................
————
102,673—
		 Unrealized losses on derivative instruments—
			 Unrealized gains or losses arising during the period.............................................
————(1,602)—
			 Less: Reclassification adjustment for gains or losses
			
included in net income................................................................................
—
—
—
—
653
—
		 Pension liability adjustments—
			 Unrealized gains or losses arising during the period.............................................
————(71,867)—
			 Less: Reclassification adjustment for gains or losses			realized in net income.................................................................................
————(1,112)—
		 Foreign currency translation adjustments..................................................................
————(199,429)—
Total comprehensive income...........................................................................................							Cash dividends.....................................................................................................................
———(195,122)——
Transfer to legal reserve.......................................................................................................
—
—
163
(163)
—
—
Gains and losses on disposal of treasury stock....................................................................
—
(30)
—
—
—
—
Net changes in treasury stock..............................................................................................
—
—
—
—
—
(306,316)
Balance, March 31, 2009 ...................................................................................................
$677,327$816,276 $102,408$4,923,347($360,000)($764,245)

Total$5,862,796
311,836(107,367)
102,673(1,602)653(71,867)(1,112)(199,429)
33,785(195,122)—(30)(306,316)$5,395,113

See accompanying notes to consolidated financial statements.
SECOM CO., LTD.

Annual Report 200933

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED STATEMENTS OF CASH FLOWSSECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2009

2009

In millions of yen

Translation into thousandsof U.S. dollars (Note 3)

Years ended March 31

Year ended March 31

2008

2007

Cash flows from operating activities:
Net income.......................................................................................................................... ¥ 30,560 ¥ 61,756 ¥ 55,889
Adjustments to reconcile net income to net cash provided
by operating activities—
		 Depreciation and amortization, including amortization of deferred charges............
54,62558,19458,248
		 Accrual for pension and severance costs, less payments..........................................
(5,313)(4,083)(2,972)
		 Deferred income taxes...................................................................................................
(5,416)4,337
430
		 Loss on sales and disposal of property, plant and equipment, net...........................
1,994
976
781
		 Impairment loss on long-lived assets (Note 10)..........................................................
76
16
1,176
		 Write-down on real estate inventories (Note 8)...........................................................
8,366
—
—
		 Gain on private equity investments..............................................................................
(1,403)(4,070)—		 Provision for loss on litigation (Note 24)......................................................................
2,415
—
—
		 Impairment loss on goodwill (Note 11)........................................................................
1,578
1,128
2,966
		 Gain on sales of securities, net.....................................................................................
(299)(4,593)(5,715)
		 Loss on liquidation of subsidiaries...............................................................................
32
485—
		 Loss on other-than-temporary impairment of investment securities........................
19,5142,562
1,357
		 Equity in net income of affiliated companies...............................................................
(8,733)(5,238)(5,768)
		 Minority interests in subsidiaries..................................................................................
4,928
6,639
4,649
		 Changes in assets and liabilities, net of effects from acquisitions and disposals:			 (Increase) decrease in cash deposits........................................................................
7,030(10,142)
11,632
			 (Increase) decrease in receivables and due from subscribers, net of allowances....
8,525(4,766) (13,798)
			 (Increase) decrease in inventories............................................................................
10,099(19,267) (17,264)
			 Increase in deferred charges..................................................................................... (15,972)(16,336) (18,267)
			 Increase (decrease) in deposits received.................................................................
(3,136)(14,023)
9,022
			 Increase (decrease) in deferred revenue..................................................................
(1,037)1,468
2,137
			 Increase (decrease) in accrued income taxes..........................................................
(5,530)(332)
1,697
			 Increase in guarantee deposits received..................................................................
1,811
329
2,318
			 Increase in unearned premiums and other insurance liabilities............................
5,664
4,939
4,936
			 Other, net.....................................................................................................................
(2,968)
10,820(3,794)2009$ 311,836
557,398(54,214)(55,265)
20,347776
85,367(14,316)
24,643
16,102(3,051)
327
199,122(89,112)50,28571,73586,990103,051(162,980)(32,000)(10,582)(56,429)
18,48057,796(30,286)				 Net cash provided by operating activities............................................................

107,410

92,57367,886

1,096,020

Cash flows from investing activities:
Increase in time deposits...................................................................................................
Proceeds from sales of property, plant and equipment..................................................
Payments for purchases of property, plant and equipment...........................................
Proceeds from sales and redemptions of investment securities...................................
Payments for purchases of investment securities...........................................................
(Increase) decrease in short-term investments................................................................
Acquisitions, net of cash acquired (Note 4).....................................................................
Payments for investments in affiliated companies (Note 9)...........................................
(Increase) decrease in short-term receivables, net..........................................................
Payments for long-term receivables.................................................................................
Proceeds from long-term receivables...............................................................................
Other, net.............................................................................................................................

(12)
206
(44,790)
60,118(57,133)(3,317)(1,498)—87(6,796)
7,160(3,944)(1,612)(2,425)
4,277
3,919(45,332) (46,378)
87,439 132,923(99,262) (103,242)
6,397
32,548(317)
4,648(1,741)(5,158)(1,207)(474)(3,773)(6,898)6,581
15,740(3,557)(3,167)

(122)
2,102
(457,041)
613,449(582,990)(33,847)(15,286)—
888(69,347)
73,061(40,245)				 Net cash provided by (used in) investing activities.............................................

(49,919)(52,107)

22,036(509,378)

Cash flows from financing activities:
Proceeds from long-term debt..........................................................................................
Repayments of long-term debt.........................................................................................
Increase (decrease) in bank loans, net..............................................................................
Decrease in investment deposits by policyholders.........................................................
Dividends paid....................................................................................................................
Increase in treasury stock, net...........................................................................................
Other, net.............................................................................................................................

11,396(13,411)(55,161)(1,188)(19,122)(30,019)(2,412)

12,955(12,792)
6,075(6,109)(17,998)(27)(1,430)12,154(52,269)
20,687(94,424)(13,499)
(100)
(920)

116,286(136,847)(562,867)(12,122)(195,122)(306,316)(24,614)(19,326) (128,371)(1,121,602)

				 Net cash used in financing activities.................................................................... (109,917)
Effect of exchange rate changes on cash and cash equivalents . .....................................

(2,758)222

620(28,142)

Net increase (decrease) in cash and cash equivalents ......................................................
Cash and cash equivalents at beginning of year . ..............................................................

(55,184)
214,577

21,362
193,215(37,829)
231,044(563,102)
2,189,561¥214,577 ¥193,215$1,626,459

Cash and cash equivalents at end of year............................................................................ ¥159,393
See accompanying notes to consolidated financial statements.

34

SECOM CO., LTD.

Annual Report 2009

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2009

1. Nature of Operations
The parent company and its subsidiaries (collectively “theCompany”) are engaged in the areas of security services,
fire protection services, medical services, insurance services,
geographic information services, real estate development
and sales, and information and communication related andother services. With these services combined, the Company
is focusing on its “Social System Industry,” a network ofintegrated systems and services, targeted at the needs ofpeople and business.
The Company’s principal business activities are security
services, including on-line centralized security services forcommercial and residential premises, static guard services,armored car services for cash collection and deposit, andthe development, manufacturing and sale of various security
equipment. The Company has also been diversifying theoperation of its services covering: fire protection services,
including automatic fire alarm systems and fire extinguishing systems; home and other medical services; non-life
insurance services; geographic information services using
geographic information system (“GIS”) and surveying andmeasuring technology; real estate development and sales,
focusing on development and sale of condominiums thatreinforce security; and information and communication
related services, centered on information security services
and the provision of comprehensive information networks
designed to assist people and companies in the event of amajor disaster; lease of real estate and other services.
2. Significant Accounting Policies
The parent company and its Japanese subsidiaries­maintain their records and prepare their statutory financial­statements in accordance with accounting principles
generally accepted in Japan. Certain adjustments
and reclassifications have been incorporated in theaccompanying financial statements to ­conform withaccounting principles generally accepted in the United Statesof America. These adjustments were not recorded in thestatutory books of account.
Significant accounting policies used in the preparation of
the accompanying consolidated financial statements are
summarized below:(1) Basis of Consolidation and Investments in Affiliated­Companies
The consolidated financial statements include the accountsof the parent company and those of its majority owned­subsidiaries. The consolidated financial statements also
include variable interest entities to which the Company is theprimary beneficiary. All significant intercompany transactions
and accounts have been eliminated in consolidation.
Investments in 20 to 50 percent owned companies, inwhich the ability to exercise significant influence exists, areaccounted for under the equity method. Consolidated income
includes the Company’s current equity in the net income ofaffiliated companies, after elimination of intercompany profits.
The excess of cost over underlying identifiable net assets at
acquisition dates of investments in subsidiaries and affiliatedcompanies is recorded as goodwill.

On occasion, a consolidated subsidiary or affiliatedcompany accounted for using the equity method may issue
its shares to third parties as either a public or private offeringor upon ­conversion of convertible bonds to common stock at
amounts per share in excess of or less than the Company’s
average per share carrying value. With respect to suchtransactions, where the sale of such shares is not a part of abroader corporate reorganization contemplated or plannedby the Company, the resulting gains or losses arising fromthe change in ownership interest are recorded in income forthe year the transaction occurs.
(2) Consolidation of Variable Interest Entities
In December 2003, the Financial Accounting Standards
Board (“FASB”) issued FASB Interpretation No. 46 (revised
December 2003) (“FIN No. 46R”), “Consolidation of Variable
Interest Entities, an Interpretation of ARB No. 51.” FIN No.
46R addresses the consolidation and ­disclosure by business­enterprise of a variable interest entity (“VIE”) as definedin the Interpretation. FIN No. 46R requires that the primary
beneficiary—a party that absorbs a majority of the entity’s
expected loss and receives a majority of the entity’s expected
residual returns, or both, as a result of holding variable­interests—consolidates the VIE and an enterprise that holds­significant variable interests but is not the ­primary beneficiary discloses certain required information about the VIE. FIN
No. 46R was effective immediately for all new VIEs created or
acquired after January 31, 2003. For VIEs created or acquired
prior to February 1, 2003, FIN No. 46R was e­ ffective for theCompany on April 1, 2004.
The Company provides loans and guarantees to­organizations managing hospitals and health care-related
institutions and to a PFI (Private Finance Initiative)
organization which was established to build, maintain andoperate correctional facilities. Certain organizations are
considered as VIEs under FIN No. 46R.
Total assets held by VIEs to which the Company is theprimary beneficiary were ¥16,594 million ($169,327 thousand)and ¥17,284 million at March 31, 2009 and 2008, respectively.
Total assets held by VIEs to which the Company holds­significant variable interests but is not the primary beneficiaryat March 31, 2009 and 2008 were ¥46,654 million ($476,061
thousand) and ¥45,889 million, respectively. The Company’s
maximum exposure to losses related to VIEs at March 31,
2009 and 2008 were ¥9,794 million ($99,939 thousand) and¥9,164 million, r­ espectively.
The Company also provided loans and guarantees to realestate investment companies. Certain investment companies
were considered as VIEs under FIN No. 46R. In September
2006, the Company acquired 100% ownership of these VIEs
and consolidated as its subsidiaries. There are no such VIEs
to which the Company holds significant variable interests but
was not primary
beneficiary at March 31, 2009.
­

SECOM CO., LTD.

Annual Report 200935

CONSOLIDATED FINANCIAL STATEMENTS(3) Revenue Recognition
The Company generates revenue principally through salesof security services, merchandise and software, and insurance
services under separate contractual arrangements. The
Company recognizes revenue when persuasive evidence of anarrangement exists, delivery has occurred or services havebeen rendered, title and risk of loss have been transferred tothe customer, the sales price is fixed or determinable, andcollectibility is probable.
Revenue from security services is recognized over thecontractual period or, in the case of specific services, whensuch services are rendered. Subscribers are generally
requested to prepay a portion of service charges which arecredited to deferred revenue and taken into income ratably
over the ­covered service period. Revenue from installation
services of security equipment related to on-line centralized
security ­services is deferred and recognized over thecontractual period of security services after completion of theinstallation. The related installation costs are also deferred
and amortized over the c­ ontractual period (Note 2 (12)).
The Company enters into arrangements with multiple
elements, which may include any combination of security
equipment, installation and security service. The Company
allocates revenue to each element based on its relative fairvalue if such ­element meets criteria for treatment as a­separate unit of accounting as prescribed in the Emerging
Issues Task Force (“EITF”) No. 00-21, “Accounting for
Revenue Arrangement with Multiple Deliverables.”Otherwise, revenue is deferred until the undelivered­elements are fulfilled as a single unit of accounting.
Revenue from sales of merchandise and software is­recognized when the merchandise and software are received
by the customer and, in the case of installations, when such
installations are completed.
Revenue from construction contracts for fire protection
services is recognized when constructions are completed.
Revenue from long-term contracts for geographic­informa­tion services is recognized under the percentageof-­completion method.
Property and casualty insurance premiums are earned­ratably over the terms of the related insurance contracts.
Unearned ­premiums are earned ratably over the terms of theunexpired portion of premiums written.
Revenue from sales of real estate is recognized when theownership of real estates are transferred to the customers.
Revenue from sales of equipment under sales-type leases
is recognized at the inception of the lease. Unearned incomeon sales-type leases and direct-financing leases is recognizedover the life of each respective lease using the interest
method. Leases not qualifying as sales-type leases or directfinancing leases are accounted for as operating leases andthe related ­revenue is recognized over the lease term.
Taxes collected from customers and remitted to­governmental authorities on revenue-producing transactions
are accounted for on a net basis and therefore are excluded
from net sales and operating revenue in consolidated­statements of income.

36

SECOM CO., LTD.

Annual Report 2009

(4) Foreign Currency Translation
All asset and liability accounts of foreign subsidiaries
and affiliates are translated into Japanese yen at the rates
of exchange in effect at year-end and all income and expense
accounts are translated at average rates of exchange
during the year. The resulting translation adjustments areaccumulated and reported as part of other comprehensive
income (loss).
Foreign currency receivables and payables of the Company
are translated into yen at the rate in effect at the balance
sheet date and the resulting translation gains and losses are
credited or charged to income for the year.
(5) Cash Equivalents
For the purpose of the statements of cash flows, theCompany considers all highly liquid investments purchasedwith initial maturities of three months or less to be cash
equivalents.
(6) Investments in Debt and Equity Securities
The Company classifies investments in debt and equity
securities as “available-for-sale” or “held-to-maturity.” The
Company has no securities classified as “trading.” “Held-tomaturity” securities are those securities in which the Company
has the ability and intent to hold the security until maturity. All
securities not included in “trading” or “held-to-maturity” areclassified as “available-for-sale” securities. Market­able debt
and equity securities which are classified as “available-forsale” are recorded at fair value. Unrealized holding gains
and losses on securities classified as “available-for-sale”
are reported as part of other comprehensive income (loss),
net of tax. Debt securities classified as “held-to-maturity”
are reported at ­amortized cost.
A decline in the fair value of any available-for-sale ­securities
below cost that is deemed to be other-than-­temporary
results in a reduction in carrying amount to fair value.
The impairment is charged to income and a new cost basis
for the securities is established. To determine whether an
impairment is other-than-temporary, the Company considers
the length of time and extent to which the market value ofthe security has been less than its original cost, the financial
condition, other specific factors affecting the market value,
deterioration of the credit condition of the issuers, andwhether or not the Company is able to retain the investment
for a period of time sufficient to allow for the anticipated
recovery in market value.
Other investments in non-public companies arerecorded at cost as fair value is not readily determinable.
The Company periodically evaluates the values of otherinvestments in ­non-public companies for possible
impairment by taking into consideration the financial andoperating conditions of the issuer, the general market
conditions in the issuer’s industry and the period of thedecline in the estimated fair value and other relevant factors.
If the impairment is determined to be other-than-temporary,other investments in non-public companies are written down
to their impaired value through a charge to income.
Realized gains or losses on the sale of investments are
based on the moving-average cost method and are credited
or charged to income.

(7) Private Equity Investments
The Company accounts for private equity investmentsin accordance with “AICPA Audit and Accounting Guide:
Investment Companies,” in which investments are accounted
for at fair value based on the Company’s assessment of eachunderlying investment. The investments, by their nature, havelittle or no price transparency. Investments are initially carriedat cost as an approximation of fair value. Adjustments tocarrying value are made if there is evidence of a change infair value. Downward adjustments are also made, in theabsence of third-party transactions, if it is determined thatthe expected realizable value of the ­investment has declined
below the carrying value.
The carrying value of private equity investments was¥20,861 million ($212,867 thousand) and ¥33,153 million atMarch 31, 2009 and 2008, respectively.
Private equity investments are included in investment
securities in the consolidated balance sheets.
(8) Inventories
Inventories, consisting of security-related products, fire
­protection-related products, real estate and information andother related products, are stated at the lower of cost or
market. Cost is determined, in the case of real estate, basedon the specific identification method and, in the case of otherinventories, primarily using the ­moving-­average method.
(9) Allowance for Doubtful Accounts
The Company recognizes an allowance for doubtful
accounts to ensure trade and other receivables are notoverstated due to uncollectibility. Allowance for doubtful
accounts is maintained for all customers based on a variety
of factors, including the length of time receivables are pastdue, macroeconomic conditions, significant one-time eventsand historical experience. An additional reserve for individual
accounts is recorded when the Company becomes awareof a customer’s inability to meet its financial ­obligations,such as in the case of bankruptcy filings or deteriorationin the customer’s operating results or financial position. If
circumstances related to customers change, estimates of the­recoverability of receivables would be further adjusted.
(10) Deferred Insurance Acquisition Costs
Costs that vary with and are primarily related to acquiring
new insurance policies are deferred and are being amortizedprincipally over the premium-paying period of the related­insurance policies applying a percentage relationship of cost
incurred to premiums from contracts issued to applicable
unearned ­premiums throughout the period of the contract.
(11) Property, Plant and Equipment and Depreciation
Property, plant and equipment, including significant­leasehold improvements, are carried at cost and depreciatedat rates based on the estimated useful lives of the assets.
From April 1, 2008, depreciation is computed using thestraight-line method for assets except security equipment
and control stations. Prior to April 1, 2008, these assets weredepreciated primarily using the declining-balance method.
Security equipment and control stations are depreciated byusing the declining-balance method. Assets leased to others
under operating leases are depreciated using the straightline method over the estimated useful lives. Depreciation
expense was ¥33,417 million ($340,990 thousand), ¥37,241
mil­lion and ¥38,719 million for the years ended March 31,
2009, 2008 and 2007, respectively. Maintenance, repairs andrenewals are charged to income as incurred.
The estimated useful lives of depreciable assets areas ­follows:		 Buildings
22 to 50 years
		 Security equipment and control stations
5 to 8 years
		 Machinery, equipment and automobiles
2 to 20 years
Effective April 1, 2008, the Company adopted thestraight-line method of depreciation for assets except
security equipment and control stations. In accordancewith Statement of Financial Accounting Standards (“SFAS”)
No. 154, “Accounting Changes and Error Corrections, areplacement of APB Opinion No. 20 and FASB Statement
No. 3,” this change in depreciation method is treated ona prospective basis as a change in estimate. Prior period
results have not been restated. The Company has unified its
accounting policy within the Group, as it believes that thechange of depreciation method for assets except security
equipment and control stations better reflects the pattern ofconsumption of the future benefits to be derived from thoseassets being depreciated and provides a better matching ofcosts and revenues over the assets’ estimated useful lives. The
effect of the change in depreciation method for the year ended
March 31, 2009, was to reduce depreciation expense by ¥2,203
million ($22,480 thousand) and increase net income and basic
net income per share by ¥1,336 million ($13,633 thousand)and ¥6.01 ($0.06), respectively.
The Company recognizes an asset retirement liability if
the fair value of the obligation can be reasonably estimated.
Asset retirement obligations include those for which anentity has a legal obligation to perform an asset retirement
activity, however, the timing and/or method of settling theobligation are conditional on a future event that may or may
not be within the control of the entity.
(12) Deferred Charges
Deferred charges primarily consist of costs related to
installation services of security equipment related to on-line
centralized security services. The installation costs aredeferred and amortized using the straight-line method overthe contractual period of security services after completionof the installation. Amortiza­­tion expense was ¥15,359 million($156,724 thousand), ¥14,953 million and ¥14,474 million forthe years ended March 31, 2009, 2008 and 2007, respectively.

SECOM CO., LTD.

