DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERS
Directors

PROFILE

Corporate Auditors
Teruo Ogino
Ken Tsunematsu
Hiroshi Yasuda

Established in 1962, SECOM CO., LTD., is a pioneer in Japan’s security services industry. Since its founding date, SECOM has endeavored to develop
innovative offerings, particularly in the area of security services, in line withits mission to contribute to society through its business activities. These
efforts have enabled SECOM to respond to the increasing need for security
and peace of mind, as well as to achieve steady growth.
Today, SECOM—comprising the parent company and the other companies of the SECOM Group—has expanded its focus beyond its core security
services to include fire protection services, medical services, insurance services, geographic information services, and information and communication
related and other services. In addition to providing services that benefit
society in each of its business areas, SECOM continues to consolidate thefoundation of the Social System Industry, a framework of distinctive,­integrated packages of products and services that make life more secure,convenient and comfortable, and to reinforce the trust of its customers.
SECOM has also expanded into overseas markets, establishing a networkof subsidiaries and joint ventures in 11 countries and territories, where it has
earned a solid reputation for providing services of the same high quality it
offers in Japan. In particular, SECOM is focusing on the high-growth marketsof the People’s Republic of China (PRC) and Southeast Asia, where it isestablishing bases and broadening its reach as part of a larger effort topromote the acceptance of security services.
In the years ahead, SECOM will continue to leverage its comprehensive
expertise and experience to achieve further expansion and growth.

Kohei Yamashita

Kanemasa Haraguchi
Makoto Iida

Juichi Toda

Founder

Co-Founder

President andRepresentative Director

Katsuo Akiyama
Senior Managing Executive
Officer

Seiichiro Kobayashi
Executive Director

Katsuhisa Kuwahara
Executive Director

Shuji Maeda
Executive Director

Kanemasa Haraguchi

ChairmanPresident andRepresentative Director

Yasuo Nakayama
Executive Director

Koichi Sato
Executive Director

Yushiro Ito

Hiroshi Ito
Executive Officer

Shunji Ogahara
Executive Officer

Kiyomasa Sugii
Executive Officer

Minoru Takaoka
Executive Officer

Yoshihiro Chino
Executive Officer

Mamoru Sasaki
Executive Officer

Hideo Morishita
Executive Officer

Tsuneo Komatsuzaki

SECOM CO., LTD.
ANNUAL REPORT 2008

Shohei Kimura

SECOM CO., LTD.

Executive Officers

5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo 150-0001, Japan
http://www.secom.co.jp/

Executive Officer

Managing Executive Officer Takayuki Ito
Director

Seiichi MoriManaging Executive Officer Ryohei Komatsu
Executive Officer

Seiji Sakamoto

Managing Executive Officer

Seiichiro Kobayashi

Katsuhisa Kuwahara

Shuji Maeda

Executive Director

Executive Director

Executive Director

Fumio Obata
Director(As of July 31, 2008)

Year ended March 31, 2008

Yasuo Nakayama

Koichi Sato

Executive Director

Executive Director

Fumio Obata

Takayuki Ito

Director

Director

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.

Printed in Japan79

Secom Co., Ltd.

Annual Report 2008

DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERS
Directors

PROFILE

Corporate Auditors
Teruo Ogino
Ken Tsunematsu
Hiroshi Yasuda

Established in 1962, SECOM CO., LTD., is a pioneer in Japan’s security services industry. Since its founding date, SECOM has endeavored to develop
innovative offerings, particularly in the area of security services, in line withits mission to contribute to society through its business activities. These
efforts have enabled SECOM to respond to the increasing need for security
and peace of mind, as well as to achieve steady growth.
Today, SECOM—comprising the parent company and the other companies of the SECOM Group—has expanded its focus beyond its core security
services to include fire protection services, medical services, insurance services, geographic information services, and information and communication
related and other services. In addition to providing services that benefit
society in each of its business areas, SECOM continues to consolidate thefoundation of the Social System Industry, a framework of distinctive,­integrated packages of products and services that make life more secure,convenient and comfortable, and to reinforce the trust of its customers.
SECOM has also expanded into overseas markets, establishing a networkof subsidiaries and joint ventures in 11 countries and territories, where it has
earned a solid reputation for providing services of the same high quality it
offers in Japan. In particular, SECOM is focusing on the high-growth marketsof the People’s Republic of China (PRC) and Southeast Asia, where it isestablishing bases and broadening its reach as part of a larger effort topromote the acceptance of security services.
In the years ahead, SECOM will continue to leverage its comprehensive
expertise and experience to achieve further expansion and growth.

Kohei Yamashita

Kanemasa Haraguchi
Makoto Iida

Juichi Toda

Founder

Co-Founder

President andRepresentative Director

Katsuo Akiyama
Senior Managing Executive
Officer

Seiichiro Kobayashi
Executive Director

Katsuhisa Kuwahara
Executive Director

Shuji Maeda
Executive Director

Kanemasa Haraguchi

ChairmanPresident andRepresentative Director

Yasuo Nakayama
Executive Director

Koichi Sato
Executive Director

Yushiro Ito

Hiroshi Ito
Executive Officer

Shunji Ogahara
Executive Officer

Kiyomasa Sugii
Executive Officer

Minoru Takaoka
Executive Officer

Yoshihiro Chino
Executive Officer

Mamoru Sasaki
Executive Officer

Hideo Morishita
Executive Officer

Tsuneo Komatsuzaki

SECOM CO., LTD.
ANNUAL REPORT 2008

Shohei Kimura

SECOM CO., LTD.

Executive Officers

5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo 150-0001, Japan
http://www.secom.co.jp/

Executive Officer

Managing Executive Officer Takayuki Ito
Director

Seiichi MoriManaging Executive Officer Ryohei Komatsu
Executive Officer

Seiji Sakamoto

Managing Executive Officer

Seiichiro Kobayashi

Katsuhisa Kuwahara

Shuji Maeda

Executive Director

Executive Director

Executive Director

Fumio Obata
Director(As of July 31, 2008)

Year ended March 31, 2008

Yasuo Nakayama

Koichi Sato

Executive Director

Executive Director

Fumio Obata

Takayuki Ito

Director

Director

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.

Printed in Japan79

Secom Co., Ltd.

Annual Report 2008

HIGHLIGHTSSECOM 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
Centralized Security Systems
Commercial Use:

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, 2008		Years ended March 31

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

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

In thousandsof U.S. dollars
Year ended
March 31

2008

2007

2006

2008

¥ 706,695
105,628
61,7561,265,525
574,554¥ 636,678
94,41855,8891,241,182
551,732¥ 580,526
81,89350,331
1,225,228
508,696$ 7,066,950
1,056,280
617,560
12,655,250
5,745,540¥ 274.51
80.00
2,553.97¥ 248.42
60.00
2,452.47

In yenIn U.S. dollars¥ 223.69
50.00
2,261.00$ 2.750.80
25.54

Notes: 1. Yen amounts have been translated into U.S. dollars, solely for the convenience of the reader, at the rate of¥100=US$1, the rate prevailing on the Tokyo ­Foreign Exchange Market on March 31, 2008.
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 endof each period, minus treasury stock.
4. The Company recorded record-high net sales and operating revenue, operating income, and net income, inthe year ended March 31, 2008.
5. Cash dividends per share of common stock shown are based on dividends approved and paid in each period.
Subsequent to March 31, 2008, cash dividends of ¥85.00 per share were approved at the generalshareholders’ ­meeting held on June 26, 2008 (see Note 17 of the accompanying Notes to Consolidated
Financial Statements).

			Japanese GAAP		In millions of yen
SECOM CO., LTD. and Subsidiaries			
Three years ended March 31, 2008		Years ended March 31

Revenue............................................
Operating profit.................................
Ordinary profit....................................
Net income........................................
Total assets........................................
Total shareholders’ equity..................
Total net assets.................................

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

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 morethan 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.

In thousandsof U.S. dollars
Year ended
March 31

2008

2007

2006

2008

¥ 682,619
104,706
114,278
61,506
1,202,840—
630,274¥ 613,976
97,840102,720
58,2991,169,182—
601,116¥ 567,315
94,10996,66952,994
1,149,377
496,164—$ 6,826,190
1,047,060
1,142,780
615,060
12,028,400—
6,302,740

In yenIn U.S. dollars¥ 234.28
50.00
2,204.06—$ 2.73
0.80
—
25.21

¥ 273.40
80.00—
2,521.45¥ 259.14
60.00—
2,400.91

Residential Use:

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 s­ ervice 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

Note: The Company reported record-high revenue, operating profit, ordinary profit and net income based on Japanese
GAAP in the year ended March 31, 2008. Cash dividends per share of common stock shown are based on
dividends approved and paid in each period. Subsequent to March 31, 2008, cash dividends of ¥85.00 per share
were approved at the general shareholders’ meeting held on June 26, 2008.

Fire Protection Services

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

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

80

80

80

80

60

60

60

60

40

40

40

40

20

20

20

20

(In billions of yen)

0

0

0
03

04

05

06

07

08

03

04

05

06

07

08

0
03

04

05

06

07

08

03

04

05

06

07

08

Note: 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 yearof contributions from the fire protection services segment, newly established for the operations ofNohmi 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
to continued growth in net sales and operating revenue, particularly in the security services segment,
and a decline in selling, general and administrative expenses.
		 In the year ended March 31, 2006, net income declined ¥1.8 billion, to ¥50.3 billion. This result was
despite a ¥9.4 billion increase in income from continuing operations, to ¥51.2 billion, which reflected
increases in operating income and gains on sales of securities, net, and was primarily attributable to theabsence of ¥9.9 billion in income from discontinued operations, net of tax, recorded in the previous period,
owing to the sale of the Company’s education services business and certain real estate properties for lease.

77

Secom Co., Ltd.

Annual Report 2008

Subscribers

Alarm Sent

Police Department
Fire Department• Utility Companies• Other Organizations••

Alert 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 centralized­security 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 s­ ystem for industrial ­complexes and buildings.

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
dispatched to the location of the object or an emergency alert relayed to a­predetermined 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.

Medical Services

Fire Alarm Systems
This 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 Systems
SECOM 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 applications­ranging 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.

(In billions of yen)

SECOM
Control Center

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 thesharing of 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.
Nursing Homes WITH FULL-TIME PERSONAL CARE SERVICESSECOM manages the Sacravia Seijo, Royal Life Tama, Comfort Garden Azamino
and Alive Care Home series nursing homes.
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 cutting-edge
clinic in Tokyo.

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.

Insurance Services
SECURITY DISCOUNT FIRE POLICY
Security Discount Fire Policy is a commercial fire insurance policy that­features 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 wellas the patient’s portion of the cost of medical care covered by the national
health insurance 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

SECOM CCTV SYSTEMThe SECOM CCTV system is a multifunctional, cost-effective closed-circuit­surveillance camera system. The system is fully digital, eliminating the risk ofimage degradation. It is also capable of detecting attempts to disable ordestroy 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 andTomahawk III high-speed automated fire extinguishing system withgas suppression.
PYTHAGORAS SERIESPYTHAGORAS is a series of security vaults with superior protection, heat­resistance 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 of timeafter it has been engaged.

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 Services
SECOM 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 FINE FOODSSECOM Fine Foods is a line of quality food products marketed through mailorder catalogs and the Internet.
REAL ESTATE DEVELOPMENT AND SALESSECOM offers Glorio condominiums.

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 Series
The MarketPlanner series uses a variety of data sorting and presentation­methods to support the efforts of growing companies to establish area
­marketing strategies.
Safe Route Mapping Service
This 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.

Secom Co., Ltd.

Annual Report 2008

78

CONTENTS

Realizing the Social System Industry Vision ..............................................................................................
Realizing theSocial System Industry Vision

Geographic Information
Services

Security Services

Fire Protection
Services

Medical Services
Insurance Services

Information andCommunication Related
and Other Services

In line with its mission to contribute tosociety through its business activities,
SECOM is implementing a wide range ofinitiatives aimed at realizing its uniqueSocial System Industry vision.
SECOM declared 1989 as the first yearof its commitment to realizing this vision.
In the two decades since, SECOM has
maximized its capabilities to build on its
core security services business, broadening its focus to include fire protection services, medical services, insurance services,
geographic information services, and information and communication related andother services. SECOM has also promoted
close collaboration among these businesses with the aim of developing integrated packages of distinctive, value-added
products and services.
Looking ahead, SECOM will further
build on this unique approach to diversify
into new areas, with the aim of making
its services an essential part of life that isreadily accessible to people everywhere.
To this end, SECOM will promote the decisive investment of resources aimed at
reinforcing the framework of integrated
products and services that constitutes theSocial System Industry.

The success of SECOM’s efforts to datein realizing the Social System Industry isthanks in no small part to its original corporate philosophy, which emphasizes
challenging accepted norms and striving
to do what is appropriate. Challenging
accepted norms means not being content with the status quo, constantly seeking better and more suitable solutions.
Striving to do what is appropriate means
judging the legitimacy of our actions
based on whether they benefit society.
This philosophy has guided SECOM
since its establishment, and will continue to underscore its efforts to achieve
further growth by developing and offering new products and services that earn
the support of an ever-greater number ofcustomers. Going forward, SECOM recognizes that the most important condition
for achieving growth is that it remains acompany that is trusted by its customers.
“Providing reliable peace of mind.”This new corporate message encapsulates
the common goal of employees and management as SECOM pushes forward in its
drive to realize the Social System Industry.

2

SECOM continues to pursue a wide range of initiatives aimed at realizing its
vision for the future—the Social System Industry.

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

4

At the general shareholders’ meeting, shareholders
approved a resolution to raise annual cash dividendsby ¥5.00, to ¥85.00 per share.

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

8

To ensure the quality of our services, we have established an integrated­process that enables us to maintain control of every aspect of our services,

Contents

from R&D in the area of security systems and equipment to manufacturing,

Our Mission.......................................................................... 1
sales, security planning, installation, monitoring, emergency response
A Message to Shareholders................................................. 2­services and equipment maintenance.

Busuness Index................................................................... 5
Review of Operations. ......................................................... 6
Audited Financial Statements. ............................................. 25

SECOM Today ..............................................................................................................................................................

Other Financial Data............................................................. 54
Supplemental Consolidated

9

We continue to draw on our wealth of expertise and extensive productand service lineup to offer security solutions to respond to increasingly

Financial Data (Based on Japanese GAAP).......................... 59
sophisticated and diverse security needs.
Supplemental Nonconsolidated.
.........................
Financial Data (Based on Japanese GAAP)
63
Corporate Information.......................................................... 67
SECOM Group’s BasicBusiness Areas................................ 69

Directors, Corporate Auditors
Financial
Review ......................................................................................................
and Executive Officers.......................................................
71

25

Audited Financial Statements . ...............................................................................

29

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

60

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

65

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

69

Corporate Information . ...........................................................................................

73

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

77

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

79

Note: Unless specified otherwise, all figures contained in this annual report are based on thefinancial statements, which have been calculated and are presented in accordance withaccounting principles generally accepted in the United States (U.S. GAAP).
Secom Co., Ltd.

Annual Report 20081

Geographic Information
Services

Security Services

Fire Protection
Services

Medical Services
Insurance Services

Information andCommunication Related
and Other Services

2

Secom Co., Ltd.

Annual Report 2008

Realizing theSocial System Industry Vision
In line with its mission to contribute tosociety through its business activities,
SECOM is implementing a wide range ofinitiatives aimed at realizing its uniqueSocial System Industry vision.
SECOM declared 1989 as the first yearof its commitment to realizing this vision.
In the two decades since, SECOM has
maximized its capabilities to build on its
core security services business, broadening its focus to include fire protection services, medical services, insurance services,
geographic information services, and information and communication related andother services. SECOM has also promoted
close collaboration among these businesses with the aim of developing integrated packages of distinctive, value-added
products and services.
Looking ahead, SECOM will further
build on this unique approach to diversify
into new areas, with the aim of making
its services an essential part of life that isreadily accessible to people everywhere.
To this end, SECOM will promote the decisive investment of resources aimed at
reinforcing the framework of integrated
products and services that constitutes theSocial System Industry.

The success of SECOM’s efforts to datein realizing the Social System Industry isthanks in no small part to its original corporate philosophy, which emphasizes
challenging accepted norms and striving
to do what is appropriate. Challenging
accepted norms means not being content with the status quo, constantly seeking better and more suitable solutions.
Striving to do what is appropriate means
judging the legitimacy of our actions
based on whether they benefit society.
This philosophy has guided SECOM
since its establishment, and will continue to underscore its efforts to achieve
further growth by developing and offering new products and services that earn
the support of an ever-greater number ofcustomers. Going forward, SECOM recognizes that the most important condition
for achieving growth is that it remains a­company that is trusted by its customers.
“Providing reliable peace of mind.”This new corporate message encapsulates
the common goal of employees and management as SECOM pushes forward in its
drive to realize the Social System Industry.

Secom Co., Ltd.

Annual Report 2008

3

A MESSAGE TO SHAREHOLDERS“Peace of mind”
for everyone
Consolidated Operating Results
In the fiscal year ended March 31, 2008, harsh economic conditions persisted asa slowdown in the U.S. economy—precipitated by the subprime loan crisis—andsoaring fuel and raw materials prices squeezed corporate profits, while the risingcost of living hindered consumer spending.
In this environment, we continued to respond promptly to our customers’changing needs for security and peace of mind with the aim of realizing our Social
System Industry vision, by stepping up efforts to reinforce our core security services business, as well as our fire protection, medical, insurance, geographic information, and information and communication related and other services.
These efforts contributed to record-high consolidated net sales and operating revenue, operating income and net income. Owing to a full year of contributions from the fire protection services segment—newly established in December
2006—and favorable increases in security services, medical services, geographic
information services and insurance services, net sales and operating revenue
amounted to ¥706.7 billion, an increase of 11.0%, or ¥70.0 billion. Higher net sales
and operating revenue, together with a decline in impairment losses on long-lived
assets and goodwill, supported an increase of 11.9%, or ¥11.2 billion in operating
income, to ¥105.6 billion. Net income rose 10.5%, or ¥5.9 billion, to ¥61.8 billion.
Calculated in accordance with accounting principles generally accepted inJapan—Japanese GAAP—consolidated revenue rose 11.2%, to ¥682.6 billion while
operating profit, ordinary profit and net income totaled ¥104.7 billion, ¥114.3 billionand ¥61.5 billion, respectively—all record highs.
With the intention of providing returns to shareholders that more closely reflect
our operating performance, in the previous fiscal year we shifted the basis fordetermining dividends, which are calculated using Japanese GAAP, to consolidated
results, from nonconsolidated results. At the general shareholders’ meeting on
June 26, 2008, shareholders approved a resolution to pay annual cash dividendsof ¥85.00 per share, an increase of ¥5.00.

Makoto Iida
Founder

Responding to Changes in the Operating Environment
In the security services business, the growing number of cunning and malicious
crimes has made customers more inclined to reinforce security against potential
dangers, both at home and in the workplace. As a consequence, we are seeing apronounced increase in demand for high-quality security products and services.
With the aim of accommodating the increasingly varied needs of customers inthe security services market, we continue to focus on further enhancing service
quality by improving the skills of our employees and the capabilities of our security systems. Our ability to provide high-quality security services is due to our integrated approach, whereby we take full responsibility for maintaining control of

4

Secom Co., Ltd.

Annual Report 2008

every aspect of product and service development, from research and development
to manufacturing, sales, security planning, installation, monitoring, emergency
response services and equipment maintenance. Improving the skills and teamworkof employees in these areas thus enables us to further enhance service quality.
In the commercial security services market, needs are diversifying in responseto changing social conditions. In recent years, building tenant turnover and theemergence of new formats for tenancy have increaseed. This has in turn boosted
liquidity in the commercial security services market. In Japan, for instance, building tenants change with increasing frequency as companies choose to close poorly
performing offices and shops and reopen in more profitable locations—after which
the vacated premises are leased to another company, most likely in a different
industry. Recognizing this trend early on, we have endeavored to increase our market share by making it possible for customers changing premises to transfer theirsecurity services contracts to their new locations and by encouraging new tenants
to enter into new contracts. An increasing emphasis on lower operating costs andgreater efficiency has heightened the popularity of automated, unmanned facilities in a broad range of industries. We are stepping up efforts to develop products
and services designed specifically to accommodate the needs of such customers.
Recent additions to our lineup include a new security system featuring a facility
control mechanism that enables remote opening and closing of doors and shutters.
We are also seeing an increase in the need for around-the-clock security forcommercial premises. In response to an increase in crimes targeting stores andoffices in recent years, we continue to propose access-control systems that suita variety of requirements to ensure security when employees are present. We
have augmented existing on-line systems with a new feature which monitors windows and doors using sensors in the early morning and late at night, even whenemployees are present, thereby helping to prevent unlawful access and ensure
employee safety.
Employee identification cards based on integrated circuit (IC) card technology
have rapidly grown in popularity among companies in Japan in recent years. As aconsequence, there is an increasing need for employee identification cards thatcan be used for commercial security systems, facility access-control, time clocks,
PC access-control and other systems. Our mainstay security systems can not only
be used with the SECOM Wireless IC Card, but can also be made compatible withIC cards from other manufacturers. We are actively promoting these options tocustomers seeking systems that maximize the convenience of IC cards.
In the home security market, we continue to focus on boosting the numberof contracts for our on-line home security services. Underscoring the increasing
unease in society today, residential security customers are seeking ever-higher
levels of security. We offer a wide range of options carefully tailored to customer
needs. The recent revision of Japan’s Fire Protection Law and the introduction ofcorresponding regulations by local authorities have increased the number of homesthat are required to install fire alarm systems. In response, we have begun offering New Home Fire Sensor, which can be connected to our on-line home security

Shohei Kimura
ChairmanKanemasa Haraguchi
President andRepresentative Director

Secom Co., Ltd.

Annual Report 2008

5

A MESSAGE TO SHAREHOLDERS

systems, and have already received substantial numbers of orders. Other security
products that can also be connected to our on-line security systems to make homes
more secure include SECOM Anshin Glass—a high-impact, breakage-­resistantwindow glass—and residential monitoring cameras, both of which continue toearn praise from customers. These and other business activities have benefited
from the efforts in recent years of our network of offices, which has bolsteredsales and increased opportunities for us to interact directly with customers. Sales
have also benefited from the introduction of such value-added options as SECOM
Home Service, a suite of lifestyle support services through which we assist customers in resolving everyday household problems. Originally offered in the Tokyo
Metropolitan area, this service is now available nationwide. Going forward, we willcontinue to enhance and broaden the SECOM Home Service lineup with the aim ofincreasing convenience for customers.
The proliferation of mobile phones has significantly changed the face of thehome security market in many ways, one of which is a rise in the number of homes
without landlines. Because home security systems traditionally use home telephones to notify control centers should an abnormality be detected, this change has
had a noticeable impact on the security services industry. In developing our COCOSECOM mobile security system, we established a communications infrastructureusing COCO-SECOM, thereby making it possible for us to offer SECOM Home
Security to customers without home telephones. Accordingly, because we are able
to offer security services using a variety of communications methods, we are notdependent on the user’s communications infrastructure and can guarantee a­uniform level of service to all customers.
We are also expanding our presence in overseas markets. In the growing market of the PRC, we offer SECOM security services in key coastal cities and surrounding urban centers. Given our rapidly expanding contract volume in the PRC,
we are planning to double our number of branches in the years ahead by, among
others, expanding into inland areas. In the high-growth economies of Southeast
Asia, we are working to establish new bases and expand our operations in theregion. In the United Kingdom, subsidiary Secom Plc won the top prize in the 2007
Security Excellence Awards for best customer care initiative—underscoring thehigh regard in which SECOM’s approach to security services is held in the U.K.
market. Moving forward, we will continue to enhance our capabilities by further
raising the quality of our security services, while at the same time expanding ourpresence in promising markets.
To further accelerate our growth, we are also taking decisive steps to expand
businesses other than security services. In the area of fire protection services,
we have expanded sales in the home fire protection market, as well as reinforced
efforts to coordinate sales activities for large-scale buildings and develop an optimal execution and maintenance system. In medical services, we have enhanced
our various home services, which include home nursing and pharmaceutical dispensing and delivery services, as well as our other services. In insurance services,6

Secom Co., Ltd.

