AUDITED FINANCIAL STATEMENTSCONTENTSCONSOLIDATED FINANCIAL STATEMENTS .................................................................. 36
CONSOLIDATED BALANCE SHEETS.......................................................................... 36
CONSOLIDATED STATEMENTS OF INCOME............................................................. 38
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY.......................................... 39
CONSOLIDATED STATEMENTS OF CASH FLOWS .................................................... 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.............................................. 41
INDEPENDENT AUDITORS’ REPORT............................................................................... 65

Secom Co., Ltd.
Annual Report 201135

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETSSECOM CO., LTD. and Subsidiaries
March 31, 2011 and 2010
		In millions of yen

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

March 31

March 31

2010

2011

Current assets:
Cash and cash equivalents (Notes 5 and 23)................................................................. ¥0,193,942 ¥ 180,144
Time deposits (Note 13)...............................................................................................
17,185
7,337
Cash deposits (Note 6).................................................................................................
56,546
48,862
Short-term investments (Notes 7 and 23)......................................................................
6,393
13,327
Notes and accounts receivable, trade............................................................................
86,511
76,848Due from subscribers....................................................................................................
35,88629,322Inventories (Note 8)......................................................................................................
81,76998,255
Short-term receivables (Notes 9, 13 and 21).................................................................
14,063
16,165
Allowance for doubtful accounts (Note 9)....................................................................
(1,855)(2,223)
Deferred insurance acquisition costs (Note 14)..............................................................
5,456
6,145
Deferred income taxes (Note 17)..................................................................................
15,43815,737
Other current assets.....................................................................................................
10,042
10,873500,792
			 Total current assets................................................................................................
521,376$ 2,336,651
207,048
681,277
77,024
1,042,301
432,361
985,169
169,434(22,349)
65,735
186,000
120,9886,281,639

ASSETS

Investments and long-term receivables:
Investment securities (Notes 2 (7), 7, 13 and 23) .........................................................
Investments in affiliated companies (Note 10)...............................................................
Long-term receivables (Notes 9, 13 and 21)..................................................................
Lease deposits..............................................................................................................
Other investments........................................................................................................
Allowance for doubtful accounts (Note 9)....................................................................
			148,990
38,97842,672
13,636
9,842(7,858)
246,260

148,069
42,61370,852
13,438
9,412(7,848)276,536

1,795,060
469,614514,120
164,289
118,579(94,675)
2,966,987

Property, plant and equipment (Notes 11, 13, 20 and 21):Land.............................................................................................................................
Buildings and improvements.........................................................................................
Security equipment and control stations.......................................................................
Machinery, equipment and automobiles.......................................................................
Construction in progress..............................................................................................
			Accumulated depreciation............................................................................................
			

96,420
193,445
264,693
84,374
2,913
641,845(339,330)
302,515

90,521
156,137
257,395
70,4993,022
577,574(314,246)
263,328

1,161,687
2,330,663
3,189,072
1,016,554
35,096
7,733,072(4,088,313)
3,644,759

Other assets:
Deferred charges (Note 2 (12)).....................................................................................
45,634
Goodwill (Note 12).......................................................................................................
14,450
Other intangible assets (Notes 12 and 13)....................................................................
22,593
Prepaid pension and severance costs (Note 15).............................................................
6,500
Deferred income taxes (Note 17)..................................................................................
11,824
			
101,001
			 Total assets............................................................................................................ ¥1,171,152

44,125
13,152
22,497
4,742
12,97597,491¥1,138,147

549,807174,096272,206
78,313
142,458
1,216,880$14,110,265

See accompanying notes to consolidated financial statements.

36

2011

Secom Co., Ltd.
Annual Report 2011

		
In millions of yen

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

March 31

March 31

2010

2011

LIABILITIES AND EQUITY

2011

Current liabilities:
Bank loans (Notes 6 and 13)......................................................................................... ¥0, 47,698 ¥ 43,025
Current portion of long-term debt (Notes 13, 20 and 22).............................................
11,91810,801
Notes and accounts payable, trade...............................................................................
27,88225,336
Other payables.............................................................................................................
24,34823,193
Deposits received (Note 6)............................................................................................
24,73728,348Deferred revenue.........................................................................................................
40,89944,248
Accrued income taxes..................................................................................................
20,35821,064
Accrued payroll............................................................................................................
24,691
21,316
Reserve for litigation loss (Note 25)...............................................................................
—
1,770
Other current liabilities (Notes 17, 22, 23 and 24).........................................................
20,065
16,385
			 Total current liabilities............................................................................................
242,596
235,486
Long-term debt (Notes 13, 20 and 22).............................................................................
Guarantee deposits received............................................................................................
Accrued pension and severance costs (Note 15)...............................................................
Deferred revenue.............................................................................................................
Unearned premiums and other insurance liabilities (Note 14)...........................................
Investment deposits by policyholders (Notes 14 and 22)...................................................
Deferred income taxes (Note 17)......................................................................................
Other liabilities (Notes 22, 23 and 24)..............................................................................
			 Total liabilities........................................................................................................

53,02036,202
21,16918,246
83,61541,643
9,827
10,025516,343

41,572
34,82916,50320,07874,46662,226
10,4038,120
503,683$

574,675
143,590335,928
293,349
298,036
492,759245,277
297,482—
241,747
2,922,843
638,795
436,169
255,048
219,831
1,007,410
501,723
118,398
120,783
6,221,000

Commitments and contingent liabilities (Note 25)

Equity:SECOM CO., LTD. shareholders’ equity (Note 18):
Common stock:		 Authorized 900,000,000 shares;
66,378		 issued 233,288,717 shares in 2011 and 2010.........................................................
66,378Additional paid-in capital..............................................................................................
75,55581,096
Legal reserve................................................................................................................
10,104
10,053Retained earnings........................................................................................................
551,187
510,927
Accumulated other comprehensive income (loss):		 Unrealized holding gains on securities (Note 7).........................................................
2,131
5,603
		 Unrealized losses on derivative instruments (Note 24)...............................................
(6)(18)
		 Pension liability adjustments (Note 15).......................................................................
(11,909)(10,711)
		 Foreign currency translation adjustments..................................................................
(25,021)(18,622)(23,748)
			
(34,805)
Common stock in treasury, at cost:
15,258,553 shares in 2011 and 15,254,334 shares in 2010.......................................
(74,924)(74,907)569,799
			 Total SECOM CO., LTD. shareholders’ equity..........................................................
593,495
64,665
Noncontrolling interests...................................................................................................
61,314
634,464
			 Total equity...........................................................................................................
654,809
			 Total liabilities and equity...................................................................................... ¥1,171,152 ¥1,138,147

799,735
910,301
121,735
6,640,807
25,675(72)(143,482)(301,458)(419,337)(902,699)
7,150,542
738,723
7,889,265$14,110,265

Secom Co., Ltd.
Annual Report 201137

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED STATEMENTS OF INCOME
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2011
		In millions of yen

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

Years ended March 31

Year ended March 31

2011

2009

2011

Net sales and operating revenue (Notes 14 and 23) .......................................... ¥751,868 ¥670,644 ¥684,016
Costs and expenses:
Cost of sales (Note 8).......................................................................................... 498,957 433,139 462,149
Selling, general and administrative expenses (Notes 2 (18) and 19)...................... 147,667 137,720 141,960——
Loss on settlement of pre-existing relationship (Note 2 (2))..................................
3,212
292
76
Impairment loss on long-lived assets (Note 11)....................................................
3
245
1,578
Impairment loss on goodwill (Note 12)................................................................
—
2,070
1,994
Loss on sales and disposal of fixed assets, net......................................................
1,597$9,058,651
6,011,531
1,779,120
38,69936—
19,241

				

651,436

573,466

607,757

7,848,627				 Operating income.....................................................................................

100,432

97,17876,2591,210,024

Other income:Interest and dividends.........................................................................................
Reversal of reserve for litigation loss (Note 25).....................................................
Gain on sales of securities, net (Notes 7 and 10)..................................................
Gain on private equity investments (Note 23)......................................................
Other (Note 16)...................................................................................................

928
—
139
6,014
4,789

1,317
781
—
—
3,254

2,232
—
—
1,403
2,124

11,181—
1,675
72,45857,698

				

11,870

5,352

5,759

143,012

Other expenses:
Interest................................................................................................................
Loss on sales of securities, net (Note 7)................................................................
Loss on other-than-temporary impairment of investment securities (Note 23)......
Loss on private equity investments (Note 23).......................................................
Loss related to spectrum reallocation (Note 25)...................................................
Provision for loss on litigation (Note 25)...............................................................
Other (Notes 16 and 24)......................................................................................

1,683
—
84
—
—
—
2,691

1,799
7
1,764
1,367
1,254
—
1,663

2,022
231
8,831
—
—
2,415
5,356

20,277
—
1,012
—
—
—
32,422

				

4,458

7,854

18,85553,711				 Income from continuing operations before income taxes and				 equity in net income of affiliated companies...........................................

107,844

94,676

63,163

1,299,325

Income taxes (Note 17):
Current...............................................................................................................
Deferred..............................................................................................................

38,7654,512

38,7496,882

41,682(5,423)

467,048
54,361

				43,27745,631

36,259521,409				 Income from continuing operations before equity				 in net income of affiliated companies ....................................................
Equity in net income of affiliated companies . .................................................

64,567
5,028

49,0452,620

26,904
8,733

777,916
60,578				 Income from continuing operations .........................................................
Income (loss) from discontinued operations, net of tax (Note 26)...................

69,595—51,665
1,354

35,637(149)

838,494—				 Net income .............................................................................................
Less: Net income attributable to noncontrolling interests...............................

69,595(6,930)53,019(6,030)35,488(4,928)

838,494(83,494)				 Net income attributable to SECOM CO., LTD............................................ ¥ 62,665 ¥ 46,989 ¥ 30,560$ 755,000

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

Years ended March 31

Year ended March 31

2011

2010

2009

2011

Per share data (Note 2 (20)):
Income from continuing operations attributable to SECOM CO., LTD...................
Income (loss) from discontinued operations attributable to SECOM CO., LTD.......
Net income attributable to SECOM CO., LTD.......................................................

¥287.41 ¥209.41
6.10—
215.51
287.41¥138.05(0.63)
137.42

$3.46
—
3.46

Cash dividends per share....................................................................................

¥ 85.00 ¥ 85.00¥ 85.00$1.02

See accompanying notes to consolidated financial statements.

38

2010

Secom Co., Ltd.
Annual Report 2011

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYSECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2011
In millions of yen															Number of		 Additional								shares Common
paid-in
Legal
Retained					issuedstock
capitalreserveearnings

Accumulated
other comprehensive
income (loss)

Commonstock intreasury,
at costTotal
SECOM CO., LTD.
shareholders’ Noncontrolling
equityinterest

Total

Balance, March 31, 2008 .................................................... 233,288,717 ¥66,378 ¥79,998 ¥10,020¥471,066(¥ 8,031) (¥44,877)
Comprehensive income:Net income.......................................................................
————
30,560——
Other comprehensive income (loss), net of tax (Note 18):
		 Unrealized holding losses on securities.........................
—
—
—
—
—
(460)
—
		 Unrealized losses on derivative instruments..................
—
—
—
—
—
(93)
—
		 Pension liability adjustments........................................
—
—
—
—
—
(7,152)—
		 Foreign currency translation adjustments.....................
—
—
—
—
—
(19,544)—
Total comprehensive income.............................................								Cash dividends paid to SECOM CO., LTD. shareholders..........
————(19,122)——
Cash dividends paid to noncontrolling interests......................
—
—
—
—
—
—
—
Transfer to legal reserve.........................................................
—
—
—
16
(16)
—
—
Equity transactions with noncontrolling interests and other....
—
—
—
—
—
—
—
Gains and losses on disposal of treasury stock........................
—
—
(3)
—
—
—
—
Net changes in treasury stock.................................................
—
—
—
—
—
—
(30,019)¥574,554¥62,511¥637,065

30,5604,928

35,488(460)(93)(7,152)(19,544)
3,311(19,122)———(3)(30,019)

159
(20)
(959)
(622)
3,486
—
(1,701)—(3,227)
—
—

(301)
(113)
(8,111)(20,166)
6,797(19,122)(1,701)—(3,227)(3)(30,019)

Balance, March 31, 2009 .................................................... 233,288,717
66,37879,995
10,036482,488(35,280)(74,896)
Comprehensive income:Net income.......................................................................
————
46,989——Other comprehensive income (loss), net of tax (Note 18):
		 Unrealized holding gains on securities..........................
—
—
—
—
9,200
—
—
		 Unrealized gains on derivative instruments...................
—
—
—
—
—
169
—
		 Pension liability adjustments........................................
—
—
—
—
—
1,167
—
		 Foreign currency translation adjustments.....................
—
—
—
—
—
996
—
Total comprehensive income.............................................
							Cash dividends paid to SECOM CO., LTD. shareholders..........
————(18,533)——
Cash dividends paid to noncontrolling interests......................
—
—
—
—
—
—
—
Transfer to legal reserve.........................................................
—
—
—
17
(17)
—
—
Equity transactions with noncontrolling interests and other(Note 18).............................................................................
—
—
1,101
—
—
—
—
Gains and losses on disposal of treasury stock........................
—
—
(0)
—
—
—
—
Net changes in treasury stock.................................................
—
—
—
—
—
—
(11)

528,72161,069589,790

46,9896,030

53,019

9,200
169
1,167
996
58,521(18,533)
—
—

211
47
372
212
6,872
—
(1,759)
—

9,411
216
1,539
1,208
65,393(18,533)(1,759)
—

1,101
(0)
(11)

(1,517)
—
—

(416)
(0)
(11)

Balance, March 31, 2010 .................................................... 233,288,717
66,37881,096
10,053510,927(23,748)(74,907)
Cumulative effect adjustments resulting from adoption ofa new accounting standard on variable interest entities,
net of tax (Note 2 (2))..........................................................
————(3,821)——
Comprehensive income:Net income.......................................................................
————
62,665——
Other comprehensive income (loss), net of tax (Note 18):
		 Unrealized holding losses on securities.........................
—
—
—
—
—
(3,472)—
		 Unrealized gains on derivative instruments...................
—
—
—
—
—
12
—
		 Pension liability adjustments........................................
—
—
—
—
—
(972)
—
		 Foreign currency translation adjustments.....................
—
—
—
—
—
(6,399)—Total comprehensive income.............................................
							Cash dividends paid to SECOM CO., LTD. shareholders..........
————(18,533)——
Cash dividends paid to noncontrolling interests......................
—
—
—
—
—
—
—
Transfer to legal reserve.........................................................
—
—
—
51
(51)
—
—
Equity transactions with noncontrolling interests and other(Note 18).............................................................................
——(5,541)——(226)—
Gains and losses on disposal of treasury stock........................
—
—
(0)
—
—
—
—
Net changes in treasury stock.................................................
—
—
—
—
—
—
(17)

569,799

64,665

634,464

Balance, March 31, 2011 .................................................... 233,288,717¥66,378¥75,555¥10,104¥551,187(¥34,805) (¥74,924)(3,821)—(3,821)

62,665

6,930

69,595(3,472)
12(972)(6,399)51,834(18,533)
—
—

(61)
5
(640)
(381)
5,853
—
(1,822)—(3,533)17(1,612)(6,780)57,687(18,533)(1,822)—(5,767)(0)(17)(7,382)——(13,149)(0)(17)¥593,495¥61,314¥654,809

Translation into thousands of U.S. dollars (Note 3)										 Accumulated							 Additional			other com						 Common
paid-in
Legal
Retainedprehensive						
stock
capitalreserveearnings income (loss)

Commonstock intreasury,
at costTotal
SECOM CO., LTD.
shareholders’ Noncontrolling
equityinterest

Balance, March 31, 2010........................................................................... $799,735 $977,060 $121,120 $6,155,747($286,120) ($902,494)
Cumulative effect adjustments resulting from adoption ofa new accounting standard on variable interest entities,
net of tax (Note 2 (2))................................................................................
———(46,036)——
Comprehensive income:Net income.............................................................................................
———
755,000——
Other comprehensive income (loss), net of tax (Note 18):
		 Unrealized holding losses on securities...............................................
————(41,832)—
		 Unrealized gains on derivative instruments.........................................
—
—
—
—
145
—
		 Pension liability adjustments..............................................................
————(11,711)—
		 Foreign currency translation adjustments...........................................
————(77,096)—
Total comprehensive income................................................................... 							Cash dividends paid to SECOM CO., LTD. shareholders................................
———(223,289)——
Cash dividends paid to noncontrolling interests............................................
—
—
—
—
—
—
Transfer to legal reserve...............................................................................
—
—
615
(615)
—
—
Equity transactions with noncontrolling interests and other (Note 18)..........
—(66,759)——(2,723)—
Gains and losses on disposal of treasury stock..............................................
—
(0)
—
—
—
—
Net changes in treasury stock.......................................................................
—
—
—
—
—
(205)

$6,865,048

Balance, March 31, 2011 .......................................................................... $799,735 $910,301 $121,735 $6,640,807$7,150,542($419,337) ($902,699)

Total$779,096 $7,644,144(46,036)—(46,036)755,000

83,494

838,494(41,832)
145(11,711)(77,096)624,506(223,289)——(69,482)
(0)
(205)

(735)
60
(7,711)(4,590)70,518—(21,952)—(88,939)——(42,567)
205(19,422)(81,686)
695,024(223,289)(21,952)—(158,421)
(0)
(205)

$738,723 $7,889,265

See accompanying notes to consolidated financial statements.