Annual Report 200937

CONSOLIDATED FINANCIAL STATEMENTS(13) Impairment or Disposal of Long-Lived Assets
In accordance with SFAS No. 144, “Accounting for
Impairment or Disposal of Long-Lived Assets,” the Company
reviews the carrying amount of its long-lived assets held
and used, other than goodwill and intangible assets withindefinite lives, and assets to be disposed of, whenever
events or changes in circumstances ­indicated that the carrying
amount may not be recoverable. Long-lived assets to beheld and used are reviewed for impairment by comparing
the carrying amount of the assets with their estimatedfuture undiscounted cash flows. If it is determined that an
impairment loss has occurred, the loss would be recognized
during the period. The impairment loss would be calculated
as the difference between the assets’ carrying amount andthe fair value. Long-lived assets that are to be disposed ofother than by sale are considered held and used until they
are disposed of. Long-lived assets that are to be disposed ofby sale are reported at the lower of their ­carrying amount orfair value less cost to sell. Reductions in carrying amount are­recognized in the period in which the long-lived assets areclassified as held for sale.
(14) Goodwill and Other Intangible Assets
Goodwill represents the excess of costs over the fairvalue of assets of business acquired. Pursuant to SFAS
No. 142, “Goodwill and Other Intangible Assets,” goodwill
and i­ntangible assets acquired in a purchase businesscombination and determined to have an indefinite useful life
are not amortized, but instead tested for impairment at least
annually. SFAS No. 142 also requires that intangible assets
with estimable ­useful lives be amortized over their respective
estimated useful lives to their estimated residual ­values, andreviewed for impairment in accordance with SFAS No. 144.
The Company conducts its annual impairment test at the endof each fiscal year.
(15) Unearned Premiums and Other Insurance Liabilities
Unearned premiums are related to unexpired periods of
insurance contracts and are earned on a pro-rata basis over theremaining contract period. Other insurance liabilities consist
principally of liabilities for unpaid claims and adjustment
expenses, which are estimates of payments to be made onreported claims and incurred but not reported claims, which
are computed based on past experience for unpaid losses.
(16) Compensated Absences
In June 2006, the FASB ratified the Emerging Issues Task
Force (“EITF”) consensus on EITF Issue No. 06-2 (“EITF 06-2”),“Accounting for Sabbatical Leave and Other Similar Benefits
Pursuant to FASB Statement No. 43.” EITF 06-2 provides
guidance for an accrual of compensated absences that requirea minimum service period but have no increase in the benefit
even with additional years of service. On April 1, 2007, theCompany adopted EITF 06-2 and recorded an increase in the
beginning balance of accrued payrolls of ¥2,265 million andan increase in the beginning balance of deferred income taxes(Other assets) of ¥846 million, with a decrease in the beginningbalance of retained earnings of ¥1,227 million.

38

SECOM CO., LTD.

Annual Report 2009(17) Income Taxes
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences
between the financial statement carrying amounts ofexisting assets and liabilities and their respective tax bases,
and operating loss carryforwards. Deferred tax assets andliabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those
temporary differences and carryforwards are expected tobe realized or settled. The effect on deferred tax assets andliabilities of a change in tax rates is recognized in incomein the period that includes the enactment date. Valuation
allowances are recorded to reduce deferred tax assets when
it is more likely than not that a tax benefit will not be realized.
On April 1, 2007, the Company adopted FASB Interpretation
No. 48 (“FIN No. 48”), “Accounting for Uncertainty in Income
Taxes—an Interpretation of FASB Statement No. 109,” which
requires a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax return.
The Company recognizes interest and penalties accrued
related to unrecognized tax benefits in income taxes in the
consolidated statement of income.
(18) Research and Development
Research and development costs are charged to income
as incurred.
(19) Advertising Costs
Advertising costs are charged to income as incurred,
except for the costs related to insurance policies. Advertisingcosts for acquiring new insurance policies are deferred andamortized as part of insurance acquisition costs. Advertisingexpenses included in selling, general and administrative
expenses for the years ended March 31, 2009, 2008 and 2007
were ¥5,416 million ($55,265 thousand), ¥5,996 million and¥5,348 million, respectively.
(20) Derivative Financial Instruments
The Company accounts for derivative financial instrumentsin accordance with SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities,” as amended.
The Company recognizes all derivative financial
instruments in the consolidated financial statements atfair value regardless of the purpose or intent for holding
them. Changes in the fair value of derivative financial
instruments are either recognized periodically in income or inshareholders’ equity as a component of other comprehensive
income (loss) depending on whether the derivative financial
instruments qualify for hedge accounting, and if so, whether
they qualify as a fair value hedge or a cash flow hedge.
Changes in the fair values of derivative financial instruments
accounted for as a fair value hedge are recorded in income
along with the portion of the change in the fair value of thehedged item that relates to the hedged risk. Changes in thefair value of derivative financial instruments accounted for asa cash flow hedge, to the extent it is effective as a hedge, arerecorded in other comprehensive income (loss), net of tax.
Changes in the fair value of derivative financial instruments
not qualifying as a hedge are reported in income.

The Company meets the documentation requirements
which include their risk management objective and strategy
for undertaking various hedge transactions. In addition,formal assessment is made at the hedge’s inception andperiodically on an on-going basis, as to whether thederivatives used in hedging activities are highly effective
in off-setting changes in fair values or cash flow of hedged
items. Hedge accounting is discontinued for ineffective
hedges, if any. Discontinued hedges are recognized incurrent earnings.
(21) Per Share Data
Basic Earnings per Share (“EPS”) is computed based on
the average number of shares of common stock outstanding
for the period. The average number of shares of common
stock outstanding for the years ended March 31, 2009, 2008
and 2007 was 222,378 thousand shares, 224,967 thousand
shares and 224,974 thousand shares, respectively. There
were no potentially dilutive shares outstanding during theyears ended March 31, 2009, 2008 or 2007.
Cash dividends per share shown in the accompanying
consolidated statements of income are computed based on
dividends approved and paid in each fiscal year.
(22) Use of Estimates
The preparation of the consolidated financial statements
requires management of the Company to make a number of
estimates and assumptions relating to the reported amountsof assets and liabilities, the disclosures of contingent assets
and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses
during the period. Significant items subject to such estimatesand assumptions include the carrying amounts of inventories, investment securities, other investments, property, plantand equipment, goodwill and other intangible assets; valuation allowances for receivables and deferred income taxes;
valuation of derivative instruments; assets and obligations
related to employee benefits; income tax uncertainties; andother contingencies.
(23) Recent Pronouncements
In September 2006, the FASB issued SFAS No. 157, “Fair
Value Measurements.” SFAS No. 157 defines fair value,establishes a framework for measuring fair value, andexpands disclosures about fair value measurements.
SFAS No. 157 is effective for fiscal years beginning afterNovember 15, 2007, and was adopted by the Company inthe fiscal year beginning April 1, 2008. In February 2008,
the FASB issued Staff Positions (“FSP”) No. FAS 157-1,“Application of FASB Statement No. 157 to FASB Statement
No. 13 and Other Accounting Pronouncements That Address
Fair Value Measurements for Purposes of Lease Classification
or Measurement under Statement 13” and No. FAS 157-2,“Effective Date of FASB Statement No. 157,” which delays
the effective date of SFAS No. 157 for all nonfinancial assets
and nonfinancial liabilities, except those that are recognizedor disclosed at fair value in the financial statements on arecurring basis (at least annually) and remove certain leasingtransactions from its scope. The Company has not applied

the provisions of SFAS No. 157 to the impairment of long-lived
assets and goodwill that have been recognized or disclosed atfair value for the year ended March 31, 2009. The adoption did
not have a material impact on the Company’s consolidated
results of operations or financial positions.
In February 2007, the FASB issued SFAS No. 159, “The Fair
Value Option for Financial Assets and Financial Liabilities—
Including an amendment of SFAS No. 115.” SFAS No. 159
provides companies with an option to report selected financial
assets and liabilities at fair value. Unrealized gains and losses
on items for which the fair value option has been elected arerecognized in earnings. SFAS No. 159 is effective for fiscal
years beginning after November 15, 2007, and was adopted
by the Company in the fiscal year beginning April 1, 2008.
The adoption of SFAS No. 159 did not have an impact on the
Company’s consolidated results of operations and financial
condition as the Company did not elect to report financial
assets and liabilities under the fair value option.
In December 2007, the FASB issued SFAS No. 141(R),“Business Combinations.” SFAS No. 141(R) establishes
principles and requirements for how an acquirer recognizes
and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, any noncontrollinginterest in the acquiree and the goodwill acquired. SFAS
No. 141(R) also establishes disclosure requirements to­enable the evaluation of the nature and financial effects ofthe business combination. SFAS No. 141(R) is effective forfiscal years beginning after December 15, 2008 and isrequired to be adopted by the Company in the fiscal year
beginning April 1, 2009. The effect of adopting SFAS No. 141(R)will depend on the nature and significance of any acquisitions
subject to SFAS No. 141(R).
In December 2007, the FASB issued SFAS No. 160,
“Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB No. 51.” SFAS No. 160
requires that the noncontrolling interest in the equity of a
subsidiary be accounted for and reported as equity, provides
revised guidance on the treatment of net income and losses
attributable to the noncontrolling interest and changes inownership interests in a subsidiary. SFAS No. 160 also
requires additional disclosures that identify and distinguishbetween the interests of the controlling and noncontrolling
owners. SFAS No. 160 is effective for fiscal years beginning
after December 15, 2008 and is required to be adopted by theCompany in the fiscal year beginning April 1, 2009. The effectof adopting SFAS No. 160 will depend on the nature andsignificance of any transactions subject to SFAS No. 160.
In December 2008, the FASB issued FSP FAS No. 132(R)-1(“FSP 132R-1”), “Employers’ Disclosures about Postretirement
Benefit Plan Assets.” FSP 132R-1 requires additional disclosuresabout assets held in an employer’s defined benefit pension
or other postretirement plan. FSP 132R-1 is effective for fiscal
years ending after December 15, 2009 and is required to be
adopted by the Company in the fiscal year ending March 31,
2010. The Company is currently evaluating the requirements of
the additional disclosures, and does not expect the adoption of
FSP 132R-1 to have a material impact on its consolidated resultsof operations or financial positions.

SECOM CO., LTD.

Annual Report 200939

CONSOLIDATED FINANCIAL STATEMENTSIn April 2009, the FASB issued FSP FAS No. 115-2 and 124-2,“Recognition and Presentation of Other-Than-Temporary
Impairments” (“FSP 115-2 and 124-2”). FSP 115-2 and 124-2
revises the recognition and presentation requirements forother-than-­temporary impairments for debt securities, andcontains additional disclosure requirements related to debt
and equity securities. FSP 115-2 and 124-2 is effective forfiscal years ending after June 15, 2009 and is required to be
adopted by the Company in the fiscal year ending March 31,
2010. It is not anticipated that the adoption will have a material
impact on the Company’s consolidated results of operations
or financial position.
In June 2009, the FASB issued SFAS No. 167, “Amendments
to FASB Interpretation No. 46(R).” This statement requires
reporting entities to evaluate former QSPEs for consolidation,changes the approach to determining a VIE’s primary
beneficiary from a mainly quantitative assessment to an
exclusively qualitative assessment designed to identify acontrolling financial interest, and increases the frequency of
required reassessments to determine whether a company is
the primary beneficiary of a VIE. SFAS 167 is effective forfiscal years beginning after November 15, 2009. Earlier
application is prohibited. SFAS 167 will be adopted by theCompany in the fiscal year beginning April 1, 2010. The
Company is currently evaluating the effect of adopting SFAS
167 on its consolidated financial statements.
(24) Reclassifications
The accompanying consolidated financial statements forthe years ended March 31, 2008 and 2007 have been­reclassified to conform to the presentation used for the year
ended March 31, 2009.
3. U.S. Dollar Amounts
U.S. dollar amounts have been included in these financial
statements solely for the convenience of the reader. The
translations of yen into U.S. dollars have been made at therate of ¥98=US$1, the rate ­prevailing on the Tokyo Foreign
Exchange Market on March 31, 2009. These ­translations
should not be construed as representing that the yenamounts actually represent, or have been or could be
converted into U.S. dollars at that rate.
4. Acquisition
In December 2006, the Company acquired 18,500,000
newly issued shares—equivalent to 30.8 percent of
total outstanding common stocks—of Nohmi Bosai Ltd.
(“Nohmi Bosai”), listed on the First Section of the Tokyo
Stock Exchange for an aggregate value of ¥14,060 million.
Nohmi Bosai operates automatic fire alarms, fire

40

SECOM CO., LTD.

Annual Report 2009

extinguishing and other fire protection systems. As aresult of this new share acquisition, the Company owns
50.4 percent of the total outstanding ­common stocks ofNohmi Bosai. The operating results of Nohmi Bosai and its
subsidiaries (collectively, “Nohmi Bosai group”) have been
included in the consolidated financial statements since thedate of acquisition. The Company has been in an alliancewith Nohmi Bosai, which had been accounted for under theequity method before this new share acquisition. Purpose ofthis acquisition is to reinforce its alliance with Nohmi Bosai
by integrating the Company’s expertise in security systems
with Nohmi Bosai’s fire protection technologies.
The value of the transaction was determined based on the
average closing price of Nohmi Bosai’s common stocks on
the Tokyo Stock Exchange over the one month period (fromOctober 23, 2006 to November 21, 2006). Price per sharewas ¥760, which represents a 5.6 percent discount from theaverage share price.
The following table summarizes the estimated fair valuesof the assets acquired and liabilities assumed at the date ofacquisi­tion. The excess of the fair value of acquired net
assets over cost was deducted on a pro rata basis to all
acquired assets except financial assets other than­investments accounted for under the equity method,deferred tax assets, prepaid pension and severance costs,
and any other current assets.
		In millions of yen

Cash and cash equivalents........................................
Receivables and othercurrent assets............................................................
Investments andlong-term receivables...............................................
Property, plant and equipment..................................
Intangible assets.........................................................
Total assets acquired..............................................
Current liabilities.........................................................
Other liabilities............................................................
Total liabilities assumed.........................................
Minority interests in subsidiaries..............................
Net assets acquired................................................

¥17,513
41,991
9,015
5,973
4,769
79,26127,001
7,757
34,758124¥44,379

Substantially all of the trademarks (including trade names)
assigned for ¥1,879 million out of total intangible assets
acquired for ¥4,769 million are not subject to amortization.
¥2,890 million of acquired intangible assets were assigned
to assets subject to amortization, which have a weightedaverage useful life of approximately 16 years, including
customer contracts and related customer relationships of¥1,908 million with a 20-year weighted-average useful life.

The following unaudited pro forma information shows
the Company’s consolidated results of operations for theyear ended March 31, 2007 as though Nohmi Bosai group
had been consolidated at the beginning of the year.
Unaudited
In millions of yen
Year ended March 31
2007

Pro forma net sales and operating revenue....
Pro forma net income........................................

¥686,429
56,090
UnauditedIn yenYear ended March 31
2007

Pro forma basic net income per share.............

¥249.32

The unaudited pro forma data is not necessarily indicativeof the Company’s consolidated results of operations thatwould actually have been reported if the transaction in fact
had occurred at the beginning of the year, and is not necessarily representative of the Company’s consolidated resultsof ­operations for any future period.

6. Cash Deposits
The Company operates cash collection and deposit services
for financial institutions relating to cash dispensers locatedoutside of financial institution facilities and also operates cash
collection service for entities other than financial institutions.
Cash deposit balances of ¥56,668 million ($578,245 thousand)and ¥63,697 million at March 31, 2009 and 2008, respectively,
are segregated from cash and cash equivalents and are
restricted as to use by the Company. The Company funds
most of the cash for such operations through bank overdrafts
and deposits. Bank loans and deposits received, which relate
to these operations, were ¥26,894 million ($274,429 thousand)and ¥29,084 million ($296,776 thousand), respectively, atMarch 31, 2009, and ¥30,402 million and ¥32,619 million,
respectively, at March 31, 2008. As part of its fee arrangement,
the Company is reimbursed for the interest cost of therelated overdrafts.
7. Short-Term Investments and Investment Securities
Short-term investments (current) and investment securities(non-current) include debt and equity securities. The related
aggregate fair value, gross unrealized gains, gross unrealized
losses and cost pertaining to “available-for-sale” and “heldto-maturity” investments at March 31, 2009 and 2008 wereas ­follows:

5. Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2009 and 2008
were comprised as follows:

In millions of yen
March 31, 2009
Gross unrealized		 In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

2008

2009

¥100,327 ¥149,874
19,609 42,936
36,500 19,000
2,957
2,767
¥159,393 ¥214,577$1,023,745
200,092
372,449
30,173$1,626,459

2009

Cash...........................................
Time deposits............................
Call loan.....................................
Investment securities...............
			 . ..........................................

Investment securities include commercial papers andmoney management funds. These agreements mature within
three months and their carrying values approximate ­fairvalue. The Company has not experienced any losses throughdefault of the financial institutions and does not ­anticipate
default of any outstanding agreements.

Cost

Short-term investments:
Available-for-sale:		 Equity securities........ ¥710
		 Debt securities...........
11,962
Held-to-maturity:
		 Debt securities...........
1,485
		
¥ 14,157
Investment securities:
Available-for-sale:		 Equity securities........ ¥ 43,221
		 Debt securities...........
84,918
Held-to-maturity:
		 Debt securities...........
6,232
		¥134,371

Gains

LossesFair value

—
22

¥ 133
216

¥

2
24

—
¥ 349

1,487
¥ 13,832¥2,408534¥3,8403,380¥ 41,789
82,072—¥2,942102¥7,3226,130¥129,991¥¥

SECOM CO., LTD.

Annual Report 2009

577
11,76841

CONSOLIDATED FINANCIAL STATEMENTS

In millions of yen

In thousands of U.S. dollars
March 31, 2009

March 31, 2008
Gross unrealized
Cost

Short-term investments:
Available-for-sale:
		 Debt securities........... ¥Held-to-maturity:
		 Debt securities...........
		
¥

5,051
1,603
6,654

Investment securities:
Available-for-sale:		 Equity securities........ ¥ 62,195
		 Debt securities...........
85,426
Held-to-maturity:
		 Debt securities...........
8,242
		
¥155,863

Gains

¥

1

¥

0
1

Losses

¥

115

¥

0
115

Less than 12 months
Fair value

¥

4,937

¥

1,603
6,540

¥5,051918¥ 8,485
1,962¥ 58,761
84,382

1¥5,970348¥10,795

7,895¥151,038

In thousands of U.S. dollars
March 31, 2009
Gross unrealized
Cost

Gains

Short-term investments:
Available-for-sale:		 Equity securities....... $7,245 $
		 Debt securities..........
122,061
Held-to-maturity:
		 Debt securities..........
15,152
		$ 144,458 $LossesFair value—
225$ 1,357 $
5,888
2,204
120,08220
245—
15,172$ 3,561 $ 141,142

Investment securities:
Available-for-sale:		 Equity securities....... $ 441,031 $24,571
		 Debt securities..........
866,5105,449
Held-to-maturity:—
		 Debt securities..........
63,592
		$1,371,133 $30,020$39,184 $ 426,418
34,490837,469
1,041
62,551$74,715 $1,326,438

In millions of yen
March 31, 2009		

12 months or longer

Gross		Grossunrealized		 unrealized
lossesFair value
lossesAvailable-for-sale:
Equity securities........
Debt securities...........
		 Total.........................

¥ 7,71125,704¥33,415¥1,272
1,416¥2,688¥ 8,653
28,299¥36,952¥2,701
2,180¥4,881

Held-to-maturity:
Debt securities...........

¥

¥

¥

¥ 102

42

Annual Report 2009

SECOM CO., LTD.

——

Gross		Grossunrealized		 unrealized
lossesFair value
lossesAvailable-for-sale:
Equity securities........ $ 78,684
Debt securities........... 262,286
		 Total......................... $340,970$12,980
14,449$27,429$ 88,296
288,765$377,061$27,561
22,245$49,806

Held-to-maturity:
Debt securities........... $$$$ 1,041

—

—

4,061

Based on the Company’s ability and intent to hold theinvestment for a reasonable period of time sufficient for arecovery of fair value, the credit condition of the issuers, thefact that the markets have gradually showed a certain level ofrecovery and other relevant factors, the Company does notconsider these investments to be other-than-temporary
impaired at March 31, 2009.
At March 31, 2009, debt securities principally consisted ofshort-term investments in monetary trusts, Japanese­govern­ment bonds, corporate bonds, U.S. treasury securities
and U.S. Government Agency Bonds.
The cost and fair value of “available-for-sale” and ”held-tomaturity” debt securities by contractual maturity at March
31, 2009 are as follows:
In millions of yen
March 31, 2009

		

		
		
Fair value				
Fair value

Available-for-sale

Gross unrealized losses on, and fair value of, “availablefor-sale” and “held-to-maturity” securities, aggregated byinvest­ment category and the length of time that individual
securities have been in a continuous unrealized loss position,
at March 31, 2009 were as follows:

Less than 12 months

12 months or longer

398

Due within 1 year..........
Due after 1 year
through 5 years...........
Due after 5 years
through 10 years.........
Due after 10 years . ......
		 ..................................

Held-to-maturity

Cost

Fair value¥11,962¥11,768¥1,485

Cost Fair value¥1,487

52,77750,497——

26,056
6,085¥96,880

25,6305,945¥93,840—
6,232¥7,717—6,130¥7,617In thousands of U.S. dollars
March 31, 2009
Available-for-sale

Held-to-maturity

Cost

Fair value

Cost Fair value

Due within 1 year.......... $122,061
Due after 1 year
through 5 years........... 538,541
Due after 5 years
through 10 years......... 265,878
Due after 10 years . ......
62,091
		 .................................. $988,571$120,082$15,152 $15,172

515,276
261,531
60,662$957,551————
63,592 62,551$78,744 $77,723

During the years ended March 31, 2009, 2008 and 2007,
the net ­unrealized gains and losses on “available-for-sale”
securities included as part of other comprehensive income(loss), net of tax, decreased by ¥460 million ($4,694 thousand),¥11,238 m­ illion and ¥3,026­million, respectively.

