Directors, Audit and Supervisory Board Members
and Executive Officers
Directors

Shuji Maeda

Hiroshi Ito

Founder

Chairman and
Representative Director

President andRepresentative Director

SECOM CO., LTD.

Makoto Iida

Yasuo Nakayama

Kazuaki Anzai

Junzo Nakayama

Kenichi Furukawa

5-1, Jingumae 1-chome, Shibuya-ku,

Executive Director

Executive Director

Executive Director

Executive Director

Tokyo 150-0001, Japan

ANNUAL REPORT 2015

SECOM CO., LTD.

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

Yasuyuki Yoshida

Tatsuro Fuse

Takaharu Hirose

Takashi Sawada

Director

Director

Outside Director

Outside Director

Audit andSupervisory
Board Members

Executive Officers

Takayuki Ito

Shuji Maeda

Toshiyuki Mukai

Yasuyuki Yoshida

Tatsuya Izumida

Ichiro Ozeki

Ryohei Komatsu

Chairman and
Representative Director

Managing Executive Officer

Director

Executive Officer

Executive Officer

Masahiro Takeda

Tatsuro Fuse

Shokichi Ishimura

Yasufumi Kuwahara

Managing Executive Officer

Director

Executive Officer

Executive Officer

Teruhisa Yoshimura

Hiroshi Ishikawa

Sumiyuki Fukumitsu

Noriyuki Fukuoka

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Hideo Morishita

Yoichi Sugimoto

Kensuke ShindoManaging Executive Officer

Executive Officer

Executive Officer

Hideki Kato*
Kenichi Sekiya*
Makoto Yasuda*

Hiroshi Ito
President andRepresentative Director

Yasuo Nakayama
Executive Director*OutsideKazuaki Anzai
Executive Director

Junzo Nakayama
Executive Director

Kenichi Furukawa
Executive Director

ANNUAL REPORT 2015
Year ended March 31, 2015

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

Tsuneo Komatsuzaki
Managing Executive Officer

Toshiaki Mizuno
Managing Executive Officer(As of July 31, 2015)
Printed in Japan

89

SECOM Annual Report 2015

セコムアニュアルレポート2015（英語版）表紙

オモテ

初校（FSC貼込み済）Profile

SECOM CO., LTD.,

Since its establishment in 1962,
a pioneer in Japan’s security services industry, hassought to develop and encourage broad acceptance of pioneering services and systems that make life more convenientand comfortable and provide security and peace of mind, in line with its belief in the importance of contributing tosociety through its business activities.
Beginning with Japan’s first on-line security system for commercial use, launched in 1966, SECOM hascontinued to grow its businesses by developing and popularizing advanced services and systems that
respond to evolving social imperatives and benefit society. These include an on-line home security
system, introduced in 1981, and COCO-SECOM, a mobile personal security system for outdoor use,which debuted in 2001.
The overarching mission of SECOM, which comprises the parent company and the companies of the
SECOM Group, is to provide safety and security and make life more convenient and comfortable­whenever and wherever necessary. Accordingly, the Company is pressing ahead with efforts to realize
its vision for the future, the Social System Industry, which describes a framework of distinctive, ­integrated
services and systems. To this end, we have capitalized on our extensive business portfolio—which has
expanded to include security services, fire protection services, medical services, insurance services,­geographic information services, information and communication related services, and real estate andother services—to create a solid foundation for future growth, working not only to enhance individual
businesses but also to integrate services and systems, thereby yielding considerable synergies that will
drive future growth.

Today, we continue to maximize Group synergies to expand the scope of our operations by promoting
the “ALL SECOM” concept, which focuses on rallying Group strengths to create uniquely SECOM
services and systems. Through these efforts, we encourage people to turn to SECOM with the confidence
that doing so will help them resolve security and other concerns.
We have also expanded our focus beyond Japan. Currently active in 21 countries and territories,
where we provide distinctive security services, fire protection services, medical services and geographic
information services customized to reflect local needs and sensibilities, we continue to strengthen andgrow our overseas operations.

Contents
2 SECOM’s Vision
4 Financial Highlights
6 A Message to Shareholders
10	Special Feature:
ALL SECOM—Developing New Services
that Anticipate Future Needs
14 SECOM Today
30 SECOM’s CSR
32 Close-up—Support for Competitive Sports
33 Financial Review

37 Audited Financial Statements
70 Other Financial Data
75	Consolidated Financial Data
(Based on Japanese GAAP) [Reference]79	Nonconsolidated Financial Data
(Based on Japanese GAAP) [Reference]

83 Corporate Information
87 SECOM’s Basic Business Areas
89	Directors, Audit and Supervisory Board
Members and Executive Officers

SECOM Annual Report 2015

1

SECOM’s Visionystem Indu
S
l
str
cia
y
o
S

Security
services
Real estateand other services

Information andcommunication
related services

Geographic
information
services

Fire protection
services

Medicalservices
Insuranceservices

Realizing the Social System Industry
Our Social System Industry vision describes a framework of services and systems that make life
more convenient and comfortable and deliver security and peace of mind. We have worked
steadily to make this vision a reality by building a broad business portfolio that today encompasses seven segments and by combining the various services and systems in these segments into
distinctive packages, in line with our overarching mission, which is to provide safety and security,
as well as comfort and convenience, wherever and whenever necessary. This approach encourages people to turn to SECOM with the confidence that doing so will help them resolve security
and other concerns. Looking ahead, we will continue striving to provide services that respond to
customers’ expectations with the aim of making SECOM an ever-present and trusted part of ourcustomers’ lives.
To hasten the realization of our Social System Industry vision, in 2010 we introduced the ALL
SECOM concept. Since then, employees everywhere have worked together, sharing information,ideas and objectives and rallying comprehensive Group capabilities under the ALL SECOM banner
to drive growth. This concept also underpins ongoing efforts to leverage our expertise to develop
uniquely SECOM services and systems in line with three key themes: security, a super-aged society
and disaster preparedness/business continuity planning (BCP)/environmental preservation.

Applying our corporate philosophy and building on the ALL SECOM
concept to resolve concerns and alleviate everyday problems
The efforts of every SECOM employee in working toward the realization of our Social System
Industry vision are guided by our corporate philosophy, which emphasizes a refusal to be content with the status quo, as well as a commitment to doing what is appropriate. The former
means seeking constantly to provide novel services and systems by challenging accepted norms,
while the latter means judging the legitimacy of our actions by examining whether they are
just, fair and beneficial, not only to SECOM but to society as a whole. This ­philosophy continues
to be a major driving force behind our growth and evolution.
As we strive to grow our businesses and earn ever-broader acceptance of our many services,
the expectations of society and our customers will continue to rise. By applying our corporate
philosophy, as well as by building on the ALL SECOM concept to address social imperatives andhelp resolve concerns and everyday problems, we will continue to respond accurately to evolving needs, thus ensuring our ability to provide services and systems that enhance convenienceand comfort and provide security and peace of mind.

2

SECOM Annual Report 2015

SECOM Annual Report 20153

Financial Highlights

Pursuant to the applicable Japanese law, SECOM is required to publish results in line with accounting principles generally accepted in Japan(Japanese GAAP). Key financial highlights calculated using Japanese GAAP are shown below for reference.