Annual Report 2008

we have endeavored to bolster sales of distinctive non-life insurance policies,
which include a fire insurance policy for commercial premises, a comprehensive
home insurance policy, a comprehensive automobile insurance policy and
MEDCOM, an unrestricted cancer treatment policy that covers the cost of treatments, including those not covered by Japan’s national health insurance scheme.
In geographic information services, we have built on our advanced measuring technologies and 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 TerraSAR-X, a German commercial satellite. We have already laid a solid business foundation that will enable us to
use this data in a wide range of areas. Our information and communication related
and other services business encompasses a wide array of services, ranging fromconsulting to the provision of effective solutions, with a focus on such areas as
information security services and disaster response support services. Recent
efforts have included expanding the lineup of services offered under the umbrellaof the SECOM Safety Confirmation Service, which is designed to help confirm thesafety of employees in the event of a major disaster.
Realizing the Social System Industry
Having positioned the security services business as our core focus and expanded ourbusiness portfolio to include fire protection services, medical services, insurance services, geographic information services, and information and communication related
and other services, we have developed products and services that deliver evergreater added value by promoting close collaboration among these businesses. Our
quest to realize our Social System Industry vision involves the creation of a comprehensive framework of products and services that are an essential part of life. To thisend, we are striving to develop and offer new products and services that contributeto a safer and more secure society. We are confident that such efforts will enable us
to achieve steady growth in corporate value.
On January 1, 2008, we unveiled a new corporate message, “providing reliable
peace of mind.” This reflects our mission as a company providing 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.
We look forward to the support of our shareholders in these and all of ourendeavors.
June 26, 2008

Makoto Iida
Founder

Shohei Kimura
ChairmanKanemasa Haraguchi
President and Representative Director

Secom Co., Ltd.

Annual Report 2008

7

BUSINESS INDEX
Percentage of consolidated
net sales andoperating revenue*

61.6%

nSecurity Services

P9

nCommercial Security Services

P10

nHome Security Services

P14

nOther Security Services

P17

nSecurity Services in Overseas Markets

P19

nFire Protection Services

P20

nMedical Services

P21

nInsurance Services

P22

nGeographic Information Services

P23

nInformation and Communication Related andOther Services

P24

Security Services

11.7%

Fire Protection Services

7.2%

Medical Services

4.7%

Insurance Services

5.6%

Geographic
Information Services

9.2%

Information andCommunication Related
and Other Services*Pie charts show percentage of consolidated net sales and operating revenue(Excluding intersegment transactions)8

Secom Co., Ltd.

Annual Report 2008

SECOM TODAY

Security Services
An integrated package enables SECOM to provide high-grade security services.

SECOM offers exceptional on-line security systems that seamlessly combine the advantagesof advanced equipment and human expertise. Equipment configured with sensors that
detect intruders, fires and device malfunctions
is installed at the subscriber’s premises. The
sensors are linked by telecommunications circuits to SECOM control centers, where they
are monitored around-the-clock. Should an
emergency occur at the customer’s premises,
alarm signals are transmitted to a control center, which dispatches emergency response
personnel—who respond immediately by taking the appropriate measures to protect the
security of subscribers and their premises—
and, when necessary, the police and/or fire
department.
The distinguishing feature of our security
systems is our integrated approach, whereby
we take full responsibility for maintaining­control of every aspect of our security systems
from research and development (R&D) to manufacturing, sales, security planning, installation,
monitoring, emergency response services andequipment maintenance. This integrated
approach is the key to our high-grade security
services, enabling us to maintain proprietaryknow-how and crucial information in-house, tobe deployed readily in the development of new
systems. Moreover, because systems aredeveloped in-house, we are able to both
update and incorporate them promptly and­flexibly, as well as provide new equipment thatis compatible with existing systems. Tailoredsecurity planning and equipment installation by
our seasoned security professionals means weare able to offer subscribers the optimal system for their particular security needs.
Furthermore, because we rent, rather thansell, security systems to subscribers, we areable to respond swiftly in the event of a malfunction or breakdown and repair or provide
replacement equipment—thus ensuring thatsystems are maintained in optimal operating
condition. Rental contracts also enable­subscribers to minimize the initial costs.
Using SECOM field personnel to provide
emergency response services and maintenancenot only ensures appropriate and timely services, but also gives us access to the opinionsof subscribers and information which we areable to feed back to our R&D departments,
leading to system improvements. Our integrated approach ensures that such information
obtained is distributed among other pertinent
departments and incorporated into the relevant systems, thereby enabling us to offer
distinctive, high-grade services. Additionally,
our integrated approach enhances cost control,
allowing us to offer security s­ ervices to customers at appropriate prices.
Our expert emergency response personnel are crucial to our ability to offer high-grade
security services. These highly trained security professionals provide broad-based support for our security services, including guard
services and system maintenance, as well as
temporary facility repairs, designed to keep
facilities operable until maintenance experts
are available. SECOM emergency response
personnel are available around-the-clock to
respond swiftly and effectively to requests
from subscribers, thereby playing a critical rolein ensuring that customers can rely on, and aresatisfied with, our services.

Emergency response personnel

Static guard

Secom Co., Ltd.

Annual Report 2008

9

SECOM TODAY

C ommercial Security Services
SECOM is drawing on its wealth of expertise, its extensive product and service lineup, and its
ability to provide solutions that respond to increasingly sophisticated and diverse security needs
and earn the satisfaction of customers.

Providing Uniquely SECOM Solutions to
Varied Security Needs
Large commercial complexes increasingly
require advanced security systems that protect
people and property from crimes and otherhazards. For prospective tenants, a sophisticated security system is an important consideration. To facilitate prompt responses to suchneeds, we have established System Design
centers—specialized units that design security
systems for large complexes—within major
cities throughout Japan. In close cooperation with sales staff, center engineers work todesign systems that accommodate specificsecurity requirements.
SECOM’s large-scale proprietary security
systems combine advanced equipment andhighly trained, professional static guard­services. Technology and human expertise
thus complement each other in a single
sophisticated package.
By adding various products and services
from the SECOM Group’s extensive lineup,
we also create customized packages. At thesame time, we are taking advantage of Groupcapabilities to expand sales channels. For
example, in many instances a solid relationshipestablished with a subscriber to the SECOM
Safety Confirmation Service—part of a rangeof disaster response support services—has led
to a new contract for security services, underscoring the effectiveness of this approach.
Looking ahead, we will continue to create newvalue and respond to the varied needs of customers in the commercial security services
markets by leveraging our expertise in security
services and our comprehensive capabilities.

March 2008 marked the opening of Akasaka Sacas, a new development in Tokyo’s Akasaka district thathas caused a considerable buzz. An exciting, comprehensive entertainment complex comprising fivebuildings, including Akasaka Biz Tower, which has three floors below ground and 39 above, Akasaka
Sacas houses facilities for events, theater and music, as well as a variety of dining options.
Akasaka Biz Tower uses SECOM security gate systems. We also provide the SECOM AED Package
Service, static guard services and a variety of other services.

10

Secom Co., Ltd.

Annual Report 2008

Developing Security Systems that
Respond to Diverse Types of Crime
Criminal acts are growing ever more cunning and malicious, and crimes today areoften committed in just minutes. SECOM AX,
an on-line security system employing proprietary image recognition technology, features advanced on-site sensors that detect
irregularities, even in the dark. If an intruder isdetected, images are immediately transmitted
to a SECOM control center, enabling control
center staff to accurately ascertain the statusof the intruder and respond appropriately. If
the subscriber has also installed the SECOM
Foggy Protection System, control center staff
can activate this system remotely, filling theroom with a thick but harmless chemical mistthat significantly reduces visibility for the
intruder, thus hindering his or her ability to­proceed as planned.
A recent introduction to our lineup is
the newly developed SECOM T-AX, which
combines SECOM AX with the features of
SECOM TX, a centralized security system forcommercial buildings with multiple tenants.
As a result, we are now able to provide security systems employing proprietary image­recognition to large commercial complexes.

Demand is growing for surveillance camera systems to prevent information leaks, thetheft of information and crimes. In response,
we recently launched the HVR System, a surveillance camera system that capitalizes on our
proprietary expertise in such things as detecting attempts to disable or destroy cameras.
With this high-performance system, control
equipment is linked to a combination of digital and analog cameras—up to 16 in total—toenable effective, continuous recording overextended periods. To date, the switch to digital camera-based systems has necessitatedthe removal of existing analog cameras. With
the HVR System, customers can continue to
use existing analog cameras, thus making thisa highly economical option. Going forward, we
will continue to promote the HVR System as
a flexible, economically priced option for both
existing and new customers.

HVR System surveillance camera

HVR System recording unit

Catering to Commercial Security Needs
Around-the-Clock
The enforcement of Japan’s Personal
Information Protection Law in 2005 has reinforced the need for stringent managementof personal information pertaining to customers and other individuals. Despite increased

SESAMO IDj, an access-control
system that identifies people by
the veins in their palms

SECOM Control Center

Secom Co., Ltd.

Annual Report 2008

11

SECOM TODAY

110 Emergency Call for Children
which enables children in danger
to take shelter in ATM booths

vigilance, however, incidents involving personal information leaks have continued tooccur. In most cases, the leaks have resulted
from the illicit removal of physical documents, PCs, or data contained in PCs, from theworkplace.
To help commercial customers improvetheir ability to protect such information, we
have developed SESAMO TRII, a comprehensive access-control system that makes it possible to restrict access to selected areas, times
and individuals, as well as keep a detailed
access record. Integrating this system withelectronic authorization systems, provided bysubsidiary SECOM Trust Systems Co., Ltd.,and contactless IC card-based identification
systems facilitates effective control of PC
boot-up and network access. SESAMO TRII
can also be combined with identification systems in the SESAMO series that use biometric
information—­including SESAMO IDs, a fingerprint identification system, and SESAMO IDj,
which identifies individuals by the veins in theirpalms—for even more sophisticated access
control. Our Electronic Article Surveillance(EAS) system, originally developed to prevent
shoplifting, is also used in offices to reinforce
daytime security.
Prompted by a number of recent crimes targeting stores and offices in the early morningand evening—times when employees areoften at work—customers are stepping up
efforts to protect employees in the workplace.
To assist in these endeavors, we have developed a service that augments existing on-line
security systems, allowing us to monitor windows and doors using sensors even when
workers are present, thereby helping to prevent
unlawful access and ensure employee safety.
The device is compatible with existing commercial security systems, and we will continue tomarket it to customers in a variety of industries
as an effective way to reinforce safety.

Leveraging Existing Strengths to
Cultivate New Customers
Another recent SECOM offering is 110
Emergency Call for Children (110 is the number for Japan’s emergency call service), which
employs technologies used in SECOM IX, aremote imaging system developed for use
in automated teller machine (ATM) booths.
A child who feels he or she may be in danger for any reason can call for help simply by
ducking into an ATM booth and pushing the
emergency call button, which immediately
locks the automatic door, preventing anyone
else from entering. SECOM image monitoring center staff will then confirm the situation
using the images and attempt to make contact

Contracts for Centralized Security Systems

Centralized (On-Line) Security Systems(As of March 31, 2008)(2) Alert SECOM Emergency
Response Personnel

SECOM
Emergency
Depot(1) Alert using
telephonecircuits

Secom Co., Ltd.

Fire Dept.

PoliceDept.

Home

Commercial

Gas
Company

POLICE(3) Dispatch SECOM Emergency
Response Personnel

12

SECOM
Control Center(2) Alert Emergency Services andUtilities as Necessary

Subscriber

Annual Report 2008

Service industries
12.0%
Retailing/wholesaling
7.7%
Financial services
7.2%
Manufacturing
6.6%
Government agencies 5.3%
Other
22.3%
Home
38.9%

on the ATM booth’s speaker phone and reassure the child, and when warranted dispatch
emergency response personnel and contact
the police. Following 110 Emergency Call forChildren’s adoption for use in regional bankATM booths, a number of agricultural cooperatives also contracted SECOM to install the­system in its credit cooperative ATM booths.
The Setagaya Security Patrol, launched in
April 2007, capitalizes on SECOM’s accumulated expertise in security patrol services forcommercial buildings. The patrol, provided
under contract with Tokyo’s Setagaya Ward,conducts around-the-clock street and park
patrols using cars bearing the SECOM logo.
Since the patrol began, it has played apart in the arrest of ­individuals suspectedof wrongdoing.
Praise for the Setagaya Security Patrol
prompted Tokyo’s Minato Ward to contract
the Minna-to (a play on words tying together
the ward name and the Japanese phrase“minna to,” or “everyone together”) Patrol,
which focuses on nighttime patrols throughout
the ward and regular patrols of routes to andfrom school and of facilities especially for children aimed at ensuring their safety. This service has also earned praise from local ­residents
for helping to protect the ward from crime.

Expanded Participation in PFICorrectional Facilities: Kitsuregawa
Rehabilitation Program Center
Having played a key role in Japan’s first private
finance initiative (PFI) correctional facility—
the Mine Rehabilitation Program Center in thecity of Mine, Yamaguchi Prefecture, in April

Exterior of the Kitsuregawa Rehabilitation Program Center, a PFI
correctional facility

2007—in October 2007, we commenced operation of Kitsuregawa Rehabilitation Program
Center and Kurobane Prison, two correctional
facilities in, respectively, Sakura and Ohtawara,
Tochigi Prefecture. Prior to this, a SECOM-led
consortium had secured a 15-year contract
through general bidding for Social Rehabilitation
Support Kitsuregawa Co., Ltd.—a special­purpose company in which SECOM is the­principal s­ hareholder—to o­ perate and maintainthe Kitsuregawa Rehabilitation Program Center,in partnership with the Ministry of Justice.
Rigorous security for the Kitsuregawa
Rehabilitation Program Center, which focuses
on rehabilitation programs for convicted
offenders, is provided by a closed-circuit surveillance camera system that is monitoredfrom a central monitoring office. With aninformation system provided and overseen
by SECOM Group company SECOM Trust
Systems and maintenance services provided by Group company Tokyo Biso Kogyo
Corporation, the center capitalizes on SECOM
Group capabilities. Incorporating such innovative approaches as group sessions focusedon behavior modification and vocational training aimed to equip inmates with marketable skills and qualifications that are in highdemand, the facility marks a departure fromtraditional prisons.
These projects will enable us to secure
additional expertise in correctional facility
management, as well as to contribute to asociety that is secure and free from apprehension by promoting and assisting in the prompt
rehabilitation of inmates, thereby facilitating
early release and preventing recidivism.

Setagaya Security Patrol car
bearing the SECOM logo

Minna-to Patrol car
bearing the SECOM logo

Entrance to the Kitsuregawa Rehabilitation Program Center

Secom Co., Ltd.

Annual Report 2008

13

SECOM TODAY

H ome Security Services
To ensure our ability to resolve unease and bring peace of mind to homeowners, we are steppingup efforts to reinforce marketing of residential security products and systems.

SECOM Home Security Subscribers
Increase as Security Systems Becomea Standard Feature in Many Homes
Launched in 1981, SECOM Home Security—
Japan’s first-ever home security system—encompasses around-the-clock monitoring for
intruders, fires, gas leaks and medical emergencies. Should an abnormality be detected, a
SECOM control center dispatches emergency
response personnel and, if necessary, contacts
the police and/or fire department. Today, ourgrowing customer base ranges from single
people living in condominiums to middle-aged
subscribers with families and seniors.
Recent years have brought an increase in
the incidence of residential break-ins while
the occupants are at home, clearly increasing
the danger of physical harm. Accordingly, we
have introduced a number of security products that can be integrated into SECOM Home
Security to create a system that both ensurespersonal security when the occupants are inand protects their property when they are out.
These include SECOM Anshin Glass, a highimpact, breakage-resistant window glass witha built-in sensor that deters break-ins through14

Secom Co., Ltd.

Annual Report 2008

­ indows—­a modus operandi particularly popuw
lar among thieves targeting detached dwellings. Among other options is the External
Image Monitoring service, which is designed
to discourage trespassers, and SECURIFACE,
an intercom system featuring a built-in facedetection function that recognizes when the
person at the door is attempting to hide his or
her face.
We are also working to cultivate new sales
routes that will enable us to further promotemarket penetration for SECOM Home Security.
For example, in the period under review, we
entered into an alliance with a leading glass
manufacturer in Japan, thereby enabling us toincrease sales of SECOM Home Security in thehome renovations market. We anticipate substantial demand for SECOM Home Security,
as renovating one’s home provides an ideal
opportunity to consider reinforcing security. In
the market for built-for-sale houses, we havejoined forces with a major residential construction company to install high-grade home security systems for the company’s model houses.
These houses feature the basic SECOM Home
Security package as standard equipment, as
well as SECURIFACE, and are also equippedwith the Sensor Light Camera—which detects
when a person approaches the house at night,
automatically turning on a light and photographing the person—and Home Pythagoras, a security vault that offers superior heat resistanceand protection against vandalism.

SECOM Home Security

In the market for security for previously
owned condominiums, we allied ourselveswith Japan’s top condominium management
firm to propose home security packages featuring intercom systems with monitoring cameras
for units to be sold to private owners.
Needs are also growing for our “town security” systems, which are designed to provide
security for entire communities. Town security systems involve providing SECOM Home
Security for each home and various security
products for the entire neighborhood, thereby
providing superior security for the community
as a whole.

Value-Added SECOM Home Security
Peripheral Services

Built-for-sale house equipped withSECOM Home Security package
as a standard feature

To further enhance the satisfaction of
SECOM Home Security subscribers, weoffer a wide selection of additional services.
These include SECOM Home Service,
which comprises a host of lifestyle support
services. These include Anshin Support
Service, which assists in resolving concernsthat arise in everyday life by, among others,
patrolling around subscribers’ homes whenresidents are away on vacation or for­business; Troubleshooting Support Service,
which includes assistance by expert firms
in r­ esolving such problems as lost keys, ­broken ­windows and malfunctioning PCs;and Housework Support Service, which
includes assistance with housecleaning,

SECOM Home Service, a suite of value-added lifestyle support
services available to SECOM Home Security subscribers

Secom Co., Ltd.

Annual Report 2008

15

SECOM TODAY

meal preparation, and trees and gardens,also provided by expert firms with which
SECOM has concluded business alliances.
These services are available to SECOM
Home Security subscribers around-the-clock.
All the subscriber has to do is simply call ourHome Service desk and place a request, and
we look after the rest.

For subscribers to SECOM Home Security
or the SECOM MS–3 condominium security
system, we recently introduced an emergency
earthquake early warning (EEW) service.
Providing early warning of impending tremors,
EEW systems give people precious extra­seconds to protect themselves at home.

Town Security equips each home with SECOM Home Security and the neighborhood
as a whole with various security products, including surveillance cameras.

16

Secom Co., Ltd.

Annual Report 2008

O ther Security Services
The distinctive SECOM AED Package Service continues to attract an increasing number ofsubscribers. COCO-SECOM provides real-time information on the whereabouts of people and items,
and the option of requesting the dispatch of emergency response personnel, and has contributed to
the favorable resolution of a number of incidents.
SECOM’s Evolving
AED Package Service
Orders for SECOM AED Package Service
emergency lifesaving kits continue to increase.
What is distinctive about this service is thatrather than simply placing automated external
defibrillators (AEDs)—electronic devices used
to reestablish a normal heart rhythm—at a customer’s premises, we offer a full-service package. This package encompasses leasing andmaintenance of AEDs, with periodic replacement of depleted supplies and servicing in theevent of a malfunction—available around-theclock from a dedicated help desk. These kits
are increasingly being used in, among others,
sports facilities, public-sector office buildings,
airports, railway stations, cinemas, gas stations, financial institutions and other large
complexes. With the aim of further enhancing
their usefulness, we recently launched a monitoring service that makes it possible for AED
units installed in ATM ­corners to be constantly
ready for use.

moving people and vehicles. COCO-SECOM
has since attracted attention as an effectivemeans to protect children from abduction, prevent vehicle theft and monitor the movementsof valuables and employees. COCO-SECOM
has played a role in the resolution of numerous
incidents, including the location of lost children
and the recovery of stolen automobiles.
COCO-SECOM uses signals from Global
Positioning System (GPS) satellites and cellular
telephone base stations to accurately pinpoint
locations. Unlike GPS-enabled cellular telephones, COCO-SECOM transmitter devices
are exclusively for locating people or property,
meaning they are user-friendly and can beused to call an operator at the COCO-SECOM
operations center around-the-clock to request
the dispatch of emergency response personnel from one or more of our approximately
2,200 SECOM ­emergency depots nationwide.
In a bid to enhance the convenience of
COCO-SECOM, we have modified contract
conditions, thus enabling families to use a­single COCO-SECOM device concurrently.

Enhancing the Convenience of
COCO-SECOM
We launched COCO-SECOM mobile security
systems in April 2001 to provide security for

COCO-SECOM Operations Center

The increasingly popular COCO-SECOM

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

POLICEPOLICE

Request for
Search(Telephone/Internet)
COCO-SECOM Transmitter
Device (Vehicle-Mounted)

Subscriber

Police Dept.,
Emergency
Services

COCO-SECOM
Transmitter
Device(Portable)

Dispatch
Emergency
Response
Personnel(If Requested)

SECOM AED Package Service

Secom Co., Ltd.

Annual Report 2008

17

SECOM’s Research and Development Activities

Charged with developing the coretechnologies and systems thatwill enable us to realize our Social
System Industry vision, the SECOM
Development Center focuses on systems that anticipate society’s needs
and are both original and reliable.
We place our highest priority on
quality. Since SECOM systems arein action around-the-clock, they must
be able to detect abnormalities at
any time of the day or night. Ensuring
stable system operations under awide range of climatic conditions andin a variety of environments demands
a significantly higher level of precision and reliability than, for example,
a standard electronics appliance.
Accordingly, we conduct exhaustive reliability tests on both systems
and equipment at the development
stage. Only those that meet the­stringent benchmarks set forth inour proprietary SECOM Equipment
Standards are taken to the nextlevel—­production at factories in
SECOM Development Center

18

Secom Co., Ltd.

Annual Report 2008

Japan and overseas, including
Secom Industries Co., Ltd. The
SECOM Development Center andour plants actively exchange information to ensure consistently high product ­quality. We also place a highpriority on the speed of development, recognizing that we have a
responsibility to remain abreast ofsocial change and crime trends, andto respond swiftly and effectively to
any which may arise.
The SECOM Intelligent Systems(IS) Laboratory works to develop
sophisticated technologies to support the new products and service
models that will help realize the Social
System Industry vision. These include
the core sensing, image processing,robotics, network security and medical information processing technologies that will underlie our lineup in the
future. These technologies are transformed into products and systems at
the SECOM Development Center.
To date, these efforts haveyielded such products as SECOM
AX—which incorporates a proprietary
image recognition technology—and
SECOM Robot X, an outdoor sur­veillance robot that uses advanced
automatic drive control and image
processing technologies to detect
intruders. Communications and­medical information technologies
developed in-house facilitated thecreation of HOSPINET—a remote
image diagnosis support service thattransmits computed tomography (CT)and magnetic resonance imaging(MRI) data to our HOSPINET center,
where it is examined by our diag­nostic experts. Researchers at the
SECOM IS Laboratory frequently visit
subscribers’ premises and accompany salespeople and emergency
response personnel, allowing them toaccumulate the first-hand knowledge
and experience in the field that facilitates the development of distinctively SECOM products and systems
which respond effectively to theneeds of customers.
Our research and development
teams will continue working to bettergrasp the needs of our customers,
and develop innovative products andsystems that anticipate the future andenable us to respond to the expectations, and earn us the trust, of society.

SECOM IS Laboratory

SECOM TODAY

Security Services in Overseas Markets
SECOM provides the same high-grade security services as it does in Japan to customers inoverseas markets. Operations in Asia are expanding particularly rapidly. In the period underreview, Secom plc in the United Kingdom won the 2007 Security Excellence Award.