Proceeds from the sale of “available-for-sale” securities
for the years ended March 31, 2009, 2008 and 2007 were¥59,340 million ($605,510 thousand), ¥106,925 million and¥109,405 million, respectively. On those sales, the gross­realized gains and gross realized losses, using moving-­
average cost basis, for the years ended March 31, 2009,2008 and 2007 were as follows:		 In thousands ofGross realized gains........
Gross realized losses.......

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2009

2008

2007

2009

¥679
325

¥3,005623¥4,076295$6,9293,316

The Company maintains long-term investment securities,
included as investment securities, issued by a number of
non-public companies. The aggregate carrying amount of theinvestments in non-public companies, at cost net of otherthan-temporary impairment, was ¥10,714 million ($109,327
thousand) and ¥12,150 million at March 31, 2009 and 2008,
respectively. The corresponding fair value at that date was
not computed as such estimation was not practical.
8. Inventories
Inventories at March 31, 2009 and 2008 comprised the­following:
		 In thousands of		In millions of yen

U.S. dollars

March 31

March 31

2008

2009

Security-related products............... ¥ 7,333 ¥ 7,732
Fire protection-related products.... 16,241 13,747
Real estate....................................... 67,614 91,182
Information and other-related
products.........................................
4,883
5,781
			 .............................................. ¥96,071 ¥118,442

2009$ 74,826
165,724
689,939
49,827$980,316

Work in process for real estate inventories at March 31,
2009 and 2008, amounting to ¥61,437 million ($626,908
thousand) and ¥73,312 million, respectively, are included inreal estate.
The amount of write-down on real estate inventories
included in cost of sales for the year ended March 31, 2009was ¥8,366 million ($85,367 thousand).
9. Investments in Affiliated Companies
The Company has investments in affiliated companies thatare accounted for under the equity method. Investments
principally consist of investments in Taiwan Secom Co., Ltd.,a 28.1 percent owned affiliate, which is listed on the Taiwan
Stock Exchange; S1 Corporation, a 27.2 percent owned
affiliate, which is listed on the Korea Exchange; Toyo Tech
Co., Ltd., a 27.8 percent owned affiliate acquired—amounting

to ¥5,146 million—in December 2006, which is listed on theSecond Section of the Osaka Securities Exchange; and Tokyo
Biso Kogyo Corporation, a 36.6 percent owned new affiliate byadditionally acquiring ¥1,740 million—equivalent to 16.6
percent of total outstanding common stocks—in May 2007
and March 2008, which is listed on the Second Section of theTokyo Stock Exchange.
In December 2006, the Company additionally acquired
18,500,000 newly issued shares of Nohmi Bosai, listed on theFirst Section of the Tokyo Stock Exchange, and as a result theCompany held 50.4 percent of its ownership. Nohmi Bosai
had been accounted for under the equity method before theacquisition and has been consolidated as its subsidiaries
since the date of acquisition. (For more details, see Note 4.)
Summarized financial information regarding the affiliated­companies accounted for under the equity method was
as ­follows:		 In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

2008

2009

Current assets.............................. ¥ 90,419 ¥ 96,089
Non-current assets...................... 106,004 134,467$ 922,643
1,081,673

Total assets............................... ¥196,423 ¥230,556$2,004,316

Current liabilities.......................... ¥ 39,994 ¥ 48,212
Non-current liabilities..................
34,48636,846
Shareholders’ equity................... 121,943 145,498$ 408,102
351,898
1,244,316

Total liabilities andshareholders’ equity.............. ¥196,423 ¥230,556$2,004,316

		

2009

		 In thousands ofIn millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2007

2009

Net sales...................... ¥177,465 ¥202,335 ¥196,486

2009$1,810,867

Gross profit................. ¥ 54,621 ¥ 64,213 ¥ 67,315$ 557,357

Net income.................. ¥ 18,574 ¥ 22,576 ¥ 18,851$ 189,531

2008

Dividends received from affiliated companies for the years
ended March 31, 2009, 2008 and 2007 were ¥2,503 million($25,541 thousand), ¥2,657 million and ¥2,193 million,
respectively.
Four listed affiliated companies accounted for under theequity method with an aggregated carrying amount of¥29,752 million ($303,592 thousand) and ¥37,035 ­million atMarch 31, 2009 and 2008, respectively, had a quoted market
value of ¥53,118 million ($542,020 thousand) and ¥80,984­million at March 31, 2009 and 2008, respectively.
The amounts of goodwill were ¥2,710 million ($27,653
thousand) and ¥2,710 million at March 31, 2009 and 2008,
respectively.

SECOM CO., LTD.

Annual Report 200943

CONSOLIDATED FINANCIAL STATEMENTS

In November 2006, the parent company sold theoutstanding shares of Miyagi Network Inc., a 39.4 percent
owned affiliate, to Mediatti Communications, Inc. for ¥1,419
million. The sales resulted in a gain of ¥855 million.
A summary of transactions and balances with the affiliatedcompanies accounted for under the equity method ispresented below:

Impairment loss on long-lived assets by ­business segment
for the years ended March 31, 2009, 2008 and 2007 was
as follows:		 In thousands of

U.S. dollars

Years ended
March 31

Year ended
March 31

2009

2008

2007

2009

Sales..............................

¥1,737¥2,584¥1,843$17,724

Purchases......................

¥8,293¥6,237¥3,777$84,622

		 In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

2009

2008

2009

Notes and accounts
receivable, trade........................... ¥ 461¥ 523$ 4,704

Loans receivable............................. ¥

¥

$

		

92

98

¥2,482$30,092

Guarantees for bank loans............. ¥

¥

$

10

82

The Company's equity in undistributed income of affiliates
at March 31, 2009 and 2008 included in retained earnings
was ¥23,147 million ($236,194 thousand) and ¥15,496 million,
respectively.
10. Long-Lived Assets
The Company has assessed the potential impairment for its
long-lived assets. As a result of significant decreases in rental
rates, market prices and revenue forecasts, and changes ofassumptions regarding useful lives before sale, the Company
principally recognized impairment losses on medical services
equipment for the year ended March 31, 2007. The fair value
was determined by the estimated present value of future
cash flows or appraisal value.

44

SECOM CO., LTD.

Annual Report 2009

Year ended
March 31

2009

2008

2007

2009

¥34
—
—
—

¥— ¥ —
16
32
0 1,134
—
—

$347
—
—
—

42

—

10

429

—

—

—

—

—
—

—
—

—
—

—
—

		 Total..............................

¥76¥16 ¥1,176

$776

939

Notes and accounts payable.......... ¥2,949
8

U.S. dollars

Years ended
March 31

Security services.................
Fire protection services......
Medical services.................
Insurance services..............
Geographic information
services..............................
Real estate development
and sales............................
Information andcommunication related
and other services............
Corporate items..................

		 In thousands ofIn millions of yen

In millions of yen

11. Goodwill and Other Intangible Assets
The components of acquired intangible assets excluding
goodwill at March 31, 2009 and 2008 were as ­follows:
In millions of yen
March 31, 2009
Gross		carrying Accumulated
amount amortization

Net
carrying
amountAmortized intangible assets:
Software...................................... ¥30,725
Other............................................
5,058
		 Total . ....................................... ¥35,783(¥18,739)(2,179)(¥20,918)¥11,986
2,879¥14,865

Unamortized intangible assets...... ¥ 4,056¥¥ 4,056—

In millions of yen
March 31, 2008
Gross		carrying Accumulated
amount amortization

Net
carrying
amountAmortized intangible assets:
Software...................................... ¥30,055
Other............................................
4,911
		 Total . ....................................... ¥34,966(¥16,488)(1,764)(¥18,252)¥13,567
3,147¥16,714

Unamortized intangible assets...... ¥ 4,413¥¥ 4,413—

In thousands of U.S. dollars
March 31, 2009
Gross		carrying Accumulated
amount amortization

Net
carrying
amountAmortized intangible assets:
Software...................................... $313,520
Other............................................ 51,612
		 Total . ....................................... $365,132($191,214) $122,306(22,235)
29,377($213,449) $151,683

Unamortized intangible assets...... $ 41,388$— $ 41,388

Aggregate amortization expense for the years ended
March 31, 2009, 2008 and 2007 was ¥5,850 million ($59,694
thousand), ¥5,999 million and ¥5,055 million, respectively.
Amortized intangible assets are amortized using the straightline method over the estimated useful lives. The weighted
average amortization period for internal use software isapproximately five years.
The estimated aggregate amortization expense for­intangible assets for the next five years is as follows:		 In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2010......................................................
2011......................................................
2012......................................................
2013......................................................
2014......................................................

¥4,743
3,868
2,846
1,697
347

$48,398
39,46929,041
17,316
3,541

The changes in the carrying amount of goodwill by businesss­ egment for the years ended March 31, 2009 and 2008 wereas follows:
In millions of yen						 Information and				 Geographic Real estate communication
		
Security
Medical information development
related and		services
services
servicesand sales other services

March 31, 2007.... ¥1,457 ¥7,047 ¥3,623
Goodwillacquired during
the year..............
117——
Disposal...............
——(1)
Impairment
losses................. (117)(876)—
Translation
adjustment........
(30)——
March 31, 2008.... 1,427 6,171 3,622
Goodwillacquired during
the year.............. 1,386—
155
Disposal...............
———
Impairment
losses................. (407)(996)—
Translation
adjustment........ (664)——March 31, 2009.... ¥1,742 ¥5,175 ¥3,777

Total

¥ 135

¥5,101¥17,363

—
—

—
(180)

117
(181)

(135)

—

(1,128)

—
—

—
4,921

(30)
16,141

—
—

—
—

1,541
—

—

(175)

(1,578)—¥ ——¥4,746(664)¥15,440

In thousands of U.S. dollars						 Information and				 Geographic Real estate communication
		
Security
Medical information development
related and		services
services
servicesand sales other services

March 31, 2008.... $14,561 $62,969 $36,959
Goodwillacquired during
the year.............. 14,143— 1,582
Disposal...............
———
Impairment
losses................. (4,153) (10,163)—
Translation
adjustment........ (6,775)——
March 31, 2009.... $17,776 $52,806 $38,541

$—
—
—

Total

$50,214 $164,703——

15,725——(1,786) (16,102)—$——(6,775)$48,428 $157,551

The Company principally recognized impairment losses
related to goodwill allocated to the reporting units in the
medical services segment of ¥996 million ($10,163 thousand)and ¥876 million, and in the security services segment of ¥407
million ($4,153 thousand) and ¥117 million for the years ended
March 31, 2009 and 2008, respectively, due to decreases in theestimated fair value of these reporting units mainly caused bydecreases of expected cash flows.
The fair value was deter­mined by the estimated present
value of future cash flows or quoted market prices.
12. Bank Loans and Long-Term Debt
Bank loans of ¥78,180 million ($797,755 thousand) and¥133,056 million at March 31, 2009 and 2008, respectively,
are generally comprised of 30 to 365 day notes. Theirweighted average interest rates were 1.28 percent and1.37 percent at March 31, 2009 and 2008, respectively.
Substantially all of these loans are borrowed from banks.
The Company has entered into basic agreements withthese banks which state that, with respect to all present or
future loans with such banks, collateral (including sums on
deposit with such banks) or guarantors shall be provided
immediately upon request. Further, any collateral furnishedpursuant to such agreements or otherwise will be applicable
to all indebted­ness to such banks. The Company has notbeen requested to submit such additional security.
At March 31, 2009, Nohmi Bosai, a subsidiary of theparent company, had unused committed line of credit fromshort-term arrangement aggregating ¥4,000 million ($40,816
thousand). The line of credit expires in March 2010. Under theagreement, Nohmi Bosai is required to pay committed feesat an annual rate of 0.15 percent, on the unused portion of
the line of credit. At March 31, 2009, the parent company had
overdraft agreements with seven banks and its unused linesof credit amounted to ¥67,000 million ($683,673 thousand).
The parent company incurs no fee on the unused portionof the lines of credit. The overdraft agreements expire
in the period from April 2009 to March 2010. The p­ arent
company has the ability and intent to extend these overdraft
agreements under similar terms and conditions.

SECOM CO., LTD.

Annual Report 200945

CONSOLIDATED FINANCIAL STATEMENTS

Long-term debt at March 31, 2009 and 2008 comprisedthe ­following:
		 In thousands of		In millions of yen

U.S. dollars

March 31

March 31

2008

2009

2009

Loans, principally from banks
due 2008–2027 with interest
rates ranging from 1.17% to10.05% in 2009 and 2008:
Secured........................................... ¥20,811 ¥20,624
Unsecured...................................... 4,336
5,249
0.61% unsecured bonds due 2010....
450
750
0.91% unsecured bonds due 2010....
440
660
1.14% unsecured bonds due 2013.... 4,590—
Unsecured bonds due 2009–2014
with floating interest rates basedon 6-month TIBOR plus
0.00%–0.20%.................................... 12,230 14,051
Obligations under capital leases,
due 2008–2026 (Note 19)................. 9,514 11,910
			 ................................................. 52,371 53,244
Less:
Portion due within one year........... 15,967
9,061
			 ................................................. ¥36,404 ¥44,183$212,357
44,2454,592
4,490
46,837

124,796
97,081
534,398
162,929$371,469

Property, plant and equipment with a carrying amount of¥58,100 million ($592,857 thousand), investment securities
with a carrying amount of ¥745 million ($7,602 thousand),time deposits of ¥1,483 million ($15,133 thousand), short-termand long-term receivables of ¥1,095 million ($11,173 thousand)and other intangible assets and other with a carrying amountof ¥818 million ($8,347 thousand) were pledged as ­collateralfor bank loans and long-term debt at March 31, 2009.
The aggregate annual maturities on long-term debt after
March 31, 2009 are as follows:		 In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2010.....................................................
2011.....................................................
2012.....................................................
2013.....................................................
2014.....................................................
Thereafter............................................
............................................................

¥15,967
8,389
6,796
8,826
6,503
5,890
¥52,371$162,929
85,602
69,34790,061
66,357
60,102$534,398

13. Insurance-Related Operations
Secom General Insurance Co., Ltd. (“Secom Insurance”),
a subsidiary of the parent company, maintains accounting
records as noted in Note 2 in accordance with the accounting
principles and ­practices generally accepted in Japan, whichvary in certain respects from account­ing principles generally
accepted in the United States of America. Those differences
are principally, (a) that insurance acqui­sition costs arecharged to income when incurred in Japan whereas in
the United States of America those costs are deferred andamortized generally over the premium-­paying period of
the insurance policies, (b) that liabilities related to incurred
but not reported claims are computed based on related
regulations in Japan whereas in the United States of America
those liabilities are computed based on past experience

46

SECOM CO., LTD.

Annual Report 2009

for unreported losses, and (c) that unearned premiums
are calculated based on the ­documents authorized by theSupervisory Authorities in Japan whereas in the UnitedStates of America unearned premiums are reflected basedon the lapse and ­surrender over the contract period.
In addition, under certain property and casualty insurance
contracts with a refund clause and long-term insurance
policies that p­ rovide refunds at maturity, such as personal
accident and fire, the policyholder receives a refund if
premiums have been fully paid unless a substantial settlement(as defined in the ­policy) has occurred. The Company has
provided for such refundable amounts by classifying a portionof the net pre­mi­ums written, together with interest thereon,as investment deposits by policyholders. Contract and policy
terms are p­ rincipally five years.
For purposes of preparing the consolidated financial­state­ments, appropriate adjustments have been made toreflect such items in accordance with account­ing principles
generally accepted in the United States of America.
The net equity of Secom Insurance at March 31, 2009 and2008 was ¥47,753 million ($487,276 thousand) and ¥35,218
million, respectively.
Net sales and operating revenue of Secom Insurance
include net realized investment gains and losses, including
the results on sales of securities, loss on other-thantemporary impairment of investment securities andimpairment loss on long-lived assets. Net realized
investment gains and losses for the years ended March 31,
2009, 2008 and 2007 were losses of ¥10,152 million ($103,592
thousand), and gains of ¥1,922 million and ¥3,612 million,
respectively. Loss on other-than-temporary impairment ofinvestment securities for the years ended March 31, 2009,2008 and 2007 were ¥10,683 million ($109,010 thousand),¥650 million and ¥331 million, respectively.
14. Pension and Severance Costs
Employees of the parent company and its domestic­subsidiaries whose services are terminated are, under most­circumstances, eligible for lump-sum benefits and/or ­eligible
for pension benefits.
The parent company and certain domestic subsidiaries
have adopted a cash balance pension plan and a defined
contribution pension plan. Benefits under the cash balance
pension plan are calculated by the amount equal to a certain
percentage of employee’s annual income over their period ofservice, plus interest calculated by the 3-year average yieldfor 10-year government bonds. The defined contribution
pension plan was established in April 2003, by transferring a
portion equivalent to 20 percent of the cash balance pension
plan, including portions funded in prior periods. Specified
percentage of employees’ annual income is contributed tothe defined contribution pension plan.
In April 2005, the parent company and certain domestic
subsidiaries transferred an additional portion of the cash
balance pension plan to the defined contribution pension
plan. Accord­ingly, the ratio of the accumulated amount in
the cash balance pension plan and the amount ofcontributions to the defined contribution pension planchanged to 70 percent and 30 percent, including portions
funded in prior periods.

In March 2009, Pasco Corporation and its domestic
subsidiaries settled and transferred a portion of the taxqualified non-contributory pension plan to the defined
contribution pension plan. In accordance with SFAS No. 88“Employers’ Accounting for Settlements and Curtailments ofDefined Benefit Pension Plans and for Termination Benefits,”
the Company accounted for these transfers as a partial
settlement of benefit obligation. The amount of settlement
loss was immaterial for the year ended March 31, 2009.
On March 31, 2007, the Company adopted the recognitionand disclosure provisions of SFAS No. 158, “Employers’
Accounting for Defined Benefit Pension and Other
Postretirement Plans, an amendment of FASB Statement
No. 87, 88, 106, and 132(R).” SFAS No. 158 required theCompany to recognize the funded status (i.e., the difference
between the fair value of plan assets and the projected­benefit obligations) of its pension plans in the consolidatedbalance sheet at March 31, 2007, with a corresponding
adjustment to accumulated other comprehensive income(loss), net of tax. The adjustment to accumulated other­comprehensive income (loss) at adoption represents theunrecognized actuarial loss and unrec­ognized prior service
benefit, both of which were previously netted against theplan’s funded status in the consolidated balance sheets­pursuant to the provisions of SFAS No. 87 “Employers’
Accounting for Pensions.” These amounts will be subsequently recognized as net periodic pension and severance
costs pursuant to the Company’s historical accounting policy
for amortizing such amounts. In addition, actuarial gains andlosses that arise in subsequent periods and are not recognized as net periodic pension and severance cost in the same
periods will be ­recognized as other comprehensive income(loss). Those amounts will be subsequently recognized as acomponent of net periodic pension and s­ everance cost on thesame basis as the amounts recognized in accumulated other­comprehensive income (loss) at a
­ doption of SFAS No. 158.
Net periodic pension and severance costs for the years
ended March 31, 2009, 2008 and 2007 were as follows:		 In thousands of2009

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2008

2007

Net periodic pension andseverance costs:
Service cost....................... ¥4,694 ¥4,511 ¥3,998
Interest cost....................... 1,430 1,424 1,146
Expected return onplan assets....................... (1,952) (1,808) (1,620)
Amortization of priorservice benefit................. (1,713) (1,715) (1,715)
Recognized actuarialloss...................................
861 1,005 1,123
		 Net periodic pension
		 and severance costs... ¥3,320 ¥3,417 ¥2,932

2009

The changes in benefit obligation, assets and funded­status were as follows:		 In thousands ofIn millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

		

2009

2009

2008

Change in benefit obligation:
Benefit obligation
at beginning of year.............. ¥71,820 ¥71,000
Service cost..............................
4,694
4,511
Interest cost..............................
1,430
1,424
Actuarial loss............................
818
337
Benefits paid............................
(4,989) (5,452)
Settlement................................
(1,683)—
Benefit obligation
at end of year.........................
72,09071,820Change in plan assets:
Fair value of plan assets
at beginning of year..............
62,536
68,371
Actual loss on plan assets.......
(9,887) (7,792)
Employer contribution.............
5,979
5,509
Benefits paid............................
(3,529) (3,552)
Fair value of plan assets
at end of year.........................
55,09962,536
Funded status
at the end of year....................... (¥16,991) (¥ 9,284)$732,857
47,898
14,592
8,347(50,908)(17,173)735,613638,123(100,888)
61,010(36,010)562,235($173,378)

Amounts recognized in the consolidated balance sheet atMarch 31, 2009 and 2008 consist of:		 In thousands ofIn millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

		

2009

2009

2008

Prepaid pension andseverance costs........................... ¥ 823 ¥ 9,135
Accrued pension andseverance costs........................... (17,814) (18,419)
			 Net amount recognized.... (¥16,991) (¥ 9,284)

$

8,398

(181,776)($173,378)

Other changes in plan assets and benefit obligationsr­ ecognized in other comprehensive income (loss) for the year
ended March 31, 2009 were summarized as follows:		 In thousands of$47,898
14,592(19,918)(17,480)
8,786

In millions of yen

Current year actuarial loss...................
Amortization of actuarial loss..............
Settlement of actuarial loss.................
Amortization of prior service benefit...
Settlement of prior service benefit......
			¥12,657
(861)
(596)
1,713
78
¥12,991

U.S. dollars$129,153(8,786)(6,082)
17,480796$132,561$33,878

SECOM CO., LTD.