U.S. GAAP

Japanese GAAPSECOM CO., LTD. and Subsidiaries

In millions of yen

In thousands of U.S. dollars

SECOM CO., LTD. and Subsidiaries

In millions of yen

In thousands of U.S. dollars

For the years ended/as of March 31

Years ended March 31

Year ended March 31

For the years ended/as of March 31

Years ended March 31

Year ended March 31

2013

2015

2013

2015

858,406
113,549
70,5801,340,350
679,176$ 7, 876,9 83
1,016,725
668 , 20 0
12 ,715, 525
6, 8 83,076

In yenIn U.S. dollars

765,635
108,370
113,618
63,6581,249,110
764,139$ 7,006,017
1,030,125
1,139,067
628,267
11,755,958
7,561,175

In yenIn U.S. dollars

323.3690.00
3,111.64$ 3.06
1.46
31.54

291.6590.00
3,065.13$ 2.88
1.46
30.56

2015

¥

Net sales and operating revenue
Operating income
Net income attributable to SECOM CO., LTD.
Total assets
Total SECOM CO., LTD. shareholders’ equity

Per share of common stock:
Net income attributable to SECOM CO., LTD.
Cash dividends
SECOM CO., LTD. shareholders’ equity

945,238
122,007
80,184
1,525,863
825,969¥

367.37175.003,784.27

2014¥

921,146
120,078
73,9791,440,705
753,099¥338.94105.003,450.36¥¥

Notes: 1. Yen amounts have been translated into U.S. dollars, solely for the convenience of the reader, at the approximate rate of ¥120=US$1, the rate
prevailing on the Tokyo Foreign Exchange Market on March 31, 2015.
2. Net income attributable to SECOM CO., LTD. per share of common stock is based on the average number of shares outstanding during each period,
less treasury stock.
3. SECOM CO., LTD. shareholders’ equity per share of common stock is based on the number of shares outstanding at the end of each period, lesstreasury stock.
4. Cash dividends per share of common stock are based on dividends approved and paid in each fiscal year. At the general shareholders’ meeting heldon June 25, 2014, shareholders approved a proposal to pay an annual dividend of ¥115.00 per share for fiscal year 2014. Subsequently at the Boardof Directors’ meeting held on November 10, 2014, directors approved a proposal to pay an interim dividend of ¥60.00 per share for the first half ofthe year ended March 31, 2015. Because the interim dividend, the record date for which is September 30, was newly adopted in the year ended
March 31, 2015, the actual figure for dividends paid to shareholders for the year ended March 31, 2015, is the aggregate of the two. At the general shareholders’ meeting held on June 25, 2015, approval was granted for a proposal to pay a year-end dividend of ¥65.00 for the year ended
March 31, 2015. (For further information, please see Note 18 of the accompanying Notes to Consolidated Financial Statements.)
5. Effective from the fiscal year ended March 31, 2014, losses attributable to certain businesses in the real estate and other services segment arereclassified and presented as “loss from discontinued operations, net of tax” in the consolidated statements of income. Figures for previous fiscal
years have been restated to conform with this change.

2015

¥

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

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

840,722
123,615
136,688
75,392
1,410,715
907,341¥345.42175.003,667.33

Net Income (Japanese GAAP)(In billions of yen)

(In billions of yen)

100

100

70.6

62.7

74 0
74.0

60
41.2

40

40

20

20

2010

2011

2012

2013

2014

¥

320.14105.003,345.06

2015

¥

¥

75.4

80
63.7

60.8

0

822,228
120,018
126,677
69,876
1,328,226
830,369

80.2

60
47.0

¥

Note: Cash dividends per share of common stock are based on dividends approved and paid in each fiscal year. At the general shareholders’ meeting held on
June 25, 2014, shareholders approved a proposal to pay an annual dividend of ¥115.00 per share for fiscal year 2014. Subsequently at the Board of
Directors’ meeting held on November 10, 2014, directors approved a proposal to pay an interim dividend of ¥60.00 per share for the first half of theyear ended March 31, 2015. Because the interim dividend, the record date for which is September 30, was newly adopted in the year ended March 31,
2015, the actual figure for dividends paid to shareholders for the year ended March 31, 2015, is the aggregate of the two. At the general shareholders’meeting held on June 25, 2015, approval was granted for a proposal to pay a year-end dividend of ¥65.00 for the year ended March 31, 2015.

Net income attributable to
SECOM CO., LTD. (U.S. GAAP)

80

2014

69.9

47.6
35.5

0
2010

2011

2012

2013

2014

2015

Note: In the year ended March 31, 2015, net income attributable to SECOM CO., LTD., advanced ¥6.2 billion, to ¥80.2 billion. This result was
attributable to an increase in operating income in the insurance services segment, which reflected a decline in losses due to damage caused
by natural disasters, as well as to an increase in operating income in the security services segment, owing mainly to higher segment net sales
and operating revenue. Another contributing factor was a decrease in income taxes, a consequence of tax reform in Japan, which lowered
the statutory tax rate.
In the year ended March 31, 2014, net income attributable to SECOM CO., LTD., rose ¥3.4 billion, to ¥74.0 billion. Factors behind thisresult include an increase in operating income in the fire protection services segment, owing to robust segment net sales and operating revenue and the reduction of cost of sales; a full year of contributions from information and communication related services segment subsidiary
At Tokyo Corporation, consolidated in the previous period; and an increase in operating income in the security services segment, attributable
to higher segment net sales and operating revenue.
In the year ended March 31, 2013, net income attributable to SECOM CO., LTD., climbed ¥29.3 billion, to ¥70.6 billion. This result wasdue primarily to the contributions of two newly acquired subsidiaries in Japan—Nittan Co., Ltd., a major domestic provider of fire protection
services, and At Tokyo, a leading data center services firm—which were consolidated during the period, as well as to a decline in write-down
on real estate inventories and a decrease in impairment loss on long-lived assets, which is included in loss from discontinued operations.
4

SECOM Annual Report 2015

SECOM Annual Report 2015

5

A Message to Shareholders

Founderof Shareholders. At the Ordinary General Meeting of Shareholders, held on June 25, 2015,
management proposed and shareholders approved the payment of a year-end cash dividendof ¥65.00 per share. Together with an interim dividend of ¥60.00, dividends for the full term
amounted to ¥125.00 per share, up ¥10.00 from the previous fiscal year.
In the period under review we also introduced a shareholder benefit program. Our objectives
here were twofold, namely, to reward shareholders for their ongoing support and to deepen theirunderstanding of what we do by giving them the opportunity to actually use SECOM products
and services.