Expanding Operations in the PRC andSoutheast Asia
Our overseas operations currently encompass
businesses in Taiwan, the Republic of Korea(ROK), the PRC, Thailand, Malaysia, Singapore,
Australia, Indonesia, Vietnam, the United
Kingdom and the United States. At present,
sharp economic growth in Southeast Asia
has spurred a sudden jump in security needs.
One result of this has been a rapid increase insales of monitoring camera systems designed
to enhance security within companies. A distinguishing feature of our business when we
first entered the Southeast Asian market wasthat many of our subscribers were the local
operations of Japanese companies that naturally expected the same level of security services as they receive in Japan—a feature thatwas highly conducive to the introduction of
the SECOM business model. Looking ahead,
we will strive to reinforce our operations inSoutheast Asian markets by expanding our
local branch office networks and establishinga robust operating foundation.
In the PRC, we have set up security services companies in key cities in the country’s
high-growth coastal areas, namely, Dalian,Shanghai, Beijing, Qingdao and Shenzhen,
through which we provide local customers withthe same types of security services we offer inJapan. These companies have also expanded
their focus beyond their immediate markets,
establishing branches and offices in surrounding cities and increasing subscriptions.
With security systems beginning to findwide acceptance in the PRC, we will focus
on broadening our presence by establishing
operations in key inland cities, thereby creatinga nationwide service network. In the PRC,
SECOM security equipment is distributedby Shanghai Guanlin Secom Intelligence
Technology Co., Ltd., a comprehensive security
equipment trading company established as a

joint venture with a local partner. This company
sources basic equipment from Chinese manufacturers or local plants of overseas manufacturers and adds the necessary additional
equipment to create advanced, tailored security
systems. Shanghai Guanlin Secom Intelligence
Technology boasts solid connections with local
security equipment manufacturers, underscoring its importance to our plans to further growour business in this crucial market.

Emergency response personnel ofsubsidiary Beijing Jingdun Secom
Electronic Security Co., Ltd.

Secom plc Receives
Security Excellence Award
SECOM Group company Secom plc, which
provides security services in the United
Kingdom, was awarded the 2007 Security
Excellence Award for the best customer careinitiative. Sponsored by the British Security
Industry Association, the Association of Chief
Police Officers and an industry publication,
among others, the Security Excellence Awards
are the most prestigious awards given to security companies in the United Kingdom. Secom
plc’s award underscores the appreciation our
unique approach to security has earned in the
United Kingdom.
Secom plc also secured a major order toprovide a security system for police facilities
at London Heathrow Airport. This order camethrough the Metropolitan Police, the territorial
police force responsible for Greater London,and encompasses the provision of security
systems for police facilities at Heathrow’s new
Terminal 5, and at St. Pancras International andStratford stations (Eurostar), all of which areconsidered to be high risk terrorist targets.
The order reflects the Metropolitan Police’s
high opinion of Secom plc’s service record
and the high quality of security systems it had
previously provided for other police facilities.
Secom plc will continue to focus on proving
superior security systems with the aim of­further growing its business.

2007 Security Excellence Awards ceremony

Terminal 5 of London’s Heathrow Airport

Secom Co., Ltd.

Annual Report 2008

19

SECOM TODAY

Fire Protection Services
SECOM offers reliable fire protection services backed by expertise and a solid track record.
Sales of residential fire alarm systems are brisk, while demand for system renovations is
also expanding.

Residential fire alarm

20

Secom Co., Ltd.

Demand for Residential Fire Alarm
Systems On the Rise

Growing Demand for Fire Protection
Systems in the Renovations Market

Nohmi Bosai Ltd., which became a consolidated subsidiary in December 2006, is one ofJapan’s leading manufacturers of fire alarm, fire
extinguishing and other fire protection systems.
Nohmi Bosai products marketed under
the SECOM brand include New Home Fire
Sensor, a fire alarm system for residential
applications. Owing to a change in Japan’s Fire
Protection Law, the installation of such systems is now mandatory in new homes nationwide. Moreover, local authorities throughout
the country have introduced regulations thatwill gradually oblige existing homes to beequipped with fire alarm systems. Owing to
the change in the law, demand for the New
Home Fire Sensor has risen sharply. Among
its numerous advanced features which haveearned high marks from residential construction companies, New Home Fire Sensor is
powered by a battery with a life of 10 years,
meaning it is unaffected by power failures, and
it is freestanding—meaning it does not requiretime-consuming wiring and is easy to install.
Service personnel respond promptly in theevent of a malfunction to ensure the units arealways in excellent condition.
We view fire protection as an area with considerable growth potential and will continue
efforts to establish a preeminent market position, as well as to promote widespread acceptance of residential fire protection systems.

Nohmi Bosai provides fire protection systems
for a broad range of facilities—including multipurpose complexes, office buildings, condominiums, plants, tunnels cultural properties, ships,
hospitals and detached houses—and strives toenhance its service capabilities and expand thenumber of installations. Recently, demand has
grown in the renovations market, with many
facility owners taking advantage of the opportunity to install advanced fire protection systems.
Nohmi Bosai is drawing on its expertise toadvise customers on the most appropriate
choices for their needs.
Nohmi Bosai is also cultivating environmentrelated businesses, notably Dry Mist—an­ultrafine dry mist spraying system designed tocombat the heat island phenomenon. It uses
the principle that water draws heat from its
surroundings to lower the temperature when
it vaporizes. Dry Mist achieves a two to threedegree reduction in the ambient temperature of
the misted areas. It uses tap water, ensuring themist is hygienic, and adjusts automatically toaccommodate different temperatures, humidity
levels, wind speeds and directions, and other
weather conditions to provide a cool, refreshingmist. With orders for Dry Mist increasing,Nohmi Bosai will step up efforts to apply its
extensive know-how and experience to help
create a pleasant urban environments and­cultivate new businesses.

Nohmi Bosai’s Menuma Factory

Facility maintenance services

Annual Report 2008

Medical Services
SECOM is expanding its home nursing services and leveraging Group capabilities to develop andmanage specialized nursing homes.

Expanding our Trusted
Home Nursing Services
Protecting one’s health is crucial to security
and peace of mind, and is thus an important
aspect of our commitment to realizing ourSocial System Industry vision. Accordingly, we
entered the medical services business. Today
our medical services business encompasses a
broad range of services.
We began in 1991 with the provision ofJapan’s first private-sector home nursing services, whereby nurses regularly visit patientsin their homes, providing highly skilled nursing
services and treatment in line with the instructions of patients’ physicians. We have a network of approximately 40 SECOM visiting
nurse stations, which dispatch our roster ofapproximately 260 nurses to patients’ homes,
and we will continue working to provide homenursing services that are individual-­oriented,
thereby ensuring ­customer satisfaction.

The SECOMFORT series continues toattract critical and popular acclaim for offering an environment that is conducive to theevolving needs of seniors in the years ahead,
thereby ensuring security and peace of mind.

Contributing to Better Regional
Medical Care
We have established affiliations with local
hospitals to ensure effective follow-up support
for customers of our home nursing services,
as well as with the aim of helping to create amore effective local medical care system. We
currently have affiliations with 16 such institutions. We endeavor to assist these institutions
to improve management efficiency, secure
top-level human resources and the latest medical equipment, enhance service capabilities
and address other critical challenges.

Visiting nurse training

Artist’s rendition of Comfort Hills Rokko

The SECOMFORT Series of
Nursing Homes
The first facility in our SECOMFORT series ofnursing homes, Comfort Garden Azamino, in
Yokohama, opened in 2006. The SECOMFORT
series, which combines security services andmedical services, is based on the concept of“comfortable aging,” or aging without apprehension. The second SECOMFORT nursing
home, Comfort Hills Rokko, is scheduled toopen in Kobe in June 2009.

Home Medical Services
Prescription

Medical Care
Institution

Physician Guidance
Nurse Report

Coordination

Pharmaceutical
Dispensing andHome Delivery
Service(SECOM Pharmacy)

Home Nursing Services(SECOM Visiting
Nurse Station)

Consulting
Prescription
Pharmaceutical Delivery

Patient

Nurse Visit
Outpatient Care

Home nursing services

Secom Co., Ltd.

Annual Report 2008

21

SECOM TODAY

Insurance Services
SECOM’s non-life insurance policies ensure security and peace of mind in the event of misfortune.
We continue to develop and actively market a variety of distinctive policies.

Security and Non-Life Insurance
The rationale behind having a non-life insurance company in the SECOM Group is ourconviction that augmenting security services,which are preventative in nature, by adding
insurance, which looks after customers in theevent of misfortune, reinforces security andpeace of mind.
New SECOM Anshin My Car
on-site emergency services

Head office of SECOM General
Insurance Co., Ltd.

Uniquely SECOM Non-Life Insurance
Policies
Our lineup of distinctive policies includes
SECOM Anshin My Home, a policy designed
for households that offers a discount on premiums to customers who have installed home
security systems—taking into account the
reduced risk of fire in such homes. Additional
discounts, up to 60% in total, are offered tocustomers who have installed exclusively­electrical appliances or structures built with
fire-safe materials.
The same concept underlies the Security
Discount Fire Policy, which offers a discounton premiums of up to 30% to commercial customers that have installed security systems,
recognizing this as a risk-mitigating factor.
Such policies that acknowledge the reduced
risk which comes with the installation of
security systems continue to yield considerable synergies, with subscribers to security
systems frequently taking advantage of the­opportunity to also purchase insurance.
New SECOM Anshin My Car is a comprehensive automobile insurance policy that
includes around-the-clock support services
from SECOM emergency response personnel
in the event of an accident. This policy enables
us to ease the concerns of subscribers andoffer peace of mind, even in the event of a
motor accident.

To enable cancer patients to take advantageof the best treatment options available, wedeveloped MEDCOM—an unrestricted cancer treatment policy that fully covers costs for
hospitalization and all types of medical treatments, both those that are covered by Japan’s
National Health Insurance scheme and thosethat are not. This enables subscribers to takeadvantage of advanced treatment options
without having to worry about the frequently
prohibitive costs. Subscribers also have accessto MEDCOM Nurse Call, a free-of-charge support service whereby agents who are also
qualified nurses provide consultation, introduce medical institutions and help arrange forsubscribers to obtain second opinions.
Recognizing the importance of insurance inensuring peace of mind, we will continue tofocus efforts on developing and marketing avariety of attractive and innovative offerings.

SECOM General Insurance call center

22

Secom Co., Ltd.

Annual Report 2008

Geographic Information Services
Subsidiary Pasco Corporation has obtained exclusive rights in Japan to sell image data offered by
the operator of a new commercial satellite. Pasco is also promoting the joint development of new
broad-range, high-precision surveying and measuring technologies with the aim of establishingitself as a leading provider of geospatial information services.
Responding to Emerging Needs while
Reinforcing Results
Owing to the recent amalgamation of cities,
towns and villages throughout Japan, local
and regional authorities are actively revamping their information systems and integrating
mapping data, aerial photographs and otherbasic geographic information. In this environment, Pasco’s success in promptly developing solutions to such needs is underscoredby the rising demand for its PasCAL series ofgeographic information system (GIS) solutions
and its various public facility management
systems.
For the private sector, Pasco has earned
a reputation for marketing support services—which help companies analyze businessareas and formulate branch development
strategies—­and logistics support services,which aid efforts to develop appropriate plans
for the transport of goods. In 2007, Pasco
introduced a highly acclaimed service designed
to assist companies in formulating business
continuity plans (BCPs) by, for example, using
GIS data to forecast the number of employeesthat would be unable to return home safely inthe event of a major disaster. Initially offered
only in selected areas, this service will also
soon be available in the Tokyo and Osaka­metropolitan regions.

Pasco Introduces Satellite InformationBased Geographic Information Services
Pasco has obtained exclusive rights in Japanand nonexclusive rights worldwide to sell
image data generated by the operator of a
German commercial satellite. This satellite is
unique since it uses microwaves to capture
images of the earth’s surface—meaning it cancapture images regardless of the weather or
the time of day—and has been used to generate image data for such things as national
land maps in tropical areas near the equatorthat are generally obscured by clouds. Pasco
is also working to develop a wide range ofhigh-­precision surveying technologies withthe aim of contributing to efforts to prevent
global warming. Of particular note, Pasco isgathering, comparing and analyzing image
data from the satellite to measure and monitor the flooding from glaciers in the Himalayas,
the lingering snow on Mt. Fuji, the melting of
the Antarctic ice shelf and the decline of the
Amazon forests. Going forward, we are confident that Pasco’s surveying technologies
will play a crucial role in advanced efforts topromptly identify environmental damage andassess the impact of global warming.

Hypsographic map of digital surface
model generated from aerial photos

New Services Through UbiquitousTechnologies
Pasco is taking decisive steps to diversify its
operations. One of the company’s new businesses is “Ubiquitous Consulting.” As a participant in the city of Kobe’s Free Mobility
Project, Pasco took part in the development ofan urban planning proposal designed to enable
all residents, including those with physicalimpairments, to move around the city easily and comfortably. Since then, Pasco has
expanded its focus to include the use of electronic tags and radio wave markers in urban
living spaces—including public roads, public facilities, bridges and parks—to f­ acilitate
effective maintenance and management.
Positioning information and management
data provided by such tags and markers
can be used together with the Internet to­create a more pleasant living environment.

Secom Co., Ltd.

Image of Mt. Fuji, Japan, captured by TerraSAR-X(© Infoterra GmbH, Distribution [PASCO])

Annual Report 2008

23

SECOM TODAY

Information and Communication Related andOther Services
In the area of information and communication related services, we augmented the SECOM
Safety Confirmation Service lineup, earning praise from customers. In real estate development
and sales, we continue to offer attractive condominiums that deliver both quality and peaceof mind.
SECOM Safety Confirmation Service

The disaster monitoring center of
SECOM Trust Systems Co., Ltd.

Secure Data Center

Awareness of the need for effective BCPs
among Japanese companies has increased
since Japan’s government introduced business continuity guidelines in 2005. Against thisbackdrop, the SECOM Safety Confirmation
Service continues to attract considerable attention. This comprehensive service helps com­panies confirm the safety of employees andassess damage in the aftermath of an earthquake or other major disaster, thereby assisting them in swiftly resuming operations. The
effectiveness of the service—which waslaunched in 2004—was demonstrated during
the Niigata Chuetsu and Fukuoka earthquakes,
which occurred soon after its introduction.
Recently we have taken steps to enhance
the service. In January 2007, we introduced
SECOM Safety Confirmation Service GS,
which provides risk information to employees
on assignment abroad—thus assisting companies in more effectively managing risks related
to overseas operations. In November 2007,
we launched SECOM Safety Confirmation
Service SCM, which enables companies toconfirm the safety of key customers anddetermine the extent of the damage wheresuch customers are located—a vital challenge
in the formulation of BCPs.
We also offer a variety of other services inthis category that assist in the formation ofeffective BCPs. These
include the SECOM
Disaster Response
Support Service, whichhelps companies todevelop effective initial response strategies, thereby preparing
them to act swiftly in the­aftermath of a disaster.

Glorio Seta (Tokyo)

24

Secom Co., Ltd.

Annual Report 2008

Support for Sophisticated Information
Security: The Secure Data Center
In response to the call for peace of mind intoday’s networked society, we offer a variety of services designed to ensure the security of networks and information. The Secure
Data Center provides a safe environment forour subscribers’ valuable data that combines
physical and information security—housing
subscribers’ servers and providing sophisticated protection against unauthorized accessand computer viruses, as well as digitalauthentication services. Secure Data Center
subscriptions continue to rise, underscoring
the praise the facility has earned from prominent financial institutions for which it has built
digital authentication registry offices. Goingforward, we will continue working both toboost sales of Secure Data Center subscriptions and to advance our information security
services.

Secure and Comfortable
SECOM Condominiums
Group subsidiary Secom Home Life Co., Ltd.,
offers the Glorio series of condominiums.
Developed with an emphasis on peace of mind
and quality lifestyles for residents, these condominiums are equipped with our on-line security system as a standard feature. The Glorio
series also offers Glorio Support 24, a condominium management service that not only
gives residents around-the-clock access to avariety of maintenance services, but also provides responses to enquiries on a broad rangeof subjects—including medical care, non-life
insurance and nursing care. Leveraging uniqueGroup capabilities, these services continue toearn acclaim from residents.

FINANCIAL REVIEW
Operating Results
Overview
In the year ended March 31, 2008, theparent company and its consolidated subsidiaries (collectively “the Company”)
sought to respond to the needs of its
customers by taking steps aimed at reinforcing its security services business—
including strengthening the performancefeatures of its on-line security systems
and products, and enhancing its lineup. At
the same time, the Company promoted
the expansion of its fire protection services, medical services, insurance services, geographic information services,
and information and communication
related and other services. Reflecting afull year of contributions from the fire protection services segment—newly established for the operations of Nohmi Bosai,
which became a consolidated subsidiary
in December 2006—and favorable
increases in security services, medical
services, geographic information services and insurance services, consolidated net sales and operating revenuerose 11.0%, or ¥70.0 billion, from theprevious period, to ¥706.7 billion. Higher
net sales and operating revenue, together
with a decline in impairment losses onlong-lived assets and goodwill, supported
an 11.9%, or ¥11.2 billion, increase inoperating income, to ¥105.6 billion. Net
income rose 10.5%, or ¥5.9 billion, to¥61.8 billion.
Net Sales and Operating Revenue
Net sales and operating revenue rose
11.0%, or ¥70.0 billion, from the previous
period, to ¥706.7 billion, reflecting a fullyear of contributions from the fire protection services segment—newly established
for the operations of Nohmi Bosai, whichbecame a consolidated subsidiary inDecember 2006—and favorable increases
in security services, medical services,
geographic information services andinsurance services. Net sales and operating revenue in the information and communication related and other services
segment decreased. (For more details,
please see Segment Information below.)

Costs and Expenses
Total costs and expenses increased
10.8%, or ¥58.8 billion, to ¥601.1 billion.
Cost of sales rose 10.7%, or ¥43.9 billion, to ¥454.2 billion, equivalent to 64.3%
of net sales and operating revenue,
edging down from 64.4% in the previous period. Selling, general and administrative expenses were up 13.9%, or¥17.7 billion, to ¥144.8 billion, or 20.5%of net sales and operating revenue, up
from 20.0% in the previous period. This
increase was primarily attributable to theinclusion of a full year of sales of the fire
protection services segment, net sales
and operating revenue of which tend to
be concentrated in the fourth quarter.
Impairment loss on long-lived assets
declined ¥1.2 billion, to ¥16 million, andimpairment loss on goodwill decreased¥1.8 billion, to ¥1.1 billion. Loss on
sales and disposal of property, plant and­equipment, net rose ¥195 million, to¥976 million.
Operating Income
Operating income increased 11.9%, or¥11.2 billion, to ¥105.6 billion, and rep­resented 14.9% of net sales and operating revenue, up slightly from 14.8% in
the previous period. This was attributable
to the increase in net sales and operating revenue and declines in the cost of
sales ratio and impairment losses on­long-lived assets and goodwill, althoughthese factors were partially countered byhigher selling, general and administrative
expenses. In terms of segment results,
increases in operating income in the­security services segment, the geographic
information services segment and thefire protection services segment, as well
as a decrease in the operating loss in the
medical services segment, were the primary contributors to the overall increase.
(For more details, please see Segment
Information below.)

Income before Income Taxes
Income before income taxes amounted
to ¥110.3 billion, up 15.7%, or ¥14.9 billion, from the previous period, owing toincreases in operating income and net
other income.
Income Taxes
Income taxes rose ¥6.5 billion, to ¥47.1
billion, reflecting the increase in income
before income taxes, and were equivalent to 42.7% of income before income
taxes, compared with 42.6% in the previous period.
Minority Interests in Subsidiaries andEquity in Net Income of AffiliatedCompanies
Minority interests in subsidiaries
amounted to ¥6.6 billion, an increaseof ¥2.0 billion from the previous period,
owing to the inclusion of a full year of
results for the fire protection services
segment. Equity in net income of affiliated companies declined ¥530 million,to ¥5.2 billion.
Net Income
As a consequence of the aforementioned
factors, net income increased 10.5%,
or ¥5.9 billion, to ¥61.8 billion, and wasequivalent to 8.7% of net sales and­operating revenue, compared with 8.8%in the previous period. Net income pershare was ¥274.51. A resolution to raiseannual cash dividends by ¥5.00, to ¥85.00
per share, was approved at the generalshareholders’ meeting on June 26, 2008.
The increase in dividends reflected theCompany’s aim of ensuring returns toshareholders that closely reflect its­operating performance by determining
dividends based on consolidated results
calculated using accounting principles­generally accepted in Japan, rather thanon nonconsolidated results, an approachthat was adopted in and has been in use
since the previous period.

Other Income and Expenses
Other income rose ¥4.6 billion, to ¥13.0
billion, and other expenses increased¥857 million, to ¥8.4 billion, resulting
in net other income of ¥4.6 billion, up
from ¥918 million in the previous
period. The increase in other income
was due ­primarily to a gain on p
­ rivate
equity investments.

Secom Co., Ltd.

Annual Report 2008

25

FINANCIAL REVIEW

Segment Information

For detailed segment information, please see Note 25 of the accompanying Notes to the Consolidated
Financial Statements.

Security Services
The security services segment encompasses electronic security services, othersecurity services, and merchandise andother. In the period under review, net
sales and operating revenue in the segment rose 4.7%, or ¥19.8 billion, to¥436.7 billion. Excluding intersegment
transactions, net sales and operating revenue in the segment amounted to ¥435.3
billion, equivalent to 61.6% of overall net
sales and operating revenue, down from
65.3% in the previous period.
Electronic security services include
centralized systems (on-line commercial
and home security systems) and largescale proprietary security systems, whichcenter on 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 to detect events, such as intrusions, fires and equipment malfunctions.
Sensors are linked to a SECOM control
center via telecommunications circuits
to enable remote monitoring around-theclock. Should an event be detected at
the subscriber’s premises, the relevant
information is relayed to the control center, where staff dispatch emergency
response personnel. Control center staff
also notify the police or fire department if
required while the emergency response
personnel take other appropriate measures. To ensure our ability to deliver
the level of quality subscribers expect,
we have established an integrated
approach, whereby we take full respon­
sibility for maintaining control over every
aspect of our electronic security services,from R&D to manufacturing, sales, security planning, installation, monitoring,
emergency response services and­equipment maintenance.
In the period under review, net sales
and operating revenue from electronic
security services amounted to ¥296.2 billion, an increase of 3.6%, or ¥10.3 billion.
In the area of on-line security systems
for commercial subscribers, we focusedon reinforcing performance features andenhancing our lineup in response to customer needs. In on-line security systems
for the home, we worked to increase subscriptions for SECOM Home Security bycarefully promoting products and services
tailored to customers’ requirements.
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

26

Secom Co., Ltd.