Secom Co., Ltd.
Annual Report 201139

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED STATEMENTS OF CASH FLOWSSECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2011
		In millions of yen

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

Years ended March 31

Year ended March 31

2011

2010

2009

Cash flows from operating activities:
Net income............................................................................................................................ ¥ 69,595 ¥ 53,019 ¥ 35,488
Adjustments to reconcile net income to net cash provided by operating activities—
		 Depreciation and amortization, including amortization of deferred charges
		 (Notes 2 (11), 2 (12) and 12)............................................................................................
56,951
55,13054,625
		 Accrual for pension and severance costs, less payments.....................................................
(2,687)(3,723)(5,313)
		 Deferred income taxes, including discontinued operations.................................................
4,512
6,885
(5,416)
		 Loss on sales and disposal of fixed assets, net....................................................................
1,597
2,070
1,994
		 Impairment loss on long-lived assets (Note 11)...................................................................
3292
76
		 Write-down on real estate inventories (Note 8)..................................................................
1,482
1,285
8,366
		 (Gain) loss on private equity investments (Note 23)............................................................
(6,014)
1,367(1,403)
		 Provision (reversal of reserve) for litigation loss (Note 25)....................................................
—
(781)
2,415
		 Impairment loss on goodwill (Note 12)...............................................................................
—
245
1,578
		 Gain on sales of securities, net (Notes 7, 10 and 14)..........................................................
(1,658)(1,302)(299)
		 Loss on liquidation of subsidiaries......................................................................................
——
32
		 Loss on other-than-temporary impairment of investment securities (Notes 14 and 23)........
765
6,321
19,514
		 Equity in net income of affiliated companies......................................................................
(5,028)(2,620)(8,733)
		 Gain on sales of discontinued operations (Note 26)............................................................
—
(777)
—
—
		 Loss on settlement of pre-existing relationship (Note 2 (2)).................................................
3,212—
		 Payments for legal settlement (Note 25).............................................................................
(1,770)——		 Changes in assets and liabilities, net of effects from acquisitions and disposals:			 (Increase) decrease in cash deposits...............................................................................
(7,685)7,806
7,030
			 (Increase) decrease in receivables and due from subscribers, net of allowances...............
(6,861)3,845
8,525
			 (Increase) decrease in inventories...................................................................................
14,564(3,386)
10,099
			 Increase in deferred charges.......................................................................................... (15,097)(14,502) (15,972)
			 Decrease in notes and accounts payable........................................................................
(182)(3,059)(7,657)
			 Decrease in deposits received.........................................................................................
(4,236)(5,133)(3,136)
			 Increase (decrease) in deferred revenue..........................................................................
(5,419)255(1,037)
			 Increase (decrease) in accrued income taxes...................................................................
(1,231)
2,021(5,530)			 Increase in guarantee deposits received.........................................................................
1,367
2,541
1,811
			 Increase in unearned premiums and other insurance liabilities........................................
9,148
5,598
5,664
			 Other, net......................................................................................................................
7,297
3,292
4,689
				 Net cash provided by operating activities................................................................... 112,625
116,689 107,410
Cash flows from investing activities:(Increase) decrease in time deposits........................................................................................
(9,665)
1,413(12)Proceeds from sales of property, plant and equipment...........................................................
780
1,765
206
Payments for purchases of property, plant and equipment..................................................... (41,726)(38,283) (44,790)(4,829)(7,231)(4,166)
Payments for purchases of intangible assets...........................................................................
Proceeds from sales and redemptions of investment securities (Note 7)..................................
37,18744,85760,065
Payments for purchases of investment securities.................................................................... (32,163)(24,585) (57,133)(Increase) decrease in short-term investments.........................................................................
(1,854)
3,776(3,317)
Proceeds from sales of discontinued operations.....................................................................
—
5,185
—
Acquisitions, net of cash acquired (Note 4).............................................................................
(1,809)996(1,498)Proceeds from sales in investments in affiliated companies (Note 10).....................................
5,055
—
53
Decrease in short-term receivables, net..................................................................................
164
250
87
Payments for long-term receivables........................................................................................
(402)(5,014)(6,796)
Proceeds from long-term receivables......................................................................................
1,965
6,043
7,160
Other, net..............................................................................................................................
421
226
222
				 Net cash used in investing activities........................................................................... (46,876)(10,602) (49,919)
Cash flows from financing activities:
Proceeds from long-term debt...............................................................................................
11,277
6,885
11,396
Repayments of long-term debt.............................................................................................. (11,597)(12,951) (13,411)
Decrease in bank loans, net...................................................................................................
(312)(35,156) (55,161)
Decrease in investment deposits by policyholders................................................................... (20,583)(23,838)(1,188)Dividends paid to SECOM CO., LTD. shareholders.................................................................. (18,533)(18,533) (19,122)(1,822)(1,759)(1,701)Dividends paid to noncontrolling interests..............................................................................
Payments for acquisition of shares of consolidated subsidiaries from noncontrollinginterest holders.................................................................................................................... (13,703)(399)—
Increase in treasury stock, net................................................................................................
(17)(11) (30,019)
Other, net..............................................................................................................................
—
75
(711)
				 Net cash used in financing activities........................................................................... (55,290)(85,687) (109,917)
Cumulative effect adjustments resulting from adoption of a new accounting
standard on variable interest entities (Note 2 (2)) ............................................................
3,905
—
—
Effect of exchange rate changes on cash and cash equivalents ........................................
(566)
351
(2,758)Net increase (decrease) in cash and cash equivalents . .......................................................
13,79820,751(55,184)
Cash and cash equivalents at beginning of year ................................................................ 180,144
159,393 214,577
Cash and cash equivalents at end of year............................................................................ ¥193,942 ¥180,144 ¥159,393
See accompanying notes to consolidated financial statements.

40

Secom Co., Ltd.
Annual Report 20112011

$ 838,494
686,157(32,373)
54,361
19,241
36
17,855(72,458)——(19,976)—
9,217(60,578)—
38,699(21,325)(92,590)(82,663)
175,470(181,892)(2,193)(51,036)(65,289)(14,831)
16,470110,21787,915
1,356,928(116,446)
9,398(502,723)(58,181)448,036(387,506)(22,337)—(21,795)
60,904
1,976(4,843)
23,6755,071(564,771)
135,867(139,723)(3,759)(247,988)(223,289)(21,952)(165,096)(205)—(666,145)
47,048(6,819)166,241
2,170,410$2,336,651

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2011

1. Nature of Operations
The parent company and its subsidiaries (collectively “theCompany”) are engaged in the areas of security services, fire protection services, medical services, insurance services, geographic
information services, real estate development and sales, and information and communication related and other services. With these
services combined, the Company is focusing on the establishmentof a “Social System Industry,” a network of integrated systems andservices, targeted at the needs of people and business.
The Company’s principal business activities are security services,
including on-line security systems for commercial and residential
premises, static guard services, armored car services for cash collection and deposit and security merchandise. The Company has also
been diversifying its services covering: fire protection services,
including automatic fire alarm systems and fire extinguishing systems; medical services, including home and other medical services;
insurance services, focusing on non-life insurance services; geographic information services using geographic information system(“GIS”) and surveying and measuring technology; real estate­development and sales, focusing on the development and sale ofcondominiums that feature security services and disaster prevention
services; and information and communication related services,­centered on information security services and the provision of comprehensive information networks designed to assist people andcompanies in the event of a major disaster; lease of real estate andother services.
2. Significant Accounting Policies
The parent company and its Japanese subsidiaries ­maintain theirrecords and prepare their statutory financial ­statements in accordance with accounting principles generally accepted in Japan(“Japanese GAAP”). Certain adjustments and reclassifications havebeen incorporated in the accompanying financial statements to­conform with U.S. generally accepted accounting principles (“U.S.
GAAP”). These adjustments were not recorded in the statutory
books of account.
Significant accounting policies used in the preparation of theaccompanying consolidated financial statements are summarized
below:(1) Basis of Consolidation and Investments in Affiliated­Companies
The consolidated financial statements include the accounts of theparent company and those of its majority owned ­subsidiaries. All
significant intercompany transactions and balances have been­eliminated in consolidation.
Investments in companies in which the ability to exercise significant influence exists (generally 20 to 50 percent owned companies),
are accounted 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 affiliated ­companies
is recorded as goodwill.
(2) Consolidation of Variable Interest Entities
The consolidated financial statements also include variable­interest entities (“VIEs”) of which the Company is the primary
beneficiary.

In December 2009, the Financial Accounting Standards Board(“FASB”) issued Accounting Standards Update (“ASU”) No. 200917, “Improvements to Financial Reporting by Enterprises Involved
with Variable Interest Entities,” which amends the AccountingStandards Codification (“ASC”) 810, “Consolidation.” Thisaccounting standard requires the reporting entity to consolidate avariable interest entity (“VIE”) as its primary beneficiary when it isdeemed to have a controlling financial interest in a VIE, meeting
both of the following characteristics:• The power to direct activities of a VIE that most significantly
impact the VIE’s economic performance.
• The obligation to absorb losses of the VIE that could potentiallybe significant to the VIE or the right to receive benefits fromthe VIE that could potentially be significant to the VIE.
This accounting standard is effective for fiscal years beginning
after November 15, 2009 and was adopted by the Company inthe fiscal year ended March 31, 2011. Due to the adoption of thisaccounting standard, certain organizations managing hospitals andhealth care-related institutions previously not consolidated until
March 31, 2010 were included in the scope of consolidation asof April 1, 2010. As a result, assets of ¥22,907 million ($275,988
thousand) and liabilities of ¥26,728 million ($322,024 thousand),after elimination of intercompany balances, were included in
the consolidated balance sheet at April 1, 2010. The cumulative
effect adjustments resulting from the adoption of this accounting
standard decreased the beginning retained earnings for the year
ended March 31, 2011 by ¥3,821 million ($46,036 thousand), netof tax. In addition, the Company recognized in the medical services
segment ¥3,212 million ($38,699 thousand) as a loss on settlementof pre-existing relationship, which relates to the settlement of alease contract between the Company and the entity newly includedin the scope of consolidation according to the adoption of thisaccounting standard.
The Company provides investments, loans and guarantees to­organizations managing hospitals and health care-related institutions, to a company holding real estate and to a PFI (Private FinanceInitiative) organization which was established to build, maintain andoperate correctional facilities. Certain organizations are considered
VIEs under ASC 810.
Total assets and liabilities held by VIEs of which the Company is
the primary beneficiary were ¥67,860 million ($817,590 thousand)and ¥77,277 million ($931,048 thousand), respectively, at March
31, 2011, and ¥65,678 million and ¥76,502 million, respectively, atMarch 31, 2010. Total assets and liabilities held by VIEs of which
the Company holds ­significant variable interests but is not the primary beneficiary were ¥31,642 million ($381,229 thousand) and¥32,574 million ($392,458 thousand), respectively, at March 31,
2011, and ¥32,371 million and ¥33,116 million, respectively, atMarch 31, 2010. The Company’s assets in the consolidated balance
sheets and the Company’s maximum exposure to losses related to
VIEs at March 31, 2011 and 2010 were ¥4,568 million ($55,036
thousand) and ¥4,356 million, ­respectively.
(3) Revenue Recognition
The Company generates revenue principally through sales of
security services, merchandise and software, and insurance services
under separate contractual arrangements. The Company recognizes
revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, title and risk ofloss have been transferred to the customer, the sales price is fixed
or determinable, and collectibility is probable.

Secom Co., Ltd.
Annual Report 201141

CONSOLIDATED FINANCIAL STATEMENTS

Revenue from security services is recognized over the contractual
period or, in the case of specific services, when such services are
rendered. Subscribers are generally requested to prepay a portion ofservice charges which are credited to deferred revenue and recognized in 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 the installation. The related installation costs are also deferred and amortizedover 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 eachelement based on its relative fair value if such ­element meets criteria for treatment as a ­separate unit of accounting as prescribed in
ASC 605, “Revenue Recognition.” Otherwise, revenue is deferred
until the undelivered ­elements are fulfilled as a single unit ofaccounting.
Revenue from sales of merchandise and software is r­ ecognizedwhen the merchandise and software are received by the customer
and, in the case of installations, when such installations arecompleted.
Revenue from construction contracts is principally recognizedwhen construction is completed.
Revenue from long-term contracts for fire protection services andgeographic ­informa­tion services is principally recognized under thepercentage-of-­completion method.
Property and casualty insurance premiums are earned ­ratably over
the terms of the related insurance contracts. Unearned ­premiums
are earned ratably over the terms of the unexpired portion ofpremiums written.
Revenue from sales of real estate is recognized when the t­ itle of
the real estate is transferred to the customer.
Revenue from sales of equipment under sales-type leases isrecognized at the inception of the lease. Unearned income onsales-type leases and direct-financing leases is recognized over thelife of each respective lease using the interest method. Leases not
qualifying as sales-type leases or direct-financing leases areaccounted for as operating leases and the related ­revenue is­recognized over the lease term.
Taxes collected from customers and remitted to ­governmental
authorities on revenue-producing transactions are accounted for on
a net basis and therefore are excluded from net 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 effectat year-end and all income and expense accounts are translated ataverage rates of exchange during the year. The resulting translation
adjustments are accumulated and reported as part of other­comprehensive income (loss).
Foreign currency receivables and payables of the Company aretranslated 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.

42

Secom Co., Ltd.
Annual Report 2011

(5) Cash Equivalents
For the purpose of the consolidated statements of cash flows, theCompany considers all highly liquid investments purchased withinitial ­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 arethose securities in which the Company has the ability and intent tohold 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 are classified
as “available-for-sale” are recorded at fair value. Unrealized holding
gains and losses on securities classified as “available-for-sale” arereported as part of other comprehensive income (loss), net of tax.
Debt securities classified as “held-to-maturity” are reported at­amortized 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 ischarged to income and a new cost basis for the securities is established. To determine whether an impairment is other-than-­temporary, the Company considers the length of time and extent towhich the market value of the security has been less than its original cost, the financial condition, other specific factors affecting themarket value, deterioration of the credit condition of the issuers,
and whether or not the Company is able to retain the investment
for a period of time sufficient to allow for the ­anticipated recovery
in market value.
Other investments in non-public companies are recorded at cost
as fair value is not readily determinable. The Company periodicallyevaluates 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 the issuer’s industry and the period of the decline in theestimated fair value and other relevant factors. If the impairment isdetermined 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 toincome.
(7) Private Equity Investments
The Company accounts for private equity investments in accordance with ASC 946, “Financial Services—Investment Companies,”in which investments are accounted for at fair value based on the
Company’s assessment of each underlying investment. The investments, by their nature, have little or no price transparency.
Investments are initially carried at cost as an approximation of fairvalue. Adjustments to carrying value are made if there is evidenceof a change in fair value. Downward adjustments are also made, in
the absence of third-party transactions, if it is determined that the
expected realizable value of the ­investment has declined below thecarrying value.
The carrying value of private equity investments was ¥25,980
million ($313,012 thousand) and ¥23,520 million at March 31,
2011 and 2010, respectively.
Private equity investments are included in investment securities in
the consolidated balance sheets.

(8) Inventories
Inventories, consisting of security-related products, fire
­protection-related products, real estate and information and otherrelated products, are stated at the lower of cost or market. Cost isdetermined, in the case of real estate, based on the specific identification method and, in the case of other inventories, primarily using
the ­moving-­average method.
(9) Allowance for Doubtful Accounts
The Company recognizes an allowance for doubtful accounts toensure trade and other receivables are not overstated due touncollectibility. Allowance for doubtful accounts is maintained for
all customers based on a variety of factors, including the length oftime receivables are past due, macroeconomic conditions, significant one-time events and historical experience. An additional
reserve for individual accounts is recorded when the Company
becomes aware of a customer’s inability to meet its financial­obligations, 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 of the­recoverability of receivables would be further adjusted.
(10) Deferred Insurance Acquisition Costs
Costs that vary with and are primarily related to acquiring new
insurance policies are deferred and amortized principally over thepremium-paying period of the related i­nsurance policies applying apercentage 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 and depreciated at rates based on
the estimated useful lives of the assets. Depreciation is computed
using the straight-line method for assets other than security equipment and control stations. Security equipment and control stations
are depreciated by using the declining-balance method. Assets
leased to others under operating leases are depreciated using thestraight-line method over the estimated useful lives. Depreciation
expense was ¥35,634 million ($429,325 thousand), ¥34,033 mil­lionand ¥33,417 million for the years ended March 31, 2011, 2010 and2009, respectively. Maintenance, repairs and renewals are charged
to income as incurred.
The estimated useful lives of depreciable assets are as f­ ollows:		 Buildings
22 to 50 years
		 Security equipment and control stations
5 to 8 years
		 Machinery, equipment and automobiles
2 to 20 years
Effective April 1, 2008, the Company adopted the straight-line
method of depreciation for assets other than security equipment
and control stations. In accordance with ASC 250, “Accounting
Changes and Error Corrections,” this change in depreciation
method is treated on a prospective basis as a change in estimate.
Prior period results have not been restated. The Company has unified its accounting policy within the Group, as it believes that thechange of depreciation method for assets other than security equipment and control stations better reflects the pattern of consumption of the future benefits to be derived from those assets being
depreciated and ­provides a better matching of costs and revenues
over the assets’ estimated useful lives.