Consolidated Operating Results

Understanding and Responding to Change

Buoyed by a weaker yen and rising share prices, the Japanese economy remained on a path ofgradual recovery in the fiscal year ended March 31, 2015, despite waning consumer spending in
the aftermath of Japan’s consumption tax hike. This was due mainly to improvements in ­corporate
earnings and in employment and personal income levels.
In this environment, we continued working toward the realization of our vision for the future,
the Social System Industry, in line with our goal of providing safety and security, as well as comfort and convenience, wherever and whenever necessary. To this end, we responded to the needsof customers through the provision of high-grade services and systems in our security services
segment, as well as in our other segments: fire protection services, medical services, insurance
services, geographic information services, information and communication related services, andreal estate and other services. We also pressed forward with efforts to apply the ALL SECOM­concept, maximizing synergies among our various independent businesses to strengthen theGroup as a whole, with a view to ­hastening our advance to a new stage of growth.
Consolidated net sales and operating revenue advanced 2.6%, or ¥24.1 billion, to ¥945.2­billion. Principal contributing factors included higher net sales and operating revenue in the­security services and medical services segments—the former underpinned by increased revenue
from on-line security systems and higher sales of large-scale security systems and security camera
systems and the latter by the expansion and rebuilding of hospitals and a robust performance by
the pharmaceuticals dispensing services business—and the inclusion of a full year of operating
results for a subsidiary newly consolidated in the fourth quarter of the fiscal year ended March
31, 2014. Operating income rose 1.6%, or ¥1.9 billion, to ¥122.0 billion, bolstered by improvements in the insurance services and the security services segments ascribed to, respectively, adecline in losses incurred due to damage caused by natural disasters and the increase in net salesand ­operating revenue. Net income attributable to SECOM CO., LTD., was up 8.4%, or ¥6.2
­billion, to ¥80.2 billion, owing mainly to the increase in operating income and to lower income
taxes, which primarily reflected a statutory tax rate reduction that resulted from tax reform in Japan.

Needs for security, peace of mind, convenience and comfort are becoming more varied andsophisticated. Accordingly, we continue working to reinforce the three key components of ouroperating foundation, namely our technologies, our people and our operational structure, withthe goal of building an ever-broader portfolio of services and systems that position us to respondin a timely manner to increasingly diverse needs. In our core commercial security services business, the importance of reducing oper­ating costs and enhancing internal monitoring is growing,a trend that continues to encourage the adoption of our value-added security systems andsecurity cameras, underscoring the ­importance of optimizing services to meet evolving needs.
In the period under review, we expanded sales of such high-value-added offerings as SECOM
AX, a remote imaging on-line security system that features advanced image recognition technologies; SECOM LX, which combines on-line security and access control functions to facilitate
efficient personnel management, thus reducing costs; and SECOM FX, an on-line security andfacility control system.
Recent years have seen a sharp increase in the number of companies seeking to reinforce
security and internal monitoring by installing safety and production management systems for­factories and systems that prevent leaks of classified information and personal data. In response
to such needs, we are actively proposing systems that combine security cameras and access
control. We recently introduced SECOM NVR, a next-generation security camera system that alsooffers optional access to SECOM Image Archive Service, enabling subscribers to store camera
images remotely at one of our data center facilities.
In the area of home security services, we continued to respond to growing needs for systems
that enhance comfort and convenience and provide security and peace of mind, as a result of
which in June 2014 the number of households in Japan that have installed SECOM Home Security
topped one million. We also sought to bolster sales of SECOM Home Security G-Custom, an
on-line residential security system that includes a number of added features that enhance everyday
convenience.
In our overseas security services business, we bolstered efforts to encourage broad acceptanceof SECOM-style security services, focusing on the rapidly growing economies of Southeast Asiaand the People’s Republic of China (PRC). These include establishing a presence in Myanmar.
“SECOM-style security services” is a term we use to describe comprehensive on-line security
systems that encompass the installation of security equipment at the subscriber’s premises,around-the-clock monitoring from a SECOM control center via telecommunications circuits andthe prompt dispatch of highly trained emergency response personnel in the event an irregularity
is detected.
In fire protection services, subsidiaries Nohmi Bosai Ltd. and Nittan Co., Ltd., two of Japan’s
leading fire protection services providers, leverage their respective business foundations andEnhancing Returns to Shareholders
We recognize that providing a fair return to shareholders is a crucial management task. In linewith our basic policy of ensuring a consistent and stable distribution of profits, we determine ourconsolidated dividend payout ratio based on an overall assessment of trends in our consolidated
operating performance. We make it a basic rule to distribute profits twice annually in the formof an interim dividend, introduced in the period under review, which is paid to shareholders ofrecord as of September 30 each year and a year-end dividend, which is paid to shareholders ofrecord as of March 31 the following year. The interim dividend is determined by the Board of
Directors, while the year-end dividend is determined by shareholder vote at the General Meeting

6

SECOM Annual Report 2015

The Management

Makoto Iida

Looking to the future, we are working to expedite
development efforts under the ALL SECOM banner to realize
a broader range of services and systems that respond toincreasingly diverse and sophisticated needs and position us
for further growth.

Shuji Maeda
Chairman and Representative Director

Hiroshi Ito
President and Representative Director

SECOM Annual Report 2015

7

A Message to Shareholders

The Management

product development capabilities to provide high-grade automatic fire alarm systems and fire
extinguishing equipment, among others. Both companies also took steps to fortify their overseas
operations, such as introducing new products and strengthening collaboration with our security
services business.
Efforts in our medical services business continued to concentrate on Home Medical Services,which comprise home nursing and pharmaceutical dispensing services, as well as on the operation of residences for seniors, electronic medical reporting systems, sales of medical equipment
and pharmaceuticals, personal care services and support for associated hospitals. In addition, we
promoted initiatives directed at addressing needs engendered by Japan’s super-aged society, such as
opening SECOM Home Health Care Center Kamakura, a comprehensive senior care facility offeringhome nursing, home-based personal care, day services and home care support services, and Alive
Shinagawa–Oi, an Alive Care Home series’ nursing home in Tokyo that cooperates closely with local
hospitals, commercial facilities and organizations to provide support services for seniors.
In our insurance services business, we promoted sales of our distinctive non-life insurance
policies. These include the Security Discount Fire Policy, a fire insurance policy for commercial
premises, and SECOM Anshin My Home, a comprehensive fire insurance policy for homes, bothof which offer discounts to subscribers who have installed on-line security systems, recognizing
the risk-mitigating factors of such systems; MEDCOM, an unrestricted cancer treatment policythat covers all treatment costs; and SECOM Anshin My Car, a comprehensive automobile insurance policy that includes access to on-site support services provided by our emergency response
personnel in the event of an accident.
Our geographic information services business centers on the collection of geographic datafrom commercial satellite images, aerial photography and vehicle/ground surveying, which we
integrate, process and analyze to provide geospatial information services to public sector entities—including national and local governments—and private-sector customers in Japan. We also
extend these services to government agencies abroad, including those in emerging economies
and developing countries. In the period under review, we sought to provide services that respondto increasing domestic and overseas needs for geospatial information associated with, among
others, the construction and maintenance of critical infrastructure and the prevention andmitigation of disasters.
We are also known for our broad range of information and communication related services,which focus on data center services and encompass BCP support services, information security
services and cloud-based services. In the period under review, we launched SECOM Premium Net,a system designed to protect against online banking scams, a mounting problem, and the SECOM
Minutes Digitization Service, which enables companies to digitize the minutes of board of directors’
meetings and entrust them to us for rigorously safe storage at one of our data center facilities.
Our real estate and other services business continued to emphasize the development and saleof condominiums equipped with distinctive security and contingency planning. Other services
include real estate leasing, construction and installation.