Annual Report 200947

CONSOLIDATED FINANCIAL STATEMENTS

Amounts recognized in accumulated other comprehensive
income (loss) at March 31, 2009 and 2008 consist of:

The weighted-average asset allocation of the Company’s­pension plans at March 31, 2009 and 2008 were as follows:		 In thousands of

		 March 31

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

		

2009

2009

2008

Actuarial loss.................................... ¥33,903 ¥22,703
Prior service benefit......................... (12,536) (14,327)
			 Net amount recognized....... ¥21,367 ¥ 8,376$345,949(127,918)$218,031

The estimated prior service benefit and actuarial loss forthe defined benefit pension plans that will be amortized fromaccumulated other comprehensive income (loss) into net
periodic benefit cost over the next year are ¥1,682 million($17,163 thousand) and ¥1,021 million ($10,418 thousand),
respectively.
The accumulated benefit obligation for the pension planwas ¥66,154 million ($675,041 thousand) and ¥66,079 million
at March 31, 2009 and 2008, respectively.
The projected benefit obligation, accumulated benefit­obligation and fair value of plan assets for the pension plans
with ­accumulated benefit obligation in excess of plan assets
were ¥26,072 million ($266,041 thousand), ¥23,093 million($235,643 thousand) and ¥8,361 million ($85,316 thousand),
respectively, at March 31, 2009, and ¥27,588 million, ¥24,775
million and ¥9,335 million, respectively, at March 31, 2008.
The Company uses March 31 as the measurement date forthe domestic pension plan.
Weighted-average assumptions used to determine
the benefit obligation at March 31, 2009 and 2008 wereas follows:		 March 31

Discount rate............................................................
Rate of compensation increase..............................

2009

2008

2.1%
2.7

2.0%
2.7

Weighted-average assumptions used to determine net­ ension and severance costs for the years ended March 31,p2009, 2008 and 2007 were as follows:
Years ended
March 31

Discount rate............................................
Expected return on plan assets..............
Rate of compensation increase..............

2009

2008

2007

2.0%
3.0
2.7

2.0%
3.0
2.7

1.9%
3.0
2.7

The Company determines the expected long-term rate of
return based on the expected long-term return of the various
asset categories in which it invests. The Company considers
the current expectations for future returns and the actual­historical returns of each plan asset category.

48

SECOM CO., LTD.

Annual Report 2009

2009

Asset category:
Equity securities...................................................
Debt securities.....................................................
Call loan................................................................
Other.....................................................................
		 Total...................................................................

2008

6.9% 26.6%
43.5
20.9
16.2
11.6
33.4
40.9
100.0% 100.0%

The Company’s investment policy is designed toensure that sufficient plan assets are available to provide
future p­ ayments of pension benefits to the eligible plan
participants. The policy does not use target allocations forthe individual asset catego­ries. Plan assets are invested
primarily in equity and debt securities, and mutual fundswith the objective to minimize risk and achieve the expected
rate of return. The investment results are periodicallymonitored and asset allocation is adjusted as necessary.
The Company expects to contribute ¥5,248 million ($53,551
thousand) to its domestic defined benefit plans in the year
­ending March 31, 2010.
The following benefit payments, which reflect future­services, as appropriate, are expected to be paid.
		In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2010.....................................................
2011.....................................................
2012.....................................................
2013.....................................................
2014.....................................................
2015–2019............................................

¥ 4,130
4,154
4,250
4,523
4,622
22,741$ 42,143
42,38843,367
46,15347,163232,051

The parent company and certain subsidiaries have defined
contribution pension plans. The contributions to the defined
contribution pen­sion plans for the years ended March 31,
2009, 2008 and 2007 were ¥1,469 million ($14,990 thousand),¥1,413 million and ¥1,392 ­million, respectively.
15. Exchange Gains and Losses
Other expense for the year ended March 31, 2009 and 2008
include net exchange losses of ¥1,564 million ($15,959
thousand) and ¥826 million. Other income for the year ended
March 31, 2007 includes net exchange gains of ¥76 million.

16. Income Taxes
Total income taxes for the years ended March 31, 2009,2008 and 2007 were allocated as follows:

The significant components of deferred tax assets andliabilities at March 31, 2009 and 2008 were as follows:­		 In thousands of2009

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2007

2009

Net Income.......................... ¥36,575 ¥47,106 ¥40,566
Shareholders’ equity—
accumulated othercomprehensive
income (loss):
Unrealized holding gains(losses) on securities....
(452) (8,189) (3,437)
Unrealized gains(losses) on derivative
instruments...................
(102)
(8)
(17)
Pension liability
adjustments................... (4,863) (3,901)—
Minimum pension
liability adjustments.....
——(20)
Foreign currencytranslation
adjustments...................
(859)
(497)
476
Cumulative effect ofchange in accounting
principle-adoptionof EITF 06-2........................
—
(846)
—
Adjustments for initiallyapplying SFAS No. 158.....
——
897
		 . .................................... ¥30,299 ¥33,665 ¥38,465$373,215

2008(4,612)(1,041)(49,623)—(8,765)——$309,174

The parent company and its domestic subsidiaries were
­subject to a corporate tax of 30 percent, an inhabitants tax ofapproximately 20.3 percent, and a deductible enterprise tax
of approximately 7.4 percent, which, in the aggregate, indicate
a statutory tax rate in Japan of approximately 40.5 ­percent
for the years ended March 31, 2009, 2008 and 2007.
Reconciliations of the differences between income taxes­computed at statutory tax rates and consolidated income
taxes from continuing operations were as follows:		 In thousands of2009

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2008

2007

Income taxes computed
at statutory tax rate of
40.5%................................. ¥25,649 ¥44,658 ¥38,611
Increase (decrease)resulting from:
Unrecognized tax
benefits fromsubsidiaries in loss
positions........................ 10,214
2,309
1,552
Reversal of valuation
allowance due toutilization of operating
loss carryforwards........
(187) (1,260) (1,629)
Per capita tax...................
811
805
713
Other, net.........................
88
594
1,319
		 Consolidated
		 income taxes............. ¥36,575 ¥47,106 ¥40,566

2009$261,724

		 In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

2008

2009

		

2009

Deferred tax assets:
Loss carryforwards..................... ¥17,465 ¥ 9,907
Deferred revenue........................ 12,896 13,601
Adjustment of book value atthe date of acquisition—
		 Land and buildings.................
7,320
4,899
		 Other assets.............................
462
2,764
Accrued pension andseverance costs.........................
6,810
7,149
Property, plant andequipment................................
6,137
6,524
Accrued bonus............................
5,323
5,053
Intangible assets.........................
4,006
2,634
Allowance for doubtful
accounts....................................
3,957
2,239
Vacation accrual..........................
3,589
3,427
Investment securities..................
3,505
1,641
Write-down on real estate
inventories.................................
2,573—
Unrealized holding losses on
securities...................................
1,405
1,941
Other............................................
9,387
9,014
		 Gross deferred tax assets....... 84,835 70,793
		 Less: Valuation allowance...... (26,863) (17,068)
		 Total deferred tax assets........ 57,972 53,725
Deferred tax liabilities:
Deferred installation costs........... (8,137) (8,408)
Adjustment of book value atthe date of acquisition—
		 Land and buildings................... (4,514) (5,180)
		 Other assets.............................
(1,734) (1,740)
Investments in affiliatedcompanies................................... (2,705) (7,496)
Unearned premiums andother insurance liabilities........... (2,679) (3,324)
Prepaid pension andseverance costs...........................
(104) (3,189)
Other.............................................. (4,982) (7,157)
		 Gross deferred tax liabilities.... (24,855) (36,494)
			 Net deferred tax assets . ...... ¥33,117 ¥17,231$178,214131,592
74,694
4,714
69,49062,62254,31640,87840,37836,62235,76526,255
14,337
95,786865,663(274,112)
591,551(83,031)(46,061)(17,694)(27,602)(27,337)(1,061)(50,837)(253,623)$337,928

The valuation allowance principally relates to deferred tax
assets of the subsidiaries with operating loss carryforwards,
for tax purposes, that are not expected to be realized. The netchange in the total valuation allowance for the years ended
March 31, 2009, 2008 and 2007 was an increase of ¥9,795
million ($99,949 thousand), ¥1,477 million and ¥245 million,
respectively.

104,224(1,908)8,276
899$373,215

SECOM CO., LTD.

Annual Report 200949

CONSOLIDATED FINANCIAL STATEMENTS

In assessing the realizability of deferred tax assets, theCompany management considers whether it is more likely
than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable
income during the periods in which those temporary
differences become deductible. The Company management
considered the sched­uled reversal of deferred tax liabilities,
projected future taxable income and tax planning strategies
in making this assessment. Based upon the level of historicaltaxable income and projec­tions for future taxable income
over the periods in which the deferred tax assets are
deductible, the Company management believes it is more
likely than not that the Company will realize the benefits ofthese deductible differences, net of the existing valuation
allowance at March 31, 2009 and 2008.
Net deferred tax assets at March 31, 2009 and 2008 arereflected in the accompanying consolidated balance sheets
under the following captions:
		 In thousands of		In millions of yen

U.S. dollars

March 31

March 31

2008

2009

2009

Deferred income taxes(Current assets)............................. ¥16,245 ¥17,395
Deferred income taxes(Other assets)................................ 19,020 11,321
Other current liabilities...................
(924) (1,410)
Deferred income taxes(Liabilities).....................................
(1,224) (10,075)
		 Net deferred tax assets . ........ ¥33,117 ¥17,231$165,765
194,082(9,429)(12,490)$337,928

The Company has not recognized deferred tax liabilities of¥455 million ($4,643 thousand) for a portion of undistributed
earnings of foreign subsidiaries totaling ¥10,551 million($107,663 thousand) at March 31, 2009 as they are notexpected to be remitted in the foreseeable future.
At March 31, 2009, the operating loss carryforwards ofdomestic subsidiaries amounted to ¥40,529 million ($413,561
thousand) and are available for offsetting against futuretaxable earnings of such subsidiaries for up to seven years,
as follows:		In thousands ofExpires in the years ending March 31
In millions of yen
U.S. dollars

2010......................................................
2011......................................................
2012......................................................
2013......................................................
2014......................................................
2015......................................................
2016......................................................
..............................................................

¥ 1,837
2,360
3,222
1,871
4,090
3,468
23,681¥40,529$ 18,745
24,08232,87819,092
41,73535,388
241,641$413,561

The operating loss carryforwards of overseas subsidiaries
at March 31, 2009 amounted to ¥4,734 million ($48,306
thousand), a part of which will begin to expire in the year
ending March 31, 2010.
The Company adopted the provisions of FIN No. 48 on
April 1, 2007. The adoption of FIN No. 48 did not have amaterial effect on the Company’s financial position andresults of operations.
The total amount of unrecognized tax benefits as of thedate of adoption of FIN No. 48 and for the years ended March
31, 2009 and 2008 were insignificant. Also there were no
movements of the gross amounts in unrealized tax benefits
and the amounts of interest and penalties recognized due tothe unrecognized tax benefits during the years ended March
31, 2009 and 2008.
Although the Company believes its estimates of
unrecognized tax benefits are reasonable, uncertainties
regarding the final determination of income tax audit
settlements and any related litigation could affect the total
amount of unrecognized tax benefits in the future periods.
Based on the information available as of March 31, 2009,
the Company does not expect significant changes to theunrecognized tax ­benefits within the next twelve months.
The Company files tax returns in Japan and various foreign
jurisdictions. In Japan, the Company is no longer subject toregular income tax examinations by the tax authorities foryears before 2007. In other foreign tax jurisdictions, major
subsidiaries are no longer subject to income tax examinations
by tax authorities for years before 2008 with few exceptions.
17. Shareholders’ Equity(1) Retained Earnings
The Japanese Corporate Law, enforced on May 1, 2006,
provides that an amount equal to 10 percent of surplus
distributed by the parent company and its Japanesesubsidiaries be appropriated as a legal reserve until theaggregate amount of additional paid-in capital and legal
reserve equals 25 percent of the ­common stock account.
The amount available for dividends under the Japanese­Corporate Law is based on the amount recorded in the­parent company’s nonconsolidated statutory financial
statements in accordance with the accounting principle
generally accepted in Japan. Such amount was ¥346,419
million ($3,534,888 thousand) at March 31, 2009.
Subsequent to March 31, 2009, the parent company’s Boardof Directors declared an annual cash dividend of ¥85.00 ($0.87)
per share, totaling ¥18,533 million ($189,112 thousand), toshareholders of record on March 31, 2009. The dividend
declared was approved at the general shareholders’ meeting
held on June 25, 2009. Dividends are recorded in the period
they are declared.
The Japanese Corporate Law provides that a company
can make dividends of surplus anytime with resolution of
the shareholders.
(2) Common Stock in Treasury
The Company may repurchase its common stock fromthe market pursuant to the Japanese Corporate Law. For
the year ended March 31, 2009, 6,928 thousand shareswere repurchased for the aggregate cost of ¥30,019 million($306,316 thousand).

50

SECOM CO., LTD.

Annual Report 2009

(3) Other Comprehensive Income (Loss)
Components of other compre­hensive income (loss) for theyears ended March 31, 2009, 2008 and 2007 is as follows:
In millions of yen
Pre-tax
amount

For the year ended March 31, 2009:
Unrealized holding losses on
securities—
		 Unrealized holding gains
		 or losses arising during
		 the period..................................... (¥17,054)
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income.......................... 16,142
Unrealized losses on derivative
instruments—
		 Unrealized gains or losses
		 arising during the year................
(263)
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income..........................
68
Pension liability adjustments—
		 Unrealized gains or losses
		 arising during the period............. (11,602)
		 Less: Reclassification		adjustment for gains
		or losses realized		in net income......................
(413)
Foreign currencytranslation adjustments................... (20,403)
			 Other comprehensive
			 income (loss)............................ (¥33,525)

Tax(expense) Net-of-tax
or benefit
amount¥6,532 (¥10,522)(6,080)10,062

106

(157)

(4)

64

4,559

(7,043)In millions of yen
Pre-tax
amount

For the year ended March 31, 2007:
Unrealized holding gains on
securities—
		 Unrealized holding gains
		 or losses arising during
		 the period..................................... (¥ 2,924)
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income.......................... (3,539)
Unrealized losses on derivative
instruments—
		 Unrealized gains or losses
		 arising during the year................
(132)
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income..........................
32
Minimum pension
liability adjustments........................
(41)
Foreign currencytranslation adjustments...................
2,669
			 Other comprehensive
			 income (loss)............................ (¥ 3,935)

Tax(expense) Net-of-tax
or benefit
amount¥1,362 (¥ 1,562)

2,075(1,464)

19

(113)

(2)

30

20

(21)

(476)

2,193

¥2,998 (¥937)

In thousands of U.S. dollars

304

(109)

859

(19,544)¥6,276 (¥27,249)

For the year ended March 31, 2008:
Unrealized holding losses on
securities—
		 Unrealized holding gains
		 or losses arising during
		 the period..................................... (¥18,914) ¥ 7,880 (¥11,034)
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income..........................
(513)
309
(204)
Unrealized losses on derivative
instruments—
		 Unrealized gains or losses
		 arising during the year................
(61)
7
(54)
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in
12
113
		 Less: net income..........................
Pension liability adjustments—
		 Unrealized gains or losses
		 arising during the period............. (9,209)
3,645(5,564)
		 Less: Reclassification		adjustment for gains
		or losses realized		in net income......................
(690)
256
(434)
Foreign currencytranslation adjustments................... (2,684)
497(2,187)
			 Other comprehensive
			 income (loss)............................ (¥32,059) ¥12,595 (¥19,464)

Tax
Pre-tax (expense)amount or benefit

Net-of-tax
amount

For the year ended March 31, 2009:
Unrealized holding losses on
securities—
		 Unrealized holding gains
		 or losses arising during
		 the period................................. ($174,020) $66,653 ($107,367)
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income...................... 164,714 (62,041) 102,673
Unrealized losses on derivative
instruments—
		 Unrealized gains or losses
		 arising during the year............
(2,684) 1,082(1,602)
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income......................
694
(41)
653
Pension liability adjustments—
		 Unrealized gains or losses
		 arising during the period......... (118,388) 46,521 (71,867)
		 Less: Reclassification		adjustment for gains
		or losses realized		in net income..................
(4,214) 3,102(1,112)Foreign currencytranslation adjustments............... (208,194) 8,765 (199,429)
			 Other comprehensive
			 income (loss)........................ ($342,092) $64,041 ($278,051)

18. Research and Development Expenses
Research and development expenses included in selling,
general and administrative expenses for the years ended
March 31, 2009, 2008 and 2007 were ¥5,943 million ($60,643
thousand), ¥5,792 million and ¥5,875 million, respectively.

SECOM CO., LTD.

Annual Report 2009

51

CONSOLIDATED FINANCIAL STATEMENTS

19. Lessee
The Company leases certain office space, employee
residen­tial facilities, computer and transportation equipment.
Some leased buildings and computer and transportationequipment are held under capital leases. The other leases areclassified as ­operating leases.
On April 23, 1996, the Company entered into a long-termlease agreement for a building and land in Mitaka, Tokyo.
The lease agreement extends for 30 years beginning May
1, 1996. For financial reporting purposes, the portion of thelease relating to the building has been classified as a capitallease; accordingly, an asset of approximately ¥5,086 million($51,898 thousand) has been recorded in the building andimprovements account. The portion of the lease relating to
the land has been classified as an operating lease. The future
minimum lease payments for the site at March 31, 2009 were
¥5,593 ­million ($57,071 thousand).
A summary of leased assets under capital leases at March
31, 2009 and 2008 is as follows:		 In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

2008

2009

¥ 5,243 ¥ 5,208$ 53,500

12,043 15,672
593
791(9,811) (10,814)¥ 8,068 ¥10,857

122,888
6,051(100,112)$ 82,327		

Buildings and improvements........
Machinery, equipment
and automobiles...........................
Other intangible assets..................
Accumulated depreciation.............
		 . ................................................

2009

Depreciation expenses under capital leases for the years
ended March 31, 2009, 2008 and 2007 were ¥3,328 million($33,959 thousand), ¥4,089 million and ¥3,704 million,­respectively.
The following is a schedule by year of future minimum
lease payments under capital leases together with the present
value of the net minimum lease payments at March 31, 2009:
		In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2010........................................................
2011........................................................
2012........................................................
2013........................................................
2014........................................................
Thereafter...............................................
Total minimum lease payments...........
Less: Amount representing interest.....
Present value of net minimum
lease payments (Note 12)...................
Less: Current portion.............................
Long-term capital leaseobligations........................................

¥ 2,907
2,097
1,339
794
449
4,173
11,7592,245$ 29,663
21,39813,663
8,102
4,582
42,582
119,990
22,909

9,514
2,571

97,081
26,234¥ 6,943$ 70,847

Rental expenses under operating leases for the years
ended March 31, 2009, 2008 and 2007 were ¥15,494 million($158,102 thousand), ¥15,912 million and ¥15,771 million,
respectively. A significant portion of such rentals relates tocancelable short-term leases for office space and employee
residential facilities, many of which are renewed upon
­expiration.

52

SECOM CO., LTD.

Annual Report 2009

On December 8, 2000, the Company entered into a leaseagreement for a building and land in Shibuya, Tokyo. The
lease agreement extends for 20 years beginning December 8,
2000. For financial reporting purposes, the lease has beenclassified as an operating lease. Based on the agreement,
annual lease payments for the site are approximately ¥1,339
million ($13,663 thousand) over a 20-year period.
The future minimum lease payments required underoperat­ing leases that have initial or remaining non-­cancelable lease terms in excess of one year at March 31,
2009 are as follows:		In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2010........................................................
2011........................................................
2012........................................................
2013........................................................
2014........................................................
Thereafter...............................................
Total future minimum lease
payments..........................................

¥ 2,419
2,288
2,242
2,197
2,193
18,719$ 24,684
23,34722,87822,41822,378191,009¥30,058$306,714

20. Lessor
The Company’s leasing operations consist principally ofleasing of security equipment and real estate for office andmedical institutions. Most of the security equipment andcertain real estate for medical institutions on lease areclassified as sales-type leases or direct-financing leases.
The other leases are ­classified as ­operating leases.
A summary of lease receivables under sales-type anddirect-financing leases at March 31, 2009 and 2008 is
as follows:		 In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

2008

2009

¥48,511 ¥48,206(3,620) (3,576)$495,010(36,939)3,474 3,480(12,264) (13,069)
36,101 35,041(8,287) (7,820)

35,449(125,142)
368,378(84,562)¥27,814 ¥27,221$283,816

		

Total minimum lease payments
to be received................................
Estimated executory cost...............
Estimated unguaranteed
residual value................................
Unearned income...........................
Lease receivables, net....................
Less: Current portion......................
Long-term lease receivables,
net..............................................