The Company recognizes an asset retirement liability if the fairvalue of the obligation can be reasonably estimated. Asset retirement obligations include those for which an entity has a legal obligation to perform an asset retirement activity, however, the timing
and/or method of settling the obligation are conditional on a future
event that may or may not be within the control of the entity.
(12) Deferred Charges
Deferred charges primarily consist of costs related to installation
services of security equipment related to on-line security systems.
The installation costs are deferred and amortized using the straightline method over the contractual period of security services after
completion of the installation. Amortiza­­tion expense was ¥15,081
million ($181,699 thousand), ¥15,312 million and ¥15,359 million
for the years ended March 31, 2011, 2010 and 2009, respectively.
(13) Impairment or Disposal of Long-Lived Assets
In accordance with ASC 360, “Property, Plant and Equipment,”
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 orchanges in circumstances ­indicated that the carrying amount may
not be recoverable. Long-lived assets to be held and used arereviewed for impairment by comparing the carrying amount of theassets with their estimated future undiscounted cash flows. If it isdetermined that an impairment loss has occurred, the loss would berecognized during the period, and calculated as the difference
between the assets’ carrying amount and the fair value. Long-lived
assets that are to be disposed of other than by sale are considered
held and used until they are disposed of. Long-lived assets that are
to be disposed of by sale are reported at the lower of their ­carrying
amount or fair value less cost to sell. Reductions in the carrying
amount are ­recognized in the period in which the long-lived assets
are classified as held for sale.
(14) Goodwill and Other Intangible Assets
Goodwill represents the excess of costs over the fair value of
assets of business acquired. Pursuant to ASC 350, “Intangibles—
Goodwill and Other,” goodwill and ­intangible assets acquired in apurchase business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment
at least annually. This accounting standard also requires that intangible assets with estimable ­useful lives be amortized over theirrespective estimated useful lives to their estimated residual ­values,
and reviewed for impairment in accordance with ASC 360. The
Company conducts its annual impairment test at the end of eachfiscal 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 the remaining
contract period. Other insurance liabilities consist principally of liabilities for unpaid claims and adjustment expenses, which are estimates of payments to be made on reported claims and incurred but
not reported claims, which are computed based on past ­experience
for unpaid losses.

Secom Co., Ltd.
Annual Report 201143

CONSOLIDATED FINANCIAL STATEMENTS(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 thefinancial statement carrying amounts of existing assets and liabilities
and their respective tax bases, and operating loss carryforwards.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in whichthose temporary differences and carryforwards are expected to berealized or settled. The effect on deferred tax assets and liabilities ofa change in tax rates is recognized in income in the period that
includes the enactment date. Valuation allowances are recorded toreduce deferred tax assets when it is more likely than not that a tax
benefit will not be realized.
The Company recognizes in the consolidated financial statements
the impact of a tax position, if any, based on the technical meritsof the position, when that position is more likely than not to besustained upon examination. The benefit of the tax position ismeasured at the largest amount of benefit that is greater than
50 percent likely of being realized upon settlement with the­appropriate tax authority.
The Company recognizes interest and penalties accrued related
to unrecognized tax benefits in income taxes in the consolidated
statements 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 forthe costs related to insurance policies. Advertising costs for acquiring new insurance policies are deferred and amortized as part of
insurance acquisition costs. Advertising expenses included in selling,
general and administrative expenses for the years ended March 31,
2011, 2010 and 2009 were ¥4,034 million ($48,602 thousand),¥4,665 million and ¥5,292 million, respectively.
(19) Derivative Financial Instruments
The Company accounts for derivative financial instruments inaccordance with ASC 815, “Derivatives and Hedging.”
The Company recognizes all derivative financial instruments inthe consolidated financial statements at fair value regardless of the
purpose or intent for holding them. Changes in the fair value ofderivative financial instruments are either recognized periodically inincome or in 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 the fair value of derivative financial instruments
accounted for as a cash flow hedge, to the extent it is effective as ahedge, are recorded in other comprehensive income (loss), net oftax. Changes in the fair value of derivative financial instruments not
qualifying as a hedge are reported in income.
The Company meets the documentation requirements necessaryfor effective hedges which include their risk management objective and strategy for undertaking various hedge transactions. In
addition, formal assessment is made at inception of the hedge andperiodically on an on-going basis, as to whether the derivatives

44

Secom Co., Ltd.
Annual Report 2011used in hedging activities are highly effective in off-setting changes
in fair values or cash flow of hedged items. Hedge accounting is
discontinued for ineffective hedges, if any. Discontinued hedges arerecognized in 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 forthe years ended March 31, 2011, 2010 and 2009 was 218,032
thousand shares, 218,035 thousand shares and 222,378 thousand
shares, respectively. There were no potentially dilutive shares outstanding during the years ended March 31, 2011, 2010 or 2009.
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 andassumptions relating to the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts ofrevenues and expenses during the period. Actual results could differ
from those estimates. Significant items subject to such estimatesand assumptions include the carrying amounts of inventories,
deferred insurance acquisition costs, investment securities, otherinvestments, property, plant and equipment, goodwill, other intangible assets and unearned premiums and other insurance liabilities;
valuation of receivables; valuation allowances for deferred income
taxes; valuation of derivative instruments; assets and obligations
related to employee benefits; income tax uncertainties; reserve for
litigation loss; and other contingencies.
(22) Recent Pronouncements
In December 2009, the FASB issued ASU No. 2009-17,“Improvements to Financial Reporting by Enterprises Involved with
Variable Interest Entities.” This accounting standard requires anenterprise to perform an ­analysis to identify the primary beneficiaryof a variable interest entity and also requires ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity. This accounting standard is effective for fiscal
years beginning after November 15, 2009 and was adopted by theCompany in the ­fiscal year ended March 31, 2011. The impact of
the adoption on the Company’s consolidated results of operations
and financial ­position is described in Note 2 (2).
In July 2010, the FASB issued ASU No. 2010-20, “Disclosuresabout the Credit Quality of Financing Receivables and theAllowance for Credit Losses.” This accounting standard requires anentity to provide certain existing disclosures and new disclosures, ona disaggregated basis, about its financing receivables and related
allowance for credit losses. This accounting standard is effective
for fiscal years beginning on or after December 15, 2010 and was
adopted by the Company in the fiscal year ended March 31, 2011.
The adoption of this accounting standard had no impact on the
Company’s consolidated results of operations and financial position.
The Company’s additional disclosures from the adoption of thisaccounting standard are described in Note 9.
In September 2009, the FASB issued ASU No. 2009-13,“Multiple-Deliverable Revenue Arrangements, a Consensus of
the FASB Emerging Issues Task Force.” This accounting standard
addresses the accounting for multiple-deliverable arrangements toenable the vender to account for products or services separately
rather than as a combined unit, and also addresses how to separate deliverables and how to measure and allocate arrangement
consideration to one or more units of accounting. This accounting
standard will be effective prospectively for revenue arrangements
entered into or materially modified in fiscal years beginning on
or after June 15, 2010, and will be adopted by the Company inthe fiscal year beginning April 1, 2011. It is not anticipated thatthe adoption will have a material impact on the Company’s
consolidated results of operations or financial position.
In October 2009, the FASB issued ASU No. 2009-14, “Certain
Revenue Arrangements That Include Software Elements, aConsensus of the FASB Emerging Issues Task Force.” This accounting standard modifies the scope of the software revenue rec­ognition guidance and excludes tangible products containing
software components and nonsoftware components that function
together to deliver the tangible product’s essential functionality from the scope. This accounting standard is effective for fiscal
years beginning on or after June 15, 2010, and will be adopted by
the Company in the fiscal year beginning April 1, 2011. It is not
anticipated that the adoption will have a material impact on the
Company’s consolidated results of operations or financial position.
In October 2010, the FASB issued ASU No. 2010-26,“Accounting for Costs Associated with Acquiring or Renewing
Insurance Contracts, a Consensus of the FASB Emerging Issues Task
Force.” This accounting standard redefines the definition of acquisition costs qualifying for deferral to be costs that are related directly
to the successful acquisition of new or renewal insurance contracts.
This accounting standard is effective for fiscal years beginning
after December 15, 2011, and will be adopted by the Company inthe fiscal year beginning April 1, 2012. The Company is currently
evaluating the effect of adopting this accounting standard on its­consolidated financial statements.
In April 2011, the FASB issued ASU No. 2011-02, “A Creditor’s
Determination of Whether a Restructuring Is a Troubled Debt
Restructuring.” This accounting standard provides the criteria
as to whether a loan modification constitutes a troubled debt
restructuring and requires additional disclosures about troubled
debt restructurings. This accounting standard is effective for fiscal
years beginning on or after June 15, 2011, and will be adopted by
the Company in the fiscal year beginning April 1, 2012. It is not
anticipated that the adoption will have a material impact on the
Company’s consolidated results of operations or financial position.
In May 2011, the FASB issued ASU No. 2011-04, “Amendments
to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRSs.” This accounting standard
amends current U.S. GAAP to create more commonality with
IFRSs by changing the wording used to describe requirements in
U.S. GAAP for measuring fair value and for disclosing information
about fair value measurements. This accounting standard is effective for fiscal years beginning after December 15, 2011, and will be
adopted by the Company in the fiscal year beginning April 1, 2012.
It is not anticipated that the adoption will have a material impact
on the Company’s consolidated results of operations or financial
position.
(23) Reclassifications
The accompanying consolidated financial statements for the years
ended March 31, 2010 and 2009 have been ­reclassified to conformto the presentation used for the year ended March 31, 2011.

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 the rate of ¥83=US$1, therate ­prevailing on the Tokyo Foreign Exchange Market on March 31,
2011. These ­translations should not be construed as representingthat the yen amounts actually represent, or have been or could be
converted into U.S. dollars at that rate.
4. Acquisitions
In July 2009, the Company acquired all outstanding shares of
MAC International Co., Ltd. in exchange for the Company’s longterm receivables of ¥3,733 million and other short-term receivablesof ¥1,000 million, by foreclosing. The following table summarizes
the estimated fair values of the assets acquired and liabilities
assumed at the date of acquisition. Short-term loans of ¥5,684 million and long-term debt of ¥868 million to domestic subsidiaries
were eliminated in consolidation.
In millions of yen

Cash and cash equivalents.................................................
Other current assets...........................................................
Investments and long-term receivables...............................
Property, plant and equipment...........................................
Goodwill............................................................................
Other assets.......................................................................
Total assets acquired......................................................
Current liabilities................................................................
Other liabilities...................................................................
Total liabilities assumed..................................................
Net assets acquired........................................................

¥ 1,037
322
8,941
4,138
702
20
15,1605,798
4,629
10,427¥ 4,733

In February 2010, MAC International Co., Ltd. was merged into
Secom Medical System Co., Ltd., a subsidiary of the Company.
The pro-forma result related to this acquisition is not disclosed
because the impact on the consolidated financial statements is
not material.
5. Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2011 and 2010 werecomprised as follows:		 In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

2011

2010

2011

Cash. .......................................... ¥120,371 ¥125,552
Time deposits..............................
41,427
15,429Call loan......................................
29,50036,500Investment securities....................
2,644
2,663
			 . .......................................... ¥193,942 ¥180,144$1,450,253
499,121355,42231,855$2,336,651

Investment securities include negotiable certificates of deposit
and money management funds. These agreements mature within
three months and their carrying values approximate ­fair value. The
Company has not experienced any losses through default of thefinancial institutions and does not ­anticipate default of any­outstanding agreements.

Secom Co., Ltd.
Annual Report 201145

CONSOLIDATED FINANCIAL STATEMENTS

6. Cash Deposits
The Company operates cash collection and deposit services forfinancial institutions relating to cash dispensers located outside offinancial institution facilities and also operates cash collection­service for entities other than financial institutions. Cash deposit
balances of ¥56,546 million ($681,277 thousand) and ¥48,862­million at March 31, 2011 and 2010, respectively, are segregatedfrom cash and cash equivalents and are restricted as to use by theCompany. The Company funds most of the cash for such operations through bank overdrafts and deposits. Bank loans and deposits received, which relate to these operations, were ¥29,387 million($354,060 thousand) and ¥20,659 million ($248,904 thousand),
respectively, at March 31, 2011, and ¥24,492 million and ¥23,790
million, respectively, at March 31, 2010. As part of its fee arrangement, the Company is reimbursed for the interest cost of therelated overdrafts.
7. Short-Term Investments and Investment Securities
Short-term investments (current) and investment securities(non-current) include debt and equity securities. The related aggregate fair value, gross unrealized gains, gross unrealized losses andcost pertaining to “available-for-sale” and “held-to-maturity”
investments at March 31, 2011 and 2010 were as ­follows:

In thousands of U.S. dollars
March 31, 2011
Gross unrealized
Cost

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

Cost

6,358
10
6,368

Investment securities:
Available-for-sale:		 Equity securities............ ¥ 29,930
		 Debt securities..............
71,170
Held-to-maturity:
		 Debt securities..............
7,473
		
¥108,573

Gains

¥

27

¥

0
27

46

Secom Co., Ltd.
Annual Report 201176,904120
76,723 $

0
325 $

—
24 $

120
77,024Gross unrealized losses on, and fair value of, “available-for-sale”
and “held-to-maturity” securities, aggregated by invest­ment­category and the length of time that individual securities have been
in a continuous unrealized loss position, at March 31, 2011 wereas follows:		Less than 12 months

¥

2

¥

—
2

Fair value

¥

6,383

¥

10
6,393

¥4,4602,289¥2,059660¥ 32,331
72,79920¥6,76949¥2,7687,444¥112,574

March 31, 2010

Investment securities:
Available-for-sale:		 Equity securities............ ¥ 37,173
		 Debt securities..............
61,397
Held-to-maturity:
6,086		 Debt securities..............
		¥104,656

24 $		Gross unrealized
Cost

325 $

March 31, 2011
Losses

Gains

LossesFair value

¥ 908

¥ —

¥ 13,287

—
¥ 908

¥

0
0

40
¥ 13,327¥7,153
2,446

¥330
—

¥ 43,996
63,8438¥9,607

0
¥330

6,094
¥113,933

Fair value

76,603 $In millions of yen

In millions of yen

Short-term investments:
Available-for-sale:
		 Debt securities.............. ¥ 12,379
Held-to-maturity:
		 Debt securities..............
40		
¥ 12,419

LossesInvestment securities:
Available-for-sale:		 Equity securities........... $ 360,602 $53,735 $24,807 $ 389,530
		 Debt securities.............
857,470 27,578
7,952
877,096
Held-to-maturity:
		 Debt securities.............
90,036241
590
89,687		
$1,308,108 $81,554 $33,349 $1,356,313

Gross unrealized

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

Gains

In millions of yen
March 31, 2011
12 months or longer				
Fair value

Gross		Grossunrealized		 unrealized
lossesFair value
lossesAvailable-for-sale:
Equity securities............
Debt securities..............
			¥11,718
9,164¥20,882¥2,059662¥2,721

¥—
—
¥—

¥—
—
¥—

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

¥ 6,961

¥

¥—

¥—

49

In thousands of U.S. dollars
March 31, 2011
Less than 12 months

12 months or longer				
Fair value

Gross		Grossunrealized		 unrealized
lossesFair value
lossesAvailable-for-sale:
Equity securities............ $141,181
Debt securities.............. 110,409
		$251,590$24,807
7,976$32,783

$—
—
$—

$—
—
$—

Held-to-maturity:
Debt securities.............. $ 83,867

$

$—

$—

590

Based on the Company’s ability and intent to hold the investment
for a reasonable period of time sufficient for a recovery of fairvalue, the credit condition of the issuers and other relevant factors,
the Company does not consider these investments to be otherthan-temporarily impaired at March 31, 2011.
At March 31, 2011, debt securities principally consisted of shortterm investments in monetary trusts, Japanese ­govern­ment bonds,
corporate bonds, U.S. treasury securities and U.S. Government
Agency Bonds.

The cost and fair value of “available-for-sale” and ”held-to-­maturity” debt securities by contractual maturity at March 31, 2011
are as follows:
In millions of yen

8. Inventories
Inventories at March 31, 2011 and 2010 comprised the­following:
		 In thousands ofMarch 31, 2011
Available-for-saleDue within 1 year............
Due after 1 year
through 5 years.............
Due after 5 years
through 10 years...........
Due after 10 years ..........
		 ..................................