care, medical services, nursing care and personal care, is to accelerate efforts to develop new
medical services. Established in line with our super-aged society theme, the SECOM Medical
Support Center joins SECOM control centers (security) and the SECOM Anshin Information
Center (disaster preparedness/BCP/environmental preservation). Going forward, we will accelerate collaboration among the three facilities under the ALL SECOM banner with the aim ofenhancing comfort and convenience and ensuring security and peace of mind.
We remain committed to providing uniquely SECOM services that respond to evolving social
imperatives and increasingly diverse customer needs. For example, we are broadening ourselection of IC chip-embedded ID card services, which includes employee ID cards that allow
meticulous access control and management of employee attendance, as well as cashless payment
at, for example, company cafeterias—all of which can help reduce costs and improve operational
efficiency—our offerings now include cloud-based services and information security services.
In October 2015, Japan will introduce the My Number social security and tax identity system,
under which every resident of the country will be assigned a personal ID number. With the implementation of this system, companies will be required to collect and manage ID numbers of all of
their employees for procedures related to social security, income tax and disaster relief. We havealready introduced the SECOM Anshin My Number Service, which enables subscribers to entrust
employee My Number data to us for storage at a Secure Data Center facility, thereby ensuring
robust physical and cyber security.
Another recent highlight was the establishment of SECOM Lifestyle Partner Kugayama, afacility designed to help resolve a variety of worries for seniors, a key challenge in a super-agedsociety. Under the ALL SECOM banner, SECOM Lifestyle Partner Kugayama is collaborating withother SECOM Group facilities in the Kugayama area, as well as with local authorities and privatesector businesses, to enhance its menu of support services that help local seniors deal with issuesof concern in their lives. Recognizing demographic trends in Japan as an opportunity for growth,
we will direct our efforts toward creating new services that address the needs of Japan’s rapidly
aging population.
By rallying the capabilities of the SECOM Group, guided by the ALL SECOM concept, we will
step up efforts to develop forward-looking services and systems that respond to evolving social
imperatives. Through these efforts, we will continue to encourage people to turn to SECOM withthe confidence that doing so will help them resolve security and other concerns. Looking ahead,
our focus will be on making SECOM an ever-present and trusted part of our customers’ lives.
In line with our corporate message—“Providing reliable peace of mind”—we will accelerate
the realization of our Social System Industry vision by providing indispensable services that fulfill
the promise of the ALL SECOM concept. In all of our endeavors, we look forward to the ongoingsupport of shareholders.
June 25, 2015

ALL SECOM: The Way Forward
Guided by the ALL SECOM concept, we will press ahead with the development of innovative services that anticipate future needs in line with three key themes—security, a super-aged society
and disaster preparedness/BCP/environmental preservation. One key to the success of this effort
is our new SECOM Medical Support Center. The objective of this facility, which is staffed withnurses, public health counselors and dieticians and provides one-stop consultation on health8

SECOM Annual Report 2015

Makoto Iida
Founder

Shuji Maeda
Chairman and Representative Director

Hiroshi Ito
President and Representative Director

SECOM Annual Report 20159

Special Feature

ALL SECOM—Developing New Services that Anticipate Future Needs

Guided by the ALL SECOM concept, we are working to drive future growth by developing services that anticipate futureneeds in line with three key themes: security, a super-aged society and disaster preparedness/BCP/environmental
preservationg Principal sources ofWe acknowledge the three core components of our operating foundation as
the principal sources of our competitiveness, namely, our technologies, ourpeople and our operational structure.
On the technology front, the SECOM
Intelligent Systems Laboratory conducts
research aimed at developing coretechnologies crucial to the realizationof our Social System Industry vision.
The SECOM Development Center uses
these core technologies to promote theswift development of distinctive, reliable
systems that respond to the requirements of customers. Having recognizedthat technological prowess is crucial
to maintaining a competitive edge inthe security services market, we keep
abreast of evolving social imperatives,technical trends and changing patterns

Addressing challenges in three areas
under the ALL SECOM banner

Realizingl System Ind
ocia
us
S
try
e
th

Super-aged society
Health care

Shortage of doctors
and nurses
Need for nursing
and other care services

Lifestyle support

L SECOM
AL

Population decline

Facility
management
Burglaries

Insurance

telecommunications circuits to provide
around-the-clock monitoring. Should anirregularity be detected, control center
staff dispatch emergency response personnel from one of our more than 2,800
emergency depots. The effectiveness ofour security services in the event of an
intrusion, fire or other irregularity reflects
our ability to combine the precision ofequipment with the skills and prompt
decision-making capabilities of people.

Information leaks

Disaster preparedness/BCP/
environmental preservation
Earthquakes

model communities fora super-aged society
A key challenge for super-aged societies
is responding to rising needs for services
that make it possible for seniors tolive comfortably and in good health.
For example, access to in-home healthcare and personal care services canhelp seniors stay safely and securely intheir own homes rather than moving
into a care facility. In response to suchneeds, we recently opened SECOM
Home Health Care Center Kugayama,
a comprehensive senior care facility,
in Suginami, Tokyo. Under the mottoof “Helping people stay happy andindependent in the comfort of theirown homes,” the facility collaborates
with the nearby Kugayama Hospital,
one of our affiliated hospitals, to realize
effective community-based health care,

Super-aged society

D
Big ata

Disaster preparedness/BCP/
environmental preservation

TsunamiData Center

Energy shortages

Living environments

Sudden illness

Securityg Promoting the creation of

Operational structure

Energy conservation

Security, peace of mind,
convenience and comfort

Our principal sources of competitiveness are underpinned by our data center
facilities, which make effective use of
Big Data to expedite the creation of services and systems that respond to needs
arising as a result of evolving social
imperatives. Guided by the ALL SECOM
concept, SECOM control centers, theSECOM Medical Support Center andthe SECOM Anshin Information Centercollaborate to spearhead efforts to provide these new services and systems tocustomers, thereby helping to make life
more comfortable and convenient andproviding security and peace of mind.

Secure Data Center facility

Typhoons

Data Center

Services designed to respond toneeds engendered by a super-agedsociety are the responsibility of the
SECOM Medical Support Center, whichis staffed with nurses, public healthcounselors and dieticians and provides
one-stop consultation regarding healthcare, medical services, nursing care andpersonal care, among others.
Under the theme of disaster preparedness/BCP/environmental preservation, the SECOM Anshin Information
Center provides a variety of criticalservices. In the event of a disaster, thefacility analyzes Big Data sets encompassing public evacuation information
and Internet-derived information andits own proprietary information, among
others, facilitating the swift provision of
accurate and truly beneficial information
to subscribers.

Special Featureof criminal behavior, while at the sametime advancing the development andprovision of innovative systems.
To foster the capabilities of ourhuman resources, we provide training
for employees, who include emergency
response personnel, sales staff andadministrative staff, at four training
centers across Japan. This enables us
to equip employees with the advanced
knowledge and technological skills theyneed, as well as to ensure that they
understand our corporate philosophy
and observe a code of conduct befitting
security professionals, qualities that facilitate the provision of high-grade services.
The operating structure of our security services business in Japan centers on
our 47 control centers. Our security systems use sensors and other equipment
installed at subscribers’ premises, which
are linked to a SECOM control center via

competitiveness

Fires

SECOM
Medical Support Center

SECOM
Anshin Information Center

Missing children
Theft

SECOM Control Centers

Guided by the ALL SECOM concept, we are working to make life more comfortable andconvenient and to deliver security and peace of mind by responding to social imperatives andhelping to resolve everyday concerns.