Annual Report 2008services, for the transport of cash andvaluables by specially fitted armoredcars and security professionals. In the
period under review, net sales and operating revenue from static guard services
increased 10.7%, or ¥4.5 billion, to ¥46.6
billion, while that from armored car services declined 3.7%, or ¥761 million, to¥19.5 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 monitoring systems, which can befree-standing or connected to on-line
security systems. In the period underreview, net sales and operating revenue
in this category amounted to ¥72.9 billion, an increase of 8.7%, or ¥5.8 billion.
Favorable sales were supported by major
orders for access-control systems.
Operating income in the security­services segment rose 7.3%, or ¥7.0 billion, to ¥103.1 billion. The operating margin rose to 23.6%, from 23.1% in theprevious period, as the increase in­operating income outpaced that ofcosts and expenses.
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 ofapplications, including office buildings,
plants, tunnels, cultural properties, ships
and residences.
In the period under review, net sales
and operating revenue amounted to¥86.6 billion, up from ¥28.4 billion in theprevious period. Operating income was¥4.9 billion, compared with ¥1.8 billion
in the previous period, while the operating margin was 5.7%, down from 6.4%
in the previous period. The principal factor behind the significant increases in
net sales and operating revenue andoperating income was the inclusion ofa full year of results for Nohmi Bosai,
which became a consolidated subsidiary
in December 2006. The decline in operating margin reflects the fact that net
sales and operating revenue for fire protection services from the constructionindustry tend to be concentrated in the
fourth quarter.
Medical Services
The medical services segment includes
home medical services, comprising pharmaceutical dispensing and delivery andhome nursing services, remote image

diagnosis support services, electronic
medical report systems, sales of medical equipment, the operation of nursing
homes, personal care services, the leasing of real estate for medical institutions,and others.
Net sales and operating revenue in the
medical services segment amounted to¥50.9 billion in the period under review,
an increase of 10.4%, or ¥4.8 billion. This
increase was primarily due to higher net
sales and operating revenue from medical equipment sales and the provision ofhome medical services.
The segment reported an operating
loss of ¥1.1 billion, an improvement fromthe ¥2.9 billion loss posted in the previous period. This was attributable largely
to declines in impairment losses on longlived assets and goodwill.
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 market 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—bothof which offer discounts on premiums
to customers who have installed home
security systems, thus recognizing thisas 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 thesubscriber be involved in an accident, and
MEDCOM, an unrestricted cancer treatment policy that covers the entire cost of
medical treatment for cancer.
In the period under review, the insurance services segment generated net
sales and operating revenue of ¥36.1 billion, an increase of 4.2%, or ¥1.4 billion,
as expanded marketing of non-life insurance policies boosted net premiums written and exceeded the impact of a decline
in the net gain on sales of securities.
The insurance services segment registered operating income of ¥3.8 billion, edging up 0.4%, or ¥14 million.
This result primarily reflected a decline
in net claims paid, which had risen in
the previous period owing to the impact
of typhoons, which partially offset the
impact of a decline in the net gain on
sales of securities.

Financial Position
Geographic Information Services
This segment encompasses a variety of
GIS services tailored to the needs of the
public and private sectors, as well as surveying and measuring, and construction
consulting services.
In the period under review, net sales
and operating revenue in the geographic
information services segment increased
8.5%, or ¥3.1 billion, to ¥39.7 billion. This
result reflected firm revenues from theprovision of map data to public agencies
and government offices for use in the
preparation of land development, preservation, urban planning and disaster prevention plans, and in the preparation andmaterials for the assessment and management of property taxes, as well as
an increase in overseas orders.
Segment operating income amounted
to ¥1.4 billion, an increase of 265.2%,
or ¥1.0 billion, boosting the operating
margin to 3.6%, from 1.1% in the previous period. This improvement was primarily attributable to the increase in net
sales and operating revenue, and also
reflected a decrease in selling, generaland administrative expenses.
Information and Communication
Related and Other Services
This segment comprises information andcommunication related services, including information security systems and network system operations services, which
protect subscribers’ information security in the event of a major disaster; realestate development and sales; and realestate leasing.
Net sales and operating revenue forthe segment in the period under review
amounted to ¥74.2 billion, a declineof 16.3%, or ¥14.5 billion. This result
reflected such factors as rising condominium prices, a consequence of higher construction costs, and flagging consumer
confidence, owing to the current unclear
economic outlook, which combined topush down the condominium market in
the second half of the period, hampering
net sales and operating revenue from realestate development and sales.
Operating income declined 26.5%, or¥1.9 billion, to ¥5.4 billion. The operating
margin slipped to 7.3%, from 8.3% in theprevious period.

Total assets as of March 31, 2008,
amounted to ¥1,265.5 billion, up 2.0%,
or ¥24.3 billion, from the end of the­previous period.
Total current assets increased 4.7%,
or ¥26.3 billion, to ¥580.5 billion. Thiswas due primarily to increases in cash
and cash equivalents (for more details,
please see Cash Flows below), and anincrease in inventories in the real estatedevelopment and sales business—a portion of which was offset by a decline in
cash deposits and sales of short-term
investment securities accompanying
an increase in new investments by our
U.S. investment company. While current assets increased, current liabilities
declined (see below), as a consequenceof which the current ratio rose only
slightly to 1.7 times, from 1.6 times
at the end of the previous period.
Investments and long-term receivables
edged up 0.3%, or ¥1.0 billion, to ¥329.6
billion. An increase in investments in affiliated companies attributable to a transfer from investment securities—related
to the acquisition of additional sharesin Tokyo Biso Kogyo—and equity in net
income of affiliated companies was offset by a decline in investment securities.
The decline in investment securities wasdue to the fact that unrealized losses on
securities—a consequence of flagging
stock market conditions—and the aforementioned transfer exceeded the amountof new investments.
Property, plant and equipment, lessaccumulated depreciation, was alsoessentially level, rising 0.4%, or ¥1.0 billion, to ¥251.5 billion. This reflected anincrease in security equipment and control stations necessitated by an increase
in security systems subscribers andthe purchase of land for the real estateleasing business, as well as an increase inaccumulated depreciation resulting fromthe depreciation of assets.
Other assets were down 3.7%,
or ¥4.0 billion, to ¥103.9 billion. This
reflected declines in prepaid pension
and severance costs, a consequenceof a deteriorating investment environment, and other intangible assets—theimpact of which was partially offset by anincrease in deferred income taxes resulting from the aforementioned unrealized
losses on securities.
Total liabilities were level, edging up
0.1%, or ¥321 million, to ¥628.5 billion.
Current liabilities edged down 0.3%, or¥883 million, to ¥347.2 billion, as thedecline in deposits received, including
deposits related to armored car services,
was largely offset by increases in bankloans related to the purchase of realestate for sale, accrued payrolls andnotes and accounts payable, trade.
Unearned premiums and other insurance
liabilities rose, reflecting an increase
in insurance contracts. Long-term debt
rose, owing primarily to the opening of
the Kitsuregawa Rehabilitation Program
Center. Investment deposits by policyholders declined, as certain policies designed
for payout at maturity came due.
Total shareholders’ equity rose 4.1%,
or ¥22.8 billion, to ¥574.6 billion. Retained
earnings were ¥471.1 billion, an increaseof ¥42.2 billion. This was partially offset
by an accumulated other comprehensive loss of ¥8.0 billion, compared withincome of ¥11.4 billion in the previous
period, resulting primarily from unrealized
losses on securities and losses from pension liability adjustments, a consequenceof flagging stock market conditions. The
equity ratio rose to 45.4%, from 44.5%.

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

04 05 06 07 08

0

04 05 06 07 08

Secom Co., Ltd.

Annual Report 2008

27

FINANCIAL REVIEWCash Flows
SECOM is committed to maintaining sufficient 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 ¥92.6 billion. The principal items contributing to this total were net income of¥61.8 billion and depreciation and amortization of ¥58.2 billion. Cash used in operating activities included an increase ininventories of ¥19.3 billion, owing to thepurchase of real estate for sale, and anincrease in deferred charges of ¥16.3 billion. Operating activities provided ¥24.7
billion more than in the previous period,
owing mainly to higher net income, as
well as to a considerably lower increase
in receivables and due from subscribers,
net of allowances. A decline in deposits
received related to armored car services
led to a decrease in cash deposits.
Net cash used in investing activities
amounted to ¥52.1 billion. Significant factors included ¥45.3 billion in payments forpurchases of property, plant and equipment, a result of the purchase of security
equipment and control stations, necessitated by an increase in security systems
subscribers, and a net total of ¥5.4 billion
in payments for purchase of short-term

investments and investment securities.
In the previous period, investment activities provided a net total of ¥22.0 billion.
The difference in the period under review
was net payments for purchases of shortterm investments and investment securities, compared with net proceeds fromsales of short-term investments andinvestment securities in the previous
period to fund the payout of investment
deposits received from insurance policyholders. Similarly, net proceeds fromshort-term receivables and long-term
receivables in the period under review
decreased from the previous period.
Net cash used in financing activitieswas ¥19.3 billion. This amount reflected¥18.0 billion in dividends paid and a ¥6.1
billion decrease in investment deposits bypolicyholders, as well as net proceedsfrom bank loans and long-term debt of¥6.2 billion. Financing activities used
¥109.0 billion less than in the previous
period, owing to a ¥6.1 billion decrease
in investment deposits by policyholders,compared with a ¥94.4 billion decreasein the previous period.
As a result of operating, investing
and financing activities during the period
under review, cash and cash equivalents
at end of year amounted to ¥214.6 billion,up ¥21.4 billion from ¥193.2 billion at theend of the previous period.

Depreciation andAmortization

Capital Expenditures(In billions of yen)60

(In billions of yen)

100

60

48

Cash Flows(In billions of yen)

50

45

36

0
30

24

–50
15

12
0

04 05 06 07 08

0

–100
–150
04 05 06 07 08

06

07

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

28

Secom Co., Ltd.

Annual Report 200808

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 2008

29

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETSSECOM CO., LTD. and Subsidiaries
March 31, 2008 and 2007

In millions of yen

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

	March 31	March 31

ASSETS

2007

2008

Current assets:
Cash and cash equivalents (Note 5)........................................................................ ¥0,214,577 ¥0,193,215
Time deposits (Note 12)............................................................................................
8,820
7,194
Cash deposits (Note 6)..............................................................................................
63,69775,329
Short-term investments (Note 7).............................................................................
6,540
14,892
Notes and accounts receivable, trade ....................................................................
88,411
85,971
Due from subscribers ..............................................................................................
29,947
27,963Inventories (Notes 8 and 12)....................................................................................
118,442
98,337
Short-term receivables (Notes 12 and 20)..............................................................
17,871
19,727
Allowance for doubtful accounts.............................................................................
(1,827)(1,944)
Deferred insurance acquisition costs (Note 13)......................................................
6,624
5,695
Deferred income taxes (Note 16).............................................................................
17,395
16,947
Other current assets..................................................................................................
10,041
10,912
			 Total current assets............................................................................................
580,538
554,238

2008$02,145,770
88,200636,970
65,400884,110
299,470
1,184,420
178,710(18,270)
66,240173,950
100,410
5,805,380

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

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

204,142
38,832
71,271
13,457
10,139(9,282)
328,559

1,966,880
468,140
702,650
133,700
112,900(88,260)
3,296,010

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

78,818143,661
244,933
71,945
5,977
545,334(293,823)
251,51177,273143,012233,323
69,446
5,261
528,315(277,810)
250,505

788,180
1,436,610
2,449,330
719,450
59,7705,453,340(2,938,230)
2,515,110

Other assets:
Deferred charges (Note 2 (12)).................................................................................
46,151
Goodwill (Note 11)....................................................................................................
16,141Other intangible assets (Notes 11 and 12)..............................................................
21,127
Prepaid pension and severance costs (Note 14)....................................................
9,135
Deferred income taxes (Note 16).............................................................................
11,321
			103,875
			 Total assets......................................................................................................... ¥1,265,525

45,20817,363
23,41915,817
6,073
107,880¥1,241,182

461,510
161,410211,270
91,350113,210
1,038,750$12,655,250

See accompanying notes to consolidated financial statements.

30

Secom Co., Ltd.

Annual Report 2008

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

In millions of yen

	March 31	March 31

LIABILITIES AND SHAREHOLDERS’ EQUITY

2007

2008

Current liabilities:
Bank loans (Notes 6 and 12)..................................................................................... ¥0,133,056 ¥0,126,964
Current portion of long-term debt (Notes 12 and 19)............................................
9,061
10,044
Notes and accounts payable, trade.........................................................................
30,95628,892Other payables..........................................................................................................
29,05829,903
Deposits received (Note 6).......................................................................................
36,66750,689Deferred revenue......................................................................................................
43,49642,555
Accrued income taxes..............................................................................................
24,69325,023
Accrued payrolls.......................................................................................................
22,572
19,047
Other current liabilities (Note 16)............................................................................
17,66814,993
			 Total current liabilities.......................................................................................
347,227
348,1102008$ 1,330,560
90,610309,560
290,580
366,670
434,960
246,930
225,720
176,680
3,472,270

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

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

40,15330,21018,446
21,71658,266
93,361
12,635
5,242
628,139441,830
305,810
184,190
222,830
632,050
872,520
100,750
52,3506,284,600

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

62,511

61,311

625,110

Commitments and contingent liabilities (Note 23)

Shareholders’ equity (Note 17):
Common stock:		 Authorized 900,000,000 shares;		 issued 233,288,717 shares in 2008 and 2007.....................................................
66,37866,378Additional paid-in capital.........................................................................................
79,99879,998Legal reserve.............................................................................................................
10,0209,923
Retained earnings.....................................................................................................
471,066
428,850
Accumulated other comprehensive income (loss):		 Unrealized gains (losses) on securities (Note 7).................................................
(3,137)
8,101
		 Unrealized losses on derivative instruments (Note 22).....................................
(94)
(53)
		 Pension liability adjustments (Note 14)...............................................................
(4,726)1,272
		 Foreign currency translation adjustments..........................................................
(74)
2,113
			
(8,031)
11,433
Common stock in treasury, at cost:
8,323,599 shares in 2008 and 8,318,900 shares in 2007.......................................
(44,877)(44,850)
			 Total shareholders’ equity.................................................................................
574,554551,732
			 Total liabilities and shareholders’ equity......................................................... ¥1,265,525 ¥1,241,182

Secom Co., Ltd.

663,780
799,980
100,200
4,710,660(31,370)(940)(47,260)(740)(80,310)(448,770)
5,745,540$12,655,250

Annual Report 2008

31

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED STATEMENTS OF INCOME
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2008

2008

In millions of yen

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

Years ended March 31

Year ended March 31

2006

2008

Net sales and operating revenue .......................................................................... ¥706,695 ¥636,678 ¥580,526
Costs and expenses:
Cost of sales......................................................................................................... 454,165
410,275
364,932
Selling, general and administrative expense (Notes 2 (18) and 18)................ 144,782
127,062
128,077
Impairment loss on long-lived assets (Note 10)................................................
16
1,176
821
Impairment loss on goodwill (Note 11).............................................................
1,128
2,966
149
Loss on sales and disposal of property, plant and equipment, net.................
976
781
2,164
Settlement loss of benefit obligation on transfer to defined
contribution pension plan (Note 14)................................................................
—
—
2,490
				
601,067
542,260
498,633				 Operating income..................................................................................... 105,628
94,41881,893
Other income:Interest and dividends.........................................................................................
2,969
2,993
2,209
Gain on sales of securities, net (Notes 7 and 9)................................................
2,020
1,772
10,044Gain on private equity investments...................................................................
4,070
—
—
Other (Note 15)....................................................................................................
3,952
3,672
3,683
				
13,011
8,437
15,936
Other expenses:
Interest..................................................................................................................
2,094
1,815
1,877
Loss on other-than-temporary impairment of investment securities.............
1,912
1,026
2,263
Other (Note 15)....................................................................................................
4,370
4,678
3,961
				
8,376
7,519
8,101
				 Income before income taxes................................................................... 110,263
95,33689,728
Income taxes (Note 16):
Current..................................................................................................................
42,76940,13634,931
Deferred................................................................................................................
4,337
430
2,973
				
47,10640,56637,904				 Income before minority interests in subsidiaries and equity				 in net income of affiliated companies .................................................
63,15754,77051,824
Minority interests in subsidiaries..........................................................................
(6,639)(4,649)(3,927)
Equity in net income of affiliated companies ......................................................
5,238
5,768
3,298
				 Income before cumulative effect of accounting change.......................
61,75655,88951,195
Cumulative effect of accounting change, net of tax (Note 2 (11))......................
—
—
(864)
				 Net income................................................................................................ ¥ 61,756 ¥055,889 ¥050,331$7,066,950

631,570(66,390)
52,380617,560—$ 617,560

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

Years ended March 31

Year ended March 31

Per share data (Note 2 (20)):
Income before cumulative effect of accounting change—
		 —Basic..............................................................................................................
Cumulative effect of accounting change—
		 —Basic..............................................................................................................
Net income—		 —Basic..............................................................................................................
Cash dividends per share........................................................................................
See accompanying notes to consolidated financial statements.

32

Secom Co., Ltd.

Annual Report 2008

2007

4,541,650
1,447,820
160
11,2809,760—
6,010,670
1,056,280
29,69020,20040,70039,520130,110
20,94019,12043,70083,7601,102,630
427,690
43,370471,060

2008

2007

2006

2008

¥274.51¥248.42¥227.53

$2.75

—

—

(3.84)—

274.51¥ 80.00

248.42¥ 60.00

223.69¥ 50.00

2.75
$0.80

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYSECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2008
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, 2005 .......................................................................
233,288,717¥66,378¥79,996¥ 9,787¥347,516(¥ 1,282)(¥44,558)
Comprehensive income:Net income..........................................................................................
————
50,331——	Other comprehensive income (loss), net of tax (Note 17):
		 Unrealized gains on securities—
			 Unrealized holding gains or losses arising during the period.......
—
—
—
—
—
8,896
—
			 Less: Reclassification adjustment for gains or losses
			
included in net income....................................................
—
—
—
—
—
(3,356)—
		 Unrealized gains on derivative instruments—
			 Unrealized holding gains or losses arising during the period......
—
—
—
—
—
97
—
			 Less: Reclassification adjustment for gains or losses
			
included in net income....................................................
—
—
—
—
—
18
—
		Minimum pension liability adjustments..........................................
—
—
—
—
—
(30)
—
		 Foreign currency translation adjustments......................................
—
—
—
—
—
6,346
—
Total comprehensive income............................................................... 								Cash dividends.........................................................................................
————(11,251)——
Transfer to legal reserve...........................................................................
—
—
—
38
(38)
—
—
Net changes in treasury stock..................................................................
—
—
—
—
—
—
(192)
Balance, March 31, 2006 .......................................................................
233,288,717
66,37879,996
9,825
386,558
10,689(44,750)
Comprehensive income:Net income..........................................................................................
————
55,889——	Other comprehensive income (loss), net of tax (Note 17):
		 Unrealized 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 holding 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 (Note 14)......
—
—
—
—
—
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 (22))..........................................................
————(1,227)——
Comprehensive income:Net income..........................................................................................
————
61,756——	Other comprehensive income (loss), net of tax (Note 17):
		 Unrealized 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¥66,378¥79,998¥10,020¥471,066(¥ 8,031)(¥44,877)

Total¥457,837
50,331
8,896(3,356)
97
18
(30)
6,346
62,302(11,251)—(192)
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

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, 2007....................................................................................................
$663,780$799,980 $ 99,230$4,288,500$114,330($448,500)
Cumulative effect of a change in accounting principle-adoption of
EITF 06-2, net of tax (Note 2 (22))......................................................................................
———(12,270)——
Comprehensive income:Net income......................................................................................................................
———
617,560——
	Other comprehensive income (loss), net of tax (Note 17):
		 Unrealized losses on securities—
			 Unrealized holding gains or losses arising during the period................................
————(110,340)—
			 Less: Reclassification adjustment for gains or losses
			
included in net income................................................................................
————(2,040)—		 Unrealized losses on derivative instruments—
			 Unrealized gains or losses arising during the period.............................................
—
—
—
—
(540)
—
			 Less: Reclassification adjustment for gains or losses
			
included in net income................................................................................
—
—
—
—
130
—
		 Pension liability adjustments—
			 Unrealized gains or losses arising during the period.............................................
————(55,640)—
			 Less: Reclassification adjustment for gains or losses			realized in net income.................................................................................
————(4,340)—		 Foreign currency translation adjustments..................................................................
————(21,870)—
Total comprehensive income...........................................................................................							Cash dividends.....................................................................................................................
———(179,980)——
Changes in scope of consolidation.......................................................................................
———(2,180)——Transfer to legal reserve.......................................................................................................
—
—
970
(970)
—
—
Gains and losses on disposal of treasury stock....................................................................
—
0
—
—
—
—
Net changes in treasury stock..............................................................................................
—
—
—
—
—
(270)
Balance, March 31, 2008 ...................................................................................................
$663,780$799,980 $100,200$4,710,660($ 80,310)($448,770)

Total$5,517,320(12,270)
617,560(110,340)(2,040)(540)
130(55,640)(4,340)(21,870)
422,920(179,980)(2,180)—0(270)$5,745,540

See accompanying notes to consolidated financial statements.

Secom Co., Ltd.

Annual Report 2008

33

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED STATEMENTS OF CASH FLOWSSECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2008

2008

In millions of yen

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

Years ended March 31

Year ended March 31

2007

2006

Cash flows from operating activities:
Net income.......................................................................................................................... ¥ 61,756 ¥ 55,889 ¥ 50,331
Adjustments to reconcile net income to net cash provided
by operating activities—
		 Depreciation and amortization, including amortization of deferred charges............
58,19458,24852,339
		 Accrual for pension and severance costs, less payments..........................................
(4,083)(2,972)(3,209)
		 Settlement loss of benefit obligation on transfer to defined contribution
		 pension plan (Note 14).................................................................................................
—
—
2,490
		 Deferred income taxes...................................................................................................
4,337
430
2,973
		 Loss on sales and disposal of property, plant and equipment, net...........................
976
781
2,164
		 Impairment loss on long-lived assets (Note 10)..........................................................
16
1,176
821
		 Impairment loss on goodwill (Note 11)........................................................................
1,128
2,966
149
		 Gain on sales of securities, net.....................................................................................
(4,593)(5,715) (14,514)
		 Gain on private equity investments..............................................................................
(4,070)——		 Loss on liquidation of subsidiaries...............................................................................
485——
		 Loss on other-than-temporary impairment of investment securities........................
2,562
1,357
3,444
		 Equity in net income of affiliated companies...............................................................
(5,238)(5,768)(3,298)
		Minority interests in subsidiaries..................................................................................
6,639
4,649
3,927
		 Cumulative effect of accounting change, net of tax (Note 2 (11))..............................
——
864
		 Changes in assets and liabilities, net of effects from acquisitions and disposals:			 (Increase) decrease in cash deposits........................................................................
11,632(10,142)(4,381)
			 Increase in receivables and due from subscribers, net of allowances..................
(4,766)(13,798)(668)
			 Increase in inventories............................................................................................... (19,267)(17,264) (24,146)
			 Increase in deferred charges..................................................................................... (16,336)(18,267) (16,804)
			 Increase (decrease) in deposits received................................................................. (14,023)
9,022
4,175
			 Increase in deferred revenue.....................................................................................
1,468
2,137
3,804
			 Increase (decrease) in accrued income taxes..........................................................
(332)
1,697
5,590
			 Increase (decrease) in guarantee deposits received...............................................
329
2,318
(20)
			 Increase in unearned premiums and other insurance liabilities............................
4,939
4,936
6,878
			 Other, net.....................................................................................................................
10,820(3,794)
5,552

2008

$ 617,560
581,940(40,830)—
43,3709,760
160
11,280(45,930)(40,700)
4,850
25,620(52,380)
66,390—116,320(47,660)(192,670)(163,360)(140,230)
14,680(3,320)3,290
49,390108,200				 Net cash provided by operating activities............................................................

92,57367,88678,461

925,730

Cash flows from investing activities:(Increase) decrease in time deposits................................................................................
Proceeds from sales of property, plant and equipment..................................................
Payments for purchases of property, plant and equipment...........................................
Proceeds from sales of investment securities.................................................................
Payments for purchases of investment securities...........................................................
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.............................................................................................................................

(1,612)
4,277(45,332)
87,439(99,262)
6,397
(317)
(1,741)(1,207)(3,773)6,581(3,557)(2,425)
3,919(46,378)
132,923(103,242)
32,548
4,648(5,158)(474)(6,898)15,740(3,167)101
10,995(44,272)
99,889(68,597)868(1,190)—
3,065(11,338)
18,365(4,030)(16,120)
42,770(453,320)
874,390(992,620)
63,970(3,170)(17,410)(12,070)(37,730)
65,810(35,570)				 Net cash provided by (used in) investing activities.............................................

(52,107)

22,0363,856(521,070)

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

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)

10,575(11,400)
4,387(39,934)(11,251)
(192)
(940)

129,550(127,920)
60,750(61,090)(179,980)(270)(14,300)(193,260)				 Net cash used in financing activities....................................................................