Fair value¥ 6,358¥ 6,383

32,871

33,412——27,447
10,852¥77,528

28,015
11,372¥79,182

1,500
5,973
¥7,483

1,483
5,961¥7,454¥

Cost

Fair value

10

¥

10

In thousands of U.S. dollars
March 31, 2011
Available-for-sale
Fair value

Due within 1 year............ $ 76,603
Due after 1 year
through 5 years............. 396,036
Due after 5 years
through 10 years........... 330,687
Due after 10 years .......... 130,747
		 .................................. $934,073$ 76,904

Held-to-maturity
Cost$402,554
337,530
137,012$954,000

U.S. dollars

March 31

March 31

Held-to-maturity

Cost

Cost

In millions of yen

Fair value

120 $

120

—

—

18,072 17,868
71,964 71,819$90,156 $89,807

During the years ended March 31, 2011, 2010 and 2009, the net­ nrealized gains and losses on “available-for-sale” securitiesu
included as part of other comprehensive income (loss), net of tax,
decreased by ¥3,472 million ($41,832 thousand), increased by¥9,200 million and decreased by ¥460 million, respectively.
Proceeds from the sale of “available-for-sale” securities for theyears ended March 31, 2011, 2010 and 2009 were ¥17,187 million($207,072 thousand), ¥31,328 million and ¥59,340 million, respectively. On those sales, the gross ­realized gains and gross realized
losses, using moving-­average cost basis, for the years ended March
31, 2011, 2010 and 2009 were as follows:		 In thousands ofIn millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2011

2010

2009

2011

Gross realized gains............ ¥2,916
Gross realized losses...........
752¥1,499
383

¥679
325

$35,133
9,060

The Company maintains long-term investment securities, issued
by a number of ­non-­public companies, included as investment securities in the consolidated balance sheets. The aggregate carrying
amount of the investments in non-public companies, at cost net ofother-than-temporary impairment, was ¥10,407 million ($125,386
thousand) and ¥10,624 million at March 31, 2011 and 2010,
respectively. The corresponding fair value at that date was not­computed as such estimation was not practical.

		

2011

2010

2011

Security-related products................... ¥ 5,596 ¥ 7,940
Fire protection-related products......... 10,518 12,279
Real estate......................................... 59,913 74,423
Information and other-related
products..........................................
5,742
3,613
			 .............................................. ¥81,769 ¥98,255$ 67,422
126,723
721,843
69,181$985,169

Work in process for real estate inventories at March 31, 2011 and2010, amounting to ¥48,432 million ($583,518 thousand) and¥55,916 million, respectively, are included in real estate.
The amount of write-down on real estate inventories included incost of sales for the years ended March 31, 2011, 2010 and 2009were ¥1,482 million ($17,855 thousand), ¥1,285 million and¥8,366 million, respectively.
9.	Credit Quality of Financing Receivables and Allowance for
Doubtful Accounts
The Company has financing receivables and classifies them into
five categories: “lease receivable,” “loans receivable resulting frommedical services,” “loans receivable resulting from insurance services,” “other loans receivable” and “other.” Financing receivables
classified as “lease receivable” are resulting from lease transactions of
security equipment and real estate for office and medical institutions.
The Company continuously monitors overdue financing receivables, which the Company considers as uncollectible risk receivables. For financing receivables with specific customer collection
issues, the Company individually evaluates their collectability inorder to determine the amount of allowance for doubtful accounts.
For other financing receivables, the Company categorizes thesereceivables into groups by their nature and characteristics. The
Company collectively evaluates the collectability by each group,
using its historical experience of write-off and determines theamount of allowance for doubtful accounts.
Financing receivables and allowance for doubtful accounts at
March 31, 2011 are as follows:
In millions of yen
		
		
		
		
Lease
receivable

Allowance for
doubtful accounts:
Individually
evaluated............ ¥Collectively
evaluated............
¥

Loans
receivable
resultingfrommedicalservices

Loans
receivable
resultingfrominsuranceservices

Other
loans
receivable

Other

Total

41 ¥2,629 ¥ 874 ¥2,957 ¥1,180 ¥ 7,681
386
—
149
70
—
605
427 ¥2,629 ¥1,023 ¥3,027 ¥1,180 ¥ 8,286

Financing receivables:
Individually
evaluated............ ¥44 ¥12,326 ¥1,417 ¥3,128 ¥1,218 ¥18,133
Collectively
evaluated............ 25,551
413 6,659 3,165
196 35,984¥25,595 ¥12,739 ¥8,076 ¥6,293 ¥1,414 ¥54,117

Secom Co., Ltd.
Annual Report 201147

CONSOLIDATED FINANCIAL STATEMENTS

In thousands of U.S. dollars
		
		
		
		
Lease
receivable

Loans
receivable
resultingfrommedicalservices

Loans
receivable
resultingfrominsuranceservices

Other
loans
receivable

Other

Total

Allowance for
doubtful accounts:
Individually
evaluated............... $494 $ 31,675 $10,530 $35,627 $14,216 $ 92,542
Collectively
evaluated...............
4,651— 1,795
843—
7,289$ 5,145 $ 31,675 $12,325 $36,470 $14,216 $ 99,831
Financing receivables:
Individually
evaluated............... $530 $148,506 $17,072 $37,687 $14,675 $218,470
Collectively
evaluated............... 307,843
4,976 80,229 38,133 2,361 433,542$308,373 $153,482 $97,301 $75,820 $17,036 $652,012

The Company ascribes the fact of past due and the financial position of the debtor to credit quality indicators and classifies financing
receivables into Overdue and Current. Financing receivables determined to have no prospects for collecting contractual interest on
the basis of past due date and other factors are no longer recorded
as accruing interest.
Analysis of the age of the recorded financing receivables andfinancing receivables on nonaccrual status at March 31, 2011 are as
follows:
In millions of yen
		
		
		
		
Lease
receivable

Loans
receivable
resultingfrommedicalservices

Loans
receivable
resultingfrominsuranceservices

Other
loans
receivable

Other

Total

Current......................... ¥25,551 ¥12,436 ¥6,659 ¥3,165 ¥ 899 ¥48,710
Overdue........................
44
303 1,417 3,128
515
5,407
Total:
Financingreceivables................ ¥25,595 ¥12,739 ¥8,076 ¥6,293 ¥1,414 ¥54,117
Financingreceivables on
nonaccrual status........ ¥— ¥ 4,614 ¥1,417 ¥3,128 ¥— ¥ 9,159

In thousands of U.S. dollars
		
		
		
		
Lease
receivable

Loans
receivable
resultingfrommedicalservices

Loans
receivable
resultingfrominsuranceservices

Other
loans
receivable

Other

Total

Current......................... $307,843 $149,831 $80,229 $38,133 $10,831 $586,867
Overdue........................
530
3,651 17,072 37,687 6,205 65,145
Total:
Financingreceivables.................. $308,373 $153,482 $97,301 $75,820 $17,036 $652,012
Financingreceivables on
nonaccrual status........ $48

Secom Co., Ltd.
Annual Report 2011

— $ 55,590 $17,072 $37,687 $— $110,349

10. Investments in Affiliated Companies
The Company has investments in affiliated companies that are
accounted for under the equity method. Investments principallyconsist of Taiwan Secom Co., Ltd., a 28.8 percent owned affiliate,
which is listed on the Taiwan Stock Exchange; S1 Corporation, a27.8 percent owned affiliate, which is listed on the Korea Exchange;
Toyo Tech Co., Ltd., a 27.8 percent owned affiliate, which is listedon the Second Section of the Osaka Securities Exchange.
Combined financial information regarding the affiliated­companies accounted for under the equity method was as ­follows:		 In thousands of		In millions of yen

U.S. dollars

March 31

March 31

2011

2010

2011

Current assets................................. ¥ 72,049 ¥ 85,620
Non-current assets.......................... 111,349 122,321$ 868,060
1,341,554

Total assets................................. ¥183,398 ¥207,941$2,209,614

Current liabilities............................. ¥ 34,272 ¥ 39,388
Non-current liabilities......................
32,45835,512Equity............................................. 116,668 133,041$ 412,916
391,060
1,405,638

Total liabilities and equity............ ¥183,398 ¥207,941$2,209,614

		 In thousands of2011

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2009

2011

Net sales........................ ¥129,551 ¥153,990 ¥177,465$1,560,855

Gross profit.................... ¥ 46,156 ¥ 44,395 ¥ 54,621$ 556,096

Net income
attributable toaffiliated companies..... ¥ 16,933 ¥ 14,105 ¥ 18,574$ 204,012

2010

Dividends received from affiliated companies for the years ended
March 31, 2011, 2010 and 2009 were ¥2,175 million ($26,205
thousand), ¥2,295 million and ¥2,503 million, respectively.
Three (four at March 31, 2010) listed affiliated companies
accounted for under the equity method with an aggregated carrying amount of ¥27,555 million ($331,988 thousand) and ¥31,834­million at March 31, 2011 and 2010, respectively, had a quoted
market value of ¥61,259 million ($738,060 thousand) and ¥60,911­million at March 31, 2011 and 2010, respectively.
The amounts of goodwill were ¥3,254 million ($39,205 thousand) and ¥2,175 million at March 31, 2011 and 2010, respectively.
In June 2011, the parent company sold the outstanding share ofTokyo Biso Kogyo Corporation, a 36.6 percent owned affiliate, to
TB Holdings Corporation for ¥5,055 million ($60,904 thousand).
The sale resulted in a loss of ¥513 million ($6,181 thousand).

A summary of transactions and balances with the affiliated companies accounted for under the equity method is presented below:
		 In thousands ofIn millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2011

2010

2009

2011

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

¥1,669¥1,597¥1,737$20,108

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

¥5,128¥6,504¥8,293$61,783

		 In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

2011

2010

2011

Notes and accounts
receivable, trade.............................. ¥ 460¥ 432$ 5,542

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

¥

$

		

81

87

In millions of yen
March 31, 2011
Gross		carrying Accumulated
amountamortization¥2,189$27,241

Guarantees for bank loans................. ¥ 150¥$ 1,807

The Company's equity in undistributed income of affiliates at
March 31, 2011 and 2010 included in retained earnings was¥26,319 million ($317,096 thousand) and ¥22,819 million,
respectively.

(¥21,933)(2,965)(¥24,898)¥16,301
2,139¥18,440

Unamortized intangible assets............ ¥ 4,153¥¥ 4,153

		 In thousands ofIn millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2011

2010

2009

2011

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

¥—
—
1
—

¥ 83
15
—
—

¥34
—
—
—

$—
—
12
—

2

149

42

24

—

—

—

—

—
—

45
—

—
—

—
—

		

¥ 3

¥292

¥76

$36

—

In millions of yen
March 31, 2010
Gross		carrying Accumulated
amountamortization

Amortized intangible assets:
Software........................................ ¥33,989
Other.............................................
5,024
		
¥39,013

Net
carrying
amount(¥18,041)(2,532)(¥20,573)¥15,948
2,492¥18,440¥¥ 4,057

Unamortized intangible assets............ ¥ 4,057

11. Long-Lived Assets
The Company has assessed the potential impairment of its longlived assets. The fair value was determined by the estimated present
value of future cash flows or appraisal value.
Impairment loss on long-lived assets by ­business segment for theyears ended March 31, 2011, 2010 and 2009 was as follows:Net
carrying
amountAmortized intangible assets:
Software........................................ ¥38,234
Other.............................................
5,104
		
¥43,338

976

Notes and accounts payable............... ¥2,261—

12. Goodwill and Other Intangible Assets
The components of acquired intangible assets excluding goodwill
at March 31, 2011 and 2010 were as ­follows:—

In thousands of U.S. dollars
March 31, 2011
Gross		carrying Accumulated
amountamortization

Net
carrying
amountAmortized intangible assets:
Software........................................ $460,651
Other............................................. 61,494
		$522,145($264,253) $196,398(35,723)
25,771($299,976) $222,169

Unamortized intangible assets............ $ 50,037$— $ 50,037

Aggregate amortization expense for the years ended March 31,
2011, 2010 and 2009 was ¥6,236 million ($75,133 thousand),¥5,785 million and ¥5,850 million, respectively. Amortized intangible assets are amortized using the straight-line method over theestimated useful lives. The weighted average amortization period
for internal use software is approximately five years.
The estimated aggregate amortization expense for ­intangible
assets for the next five years is as follows:		Years ending March 31
In millions of yen

2012......................................................
2013......................................................
2014......................................................
2015......................................................
2016......................................................

¥5,739
4,516
3,554
2,392
1,166

In thousands of
U.S. dollars$69,145
54,41042,81928,81914,048

Secom Co., Ltd.
Annual Report 2011

49

CONSOLIDATED FINANCIAL STATEMENTS

The changes in the carrying amount of goodwill by businesss­ egment for the years ended March 31, 2011 and 2010 were as
follows:
In millions of yen							 Information and			Fire		 Geographic Real estate communication
		
Security protection
Medical information development
related and		services
services
services
servicesand sales other services

Goodwill................ ¥2,148
Accumulated
impairment
losses...................
(406)
March 31, 2009..... 1,742
Goodwill acquired
during the year....
—
Disposal.................
—
Impairment
losses...................
—
Translation
adjustment..........
174
Goodwill................ 2,322
Accumulated
impairment
losses...................
(406)
March 31, 2010..... 1,916
Goodwill acquired
during the year....
675
Disposal.................
—
Impairment
losses...................
—
Translation
adjustment..........
(99)
Goodwill................ 2,898
Accumulated
impairment
losses...................
(406)
March 31, 2011.... ¥2,492¥—¥9,598¥4,269¥135¥5,399 ¥21,549——(4,423)
5,175

(492)
3,777

(135)
—

(653)
4,746

(6,109)15,440

—
—

702
—

—
—

—
—

—
(2,919)702(2,919)

—

(245)

—

—

—

(245)

—
—

—
9,970

—
4,269

—
135

—
2,002

174
18,698——(4,338)
5,632

(492)
3,777

(135)
—

(175)
1,827

(5,546)
13,152

81
—

—
—

711
—

—
—

—
—

1,467
—

—

—

—

—

—

—

—
81

—
9,970

(70)
4,910

—
135

—
2,002

(169)
19,996—¥81(4,338)(492)¥5,632 ¥4,418

(135)
¥ —

(175) (5,546)¥1,827 ¥14,450

13. Bank Loans and Long-Term Debt
Bank loans of ¥47,698 million ($574,675 thousand) and ¥43,025
million at March 31, 2011 and 2010, respectively, are generallycomprised of 30 to 365 day notes. The weighted average interest
rate was 1.19 percent and 1.24 percent at March 31, 2011 and2010, 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 futureloans with such banks, collateral (including sums on deposit withsuch banks) or guarantors shall be provided immediately uponrequest. Further, any collateral furnished pursuant to such agreements or otherwise will be applicable to all indebted­ness to suchbanks. The Company has not been requested to submit such additional security.
At March 31, 2011, Nohmi Bosai Ltd., a subsidiary of the parent
company, had an unused committed line of credit from a short-termarrangement of ¥4,000 million ($48,193 thousand). The line ofcredit expires in March 2013. Under the agreement, Nohmi Bosai
Ltd. is required to pay committed fees at an annual rate of 0.15
percent, on the unused portion of the line of credit. At March 31,
2011, the Company had overdraft agreements with 17 banks andits unused lines of credit amounted to ¥10,275 million ($123,795
thousand). The Company incurs no fee on the unused portion of
the lines of credit. The overdraft agreements expire in the period
from April 2011 to March 2012. The Company has the ability andintent to extend these overdraft agreements under similar terms
and conditions.
Long-term debt at March 31, 2011 and 2010 comprisedthe ­following:

In thousands of U.S. dollars

		 In thousands of							 Information and			Fire		 Geographic Real estate communication
		
Security protection
Medical information development
related and		services
services
services
servicesand sales other services

Goodwill................ $27,976
Accumulated
impairment
losses................... (4,892)
March 31, 2010..... 23,084
Goodwill acquired
during the year.... 8,133
Disposal.................
—
Impairment
losses...................
—
Translation
adjustment.......... (1,193)
Goodwill................ 34,916
Accumulated
impairment
losses................... (4,892)
March 31, 2011.... $30,024$ — $120,120 $51,434——(52,265) (5,928)
67,855 45,506

Total

Total

$1,627$24,120 $225,277(1,627)—(2,108) (66,820)
22,012 158,457

976
—

—
—

8,566
—

—
—

—
—

17,675
—

—

—

—

—

—

—

—
—
976 120,120(843)
59,157—1,627—(2,036)24,120 240,916— (52,265) (5,928) (1,627)$976 $ 67,855 $53,229 $ —(2,108) (66,820)$22,012 $174,096

The Company recognized impairment losses primarily related togoodwill allocated to reporting units in the medical services

50

Secom Co., Ltd.
Annual Report 2011

segment of ¥245 million for the year ended March 31, 2010, due
to decreases in the estimated fair value of these reporting units
mainly caused by decreases of projected cash flows.
The fair value is deter­mined by the estimated present value of
future cash flows or quoted market prices.

		

In millions of yen

U.S. dollars

March 31

March 31

2010

2011

2011

Loans, principally from banks
due 2010–2033 with interest
rates ranging from 0.60% to10.05% in 2011 and 2010:
Secured............................................. ¥25,205 ¥20,461
Unsecured......................................... 10,160
3,037
0.61% unsecured bonds due 2010.......
—
150
0.91% unsecured bonds due 2010.......
—
220
1.14% unsecured bonds due 2013....... 3,570
4,080
1.13% unsecured bonds due 2014....... 1,644
1,730
Unsecured bonds due 2010–2015
with floating interest rates basedon 6-month TIBOR plus
0.00%–0.20%.................................... 11,793 12,588
Obligations under capital leases,
due 2010–2040 (Note 20)................... 12,566 10,107
			 ................................................. 64,938 52,373
Less: Portion due within one year.......... (11,918) (10,801)
			 ................................................. ¥53,020 ¥41,572$303,675
122,410——43,011
19,807142,084
151,398
782,385(143,590)$638,795

Assets pledged as collateral for bank loans and long-term debt at
March 31, 2011 and 2010 were as follows:		 In thousands of		In millions of yen

U.S. dollars

March 31

March 31

2011

2010

2011

Time deposits........................................ ¥ 1,993 ¥ 1,741
Short-term and long-term receivables.... 5,334 1,295
Investment securities..............................
606
646
Property, plant and equipment............... 55,755 60,411
Other intangible assets...........................
818
818$ 24,012
64,265
7,301
671,747
9,855

The aggregate annual maturities on long-term debt at March 31,
2011 are as follows:		Years ending March 31
In millions of yen

2012.....................................................
2013.....................................................
2014.....................................................
2015.....................................................
2016.....................................................
Thereafter..............................................
............................................................