10

SECOM Annual Report 2015

Security

SECOM Annual Report 201511

Special Feature: ALL SECOM—Making Use of Big Data to Expedite the Creation of New Services

diverse menu of services that enhance
comfort and convenience and provide
security and peace of mind.
g Developing the SECOM Airship

Efforts to integrate accumulated
technologies in such areas as image
detection, sensors and flying robots,with our extensive know-how in security
services, fire protection, and informationand communication, recently led to thedevelopment of the SECOM Airship, aprototype dirigible designed to prevent
crime and facilitate the implementationof disaster mitigation measures overlarge areas. The SECOM Airship isequipped with multiple high-definition
cameras, thermal imaging cameras,
directional loudspeakers, parabolic
microphones and search lights, facilitating highly precise monitoring overconsiderable distances.
Image and voice data from the
SECOM Airship, together withinformation from sensors and security
cameras on the ground and from flying
surveillance robots, is transmitted toa SECOM control center, facilitating
effective monitoring of both the groundand the skies over the target area andrealizing an unprecedented level of
security. The dirigible’s ability to transmit
aerial images of, for example, people
and traffic congestion and disaster damage, over large areas in real time meansthat its use in tandem with the SECOM
Anshin Information Center in the eventof a major disaster will hasten thecollection and analysis of informationand the assessment of damage, andhelp ensure the appropriate direction ofevacuations.
The SECOM Airship will also be used
to reinforce security for large-scale
events held at sports stadiums and onother large sites. To encourage use
for this purpose, we will continue todevelop the dirigible with a view toachieving commercialization by the endof 2016.
g Leveraging uninterrupted

monitoring capabilities todevelop new services underthe ALL SECOM banner
We collect geographic data from threemain sources: satellite images, which
are taken from 500 and 900 kilometers
above the Earth’s surface and thus are
not influenced by the weather; aerial
photographs of structures, which aretaken with cameras mounted on Cessna
aircraft from a height of between 1,000
and 2,000 meters; and high-precision
images of terrain and structures takenwith vehicle-mounted cameras (ourmobile mapping system). We integrate,
process and analyze this data to provide
geospatial information services that
support efforts to, among others, swiftly
assess disaster damage, implement
environmental protection measures andassess risks related to the deteriorationof roads.

High-resolution cameras in the
SECOM Airship take photographs overlarge areas from between 100 and 250
meters above the earth, while our flying
surveillance robot shoots sharp, clear
images of suspicious individuals andvehicles from a height of between three
and 50 meters. Security cameras andsensors installed at ground level monitor
people and structures. In the event anirregularity is detected by any of thesesystems, a SECOM control center is

automatically alerted and emergency
personnel are dispatched.
With the aim of realizing our Social
System Industry vision, we will continue
to leverage our ability to provide
uninterrupted monitoring from groundlevel to a height of 900 kilometers
above the Earth’s surface to promote
the development of innovative services
under the ALL SECOM banner that will
drive growth in the future.

Special Featureincluding support for patients recovering
at home after release from hospital.
With the aim of further enhancing
customer satisfaction, we have reexamined the everyday concerns of seniors,
placing a priority on the perspective of
individuals using our services. Drawing
on our findings, in April 2015 we alsoestablished SECOM Lifestyle Partner
Kugayama. The Kugayama area is home
to a number of SECOM Group facilities,
which include SECOM Home HealthCare Center Kugayama, Kugayama
Hospital, a visiting nurse station, a
SECOM Pharmacy outlet and a SECOMrun nursing home.
By promoting collaboration among
these facilities, as well as with otherservice providers, we strive to provide
comprehensive services tailored to local
needs. Going forward, we will build
on know-how gained through theoperation of SECOM Lifestyle Partner
Kugayama to offer an increasingly

500–
900 km©DLR

1,000–
2,000 m500–
1,000 mConcept behind SECOM Lifestyle Partner Kugayama
Everyday concerns
Transport to specific location

Request forassistance

Arrange

Respond/arrange

Proposal ofsolution

Major and local supermarkets,transport companies

Taxi and accessible taxi companies

Home modifications/housework

Local contractors,
housecleaning service companies

Shopping

SECOM Lifestyle Partner Kugayama
Respond/arrange

Introduction toservice providers

100–
250 m

Participation in the community• Local government• Welfare facilities• Events sponsoredby local merchants

Introduce/apply onbehalf of subscriber,others3–50 mSpecific concerns
Medical and nursing care

SafetySpecialized home cleaning• Kugayama Hospital (Kugayama Consultation Center)• Other facilities run by Kugayama Hospital operator Kouwakai

Local government help desks
and support centers(Rouken Kugayama geriatric health services facility and Kugayama-En
nursing home) • SECOM Kichijoji Visiting Nurse Station• SECOM Home Health Care Center Kugayama• SECOM Pharmacy Suginami

12

SECOM Annual Report 2015

OthersSECOM customer service center

Groundlevel

SECOM Home Service desk

SECOM Annual Report 2015

13

SECOM Today

Commercial Security Services

We are working to provide distinctive systems that help
companies resolve concerns and address latent risks.
g Competitive advantages in the­security services businesses

SECOM emergency response personnel

On-Line Security Systems
Flashing light

SECOM sticker

Subscribers display the SECOM
security sticker,
the sign ofwell-protected
premises.

Light flashes if the system
detects an abnormality to warn
people in the vicinity and to
guide SECOM
emergency
response personnel
dispatched to thecustomer’s premises.

PoliceDept.

SECOM
3 Dispatch
emergency responseusing
1 Alerttelecommunications

personnel

SECOM
Emergency
Depot

14

SECOM Annual Report 2015

circuits

2

Alert SECOM
emergency
response personnel

SECOM
Control Center

Fire
Dept.
Gas
CompanyAlertemergency
services asnecessary

Our principal competitive advantage in the
security services business derives from ourcommitment to providing comprehensive
on-line security systems, whereby we takeresponsibility for everything from R&D to the
production, marketing, security planning andinstallation of sensors and other equipment,
around-the-clock monitoring, emergency
response services and maintenance.
We have also created a unique R&D
configuration that facilitates the prompt
and accurate development of systems that
respond to the requirements of customers.
The effectiveness of our around-the-clockmonitoring and emergency response services
is attributable to our ability to combine theprecision of security equipment, which monitors the subscriber’s premises for intruders
and fires, among others, with the analyticalskills and prompt decision-making capabilitiesof people. Our ability to provide swift, quality
emergency response services also reflects ournationwide network of emergency depots,
which is the largest of any security services
company in Japan.
To foster the capabilities of our humanresources, we provide training for employees,
including emergency response personnel,
salespeople and administrative staff, at four
training centers across Japan. This enables
us to equip our people with the advanced
knowledge and technological skills theyneed, as well as to instill understanding of
our corporate philosophy and the importanceof observing a code of conduct befitting
security professionals, thereby ensuring theirability to provide ­high-grade services.
Our rental format is another key strength.
Because we retain ownership of security

equipment, which we rent out, initial costs forsubscribers are minimized. This format alsomeans that we look after maintenance andupkeep, enabling us to guarantee the quality
and stability of our services. This comprehensive approach enjoys the trust of customers
across a wide range of industries and is afundamental factor behind the power of the
SECOM brand.
g 
Sales of high-value-added security

systems that help subscribers reduce
costs remain robust

R&D
Emergency
response services
Emergency response
personnel

Intelligent Systems Laboratory
Development Center

Providing reliable peace of mind

Around-the-clockmonitoring

Production andassembly of systems
Secom Industries Co., Ltd.