(19,326)(128,371)(48,755)

Effect of exchange rate changes on cash and cash equivalents . .....................................

222

620

470

2,220

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

21,362
193,215(37,829)
34,032231,044 197,012

213,620
1,932,150

Cash and cash equivalents at end of year............................................................................ ¥214,577¥193,215 ¥231,044$2,145,770

See accompanying notes to consolidated financial statements.

34

Secom Co., Ltd.

Annual Report 2008

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2008

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, and information and communication related and other services. With these services
combined, the Company is focusing on its “Social System
Industry,” a network of integrated systems and services,targeted at the needs of people 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 also has 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; information and communication
related services, including information security services,­software development and system integration activities;
development and sale of real estate; lease of real estateand other services.
2. Significant Accounting Policies
The parent company and its Japanese subsidiaries main­
tain their records and prepare their statutory financial statements in accordance with accounting principles generally
accepted in Japan. Certain adjustments and reclassifications
have been incorporated in the accompanying financial
statements to c­ onform with accounting principles generally
accepted in the United States of America. These adjustments
were not recorded in the statutory books of account.
Significant accounting policies followed in the preparationof 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 owned subsidiaries. The consolidated financial statements also include
variable interest entities to which the Company is the primary 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 to organizations managing hospitals and health care-related institutions
and to a PFI (Private Finance Initiative) organization which
was established to build, maintain and operate correctional
facilities. Certain organizations are considered as VIEs
under FIN No. 46R. In March 2006, the Company provided
additional loans and acquired additional variable interestsin three organizations managing hospitals and healthcare-related organizations. As a result of the acquisitions,the Company has become the primary beneficiary of theseorganizations and has consolidated these organizations since
March 2006. The aggregated fair value of current assets,
goodwill, and other non-current assets acquired are ¥1,894
million, ¥1,711 million and ¥6,795 million, respectively,
and liabilities assumed are ¥4,144 million. The results of
their operations have been included in the consolidated
statements of income since the date of acquisition. The
consolidated pro forma information that would show the
Company’s consolidated results of operations for the year
ended March 31, 2006 has not been disclosed based onmateriality considerations.
Total assets held by VIEs to which the Company is theprimary beneficiary were ¥17,284 million ($172,840 thousand)and ¥18,405 million at March 31, 2008 and 2007, respectively.
Total assets held by VIEs to which the Company holds significant variable interests but is not the primary beneficiary at
March 31, 2008 and 2007 were ¥45,889 million ($458,890
thousand) and ¥44,105 million, respectively. The Company’s
maximum exposure to losses related to VIEs at March 31,
2008 and 2007 were ¥9,164 million ($91,640 thousand) and¥10,302 million, ­respectively.

Secom Co., Ltd.

Annual Report 2008

35

CONSOLIDATED FINANCIAL STATEMENTS

The Company also provided loans and guarantees to realestate investment companies. Certain investment companies
were considered as VIEs under FIN No. 46R. Total assets heldby these VIEs to which the Company was primary beneficiaryat March 31, 2006 were ¥10,638 million. In September 2006,
the Company acquired 100% ownership of these VIEs andconsolidated as its subsidiaries. There are no such VIEs towhich the Company holds significant variable interests but
was not primary
beneficiary at March 31, 2008.
­(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 ofan arrangement 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 ­contractual 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 a separate 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 undelivered elements 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.

36

Secom Co., Ltd.

Annual Report 2008

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 to governmental authorities on revenue-producing transactions areaccounted for on a net basis and therefore are excluded fromnet sales and operating revenue in consolidated statements
of income.
(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-to-maturity” 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” are classified as “available-for-sale”
securities. Market­able debt and equity securities which areclassified as “available-for-sale” 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 periodically reviews the fair value of available-for-sale securities
for possible impairment by taking into consideration thefinancial and operating conditions of the issuer, the generalmarket conditions in the issuer’s industry, the degree andperiod of the decline in fair value and other ­relevant factors.
Other investments in non-public companies are recorded
at cost as fair value is not readily determinable. The
Company periodically evaluates the values of other investments in ­non-public companies for possible impairment
by taking into consideration the financial and operating
conditions of the issuer, the general market conditions in theissuer’s industry and the period of the decline 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,” which investments are accounted
for at fair value, based on the Company’ assessment ofeach underlying investment. The investments, by theirnature, have little or no price transparency. Investments
are initially carried at cost as an approximation of fair value.
Adjustments to carrying value are made if there is evidenceof a change in fair value. Downward adjustments are alsomade, in the absence of third-party transactions, if it isdetermined that the expected realizable value of the­investment has declined below the carrying value.
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
past due, macroeconomic conditions, significant one-time
events and historical experience. An additional reserve forindividual accounts is recorded when the Company becomesaware of a customer’s inability to meet its financial obligations, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position.
If circumstances related to customers change, estimates ofthe ­recoverability 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 significant
leasehold improvements, are carried at cost. Depreciationis computed primarily using the ­declining-­balance method
at rates based on the estimated useful lives of the assets.
Assets leased to others under operating leases are primarily
depreciated using the straight-line method over the estimated useful lives. Depreciation expense was ¥37,241 million($372,410 thousand), ¥38,719 mil­lion and ¥33,042 million forthe years ended March 31, 2008, 2007 and 2006, respectively.
Maintenance, repairs and renewals 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
In March 2005, the FASB issued FASB Interpretation
No. 47 (“FIN No. 47”), “Accounting for Conditional Asset
Retirement Obligations—an interpretation of FASB statement
No. 143.” FIN No. 47 clarifies that the term “conditional asset
retirement obligation” as used in Statement of Financial
Accounting Standards (“SFAS”) No. 143, “Accounting for
Asset Retirement Obligations,” refers to a legal obligationof an entity to perform an asset retirement activity in which
the timing and/or method of settlement are conditional ona future event that may or may not be within the control ofthe entity. Such an obligation to perform the asset retirement
activity is unconditional even though uncertainty exists
about the timing and/or method of settlement. Accordingly,
an entity is required to ­recognize a liability for the value of aconditional asset retirement obligation if the fair value of theliability can be reasonably estimated. FIN No. 47 is effective
no later than the end of fiscal years ended after December
15, 2005 and required to be adopted by the Company on
March 31, 2006. The Company has determined that conditional legal obligations exist for ­certain of its leased facilities.
As a result of adoption of FIN No. 47, on March 31, 2006, theCompany recognized a one-time expense of ¥864 ­million as acumulative effect of accounting change, and the Company’s
buildings and improvements, and liabilities increased by¥694 million and ¥2,162 million, respectively.

Secom Co., Ltd.

Annual Report 2008

37

CONSOLIDATED FINANCIAL STATEMENTS(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 ¥14,953 million($149,530 thousand), ¥14,474 million and ¥14,045 million forthe years ended March 31, 2008, 2007 and 2006, respectively.
(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 asset 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 fair valueof assets of business acquired. Pursuant to SFAS No. 142,
“Goodwill and Other Intangible Assets,” goodwill and intangible assets acquired in a purchase business combinationand determined to have an indefinite useful life are notamortized, but instead tested for impairment at least annually. SFAS No. 142 also requires that intangible assets withestimable ­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.

38

Secom Co., Ltd.

Annual Report 2008(16) 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 of existing
assets and liabilities and their respective tax bases, andoperating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary
differences and carryforwards are expected to be realized
or settled. The effect on deferred tax assets and liabilities ofa change in tax rates is recognized in income in the periodthat includes the enactment date. Valuation allowances arerecorded 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 FIN No. 48,“Accounting for Uncertainty in Income Taxes—an Interpretationof FASB Statement No. 109,” which requires a more-likelythan-not threshold for financial statement recognition andmeasurement 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.
(17) Research and Development
Research and development costs are charged to income
as incurred.
(18) 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, 2008, 2007 and 2006
were ¥5,996 million ($59,960 thousand), ¥5,348 million and¥6,746 million, respectively.
(19) 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 at fairvalue 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 in shareholders’ 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 thehedged 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 the derivatives used in hedging activities are highly effective in offsetting changes in fair values or cash flow of hedged items.
Hedge accounting is discontinued for ineffective hedges, ifany. Discontinued hedges are recognized in current income.
(20) 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, 2008, 2007
and 2006 was 224,967 thousand shares, 224,974 thousand
shares and 225,002 thousand shares, respectively. There
were no potentially dilutive shares outstanding during theyears ended March 31, 2008, 2007 or 2006.
Cash dividends per share shown in the accompanying
consolidated statements of income are computed based on
dividends approved and paid in each fiscal year.
(21) 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 and the disclosure of contingent
assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues andexpenses during the period. Significant items subject to such
estimates and assumptions include the carrying amounts
of inventories, investment securities, other investments,
property, plant and equipment, goodwill and other intangible
assets; valuation allowances for receivables and deferredincome taxes; valuation of derivative instruments; and assets
and obligations related to employee benefits. Actual results
could differ from those estimates.
(22) Recent Pronouncements
In June 2006, the FASB ratified the EITF consensus on EITF
Issue No. 06-2 (“EITF 06-2”), “Accounting for Sabbatical
Leave and Other Similar Benefits Pursuant to FASBStatement No. 43.” EITF 06-2 provides guidance for an
accrual of compensated absences that require a minimum
service period but have no increase in the benefit even withadditional years of service. EITF 06-2 is effective for fiscal
years beginning after December 15, 2006 and was adopted
by the Company in the fiscal year beginning April 1, 2007.

Accordingly, the Company recorded an increase in the beginning balance of accrued payrolls of ¥2,265 million ($22,650
thousand) and an increase in the beginning balance ofdeferred income taxes (Other assets) of ¥846 million ($8,460
thousand) as of April 1, 2007, with a decrease in the beginning balance of retained earnings of ¥1,227 million ($12,270
thousand).
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 is required to be adopted by
the Company in the 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 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 FASBStatement No. 157,” which delays the effective date of
SFAS No. 157 for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed atfair value in the financial statements on a recurring basis (atleast annually) and remove certain leasing transactions fromits scope. It is not anticipated that the adoption will have amaterial impact on the Company’s consolidated results ofoperations or financial position.
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 andlosses on items for which the fair value option has been
elected are recognized in earnings. SFAS No. 159 is effective
for fiscal years beginning after November 15, 2007, and isrequired to be adopted by the Company in the fiscal year
beginning April 1, 2008. It is not anticipated that the adoption
will have a material impact on the Company’s consolidated
results of operations or financial position.
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 to enable the evaluation of the nature and financial effects of thebusiness combination. SFAS No. 141(R) is effective for fiscal
years beginning after December 15, 2008 and is required tobe adopted by the Company in the fiscal year beginning April
1, 2009. The Company is currently evaluating the effectof adopting SFAS No. 141(R) on its consolidated
financial statements.

Secom Co., Ltd.

Annual Report 2008

39

CONSOLIDATED FINANCIAL STATEMENTS

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 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
Company is currently evaluating the effect of adopting
SFAS No. 160 on its consolidated financial statements.

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 dateof acquisi­tion. 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 than investments accounted for under the equity method, deferred tax
assets, prepaid pension and severance costs, and any othercurrent assets.

(23) Reclassifications
The accompanying consolidated financial statements forthe years ended March 31, 2007 and 2006 have been reclassified to conform to the presentation used for the year ended
March 31, 2008.

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

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 ¥100=US$1, the rate ­prevailing on the Tokyo Foreign
Exchange Market on March 31, 2008. 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 amount of ¥14,060 million. Nohmi Bosai operates
automatic fire alarms, fire extinguishing and other fire protection systems. As a result of this new share acquisition,
the Company owns 50.4 percent of the total outstanding­common stocks of Nohmi Bosai. The operating results ofNohmi Bosai and its subsidiaries (collectively, “Nohmi
Bosai group”) have been included in the consolidated
financial statements since the date of acquisition. The
Company has been in an alliance with Nohmi Bosai, which
had been accounted for under the equity method before
this new share acquisition. Purpose of this acquisition is toreinforce its alliance with Nohmi Bosai by integrating theCompany’s expertise in security systems with Nohmi
Bosai’s fire protection technologies.

		In millions of yen¥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 and 2006 as though Nohmi Bosaigroup had been consolidated at the beginning of the years.
Unaudited
In millions of yen
Years ended March 31

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

2007

2006

¥686,429
56,090¥653,872
50,573
UnauditedIn yenYears ended March 31

Pro forma net income per share:—Basic..............................................

40

Secom Co., Ltd.

Annual Report 2008

2007

2006

¥249.32¥224.77

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 years, and is not necessarily representative of the Company’s consolidated resultsof ­operations for any future period.

to-maturity” investments at March 31, 2008 and 2007 wereas ­follows:

5. Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2008 and 2007
were comprised as follows:

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

		 In thousands ofIn millions of yen

U.S. dollars

	March 31	March 31
2008

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

2007

2008

¥149,874 ¥140,849
42,936 34,087
19,000 15,000
2,767
3,279
¥214,577 ¥193,215$1,498,740
429,360
190,000
27,670$2,145,770

Investment securities include commercial papers andmoney management funds. These agreements mature within
three months and the carrying values approximate ­market.
The Company has not experienced any losses throughdefault of the financial institutions and does not ­anticipate
default of any outstanding agreements.
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 ¥63,697 million ($636,970 thousand)and ¥75,329 million at March 31, 2008 and 2007, respectively,
are segregated from cash and cash equivalents and are
restricted as to use by the Company. The Company funds
most of the necessary cash through bank overdrafts anddeposits. Bank loans and deposits received, which relate tothese operations, were ¥30,402 million ($304,020 thousand)and ¥32,619 million ($326,190 thousand), respectively, atMarch 31, 2008, and ¥27,668 million and ¥47,166 million,
respectively, at March 31, 2007. As part of its fee arrangement, the Company is reimbursed for the interest cost of
the related 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 “held-

In millions of yen
March 31, 2008
Gross unrealized
Cost

Gains

LossesFair value

5,051

¥

1

¥

115

¥

4,937

1,603
6,654

¥

0
1

¥

0
115

¥

1,603
6,540

Investment securities:
Available-for-sale:		 Equity securities........ ¥ 62,195
		 Debt securities...........
85,426
Held-to-maturity:
		 Debt securities...........
8,242
		
¥155,863¥5,051918¥ 8,485
1,962¥ 58,761
84,382

1¥5,970348¥10,795

7,895¥151,038

In millions of yen
	March 31, 2007
Gross unrealized
Cost

Short-term investments:
Available-for-sale:
		 Debt securities........... ¥ 14,829 ¥Held-to-maturity:
		 Debt securities...........
113		¥ 14,942 ¥Gains

LossesFair value

1

¥

51

¥ 14,779

—
1

¥

—
51

113
¥ 14,892¥3,065
1,015¥ 77,127
88,251

20¥4,1003,393¥168,771

Investment securities:
Available-for-sale:		 Equity securities........ ¥ 60,394 ¥19,798
		 Debt securities...........
88,344922
Held-to-maturity:
		 Debt securities...........
3,413
—
			
¥152,151 ¥20,720

In thousands of U.S. dollars
March 31, 2008
Gross unrealized
Cost

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

Gains

LossesFair value

50,510 $10 $1,150 $

49,37016,03066,540 $010 $01,150 $

16,03065,400Investment securities:
Available-for-sale:		 Equity securities....... $ 621,950 $50,510 $ 84,850 $ 587,610
		 Debt securities..........
854,260
9,180
19,620843,820
Held-to-maturity:
		 Debt securities..........
82,42010
3,480
78,950		
$1,558,630 $59,700 $107,950 $1,510,380

Secom Co., Ltd.

Annual Report 2008

41

CONSOLIDATED FINANCIAL STATEMENTS

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, 2008 were as follows:				Less than 12 months				
Fair value

In millions of yen
March 31, 2008
12 months or longer

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

¥31,795
19,194¥50,989¥7,416
1,141¥8,557¥ 3,476
25,996¥29,472¥1,069936¥2,005

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

¥ 1,175¥ 325¥ 2,794¥

23

In thousands of U.S. dollars
March 31, 2008
Less than 12 months

12 months or longer				
Fair value

Gross		Grossunrealized		 unrealized
lossesFair value
lossesAvailable-for-sale:
Equity securities........ $317,950
Debt securities........... 191,940
		 Total......................... $509,890$74,160
11,410$85,570$ 34,760
259,960$294,720$10,690
9,360$20,050

Held-to-maturity:
Debt securities........... $ 11,750$ 3,250$ 27,940$

230

Based on relevant factors, the Company has determinedthat these investments are not considered other-than-­temporary impaired at March 31, 2008.
At March 31, 2008, debt securities principally consisted ofshort-term investments in monetary trusts, Japanese govern­
ment bonds, corporate bonds, U.S. treasury securities andU.S. Government Agency Bonds.
The cost and fair value of “available-for-sale” and ”held-tomaturity” debt securities by contractual maturity at March
31, 2008 are as follows:

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

Fair value¥ 5,051¥ 4,937

Held-to-maturity

Cost

Fair value

Cost Fair value

Due within 1 year.......... $ 50,510
Due after 1 year
through 5 years........... 421,230
Due after 5 years
through 10 years......... 364,400
Due after 10 years . ......
68,630		 .................................. $904,770$ 49,370$16,030 $16,030

418,970

14,920361,290
63,560$893,190

400
400
67,100 63,620$98,450 $94,980

14,930During the years ended March 31, 2008, 2007 and 2006,
the net ­unrealized gains on “available-for-sale” securities
included as part of other comprehensive income (loss), netof tax, decreased by ¥11,238 million ($112,380 thousand) and¥3,026 ­million and increased by ¥5,541­million, respectively.
Proceeds from the sale of “available-for-sale” securities
for the years ended March 31, 2008, 2007 and 2006 were
¥106,925 million ($1,069,250 thousand), ¥109,405 million and¥74,869 million, respectively. On those sales, the gross realized gains and gross realized losses, using moving-­average
cost basis, for the years ended March 31, 2008, 2007 and2006 were as follows:		 In thousands ofIn millions of yen

U.S. dollars

Years ended
Year ended	March 31	March 31
2008

2007

2006

2008

Gross realized gains........ ¥3,005
Gross realized losses.......
623¥4,076295¥5,71674$30,050
6,230

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 ¥45,303 million ($453,030
thousand) and ¥35,351 million at March 31, 2008 and 2007,
respectively. The corresponding fair value at that date was
not computed as such estimation was not practicable.

Held-to-maturity
Cost Fair value

		 In thousands ofMarch 31, 2008
Available-for-sale

March 31, 2008
Available-for-sale

8. Inventories
Inventories at March 31, 2008 and 2007 comprised the­following:

In millions of yen

Cost

In thousands of U.S. dollars¥1,603In millions of yen¥1,603

U.S. dollars

	March 31	March 31

42,12336,440
6,863¥90,477

41,897
36,1296,356¥89,319

1,492
40
6,710
¥9,845

1,493
40
6,362
¥9,498

		

2008

2008

2007

Security-related products............... ¥ 7,732 ¥ 7,603
Fire protection-related products.... 13,747 13,599
Real estate....................................... 91,182 72,218
Information and other-related
products.........................................
5,781
4,917
			 .............................................. ¥118,442 ¥98,337$

77,320137,470
911,820

57,810$1,184,420

Work in process for real estate inventories at March 31,
2008 and 2007, amounting to ¥73,312 million ($733,120
thousand) and ¥64,257 million, respectively, are included inreal estate.

42

Secom Co., Ltd.

Annual Report 2008

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 27.3 percent owned
affiliate, which is listed on the Korea Stock Exchange;
Toyo Tech Co., Ltd., a 27.8 percent owned affiliate acquired—amounting to ¥5,146 million—in December 2006, which islisted on the Second Section of the Osaka Securities Exchange;
and Tokyo Biso Kogyo Corporation, a 36.6 percent owned
new affiliate by additionally acquiring ¥1,740 million ($17,400
thousand)—equivalent to 16.6 percent of total outstanding
common stocks—in May 2007 and March 2008, which islisted on the Second Section of the Tokyo 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:

Four listed affiliated companies accounted for under theequity method with an aggregated carrying amount of¥37,035 million ($370,350 thousand) and ¥29,652 ­million atMarch 31, 2008 and 2007, respectively, had a quoted market
value of ¥80,984 million ($809,840 thousand) and ¥71,917­million at March 31, 2008 and 2007, respectively.
The amounts of goodwill were ¥2,863 million ($28,630
thousand) and ¥2,851 million at March 31, 2008 and 2007,
respectively.
In November 2006, the parent company sold the outstanding 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.
In March 2006, the parent company sold 23.8 percent of
the outstanding shares of Japan Cablenet Holdings Limited,a 26.0 percent owned affiliate, to KDDI Corporation for¥12,393 million. The sale resulted in a gain of ¥6,710 million.
A summary of transactions and balances with the affiliatedcompanies accounted for under the equity method ispresented below:

2008

2007

2006

2008

		 In thousands ofSales..............................

¥2,447¥1,843¥1,926$24,470

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

¥1,734¥3,777¥6,077$17,340

In millions of yen

U.S. dollars

	March 31	March 31

		 In thousands ofIn millions of yen

U.S. dollars

Years ended
Year ended	March 31	March 31

2007

2008

		 In thousands ofCurrent assets.............................. ¥ 96,089 ¥ 78,568
Non-current assets...................... 134,467 121,889$ 960,890
1,344,670

	March 31	March 31

Total assets............................... ¥230,556 ¥200,457$2,305,560

Current liabilities.......................... ¥ 48,212 ¥ 40,444
Non-current liabilities..................
36,84637,559
Shareholders’ equity................... 145,498 122,454$ 482,120
368,460
1,454,980

Total liabilities andshareholders’ equity.............. ¥230,556 ¥200,457$2,305,560

		

2008

		 In thousands ofIn millions of yen

U.S. dollars

Years ended
Year ended	March 31	March 31
2006

2008

Net sales...................... ¥202,335 ¥196,486 ¥213,967

2008$2,023,350

Gross profit................. ¥ 64,213 ¥ 67,315 ¥ 71,863$ 642,130

Net income.................. ¥ 22,576 ¥ 18,851 ¥ 15,371$ 225,760

2007

Dividends received from affiliated companies for the years
ended March 31, 2008, 2007 and 2006 were ¥2,657 million($26,570 thousand), ¥2,193 million and ¥2,068 million,
respectively.

In millions of yen

U.S. dollars

		

2008

2007

2008

Notes and accounts
receivable, trade...........................

¥509

¥811

$5,090Loans receivable.............................

¥ 98

¥100

$ 980

Notes and accounts payable..........

¥331

¥205

$3,310

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

¥ 10

¥

$ 100

9

The Company's equity in undistributed income of affiliates
at March 31, 2008 and 2007 included in retained earnings
was ¥15,818 million ($158,180 thousand) and ¥13,925 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 and idle properties for the year ended March 31, 2006. The fair value wasdetermined by the estimated present value of future cash
flows or appraisal value.

Secom Co., Ltd.

Annual Report 2008

43

CONSOLIDATED FINANCIAL STATEMENTS

Impairment loss on long-lived assets by ­business segment
for the years ended March 31, 2008, 2007 and 2006 was
as follows:		 In thousands ofIn millions of yen

U.S. dollars

Years ended
Year ended	March 31	March 31
2007

2006

2008

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

2008¥— ¥ —
16
32
0 1,134
—
—

¥ 63
—
—
—

$ —
160
0
—

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

—

10

—

—

—
—

—
—

59
699

—
—

¥16 ¥1,176

¥821

$160

11. Goodwill and Other Intangible Assets
The components of acquired intangible assets excluding
goodwill at March 31, 2008 and 2007 were as ­follows:
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 millions of yen

		March 31, 2007
Gross		carrying Accumulated
amount amortization

Net
carrying
amountAmortized intangible assets:
Software...................................... ¥31,750
Other............................................
6,092
		 Total . ....................................... ¥37,842(¥16,370)(2,194)(¥18,564)¥15,380
3,898¥19,278

Unamortized intangible assets...... ¥ 4,141¥¥ 4,141

44

Secom Co., Ltd.