2009

The following is a schedule by year of future minimum
lease payments to be received under sales-type leases anddirect-financing leases at March 31, 2009:
		In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2010........................................................
2011........................................................
2012........................................................
2013........................................................
2014........................................................
Thereafter...............................................
Total future minimum lease
payments to be received.................

¥ 9,873
8,397
6,426
4,368
2,348
17,099$100,745
85,68465,571
44,571
23,959174,480¥48,511$495,010

A summary of investment in property on operating leases
and property held for lease at March 31, 2009 and 2008 is
as follows:		 In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

2008

2009

¥32,579 ¥27,223
29,660 26,955
662
775(8,539) (7,634)¥54,362 ¥47,319$332,439
302,653
6,755(87,133)$554,714		Land.................................................
Buildings and improvements........
Other intangible assets..................
Accumulated depreciation.............
		 . ................................................

2009

The future minimum rentals on non-cancelable operatingleases at March 31, 2009 are as follows:		In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2010........................................................
2011........................................................
2012........................................................
2013........................................................
2014........................................................
Thereafter...............................................
Total future minimum rentals...........

¥ 2,545
775
775
775
775
11,270¥16,915$ 25,969
7,908
7,908
7,908
7,908
115,001$172,602

21. Fair Value of Financial Instruments
The following methods and assumptions were used to­estimate the fair value of financial instruments in cases forwhich it is ­practicable.
(1) Cash and Cash Equivalents; Time Deposits; Cash Deposits; Notes and Accounts Receivable, Trade; Due from Subscribers; Short-Term Receivables; Bank Loans; Notes andAccounts Payable, Trade; Other Payables; Deposits Received;and Accrued ­Payrolls
The carrying amounts approximate fair value because of
the short-term maturities of such instruments.
(2) Short-term Investments; Investment Securities
The fair values of short-term investments and investment
securities are principally based on quoted market price.
(3) Long-Term Receivables
The fair values of long-term receivables are based on thepresent value of future cash flows through estimatedmaturity, discounted using estimated market discount rates.
The carrying amount of long-term receivables approximatesfair value.
(4) Long-Term Debt Including Current Portion
The fair value of long-term debt including the current­portion was estimated based on the discounted amounts offuture cash flows of each instrument at the Company’s current
incremental borrowing rates for similar liabilities.

(5) Investment Deposits by Policyholders
The fair values of investment deposits by policyholders are
estimated by discounting future cash flows using the interest
rates currently being offered for similar contracts.
(6) Derivatives
The fair values of interest rate swaps and embedded­derivatives are estimated using current market pricing models by obtaining quotes from ­financial institutions.
The carrying amounts and estimated fair values of thefinan­cial instruments excluding debt and equity securities
which are disclosed in Notes 2 (7) and 7 at March 31, 2009
and 2008 are as follows:		

In millions of yen

		March 31

Carrying
amountNon-derivatives:
Liabilities—
		 Long-term debt
		 including current		 portion.......................... ¥52,371
		 Investment deposits
		 by policyholders........... 86,064
Derivatives:
Liabilities—
		 Interest rate swaps.........
242
		 Embedded derivatives....
—

2009

2008

Estimated
fair value

Carrying Estimatedamount fair value¥52,451 ¥53,244¥53,344

87,891

87,252

89,373

242
—

135
514

135
514

In thousands of U.S. dollars
March 31
2009
Carrying Estimatedamount fair value

Non-derivatives:
Liabilities—
		 Long-term debt including current		 portion..................................................
		 Investment deposits
		 by policyholders...................................
Derivatives:
Liabilities—
		 Interest rate swaps.................................
		 Embedded derivatives............................

$534,398 $535,214
878,204 896,847
2,469
—

2,469
—

Limitation:
Fair value estimates are made at a specific point intime based on relevant market information and information
about the financial instruments. These estimates are­subjective in nature and involve uncertainties and matters ofsignificant ­judgment and therefore cannot be determinedwith precision. Changes in assumptions could significantly
affect the estimates.

SECOM CO., LTD.

Annual Report 200953

CONSOLIDATED FINANCIAL STATEMENTS

22. Fair Value Measurements
SFAS 157 defines fair value as the price that would bereceived to sell an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for theasset or liability in an orderly transaction between market
participants at the measurement date. SFAS 157 establishes
a three-level fair value hierarchy that prioritizes the inputs
used to measure fair value as follows:
Level 1— Inputs are quoted prices in active markets for
identical assets or liabilities.
Level 2— Inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets thatare not active, inputs other than quoted pricesthat are observable, and inputs that are derived
principally from or corroborated by observable
market data by correlation or other means.
Level 3— Inputs are derived from valuation techniques inwhich one or more significant inputs or value
drivers are unobservable, which reflect thereporting entity’ own assumptions about theassumptions that market participants would use
in establishing a price.
The following table presents the Company’s assets and­liabilities that are measured at fair value on a recurring basis
at March 31, 2009 consistent with the fair value hierarchy
provisions of SFAS No. 157.
		

Assets:Cash equivalents....
Short-term
investments andinvestment
securities.............
Total assets................
Liabilities:
Derivatives.............
Total liabilities...........

¥

Level 1

Level 2350

¥ 2,607

In millions of yen

Level 3

¥

—

Total

¥

2,957

76,55676,90653,52856,13526,983
26,983

157,067
160,024

—
—

242
242

—
—

242
242

Level 1

Level 2In thousands of U.S. dollars
Level 3

Total

Assets:Cash equivalents.... $ 3,571 $ 26,602 $— $ 30,173
Short-term
investments andinvestment
securities.............
781,183 546,204 275,337
1,602,724
Total assets................
784,754 572,806 275,337
1,632,897
Liabilities:
Derivatives.............
Total liabilities...........

54

SECOM CO., LTD.

—
—

2,469
2,469

Annual Report 2009

—
—

2,469
2,469

Cash Equivalents
All highly liquid investments with initial maturities of threemonths or less are considered to be cash equivalents, andprincipally valued using quoted prices for identical assets inmarkets that are not active.
Short-Term Investments and Investment Securities
Equity securities and debt securities classified as Level 1
assets are valued using unadjusted quoted market price in
active markets with sufficient volume and frequency oftransactions.
Level 2 assets are comprised principally of debt securities,
which are valued using quoted prices for similar assets inactive markets, or quoted price for identical or similar assets
in markets that are not active. Non-marketable securities
classified as Level 3 assets are valued based on
unobservable inputs as the market for the assets was not
active at the measurement date.
Derivative Financial Investments
Derivative financial instruments are comprised of interest
rate swaps. These derivative instruments are valued using
observable market data and classified as Level 2 liabilities.
The following table presents the changes in Level 3 assets
measured on a recurring basis for the year ended March 31, 2009.
		In thousands ofIn millions of yen
U.S. dollars

Balance at beginning of year...............
Total gains or losses(realized or unrealized):		 Included in earnings.....................
		 Included in other		 comprehensive income (loss)......
Purchase, issuances, andsettlements, net..............................
Foreign currency translation
adjustments.....................................
Balance at end of year..........................

¥40,980$418,163(3,907)(39,867)(1,705)(17,398)(2,393)(24,418)(5,992)¥26,983(61,143)$275,337

Assets and Liabilities Measured at Fair Value on a
Nonrecurring Basis
Non-marketable equity securities with carrying amountof ¥10,830 million ($110,511 thousand) were written down
to their fair value of ¥10,714 million ($109,327 thousand),resulting in an other-than-temporary impairment charge of¥116 million ($1,184 thousand), which was included inearnings for the year ended March 31, 2009. All impaired
non-marketable equity securities were classified as Level 3
assets, as the Company uses unobservable inputs to value
these investments.

23. Derivative Financial Instruments(1) Risk Management Policy
The Company utilizes derivative financial instrumentsin the normal course of business to reduce exposure tofluctuations in interest rate. The Company assesses interest
rate risk by con­tinu­ally monitoring changes in the exposureand by evaluating hedging opportunities. The Company does
not hold or issue derivative financial instruments for trading
purposes. The Company is also exposed to credit-related
losses in the event of non-perfomance by counterparties toderivative financial instru­ments, but it is not expected thatany counterparties will fail to meet their obligations, because
most of the counterparties are internationally recognizedfinancial institutions and contracts are diversified to a­number of major financial institutions.
(2) Interest Rate Risk Management
The Company’s exposure to the market risk of changes
in interest rates relates ­primarily to its debt obligations.
The Company principally enters into interest rate swap
agreements to manage fluctuations in cash flows resulting
from changes in interest rates. Interest rate swaps are used
to change floating rates on debt obligations to fixed rates byentering into receive-floating, pay-fixed interest rate swaps
under which the Company receives floating interest rate
­proceeds and makes fixed interest rate payments, thereby­effectively creating fixed-rate debt.
(3) Cash Flow Hedge
The Company ­designates interest rate swap agreements
as cash flow hedges for variability of cash flows originatedfrom floating rate borrowings. The interest rate swap
­agreements mature at various dates through 2022. The­effective portion of changes in fair values of derivative­instruments designated as cash flow hedges of these debt
obligations are reported in other comprehensive income(loss). These amounts are reclassified into current incomein the same period that hedged items affect current income.
The ineffective portion of changes in fair values are reported
in income immediately. The sum of the amount of the hedge
ineffectiveness and net gains or losses excluded from theassessment of hedge effectiveness is not material for theyears ended March 31, 2009, 2008 and 2007 as the criticalterms of most of the interest rate swap agreements matchthe terms of the hedged debt obligations. Approximately¥21 million ($214 thousand) of net derivative losses included
in other comprehensive income (loss), net of tax at March 31,
2009, will be reclassified into current income within 12
months from that date. At March 31, 2009 and 2008, thenotional principal amounts of interest rate swap agreements
designated as cash flow hedges were ¥8,723 million ($89,010
thousand) and ¥21,111 million, respectively.

(4) Derivative Instruments Not Designated as Hedges
Certain subsidiaries enter into interest rate swap agreements to change the effective interest rates on debt securities
held as investments with the objective of increasing current
interest income. Certain subsidiaries hold embedded derivatives that must be separated from the host debt securities
and accounted for as derivative instruments, which are also
to increase investment income. Changes in fair value of theabove noted derivative financial instruments, which are not­designated as hedges, are reported in current income.
24. Commitments and Contingent Liabilities
The Company has commitments outstanding at March
31, 2009 for the ­purchase of property, plant and equipment
approximated ¥6,588 million ($67,224 thousand).
The Company provides guarantees to third parties
mainly with respect to bank loans extended to its affiliatedcompanies and other entities. Such guarantees are provided
to enhance the credit standing of the affiliated companies
and other entities. For each guarantee provided, theCompany would have to per­form under the guarantee,
if the affiliated companies and other entities default ona payment within the guaranteed period of one to five
years. The maximum amount of undiscounted pay­ments
the Company would have to make in the event of default
amounts to ¥7,061 million ($72,051 thousand) at March 31,
2009. The carrying amounts of the liabilities recognized for
the Company’s obligations under these ­guarantees at March
31, 2009 and 2008 were deemed insignificant.
In July 2004, Fujitsu Limited filed a lawsuit against Secom
Insurance in the Tokyo District Court, claiming compensation
for costs related to a system development order in the amountof ¥2,500 million ($25,510 thousand). Secom Insurance 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 ¥1,000 million ($10,204 thousand). However,on January 16, 2009, Secom Insurance resolved the matterby reaching a settlement involving the payment to Fujitsu
Limited in the amount of ¥1,000 million ($10,204 thousand),
which was paid on January 30, 2009.
Pasco Corporation filed a lawsuit against Sumitomo
Mitsui Banking Corporation for a confirmatory judgment to
the effect that it does not owe an obligation in the amountof ¥2,010 million ($20,510 thousand) to Sumitomo Mitsui
Banking Corporation with the Tokyo District Court on October
31, 2005. Sumitomo Mitsui Banking Corporation allegedthat it made a loan to a third party and acquired from thethird party its claim against Pasco Corporation for an alleged
sale of equipment to Pasco Corporation, as collateral for theloan, and demanded Pasco Corporation to pay such claim
to Sumitomo Mitsui Banking Corporation. Furthermore, on
December 5, 2005, Sumitomo Mitsui Banking Corporation
brought a cross action against Pasco Corporation in ­relation
to a demand for payment of a transferred receivable.
Subsequently, both actions were consolidated according
to a court procedure. The oral argument was concluded on
October 31, 2008, and on March 27, 2009 Tokyo District Court
rendered the following decision;

SECOM CO., LTD.

Annual Report 2009

55

CONSOLIDATED FINANCIAL STATEMENTS(Contents of decision)
1. Pasco Corporation must pay money for Sumitomo Mitsui
Banking Corporation in an amount of ¥2,010 million($20,510 thousand) as well as interest of the rate of 6
percent per annum on ¥600 million ($6,122 thousand),from November 1, 2005, and on ¥1,410 million ($14,388
thousand), from December 1, 2005, up to the full paymentof the respective amounts;
2. Pasco Corporation incurs the cost of lawsuits including thecost caused by supplementary participation; and3. The judgement can be provisionally executed.
Pasco Corporation appealed the case to the Tokyo High
Court on April 6, 2009.
Following the decision, Pasco Corporation provided areserve for litigation loss of ¥2,415 million ($24,643 thousand)for the year ended March 31, 2009.
Other than those above, it is not anticipated that damages,
if any, resulting from other legal actions will have a material
impact on the Company’s consolidated financial statements.
25. Supplemental Cash Flow Information
Supplemental cash flow information is as follows:		 In thousands of2009

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2008

2009

2007

Cash paid during theyear for:
Interest.............................. ¥ 1,978 ¥ 2,082 ¥ 1,865
Income taxes.................... 47,419 43,067 38,360
Non-cash investing andfinancing activities:
Additions to obligations
under capital leases....... ¥ 803 ¥ 2,668 ¥ 5,395$ 20,184
483,867$

8,194

26. Segment Information
The Company has applied SFAS No. 131, “Disclosuresabout Segments of an Enter­prise and Related Information,”
which requires disclosure of financial and descriptive­information about the Company’s reportable operating
segments. The ­operating segments reported below are
the segments of the Company for which separate financial
information is available and for which ­operating profit/loss
amounts are evaluated regu­larly by ­management in deciding
how to allocate resources and assess performance.

56

SECOM CO., LTD.

Annual Report 2009

The Company has seven reportable business segments:
security services, fire protection services, medical services,
insurance services, geographic information services, real estatedevelopment and sales, and information and communication
related and other services. From December 2006, theCompany newly established a business segment, the fire
protection services, due to the acquisition of Nohmi Bosaigroup. During the year ended March 31, 2009, the Company
decided to separately disclose the real estate development
and sales, which was previously included in the informationand communication related and other services segment, due
to the fact that the reporting loss exceeded the quantitative
threshold. Accordingly, segment information of all prior periods
has been restated to conform to the presentation used forthe year ended March 31, 2009.
The security services segment provides various types ofsecu­rity services by utilizing the Company’s unique security
systems and manufacturing and selling security equipment.
The fire protection services segment provides various typesof fire protection equipment, such as automatic fire alarmand fire extinguishing and other fire protection systems
for office buildings, plants, tunnels, ships, residences andcultural monuments. The medical ser­vices segment provides
intravenous solutions to patients at home, home-based­nursing care services, medical data trans­mission services byutilizing the Company’s network and leas­ing of real estate
for medical institutions. In addition, the VIEs to which theCompany is primary beneficiary manage hospitals andhealth ­care-related institutions. The insurance services­segment represents non-life insurance-related underwriting
business in the Japanese market. The geographic information services segment represents surveying and measuringservices and GIS services. The real estate development andsales ­segment represents development and sales of condominiums that reinforce security. The information and communication related and other services ­segment represents
the Company’s network business, leasing of real estate and­management of hotel business.
Corporate expenses consist principally of general and­administrative expenses of the planning, personnel andadmin­istrative departments of the parent company andadministrative ­departments of the foreign holding company.
Intersegment sales are priced on a basis intended to­approximate amounts charged to unaffiliated customers.
Identifiable assets are those assets used exclusively in theoperations of each segment or which are allocated whenused jointly. Corporate assets, which are held by the parent
company and the foreign holding company for general andadministra­tive facilities, ­consist principally of cash and cash
equivalents, short­-term investments, investment securities,
land, buildings, machinery and equipment.

Information by business and geographic segments for theyears ended March 31, 2009, 2008 and 2007 is as follows:(1) Business Segment Information
		 In thousands of2009

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2007

2009

2008

Net sales andoperating revenue:
Security services—		 Customers.................. ¥436,918 ¥435,306 ¥415,410
		 Intersegment..............
1,516
1,375
1,491
			 .................................. 438,434
436,681
416,901
Fire protection
services—
		 Customers.................. 84,175
82,57227,448
		 Intersegment..............
5,659
4,046
944
			 .................................. 89,834
86,61828,392
Medical services—		 Customers.................. 52,220
50,74145,852
		 Intersegment..............
123
127
233
			 .................................. 52,343
50,86846,085
Insurance services—		 Customers.................. 21,530
33,22931,978
		 Intersegment..............
2,919
2,894
2,702
			 .................................. 24,449
36,12334,680Geographic
information
services—
		 Customers.................. 40,207
39,37636,438
		 Intersegment..............
117
321
138
			 .................................. 40,324
39,69736,576
Real estate development
and sales—
29,92845,431
		 Customers.................. 22,072
		 Intersegment..............
2,361
—
—
			 .................................. 24,433
29,92845,431
Information andcommunication
related and otherservices—
		 Customers.................. 31,649
35,54334,121
		 Intersegment..............
8,863
8,782
9,127
			 .................................. 40,512
44,32543,248
Total............................... 710,329
724,240
651,313
Eliminations.................. (21,558)(17,545)(14,635)
		 Total net sales and		 operating revenue.... ¥688,771 ¥706,695 ¥636,678$4,458,347
15,4694,473,816
858,92957,745
916,674
532,857
1,255
534,112219,694
29,786249,480

410,276
1,194
411,470
225,224
24,092
249,316

322,949
90,439413,3887,248,256(219,980)$7,028,276

		 In thousands of2009

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2007

2009

2008

Operating income (loss):
Security services......... ¥102,475 ¥103,137 ¥ 96,162
Fire protection
services......................
5,353
4,948
1,815
Medical services.........
11(1,083)(2,914)
Insurance services......
(8,222)
3,766
3,752
Geographic
information
services......................
2,045
1,439
394
Real estate development
and sales....................
(17,577)673
4,436
Information andcommunication
related and otherservices......................
4,918
4,718
2,899
Total.............................
89,003
117,598
106,544
Corporate expenses
and eliminations.......
(12,304)(11,970) (12,126)
Operating income....... ¥ 76,699 ¥105,628 ¥ 94,418
Other income..............
5,803
13,011
8,437
Other expenses...........
(19,172)(8,376)(7,519)
		 Income before		 income taxes.......... ¥ 63,330 ¥110,263 ¥ 95,336$1,045,663
54,623
112(83,898)
20,867(179,357)

50,184
908,194(125,551)$ 782,643
59,214(195,633)$ 646,224

		 In thousands of2009

In millions of yen

U.S. dollars

March 31

March 31

2007

2009

2008

Assets:Security services......... ¥ 395,814 ¥ 473,582 ¥ 468,256
Fire protection
services......................
81,40480,777
77,850
Medical services......... 122,960
119,251
105,158
Insurance services...... 197,844
188,538
196,798
Geographic
information
services......................
58,141
58,03855,124
Real estate development
and sales....................
76,09597,261
82,840Information andcommunication
related andother services............
96,47698,081
95,693
Total............................. 1,028,734 1,115,528 1,081,719
Corporate items..........
74,335
103,183
120,631
Investments
in and loans
to affiliatedcompanies.................
40,072
46,814
38,832
		 Total assets............... ¥1,143,141 ¥1,265,525 ¥1,241,182

SECOM CO., LTD.

$ 4,038,918
830,653
1,254,694
2,018,816
593,276
776,480

984,449
10,497,286
758,520

408,898$11,664,704

Annual Report 200957

CONSOLIDATED FINANCIAL STATEMENTS

		 In thousands of2009

Depreciation andamortization:
Security services.........
Fire protection
services......................
Medical services.........
Insurance services......
Geographic
information
services......................
Real estate development
and sales....................
Information andcommunication
related and otherservices......................
Total.............................
Corporate items..........
		 Total depreciation
		 and amortization....
Capital expenditures:
Security services.........
Fire protection
services......................
Medical services.........
Insurance services......
Geographic
information
services......................
Real estate development
and sales....................
Information andcommunication
related and otherservices......................
Total.............................
Corporate items..........
		 Total capital		 expenditures...........