¥11,918
21,073
9,997
7,687
3,075
11,188¥64,938

In thousands of
U.S. dollars$143,590
253,892
120,446
92,61437,048
134,795$782,385

14. Insurance-Related Operations
Secom General Insurance Co., Ltd. (“Secom Insurance”), a­subsidiary of the parent company, maintains accounting records as
noted in Note 2 in accordance with Japanese GAAP, which vary incertain respects from U.S. GAAP. Those differences are principally,(a) that insurance acqui­sition costs are charged to income whenincurred under Japanese GAAP whereas under U.S. GAAP, thosecosts are deferred and amortized generally over the premium-­
paying period of the insurance policies, (b) that liabilities related toincurred but not reported claims are computed based on related
regulations in Japan whereas under U.S. GAAP, those liabilities arecomputed 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 under
U.S. GAAP, unearned premiums are reflected based on the lapseand ­surrender over the contract period.
In addition, under certain property and casualty insurance contracts with a refund clause and long-term insurance policies that­provide refunds at maturity, such as personal accident and fire, thepolicyholder receives a refund if premiums have been fully paid
unless a substantial settlement (as defined in the p­ olicy) has
occurred. The Company has provided for such refundable amounts
by classifying a portion of the net pre­mi­ums written, together withinterest 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 inaccordance with U.S. GAAP.
The net equity of Secom Insurance at March 31, 2011 and 2010was ¥45,838 million ($552,265 thousand) and ¥52,262 million,
respectively.
Net sales and operating revenue of Secom Insurance include net
realized investment gains and losses, including the results on salesof securities, loss on other-than-temporary impairment of investment securities and impairment loss on long-lived assets. Net realized investment gains and losses for the years ended March 31,
2011, 2010 and 2009 were gains of ¥838 million ($10,096 thousand), losses of ¥3,309 million and ¥10,152 million, respectively.
Loss on other-than-temporary impairment of investment securities
for the years ended March 31, 2011, 2010 and 2009 were ¥681
­million ($8,205 thousand), ¥4,558 million and ¥10,683 million,
respectively.
15. Pension and Severance Costs
Employees of the parent company and its domestic ­subsidiaries
whose services are terminated are, under most ­circumstances,­eligible for lump-sum benefits and/or ­eligible for pension benefits.
The parent company and certain domestic subsidiaries haveadopted 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 of service, plus interest calculatedby the 3-year average yield for 10-year government bonds. The
defined contribution pension plan was established in April 2003, bytransferring 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 to thedefined 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 ratioof the accumulated amount in the cash balance pension plan andthe amount of contributions to the defined contribution pension
plan changed to 70 percent and 30 percent, including portions
funded in prior periods.
In March 2009, Pasco Corporation, a subsidiary of the parent
company, and its domestic subsidiaries settled and transferred a
portion of the tax-qualified non-­contributory pension plan to thedefined contribution pension plan. In accordance with ASC 715,
“Compensation—Retirement Benefits,” the Company accounted
for these transfers as a partial settlement of benefit obligation. The
amount of settlement loss was immaterial for the year ended March
31, 2009.
Net periodic pension and severance costs for the years ended
March 31, 2011, 2010 and 2009 were as follows:		 In thousands of2011

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2009

Net periodic pension andseverance costs:
Service cost.......................... ¥6,313 ¥4,424 ¥4,694
Interest cost......................... 1,610 1,476 1,430
Expected return onplan assets......................... (2,065) (1,997) (1,952)
Amortization of priorservice benefit.................... (1,687) (1,682) (1,713)
Recognized actuarial loss......
924
901
861
		 Net periodic pension
		 and severance costs....... ¥5,095 ¥3,122 ¥3,320

2011$76,060
19,398(24,880)(20,325)
11,133$61,386

Secom Co., Ltd.
Annual Report 2011

51

CONSOLIDATED FINANCIAL STATEMENTS

The changes in benefit obligation, plan assets and funded ­status
were as follows:

Amounts recognized in accumulated other comprehensive
income (loss) at March 31, 2011 and 2010 consist of:		 In thousands of		 In thousands of		In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2011

2011

Change in benefit obligation:
Benefit obligation
at beginning of year.................. ¥72,524 ¥72,090
Effect of adopting
ASU No. 2009-17.....................
4,244—
Service cost.................................
6,313
4,424
Interest cost................................
1,610
1,476
Actuarial (gain) loss.....................
2,173
(873)
Prior service benefit.....................
(263)—
Benefits paid...............................
(4,941)(4,593)Acquisition..................................
840—
Benefit obligation
at end of year...........................
82,50072,524
Change in plan assets:
Fair value of plan assets
at beginning of year..................
60,76355,099Effect of adopting
ASU No. 2009-17.....................
2,200—
Actual return on plan assets........
1,975
3,436
Employer contribution.................
5,829
5,323
Benefits paid...............................
(3,342)(3,095)Acquisition..................................
406—
Fair value of plan assets
at end of year...........................
67,831
60,763Funded status
at the end of year......................... (¥14,669) (¥11,761)$873,783
51,13376,06019,39826,181(3,169)(59,530)
10,120993,976732,084
26,506
23,79570,229(40,265)
4,892
817,241

In millions of yen

U.S. dollars

March 31

March 31

2010

2011

Prepaid pension andseverance costs.............................. ¥ 6,500 ¥ 4,742
Accrued pension andseverance costs.............................. (21,169) (16,503)
			 Net amount recognized........ (¥14,669) (¥11,761)$ 78,313(255,048)($176,735)

Other changes in plan assets and benefit obligations ­recognizedin other comprehensive income (loss) for the year ended March 31,
2011 were summarized as follows:		 In thousands ofIn millions of yen

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

52

Secom Co., Ltd.
Annual Report 2011

¥2,263
(924)
(263)
1,687
¥2,763

March 31

2011

2010

2011

Actuarial loss...................................... ¥32,029 ¥30,690
Prior service benefit............................. (9,430) (10,854)
			 Net amount recognized........... ¥22,599 ¥19,836$385,892(113,615)$272,277

The estimated prior service benefit and actuarial loss for thedefined benefit pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit
cost over the next year are ¥1,648 million ($19,855 thousand) and¥1,148 million ($13,831 thousand), respectively.
The accumulated benefit obligation for the pension plan was¥75,894 million ($914,386 thousand) and ¥66,486 million at March
31, 2011 and 2010, respectively.
The projected benefit obligation, accumulated benefit ­obligationand fair value of plan assets for the pension plans with ­accumulated
benefit obligation in excess of plan assets were ¥34,647 million($417,434 thousand), ¥31,206 million ($375,976 thousand) and¥13,644 million ($164,386 thousand), respectively, at March 31,
2011, and ¥26,563 million, ¥23,411 million and ¥10,142 million,
respectively, at March 31, 2010.
The Company uses March 31 as the measurement date for thedomestic pension plan.
Weighted-average assumptions used to determine the benefit
obligation at March 31, 2011 and 2010 were as follows:		 March 31

		 In thousands of2011

U.S. dollars

March 31($176,735)

Amounts recognized in the consolidated balance sheet at March
31, 2011 and 2010 consist of:				In millions of yen

U.S. dollars$27,265(11,133)(3,169)20,325$33,288

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

2011

2010

2.1%
2.6%

2.2%
2.6%

Weighted-average assumptions used to determine net ­pension
and severance costs for the years ended March 31, 2011, 2010 and2009 were as follows:
Years ended March 31

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

2011

2010

2009

2.2%
3.0%
2.6%

2.1%
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 actual ­historical returns ofeach plan asset category.
The Company’s investment policy is designed to ensure that sufficient plan assets are available to provide future ­payments 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 in equity and debt securities, and pooled
funds with the objective to minimize risk and achieve the expected
rate of return. The investment results are periodically checked andasset allocation is adjusted as necessary.

The following table represents the fair value of the Company’s
pension plan assets at March 31, 2011 and 2010. The three levels of
input used to measure fair value are more fully described in Note 23.
		In millions of yen
March 31, 2011

Level 1

Cash and cash
equivalents................
Equity securities
Japanesecompanies.............
Debt securities
Government
bonds....................
Nongovernment
bonds....................
Pooled fund.................
Call loans.....................
Insurance contracts......
Other...........................

¥ 1,053

Level 2¥—¥

Level 3

Total—

¥ 1,053

6,963

50

—

7,013

5,978

938

6

6,922

2,333
741
—
—
—
¥17,068—
17,634
6,646
5,652
100
¥31,020651
18,338——748¥19,743

2,984
36,713
6,646
5,652
848
¥67,831* The plan’s equity securities include common stock of the parent company in theamount of ¥40 million at March 31, 2011.
* The plan’s government bonds invest approximately 95% in Japanese bonds and
5% in foreign bonds. The nongoverment bonds invest approximately 80% inJapanese bonds and 20% in foreign bonds.
* The pension investment trust fund included in the plan’s pooled funds is classified as level 2, and invests approximately 45% in equity securities, 50% in debt
securities and 5% in other investments. The unquoted beneficial certificate of
security investment trust included in the plan’s pooled funds is classified as level 3.
		In thousands of U.S. dollars
March 31, 2011
Level 1

Level 1

¥ 1,222

Level 2

¥

—

¥

Total

—

¥ 1,222

3,371

—

7

3,378

0

—

—

0

8,878

837

61

9,776

1,418
33
—
—
—
¥14,922—18,040
8,998
3,428
377
¥31,680702
12,994——397¥14,161

2,120
31,067
8,998
3,428
774
¥60,763

Total$ 12,687
84,494
83,39835,952442,325
80,072
68,096
10,217$817,241* The plan’s equity securities include common stock of the parent company in theamount of $482 thousand at March 31, 2011.
* The plan’s government bonds invest approximately 95% in Japanese bonds and
5% in foreign bonds. The nongoverment bonds invest approximately 80% inJapanese bonds and 20% in foreign bonds.
* The pension investment trust fund included in the plan’s pooled funds is classified as level 2, and invests approximately 45% in equity securities, 50% in debt
securities and 5% in other investments. The unquoted beneficial certificate of
security investment trust included in the plan’s pooled funds is classified as level 3.

The following table represents the changes in level 3 investments
for the years ended March 31, 2011 and 2010.

In millions of yen

Year ended March 31, 2011

In millions of yen
Level 3

Level 3

Cash and cash
equivalents................ $ 12,687 $— $—Equity securities
Japanesecompanies.............
83,892602—
Debt securities
Government
bonds....................
72,024
11,302
72
Nongovernment
bonds....................
28,109—7,843
Pooled fund.................
8,927
212,458 220,940
Call loans.....................
—
80,072—
Insurance contracts......
—
68,096—
Other...........................
—
1,205
9,012
$205,639 $373,735 $237,867

Equitysecurities

March 31, 2010

Cash and cash
equivalents................
Equity securities
Japanesecompanies.............
Foreigncompanies.............
Debt securities
Government
bonds....................
Nongovernment
bonds....................
Pooled funds................
Call loans.....................
Insurance contracts......
Other...........................

Level 2Debt
securities

			
NonJapanese Government government
companies
bonds
bonds

Balance at
beginning of year.............
Actual returnon plan assets:
Relating to assets soldduring the year...........
Relating to assets heldat end of year.............
Purchases, sales andsettlements, net...............
Transfer into level 3............
Balance at end of year.......

Pooled
funds

Other

Total

¥7

¥61

¥702

¥12,994¥397¥14,161

—

—

48

93

135

276

—

—

896

(370)

224

750

(7)
—
¥—

(55)
—
¥ 6

(995)
3,845
—
1,776
¥651 ¥18,338

(8)
2,780
—
1,776
¥748 ¥19,743* The plan’s equity securities include common stock of the parent company and its
domestic subsidiaries in the amount of ¥23 million at March 31, 2010.
* The plan’s government bonds invest approximately 80% in Japanese bonds and
20% in foreign bonds. The nongoverment bonds invest approximately 70% inJapanese bonds and 30% in foreign bonds.
* The pension investment trust fund included in the plan’s pooled funds is classified as level 2, and invests approximately 40% in equity securities, 50% in debt
securities and 10% in other investments. The unquoted beneficial certificate of
security investment trust included in the plan’s pooled funds is classified as level 3.

Secom Co., Ltd.
Annual Report 2011

53

CONSOLIDATED FINANCIAL STATEMENTS

In millions of yen
Year ended March 31, 2010
Equitysecurities

Debt
securities

			
NonJapanese Government government
companies
bonds
bonds

Balance at
beginning of year..............
Actual returnon plan assets:
Relating to assets soldduring the year............
Relating to assets heldat end of year..............
Purchases, sales andsettlements, net................
Transfer into level 3.............
Balance at end of year........

¥—

¥26

		 In thousands ofPooledfunds¥ 55 ¥11,177

Other

Total

¥250 ¥11,508

—

(1)

—

(301)

—

(302)

—

5

647

431

181

1,264

4
3
¥ 7

31
—
¥61

—
1,687
—
—
¥702 ¥12,994(34) 1,688—
3¥397 ¥14,161

In thousands of U.S. dollars
Year ended March 31, 2011
Equitysecurities

Debt
securities

			
NonJapanese Government government
companies
bonds
bonds

Balance at
beginning of year.............
Actual returnon plan assets:
Relating to assets soldduring the year...........
Relating to assets heldat end of year.............
Purchases, sales andsettlements, net...............
Transfer into level 3............
Balance at end of year.......

$84

$735

—

—

578

—

—

10,795(84)—$—

Pooled
funds

Other

Total

$ 8,458 $156,554 $4,783 $170,614

1,120

1,627

3,325

(4,458) 2,699

9,036(663) (11,988) 46,326(97) 33,494—— 21,398— 21,398$ 72 $ 7,843 $220,940 $9,012 $237,867

The Company expects to contribute ¥6,130 million ($73,855
thousand) to its domestic defined benefit plans in the year ­ending
March 31, 2012.
The following benefit payments, which reflect future s­ ervices, as
appropriate, are expected to be paid.
		 In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2012.....................................................
2013.....................................................
2014.....................................................
2015.....................................................
2016.....................................................
2017–2021............................................

¥ 4,573
4,807
5,034
4,230
4,888
26,372$ 55,096
57,91660,65150,96458,892
317,735

The parent company and certain subsidiaries have defined contribution pension plans. The contributions to the defined contributionpen­sion plans for the years ended March 31, 2011, 2010 and 2009were ¥1,596 million ($19,229 thousand), ¥1,468 million and¥1,469 million, respectively.
16. Exchange Gains and Losses
Other expenses for the years ended March 31, 2011 and 2009
include net exchange losses of ¥635 million ($7,651 thousand) and¥1,564 million, respectively. Other income for the year ended March
31, 2010 includes net exchange gains of ¥552 million.