Security planning

SECOM control center

Marketing teamInstallation
Technicians

SECOM Today

We offer a wide selection of on-line security
systems to commercial subscribers, including
SECOM AX, an on-line security system withadvanced on-site image sensors. In recent
years, we have seen brisk sales of SECOM LX
and SECOM FX, high-value-added systems
that not only provide excellent security but
also assist subscribers’ efforts to reduce
costs. SECOM FX also helps lower energy
consumption.
SECOM LX is a security system thatcombines an on-line security system withaccess control functions. The former includes
monitoring for intruders and fires and an
emergency call service, while the latter
centers on a card reader that automaticallyrecords people entering and exiting, facilitating the effective management of personal
information and other important corporate
information. Because subscribers can use
SECOM LX simply by adding security card features to current IC cards, SECOM LX makes
it possible to use recorded access for otherrelated applications, thereby reducing theamount of work involved in, among others,
managing employee attendance and calculating payroll, helping to improve the efficiencyof such procedures and reduce costs.

SECOM On-Line Security Systems

SECOM control center

SECOM Annual Report 201515

Commercial Security Services

SECOM FX is a security and facility
control system that combines monitoringfor intruders and fires with facility control.
The system’s monitoring function can be set
to suit the subscribers control preferences
and timetable, providing around-the-clockmonitoring for intruders and fires, while thefacility control function can be set to turnlights, air conditioners, signage illuminationand security cameras on and off at thesubscriber’s discretion. Used in the common
areas of office buildings and condominiums,
among others, and at laundromats and otherunattended facilities, the system thus facilitates the automatic raising and lowering of
shutters and turning on and off of lights andair conditioning without the need for anyone
on-site, which helps to minimize heating andlighting bills and reduce energy consumption.

High-resolution outdoor NVR camerag Greater need for internal ­monitoring

to strengthen security and­discourage crime
SECOM Image Archive Service, a security image
storage service, enhances safety and convenience

The need for systems that help strengtheninternal monitoring continues to rise, owing
in part to incidences of personal information
leaks and food products being laced with
toxic substances, which have fueled demand
for more stringent monitoring. In response tosuch needs, we introduced the SECOM NVR,
a next-generation security ­camera system thatfeatures options such as access to the SECOM
Image Archive Service, which enables subscribers to store security camera images at a
SECOM data center ­facility, ­making it suitablefor installation in a broad range of facilities,
thereby ­eliminating the need for the subscriber to have a recording device or to­ anage images. Security ­levels are furthermenhanced by around-the-clock monitoring,

16

SECOM Annual Report 2015

which ensures protection even if cameras
malfunction or wires are cut.
We recently expanded the lineup ofequipment available with SECOM NVR byintroducing a high-resolution outdoor NVR
camera. Dustproof and waterproof, the newcamera has built-in infrared LEDs that allow
it to capture clear video even in complete
darkness. The camera is thus suited to a wide
variety of applications, from parking lots andapartment complexes to factory sites, and canalso be mounted on solar panels and otherimportant outdoor structures.

g 
Sales of stereoscopic image-based

Walkthrough Face Recognition
System commence
We have built up a wealth of technologies
and expertise through the development ofsuch offerings as SESAMO ID, a fingerprintbased access control system; SECOM AX,
an image recognition-based on-line security
system; and SECURIFACE, a residential intercom system with a face detection function.
The Walkthrough Face Recognition System, arecent addition to our portfolio, is a biometricauthentication system that incorporates proprietary image processing and stereoscopic
image construction technologies employed inthese and other systems. The WalkthroughFace Recognition System makes it possible
to authenticate people as they walk past,so there is no need to stop each individual.
The system also stores camera images as arecord of traffic through the checkpoint,
enabling it to match suspicious individuals or

Walkthrough Face Recognition System (biometric authentication system)

movements to past events. Combined withan access control system, the WalkthroughFace Recognition System facilitates not only
authentication, but also the recording andmanagement of people who enter and leave
the subscriber’s premises, when and where.
Going forward, we will capitalize further on
our imaging technologies and know-how toprovide services and systems that deliver everhigher levels of security.

Contracts for
On-LineSecurity Systems

SECOM Today

Looking ahead, we will continue to provide
distinctive surveillance camera systems that
respond to diverse monitoring and security
needs.

(As of March 31, 2015)

Home

Commercial

Financial services

8.2%

Service industries

7.7%

Retailing/wholesaling

4.2%

Manufacturing

3.7%

Government agencies

3.7%

Other

17.5%

Residences (excluding
condominiums andapartments)
34.4%
Condominiums andapartments

20.6%

SECOM Annual Report 201517

Home Security Services

Our extensive range of services, which centers on
SECOM Home Security, respond to the security needs ofhomeowners and renters.

g 
SECOM Home Security continues togain market acceptance
SECOM Home Security provides around-theclock monitoring for intruders, fires and gas
leaks, emergency alerts and medical emergency calls. If sensors detect an irregularity,
the system automatically alerts a SECOM control center, where staff monitor and assess
the situation, dispatch emergency personnel
and, if necessary, notify the police and/or thefire department.
Since the release of SECOM Home
Security in 1981, we have sought to respondeffectively to the needs of subscribers bycontinuously modifying the system with theaim of enhancing comfort and convenienceand providing security and peace of mind.
Underscoring the success of these efforts,
in June 2014 the number of households
in Japan that have installed SECOM Home
Security topped one million, evidence ofSECOM Home Security’s solid reputation.
One of the most highly rated services­currently offered under the SECOM Home
Security label is SECOM Home Security
G-Custom, which combines home security
with a variety of features designed toenhance everyday convenience. These
include a data storage system, whichenables subscribers to store important­documents—including driver’s licenses,­passports, health insurance cards and­prescriptions for ­medications—at a SECOM
data center facility; on-line access to convenient SECOM lifestyle support services and18

SECOM Annual Report 2015

g 
January 5 is declared

Home Security Day
To celebrate our heritage as the company
that popularized the concept of “homesecurity” in Japan, we recently applied to andreceived approval from the Japan Anniversary
Association to declare January 5—the day of
SECOM Home Security’s launch in 1981—
Home Security Day. This move also reflects
our desire to create an occasion for people toreexamine the security of their homes.

SECOM Today

products; and a data-sharing service thatenables immediate family members and relatives to exchange photographs and send messages. SECOM Home Security G-Custom alsooffers My Page, which gives subscribers
access to information from an extensive menu
of selected collaborating companies andallows them to make online purchases.
In Japan, rapid urbanization, the increasing prevalence of nuclear families and theadvance of the country’s super-aged society
are pushing up demand for home security
services. At present, SECOM Home Security
systems are primarily used in detachedhouses, two-generation detached houses,
detached houses with commercial space andcondominiums, but we are seeing a steadyrise in installation in apartment complexes.
Accordingly, we will continue to bolster
acceptance of this system by developing services that accommodate an ever-more diverse
range of residential environments and family
configurations.