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2007

2009

2008

¥45,428¥47,191¥49,168$463,551

1,250
2,026
1,220

1,171
3,816
1,225

326
3,202
1,206

12,755
20,673
12,449

1,675

1,666

1,631

17,092

58

51

54

592

2,680
54,337288

2,707
57,827367

2,360
57,947301

27,347554,459
2,939¥54,625¥58,194¥58,248$557,398¥29,722¥33,192¥33,306$303,286

1,524
2,153
309

1,556
4,674
8

364
5,985
49

15,551
21,969
3,153

299

1,450

1,882

3,051

7

258

38

72

10,614
44,628227

5,622
46,76063

6,125
47,74912

108,306
455,3882,316¥44,855¥46,823¥47,761$457,704

The capital expenditures in the above table represent the­additions to property, plant and equipment of each segment.
The Company has no single customer that accounts formore than 10 percent of total revenues.

58

SECOM CO., LTD.

Annual Report 2009

The following table is a breakdown of security services revenue to external customers by service category. The security
services business is managed as a single operating segmentby the Company’s management.
		 In thousands of2009

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2008

2007

Electronic security
services...................... ¥303,505 ¥296,167 ¥285,858
Other security
services:
Static guard
services..................
47,99946,64842,144
Armored car
services..................
20,31019,547
20,308Merchandise andother ..........................
65,10472,944
67,100Total security
services.................. ¥436,918 ¥435,306 ¥415,410

2009$3,096,990

489,786
207,245664,326$4,458,347(2) Geographic Segment Information
Net sales and operating revenue attributed to countries
based on location of customers and long-lived assets for theyears ended March 31, 2009, 2008 and 2007 were as follows:		 In thousands of2009

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2007

2009

Net sales andoperating revenue:
Japan....................... ¥668,451 ¥684,909 ¥620,435
Other........................
20,32021,786
16,243
		 Total...................... ¥668,771 ¥706,695 ¥636,678$6,820,929
207,347$7,028,2762008

		 In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

2007

2009

Long-lived assets:
Japan...................... ¥351,143 ¥345,318 ¥347,546
Other.......................
4,925
6,185
5,023
		 Total..................... ¥356,068 ¥351,503 ¥352,569$3,583,092
50,255$3,633,347

2009

2008

There are no individually material countries with respect to
net sales and operating revenue and long-lived assets
included in other areas.

INDEPENDENT AUDITORS’ REPORTThe Board of Directors and Shareholders
Secom Co., Ltd.:

ドラインは、ロゴに必要なクリアスペースです。
中に、他のオブジェクトやテキストが入らないよう、ご留意ください。

We have audited the accompanying consolidated balance sheets of SECOM CO., LTD. and subsidiaries as of March 31, 2009
and 2008, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for each of theyears in the three-year period ended March 31, 2009, all expressed in Japanese yen. These consolidated financial statements
are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis fordesigning audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, ­evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of SECOM CO., LTD. and subsidiaries as of March 31, 2009 and 2008, and the results of their operations and their cash
flows for each of the years in the three-year period ended March 31, 2009, in conformity with accounting principles generally
accepted in the United States of America.
The accompanying consolidated financial statements as of and for the year ended March 31, 2009 have been translated
into United States dollars solely for the convenience of the reader. We have audited the translation and, in our opinion, theconsolidated financial statements expressed in Japanese yen have been translated into United States dollars on the basis set
forth in Note 3 of the notes to the consolidated financial statements.

Tokyo, Japan
June 25, 2009

SECOM CO., LTD.

Annual Report 200959

OTHER FINANCIAL DATACONTENTSSUMMARY OF SELECTED FINANCIAL DATA................................................................. 61
COMMON STOCK DATA............................................................................................. 63

60

SECOM CO., LTD.

Annual Report 2009

SUMMARY OF SELECTED FINANCIAL DATASECOM CO., LTD. and Subsidiaries
Years ended March 31
In millions of yen
2009

2008

2007

2006

2005

2004

Composition of consolidated net sales andoperating revenue by segment
Net sales and operating revenue................................................... ¥688,771 ¥706,695 ¥636,678 ¥580,526 ¥552,354 ¥517,435
435,306
400,044415,410382,360
Security services:......................................................................... 436,918
367,482
61.6%
63.5%
68.9%
65.3%
69.2%
				 As a percentage of net sales and operating revenue....
71.0%
296,167
303,505
277,892
285,858
271,872
		 Electronic security services—263,900
41.9
44.1
47.9
44.9
49.2
				 As a percentage of net sales and operating revenue....
51.0
		 Other security services—
46,64841,48042,14438,302
			 Static guard services............................................................ 47,999
37,537
6.6
7.0
7.1
6.6
6.9
				 As a percentage of net sales and operating revenue....
7.2
19,547
19,36920,30818,462
			 Armored car services........................................................... 20,310
18,618
2.8
2.9
3.3
3.2
3.4
				 As a percentage of net sales and operating revenue....
3.6
66,19560,84962,452
56,764					 Subtotal.......................................................................... 68,309
56,15572,94461,303
67,10053,724
		 Merchandise and other........................................................... 65,104
47,427
10.3
9.5
10.6
10.6
9.7
				 As a percentage of net sales and operating revenue....
9.2
82,572—27,448—Fire protection services............................................................... 84,175
—
11.7
12.2
—
4.3
—
				 As a percentage of net sales and operating revenue....
—50,741
39,21545,852
34,688
Medical services.......................................................................... 52,220
21,147
7.2
7.6
6.7
7.2
6.3
				 As a percentage of net sales and operating revenue....
4.1
33,22929,537
31,97826,465
Insurance services....................................................................... 21,530
23,536
4.7
3.1
5.1
5.0
4.8
				 As a percentage of net sales and operating revenue....
4.5
39,37635,27136,43834,915
Geographic information services............................................... 40,207
32,346
5.6
5.8
6.1
5.7
6.3
				 As a percentage of net sales and operating revenue....
6.3
29,92841,96745,431
39,699Real estate development and sales........................................... 22,072
39,193
4.2
3.2
7.2
7.1
7.2
				 As a percentage of net sales and operating revenue....
7.6
Information and communication related
35,54334,492
34,121
34,227and other services..................................................................... 31,649
33,731
5.0
4.6
6.0
5.4
6.2
				 As a percentage of net sales and operating revenue....
6.5
Net income, cash dividends and shareholders’ equity
Net income....................................................................................... ¥ 30,560
Cash dividends (paid)(2)................................................................... 19,122
Shareholders’ equity....................................................................... 528,721
Consolidated financial ratios
Percentage of working capital accounted for by:
Debt—
		 Bank loans................................................................................
		 Current portion of long-term debt..........................................
		 Convertible bonds....................................................................
		 Straight bonds..........................................................................
		 Other long-term debt...............................................................
			 Total debt...............................................................................
Shareholders’ equity...................................................................
			 Total capitalization................................................................
Return on total assets (percentage) (a)............................................
Return on equity (percentage) (b). ...................................................
Percentage of net sales and operating revenue absorbed by (c):Depreciation and amortization...................................................
Rental expense under operating leases....................................
Ratio of accumulated depreciation to depreciable
assets (percentage).......................................................................
Net property turnover (times) (c).....................................................
Before-tax interest coverage (times) (c)(d)........................................

¥ 61,756
17,998574,554¥ 55,889
13,499551,732¥ 50,331
11,251
508,696¥ 52,133
10,127457,837¥ 23,479
9,003
415,852

11.9
2.4
—
1.9
3.6
19.8
80.2
100.0
2.7
5.8

17.5
1.2
—
1.8
4.0
24.5
75.5
100.0
4.9
10.7

17.4
1.4
—
1.9
3.6
24.3
75.7
100.0
4.5
10.1

15.2
6.4
—
1.6
3.6
26.8
73.2
100.0
4.1
9.9

16.1
1.7
—
6.4
3.9
28.1
71.9
100.0
4.5
11.4

17.7
2.1
—
5.2
9.2
34.2
65.8
100.0
2.0
5.6

7.9
2.2

8.2
2.3

9.1
2.5

9.0
2.7

9.1
2.6

10.1
2.8

64.4
2.66
32.4

63.8
2.81
53.7

62.3
2.54
53.5

60.5
2.39
48.8

60.0
2.43
39.3

54.8
1.74
15.9

Note: Installation revenue is included in the corresponding electronic security services.

SECOM CO., LTD.

Annual Report 2009

61

SUMMARY OF SELECTED FINANCIAL DATA

2009

2008

2007

2006

2005

2004

Number of shares outstanding
Issued...................................................................... 233,288,717 233,288,717 233,288,717 233,288,717 233,288,717 233,281,133
8,323,599
8,318,900
8,301,997
8,266,043
8,228,652
Owned by the Company....................................... 15,251,520
Balance................................................................... 218,037,197 224,965,118 224,969,817 224,986,720 225,022,674 225,052,481
Per share information¥ 274.51¥ 248.42¥ 223.69¥ 231.66¥ 104.32¥ 137.42
Basic net income per share (in yen) (1) .................
80.00
60.00
50.00
45.00
40.00
85.00
Cash dividends paid per share (in yen) (2) . ..........
2,553.97
2,452.47
2,261.00
2,034.63
1,847.80
2,424.91
Shareholders’ equity per share (in yen) (3) . .........
448.19427.34396.31410.29294.56299.72
Cash flow per share (in yen) (1) (e) . .........................
1.90
2.23
2.66
2.19
2.46
1.50
Price/Book value ratio............................................
17.63
22.02
26.91
19.25
43.52
26.41
Price/Earnings ratio...............................................
10.80
12.80
15.19
10.87
15.41
12.11
Price/Cash flow ratio..............................................
4,840
5,470
6,020
4,460
4,540
3,630
Stock price at year-end (in yen)............................
Notes: (a) Net income/Total assets(b) Net income/Shareholders’ equity(c) Including discontinued operations(d)		(Income before income taxes + Interest expense)/Interest expense(e) (Net income + Depreciation and amortization - Dividends approved) /Average number of shares outstanding during each period

62

SECOM CO., LTD.

Annual Report 2009(1) Per share amounts are based on the average number of shares
outstanding during each period.
(2) Subsequent to March 31, 2009, cash dividends of ¥18,533 million(¥85.00 per share) were approved at the general shareholders‘meeting on June 25, 2009 (see Note 17 of the accompanying notes
to consolidated financial statements).
(3) Per share amounts are based on the number of shares outstandingat the end of each period, minus treasury stock.

COMMON STOCK DATASECOM CO., LTD.
As of March 31

Shareholder Information
Number of shareholders........................................
Common shares held by:
Financial institutions...........................................
Securities firms...................................................
Other corporations..............................................
Foreign investors................................................
Individuals and others........................................
		 Total..................................................................

2009

2008

2007

2006

2005

2004

30,85928,51230,68319,807

21,327

21,72035.67%
2.55
3.76
38.17
19.85
100.00%33.84%
3.86
3.81
41.71
16.78
100.00%32.21%
3.68
3.86
42.43
17.82
100.00%33.04%
2.16
3.92
43.40
17.48
100.00%34.32%
1.99
4.13
40.75
18.81
100.00%37.04%
2.19
4.29
37.22
19.26
100.00%

PRICE INFORMATION (TOKYO STOCK EXCHANGE)
2007
2008

2009

April–June.................................................................................
July–September........................................................................
October–December...................................................................
January–March.........................................................................
April–June.................................................................................
July–September........................................................................
October–December...................................................................
January–March.........................................................................

Price per share (in yen)

Nikkei Stock Average (in yen)

High

Low

High

Low

¥5,860
5,830
6,340
6,200
5,330
5,310
4,700
4,700

¥5,360
5,060
5,480
4,720
4,710
4,300
2,790
3,100

¥18,240.30
18,261.98
17,458.98
14,691.41
14,489.44
13,603.31
11,368.26
9,239.24¥17,028.41
15,273.68
14,837.66
11,787.51
12,656.42
11,259.86
7,162.90
7,054.98

SECOM CO., LTD.

Annual Report 200963

COMMON STOCK DATACOMMON STOCK ISSUES
			
		
		
Date

Additional
shares issued(In thousands)

Sharesoutstanding
after issue(In thousands)

Share capital
after issue(In thousandsof yen)Allotment ratio
to shareholders

June 15, 1974
Dec. 21, 1974
May 21, 1975
May 21, 1975
Dec. 1, 1975
May 31, 1976
June 1, 1976
Dec. 1, 1976
Nov. 30, 1977
Dec. 1, 1977
Dec. 1, 1978
June 1, 1981
Dec. 1, 1981
Jan. 20, 1983
Nov. 30, 1983
Nov. 30, 1984
Nov. 30, 1985
Jan. 20, 1986
Nov. 30, 1986
Nov. 30, 1987
Jan. 20, 1988
Nov. 30, 1988
Nov. 30, 1989
Jan. 19, 1990
Mar. 31, 1990
Mar. 31, 1991
Mar. 31, 1992
Mar. 31, 1993
Mar. 31, 1994
Mar. 31, 1995
Mar. 31, 1996
Mar. 31, 1997
Mar. 31, 1998
Mar. 31, 1999
Nov. 19, 1999
Mar. 31, 2000
Mar. 31, 2001
Mar. 31, 2002
Mar. 31, 2003
Mar. 31, 2005

1,968
2,760
1,196
1,244
4,320
1,880
2,060
6,798
2,042
6,300
7,560
3,000
4,836
5,320
194
1,418
186
6,031
2,878
1,609
3,541
439
1,808
22,986
1,446
2,949
2,035
267
6,986
477
613
1,825
29
159
116,410
273
25
175
6
8

9,200
11,96013,156
14,40018,72020,60022,66029,45831,50037,80045,36048,36053,19658,51658,71060,12860,314
66,34569,22370,832
74,37374,812
76,62099,606
101,052
104,001
106,036
106,303113,289
113,766
114,379
116,204
116,233
116,392
232,802
233,075
233,100
233,275
233,281
233,289¥00,460,000
598,000
657,800
720,000
936,000
1,030,000
1,133,000
1,472,900
1,575,000
1,890,000
2,268,000
2,418,000
2,659,800
3,000,000
3,280,942
5,329,282
5,602,945
5,602,945
11,269,932
15,021,200
15,021,200
16,063,099
21,573,139
21,573,139
25,070,104
32,244,732
37,338,751
37,991,568
56,756,263
58,214,178
59,865,105
65,253,137
65,327,060
65,709,927
65,709,927
66,096,852
66,126,854
66,360,338
66,368,827
66,377,829—
3 for 10
1 for 10—
3 for 10—
1 for 10
3 for 10—
2 for 10
2 for 10—
1 for 10
1 for 10———
1 for 10——
0.5 for 10——
3 for 10
—
—
—
—
—
—
—
—
—
—
10 for 10*
—
—
—
—
—

Remarks

Issue at market price (¥900)
Stock split
Stock split
Issue at market price (¥1,134)
Stock split
Issue at market price (¥2,570)
Stock split
Stock split
Issue at market price (¥1,700)
Stock split
Stock split
Issue at market price (¥2,230)
Stock split
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Stock split
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds
Conversion of convertible bonds

Notes: 1. The above is a record of SECOM’s common stock issues since the common stock was listed on the Tokyo Stock Exchange in June 1974.
2. As of March 31, 2009, the number of shares outstanding was 233,289 thousand and share capital was ¥66,377,829 thousand.
*One share was split into two.

64

SECOM CO., LTD.

Annual Report 2009

SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP)CONTENTSCONDENSED CONSOLIDATED BALANCE SHEETS(BASED ON JAPANESE GAAP).................................................................................... 66
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(BASED ON JAPANESE GAAP).................................................................................... 68

SECOM CO., LTD.

Annual Report 200965

SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP)CONDENSED CONSOLIDATED BALANCE SHEETS (BASED ON JAPANESE GAAP)SECOM CO., LTD. and Subsidiaries
As of March 31
In millions of yen

ASSETS

2009

2008

2007

2006

2005

2004

Current assets:
Cash on hand and in banks.............................................. ¥0,127,476 ¥0,200,403 ¥0,181,266 ¥ 271,780 ¥0,246,693 ¥0,202,630
Cash deposits for armored car services..........................
56,667
63,69675,328———Call loans...........................................................................
36,50019,00015,00025,00010,00038,000Notes and accounts receivable, trade.............................
77,39885,59583,39752,66750,18346,813Due from subscribers.......................................................
20,13921,125
19,217
17,678
16,204
17,561
Short-term investments....................................................
16,786
9,306
18,171
83,80973,252
47,343
Lease receivables and investment in leased assets.......
14,993—————Inventories.........................................................................
—
27,08025,94564,19440,97945,477
Merchandises and products.............................................
10,730—————Real estate inventories.....................................................
6,177
90,23071,724———Work in process.................................................................
2,174
—
—
—
—
—
Costs on uncompleted construction contracts...............
9,534
—
—
—
—
—
Work in process for real estate inventories....................
60,950—————Raw materials and supplies.............................................
5,840
—
—
—
—
—
Deferred income taxes......................................................
11,135
11,84011,597
9,462
8,207
9,768
Short-term loans receivable.............................................
4,125
7,246
5,097
15,564
46,37558,793
Other..................................................................................
15,57813,827
19,66013,41917,676
17,205
Allowance for doubtful accounts.....................................
(2,762)(1,813)(1,923)(1,617)(1,297)(4,925)				 Total current assets................................................
473,445547,538
524,484
551,959
508,274
478,668

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

85,41565,63189,29722,92384,54565,45081,71633,63687,306
63,67580,341
29,48577,27063,07065,542
28,18372,816
64,104
65,151
21,50979,07265,31580,507
19,050Intangible assets...............................................................

21,331

22,332

23,294

24,384

27,58233,820Investments and others:
201,923
241,957
243,148
231,096
243,031207,654
		 Investment securities....................................................
		 Long-term loans receivable..........................................
59,88054,59955,22357,56442,983
63,799
		 Prepaid pension and severance costs.........................
18,876
17,834
15,817
11,186
1,527—
		 Deferred income taxes..................................................
24,41322,74015,654
11,256
18,50922,523		 Other...............................................................................
46,12947,57945,692
41,21742,25855,528
		 Allowance for doubtful accounts.................................
(19,122)(17,455)(15,161)(13,401)(10,292)(14,060)				 Total fixed assets....................................................
616,698
654,936
644,478
597,370
589,183
613,211
Deferred assets.....................................................................
338
365
219
47
90
187
				 Total assets ............................................................ ¥1,090,483 ¥1,202,840 ¥1,169,182 ¥1,149,377 ¥1,097,548 ¥1,092,067

66

SECOM CO., LTD.

Annual Report 2009

In millions of yen

LIABILITIES

2009

2008

2007

2006

2005

2004

Current liabilities:
Notes and accounts payable, trade................................ ¥0,028,374 ¥0,030,459 ¥0,028,469 ¥ 18,652 ¥0,015,693 ¥0,018,460
Bank loans........................................................................
85,383136,034
129,169
112,868
108,172
119,344
Current portion of straight bonds...................................
5,036
1,936
3,356
32,210690
200
Current portion of convertible bonds.............................
—
—
—
—
—
18
Lease obligations.............................................................
202
—
—
—
—
—
Payables—other...............................................................
23,19528,98829,88826,34018,95917,743
Accrued income taxes.....................................................
18,983
24,61024,97322,15916,197
17,083
Accrued consumption taxes............................................
2,932
3,456
3,366
2,588
2,698
3,792
Accrued expenses............................................................
3,534
3,641
3,198
2,085
2,275
2,304
Deferred revenue.............................................................
31,29832,061
31,18830,74728,53228,459Accrued bonuses..............................................................
12,741
12,21011,409
8,981
8,758
8,490
Reserve for litigation losses............................................
2,415
—
—
—
—
—
Accrued bonuses to directors and corporate auditors....
—
—
80
—
—
—
Other.................................................................................
42,55846,33758,66546,80544,24545,283				 Total current liabilities..........................................
256,655
319,737
323,766
303,440
246,222
261,181Long-term liabilities:
Straight bonds..................................................................
Long-term loans...............................................................
Lease obligations.............................................................
Guarantee deposits received..........................................
Deferred income taxes.....................................................
Accrued pension and severance costs...........................
Accrued retirement benefits for directors andcorporate auditors..........................................................
Investment deposits by policyholders, unearned
premiums and other insurance liabilities....................
Other.................................................................................
				 Total long-term liabilities......................................
				 Total liabilities........................................................
Minority interests in subsidiaries . ......................
Shareholders’ equity
Common stock.................................................................
Capital surplus..................................................................
Retained earnings............................................................
Unrealized gains (losses) on securities..........................
Foreign currency translation adjustments.....................
Common stock in treasury, at cost.................................
				 Total shareholders’ equity....................................
				 Total liabilities, minority interests in				 subsidiaries and shareholders’ equity ............. ¥12,673
15,338571
34,2103,740
13,807

13,52420,024—32,532
5,042
16,096

13,941
14,363—32,164
2,717
17,596

11,18013,444—28,982
1,079
11,36240,94014,513—28,737423
12,61732,80043,530—29,160371
12,899

2,244

2,220

2,300

1,565

—

—

167,0111,621
251,218
507,874

162,329
1,057
252,828
572,565

160,142
1,073
244,299
568,065

245,644
1,043
314,303617,743

278,278
1,724
377,234
623,457

276,979
2,117
397,858
659,040———

35,46932,16329,770

—
—
—
—
—
—
—

—
—
—
—
—
—
—

—
—
—
—
—
—
—

66,377
83,054
388,077
13,230(9,825)(44,749)
496,164

66,37782,553
346,510
8,167(17,123)(44,558)
441,927

66,36882,544308,268
6,079(15,603)(44,400)
403,257— ¥— ¥— ¥1,149,377 ¥1,097,548 ¥1,092,067

Net Assets
Shareholders’ equity:
Common stock................................................................. ¥ 66,377 ¥ 66,377 ¥ 66,377 ¥Capital surplus..................................................................
83,054
83,056
83,056
Retained earnings............................................................
478,355
475,987432,696
Common stock in treasury, at cost.................................
(74,896)(44,877)(44,850)				 Total shareholders’ equity....................................
552,891
580,543537,279

— ¥
—
—
—
—

— ¥
—
—
—
—

—
—
—
—
—

Valuation, translation adjustments and others:
Unrealized gains (losses) on securities..........................
Deferred losses on hedges..............................................
Foreign currency translation adjustments.....................
				 Total valuation, translation adjustments				 and others............................................................