54

Secom Co., Ltd.
Annual Report 2011

17. Income Taxes
Total income taxes for the years ended March 31, 2011, 2010
and 2009 were allocated as follows:2011

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2009

Income fromcontinuing operations.......... ¥43,277 ¥45,631 ¥36,259
Income (loss) fromdiscontinued operations.......
—
(317)
316
Shareholders’ equity—
accumulated othercomprehensive
income (loss):
Unrealized holding gains(losses) on securities......... (1,946) 5,401(452)
Unrealized gains(losses) on derivative
instruments......................
—
107
(102)
Pension liability
adjustments.....................
(654)
857 (4,863)
Foreign currencytranslation
adjustments.....................
—
1,020
(859)
Equity transactions with
noncontrolling interest
and other ...........................
(154)
—
—
		 . .................................... ¥40,523 ¥52,699 ¥30,299

2011$521,409—(23,445)—(7,879)—(1,855)$488,230

The parent company and its domestic subsidiaries were ­subject toa corporate tax of 30 percent, an inhabitants tax of approximately
20.3 percent, and a deductible enterprise tax of approximately 7.4
percent, which, in the aggregate, results in a statutory tax rate inJapan of approximately 40.5 ­percent for the years ended March 31,
2011, 2010 and 2009.
Reconciliations of the differences between income taxes­computed at statutory tax rates and income taxes from continuing
operations were as follows:		 In thousands of2011

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2009

Income taxes computed
at statutory tax rate of
40.5%................................. ¥43,677 ¥38,344 ¥25,581
Increase (decrease)resulting from:
Unrecognized tax
benefits fromsubsidiaries in loss
positions..........................
97
7,280 10,124
Reversal of valuation
allowance due toutilization of operating
loss carryforwards............
(736)
(955)
(187)
Per capita tax.....................
831
817
807
Other, net..........................
(592)
145
(66)
		 Income taxes
		 from continuing		 operations.................... ¥43,277 ¥45,631 ¥36,259

2011$526,229

1,168(8,867)
10,012(7,133)$521,409

The significant components of deferred tax assets and liabilities
at­March 31, 2011 and 2010 were as follows:		 In thousands of		In millions of yen

U.S. dollars

March 31

March 31

2010

2011

2011

Deferred tax assets:
Loss carryforwards.......................... ¥19,372 ¥19,489
Deferred revenue............................ 11,580 12,118
Accrued pension andseverance costs.............................
8,164
6,144
Adjustment of book value atthe date of acquisition—
		 Land and buildings......................
7,546
6,887
		 Other assets................................
361
405
Accrued bonus................................
5,704
5,166
Property, plant andequipment...................................
5,528
6,184
Vacation accrual..............................
3,806
3,649
Allowance for doubtful
accounts.......................................
3,611
3,742
Intangible assets.............................
1,969
2,213
Investment securities.......................
1,902
2,593
Write-down on real estate
inventories....................................
1,823
1,467
Other..............................................
9,394 10,145
		 Gross deferred tax assets............. 80,760 80,202
		 Less: Valuation allowance............ (33,699) (32,095)
		 Total deferred tax assets.............. 47,061 48,107
Deferred tax liabilities:
Deferred installation costs............... (9,494) (7,721)
Adjustment of book value atthe date of acquisition—
		 Land and buildings...................... (5,544) (5,871)
		 Other assets................................ (1,614) (1,591)
Investments in affiliatedcompanies.................................... (5,111) (4,611)
Prepaid pension andseverance costs............................. (2,543) (1,506)
Unrealized holding gains on
securities....................................... (1,042) (3,002)
Unearned premiums andother insurance liabilities...............
(774) (2,166)
Other.............................................. (5,362) (4,687)
		 Gross deferred tax liabilities......... (31,484) (31,155)
			 Net deferred tax assets ........... ¥15,577 ¥16,952

management believes it is more likely than not that the Company
will realize the benefits of these deductible differences, net of the­existing valuation allowance at March 31, 2011 and 2010.
Net deferred tax assets at March 31, 2011 and 2010 are reflectedin the accompanying consolidated balance sheets under the­following captions:
		 In thousands of$233,398
139,518
98,361
90,916
4,349
68,723
66,60245,85543,50623,723
22,916
21,964
113,181
973,012(406,012)
567,000(114,386)(66,795)(19,446)(61,578)(30,639)(12,554)(9,325)(64,602)(379,325)$187,675

The valuation allowance principally relates to deferred tax assetsof the subsidiaries with operating loss carryforwards, for tax purposes, that are not expected to be realized. The net change in the
total valuation allowance for the years ended March 31, 2011,2010 and 2009 was an increase of ¥1,604 million ($19,325­thousand), ¥5,232 million and ¥9,795 million, respectively.
In assessing the realizability of deferred tax assets, the Company
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 historical taxable
income and projec­tions for future taxable income over the periods
in which the deferred tax assets are deductible, the Company

		

In millions of yen

U.S. dollars

March 31

March 31

2010

2011

2011

Deferred income taxes(Current assets)................................ ¥15,438 ¥15,737
Deferred income taxes(Other assets)................................... 11,824 12,975
Other current liabilities.......................
(1,858) (1,357)
Deferred income taxes(Liabilities)........................................
(9,827) (10,403)
		 Net deferred tax assets .............. ¥15,577 ¥16,952$186,000
142,458(22,385)(118,398)$187,675

The Company has not recognized deferred tax liabilities of ¥712
million ($8,578 thousand) for a portion of undistributed earnings offoreign subsidiaries totaling ¥14,526 million ($175,012 thousand)at March 31, 2011 as they are not expected to be remitted in theforeseeable future.
At March 31, 2011, the operating loss carryforwards of domestic
subsidiaries amounted to ¥45,981 million ($553,988 thousand) andare 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

2012......................................................
2013......................................................
2014......................................................
2015......................................................
2016......................................................
2017......................................................
2018......................................................
..............................................................

¥ 3,307
1,608
3,577
3,109
22,2229,708
2,450¥45,981$ 39,843
19,37343,09637,458
267,735
116,964
29,519$553,988

The operating loss carryforwards of overseas subsidiaries at
March 31, 2011 amounted to ¥3,794 million ($45,711 thousand), apart of which will begin to expire in the year ending March 31, 2012.
The total amount of unrecognized tax benefits for the years
ended March 31, 2011, 2010 and 2009 were insignificant. Also
there were no movements of the gross amounts in unrealized tax
benefits and the amounts of interest and penalties recognized dueto the unrecognized tax benefits during the years ended March 31,
2011, 2010 and 2009.
Although the Company believes its estimates of unrecognized tax
benefits are reasonable, uncertainties regarding the final determination of income tax audit settlements and any related litigation
could affect the total amount of unrecognized tax benefits in the
future periods. Based on the information available as of March 31,
2011, the Company does not expect significant changes to theunrecognized tax ­benefits within the next twelve months.
The Company files tax returns in Japan and various foreign jurisdictions. In Japan, the Company is no longer subject to regularincome tax examinations by the tax authorities for years before
2007. In other foreign tax jurisdictions, major subsidiaries are nolonger subject to income tax examinations by tax authorities foryears before 2010 with few exceptions.

Secom Co., Ltd.
Annual Report 2011

55

CONSOLIDATED FINANCIAL STATEMENTS

18. Shareholders’ Equity(1) Additional Paid-In Capital
The change in additional paid-in capital includes the effect ofchanges in the Company’s ownership interest in its consolidated
subsidiaries.
The net income attributable to SECOM CO., LTD. and transfersfrom (to) noncontrolling interests for the years ended March 31,
2011 and 2010 were as follows:		 In thousands of		In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2011

2011

Net income attributable to
SECOM CO., LTD.............................. ¥62,665 ¥46,989
Transfers from (to)noncontrolling interests:
		 Decrease in additional paid-in		 capital for acquisition of
		 Secom Techno Service Co., Ltd.’s		 ownership interests for		 the purpose of merger.............. (5,692)—
		 Other, net...................................
151
1,101
Net transfers from (to)noncontrolling interests................. (5,541)
1,101
Change from net income attributable
to SECOM CO., LTD. and transfersfrom (to) noncontrolling interests...... ¥57,124 ¥48,090$755,000(68,578)
1,819(66,759)$688,241(2) Retained Earnings
The Japanese Corporate Law 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 theaggregate amount of additional paid-in capital and legal reserve
equals 25 percent of the ­common stock account.
The amount available for dividends under the Japanese­Corporate Law is based on the amount recorded in the ­parent
company’s nonconsolidated statutory financial statements in accordance with Japanese GAAP. Such amount was ¥399,957 million($4,818,759 thousand) at March 31, 2011.
Subsequent to March 31, 2011, the parent company’s Board of
Directors declared an annual cash dividend of ¥90.00 ($1.08) per
share, totaling ¥19,623 million ($236,422 thousand), to shareholders of record on March 31, 2011. The dividend declared wasapproved at the general shareholders’ meeting held on June 24,
2011. Dividends are recorded in the year they are declared.
The Japanese Corporate Law provides that a company can makedividends of surplus anytime with resolution of the shareholders.
(3) Common Stock in Treasury
The Company may repurchase its common stock from the market
pursuant to the Japanese Corporate Law. For the year ended
March 31, 2009, 6,928 thousand shares were repurchased at theaggregate cost of ¥30,019 million.

56

Secom Co., Ltd.
Annual Report 2011

(4) Other Comprehensive Income (Loss)
Components of other compre­hensive income (loss) for the years
ended March 31, 2011, 2010 and 2009 are as follows:
In millions of yen
Pre-tax
amount

For the year ended March 31, 2011:
Unrealized holding losses on
securities—
		 Unrealized holding gains or losses
		 arising during the period................. (¥ 4,760)
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income.............................
(658)
Unrealized gains on derivative
instruments—
		 Unrealized gains or losses
		 arising during the year....................
3
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income.............................
9
Pension liability adjustments—
		 Unrealized gains or losses
		 arising during the period................. (1,052)
		 Less: Reclassification		adjustment for gains
		or losses realized		in net income..........................
(574)
Foreign currencytranslation adjustments....................... (6,399)
			 Other comprehensive
			 income (loss)............................... (¥13,431)

Tax(expense)or benefit

Net-of-tax
amount¥1,719 (¥ 3,041)

227

(431)

—

3

—

9

424

(628)

230

(344)

—

(6,399)¥2,600 (¥10,831)

For the year ended March 31, 2010:
Unrealized holding gains on
securities—
		 Unrealized holding gains or losses
		 arising during the period................. ¥11,598 (¥4,382) ¥ 7,216
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income.............................
3,003(1,019)1,984
Unrealized gains on derivative
instruments—
		 Unrealized gains or losses
		 arising during the year....................
(5)
—
(5)
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income.............................
281
(107)
174
Pension liability adjustments—
		 Unrealized gains or losses
2,724(1,140)1,584		 arising during the period.................
		 Less: Reclassification		adjustment for gains
		or losses realized		in net income..........................
(700)
283
(417)
Foreign currencytranslation adjustments.......................
2,016(1,020)996
			 Other comprehensive
			 income (loss)............................... ¥18,917 (¥7,385) ¥11,532

In millions of yen
Pre-tax
amount

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

Tax(expense)or benefit

Net-of-tax
amount¥6,532 (¥10,522)(6,080)10,062

106

(157)

(4)

64

4,559

(7,043)

304

(109)

859

(19,544)¥6,276 (¥27,249)

In thousands of U.S. dollars
Pre-tax
amountTax(expense)or benefit

Net-of-tax
amount

For the year ended March 31, 2011:
Unrealized holding losses on
securities—
		 Unrealized holding gains
		 or losses arising during
		 the period................................... ($ 57,349) $20,710 ($ 36,639)
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income.........................
(7,928) 2,735(5,193)
Unrealized gains on derivative
instruments—
		 Unrealized gains or losses
		 arising during the year................
36—
36
		 Less: Reclassification
		 Less: adjustment for gains
		 Less: or losses included in		 Less: net income.........................
109
—
109
Pension liability adjustments—
		 Unrealized gains or losses
		 arising during the period.............
(12,674) 5,108(7,566)
		 Less: Reclassification		adjustment for gains
		or losses realized		in net income......................
(6,916) 2,771(4,145)
Foreign currencytranslation adjustments...................
(77,096)— (77,096)
			 Other comprehensive
			 income (loss)........................... ($161,818) $31,324 ($130,494)

19. Research and Development Expenses
Research and development expenses included in selling, generaland administrative expenses for the years ended March 31, 2011,2010 and 2009 were ¥6,755 million ($81,386 thousand), ¥5,952
million and ¥5,943 million, respectively.
20. Lessee
The Company leases certain office space, employee residen­tial
facilities, computer and transportation equipment. Some leased
buildings, computer and transportation equipment are held undercapital leases. Other leases are classified as o
­ perating leases.
On April 23, 1996, the Company entered into a long-term leaseagreement for a building and land in Mitaka, Tokyo. The lease term
is 30 years beginning May 1, 1996. On July 15, 2010, the Company
also entered into a long-term lease agreement for the building andland adjoining. The lease term is also 30 years beginning July 15,
2010. For ­financial reporting purposes, the portion of the lease
relating to the building has been classified as a capital lease; accordingly, an asset of approximately ¥7,206 million ($86,819 thousand)has been recorded in the building and improvements 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, 2011 were ¥7,051 ­million ($84,952 thousand).
A summary of leased assets under capital leases at March 31,
2011 and 2010 is as follows:		 In thousands of		Buildings and improvements..............
Machinery, equipment
and automobiles..............................
Other intangible assets.......................
Accumulated depreciation.................
		 . ................................................

In millions of yen

U.S. dollars

March 31

March 31

2011

2010

2011

¥ 8,209 ¥ 5,243$ 98,904

14,072 13,359
306
409(10,996) (10,085)¥11,591 ¥ 8,926

169,542
3,687(132,482)$139,651

Depreciation expenses for assets under capital leases for the years
ended March 31, 2011, 2010 and 2009 were ¥3,368 million($40,578 thousand), ¥3,402 million and ¥3,328 million,­respectively.
The following is a schedule by year of future minimum lease­payments under capital leases and the present value of the net­minimum lease payments at March 31, 2011:
		 In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2012........................................................
2013........................................................
2014........................................................
2015........................................................
2016........................................................
Thereafter.................................................
Total minimum lease payments.................
Less: Amount representing interest...........
Present value of net minimum
lease payments (Note 13)........................
Less: Current portion................................
Long-term capital leaseobligations..........................................

¥ 3,230
2,230
1,602
1,217
739
9,377
18,395(5,829)$ 38,916
26,867
19,301
14,663
8,904
112,976
221,627(70,229)

12,566(2,792)

151,398(33,639)¥ 9,774$117,759

Secom Co., Ltd.
Annual Report 2011

57

CONSOLIDATED FINANCIAL STATEMENTS

Rental expenses under operating leases for the years ended
March 31, 2011, 2010 and 2009 were ¥16,504 million ($198,843
thousand), ¥14,290 million and ¥15,494 million, respectively. A­significant portion of such rentals relates to cancelable short-termleases for office space and employee residential facilities, many ofwhich are renewed upon ­expiration.
On December 8, 2000, the Company entered into a lease­agreement for a building and land in Shibuya, Tokyo. The leaseterm is 20 years beginning December 8, 2000. For financial­reporting purposes, the lease has been classified as an operatinglease. Based on the agreement, annual lease payments for the site
are approximately ¥1,299 million ($15,651 thousand) over a
20-year period.
The future minimum lease payments required under operat­ing
leases that have initial or remaining non-­cancelable lease terms inexcess of one year at March 31, 2011 are as follows:

The following is a schedule by year of future minimum lease­ ayments to be received under sales-type leases and direct-­pfinancing leases at March 31, 2011:

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

		 In thousands of2012........................................................
2013........................................................
2014........................................................
2015........................................................
2016........................................................
Thereafter.................................................
Total future minimum lease
payments............................................

¥ 2,362
2,266
2,227
2,211
2,208
15,648$ 28,458
27,301
26,831
26,63926,602
188,530¥26,922$324,361

21. Lessor
The Company’s leasing operations consist principally of leasingof security equipment and real estate for office and medical
institutions. Most of the security equipment and certain realestate for medical institutions on lease are classified as sales-typeleases or direct-financing leases. Other leases are ­classified as­operating leases.
A summary of lease receivables under sales-type and directfinancing leases at March 31, 2011 and 2010 is as follows:		 In thousands of		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.....

In millions of yen

U.S. dollars

March 31

March 31

2010

2011

¥34,327 ¥57,334(2,980) (4,746)$413,578(35,904)

1,261 7,190(7,013) (16,049)
25,595 43,729(7,748) (8,778)¥17,847 ¥34,951

15,193(84,494)308,373(93,349)$215,024

2011

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

2012........................................................
2013........................................................
2014........................................................
2015........................................................
2016........................................................
Thereafter.................................................
Total future minimum lease
payments to be received.....................

¥ 8,850
6,982
5,036
3,285
1,560
8,614

$106,627
84,12060,67539,57818,795
103,783¥34,327$413,578

A summary of investment in property under operating leases andproperty held for lease at March 31, 2011 and 2010 is as follows:		Land . ................................................
Buildings and improvements..............
Other intangible assets.......................
Accumulated depreciation.................
		 . ................................................

In millions of yen

U.S. dollars

March 31

March 31

2011

2010

2011

¥29,820 ¥34,822
26,255 31,029
662
662(8,519) (9,689)¥48,218 ¥56,824$359,277
316,325
7,976(102,638)$580,940

The future minimum rentals under non-cancelable operatingleases at March 31, 2011 are as follows:		 In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2012........................................................
2013........................................................
2014........................................................
2015........................................................
2016........................................................
Thereafter.................................................
Total future minimum rentals................

¥ 2,233
563
592
425
297
6,043
¥10,153$ 26,904
6,783
7,133
5,120
3,578
72,807$122,325

22. Fair Value of Financial Instruments
The following methods and assumptions were used to ­estimate
the fair value of financial instruments in cases for which it is­practicable.
(1) Cash and Cash Equivalents; Time Deposits; Cash Deposits;
Notes and Accounts Receivable, Trade; Due from Subscribers;
Short-Term Receivables; Bank Loans; Notes and Accounts­Payable, Trade; Other Payables; Deposits Received; andAccrued ­Payrolls
The carrying amounts approximate fair value because of theshort-term maturities of such instruments.
(2) Short-Term Investments; Investment Securities
The fair values of short-term investments and investment­securities are principally based on quoted market price.
(3) Long-Term Receivables
The fair values of long-term receivables are based on the present
value of future cash flows through estimated maturity, discounted
using estimated market discount rates. The carrying amount oflong-term receivables approximates fair value.

58

Secom Co., Ltd.
Annual Report 2011

(4) Long-Term Debt Including Current Portion
The fair value of long-term debt including the current p­ ortion
was estimated based on the discounted amounts of future cash
flows of each instrument at the Company’s current incremental­borrowing rates for similar liabilities.
(5) Investment Deposits by Policyholders
The fair values of investment deposits by policyholders are­estimated by discounting future cash flows using the interest rates
currently being offered for similar contracts.
(6) Derivatives
The fair values of interest rate swaps are estimated using
current market pricing models by obtaining quotes from ­financial
institutions.
The carrying amounts and estimated fair values of finan­cial instruments, excluding debt and equity securities, which are ­disclosed in
Notes 2 (7) and 7 at March 31, 2011 and 2010 are as follows:		

In millions of yen

		March 31

2011
Carrying
amountNon-derivatives:
Liabilities—
		 Long-term debt
		 including current		 portion............................ ¥64,938
		 Investment deposits
		 by policyholders.............. 41,643
Derivatives:
Liabilities—
		 Forward exchange contract		 (Other current liabilities)...
286
		 Interest rate swaps
		 (Other liabilities)..............
160

Estimated
fair value

2010
Carrying
amountEstimated
fair value¥65,078 ¥52,373¥52,582

41,671

62,22663,803

286

—

—

160

203

203

In thousands of U.S. dollars
March 31, 2011
Carrying
amountNon-derivatives:
Liabilities—
		 Long-term debt including current		 portion....................................................
		 Investment deposits
		 by policyholders......................................
Derivatives:
Liabilities—
		 Forward exchange contract		 (Other current liabilities)...........................
		 Interest rate swaps (Other liabilities)..........