SECOM Home Security G-Custom

By encouraging ever-broader acceptanceof SECOM Home Security, we will continue
to enhance comfort and convenience andensure security and peace of mind. We will
also further promote the development ofgroundbreaking new services and systems.
g 
Subscribers to SECOMMy Doctor Plus expand toinclude local ­governments and­corporate customers

My Page services include online
shopping

Another option available to SECOM Home
Security subscribers is SECOM My Doctor
Plus, an emergency medical alert system forseniors that also provides access to personalcare services.
SECOM My Doctor Plus features an
exclusive portable device incorporating
cellular phone, GPS locator and emergency
alert functions. Regardless of time or place,the device, when activated, sends a signal
to a SECOM control center indicating that
SECOM My Doctor Plus emergency
medical alert system for seniors

SECOM Annual Report 2015

19

Home Security Services

20

SECOM Home Security subscribers can consult with SECOM Medical Support Center nurses on
health-related issues

SECOM emergency response personnel are dispatchedpromptly in the event of an irregularity

medical assistance is required. Control center
staff confirm the subscriber’s situation by
telephone and if required dispatch emergency
response personnel. Other services available
include consultation by telephone with staff
at the SECOM Medical Support Center. If thesubscriber requests an ambulance, control
center staff contacts the fire department andsends the subscriber’s emergency information, which is stored at a SECOM data center
facility, to the portable device, to ensure
such information is immediately available toambulance attendants and hospital staff.
Recent years have seen an increase indemand for SECOM My Doctor Plus as astandalone service from local governments
and corporate customers. A city in Nagano
Prefecture has introduced the system aspart of an initiative aimed at protecting local
seniors living alone. Important information
on chronic health issues and medications, aswell as contact information for their primarycare physicians, for each of the seniors
covered by the system, is entrusted to us forsecure storage and provided when necessary
to ambulance attendants and hospital staff,
facilitating swifter treatment.
We also provide SECOM My Doctor Plus
as a standalone support service to corporate
customers seeking to open residences withcare services for seniors in unoccupied units in
multi-unit rental dwellings. In such instances,
SECOM My Doctor Plus allows facility coordinators to confirm the well-being of residents
using the portable device.

SECOM Annual Report 2015

Other Security Services

In addition to capitalizing on rising demand for the
COCO-SECOM mobile security system from local governments,
we introduced the SECOM AED Skill Up Service to increase
the number of individuals able to use AEDs.

g 
Local governments expand use of

COCO-SECOM to locate dementia
sufferers who wander

In recent years, COCO-SECOM has gained
attention as an effective way to locate
individuals suffering from dementia if they
wander or disappear, bolstering demand forthe system in this area. Local governments
have offered incentives to the families of suchindividuals to use COCO-SECOM by subsidizing the rental of transmitters. With dementia
becoming a pressing issue in Japan’s superaged society, we will continue to market
COCO-SECOM to local governments, publicagencies and nursing homes as an effective
strategy for locating sufferers who get lost.

COCO-SECOM
mobile security system

SECOM Today

The COCO-SECOM mobile security system
uses signals from GPS satellites and cellular
phone base stations to pinpoint the locationof dedicated portable transmitters carried byindividuals or attached to objects. Introduced
originally as a way to foil child abductions
and avert the theft of cars and motorcycles,
COCO-SECOM’s effectiveness has attracted
interest for more diverse applications. These
include preventing the loss of personal
belongings and the theft of construction
equipment and automated teller machines(ATMs), among others, as well as managing
taxi and bus fleets.

centers. Our lineup of AED-related services
includes the SECOM AED Package Service,a full-service AED rental package, and the
SECOM On-Line AED Management Service,
an around-the-clock service that monitors
operational status and the replacement ofexpendables. Recently, we introduced the
SECOM AED Skill Up Service, a workshop on
the operation of AEDs, recognizing that
despite the extensive installation of AEDs,
many people do not know how to use themproperly. The workshop centers on web-based
and in-person training, support by SECOM
experts regarding the proper use of AEDs andthe improvement of skills. We will accelerate
efforts to promote this service, in line with ourbelief that the ability to use an AED is an
essential skill for people everywhere.

SECOM AED Skill Up Service,a workshop to train people
in the proper use of AEDs

COCO-SECOM Mobile Security System(Location and Emergency Response)

GPS satellite

Positioning
information

COCO-SECOM
Operations
CenterNotification of police(if warranted)

g 
SECOM AED Skill Up Service isintroduced
An automated external defibrillator (AED) isa portable device that treats cardiac arrhythmia by administering an electrical pulse to
the heart to reestablish a normal rhythm.
Installation of AEDs is widespread and includes
both public-sector facilities such as train stations, airports and parks and private-sector
facilities such as schools and major shopping

Request forsearch(telephone/Internet)

Subscriber

SECOM
Emergency
Depot

Policedepartment,
emergency
services

Cellular phonebase station
COCO-SECOM Transmitter Device(vehicle-mounted)
COCO-SECOM
Transmitter Device(portable)

Dispatchemergency
response
personnel(if requested)

SECOM Annual Report 201521

Overseas Security Services

SECOM on-line security systems, which include
emergency response services, continue to earn the trust ofcustomers in overseas markets, as a result of which
demand continues to expand.

Emergency response personnel (Thaisecom Pitakkij Co., Ltd., Thailand)g High-grade services in 12 countries

and territories overseas

Emergency response personnel(Myanmar Secom Co., Ltd.)We made our overseas debut in 1978,
when we established a presence in Taiwan.
Today, our overseas security services businessencompasses operations in 12 countries andterritories. The distinguishing feature of ouroverseas security services is that we offer
SECOM-style on-line security systems, which
include emergency response services, customized to reflect local needs and sensibilities. As
in Japan, we take full responsibility for ouroperations in these markets, positioning us
to deliver high-grade SECOM-brand services.
This continues to earn praise from overseas
customers, as a result of which the use of ourservices continues to expand steadily.
g 
Economic growth underpins

expansion of operations
in Southeast Asia

Control center(Secom (Malaysia) Sdn. Bhd.)

22

SECOM Annual Report 2015

We are working tirelessly to respond to risingdemand for security services in Southeast
Asia, where steady economic growth is driving increased demand for security services
from both Japanese and local companies.
Economic growth in Thailand continues
to support a steady increase in subscribers
for Thaisecom Pitakkij Co., Ltd. Highlights inrecent years include the provision of on-line
security systems for a number of corporations

and national government agencies and ofmerchandise to health-care facilities.
Secom (Malaysia) Sdn. Bhd. provides customized security systems—comprising on-line
security systems and static guard services—tocustomers across Malaysia. Underscoring thehigh marks accorded the company’s proposalbased services, which are tailored to market
needs, a major drugstore chain is currently
in the process of installing SECOM security
systems at its stores nationwide.
In Singapore, the diverse menu of services
offered by Secom (Singapore) Pte. Ltd.
includes, among others, the provision of
on-line security systems and fire protection
systems, as well as the leasing of safety
deposit boxes.
PT. Secom Indonesia provides on-line
security systems and static guard services
to subscribers, focusing on the capital of
Jakarta and the country’s second-largest
city, Surabaya, with operations in bothcities expanding steadily. Secom Indonesia
also offers highly rated consulting services
designed to help customers prevent insider
crimes, a major threat to corporate activities.
In Vietnam, Secom Vietnam Security
Service Joint Stock Company is working toaugment its operations by responding to thesecurity needs of Japanese companies operating in the country and to promote market
acceptance of on-line security systems.
Joint venture Myanmar Secom Co., Ltd.,
has begun providing Myanmar’s first-everon-line security systems to subscribers in the
country’s largest city, Yangon. With Myanmar
continuing to attract investment from
offshore companies, including those based inJapan, we will actively market SECOM on-line
security systems in this promising market.