(3,901)(27)(30,008)(3,306)(90)(9,907)

10,157(51)(7,253)

—
—
—

—
—
—

—
—
—

(33,937)(13,304)

2,853

—

—

—

Minority interests in subsidiaries .....................................

63,65463,03560,983

—

—

—

—
— ¥

—
— ¥

—
—

Annual Report 200967				 Total net assets......................................................
582,608630,274
601,116				 Total liabilities and net assets.............................. ¥1,090,483 ¥1,202,840 ¥1,169,182 ¥SECOM CO., LTD.

SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP)CONDENSED CONSOLIDATED STATEMENTS OF INCOME (BASED ON JAPANESE GAAP)SECOM CO., LTD. and Subsidiaries
Years ended March 31
In millions of yen
2009

2008

2007

2006

2005

2004

Revenue................................................................................
		 Percentage change from prior year............................

¥678,400 ¥682,619¥613,976 ¥567,315¥547,230 ¥527,409(0.6%)
11.2%
8.2%
3.7%
3.8%
0.8%

Costs of revenue .................................................................
		 As a percentage of revenue.........................................

444,77165.6

433,030
63.4

388,78763.3

351,02061.9

341,466
6­2.4

324,759
61.6

Gross profit .........................................................................
		 As a percentage of revenue.........................................

233,62834.4

249,58936.6

255,18936.7

216,29438.1

205,76437.6

202,650
38.4

Selling, general and administrative expenses..................
		 As a percentage of revenue.........................................

145,99421.5

144,883
21.3

127,348
20.7

122,185
21.5

122,720
22.4

121,363
23.0

Operating profit...................................................................
		 As a percentage of revenue.........................................

87,63412.9

104,706
15.3

97,84015.9

94,10916.6

83,04315.2

81,286
15.4

Non-operating income........................................................
Non-operating expenses.....................................................

12,957
9,666

20,125
10,552

15,087
10,207

15,792
13,232

11,942
11,507

7,798
12,841

Ordinary profit.....................................................................
		 As a percentage of revenue.........................................

90,92413.4

114,278
16.7

102,720
16.7

96,66917.1

83,47815.3

76,24314.5

Extraordinary profit.............................................................
Extraordinary loss................................................................

482
27,875

2,748
4,984

2,601
3,317

9,349
11,18911,381
10,10531,86024,892

Income before income taxes..............................................
		 As a percentage of revenue.........................................

63,531
9.4

112,043
16.4

102,005
16.6

94,82916.7

84,754
15.5

83,211
15.8

Income taxes—current........................................................
Income taxes—deferred......................................................
Minority interest in subsidiaries.........................................

41,768(3,244)
3,504

42,602
2,656
5,278

39,961(660)
4,404

34,8883,131
3,815

28,7234,145
3,367

30,9628,985
2,152

Net income...........................................................................
		 As a percentage of revenue.........................................
		 Percentage change from prior year............................

21,5023.2(65.0)

61,506
9.0
5.5

58,2999.5
10.0

52,9949.3
9.2

48,5178.9
18.0

41,111
7.8
15.5

68

SECOM CO., LTD.

Annual Report 2009

SUPPLEMENTAL NONCONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP)CONTENTSCONDENSED NONCONSOLIDATED BALANCE SHEETS(BASED ON JAPANESE GAAP).................................................................................... 70
CONDENSED NONCONSOLIDATED STATEMENTS OF INCOME(BASED ON JAPANESE GAAP).................................................................................... 72

SECOM CO., LTD.

Annual Report 200969

SUPPLEMENTAL NONCONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP)CONDENSED NONCONSOLIDATED BALANCE SHEETS (BASED ON JAPANESE GAAP)SECOM CO., LTD.
As of March 31
In millions of yen

ASSETS
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.............................................
Short-term loans receivable to subsidiaries andaffiliated companies........................................................
Other..................................................................................
Allowance for doubtful accounts.....................................
				 Total current assets................................................

2009

2008

2007

2006

2005

2004

¥ 31,149
54,258389
11,630
6,732
2,415
455
5,652
1,101
2,034
4,446
173

¥ 77,130
60,821
534
11,661
6,760
2,921
454
6,298
952
1,913
4,714
236

¥ 71,818
67,799667
10,972
6,952
2,218
452
5,991
1,024
2,014
4,750
463

¥167,097
—
476
9,475
6,447
3,876
451
5,928
950
1,798
4,531
298

¥135,400
—
552
9,008
6,228
5,822
451
6,740
1,056
1,728
4,629
17,493¥117,302
—
292
8,856
5,372
5,680
451
5,673
1,123
1,610
5,890
19,278

11,471
3,457(567)
134,801

17,782
2,720(568)
194,333

13,9102,615(541)
191,111

12,5872,314(604)
215,630

24,4042,614(2,299)213,831

19,1192,526(5,216)
187,961

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...............................................................................

23,055386
63,064
1,071
3,717
28,306
1,588
634

21,969122
62,4191,267
3,239
25,9131,961
14

22,124136
60,2841,364
4,216
32,0922,980
22

22,811
166
59,442
1,467
4,379
32,2001,919
32

23,943
132
59,836
1,423
4,514
35,1791,692
47

25,836
145
60,6841,427
3,990
36,4392,862
72

Intangible assets:
		 Telephone rights............................................................
		 Telephone and telegraph utility rights.........................
		 Software.........................................................................
		 Other...............................................................................

—
—
6,578
542

—
—
7,184
516

—
83
4,755
3,419

0
112
6,420
83

1,946
147
6,401
84

2,134
207
8,935
457

21,26728,66843,165

46,16627,65423,874

192,775

194,110

166,839

149,535

159,772

157,612

1,874
8,468
40

1,874
8,453
31

1,074
18,30824

974
18,630
24

667
3,122
22

667
3,071
22

134,636
66,354
8,702
8,859
26,412
26,165
14,561
13,76914,763
6,760
4,896
4,893
1,065
975
(13,354)(6,812)545,056
478,710¥679,858 ¥673,043

52,9298,973
24,855
12,213
5,139
4,893
983
(7,200)463,680¥654,791

40,085
9,006
22,175
8,670
6,206
4,893
955
(7,998)428,359¥643,990

Investments and others:
		 Investment securities....................................................
		 Investment securities in subsidiaries and		 affiliated companies....................................................
		 Investments in subsidiaries and		 affiliated companies....................................................
		 Long-term loans receivable..........................................
		 Long-term loans receivable to employees..................
		 Long-term loans receivable to subsidiaries and		affiliated companies..................................................
		 Lease deposits...............................................................
		 Long-term prepaid expenses........................................
		 Prepaid pension and severance costs.........................
		 Deferred income taxes..................................................
		 Fund for insurance........................................................
		 Other...............................................................................
		 Allowance for doubtful accounts.................................
				 Total fixed assets....................................................
				 Total assets.............................................................
70

SECOM CO., LTD.

Annual Report 2009

14,16020,292
8,816
8,533
20,33519,8891,257—
10,45013,728
5,153
5,761
2,877
7,245
(4,760)(11,306)
384,880
392,586¥598,711 ¥580,547

In millions of yen

LIABILITIESCurrent liabilities:
Accounts payable.............................................................
Bank loans........................................................................
Current portion of straight and convertible bonds........
Lease obligations.............................................................
Payables—other...............................................................
Payables—construction...................................................
Accrued income taxes.....................................................
Accrued consumption taxes............................................
Accrued expenses............................................................
Deposits received.............................................................
Deferred revenue.............................................................
Accrued bonuses..............................................................
Other.................................................................................
				 Total current liabilities..........................................

2009

Net assets
Shareholders’ equity:
Common stock.................................................................
Capital surplus:
		 Additional paid-in capital.............................................
		 Other capital surplus....................................................
				 Total capital surplus..............................................
Retained earnings:
		 Legal reserve.................................................................
		 Other retained earnings:
			 Reserve for systems development..........................
			 General reserve.........................................................
			 Accumulated earnings carried forward..................
				 Total retained earnings.........................................
Common stock in treasury, at cost.................................
				 Total shareholders’ equity....................................
Valuation, translation adjustments and others:
Unrealized gains (losses) on securities..........................
				 Total valuation, translation adjustments				 and others............................................................
				 Total net assets......................................................
				 Total liabilities and net assets..............................

2007

2006

2005

2004

2,757
30,401——
10,8383,607
15,8341,566
640
31,29922,903
5,372
1,958
127,180¥002,573
27,667——
12,596
3,825
15,7752,029
639
41,60322,7355,207
895
135,548

3,168
26,06930,000—12,987
3,634
15,312
1,509
651
34,442
22,371
5,232
1,938
157,317¥002,113
31,473——
10,201
3,113
10,2791,306
599
31,146
21,727
4,967
1,764
118,694¥002,160
35,66318—
10,358
4,666
10,5702,232
634
33,95821,2474,710
1,797
128,019——192
18,146
4,766———
18,174
5,087———
18,4495,370———
18,244
5,581

30,000——18,014
5,713

30,0002,300—
17,009
5,356

1,104
12
24,221
174,926

1,070—
24,333
151,513

1,268—
25,088160,637

1,201—
25,027
182,344——
53,728172,423——
54,665
182,684———

66,377

66,37766,368

—
—

—
—

—
—

83,054
83,05482,55382,55382,54482,544

—

—

—

9,028

9,028

9,028

—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—

800
24
2,212
3,036
339,293351,3585,604(44,749)
461,646¥643,990

800
25
2,212
3,037
306,766
318,832
3,082(44,558)
426,288¥598,711

800
26
2,212
3,038
279,338
291,405
1,944(44,400)
397,862¥580,547

¥

¥

¥

¥

2,319
60,893—43
10,981
3,742
11,8491,622
597
28,451
22,735
5,537
1,928
150,704

Long-term liabilities:
Straight and convertible bonds......................................
Long-term loans...............................................................
Lease obligations.............................................................
Guarantee deposits received..........................................
Accrued pension and severance costs...........................
Accrued retirement benefits for directors andcorporate auditors..........................................................
Other.................................................................................
				 Total long-term liabilities......................................
				 Total liabilities........................................................
Shareholders’ equity
Common stock.................................................................
Capital surplus:
		 Additional paid-in capital.............................................
				 Total capital surplus..............................................
Retained earnings:
		 Legal reserve.................................................................
		 Voluntary reserve:
			 Reserve for systems development..........................
			 Reserve for tax deferral on asset replacement.......
			 General reserve.........................................................
				 Total voluntary reserve.........................................
		 Unappropriated retained earnings..............................
				 Total retained earnings.........................................
Unrealized gains on securities........................................
Common stock in treasury, at cost.................................
				 Total shareholders’ equity....................................
				 Total liabilities and shareholders’ equity ...........

2008

¥

¥

¥

¥

¥

¥ 66,377¥ 66,377¥ 66,377

83,054—
83,054

83,054
1
83,056

83,054
1
83,056

—
—
—

—
—
—

—
—
—

9,028

9,028

9,028

—

—

—

800
2,212
418,306
430,347(74,896)504,883

800
2,212
405,015
417,055(44,877)
521,612800
2,212
372,966
385,006(44,850)
489,590

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

48

(82)

4,564

—

—

—

48
504,932¥679,858(82)
521,529¥673,043

4,564
494,154¥654,791

—
—
—

—
—
—

—
—
—

¥

—

SECOM CO., LTD.

¥—

Annual Report 2009

¥

—

71

SUPPLEMENTAL NONCONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP)CONDENSED NONCONSOLIDATED STATEMENTS OF INCOME (BASED ON JAPANESE GAAP)SECOM CO., LTD.
Years ended March 31
In millions of yen
2009

2008

2007

2006

2005

2004

Revenue................................................................................
		 Percentage change from prior year............................
Service charges................................................................
		 Percentage change from prior year............................
Sales of merchandise......................................................
		 Percentage change from prior year............................

¥336,893 ¥337,611¥326,076 ¥313,096¥297,782 ¥288,493(0.2%)
3.5%
4.1%
5.1%
3.2%
3.5%
294,386
291,350
282,247
272,876
261,918
256,883
1.0
3.2
3.4
4.2
2.0
2.7
42,506
46,261
43,82940,22035,86331,610
(8.1)
5.5
9.0
12.1
13.5
11.4

Costs.....................................................................................
		 As a percentage of revenue.........................................
Cost of service..................................................................
		 As a percentage of service charges............................
Cost of sales.....................................................................
		 As a percentage of merchandise sales.......................

193,84257.5
161,548
54.9
32,29476.0

192,41757.0
158,03154.2
34,386
74.3

183,34156.2
151,53253.7
31,80972.6

171,80354.9
142,473
52.2
29,32972.9

164,51855.2
138,298
52.8
26,21973.1

159,01855.1
136,14453.0
22,87372.4

Gross profit..........................................................................
		 As a percentage of revenue.........................................
Gross profit on service....................................................
		 As a percentage of service charges............................
Gross profit on sales........................................................
		 As a percentage of merchandise sales.......................

143,05042.5
132,83845.1
10,21224.0

145,19343.0
133,31845.8
11,87425.7

142,73443.8
130,71546.3
12,01927.4

141,29345.1
130,40247.8
10,89027.1

133,26344.8
123,620
47.2
9,643
26.9

129,47544.9
120,738
47.0
8,736
27.6

Selling, general and administrative expenses..................
		 As a percentage of revenue.........................................

70,43420.9

71,03821.0

69,33021.3

69,121
22.0

67,23222.6

65,244
22.6

Operating profit...................................................................
		 As a percentage of revenue.........................................

72,61621.6

74,15522.0

73,40422.5

72,172
23.1

66,031
22.2

64,231
22.3

Non-operating income........................................................
Non-operating expenses.....................................................

9,721
3,990

9,607
4,575

7,942
4,763

6,299
7,506

6,241
6,052

4,817
6,892

Ordinary profit.....................................................................
		 As a percentage of revenue.........................................

78,34623.3

79,18723.5

76,58323.5

70,96422.7

66,21922.2

62,156
21.5

Extraordinary profit.............................................................
Extraordinary loss................................................................

67
27,068

2,221
566

1,246
1,141

6,147
5,615

1,083
5,915

25,462
29,860

Income before income taxes..............................................
		 As a percentage of revenue.........................................

51,34515.2

80,842
23.9

76,68823.5

71,49622.8

61,38820.6

57,75820.0

Income taxes........................................................................
		 Effective tax rate...........................................................

18,93136.9

30,79538.1

29,443
38.4

27,617
38.6

23,684
38.6

23,47540.6

Net income...........................................................................
		 As a percentage of revenue.........................................
		 Percentage change from prior year............................

32,4149.6(35.2)

50,04614.8
5.9

47,245
14.5
7.7

43,87914.0
16.4

37,70412.7
10.0

34,282
11.9
11.4

72

SECOM CO., LTD.

Annual Report 2009

CORPORATE INFORMATION(As of June 30, 2009)

Headquarters:
Independent auditors:
Administrator of the registerof shareholders:

5-1, Jingumae 1-chome, Shibuya-ku, Tokyo 150-0001, Japan
KPMG AZSA & Co.
Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan

MAJOR CONSOLIDATED SUBSIDIARIES		Issued capital(In millions of yen)

Percentageof equity/
voting rights

Lines of business

Security services

Domestic<Security services>
Secom Joshinetsu Co., Ltd.

¥3,530		(50.9)%

Secom Hokuriku Co., Ltd.

201		

59.1

Security services

Secom Yamanashi Co., Ltd.

15		

70.0

Security services
Security services

Secom Mie Co., Ltd.

50		

51.0

Secom Sanin Co., Ltd.

286		

67.0

Security services

Secom Miyazaki Co., Ltd.

30		

68.3

Security services

Secom Jastic Co., Ltd.

210		

100.0

Security services

Secom Jastic Joshinetsu Co., Ltd.

40		(100.0)

Security services

Secom Jastic Hokuriku Co., Ltd.

10		(100.0)

Security services

Secom Jastic Miyazaki Co., Ltd.

10		(100.0)

Security services

Secom Jastic Akita Co., Ltd.

10		

100.0

Security services

Secom Jastic Sanin Co., Ltd.

10		(100.0)

Security services

Secom Jastic Yamanashi Co., Ltd.

10		(100.0)

Security services

Secom Static Hokkaido Co., Ltd.

50		

100.0

Security services

Secom Static Tohoku Co., Ltd.

50		

100.0

Security services

Secom Static Nishi-Nihon Co., Ltd.

50		

100.0

Security services

Secom Static Kansai Co., Ltd.

50		

100.0

Security services

Secom Sado Co., Ltd.

24		(54.5)

Security services

JK. Siress Co., Ltd.

10		(100.0)

Security services

Japan Safety Guard Co., Ltd.

100		

60.0

Security services

Meian Co., Ltd.

60		

51.0

Security services

2,358		

(67.8)

Installation and maintenance of security equipment

Secom Tech Sanin Co., Ltd.

23		(100.0)Installation of security equipment

Secom Techno Joshinetsu Co., Ltd.

30		(80.5)

Installation of security equipment

Secom Win Co., Ltd.

15		(66.7)

Installation of security equipment and facilities

TES Co., Ltd.

20		(100.0)

Maintenance of equipment

Secom Tohoku Enterprise Co., Ltd.

100		(100.0)Design, construction and maintenance of facilities

Secom Industries Co., Ltd.

499		

100.0

Manufacturing of security equipment

Otec Electronics Co., Ltd.

200		

76.0

Manufacturing and sales of security systems

Secom Alpha Co., Ltd.

271		

100.0

Sales of security and water-treatment equipment

Yanoshin Air Conditioning Co., Ltd.

80		(100.0)

Sales of air-conditioning equipment

Secom Mine Security Co., Ltd.

30		

100.0

Security services

Social Rehabilitation Support Kitsuregawa Co., Ltd.

10		

51.7

Operation of PFI correctional facilities

Secom Kitsuregawa Security Co., Ltd.

50		

100.0

Security services

Home Life Kanri Co., Ltd.

40		(100.0)Condominium management

Secom Home Service Co., Ltd.

32		

100.0

Lifestyle support services

Secom Techno Service Co., Ltd.

Notes: 1. ( ) indicates the percentage of equity/voting rights held by both SECOM Co., Ltd., and certain of its subsidiaries, or by certain subsidiaries independently.
2. Subsidiaries are categorized into segments above according to their major lines of business.

SECOM CO., LTD.

(Continued)

Annual Report 200973

CORPORATE INFORMATION

MAJOR CONSOLIDATED SUBSIDIARIES		Issued capital(In millions of yen)

Percentageof equity/
voting rights

Lines of business<Fire Protection services>
Nohmi Bosai Ltd.

¥13,302		

(50.4)%

Manufacturing and sales of fire protection equipment

				and facilities

Nohmi Setsubi Co., Ltd.

30		(100.0)Installation of fire protection equipment

Ichibou Co., Ltd.

28		(73.2)

Installation of fire protection equipment

Fukuoka Nohmi Co., Ltd.

20		(100.0)

Maintenance of fire protection equipment

Chiyoda Service Co., Ltd.

20		(70.0)

Building management

Bosai Engineering Corporation40		

(100.0)Installation of fire protection equipment

Nohmi System Co., Ltd.

20		(100.0)

Maintenance of fire protection equipment

Iwate Nohmi Co., Ltd.

30		(100.0)Installation of fire protection equipment

Tohoku Bosai Plant Co., Ltd.

12		(100.0)Installation of fire protection equipment

Aomori Nohmi Co., Ltd.

20		(100.0)Installation of fire protection equipment

Osaka Nohmi Co., Ltd.

20		(100.0)Installation of fire protection equipment

Nissin Bohsai Co., Ltd.

50		(100.0)Installation of fire protection equipment

Chiba Nohmi Co., Ltd.

10		(100.0)Installation of fire protection equipment

Shikoku Nohmi Co., Ltd.

20		(100.0)Installation of fire protection equipment

Nohmi Techno Engineering Co., Ltd.

40		(100.0)Installation of environmental monitoring systems

Akita Nohmi Co., Ltd.

20		(100.0)Installation of ­fire protection equipment

Kyushu Nohmi Engineering Co., Ltd.

20		(100.0)Installation of fire protection equipment

Fukushima Nohmi Co., Ltd.