Estimated
fair value$782,385 $784,072
501,723 502,060

3,446
1,928

3,446
1,928

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

23. Fair Value Measurements
ASC 820, “Fair Value Measurements and Disclosures,” defines
fair value as the price that would be received to sell an asset or paid
to transfer a liability (an exit price) in the principal or most advantageous market for the asset or ­liability in an orderly transaction
between market participants at the measurement date. Thisaccounting standard establishes a three-level fair value hierarchy
that prioritizes the inputs used to measure fair value as follows:
Level 1— Inputs are quoted prices in active markets for identicalassets or liabilities.
Level 2— Inputs are quoted prices for similar assets or liabilities
in active markets, quoted prices for identical or similar
assets or liabilities in markets that are not active, inputs
other than quoted prices that are observable, andinputs that are derived principally from or corroborated
by observable market data by correlation or othermeans.
Level 3— Inputs are derived from valuation techniques in which
one or more significant inputs or value drivers areunobservable, which reflect the reporting entity’s own
assumptions about the assumptions that market­participants would use in establishing a price.
The following table represents the Company’s assets andliabilities that are measured at fair value on a recurring basis at
March 31, 2011 and 2010.
		

In millions of yen
March 31, 2011

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

Level 1

Level 235

¥ 2,609¥

88,643¥88,678

21,419¥24,028

27,431¥27,431

137,493¥140,137

¥

—

¥

286

¥

—

¥

286

¥

—
—

¥

160
446

¥

—
—

¥

160
446

¥

Level 3

—

		

Total

¥

2,644

In millions of yen
March 31, 2010

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

Level 1

Level 255

¥ 2,608¥

76,093¥76,148

39,398¥42,006

29,155¥29,155

144,646¥147,309

¥
¥

¥
¥

¥
¥

¥
¥

¥

—
—

203
203

Level 3

—

—
—

Total

¥

2,663

203
203

Secom Co., Ltd.
Annual Report 2011

59

CONSOLIDATED FINANCIAL STATEMENTS

In thousands of U.S. dollars
March 31, 2011
Level 1

Level 2

Level 3

Total

Assets:Cash equivalents...... $421 $ 31,434 $— $ 31,855
Short-term
investments andinvestment
securities................ 1,067,988 258,060 330,494
1,656,542
Total assets.................. $1,068,409 $289,494 $330,494 $1,688,397
Liabilities:
Derivatives(Other current
liabilities)................ $Derivatives(Other liabilities).....
Total liabilities.............. $—$3,446 $

— $

3,446

—
—

1,928
$5,374 $

—
— $

1,928
5,374

Cash Equivalents
All highly liquid investments with initial maturities of three months
or less are considered to be cash equivalents, and principally valued
using quoted prices for identical assets in markets that are notactive.
Short-Term Investments and Investment Securities
Equity securities and debt securities classified as Level 1 assets arevalued using unadjusted quoted market price in active markets with
sufficient volume and frequency of transactions.
Level 2 assets are comprised principally of debt securities, which
are valued using quoted prices for similar assets in active markets,or quoted price for identical or similar assets in markets that are
not active.
Non-marketable securities classified as Level 3 assets are valued
based on unobservable inputs as the market for the assets was not
active at the measurement date.
Derivative Financial Investments
Derivative financial instruments are comprised of forward exchange
contracts and interest rate swaps. These derivative instruments arevalued using observable market data and classified as Level 2
liabilities.
The following table represents the changes in Level 3 assets­ easured on a recurring basis for the years ended March 31, 2011mand 2010.
		 In thousands of		60

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2011

Balance at beginning of year............... ¥29,155 ¥26,983
Total gains or losses(realized or unrealized):		 Included in earnings....................
4,460 (1,808)
		 Included in other		 comprehensive income..............
975
504
Purchase, issuances andsettlements, net............................
(3,973) 3,229
Foreign currency translation
adjustments..................................
(3,186)247
Balance at end of year........................ ¥27,431 ¥29,155$351,265

Secom Co., Ltd.
Annual Report 20112011

53,735
11,747(47,867)(38,386)$330,494

Total gains or losses (realized or unrealized) related to short-term
investments and investment securities are included in net sales andoperating revenue or gain/loss on private equity investments, in the
consolidated statements of income.
Assets and Liabilities Measured at Fair Value on a
Nonrecurring Basis
Non-marketable equity securities with a carrying amount of¥10,687 million ($128,759 thousand) were written down to theirfair value of ¥10,407 million ($125,386 thousand), resulting in another-than-temporary impairment charge of ¥280 million ($3,373
thousand), which was included in earnings for the year ended
March 31, 2011. For the year ended March 31, 2010, non-marketable equity ­securities with a carrying amount of ¥10,973 million
were written down to their fair value of ¥10,623 million, resulting
in an other-than-­temporary impairment charge of ¥350 million,
which was included in earnings. All impaired non-marketable equity
securities were classified as Level 3 assets as the Company uses
unobservable inputs to value these investments.
Long-lived assets (Note 11) and goodwill (Note 12) are also­measured at fair value on a nonrecurring basis. All impaired longlived assets and goodwill were classified as Level 3 assets as theCompany uses u­ nobservable inputs to value these assets.
24. Derivative Financial Instruments(1) Risk Management Policy
The Company utilizes derivative financial instruments in thenormal course of business to reduce exposure to fluctuations incurrency rates and in interest rates. The Company assesses currency
rate risk and interest rate risk by con­tinually monitoring changes inthe exposure and 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 to derivative financial instru­ments, but it is not expected that any counterparties will fail to meet their obligations, because most of thecounterparties are internationally recognized financial institutions
and contracts are diversified amongst a ­number of major financial
institutions.
(2) Risk Management
The Company has exposure to the market risk of changes incurrency rates which relates to time deposits. The Company enters
into forward exchange contracts to manage fluctuation resulting
from changes in currency rates. The Company also has exposure to
the market risk of changes in interest rates which 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 tochange floating rates on debt obligations to fixed rates by entering
into receive-floating, pay-fixed interest rate swaps under which theCompany receives floating interest rate ­proceeds and makes fixedinterest rate payments, thereby ­effectively creating fixed-rate debt.
(3) Cash Flow Hedge
The Company ­designates interest rate swap agreements as cash
flow hedges for variability of cash flows originated from floating
rate borrowings. The interest rate swap ­agreements mature atvarious dates through 2012. The ­effective portion of changes in fairvalues of derivative ­instruments designated as cash flow hedgesof 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 ineffectivenessand net gains or losses excluded from the assessment of hedge
effectiveness is not material for the years ended March 31, 2011,2010 and 2009 as the critical terms of most of the interest rate
swap agreements match the terms of the hedged debt obligations.
Approximately ¥6 million ($72 thousand) of net derivative losses
included in other comprehensive income (loss), net of tax at March
31, 2011, will be reclassified into current income within 12 months
from that date. At March 31, 2011 and 2010, the notional principal
amounts of interest rate swap agreements designated as cash
flow hedges were ¥1,000 million ($12,048 thousand) and ¥2,000
million, respectively.
(4) Derivative Instruments Not Designated as Hedges
The Company enters into forward exchange contracts to reduce
exposure to fluctuations in currency rates relating to time deposits,
and interest rate swap agreements to reduce exposure to fluctuations in interest rates relating primarily to debt obligations. Changes
in fair value of the above noted derivative financial instruments,
which are not d­ esignated as hedges, are reported in current income.
Fair values of derivative instruments reflected in the consolidatedbalance sheet as of March 31, 2011 and 2010 are as follows:
Derivatives designated as hedging instruments
Liabilities:
		 In thousands ofLocationInterest rate swaps

Other liabilities

In millions of yen

U.S. dollars

March 31

March 31

2011

2010

2011

¥8

¥25

$97

Derivatives not designated as hedging instruments
Liabilities:
		 In thousands of

Forward exchange
contract
Interest rate swaps

In millions of yen

U.S. dollars

March 31

March 31

Location

2011

2010

2011

Other current
liabilities
Other liabilities

¥286
¥152

¥ —
¥178

$3,446$1,831

Effects of derivative instruments on the consolidated statements
of income for the years ended March 31, 2011 and 2010 are as
follows:
Derivatives designated as cash flow hedging instruments
Gains (losses) recognized in other comprehensive income(effective portion)
		 In thousands of		Interest rate swaps		

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2011

2010

2011

¥4

(¥6)

$48

Gains (losses) reclassified from accumulated other comprehensive
income into income (effective portion)
		 In thousands ofInterest rate swaps

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

Location

2011

2010

2011

Other expenses(¥12)(¥358)($145)

Derivatives not designated as hedging instruments
		 In thousands ofLocation

Forward exchange
Other expenses
contract		Interest rate swaps
Other expenses

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2011

2010

2011

(¥286)
(¥31)

¥—
(¥81)

($3,446)($373)

25. Commitments and Contingent Liabilities
The Company has commitments outstanding at March 31, 2011
for the ­purchase of property, plant and equipment of approximately¥9,900 million ($119,277 thousand).
The Company provides guarantees to third parties mainly withrespect to bank loans extended to its affiliated companies and otherentities. Such guarantees are provided to enhance the credit standing of the affiliated companies and other entities. For each guarantee provided, the Company would have to per­form under theguarantee, if the affiliated companies and other entities default ona payment within the guaranteed period of one to five years. The
maximum amount of undiscounted pay­ments the Company would
have to make in the event of default amounts to ¥1,911 million($23,027 thousand) at March 31, 2011. The carrying amounts of
the liabilities recognized for the Company’s obligations under these­guarantees at March 31, 2011 and 2010 were deemed insignificant.
Loss related to spectrum reallocation is for disposal and replacement of equipment, since the allotted spectrum currently used in
COCO-SECOM will no longer be available after July 2012 as a resultof spectrum reallocation by the government.
Pasco Corporation filed a lawsuit against Sumitomo Mitsui
Banking Corporation asking for a confirmatory judgment to theeffect that it does not owe an obligation in the amount of ¥2,010
million to Sumitomo Mitsui Banking Corporation with the Tokyo
District Court on October 31, 2005. Sumitomo Mitsui Banking
Corporation alleged that it made a loan to a third party andacquired from the third party its claim against Pasco Corporation
for an alleged sale of equipment to Pasco Corporation, as collateral
for the loan, and demanded Pasco Corporation to pay such claim
to Sumitomo Mitsui Banking Corporation. On December 5, 2005,
Sumitomo Mitsui Banking Corporation brought a cross action
against Pasco Corporation in ­relation to a demand for paymentof a transferred receivable. Subsequently, both actions were consolidated according to a court procedure. The oral argument was
concluded on October 31, 2008, and on March 27, 2009 Tokyo
District Court rendered the following judgement:
1.		Pasco Corporation must pay money to Sumitomo Mitsui Banking
Corporation in an amount of ¥2,010 million as well as interest at
the rate of 6 percent per annum on ¥600 million, from
November 1, 2005, and on ¥1,410 million, from December 1,
2005, up to the full payment of the respective amounts;

Secom Co., Ltd.
Annual Report 2011

61

CONSOLIDATED FINANCIAL STATEMENTS

2.		Pasco Corporation incurs the cost of lawsuits including the costcaused by supplementary participation; and3.		The judgement can be provisionally executed.
Pasco Corporation appealed the case to the Tokyo High Court on
April 6, 2009.
Following the decision, Pasco Corporation provided a reserve for
litigation loss of ¥2,415 million for the year ended March 31, 2009.
On May 10, 2010, Pasco Corporation and Sumitomo Mitsui
Banking Corporation reached a settlement under which Pasco
Corporation will pay to Sumitomo Mitsui Banking Corporation an
amount of ¥1,750 million, after several oral proceedings and­settlement negotiations at the Tokyo High Court.
Pursuant to the settlement, Pasco Corporation accounted for¥781 million as a reversal of reserve for litigation loss in the year
ended March 31, 2010, and provided for ¥1,770 million, a sum of
the above settlement amount and related litigation expenses, in the
consolidated balance sheet as of March 31, 2010. These amounts
were paid in the year ended March 31, 2011.
Other than those above, it is not anticipated that damages, if any,
resulting from other legal actions will have a material impact on the
Company’s consolidated financial statements.
26. Discontinued Operations
The Company accounted for the sale of certain businesses inaccordance with ASC 205-20, “Discontinued Operations.” The
Company sold all of the shares of Japan Image Communications
Co., Ltd., and Asia Pacific Business Link Ltd., included in the information and communication related and other services segment, inAugust and December 2009, respectively. The Company reported
the operating results related to these ­operations as discontinued
operations. Prior period figures have been restated.
Discontinued operations for the years ended March 31, 2010 and2009 were as follows:
In millions of yen
Years ended March 31
2010

2009

¥2,135¥4,755

260
777
317

167
—
(316)

¥1,354(¥ 149)Attributable to noncontrolling interests.............. (¥ 23)
Attributable to SECOM CO., LTD. . .................... ¥1,331¥ 10(¥ 139)Net sales and operating revenue........................
Income from discontinued operations
before income taxes.........................................
Gain on sales of discontinued operations...........
Income taxes......................................................
Income (loss) from discontinued operations,net of tax.........................................................

Income (loss) from discontinued operations, net of tax, by business segment for the years ended March 31, 2010 and 2009 wereas follows:
In millions of yen
Years ended March 31

Security services.................................................
Medical services.................................................
Real estate development and sales.....................
Information and communication related
and other services............................................
Income (loss) from discontinued operations,net of tax.........................................................

62

Secom Co., Ltd.
Annual Report 2011

2010

2009

¥ 110
1
—

¥231
3
0

1,243

(383)

¥1,354(¥149)

27. Supplemental Cash Flow Information
Supplemental cash flow information is as follows:		 In thousands of2011

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2011

2009

Cash paid during theyear for:
Interest................................ ¥ 1,689 ¥ 1,830 ¥ 1,978
Income taxes....................... 39,719 36,719 47,419
Non-cash investing andfinancing activities:
Additions to obligations
under capital leases........... 4,240 3,963
803
Acquisitions (Note 4)—
		 Fair value of		 assets acquired...............
— 15,160—
		 Fair value of		 liabilities assumed...........
— 10,427—
		 Total considerations.......... ¥— ¥ 4,733 ¥—$ 20,349
478,542

51,084—$——

28. Segment Information
The Company has applied ASC 280, “Segment Reporting,”
which requires disclosure of financial and descriptive ­information
about the Company’s reportable operating segments. The ­operating
segments reported below are the segments of the Company forwhich separate financial information is available and for which­operating profit/loss amounts are evaluated regu­larly by­management in deciding how to allocate resources and assess
performance.
The Company has seven reportable business segments: security
services, fire protection services, medical services, insurance services,
geographic information services, real estate development and sales,
and information and communication related and other services.
The security services segment provides various types of secu­rity
services by utilizing the Company’s unique security systems andmanufacturing and selling security equipment. The fire protection
services segment provides various types of fire protection equipment, such as automatic fire alarm and fire extinguishing and otherfire protection systems for office buildings, plants, tunnels, ships,
residences and cultural monuments. The medical ser­vices segmentprovides intravenous solutions to patients at home, home-based­nursing care services, medical data trans­mission services by utilizing
the Company’s network and leas­ing of real estate for medical institutions. In addition, the VIEs of which the Company is primary beneficiary manage hospitals and health ­care-related institutions. The
insurance services ­segment represents non-life insurance-related
underwriting business in the Japanese market. The geographic
information services segment represents surveying and measuringservices and GIS services. The real estate development and sales­segment represents development and sales of condominiums thatreinforce security. The information and communication related andother services ­segment represents the Company’s network business,leasing of real estate and ­management of hotel business.
Corporate expenses consist principally of general and administrative expenses of the planning, personnel and admin­istrative departments of the parent company and administrative departments ofthe foreign holding company.