Annual Report 2008—

In thousands of U.S. dollars
March 31, 2008
Gross		carrying Accumulated
amount amortization

Net
carrying
amountAmortized intangible assets:
Software...................................... $300,550
Other............................................ 49,110
		 Total . ....................................... $349,660($164,880) $135,670(17,640)
31,470($182,520) $167,140

Unamortized intangible assets...... $ 44,130$— $ 44,130

The net carrying amount of amortized and unamortizedintangible assets acquired in a purchase business combination in December 2006 were ¥2,841 million and ¥1,879
million, respectively, at March 31, 2007.
Aggregate amortization expense for the years ended
March 31, 2008, 2007 and 2006 was ¥5,999 million ($59,990
thousand), ¥5,055 million and ¥5,251 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

2009......................................................
2010......................................................
2011......................................................
2012......................................................
2013......................................................

¥5,396
3,742
2,942
2,502
891

$53,960
37,42029,42025,0208,910

The changes in the carrying amount of goodwill by businesss­ egment for the years ended March 31, 2008 and 2007 wereas follows:
In millions of yen					 Information and				 Geographic communication
		
Security	Medical information
related and		services
services
services other services

March 31, 2006.......... ¥1,302 ¥9,383 ¥3,771
Goodwill acquired
during the year........
——
4
Disposal.....................
———
Impairment losses....
— (2,336)(152)
Translation
adjustment..............
155——
March 31, 2007.......... 1,457
7,047
3,623
Goodwill acquired
during the year........
117——
Disposal.....................
——(1)
Impairment losses....
(117)
(876)
—
Translation
adjustment..............
(30)——
March 31, 2008.......... ¥1,427 ¥6,171 ¥3,622

Total¥5,877 ¥20,333
—
(163)
(478)

4
(163)
(2,966)

—
5,236

155
17,363

—
(180)
(135)

117
(181)
(1,128)—(30)¥4,921 ¥16,141

In thousands of U.S. dollars					 Information and				 Geographic communication
		
Security	Medical information
related and		services
services
services other services

Total

March 31, 2007.......... $14,570 $70,470 $36,230 $52,360 $173,630
Goodwill acquired
during the year........ 1,170
—
—
—
1,170
Disposal.....................
——(10) (1,800) (1,810)
Impairment losses.... (1,170) (8,760)—(1,350) (11,280)
Translation
adjustment..............
(300)
—
—
—
(300)
March 31, 2008.......... $14,270 $61,710 $36,220 $49,210 $161,410

The Company principally recognized impairment losses
related to goodwill allocated to the reporting units in the
medical services segment of ¥876 million ($8,760 thousand)and ¥2,336 million for the year ended March 31, 2008 and2007, respectively, due to decreases in the estimated fairvalue of these reporting units mainly caused by decreasesof 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 ¥133,056 million ($1,330,560 thousand) and¥126,964 million at March 31, 2008 and 2007, respectively,
are generally comprised of 30 to 365 day notes. Theirweighted average interest rates were 1.37 percent and1.27 percent at March 31, 2008 and 2007, 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, 2008, Pasco Corporation (“PASCO”) andNohmi Bosai, subsidiaries of the parent company, had
unused committed lines of credit from short-term arrangements aggregating ¥5,500 million ($55,000 thousand) and¥4,000 million ($40,000 thousand), respectively. The lines ofcredit expire in July 2008 and March 2010, respectively.
PASCO uses these lines of credit as a backup and does notintend to extend them after July 2008. Under the agreements, PASCO and Nohmi Bosai are required to pay committed fees at an annual rate of 0.40 percent and 0.15 percent,respectively, on the unused portion of the lines of credit. At
March 31, 2008, Secom Home Life Co., Ltd. (“Secom HomeLife”), a subsidiary of the parent company, had overdraft
agreements with six banks and its unused lines of credit
amounted to ¥38,050 million ($380,500 thousand). However,

Secom Home Life incurs no fee on the unused portion of thelines of credit. The overdraft agreements expire in the period
from April 2008 to March 2009. Secom Home Life has theability and intent to extend these overdraft agreements
under similar terms and conditions.
Long-term debt at March 31, 2008 and 2007 comprisedthe ­following:
		 In thousands ofIn millions of yen

U.S. dollars

	March 31	March 31

		

2008

2007

Loans, principally from banks
due 2007–2027 with interest
rates ranging from 0.00 to
5.83%in 2008 and 2007:
Secured........................................... ¥20,624 ¥17,252
Unsecured...................................... 5,249
2,456
0.46% unsecured bonds due 2007....
—1,500
0.61% unsecured bonds due 2010....
750
1,050
0.91% unsecured bonds due 2010....
660
880
Unsecured bonds due 2009–2014
with floating interest rates basedon 6-month TIBOR plus
0.15%–0.20%.................................... 14,051 13,868
Obligations under capital leases,
due 2007–2026 (Note 19)................. 11,910 13,191
			 ................................................. 53,244 50,197
Less:
Portion due within one year........... 9,061 10,044
			 ................................................. ¥44,183 ¥40,153

2008$206,240
52,490
—
7,500
6,600

140,510
119,100
532,440
90,610$441,830

Property, plant and equipment with a carrying amount of¥51,764 million ($517,640 thousand), inventories with a carrying amount of ¥71,525 million ($715,250 thousand), investment securities with a carrying amount of ¥870 million($8,700 thousand), time deposits of ¥1,191 million ($11,910
thousand), short-term and long-term receivables of ¥993 million ($9,930 thousand) and other intangible assets and otherwith a carrying amount of ¥1,593 million ($15,930 thousand)were pledged as ­collateral for bank loans and long-term debt
at March 31, 2008.
The aggregate annual maturities on long-term debt after
March 31, 2008 are as follows:		 In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2009.....................................................
2010.....................................................
2011.....................................................
2012.....................................................
2013.....................................................
Thereafter............................................
............................................................

Secom Co., Ltd.

¥ 9,061
12,402
11,186
6,459
6,061
8,075
¥53,244

Annual Report 2008

$ 90,610
124,020
111,860
64,59060,61080,750$532,440

45

CONSOLIDATED FINANCIAL STATEMENTS

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 and amortized generally over the premium-­paying period of the insurance policies, (b) that liabilities related to incurred but notreported claims are computed based on related regulationsin Japan whereas in the United States of America those liabilities are computed based on past experience for unreported losses, and (c) that unearned premiums are calculated
based on the ­documents authorized by the Super­visory
Authorities in Japan whereas in the United States of America
unearned premiums are reflected based on the lapse and­surrender over the contract period.
In addition, under certain property and casualty insurance
contracts with a refund clause and long-term insurance policies that ­provide refunds at maturity, such as personal accident and fire, the policyholder receives a refund if premiums
have been fully paid unless a substantial settlement (asdefined 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 ­principally five years.
For purposes of preparing the consolidated financial state­ments, appropriate adjustments have been made to reflect
such items in accordance with U.S. generally accepted
account­ing principles.
The net equity of Secom Insurance at March 31, 2008 and2007 was ¥35,218 million ($352,180 thousand) and ¥30,553
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 and impairment loss on long-lived assets. Net realized investment gains
for the years ended March 31, 2008, 2007 and 2006 were
¥1,922 million ($19,220 thousand), ¥3,612 million and¥3,290 million, respectively.

46

Secom Co., Ltd.

Annual Report 2008

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 of contributions to the defined contribution pension plan changed to
70 percent and 30 percent, including portions funded in priorperiods. The contribution from the cash balance pension
plan to the defined contribution plan, which was equivalent
to the benefit transferred to the defined contribution pension
plan, was ¥4,257 million. In accordance with SFAS No. 88,“Employer’s Accounting for Settlements and Curtailmentsof Defined Benefit Pension and for Termination Benefits,”
the Company accounted for these transfers as a partial­settlement of benefit obligation and recognized settlement
losses of ¥2,490 million as “Settlement loss of benefit obligation on transfer to defined contribution pension plan” in the
consolidated statements of income for the year ended March
31, 2006.
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 other comprehensive income (loss) at adoption represents the unrecognized actuarial loss and unrec­ognized prior service benefit,
both of which were previously netted against the plan’sfunded status in the consolidated balance sheets pursuant to
the provisions of SFAS No. 87. 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 severance cost on thesame basis as the amounts recognized in accumulated other­comprehensive income (loss) at adoption of SFAS No. 158.
The incremental effects of adopting the provision of SFAS
No. 158 on the consolidated balance sheet at March 31, 2007
are as follows:
In millions of yen
		Before		After
		Application of		 Application of
		SFAS No. 158 Adjustments SFAS No. 158

Prepaid pension andseverance costs........................
Deferred income taxes(Other assets)...........................
Accrued pension andseverance costs........................
Minority interestsin subsidiaries..........................
Accumulated othercomprehensive
income (loss)............................

¥13,239¥2,578¥15,817

7,107(1,034)

6,073

17,914532

18,446

61,706(395)

61,311

13,114(1,681)

11,433

Net periodic pension and severance costs for the years
ended March 31, 2008, 2007 and 2006 were as follows:

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

U.S. dollars

Years ended
Year ended	March 31	March 31

		

2008

2007

Change in benefit obligation:
Benefit obligation
at beginning of year.................. ¥71,000 ¥57,975
Service cost..................................
4,511
3,998
Interest cost..................................
1,424
1,146
Actuarial loss................................
337
208
Benefits paid................................ (5,452) (3,495)
Acquisition...................................
— 11,168
Benefit obligation
at end of year............................. 71,820 71,000
Change in plan assets:
Fair value of plan assets
at beginning of year.................. 68,371 57,118
Actual return (loss) on
plan assets.................................. (7,792)
4,685
Employer contribution.................
5,509
4,818
Benefits paid................................ (3,552) (2,518)
Acquisition...................................
—
4,268
Fair value of plan assets
at end of year............................. 62,536 68,371
Funded status at the end of year.... (¥ 9,284) (¥ 2,629)

2008$710,000
45,11014,2403,370(54,520)—718,200

683,710(77,920)
55,090(35,520)—625,360($ 92,840)

Amounts recognized in the consolidated balance sheet atMarch 31, 2008 and 2007 consist of:		 In thousands ofIn millions of yen

U.S. dollars

		 In thousands ofYears ended
Year ended	March 31	March 31

Years ended
Year ended	March 31	March 31

		In millions of yen

2008

2007

2006

Net periodic pension andseverance costs:
Service cost....................... ¥4,511 ¥3,998 ¥3,629
Interest cost....................... 1,424 1,146 1,097
Expected return onplan assets....................... (1,808) (1,620) (1,550)
Amortization of priorservice benefit................. (1,715) (1,715) (1,715)
Recognized actuarialloss................................... 1,005 1,123
962
		 Net periodic pension
		 and severance costs... ¥3,417 ¥2,932 ¥2,423

U.S. dollars

2008$45,110
14,240(18,080)(17,150)
10,050$34,170

2008

2007

Prepaid pension andseverance costs.............................. ¥ 9,135 ¥ 15,817
Accrued pension andseverance costs.............................. (18,419) (18,446)
			 Net amount recognized....... (¥ 9,284) (¥ 2,629)

2008$ 91,350(184,190)($ 92,840)

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for the year
ended March 31, 2008 were summarized as follows:		 In thousands ofIn millions of yen

Current year actuarial loss...................
Amortization of actuarial loss..............
Amortization of prior service benefit...
			

Secom Co., Ltd.

¥ 9,937(1,005)
1,715¥10,647

Annual Report 2008

U.S. dollars$ 99,370(10,050)
17,150$106,470

47

CONSOLIDATED FINANCIAL STATEMENTS

Amounts recognized in accumulated other comprehensive
income (loss) at March 31, 2008 and 2007 consist of:

The weighted-average asset allocation of the Company’s­pension plans at March 31, 2008 and 2007 were as follows:		 In thousands of		March 31

Years ended
Year ended	March 31	March 31

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

In millions of yen

		

2008

U.S. dollars

2008

2007

Actuarial loss.................................... ¥22,703 ¥13,771
Prior service benefit......................... (14,327) (16,042)
			 Net amount recognized....... ¥ 8,376 (¥ 2,271)$227,030(143,270)$ 83,760

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 ¥1,715 million($17,150 thousand) and ¥868 million ($8,680 thousand),
respectively.
The accumulated benefit obligation for the pension planwas ¥66,079 million ($660,790 thousand) and ¥65,283 million
at March 31, 2008 and 2007, respectively.
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans
with ­accumulated benefit obligation in excess of plan assets
were ¥27,588 million ($275,880 thousand), ¥24,775 million($247,750 thousand) and ¥9,335 million ($93,350 thousand),
respectively, at March 31, 2008, and ¥28,207 million, ¥25,401
million and ¥9,853 million, respectively, at March 31, 2007.
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, 2008 and 2007 wereas follows:		March 31

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

2008

2007

2.0%
2.7

2.0%
2.7

Weighted-average assumptions used to determine net pension and severance costs for the years ended March 31, 2008,2007 and 2006 were as follows:
Years ended	March 31

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

2008

2007

2006

2.0%
3.0
2.7

1.9%
3.0
2.7

2.0%
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 2008

2008

2007

26.6% 39.9%
20.9
26.9
11.6
6.0
40.9
27.2
100.0% 100.0%

The Company’s investment policy is designed to ensurethat sufficient plan assets are available to provide future­payments of pension benefits to the eligible plan participants. The policy does not use target allocations for the individual asset catego­ries. Plan assets are invested primarily inequity and debt securities, and mutual funds with the objective to minimize risk and achieve the expected rate of return.
The investment results are periodically monitored and asset
allocation is adjusted as necessary.
The Company expects to contribute ¥5,499 million ($54,990
thousand) to its domestic defined benefit plans in the year
­ending March 31, 2009.
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

2009.....................................................
2010.....................................................
2011.....................................................
2012.....................................................
2013.....................................................
2014–2018............................................

¥ 5,582
4,567
4,528
4,581
4,900
23,140$ 55,820
45,67045,28045,81049,000231,400

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,
2008, 2007 and 2006 were ¥1,413 million ($14,130 thousand),¥1,392 million and ¥1,365 ­million, respectively.
15. Exchange Gains and Losses
Other expense for the year ended March 31, 2008 includes
net exchange losses of ¥826 million ($8,260 thousand). Other
income for the years ended March 31, 2007 and 2006
includes net exchange gains of ¥76 million and ¥664 million.

16. Income Taxes
Total income taxes for the years ended March 31, 2008,2007 and 2006 were allocated as follows:

The significant components of deferred tax assets andliabilities at March 31, 2008 and 2007 were as follows:­		 In thousands ofIn millions of yen

U.S. dollars

Years ended
Year ended	March 31	March 31
2006

2008

Net Income.......................... ¥47,106 ¥40,566 ¥37,904
Shareholders’ equity—
accumulated othercomprehensive
income (loss):
Unrealized gains(losses) on securities.... (8,189) (3,437) 3,672
Unrealized gains(losses) on derivative
instruments...................
(8)
(17)
79
Pension liability
adjustments................... (3,901)——
	Minimum pension
liability adjustments.....
—
(20)
(27)
Foreign currencytranslation
adjustments...................
(497)
476
971
Cumulative effect ofchange in accounting
principle-adoptionof EITF 06-2........................
(846)
—
—
Adjustments for initiallyapplying SFAS No. 158.....
—
897—
		 . .................................... ¥33,665 ¥38,465 ¥42,599

2008$471,060

2007(81,890)(80)(39,010)—(4,970)(8,460)—$336,650

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, 2008, 2007 and 2006.
Reconciliations of the differences between income taxes­computed at statutory tax rates and consolidated income
taxes from continuing operations were as follows:		 In thousands ofIn millions of yen

U.S. dollars

Years ended
Year ended	March 31	March 31
2008

2007

2006

Income taxes computed
at statutory tax rate of
40.5%................................. ¥44,658 ¥38,611 ¥36,340
Increase (decrease)resulting from:
Unrecognized tax
benefits fromsubsidiaries in loss
positions........................ 2,309
1,552
1,366
Reversal of valuation
allowance due toutilization of operating
loss carryforwards........ (1,260) (1,629)(642)
Per capita tax...................
805
713
699
Other, net.........................
594
1,319
141
		 Consolidated
		 income taxes............. ¥47,106 ¥40,566 ¥37,904

2008$446,580

		 In thousands ofIn millions of yen

U.S. dollars

	March 31	March 31

		

2008

2007

Deferred tax assets:
Deferred revenue........................ ¥13,601 ¥13,201
Operating loss carryforwards....
9,907
9,544
Adjustment of book value atthe date of acquisition—
		 Land and buildings.................
4,899
5,147
		 Other assets.............................
2,764
2,764
Accrued pension andseverance costs.........................
7,149
7,400
Property, plant andequipment................................
6,524
6,795
Accrued bonus............................
5,053
4,781
Vacation accrual..........................
3,427
2,287
Intangible assets.........................
2,634
1,955
Allowance for doubtful
accounts....................................
2,239
2,350
Unrealized losses on securities.
1,941—
Investment securities..................
1,641
2,980
Other............................................
9,014
8,915
		 Gross deferred tax assets....... 70,793 68,119
		 Less: Valuation allowance...... (17,068) (15,591)
		 Total deferred tax assets........ 53,725 52,528
Deferred tax liabilities:
Deferred installation costs........... (8,408) (8,483)
Investments in affiliatedcompanies................................... (7,496) (6,732)
Adjustment of book value atthe date of acquisition—
		 Land and buildings................... (5,180) (5,607)
		 Long-term receivables.............. (1,740) (1,752)
Unearned premiums andother insurance liabilities........... (3,324) (2,347)
Prepaid pension andseverance costs........................... (3,189) (5,918)
Unrealized gains on securities.....
— (6,825)
Other.............................................. (7,157) (5,457)
		 Gross deferred tax liabilities.... (36,494) (43,121)
			 Net deferred tax assets......... ¥17,231 ¥ 9,407

2008$136,010
99,07048,99027,64071,49065,24050,53034,27026,34022,39019,41016,41090,140707,930(170,680)
537,250(84,080)(74,960)(51,800)(17,400)(33,240)(31,890)—(71,570)(364,940)$172,310

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, 2008 and 2007 was an increase of ¥1,477 million($14,770 thousand) and ¥245 million, respectively.

23,090(12,600)
8,050
5,940
$471,060

Secom Co., Ltd.

Annual Report 2008

49

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 of these deductible differences, net of the existing valuation allowance at
March 31, 2008 and 2007.
Net deferred tax assets at March 31, 2008 and 2007 arereflected in the accompanying consolidated balance sheets
under the following captions:
		 In thousands ofIn millions of yen

U.S. dollars

	March 31	March 31

		

2008

2008

2007

Deferred income taxes(Current assets)............................. ¥17,395 ¥16,947
Deferred income taxes(Other assets)................................ 11,321
6,073
Other current liabilities...................
(1,410)(978)
Deferred income taxes(Liabilities)..................................... (10,075) (12,635)
		 Net deferred tax assets . ........ ¥17,231 ¥ 9,407$173,950
113,210(14,100)(100,750)$172,310

The Company has not recognized deferred tax liabilities of¥806 million ($8,060 thousand) for a portion of undistributed
earnings of foreign subsidiaries totaling ¥8,941 million($89,410 thousand) at March 31, 2008 because they are notexpected to be remitted in the foreseeable future.
At March 31, 2008, the operating loss carryforwards ofdomestic subsidiaries amounted to ¥20,503 million ($205,030
thousand) and are available for offsetting against future taxable 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

2009......................................................
2010......................................................
2011......................................................
2012......................................................
2013......................................................
2014......................................................
2015......................................................
..............................................................

50

Secom Co., Ltd.

Annual Report 2008

¥

56
481
4,155
4,229
2,522
4,270
4,790
¥20,503

$

560
4,810
41,55042,29025,22042,70047,900$205,030

The operating loss carryforwards of overseas subsidiaries
at March 31, 2008 amounted to ¥7,041 million ($70,410 thousand), a part of which will begin to expire in the year ending
March 31, 2009.
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 that as of March 31, 2008
were insignificant. Also there were no movements of thegross amounts in unrealized tax benefits and the amounts ofinterest and penalties recognized due to the unrecognizedtax benefits during the year ended March 31, 2008.
Although the Company believes its estimates of unrecognized tax benefits are reasonable, uncertainties regarding thefinal 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, 2008, the Company does
not expect significant changes to the unrecognized tax­benefits 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 2004. In other foreign tax jurisdictions, major
subsidiaries are no longer subject to income tax examinations
by tax authorities for years before 2007 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 Japanese subsidiaries be appropriated as a legal reserve until the aggregate
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 ¥363,068 million($3,630,680 thousand) at March 31, 2008.
Subsequent to March 31, 2008, the parent company’s Boardof Directors declared an annual cash dividend of ¥19,122
million ($191,220 thousand) to shareholders of record on
March 31, 2008. The dividend declared was approved at thegeneral shareholders’ meeting held on June 26, 2008.
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) Other Comprehensive Income (Loss)
Components of other compre­hensive income (loss) for theyears ended March 31, 2008, 2007 and 2006 is as follows:
In millions of yen
Pre-tax
amountTax(expense) Net-of-tax
or benefit
amount

For the year ended March 31, 2008:
Unrealized 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 holding gains
		 or losses arising during
		 the year.........................................
(61)
7
(54)
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income..........................
121
13
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)
For the year ended March 31, 2007:
Unrealized 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 holding 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)¥1,362 (¥ 1,562)

2,075(1,464)

19

(113)

(2)

30

20

(21)

(476)

2,193

¥2,998 (¥937)

In millions of yen
Pre-tax
amountTax(expense) Net-of-tax
or benefit
amount

For the year ended March 31, 2006:
Unrealized gains on securities—
		 Unrealized holding gains
		 or losses arising during
		 the period...................................... ¥14,660 (¥5,764) ¥ 8,896
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income........................... (5,448)
2,092(3,356)
Unrealized gains on derivative
instruments—
		 Unrealized holding gains
		 or losses arising during
		 the year..........................................
163
(66)
97
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income...........................
31
(13)
18
	Minimum pension
liability adjustments.........................
(57)
27
(30)
Foreign currencytranslation adjustments.................... 7,317
(971)
6,346
			 Other comprehensive
			 income (loss)............................. ¥16,666 (¥4,695) ¥11,971
In thousands of U.S. dollars
Pre-tax
amountTax(expense) Net-of-tax
or benefit
amount

For the year ended March 31, 2008:
Unrealized losses on securities—
		 Unrealized holding gains
		 or losses arising during
		 the period................................. ($189,140) $ 78,800 ($110,340)
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income......................
(5,130)3,090(2,040)
Unrealized losses on derivative
instruments—
		 Unrealized gains or losses
		 arising during the year............
(610)
70
(540)
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income......................
120
10
130
Pension liability adjustments—
		 Unrealized gains or losses
		 arising during the period......... (92,090) 36,450 (55,640)
		 Less: Reclassification		adjustment for gains
		or losses realized		in net income..................
(6,900)2,560(4,340)Foreign currencytranslation adjustments............... (26,840)
4,970 (21,870)
			 Other comprehensive
			 income (loss)........................ ($320,590) $125,950 ($194,640)

Secom Co., Ltd.

Annual Report 2008

51

CONSOLIDATED FINANCIAL STATEMENTS

18. Research and Development Expenses
Research and development expenses included in selling,
general and administrative expenses for the years ended
March 31, 2008, 2007 and 2006 were ¥5,792 million ($57,920
thousand), ¥5,875 million and ¥4,061 million, respectively.
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($50,860 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, 2008 were
¥5,920 ­million ($59,200 thousand).
A summary of leased assets under capital leases at March
31, 2008 and 2007 is as follows:		 In thousands ofIn millions of yen

U.S. dollars

	March 31	March 31

		

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

2007

2008

¥ 5,208 ¥ 5,208

2008$ 52,080

15,672 16,531
791
723(10,814) (10,488)¥10,857 ¥11,974

156,720
7,910(108,140)$108,570

Depreciation expenses under capital leases for the years
ended March 31, 2008, 2007 and 2006 were ¥4,089 million($40,890 thousand), ¥3,704 million and ¥3,576 million,­respectively.