20		(100.0)Installation of fire protection equipment

Tohoku Nohmi Co., Ltd.

20		(100.0)Installation of fire protection equipment

Nohmi Plant Niigata Co., Ltd.

20		(100.0)Installation of fire protection equipment

Hokkaido Nohmi Co., Ltd.

20		(100.0)Installation of fire protection equipment

Yashima Bosai Setsubi Co., Ltd.

20		

(75.5)

Installation of fire protection equipment

6,545		

100.0Home health/nursing care and other medical-related<Medical services>
Secom Medical System Co., Ltd.

				

services

Seisho Corporation

10		(100.0)

Maintenance of medical facilities

Koyu Co., Ltd.

10		(100.0)

Sales of medical and other supplies

Mac Corporation95		(100.0)

Sales of medical equipment

Yoshikikaku Co., Ltd.

20		(100.0)Operation of restaurants and shops at medical facilities

Kensei Co., Ltd.

100		(100.0)

Ryomay Royal Life Co., Ltd.

210		

86.5

Management of nursing homes

Management of pharmacies

Alive Medicare Co., Ltd.

50		(100.0)Management of nursing homes

Secom Medical Resource Co., Ltd.

10		(100.0)

Medical staffing solutions

Secomfort Co., Ltd.

100		(100.0)Management of nursing homes

Secomfort West Co., Ltd.

100		(100.0)Management of nursing homes3		

(100.0)Management of pharmacies

Secom Insurance Service Co., Ltd.

225		(100.0)

Secom General Insurance Co., Ltd.

16,809		

97.1

US Chemical Co., Ltd.
<Insurance services>

Non-life insurance agency
Non-life insurance

Notes: 1. ( ) indicates the percentage of equity/voting rights held by both SECOM Co., Ltd., and certain of its subsidiaries, or by certain subsidiaries independently.
2. Subsidiaries are categorized into segments above according to their major lines of business.

74

SECOM CO., LTD.

Annual Report 2009(Continued)

MAJOR CONSOLIDATED SUBSIDIARIES		Issued capital(In millions of yen)

Percentageof equity/
voting rights

Lines of business<Geographic information services>¥8,758		

69.8%

Geographic information services

Pasco Space Mapping Technology Co., Ltd.

Pasco Corporation25		

(100.0)Geographic information services

GIS Hokkaido Co., Ltd.

190		(100.0)Geographic information services

GIS Tohoku Co., Ltd.

50		(84.6)

Geographic information services

GIS Kanto Co., Ltd.

40		(52.6)

Geographic information services

GIS Tokai Co., Ltd.

50		(100.0)Geographic information services

GIS Kansai Co., Ltd.

99		(100.0)Geographic information services

GIS Shikoku Co., Ltd.

30		(72.8)

Geographic information services

Pasco Road Center Co., Ltd.

50		(72.2)

Geographic information services

Tokyo Digital Map Corporation

10		(100.0)Geographic information services

Mid Map Tokyo Corporation15		

(60.0)

Geographic information services

Grafica Co., Ltd.

20		

(51.0)

Geographic information services

3,700		

99.9Development of residential buildings

1,469		

100.0Information, communication, information security<Real estate development and sales>
Secom Home Life Co., Ltd.
<Information and communication related
and other services>
Secom Trust Systems Co., Ltd.

				

services and software development

Arai & Co., Ltd.

Real estate leasing

3,000		

86.7Arai Corporation, Inc.

10		

(100.0)Management of real estate

Secom Credit Co., Ltd.

400		

100.0

Credit services

Secom Corporation

100		

100.0

Printing services

Secom Auto Service Co., Ltd.

45		

100.0

Car maintenanceWonder Dream Co., Ltd.

490		

100.0

Employee welfare for SECOM Group

Secom Staff Service Co., Ltd.

50		(100.0)

Employment agency

The Windsor Hotels International Co., Ltd.

165		

90.0

Hotel management

Notes: 1. ( ) indicates the percentage of equity/voting rights held by both SECOM Co., Ltd., and certain of its subsidiaries, or by certain subsidiaries independently.
2. Subsidiaries are categorized into segments above according to their major lines of business.

SECOM CO., LTD.

(Continued)

Annual Report 200975

CORPORATE INFORMATION

MAJOR CONSOLIDATED SUBSIDIARIES		Issued capital(In millions of yen)

Percentageof equity/
voting rights

Lines of business

Overseas<Security services>
Secom Plc

£39,126 thousand

100.0%

Security services

Secom (China) Co., Ltd.

¥5,550 million

100.0

Holding company

Dalian Secom Security Co., Ltd.

US$2,000 thousand(95.0)

Security services

Shanghai Secom Security Co., Ltd.

US$3,500 thousand(65.0)

Security services

Beijing Jingdun Secom

US$2,500 thousand(80.0)

Security services

Qingdao Secom Security Co., Ltd.

US$1,000 thousand(80.0)

Security services

Shenzhen Secom Security System Co., Ltd.

US$2,000 thousand(90.0)

Security services

Fujian Secom Security Co., Ltd.

Rmb7,000 thousand(95.0)

Security services

Tianjin Secom Property Management Co., Ltd.

Rmb2,000 thousand(70.0)

Comprehensive building management services

P.T. Secom Indopratama

US$3,950 thousand

94.9

Security services

Thaisecom Pitakkij Co., Ltd.

THB379 million

70.0

Security services

Secom Australia Pty. Ltd.

AUD7,822 thousand

100.0

Security services

Secom Technical Services Unit Trust

AUD5,951 thousand(70.0)

Security services

US$600 thousand

80.0

Security service-related consulting

US$14,300 thousand(100.0)Electronic Security Co., Ltd.

Secom Vietnam Co., Ltd.
<Other services>
Shanghai Nohmi Secom

Manufacturing and sales of fire protection equipment

Fire Protection Equipment Co., Ltd.				

and facilities

Nohmi Taiwan Ltd.

Manufacturing and sales of fire protection equipment

NT$15,000 thousand(52.0)

				and facilities

P.T. Nusantara Secom InfoTech

Geographic information services andUS$3,304 thousand(100.0)				

software development

Pasco Philippines Corp.

(100.0)Geographic information services

PHP20,400 thousand

Pasco China Corporation

Rmb5,329 thousand(99.0)

Geographic information services

Pasco (Thailand) Co., Ltd.

THB100,979 thousand(100.0)Geographic information services

EUR2,722 thousand(100.0)Geographic information services

US$40 thousand(50.1)

Geographic information services

BRL5,000 thousand(51.0)

Geographic information services

FM-International Oy
Pasco Map, LLC
Base Aerofotogrametria E Projetos S.A.

US$0.3 thousand

100.0

Holding company

ClearLight Partners, LLC

The Westec Security Group, Inc.

US$131,803 thousand(99.7)

Investment

ClearLight Partners II, LLC

US$98,230 thousand(99.0)

Investment

Asia Pacific Business Link Ltd.

US$9,670 thousand

88.6

Holding company; housing-related businessShanghai Asia Pacific Property Co., Ltd.

US$5,000 thousand(100.0)

Housing-related businessNotes: 1. ( ) indicates the percentage of equity/voting rights held by both SECOM Co., Ltd., and certain of its subsidiaries, or by certain subsidiaries independently.
2. Subsidiaries are categorized into segments above according to their major lines of business.

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Annual Report 2009

(2,1) -1- Cover̲ura(E)0811̲yon.indd 09.9.3 0:23:32 PM

SECOM GROUP’S BASIC BUSINESS AREAS
SECOM AED Package Service

Centralized Security Systems
SECOM offers a wide range of services and productswith the aim of realizing the Social System Industry.

SECOM
Emergency
Depot

Dispatch

Emergency Response

Merchandise

Security Services....................................

2

services of theverarching goal ofwherever necessary.

....................................

4eting, shareholders
nual cash dividends
m of enhancing
0.0 billion worth ofunder review.

Centralized Security Systems
Commercial Use:
SECOM AXSECOM AX is an on-line security system with advanced on-site image sensors
that incorporate microphones to enable the SECOM control center staff to checkthe subscriber’s premises by listening and viewing.
SECOM IXSECOM IX is a remote imaging security system for commercial facilities offeringround-the-clock services.
SECOM DXSECOM DX is an on-line security system developed to meet the needs of shops,
offices, warehouses, factories and other commercial and industrial
establishments.
SECOM TXSECOM TX is an on-line security system for commercial buildings with more than
one tenant.
HANKS SYSTEMHANKS SYSTEM is an on-line security system for financial institutions, including
automated banking facilities.
SECOM CXSECOM CX offers a comprehensive building management system that monitorsand manages large building complexes.

Residential Use:....................................
....................................

89

hat allows us to offer

SECOM HOME SECURITY
SECOM Home Security is a comprehensive home security system combining
basic intrusion- and fire-prevention services and emergency call services, as well
as gas leak monitoring and medical emergency call service options. The system
is linked around the clock with a SECOM control center, where personnel
respond immediately in the event of a problem by dispatching emergency
response personnel and, if necessary, contacting the appropriate authorities.
Subscribers are also eligible for telephone health counseling and other services

SECOM
Control Center

Subscribers

Alarm Sent

Police Department
Fire DepartmenttUtility CompaniestOther OrganizationsttAlert as Necessaryoffered through SECOM Medical Club. Subscribers in certain areas also haveaccess to SECOM Home Service, a suite of lifestyle support services.
SECOM CONDOMINIUM SECURITY SYSTEMSSECOM condominium security systems provide comprehensive building
management functions for condominiums and total safety with a centralized
security system for each unit in the building. SECOM MS-3, the top-of-the-line
system, can be used for buildings of any size, either as a retrofit or a new
installation.

Large-Scale Proprietary Security Systems
TOTAX ZETATOTAX ZETA integrates networking capabilities and a security system into acomprehensive local control system for industrial complexes and buildings.

The SECOM AED Package Service is a full-service package encompassing
leasing and maintenance of emergency lifesaving kits featuring automatedexternal defibrillators (AEDs) to non-medical professionals.

COCO-SECOM
COCO-SECOM is an innovative system that uses signals from Global
Positioning System (GPS) satellites and cellular telephone base stations tolocate moving objects, such as people, vehicles and property. As an option,customers can also request to have emergency response personnel dispatchedto the location of the object or an emergency alert relayed to a predetermined
telephone number.

Static Guard Services
Static guard services are provided for facilities where customer needs are best
served by professionally trained on-site personnel.

Armored Car Services
SECOM provides armored car services for the collection and transportation of
cash and other valuables.

propriate prices. This

SECOM CCTV SYSTEMThe SECOM CCTV system is a multifunctional, cost-effective closed-circuit
surveillance camera system. The system provides stable monitoring evenin places where insufficient light makes clear images difficult and allows the
combined use of digital and analog cameras. It is also capable of detecting
attempts to disable or destroy the camera.
SECURILOCK SERIESThe SECURILOCK series uses identification numbers, integrated circuit (IC)pass cards and other methods to control access to restricted areas.
SESAMO SERIESThe SESAMO series comprises access-control systems for use in corporate
offices, factories, parking facilities and any other security-sensitive areas.
These systems employ such technologies as contactless IC pass cards,
magnetic cards, personal identification numbers, fingerprint identification andpalm vein identification.
TOMAHAWK SERIESThe TOMAHAWK series is an extensive lineup of innovative extinguishingsystems, including TOMAHAWK MACH II residential-use fire extinguisher and
TOMAHAWK III high-speed automated fire extinguishing system withgas suppression.
PYTHAGORAS SERIESPYTHAGORAS is a series of security vaults with superior protection, heat
resistance and performance.
SENSOR LIGHTSENSOR LIGHT is a sensor-equipped light activated automatically when thesensor detects human body temperature.
SECURIFACESECURIFACE is a residential intercom system that combines a face detection
function with SECOM Home Camera System, enhancing security for people
at home.
PHYSICAL SECURITY PRODUCTS FOR HOMESSECOM offers a broad range of physical security products for homes. These
include SECOM Anshin Glass, a high-impact breakage-resistant window glass
designed to prevent intruders from entering through broken windows;
SECOM Window Frame, a window frame with reinforced stainless bars; andStrong Door, a door that cannot be forced open for an extended period oftime after it has been engaged.

spond to the diverse
Fire Protection Services.................................... 18
shed a number ofties in the country’s
work to broaden oure PRC, with the aim
stomers throughout....................................

25....................................

29....................................

60

panese GAAP) .............
n Japanese GAAP) .....

65....................................

73....................................

77....................................

79

Medical Services

FIRE ALARM SYSTEMSThis business encompasses the assembly, installation and sale of a broad rangeof equipment and systems, including automatic fire alarm systems, environmental monitoring systems, and fire and smoke control systems, suited to buildingsof varying sizes and uses, from homes to large-scale commercial and industrial
facilities.
FIRE EXTINGUISHING SYSTEMSSECOM offers an extensive lineup, including fire sprinklers and other water fire
extinguishing systems, foam fire extinguishing systems, dry chemical fire extinguishing systems and inert gas fire extinguishing systems, for applications
ranging from office buildings to chemical plants and tunnels.
MAINTENANCE SERVICES
This business centers on inspection, maintenance and repair services, as wellas round-the-clock on-line monitoring and other services provided through acustomer services center.
OTHERSThis category comprises the installation and maintenance of parking lot control
systems and the assembly and sale of printed circuit boards for manufacturers inother industries, including medical and electronics equipment.

69

hich have been calculated and77

SECOM CO., LTD.

Annual Report 2009

HOME MEDICAL SERVICESSECOM’s medical services for patients at home include pharmaceutical services,encompassing the preparation—in the SECOM Pharmacy cleanroom—anddelivery of prescription pharmaceuticals, and home nursing services provided
through visiting nurse stations. SECOM also provides consulting and support
services for physicians opening home medical care clinics.
HOME-BASED PERSONAL CARE SERVICESSECOM provides patients recovering at home with caregivers to assist withpersonal hygiene, bathing, exercise and other daily activities, as well as provide
light housekeeping.
SECOM UBIQUITOUS ELECTRONIC MEDICAL REPORT (EMR)
SECOM Ubiquitous EMR is a medical report system for home medical care aimed
at clinics and small and medium-sized hospitals. The system enables the sharingof data among members of the home-care team, including the primary
physician, visiting nurse and pharmacy.
HOSPINET
Hospinet, a remote image diagnosis support service, transmits magnetic
resonance imaging (MRI), computerized tomography (CT) and other images to
SECOM’s Hospinet center, where diagnostic experts examine them and provide
consultation to the primary physician.
MY SPOONMy Spoon is a robot that enables people with impaired upper body mobility to
eat with minimal assistance. This is the first robot of its kind in Japan.
RESIDENCES FOR SENIORS WITH FULL-TIME PERSONAL CARE SERVICESSECOM manages the Sacravia Seijo, Royal Life Tama, Comfort Garden Azamino,
Comfort Hills Rokko and Alive Care Home series of residences for seniors.
SECOM HEALTH CARE CLUBSECOM Health Care Club is a membership-based club that provides access to avariety of health management services, including testing with a PET/CT scanner.
The club is offered through an alliance with Yotsuya Medical Cube, a cuttingedge clinic in Tokyo.

Insurance Services
SECURITY DISCOUNT FIRE POLICY
Security Discount Fire Policy is a commercial fire insurance policy that features
reduced premiums for subscribers to commercial security systems.
SECOM ANSHIN MY HOME
SECOM Anshin My Home is a comprehensive fire insurance policy thatfeatures reduced premiums for subscribers to home security systems.
MEDCOM
MEDCOM is an unrestricted treatment policy that covers the cost of cancer
treatment not covered by Japan’s national health insurance scheme, as well as
the patient’s portion of the cost of medical care covered by the national healthinsurance scheme. MEDCOM also provides hospital referrals andtreatment-related consulting services.
NEW SECOM ANSHIN MY CAR
New SECOM Anshin My Car is a comprehensive automobile insurance policythat includes on-site emergency services in the event of an accident, as well as
discounts for drivers without a traffic violation history or on cars equippedwith antitheft devices.

Geographic Information Services
PasCAL SERIES
Designed for local governments, the PasCAL series of comprehensive GIS
services facilitate the effective use of GIS in a variety of situations.
MarketPlanner SERIESThe MarketPlanner series uses a variety of data sorting and presentation
methods to support the efforts of growing companies to establish area
marketing strategies.
SAFE ROUTE MAPPING SERVICEThis service helps companies ensure their employees are able to reach homesafely and assists crisis management efforts in the event of a major
earthquake. A version of this service is also available to individuals.

Real Estate Development and Sales
REAL ESTATE DEVELOPMENT AND SALESSECOM offers Glorio condominiums.

Information and Communication Related and Other Services
SECURE DATA CENTERThe Secure Data Center provides a comprehensive service for e-business thatcombines SECOM’s expertise in both physical and information security.
DIGITAL AUTHENTICATION SERVICESSECOM offers public key infrastructure (PKI) services that provide an effectivemeans of establishing credibility among Internet users, including issuance ofdigital certificates and a set-up and operating service for organizations thatwish to establish their own digital certificate authority.
NETWORK SECURITY MONITORING SERVICESSECOM provides security and stability for clients’ IT systems around theclock. SECOM monitors and reports on threats to security, and on network
operating status and network traffic.
DISASTER RESPONSE SERVICESSECOM offers a variety of services, including SECOM Safety Confirmation
Service, which helps commercial subscribers ascertain the safety of employees
and collect and share information in the event of a major disaster, thereby
assisting them to reopen for business as soon as possible.

SECOM CO., LTD.

Annual Report 200978

09.9.3 0:23:30 PM(1,1) -1- Cover̲omote(E)0818̲yon.indd 09.9.3 0:16:04 PM

DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERS

Directors

Makoto Iida

Juichi Toda

Shohei Kimura

Kanemasa Haraguchi

Founder

Co-Founder

ChairmanPresident andRepresentative Director

Shuji Maeda

Koichi Sato

Fumio Obata

Katsuhisa Kuwahara

Yasuo Nakayama

Executive Vice President

Executive Vice President

Senior Executive
Director

Executive Director

Executive Director

Hiroshi Ito

Takayuki Ito

Executive Director

Director

Corporate Auditors

Executive Officers

Teruo Ogino

Kanemasa Haraguchi

Katsuhisa Kuwahara

Shunji Ogahara

Takayuki Ito

Naohide Nakamura

Ken Tsunematsu

President andRepresentative Director

Executive Director

Executive Officer

Director

Executive Officer

Yasuo Nakayama

Minoru Takaoka

Ryohei Komatsu

Masahiro Takeda

Executive Director

Executive Officer

Executive Officer

Executive Officer

Seiichi Mori

Hideo Morishita

Teruo Kano

Teruhisa Yoshimura

Executive Officer

Executive Officer

Executive Officer

Executive Vice PresidentManaging Executive
Officer

Tsuneo Komatsuzaki

Yukio Tsunoda

Katsuo Akiyama

Hiroshi Ito

Executive Officer

Executive Officer

Senior Managing
Executive Officer

Executive Director

Hiroshi Yasuda
Kohei Yamashita

Shuji Maeda
Executive Vice President

Koichi Sato

(As of July 31, 2009)

Fumio Obata
Senior Executive Director

79

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SECOM CO., LTD.

Annual Report 2009

DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERS

Directors

SECOM CO., LTD.

Makoto Iida

Juichi Toda

Founder

Co-Founder

Shohei Kimura

Kanemasa Haraguchi

ChairmanPresident andRepresentative Director

ANNUAL REPORT 2009

SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Shuji Maeda
Executive Vice President

Hiroshi Ito
Executive Director

Koichi Sato

Fumio Obata

Executive Vice President

Senior Executive
Director

Katsuhisa Kuwahara
Executive Director

Tokyo 150-0001, Japan

Yasuo Nakayama
Executive Director

http://www.secom.co.jp/

Takayuki Ito
Director

ANNUAL REPORT 2009
Year ended March 31, 2009
Corporate Auditors

Executive Officers

Teruo Ogino

Kanemasa Haraguchi

Katsuhisa Kuwahara

Shunji Ogahara

Takayuki Ito

Naohide Nakamura

President andRepresentative Director

Executive Director

Executive Officer

Director

Executive Officer

Yasuo Nakayama

Minoru Takaoka

Ryohei Komatsu

Masahiro Takeda

Executive Director

Executive Officer

Executive Officer

Executive Officer

Seiichi Mori

Hideo Morishita

Teruo Kano

Teruhisa Yoshimura

Executive Officer

Executive Officer

Executive Officer

Executive Vice PresidentManaging Executive
Officer

Katsuo Akiyama

Hiroshi Ito

Tsuneo Komatsuzaki

Yukio Tsunoda

Executive Officer

Executive Officer

Senior Managing
Executive Officer

Executive Director

Ken Tsunematsu
Hiroshi Yasuda
Kohei Yamashita

Shuji Maeda

In response to changing customer needs,
SECOM is working to realize its vision for the
future— the Social System Industry—by
providing comprehensive, integrated services
and systems that make life more secure,convenient and comfortable.

Executive Vice President

Koichi Sato

(As of July 31, 2009)

Fumio Obata
Senior Executive Director
79

SECOM CO., LTD.

Annual Report 2009

Printed in Japan