Intersegment sales are priced on a basis intended to ­approximate
amounts charged to unaffiliated customers.
Identifiable assets are those assets used exclusively in the operations of each segment or which are allocated when used jointly.
Corporate assets, which are held by the parent company and theforeign holding company for general and administra­tive facilities,­consist principally of cash and cash equivalents, short­-term investments, investment securities, land, buildings and improvements,
machinery and equipment.
Information by business and geographic segments for the years
ended March 31, 2011, 2010 and 2009 is as follows:(1) Business Segment Information
		 In thousands of2011

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2009

2011

2010

Net sales andoperating revenue:
Security services—		 Customers.................... ¥424,706 ¥424,385 ¥436,918
		 Intersegment.................
2,095
1,975
1,516
			 .................................. 426,801
426,360
438,434
Fire protection services—		 Customers.................... 75,176
80,132
84,175
		 Intersegment.................
4,887
4,297
5,659
			 .................................. 80,063
84,42989,834
Medical services—		 Customers.................... 125,020
56,30952,220		 Intersegment.................
151
123
123
			 .................................. 125,171
56,432
52,343
Insurance services—		 Customers.................... 33,133
29,142
21,530		 Intersegment.................
2,635
2,982
2,919
			 .................................. 35,768
32,12424,449Geographic information
services—
		 Customers.................... 43,539
41,91840,207
		 Intersegment.................
167
140
117
			 .................................. 43,706
42,05840,324
Real estate development
and sales—
		 Customers.................... 24,817
13,26822,072
		 Intersegment.................
95
188
2,361
			 .................................. 24,912
13,45624,433
Information andcommunication related
and other services—		 Customers.................... 25,477
25,49026,894
		 Intersegment.................
6,541
8,044
8,671
			 .................................. 32,018
33,53435,565
Total................................ 768,439
688,393
705,382
Eliminations..................... (16,571)(17,749)(21,366)
		 Total net sales and		 operating revenue....... ¥751,868 ¥670,644 ¥684,016$5,116,940
25,241
5,142,181
905,735
58,880964,615
1,506,265
1,819
1,508,084
399,193
31,747
430,940
524,566
2,012
526,578
299,000
1,145
300,145306,952
78,807385,759
9,258,302(199,651)

		 In thousands of2011

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2009

2011

2010

Operating income (loss):
Security services............. ¥ 99,855 ¥101,623 ¥102,475
Fire protection
services........................
3,158
4,193
5,353
Medical services.............
1,771
2,254
11
Insurance services..........
(180)(1,503)(8,222)
Geographic information
services........................
3,393
2,177
2,045
Real estate development
and sales......................
525(3,702)(17,577)
Information andcommunication related
and other services........
3,239
3,850
4,478
Total.............................. 111,761
108,892
88,563
Corporate expenses
and eliminations..........
(11,329)(11,714)(12,304)
Operating income.......... ¥100,432 ¥ 97,178 ¥ 76,259
Other income.................
11,8705,352
5,759
Other expenses..............
(4,458)(7,854)(18,855)
		 Income from continuing		 operations before		 income taxes
		 and equity in net
		 income of affiliated		 companies................ ¥107,844 ¥ 94,676 ¥ 63,163$1,203,072
38,04821,337(2,169)40,8806,326
39,024
1,346,518(136,494)$1,210,024
143,012(53,711)$1,299,325

		 In thousands of2011

In millions of yen

U.S. dollars

March 31

March 31

2009

2011

2010

Assets:Security services............. ¥ 400,428 ¥ 398,333 ¥ 390,414
Fire protection
services........................
80,346
79,761
81,404
Medical services............. 161,877
131,061
122,960
Insurance services.......... 177,571
190,329
197,844
Geographic
information services.....
58,69758,09258,141
Real estatedevelopment
and sales......................
60,431
77,94876,095
Information andcommunication related
and other services........
88,881
89,911
96,476
Total.............................. 1,028,231 1,025,435 1,023,334
Corporate items............. 103,943
70,09979,735Investments inaffiliated companies.....
38,97842,61340,072
		 Total assets.................. ¥1,171,152 ¥1,138,147 ¥1,143,141$ 4,824,434
968,024
1,950,325
2,139,410
707,193728,084
1,070,856
12,388,326
1,252,325
469,614$14,110,265$9,058,651

Secom Co., Ltd.
Annual Report 2011

63

CONSOLIDATED FINANCIAL STATEMENTS

		 In thousands of2011

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

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2009

2011

2010

¥44,604¥45,694¥45,428$537,398

1,490
5,137
1,200

1,428
2,253
1,017

1,250
2,026
1,220

17,952
61,891
14,458

1,666

1,857

1,675

20,072

48

46

58

578

2,587
56,732219

2,577
54,872258

2,680
54,337288

31,169683,518
2,639¥56,951¥55,130¥54,625$686,157¥27,643¥27,154¥29,722$333,048

3,602
5,563
14

1,804
4,069
275

1,524
2,153
309

43,39867,024
169

2,166

883

299

26,096

19

2

7

229

3,157
42,16434

4,477
38,66455

10,614
44,628227

38,036
508,000
410¥42,198¥38,719¥44,855$508,410

		 In thousands ofIn millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2009

2011

¥297,802 ¥299,089 ¥303,505$3,587,976

2011

64

Secom Co., Ltd.
Annual Report 2011

		 In thousands ofIn millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2009

2011

Net sales andoperating revenue:
Japan......................... ¥726,381 ¥649,523 ¥661,219
Other.........................
25,487
21,121
22,797
		 Total....................... ¥751,868 ¥670,644 ¥684,016$8,751,579
307,072$9,058,651

2011

2010

		 In thousands of

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 for morethan 10 percent of total revenues.
The following table is a breakdown of security services revenue toexternal customers by service category. The security services business is managed as a single operating segment by the ­Company’s
management.

Electronic security
services........................
Other security services:
Static guard
services....................
Armored car
services....................
Merchandise andother ..........................
Total security
services....................

(2) Geographic Segment Information
Net sales and operating revenue attributed to countries based on
location of customers and long-lived assets for the years ended
March 31, 2011, 2010 and 2009 were as follows:

2010

46,372

46,21347,999558,699

20,12919,823

20,310242,518

60,40359,26065,104

727,747¥424,706 ¥424,385 ¥436,918$5,116,940

In millions of yen

U.S. dollars

March 31

March 31

2009

2011

Long-lived assets:
Japan........................ ¥395,884 ¥352,028 ¥351,143
Other........................
5,161
3,834
4,925
		 Total...................... ¥401,045 ¥355,862 ¥356,068$4,769,687
62,181$4,831,868

2011

2010

There are no individually material countries other than Japan withrespect to net sales and operating revenue and long-lived assets.
29. Subsequent Events
The parent company and Secom Techno Service Co., Ltd.
(“Secom Techno”), a subsidiary of the parent company, resolved attheir respective meetings of the Board of Directors held on May 11,2011, to conduct an absorption-type merger (the “Merger”) on
July 1, 2011, with the parent company being the surviving company
and Secom Techno being the absorbed company, and they haveentered into a merger agreement in relation to the Merger. The parent company and Secom Techno have reached the conclusion thatthe realization of maximum synergy and the acceleration of efforts
towards the establishment of the Social System Industry, by meansof conducting management integration through the tender offer
for the parent company to acquire the common stock of Secom
Techno from February 9, 2011 to March 24, 2011 and the Merger,
would be invaluable, not only to the expansion of the value ofSecom Techno, but also to the expansion of the value of the Group
as a whole. For details of allotment with respect to the Merger,
0.85 shares of common stock of the parent company will be allotted and delivered in exchange for each share of common stock ofSecom Techno; provided, however, that no shares will be allotted in
the Merger for the shares of common stock of Secom Techno heldby the parent company and treasury shares held by Secom Techno.
Moreover, all of the shares to be delivered by the parent company
are scheduled to be sourced from the treasury shares held by theparent company, and the parent company does not plan to issue
new shares upon the allotment in the Merger.
The Company has evaluated subsequent events through June 24,
2011, the date at which the financial statements were available tobe issued, and determined there are no other items to disclose.

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 (the “Company”) as of March 31,
2011 and 2010, and the related consolidated statements of income, changes in equity and cash flows for each of the years in the three-year
period ended March 31, 2011, all expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company’s­management. 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. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material­misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that areappropriate 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, e­ vidence supporting theamounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by­management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis forour 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, 2011 and 2010, and the results of their operations and their cash flows for each of theyears in the three-year period ended March 31, 2011, in conformity with U.S. generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, the Company adopted Accounting Standards Update No. 2009-17,
Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, in the year ended March 31, 2011.
The accompanying consolidated financial statements as of and for the year ended March 31, 2011 have been translated into UnitedStates dollars solely for the convenience of the reader. We have audited the translation and, in our opinion, the consolidated financial­statements expressed in Japanese yen have been translated into United States dollars on the basis set forth in Note 3 to the consolidated
financial statements.

Tokyo, Japan
June 24, 2011

Secom Co., Ltd.
Annual Report 201165

OTHER FINANCIAL DATACONTENTSSUMMARY OF SELECTED FINANCIAL DATA................................................................. 67
COMMON STOCK DATA............................................................................................. 69

66

Secom Co., Ltd.
Annual Report 2011

SUMMARY OF SELECTED FINANCIAL DATASECOM CO., LTD. and Subsidiaries
Years ended March 31
In millions of yen
2011

2010

2009

2008

2007

2006

Composition of consolidated net sales andoperating revenue by segment
Net sales and operating revenue......................................................... ¥751,868 ¥670,644 ¥684,016 ¥701,836 ¥631,945 ¥575,856
424,385436,918
435,306
415,410400,044
Security services:............................................................................. 424,706
63.3%
63.9%
56.5%
62.0%
65.7%
69.5%
				 As a percentage of net sales and operating revenue............
299,089
303,505
297,802
296,167
285,858
277,892
		 Electronic security services—
44.6
44.4
39.6
42.2
45.2
48.3
				 As a percentage of net sales and operating revenue............
		 Other security services—
46,21347,99946,64842,144
41,480			 Static guard services................................................................ 46,372
6.9
7.0
6.2
6.6
6.7
7.2
				 As a percentage of net sales and operating revenue............
19,823
20,31019,547
20,30819,369
			 Armored car services................................................................ 20,129
3.0
3.0
2.7
2.8
3.2
3.4
				 As a percentage of net sales and operating revenue............
66,03668,30966,19562,452
60,849					 Subtotal........................................................................... 66,501
59,26065,10472,944
67,10061,303
		 Merchandise and other............................................................... 60,403
8.8
9.5
8.0
10.4
10.6
10.6
				 As a percentage of net sales and operating revenue............
80,132
84,17582,57227,448—Fire protection services.................................................................... 75,176
11.9
12.3
10.0
11.8
4.3
—
				 As a percentage of net sales and operating revenue............
56,30952,22050,74145,852
39,215
Medical services.............................................................................. 125,020
8.4
7.6
16.6
7.2
7.3
6.8
				 As a percentage of net sales and operating revenue............
29,142
21,53033,22931,97829,537
Insurance services........................................................................... 33,133
4.3
3.2
4.4
4.7
5.1
5.1
				 As a percentage of net sales and operating revenue............
41,91840,20739,37636,43835,271
Geographic information services..................................................... 43,539
6.3
5.9
5.8
5.6
5.8
6.1
				 As a percentage of net sales and operating revenue............
13,26822,07229,92845,431
41,967
Real estate development and sales.................................................. 24,817
2.0
3.2
3.3
4.3
7.2
7.3
				 As a percentage of net sales and operating revenue............
Information and communication related
25,49026,89430,68429,38829,822and other services......................................................................... 25,477
3.8
3.9
3.4
4.4
4.6
5.2
				 As a percentage of net sales and operating revenue............
Net income attributable to SECOM CO., LTD., cash dividends
and SECOM CO., LTD. shareholders’ equity
Net income attributable to SECOM CO., LTD...................................... ¥ 62,665
Cash dividends (paid)(2). ...................................................................... 18,533
SECOM CO., LTD. shareholders’ equity............................................... 593,495
Consolidated financial ratios
Percentage of working capital accounted for by:
Debt
		 Bank loans..................................................................................
		 Current portion of long-term debt...............................................
		 Straight bonds.............................................................................
		 Other long-term debt..................................................................
			 Total debt................................................................................
SECOM CO., LTD. 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). ..............................................

¥ 46,989
18,533569,799¥ 30,560
19,122528,721¥ 61,756
17,998574,554¥ 55,889
13,499551,732¥ 50,331
11,251
508,696

6.8
1.7
2.0
5.5
16.0
84.0
100.0
5.4
10.6

6.5
1.6
2.6
3.6
14.3
85.7
100.0
4.1
8.2

11.9
2.4
1.9
3.6
19.8
80.2
100.0
2.7
5.8

17.5
1.2
1.8
4.0
24.5
75.5
100.0
4.9
10.7

17.4
1.4
1.9
3.6
24.3
75.7
100.0
4.5
10.1

15.2
6.4
1.6
3.6
26.8
73.2
100.0
4.1
9.9

7.6
2.2

8.2
2.1

7.9
2.2

8.2
2.3

9.1
2.5

9.0
2.7

62.5
2.49
65.1

64.9
2.55
53.5

64.4
2.66
32.4

63.8
2.81
53.7

62.3
2.54
53.5

60.5
2.39
48.8

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

Secom Co., Ltd.
Annual Report 2011

67

SUMMARY OF SELECTED FINANCIAL DATA

2011

2010

2009

2008

2007

2006

Number of shares outstanding
233,288,717 233,288,717 233,288,717 233,288,717 233,288,717 233,288,717
Issued8,323,599
8,318,900
8,301,997
Owned by the Company........................................... 15,258,553 15,254,334 15,251,520
Balance..................................................................... 218,030,164 218,034,383 218,037,197 224,965,118 224,969,817 224,986,720
Per share information
Net income attributable to SECOM CO., LTD.
¥ 215.51¥ 137.42¥ 274.51¥ 248.42¥ 223.69¥ 287.41
per share (in yen) (1) . ...............................................
85.00
85.00
80.00
60.00
50.00
85.00
Cash dividends paid per share (in yen) (2) ...................
2,613.34
2,424.91
2,553.97
2,452.47
2,261.00
2,722.08
SECOM CO., LTD. shareholders’ equity
per share (in yen) (3) . ...............................................
383.36299.72448.19427.34396.31458.62
Cash flow per share (in yen) (1) (e) ................................
1.57
1.50
1.90
2.23
2.66
1.42
Price/Book value ratio................................................
18.98
26.41
17.63
22.02
26.91
13.45
Price/Earnings ratio...................................................
10.67
12.11
10.80
12.80
15.19
8.43
Price/Cash flow ratio.................................................
4,090
3,630
4,840
5,470
6,020
3,865
Stock price at year-end (in yen).................................
Notes: (a) Net income attributable to SECOM CO., LTD. / Total assets(b) Net income attributable to SECOM CO., LTD. / SECOM CO., LTD.
shareholders’ equity(c) Including discontinued operations(d)		(Income before income taxes and equity in net income of affiliatedcompanies + Interest expense)/Interest expense(e) (Net income attributable to SECOM CO., LTD. + Depreciation andamortization - Dividends approved) / Average number of shares outstanding
during each period

68

Secom Co., Ltd.
Annual Report 2011

(1) Per share amounts are based on the average number of shares outstanding
during each period.
(2) Subsequent to March 31, 2011, cash dividends of ¥19,623 million (¥90.00
per share) were approved at the general shareholders’ meeting on June 24,2011 (see Note 18 of the accompanying notes to consolidated financial
statements).
(3) Per share amounts are based on the number of shares outstanding at theend of each period, minus treasury stock.

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

Shareholder Information
Number of shareholders.............................................
Common shares held by:
Japanese government and local public entities.......
Financial institutions...............................................
Securities firms.......................................................
Other domestic corporations..................................
Foreign investors....................................................
Individuals and others.............................................
		 Total...................................................................

2011

2010

2009

2008

2007

2006

30,33831,48830,85928,51230,68319,807

0.08%
30.76
4.75
3.71
41.27
19.43
100.00%

0.08%
31.34
4.28
3.73
40.77
19.80
100.00%

0.00%
35.67
2.55
3.76
38.17
19.85
100.00%

—%
33.84
3.86
3.81
41.71
16.78
100.00%

—%
32.21
3.68
3.86
42.43
17.82
100.00%

—%
33.04
2.16
3.92
43.40
17.48
100.00%

PRICE INFORMATION (TOKYO STOCK EXCHANGE)
2009
2010

2011

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

¥4,100
4,600
4,640
4,540
4,165
4,225
3,920
4,230

¥3,420
3,900
3,940
3,965
3,785
3,635
3,620
3,425

¥10,135.82
10,639.71
10,638.06
11,097.14
11,339.30
9,795.24
10,370.53
10,857.53¥8,351.91
9,050.33
9,081.52
9,932.90
9,382.64
8,824.06
9,154.72
8,605.15

Secom Co., Ltd.
Annual Report 201169

COMMON STOCK DATACOMMON STOCK ISSUES
			
		
		
Date

June
Dec.
May
May
Dec.
May
June
Dec.
Nov.
Dec.
Dec.
June
Dec.
Jan.
Nov.
Nov.
Nov.
Jan.
Nov.
Nov.
Jan.
Nov.
Nov.
Jan.
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
Mar.
Nov.
Mar.
Mar.
Mar.
Mar.
Mar.

15, 1974
21, 1974
21, 1975
21, 1975
1, 1975
31, 1976
1, 1976
1, 197630, 1977
1, 1977
1, 1978
1, 1981
1, 198120, 1983
30, 1983
30, 1984
30, 1985
20, 1986
30, 1986
30, 1987
20, 1988
30, 1988
30, 1989
19, 1990
31, 1990
31, 1991
31, 1992
31, 1993
31, 1994
31, 1995
31, 1996
31, 1997
31, 1998
31, 1999
19, 1999
31, 2000
31, 2001
31, 2002
31, 2003
31, 2005

Additional
shares issued(In thousands)

Sharesoutstanding
after issue(In thousands)

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

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, 2011, the number of shares outstanding was 233,289 thousand and share capital was ¥66,377,829 thousand.
*One share was split into two.

70

Secom Co., Ltd.
Annual Report 2011