52

Secom Co., Ltd.

Annual Report 2008

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, 2008:
		In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2009........................................................
2010........................................................
2011........................................................
2012........................................................
2013........................................................
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........................................

¥ 3,675
2,727
1,822
1,171
640
4,524
14,5592,649$ 36,750
27,27018,22011,7106,400
45,240145,590
26,49011,910
3,282

119,100
32,820¥ 8,628$ 86,280

Rental expenses under operating leases for the years
ended March 31, 2008, 2007 and 2006 were ¥15,912 million($159,120 thousand), ¥15,771 million and ¥15,415 million,
respectively.
A significant portion of such rentals relates to cancelable
short-term leases for office space and employee residential
facilities, many of which are renewed upon expiration.
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 ($13,390 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,
2008 are as follows:		In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2009........................................................
2010........................................................
2011........................................................
2012........................................................
2013........................................................
Thereafter...............................................
Total future minimum lease
payments..........................................

¥ 2,504
2,329
2,255
2,233
2,219
20,908$ 25,040
23,29022,55022,33022,190209,080¥32,448$324,480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 and certain real estate for medical institutions on lease are classified
as sales-type leases or direct-financing leases. The otherleases are ­classified as o
­ perating leases.
A summary of lease receivables under sales-type anddirect-financing leases at March 31, 2008 and 2007 is
as follows:		 In thousands ofIn millions of yen

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

2008

2007

2008

¥48,206 ¥32,375(3,576) (2,034)$482,060(35,760)

3,480 2,161(13,069) (6,289)
35,041 26,213(7,820) (6,340)

34,800(130,690)
350,410(78,200)¥27,221 ¥19,873$272,210

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, 2008:
		In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2009........................................................
2010........................................................
2011........................................................
2012........................................................
2013........................................................
Thereafter...............................................
Total future minimum lease
payments to be received.................

¥ 9,317
7,647
6,170
4,279
2,369
18,424$ 93,170
76,47061,70042,79023,690184,240¥48,206$482,060

A summary of investment in property on operating leases
and property held for lease at March 31, 2008 and 2007 is
as follows:		 In thousands ofIn millions of yen

U.S. dollars

	March 31	March 31

		Land.................................................
Buildings and improvements........
Other intangible assets..................
Accumulated depreciation.............
		 . ................................................

2008

		In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2009........................................................
2010........................................................
2011........................................................
2012........................................................
2013........................................................
Thereafter...............................................
Total future minimum rentals...........

¥ 2,622
760
760
760
760
12,104¥17,766$ 26,220
7,600
7,600
7,600
7,600
121,040$177,660

U.S. dollars

	March 31	March 31

		The future minimum rentals on non-cancelable operatingleases at March 31, 2008 are as follows:

2007

2008

¥27,223 ¥25,686
26,955 26,299
775
775(7,634) (6,881)¥47,319 ¥45,879$272,230
269,550
7,750(76,340)$473,190

21. Fair Value of Financial Instruments
The following methods and assumptions were used to estimate 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 estimated maturity, 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 embedded derivatives are estimated using current market pricing models by
obtaining quotes from ­financial institutions.

Secom Co., Ltd.

Annual Report 2008

53

CONSOLIDATED FINANCIAL STATEMENTS

The carrying amounts and estimated fair values of thefinan­cial instruments excluding debt and equity securities
which are disclosed in Note 7 at March 31, 2008 and 2007 are
as follows:		

In millions of yen

		March 31
Carrying
amountNon-derivatives:
Liabilities—
		 Long-term debt
		 including current		 portion.......................... ¥53,244
		 Investment deposits
		 by policyholders........... 87,252
Derivatives:
Assets—		 Interest rate swaps.........
—
Liabilities—
		 Interest rate swaps.........
135
		 Embedded derivatives....
514

2008

2007

Estimated
fair value

Carrying Estimatedamount fair value¥53,344 ¥50,197¥50,134

89,37393,361

95,246

—

8

8

135
514

84
—

84
—

In thousands of U.S. dollars
	March 31
2008
Carrying Estimatedamount fair value

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

$532,440 $533,440
872,520 893,730
—

—

1,350
5,140

1,350
5,140

Limitation:
Fair value estimates are made at a specific point intime based on relevant market information and information about the financial instruments. These estimatesare ­subjective in nature and involve uncertainties andmatters of significant ­judgment and therefore cannot be
determined with precision. Changes in assumptions could
significantly affect the estimates.

54

Secom Co., Ltd.

Annual Report 2008

22. 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 2012. 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, 2008, 2007 and 2006 as the criticalterms of most of the interest rate swap agreements matchthe terms of the hedged debt obligations. Approximately¥23 million ($230 thousand) of net derivative losses included
in other comprehensive income (loss), net of tax at March 31,
2008, will be reclassified into current income within 12
months from that date. At March 31, 2008 and 2007, thenotional principal amounts of interest rate swap agreements
designated as cash flow hedges were ¥21,111 million($211,110 thousand) and ¥23,052 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.
23. Commitments and Contingent Liabilities
The Company has commitments outstanding at March
31, 2008 for the ­purchase of property, plant and equipment
approximated ¥10,843 million ($108,430 thousand).
The Company provides guarantees to third parties mainlywith respect to bank loans extended to its affiliated companies and other entities. Such guarantees are provided toenhance the credit standing of the affiliated companies andother entities. For each guarantee provided, the Company
would have to per­form under the guarantee, if the affiliatedcompanies and other entities default on a payment within
the guaranteed period of one to five years. The maximum
amount of undiscounted pay­ments the Company would haveto make in the event of default amounts to ¥3,975 million($39,750 thousand) at March 31, 2008. The carrying amountsof the liabilities recognized for the Company’s obligations
under these ­guarantees at March 31, 2008 and 2007 weredeemed insignificant.
In July 2004, Fujitsu Ltd. filed a lawsuit against Secom
Insurance in the Tokyo District Court, claiming compensation for costs related to a systems development order in
the amount of ¥2,500 million ($25,000 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 ($10,000
thousand), which is ­pending at March 31, 2008.

PASCO filed a lawsuit against Sumitomo Mitsui Banking
Corporation (“SMBC”) for obtaining a confirmation judgmentto the effect that it does not owe an obligation in the amountof ¥2,010 million ($20,100 thousand) to SMBC with theTokyo District Court on October 31, 2005. SMBC alleged thatit made a loan to a third party and acquired from the third
party its claim against PASCO for an alleged sale of equipment to PASCO as a collateral for the loan, and demanded
PASCO to pay such claim to SMBC. However, upon carefully
investigating the case with counsel, the Company believes
that the alleged transactions were null and void, and theCompany’s pleading should be admitted. Furthermore, on
December 5, 2005, SMBC brought a cross action against
PASCO in relation to a demand for payment of a transferred
receivable. Subsequently, both actions were consolidated
according to a court procedure. The existence of the debt in
the above-mentioned sum is still being disputed in court at
March 31, 2008.
24. Supplemental Cash Flow Information
Supplemental cash flow information is as follows:		 In thousands ofIn millions of yen

U.S. dollars

Years ended
Year ended	March 31	March 31
2008

2007

2006

Cash paid during theyear for:
Interest.............................. ¥ 2,082 ¥ 1,865 ¥ 1,873
Income taxes.................... 43,067 38,360 28,959
Non-cash investing andfinancing activities:
Additions to obligations
under capital leases....... ¥ 2,668 5,395 2,253

Secom Co., Ltd.

Annual Report 2008

2008

$ 20,820
430,670$ 26,680

55

CONSOLIDATED FINANCIAL STATEMENTS

25. Segment Information
The Company has applied SFAS No. 131, “Disclosuresabout Segments of an Enter­prise and Related Information,”
which requires disclosure of financial and descriptive information about the Company’s reportable operating segments.
The ­operating segments reported below are the segmentsof the Company for which separate financial information isavailable and for which ­operating profit/loss amounts areevaluated regu­larly by ­management in deciding how toallocate resources and assess performance.
The Company has six reportable business segments:
security services, fire protection services, medical services,
insurance services, geographic information services, andinformation and communication related and other services.
From December 2006, the Company newly established abusiness segment, the fire protection services, due to theacquisition of Nohmi Bosai group.
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-based
nursing care services, medical data trans­mission services byutilizing the Company’s network and leas­ing of real estate
for medical institutions. Also the VIEs to which the Company
is primary beneficiary manage hospitals and healthcare-related institutions. The insurance services segment
represents non-life insurance-related underwriting businessin the Japanese market. The geographic information services
segment represents surveying and measuring services and
GIS services. The information and communication related
and other services ­segment represents the Company’s
network business, development and sales of real estate andleasing of real estate, and management 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.

56

Secom Co., Ltd.

Annual Report 2008

Information by business and geographic segments for theyears ended March 31, 2008, 2007 and 2006 is as follows:(1) Business Segment Information
		 In thousands ofIn millions of yen

U.S. dollars

Years ended
Year ended	March 31	March 31
2008

2007

2006

Net sales andoperating revenue:
Security services—		 Customers.................. ¥435,306 ¥415,410 ¥400,044
		 Intersegment..............
1,375
1,491
1,317
			 .................................. 436,681
416,901
401,361
Fire protection
services—
		 Customers.................. 82,572
27,448—
		 Intersegment..............
4,046
944
—
			 .................................. 86,618
28,392—
	Medical services—		 Customers.................. 50,741
45,852
39,215
		 Intersegment..............
127
233
220
			 .................................. 50,868
46,08539,435
Insurance services—		 Customers.................. 33,229
31,97829,537
		 Intersegment..............
2,894
2,702
2,496
			 .................................. 36,123
34,68032,033
Geographic
information
services—
		 Customers.................. 39,376
36,43835,271
		 Intersegment..............
321
138
113
			 .................................. 39,697
36,57635,384
Information andcommunication
related and otherservices—
		 Customers.................. 65,471
79,55276,459
		 Intersegment..............
8,700
9,096
6,406
			 .................................. 74,171
88,64882,865
Total............................... 724,158
651,282
591,078
Eliminations.................. (17,463)(14,604)(10,552)
		 Total net sales and		 operating revenue.... ¥706,695 ¥636,678 ¥580,526

2008$4,353,060
13,7504,366,810
825,720
40,460866,180
507,410
1,270
508,680
332,290
28,940361,230

393,760
3,210
396,970

654,71087,000741,710
7,241,580(174,630)$7,066,950

		 In thousands of		 In thousands ofYears ended
Year ended	March 31	March 31

Years ended
Year ended	March 31	March 31

In millions of yen

2008

2007

Operating income (loss):
Security services......... ¥103,137 ¥ 96,162
Fire protection
services......................
4,948
1,815
	Medical services.........
(1,083)(2,914)
Insurance services......
3,766
3,752
Geographic
information
services......................
1,439
394
Information andcommunication
related and otherservices......................
5,391
7,335
Total............................. 117,598
106,544
Corporate expenses
and eliminations.......
(11,970)(12,126)
Operating income....... ¥105,628 ¥ 94,418
Other income..............
13,011
8,437
Other expenses...........
(8,376)(7,519)
		 Income before		 income taxes.......... ¥110,263 ¥ 95,336

2006

U.S. dollars

2008¥86,660$1,031,370—(1,321)
5,061

49,480(10,830)
37,660900

14,3905,643
96,94353,9101,175,980(15,050)¥81,893
15,936(8,101)(119,700)$1,056,280
130,110(83,760)¥89,728$1,102,630

		 In thousands ofIn millions of yen

U.S. dollars

	March 31	March 31
2008

2007

2006

Assets:Security services......... ¥ 472,071 ¥ 467,071 ¥ 438,989
Fire protection
services......................
80,777
77,850—	Medical services......... 119,251
105,158
102,838
Insurance services...... 188,538
196,798
284,911
Geographic
information
services......................
58,03855,12455,448
Information andcommunication
related andother services............ 195,284
178,532
145,757
Total............................. 1,113,959 1,080,533 1,027,943
Corporate items.......... 104,752
121,817
159,210Investments
in and loans
to affiliatedcompanies.................
46,814
38,832
38,075
		 Total assets............... ¥1,265,525 ¥1,241,182 ¥1,225,228

In millions of yen

2008$ 4,720,710
807,770
1,192,510
1,885,380
580,380

1,952,840
11,139,590
1,047,520

Depreciation andamortization:
Security services.........
Fire protection
services......................
	Medical services.........
Insurance services......
Geographic
information
services......................
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......................
Information andcommunication
related and otherservices......................
Total.............................
Corporate items..........
		 Total capital		 expenditures...........

U.S. dollars

2008

2007

2006

2008

¥47,191¥49,168¥44,942$471,910

1,171
3,816
1,225

326
3,202
1,206

—
1,629
1,143

11,71038,16012,250

1,666

1,631

1,494

16,6602,758
57,827367

2,414
57,947301

2,690
51,898441

27,580578,270
3,670¥58,194¥58,248¥52,339$581,940¥33,192¥33,306¥29,351$331,920

1,556
4,674
8

364
5,985
49

—
8,474
1,733

15,56046,740
80

1,450

1,882

436

14,5005,880
46,76063

6,163
47,74912

7,448
47,442120

58,800467,600
630¥46,823¥47,761¥47,562$468,230

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.

468,140$12,655,250

Secom Co., Ltd.

Annual Report 2008

57

CONSOLIDATED FINANCIAL STATEMENTS

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 ofIn millions of yen

U.S. dollars

Years ended
Year ended	March 31	March 31
2008

2007

2006

Electronic security
services...................... ¥296,167 ¥285,858 ¥277,892
Other security
services:
Static guard
services..................
46,64842,144
41,480
Armored car
services..................
19,547
20,30819,369Merchandise andother ..........................
72,944
67,10061,303
Total security
services.................. ¥435,306 ¥415,410 ¥400,044

2008$2,961,670

466,480
195,470
729,440$4,353,060(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, 2008, 2007 and 2006 were as follows:		 In thousands ofIn millions of yen

U.S. dollars

Years ended
Year ended	March 31	March 31
2006

2008

Net sales andoperating revenue:
Japan....................... ¥684,909 ¥620,435 ¥564,803
Other........................
21,786
16,243
15,723
		 Total...................... ¥706,695 ¥636,678 ¥580,526

2008$6,849,090
217,860$7,066,950

2007

		 In thousands ofIn millions of yen

U.S. dollars

	March 31	March 31
2006

2008

Long-lived assets:
Japan...................... ¥345,318 ¥347,546 ¥330,752
Other.......................
6,185
5,023
5,609
		 Total..................... ¥351,503 ¥352,569 ¥336,361

2008$3,453,180
61,850$3,515,030

2007

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

58

Secom Co., Ltd.

Annual Report 2008

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

ラインは、ロゴに必要なクリアスペースです。
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, 2008
and 2007, 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, 2008, 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, 2008 and 2007, and the results of their operations and their cash
flows for each of the years in the three-year period ended March 31, 2008, in conformity with accounting principles generally
accepted in the United States of America.
As discussed in Note 2 of the notes to the consolidated financial statements, SECOM CO., LTD. and subsidiaries changed
their method of accounting for conditional asset retirement obligations in the year ended March 31, 2006.
The accompanying consolidated financial statements as of and for the year ended March 31, 2008 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 26, 2008

Secom Co., Ltd.

Annual Report 2008

59

OTHER FINANCIAL DATACONTENTS
Summary of Selected Financial Data........................................................................ 61
Common Stock Data......................................................................................................... 63

60

Secom Co., Ltd.

Annual Report 2008

SUMMARY OF SELECTED FINANCIAL DATASECOM CO., LTD. and Subsidiaries
Years ended March 31
In millions of yen
2008

2007

2006

2005

2004

2003

Composition of consolidated net sales andoperating revenue by segment
Net sales and operating revenue................................................... ¥706,695 ¥636,678 ¥580,526 ¥552,354 ¥517,435 ¥497,691
400,044415,410382,360
367,482
Security services:......................................................................... 435,306
352,985
61.6%
68.9%
65.3%
69.2%
71.0%
				 As a percentage of net sales and operating revenue....
70.9%
296,167
277,892
285,858
271,872
263,900
		 Electronic security services—
257,075
41.9
47.9
44.9
49.2
51.0
				 As a percentage of net sales and operating revenue....
51.6
		 Other security services—
41,48042,14438,30237,537
			 Static guard services............................................................ 46,648
35,908
6.6
7.1
6.6
6.9
7.2
				 As a percentage of net sales and operating revenue....
7.2
19,36920,30818,462
18,618
			 Armored car services........................................................... 19,547
17,261
2.8
3.3
3.2
3.4
3.6
				 As a percentage of net sales and operating revenue....
3.5
60,84962,452
56,76456,155					 Subtotal.......................................................................... 66,195
53,16961,303
67,10053,72447,427
		Merchandise and other........................................................... 72,944
42,741
10.3
10.6
10.6
9.7
9.2
				 As a percentage of net sales and operating revenue....
8.6—
27,448——Fire protection services............................................................... 82,572
—
11.7
—
4.3
—
—
				 As a percentage of net sales and operating revenue....
—39,21545,852
34,68821,147
	Medical services.......................................................................... 50,741
19,637
7.2
6.7
7.2
6.3
4.1
				 As a percentage of net sales and operating revenue....
3.9
29,537
31,97826,46523,536
Insurance services....................................................................... 33,229
15,234
4.7
5.1
5.0
4.8
4.5
				 As a percentage of net sales and operating revenue....
3.1
35,27136,43834,91532,346
Geographic information services............................................... 39,376
39,525
5.6
6.1
5.7
6.3
6.3
				 As a percentage of net sales and operating revenue....
8.0
Information and communication related
76,45979,55273,92672,924and other services..................................................................... 65,471
70,310
9.2
13.2
12.5
13.4
14.1
				 As a percentage of net sales and operating revenue....
14.1
Net income, cash dividends and shareholders’ equity
Net income....................................................................................... ¥ 61,756
Cash dividends (paid)(2)................................................................... 17,998
Shareholders’ equity....................................................................... 574,554
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)........................................

¥ 55,889
13,499551,732¥ 50,331
11,251
508,696¥ 52,133
10,127457,837¥ 23,479
9,003
415,852¥ 30,275
9,330
372,518

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

20.0
3.3
0.0
5.2
11.4
39.9
60.1
100.0
2.6
8.1

8.2
2.3

9.1
2.5

9.0
2.7

9.1
2.6

10.1
2.8

10.3
3.0

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

50.6
1.37
15.2

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

Secom Co., Ltd.

Annual Report 2008

61

SUMMARY OF SELECTED FINANCIAL DATA

2008

2007

2006

2005

2004

2003

Number of shares outstanding
Issued...................................................................... 233,288,717 233,288,717 233,288,717 233,288,717 233,281,133 233,281,133
8,323,599
8,318,900
8,301,997
8,266,043
8,228,652
8,200,245
Owned by the Company.......................................
Balance................................................................... 224,965,118 224,969,817 224,986,720 225,022,674 225,052,481 225,080,888
Per share information¥ 274.51¥ 248.42¥ 223.69¥ 231.66¥ 104.32¥ 132.87
Basic net income per share (in yen) (1) .................
80.00
60.00
50.00
45.00
40.00
40.00
Cash dividends paid per share (in yen) (2) . ..........
2,553.97
2,452.47
2,261.00
2,034.63
1,847.80
1,655.04
Shareholders’ equity per share (in yen) (3) . .........
448.19427.34396.31410.29294.56321.88Cash flow per share (in yen) (1) (e) . .........................
1.90
2.23
2.66
2.19
2.46
1.84
Price/Book value ratio............................................
17.63
22.02
26.91
19.25
43.52
22.88
Price/Earnings ratio...............................................
10.80
12.80
15.19
10.87
15.41
9.44
Price/Cash flow ratio..............................................
4,840
5,470
6,020
4,460
4,540
3,040
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 2008

(1) Per share amounts are based on the average number of shares
outstanding during each period.
(2) Subsequent to March 31, 2008, cash dividends of ¥19,122 million(¥85.00 per share) were approved at the general shareholders‘meeting on June 26, 2008 (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..................................................................

2008

2007

2006

2005

2004

2003

28,51230,68319,807

21,327

21,72020,23033.84%
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%46.14%
2.04
4.60
28.64
18.58
100.00%

PRICE INFORMATION (TOKYO STOCK EXCHANGE)
2006
2007

2008

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

¥6,460
6,010
6,310
6,360
5,860
5,830
6,340
6,200

¥5,090
5,160
5,670
5,250
5,360
5,060
5,480
4,720

¥17,563.37
16,385.96
17,225.83
18,215.35
18,240.30
18,261.98
17,458.98
14,691.41¥14,218.60
14,437.24
15,725.94
16,642.25
17,028.41
15,273.68
14,837.66
11,787.51

Secom Co., Ltd.

Annual Report 2008

63

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, 2008, 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 2008

SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP)CONTENTS
Condensed CONSOLIDATED BALANCE SHEETS(Based on Japanese gaap)............................................................................................ 66
Condensed CONSOLIDATED STATEMENTS OF INCOME(Based on Japanese gaap)............................................................................................ 68

Secom Co., Ltd.

Annual Report 2008

65

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

2008

2007

2006

2005

2004

2003

Current assets:
Cash on hand and in banks.............................................. ¥0,200,403 ¥0,181,266 ¥ 271,780 ¥0,246,693 ¥0,202,630 ¥0,175,776
Cash deposits for armored car services..........................
63,69675,328————Call loans...........................................................................
19,00015,00025,00010,00038,00030,000Notes and accounts receivable, trade.............................
85,59583,39752,66750,18346,81343,922
Due from subscribers.......................................................
21,125
19,217
17,678
16,204
17,561
16,336
Short-term investments....................................................
9,306
18,171
83,80973,252
47,34336,402Inventories.........................................................................
27,08025,94564,19440,97945,47741,339Inventories for real estate for sales.................................
90,23071,724————
Deferred income taxes......................................................
11,84011,597
9,462
8,207
9,768
7,678
Short-term loans receivable.............................................
7,246
5,097
15,564
46,37558,79351,355
Other..................................................................................
13,827
19,66013,41917,676
17,205
19,650Allowance for doubtful accounts.....................................
(1,813)(1,923)(1,617)(1,297)(4,925)(1,558)				 Total current assets................................................
547,538
524,484
551,959
508,274
478,668
420,903

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

84,54565,45081,71633,63687,306
63,67580,341
29,48577,27063,07065,542
28,18372,816
64,104
65,151
21,50979,07265,31580,507
19,05090,82365,02687,853
17,313

Intangible assets...............................................................

22,332

23,294

24,384

27,58233,82034,544

Investments and others:
		 Investment securities....................................................
241,957
243,148
231,096
243,031207,654
188,880
		 Long-term loans receivable..........................................
54,59955,22357,56442,983
63,799102,448
		 Prepaid pension and severance costs.........................
17,834
15,817
11,186
1,527——
		 Deferred income taxes..................................................
22,74015,654
11,256
18,50922,52338,056
		 Other...............................................................................
47,57945,692
41,21742,25855,52852,098
		 Allowance for doubtful accounts.................................
(17,455)(15,161)(13,401)(10,292)(14,060)(8,010)				 Total fixed assets....................................................
654,936
644,478
597,370
589,183
613,211
669,034
Deferred assets.....................................................................
365
219
47
90
187
192
				 Total assets ............................................................ ¥1,202,840 ¥1,169,182 ¥1,149,377 ¥1,097,548 ¥1,092,067 ¥1,090,131

66

Secom Co., Ltd.

Annual Report 2008

In millions of yen

LIABILITIES

2008

2007

2006

2005

2004

2003

Current liabilities:
Notes and accounts payable, trade................................ ¥0,030,459 ¥0,028,469 ¥ 18,652 ¥0,015,693 ¥0,018,460 ¥0,015,529
Bank loans........................................................................
136,034
129,169
112,868
108,172
119,344
135,540
Current portion of straight bonds...................................
1,936
3,356
32,210690
200—
Current portion of convertible bonds.............................
—
—
—
—
18
—
Payables—other...............................................................
28,98829,88826,34018,95917,743
19,580Accrued income taxes.....................................................
24,61024,97322,15916,197
17,083
10,756
Accrued consumption taxes............................................
3,456
3,366
2,588
2,698
3,792
3,444
Accrued expenses............................................................
3,641
3,198
2,085
2,275
2,304
1,837
Deferred revenue.............................................................
32,061
31,18830,74728,53228,45928,851
Accrued bonuses..............................................................
12,21011,409
8,981
8,758
8,490
8,852
Accrued bonuses to directors and corporate auditors....
—
80
—
—
—
—
Other.................................................................................
46,33758,66546,80544,24545,28335,140				 Total current liabilities..........................................
319,737
323,766
303,440
246,222
261,181259,531
Long-term liabilities:
Straight bonds..................................................................
Convertible bonds............................................................
Long-term loans...............................................................
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 ............. ¥13,524—20,02432,532
5,042
16,096

13,941—
14,36332,164
2,717
17,596

11,180—13,44428,982
1,079
11,36240,940—14,51328,737423
12,61732,800—43,53029,160371
12,89932,00018
48,301
28,304459
45,210

2,220

2,300

1,565

—

—

—

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

274,476
4,033
432,803692,335——

35,46932,16329,77028,042

—
—
—
—
—
—
—

—
—
—
—
—
—
—

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

66,36882,544
276,397
116(11,386)(44,287)369,753— ¥— ¥1,149,377 ¥1,097,548 ¥1,092,067 ¥1,090,131

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

— ¥
—
—
—
—

— ¥
—
—
—
—

— ¥
—
—
—
—

—
—
—
—
—

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

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

10,157(51)(7,253)

—
—
—

—
—
—

—
—
—

—
—
—

(13,304)

2,853

—

—

—

—

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

63,03560,983

—

—

—

—

—
— ¥

—
— ¥

—
— ¥

—
—

Annual Report 200867				 Total net assets......................................................
630,274
601,116				 Total liabilities and net assets.............................. ¥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
2008

2007

2006

2005

2004

2003

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

¥682,619 ¥613,976¥567,315 ¥547,230¥527,409 ¥523,271
11.2%
8.2%
3.7%
3.8%
0.8%
5.1%

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

433,030
63.4

388,78763.3

351,02061.9

341,466
6­2.4

324,759
61.6

325,952
62.3

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

249,58936.6

255,18936.7

216,29438.1

205,76437.6

202,650
38.4

197,319
37.7

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

144,883
21.3

127,348
20.7

122,185
21.5

122,720
22.4

121,363
23.0

124,416
23.8

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

104,706
15.3

97,84015.9

94,10916.6

83,04315.2

81,28615.4

72,902
13.9

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

20,125
10,552

15,087
10,207

15,792
13,232

11,942
11,507

7,798
12,841

8,672
11,512

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

114,278
16.7

102,720
16.7

96,66917.1

83,47815.3

76,24314.5

70,063
13.4

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

2,748
4,984

2,601
3,317

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

13,587
15,728

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

112,043
16.4

102,005
16.6

94,82916.7

84,754
15.5

83,211
15.8

67,921
13.0

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

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

27,8082,171
2,358

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

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

35,583
6.8
271.3

68

Secom Co., Ltd.

Annual Report 2008

SUPPLEMENTAL NONCONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP)CONTENTS
Condensed NONCONSOLIDATED BALANCE SHEETS(Based on Japanese GAAP)............................................................................................ 70
Condensed NONCONSOLIDATED STATEMENTS OF INCOME(Based on Japanese GAAP)............................................................................................ 72

Secom Co., Ltd.

Annual Report 2008

69

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

2008

2007

2006

2005

2004

2003

¥ 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¥093,044
—
365
8,311
4,695
3,047
7,951
6,738
1,420
1,507
4,642
23,035

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

30,0762,367(3,602)
183,602

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

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

28,777525
60,2201,501
3,678
42,1971,463
18Intangible assets:
		 Telephone rights............................................................
		 Telephone and telegraph utility rights.........................
		 Software.........................................................................
		 Other...............................................................................

—
—
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

2,033
540
10,957800

28,66843,165

46,16627,65423,874

20,796

194,110

166,839

149,535

159,772

157,612

155,886

1,874
8,453
31

1,074
18,30824

974
18,630
24

667
3,122
22

667
3,071
22

4,015
3,336
23

66,35452,9298,859
8,973
26,16524,855
13,76912,213
6,760
5,139
4,893
4,893
975
983
(6,812)(7,200)478,710463,680¥673,043 ¥654,791

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

14,1608,816
20,335
1,257
10,4505,153
2,877(4,760)384,880¥598,711

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

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 2008

20,292
6,700
8,533
8,489
19,88919,709——13,72818,379
5,761
5,761
7,245
4,889
(11,306)(1,596)
392,586
399,104¥580,547 ¥582,707

In millions of yen

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

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 on securities........................................
				 Total valuation, translation adjustments				 and others............................................................
				 Total net assets......................................................
				 Total liabilities and net assets..............................

2007

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——
18,174
5,087

2006

2005

2004

2003

3,168
26,06930,00012,987
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¥002,121
53,503
—
9,605
3,535
6,806
2,157
576
24,74921,0484,920
1,679
130,706——
18,4495,370——
18,244
5,581

30,000—18,014
5,713

30,0002,300
17,0095,356

30,0183,700
16,72130,3781,070
24,333
151,513

1,268
25,088160,637

1,201
25,027
182,344—
53,728172,423—
54,665
182,684—
80,818211,524——

66,377

66,37766,36866,368————83,054
83,05482,55382,55382,54482,54482,54482,544

—

—

9,028

9,028

9,028

9,028

—

—

800

800

800

800

—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—

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

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

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

27
2,212
3,039
254,364
266,431124(44,287)
371,182¥582,707

¥

¥

¥

¥

¥

Long-term liabilities:
Straight and convertible bonds......................................
Long-term loans...............................................................
Guarantee deposits received..........................................
Accrued pension and severance costs...........................
Accrued retirement benefits for directors andcorporate auditors..........................................................
				 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

83,054
1
83,056

83,054
1
83,056

—
—
—

—
—
—

—
—
—

—
—
—

9,028

9,028

—

—

—

—

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

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

(82)

4,564

—

—

—

—

(82)
521,529¥673,043

4,564
494,154¥654,791

—
—
—

—
—
—

—
—
—

—
—
—

¥

—

¥

—

Secom Co., Ltd.

¥—

Annual Report 2008

¥

—

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
2008

2007

2006

2005

2004

2003

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

¥337,611 ¥326,076¥313,096 ¥297,782¥288,493 ¥278,610
3.5%
4.1%
5.1%
3.2%
3.5%
1.4%
291,350
282,247
272,876
261,918
256,883
250,237
3.2
3.4
4.2
2.0
2.7
2.5
46,261
43,82940,22035,86331,61028,373
5.5
9.0
12.1
13.5
11.4
(7.4)

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

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
22,873
72.4

155,49955.8
135,315
54.1
20,18471.1

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

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

123,11144.2
114,921
45.9
8,189
28.9

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

71,03821.0

69,33021.3

69,121
22.0

67,23222.6

65,244
22.6

68,943
24.8

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

74,15522.0

73,40422.5

72,172
23.1

66,031
22.2

64,231
22.3

54,167
19.4

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

9,607
4,575

7,942
4,763

6,299
7,506

6,241
6,052

4,817
6,892

4,288
4,942

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

79,18723.5

76,58323.5

70,96422.7

66,21922.2

62,15621.5

53,513
19.2

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

2,221
566

1,246
1,141

6,147
5,615

1,083
5,915

25,462
29,860

6,543
7,535

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

80,842
23.9

76,68823.5

71,49622.8

61,38820.6

57,75820.0

52,521
18.9

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

30,79538.1

29,443
38.4

27,617
38.6

23,684
38.6

23,475
40.6

21,73641.4

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

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

30,784
11.0
81.6

72

Secom Co., Ltd.

Annual Report 2008

CORPORATE INFORMATION(As of June 30, 2008)

Headquarters:
5-1, Jingumae 1-chome, Shibuya-ku, Tokyo 150-0001, Japan
Independent auditors:
KPMG AZSA & Co.
Administrator of the register 	Mitsubishi UFJ Trust and Banking Corporationof shareholders:
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

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

¥3,530		(50.9)%

Secom Hokuriku Co., Ltd.

201		

59.1

Security services
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.

20		

(79.1)

Installation of security equipment

Secom Win Co., Ltd.

15		(66.7)

Installation of security equipment and facilities

Secom Maintenance Joshinetsu Co., Ltd.

10		(100.0)	Maintenance of equipment

TES Co., Ltd.

20		(100.0)	Maintenance of equipment

Secom Tohoku Enterprise Co., Ltd.

100		(100.0)

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.

5		(100.0)Condominium management

Secom Techno Service Co., Ltd.

Design, construction and maintenance of facilities

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 200873

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		

(72.3)

Installation of fire protection equipment and				sales of fire protection equipment<Medical services>
Secom Medical System Co., Ltd.

6,545		

100.0

				

Home health/nursing care and other medical-related
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)	Management of pharmacies

Ryomay Royal Life Co., Ltd.

210		

86.5	Management of nursing homes

Alive Medicare Co., Ltd.

50		(100.0)	Management of nursing homes

Japan Life Plus Medical Co., Ltd.

10		(100.0)	Medical-related services

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 homes

US Chemical Co., Ltd.

3		(100.0)	Management of pharmacies<Insurance services>
Secom Insurance Service Co., Ltd.

225		(100.0)

Secom General Insurance Co., Ltd.

8,093		

89.6Non-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 2008

(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 Road Center Co., Ltd.

Pasco Corporation50		

(72.2)

Geographic information services

Urban Environmental Improvement Center Co., Ltd.

50		

(95.0)

Geographic information services

GIS Hokkaido Co., Ltd.

190		(100.0)Geographic information services

GIS Tohoku Co., Ltd.

50		(84.6)

Geographic information services

GIS Hokuriku Co., Ltd.

20		(100.0)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		(86.2)

Geographic information services

GIS Kyushu Co., Ltd.

50		(100.0)Geographic information services

Tokyo Digital Map Co., Ltd.

10		(100.0)Geographic information services

Pasco Space Mapping Technology Co., Ltd.

25		(100.0)Geographic information services

Mid Map Tokyo Corporation15		

(60.0)

Geographic information services

1,469		

100.0Information, communication, information security<Information and communication related
and other services>
Secom Trust Systems Co., Ltd.

				

services and software development

Laboratory for Innovators of Quality of Life

Research and planning of social life

Japan Image Communications Co., Ltd.

100		(94.5)

487		

95.3

Commissioned broadcasting service

Secom Home Life Co., Ltd.

3,700		

99.9Development of residential buildings

Arai & Co., Ltd.

3,000		

(93.0)

Real estate leasing

Stappy, Inc.

5		

100.0	Management of real estate

Arai 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 200875

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(90.0)

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

Tianjin Secom Property Management Co., Ltd.

Rmb2,000 thousand(70.0)

Provision of comprehensive building

Electronic Security Co., Ltd.

				management services

P.T. Secom Indopratama

94.9

Security services

US$3,950 thousand

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

AUD4,185 thousand(70.0)

Security services

US$600 thousand

80.0

Security service-related consulting

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

US$14,300 thousand(100.0)	Manufacturing and sales of fire protection equipment

Fire Protection Equipment Co., Ltd.				
Nohmi Taiwan Ltd.

NT$15,000 thousand

and facilities(52.0)	Manufacturing and sales of fire protection equipment

				and facilities

P.T. Nusantara Secom InfoTech

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

software development

Pasco-Certeza Computer Mapping Corporation

PHP8,400 thousand(70.0)

Geographic information services

Suzhou Super Dimension Earth Science

Rmb1,000 thousand(92.0)

Geographic information services

Pasco China Corporation

Rmb5,284 thousand(100.0)Geographic information services

Pasco (Thailand) Co., Ltd.

THB30,979 thousand(100.0)Geographic information services

FM-International Oy

EUR2,122 thousand(100.0)Geographic information services

Pasco North America Inc.

US$171 thousand(100.0)Geographic information services

Pasco Geomatics India Pvt. Ltd.

INR5,575 thousand(100.0)Geographic information services

The Westec Security Group, Inc.

US$0.3 thousand

100.0

Holding company

ClearLight Partners, LLC

US$235,103 thousand(99.7)

Investment

ClearLight Partners II, LLC

US$96,688 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)Research and Development Co., Ltd.

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.

76

Secom Co., Ltd.

Annual Report 2008

HIGHLIGHTSSECOM 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
Centralized Security Systems
Commercial Use:

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, 2008		Years ended March 31

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

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

In thousandsof U.S. dollars
Year ended
March 31

2008

2007

2006

2008

¥ 706,695
105,628
61,7561,265,525
574,554¥ 636,678
94,41855,8891,241,182
551,732¥ 580,526
81,89350,331
1,225,228
508,696$ 7,066,950
1,056,280
617,560
12,655,250
5,745,540¥ 274.51
80.00
2,553.97¥ 248.42
60.00
2,452.47

In yenIn U.S. dollars¥ 223.69
50.00
2,261.00$ 2.750.80
25.54

Notes: 1. Yen amounts have been translated into U.S. dollars, solely for the convenience of the reader, at the rate of¥100=US$1, the rate prevailing on the Tokyo ­Foreign Exchange Market on March 31, 2008.
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 endof each period, minus treasury stock.
4. The Company recorded record-high net sales and operating revenue, operating income, and net income, inthe year ended March 31, 2008.
5. Cash dividends per share of common stock shown are based on dividends approved and paid in each period.
Subsequent to March 31, 2008, cash dividends of ¥85.00 per share were approved at the generalshareholders’ ­meeting held on June 26, 2008 (see Note 17 of the accompanying Notes to Consolidated
Financial Statements).

			Japanese GAAP		In millions of yen
SECOM CO., LTD. and Subsidiaries			
Three years ended March 31, 2008		Years ended March 31

Revenue............................................
Operating profit.................................
Ordinary profit....................................
Net income........................................
Total assets........................................
Total shareholders’ equity..................
Total net assets.................................

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

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 morethan 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.

In thousandsof U.S. dollars
Year ended
March 31

2008

2007

2006

2008

¥ 682,619
104,706
114,278
61,506
1,202,840—
630,274¥ 613,976
97,840102,720
58,2991,169,182—
601,116¥ 567,315
94,10996,66952,994
1,149,377
496,164—$ 6,826,190
1,047,060
1,142,780
615,060
12,028,400—
6,302,740

In yenIn U.S. dollars¥ 234.28
50.00
2,204.06—$ 2.73
0.80
—
25.21

¥ 273.40
80.00—
2,521.45¥ 259.14
60.00—
2,400.91

Residential Use:

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 s­ ervice 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

Note: The Company reported record-high revenue, operating profit, ordinary profit and net income based on Japanese
GAAP in the year ended March 31, 2008. Cash dividends per share of common stock shown are based on
dividends approved and paid in each period. Subsequent to March 31, 2008, cash dividends of ¥85.00 per share
were approved at the general shareholders’ meeting held on June 26, 2008.

Fire Protection Services

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

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

80

80

80

80

60

60

60

60

40

40

40

40

20

20

20

20

(In billions of yen)

0

0

0
03

04

05

06

07

08

03

04

05

06

07

08

0
03

04

05

06

07

08

03

04

05

06

07

08

Note: 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 yearof contributions from the fire protection services segment, newly established for the operations ofNohmi 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
to continued growth in net sales and operating revenue, particularly in the security services segment,
and a decline in selling, general and administrative expenses.
		 In the year ended March 31, 2006, net income declined ¥1.8 billion, to ¥50.3 billion. This result was
despite a ¥9.4 billion increase in income from continuing operations, to ¥51.2 billion, which reflected
increases in operating income and gains on sales of securities, net, and was primarily attributable to theabsence of ¥9.9 billion in income from discontinued operations, net of tax, recorded in the previous period,
owing to the sale of the Company’s education services business and certain real estate properties for lease.

77

Secom Co., Ltd.

Annual Report 2008

Subscribers

Alarm Sent

Police Department
Fire Department• Utility Companies• Other Organizations••

Alert 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 centralized­security 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 s­ ystem for industrial ­complexes and buildings.

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
dispatched to the location of the object or an emergency alert relayed to a­predetermined 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.

Medical Services

Fire Alarm Systems
This 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 Systems
SECOM 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 applications­ranging 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.

(In billions of yen)

SECOM
Control Center

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 thesharing of 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.
Nursing Homes WITH FULL-TIME PERSONAL CARE SERVICESSECOM manages the Sacravia Seijo, Royal Life Tama, Comfort Garden Azamino
and Alive Care Home series nursing homes.
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 cutting-edge
clinic in Tokyo.

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.

Insurance Services
SECURITY DISCOUNT FIRE POLICY
Security Discount Fire Policy is a commercial fire insurance policy that­features 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 wellas the patient’s portion of the cost of medical care covered by the national
health insurance 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

SECOM CCTV SYSTEMThe SECOM CCTV system is a multifunctional, cost-effective closed-circuit­surveillance camera system. The system is fully digital, eliminating the risk ofimage degradation. It is also capable of detecting attempts to disable ordestroy 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 andTomahawk III high-speed automated fire extinguishing system withgas suppression.
PYTHAGORAS SERIESPYTHAGORAS is a series of security vaults with superior protection, heat­resistance 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 of timeafter it has been engaged.

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 Services
SECOM 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 FINE FOODSSECOM Fine Foods is a line of quality food products marketed through mailorder catalogs and the Internet.
REAL ESTATE DEVELOPMENT AND SALESSECOM offers Glorio condominiums.

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 Series
The MarketPlanner series uses a variety of data sorting and presentation­methods to support the efforts of growing companies to establish area
­marketing strategies.
Safe Route Mapping Service
This 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.

Secom Co., Ltd.

Annual Report 2008

78

DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERS
Directors

PROFILE

Corporate Auditors
Teruo Ogino
Ken Tsunematsu
Hiroshi Yasuda

Established in 1962, SECOM CO., LTD., is a pioneer in Japan’s security services industry. Since its founding date, SECOM has endeavored to develop
innovative offerings, particularly in the area of security services, in line withits mission to contribute to society through its business activities. These
efforts have enabled SECOM to respond to the increasing need for security
and peace of mind, as well as to achieve steady growth.
Today, SECOM—comprising the parent company and the other companies of the SECOM Group—has expanded its focus beyond its core security
services to include fire protection services, medical services, insurance services, geographic information services, and information and communication
related and other services. In addition to providing services that benefit
society in each of its business areas, SECOM continues to consolidate thefoundation of the Social System Industry, a framework of distinctive,­integrated packages of products and services that make life more secure,convenient and comfortable, and to reinforce the trust of its customers.
SECOM has also expanded into overseas markets, establishing a networkof subsidiaries and joint ventures in 11 countries and territories, where it has
earned a solid reputation for providing services of the same high quality it
offers in Japan. In particular, SECOM is focusing on the high-growth marketsof the People’s Republic of China (PRC) and Southeast Asia, where it isestablishing bases and broadening its reach as part of a larger effort topromote the acceptance of security services.
In the years ahead, SECOM will continue to leverage its comprehensive
expertise and experience to achieve further expansion and growth.

Kohei Yamashita

Kanemasa Haraguchi
Makoto Iida

Juichi Toda

Founder

Co-Founder

President andRepresentative Director

Katsuo Akiyama
Senior Managing Executive
Officer

Seiichiro Kobayashi
Executive Director

Katsuhisa Kuwahara
Executive Director

Shuji Maeda
Executive Director

Kanemasa Haraguchi

ChairmanPresident andRepresentative Director

Yasuo Nakayama
Executive Director

Koichi Sato
Executive Director

Yushiro Ito

Hiroshi Ito
Executive Officer

Shunji Ogahara
Executive Officer

Kiyomasa Sugii
Executive Officer

Minoru Takaoka
Executive Officer

Yoshihiro Chino
Executive Officer

Mamoru Sasaki
Executive Officer

Hideo Morishita
Executive Officer

Tsuneo Komatsuzaki

SECOM CO., LTD.
ANNUAL REPORT 2008

Shohei Kimura

SECOM CO., LTD.

Executive Officers

5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo 150-0001, Japan
http://www.secom.co.jp/

Executive Officer

Managing Executive Officer Takayuki Ito
Director

Seiichi MoriManaging Executive Officer Ryohei Komatsu
Executive Officer

Seiji Sakamoto

Managing Executive Officer

Seiichiro Kobayashi

Katsuhisa Kuwahara

Shuji Maeda

Executive Director

Executive Director

Executive Director

Fumio Obata
Director(As of July 31, 2008)

Year ended March 31, 2008

Yasuo Nakayama

Koichi Sato

Executive Director

Executive Director

Fumio Obata

Takayuki Ito

Director

Director

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.

Printed in Japan79

Secom Co., Ltd.

Annual Report 2008

DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERS
Directors

PROFILE

Corporate Auditors
Teruo Ogino
Ken Tsunematsu
Hiroshi Yasuda

Established in 1962, SECOM CO., LTD., is a pioneer in Japan’s security services industry. Since its founding date, SECOM has endeavored to develop
innovative offerings, particularly in the area of security services, in line withits mission to contribute to society through its business activities. These
efforts have enabled SECOM to respond to the increasing need for security
and peace of mind, as well as to achieve steady growth.
Today, SECOM—comprising the parent company and the other companies of the SECOM Group—has expanded its focus beyond its core security
services to include fire protection services, medical services, insurance services, geographic information services, and information and communication
related and other services. In addition to providing services that benefit
society in each of its business areas, SECOM continues to consolidate thefoundation of the Social System Industry, a framework of distinctive,­integrated packages of products and services that make life more secure,convenient and comfortable, and to reinforce the trust of its customers.
SECOM has also expanded into overseas markets, establishing a networkof subsidiaries and joint ventures in 11 countries and territories, where it has
earned a solid reputation for providing services of the same high quality it
offers in Japan. In particular, SECOM is focusing on the high-growth marketsof the People’s Republic of China (PRC) and Southeast Asia, where it isestablishing bases and broadening its reach as part of a larger effort topromote the acceptance of security services.
In the years ahead, SECOM will continue to leverage its comprehensive
expertise and experience to achieve further expansion and growth.

Kohei Yamashita

Kanemasa Haraguchi
Makoto Iida

Juichi Toda

Founder

Co-Founder

President andRepresentative Director

Katsuo Akiyama
Senior Managing Executive
Officer

Seiichiro Kobayashi
Executive Director

Katsuhisa Kuwahara
Executive Director

Shuji Maeda
Executive Director

Kanemasa Haraguchi

ChairmanPresident andRepresentative Director

Yasuo Nakayama
Executive Director

Koichi Sato
Executive Director

Yushiro Ito

Hiroshi Ito
Executive Officer

Shunji Ogahara
Executive Officer

Kiyomasa Sugii
Executive Officer

Minoru Takaoka
Executive Officer

Yoshihiro Chino
Executive Officer

Mamoru Sasaki
Executive Officer

Hideo Morishita
Executive Officer

Tsuneo Komatsuzaki

SECOM CO., LTD.
ANNUAL REPORT 2008

Shohei Kimura

SECOM CO., LTD.

Executive Officers

5-1, Jingumae 1-chome, Shibuya-ku,
Tokyo 150-0001, Japan
http://www.secom.co.jp/

Executive Officer

Managing Executive Officer Takayuki Ito
Director

Seiichi MoriManaging Executive Officer Ryohei Komatsu
Executive Officer

Seiji Sakamoto

Managing Executive Officer

Seiichiro Kobayashi

Katsuhisa Kuwahara

Shuji Maeda

Executive Director

Executive Director

Executive Director

Fumio Obata
Director(As of July 31, 2008)

Year ended March 31, 2008

Yasuo Nakayama

Koichi Sato

Executive Director

Executive Director

Fumio Obata

Takayuki Ito

Director

Director

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.

Printed in Japan79

Secom Co., Ltd.

Annual Report 2008