■ Countries and­territories outside
Japan in which
the SECOM Group
has security services­operations

g 
Scope of overseas operations

broadens

Secom Australia Pty. Ltd. has for many
years provided security services to major
financial institutions and government agencies, earning positive reviews across theboard. The company has also installed security systems at a number of key Australian
military facilities. Secom Australia continues
working to expand its customer base andrecently secured contracts to provide security
services for a major media firm, as well as for
the Australian branches of an international
apparel retailer.
In New Zealand, Secom Guardall NZ Ltd.
continues to provide service packages combining maintenance and inspection with monitoring using on-line security systems tomultiple major global financial institutions.
Secom plc, in the United Kingdom, isrenowned for the quality of its “SECOMstyle” security services, as a result of which it
has risen to the number three position in the
U.K. security services market. Testament to
the high marks given for the quality of thecompany’s services, Secom plc has recently
won key contracts from major financial­institutions to provide security solutions forbranches and ATMs.
We recognize that the desire for convenience and comfort, as well as for safety andpeace of mind, is something shared by people
the world over. Accordingly, we will continue
to cultivate promising new overseas markets
for our distinctive security services.

SECOM Today

Taiwan Secom Co., Ltd., a publicly listed firm
and the leading provider of security services in
Taiwan, offers a wide array of security services, centered on on-line security systems.
Recently, the company launched a wirelessalarm system for residential and small-scalecommercial applications. In line with our goalof enhancing security and peace of mind,
Taiwan Secom also collaborated with the
National Center for Research on Earthquake
Engineering to develop and begin offering anearthquake alert system.
In the Republic of Korea (ROK), S1
Corporation, which is also publicly listed, provides not only on-line security systems, butalso an extensive selection of other services
that make life more convenient and comfortable and provide security and peace of mind.
In January 2014, S1 entered the market forbuilding solutions, a move aimed at further
reinforcing its business foundation. In addition, the company has established a social
contribution agreement with the Seoul metropolitan government whereby it will support
efforts to improve the safety of welfare facilities, enabling it to help enhance community
security and peace of mind through its social
contribution activities as well as through its
business activities.
We currently provide our distinctive on-line
security systems to subscribers in the People’s
Republic of China (PRC) through a network of
security service bases in 19 cities. With
demand for security services growing in all ofthese locations, we will continue to expand
our operations by providing high-grade services that meet the needs of customers.

Emergency response personnel(Taiwan Secom Co., Ltd.)

Control center(S1 Corporation, ROK)SECOM Annual Report 201523

Fire Protection Services

An integrated services provider, we offer high-grade systems
that respond to the needs of customers in Japan and overseas.

Water spray system installed in road tunnel(Nohmi Bosai)g High-grade fire protection systemsg 
Integrating automatic fire protection

Our fire protection services business is­spearheaded by subsidiaries Nohmi Bosaiand Nittan, two leading players in Japan’s
fire ­protection industry, which together
boast an extensive portfolio of automatic
fire alarm ­systems and fire extinguishingsystems. As ­integrated service providers, thetwo companies take responsibility for R&D,
planning, design, production, installation and­maintenance of high-grade systems.

equipment and security services
in Thailand
In Southeast Asia, brisk economic growth isdriving needs for fire protection infrastructure.
In cooperation with Thaisecom Pitakkij, Nohmi
Bosai is focusing its efforts on expanding salesof packages comprising nitrogen gas fire extinguishing systems and security services. Other
highlights of late include the establishment ofa representative office in Singapore and therealignment of Nohmi Bosai’s regional bases.

g 
Introducing a new manual fire

alarm box

Advanced PIII map-type fire alarm system(Nohmi Bosai)

Business negotiations at a showroom(Nittan)

24

SECOM Annual Report 2015

Nohmi Bosai provides high-grade fire protection systems for a range of applications, including office buildings, plants, tunnels, structuresdesignated as cultural properties, ships andhomes. A recent addition to the company’s
lineup is a manual fire alarm box with an integrated ring-type pilot lamp—the purpose ofwhich is to illuminate the box’s location—that
is designed to be mounted flush with the wall.
With conventional alarm boxes, parts of which
protrude from the wall, damage from frequent
impact is a problem, as is the fact that such
units are felt to mar aesthetic appearance. The
flat design of Nohmi’s new manual fire alarmbox resolves both of these issues, earning
positive reviews from customers and winninga 2014 Good Design award in Japan.
In response to growing demand from customers seeking to update automatic fire alarmsystems, Nohmi Bosai also commenced sales ofAdvanced PIII map-type system, which combines a conventional fire alarm system with anautomatic testing function. Every device connected to this system has its own address, sowhen a fire is detected the affected room andthe address of the device that has been activated are displayed on the panel. The new unit
also indicates the status of device addresses onan address map, making it possible to pinpoint
the exact location of the fire even more easily.

g 
A fire protection solutions businessthat addresses broad needs
Nittan is promoting proposal-oriented sales tocustomers who have already installed fire protection systems, as well as to customers whomake use of its maintenance and inspections
services, to further optimize systems currently
in use. The company is also benefiting fromrising orders for fire protection solutions
for buildings under renovation. Nittan willcontinue to grow its businesses throughmeticulous cost management at all stages,
from system development through to production, as well as by fortifying its marketingstrategies and to reinforce its competitivenessby providing solutions that encompass training
and advice regarding emergency supplies.
g 
Expanding overseas operations

Nittan continues to see firm sales of fire
­detection systems for use on ships in Sweden.
The company is also boosting orders bylaunching attractive new products and broadening its sales channels by collaborating withSECOM Group security services companies inIndonesia, Thailand and Vietnam to market
automatic fire alarm and fire extinguishing­systems to security services subscribers. In the
United Kingdom, collaboration with Secomplc continues to support solid sales of fire
­detection systems and other offerings.

Medical Services

We offer distinctive nursing homes and a variety of services
that respond to the needs of a super-aged society.

SECOM Health Care Club KENKO physical examinationg 
New-concept nursing home

Alive Shinagawa–Oi opens

A recent addition to our medical services
lineup is SECOM SMASH, a hospital management support service that encompasses business analysis and consulting. (“SMASH” is anacronym for “strategic management assisted
system for healthcare.”) This service employs
proprietary SECOM analysis methods to analyze trends in revenues and expenditures,
patient numbers and length of hospitalization for inpatients on a departmental basis,
with findings stored at a SECOM data center
facility to ensure rigorous protection andprovided to customers using a private cloud.
Management experts also offer consulting
to assist hospitals in formulating management strategies. SECOM SMASH thus
enables hospitals to enhance their operating
efficiency and improve the quality of carethey provide, which in turn helps reduce theburden of expenses on Japan’s public healthcare ­system.

Alive Shinagawa–Oi
SECOM Today

In line with the comprehensive communitybased health-care framework put forth by
Japan’s Ministry of Health and Welfare, we
opened Alive Shinagawa–Oi, the 10th facility
in our Alive series of nursing homes. In addition to working closely with local general­hospitals, Alive Shinagawa–Oi provides anenvironment in which seniors have ongoing
access to health care, from day-to-day healthmanagement to house calls by doctors andemergency medical treatment. In addition tocooperating with a local department store toestablish its own stop on the store’s shuttle
bus route, the facility works with community
organizations to ensure residents maintainlinks with the local community, thereby helping to provide security and peace of mind.
Looking ahead, we will continue to capitalize
on our experience in the provision of healthcare and personal care services to seniors andpromote the establishment of nursing homesthat enhance residents’ quality of life.

g 
SECOM SMASH is introducedg 
SECOM Health Care Club KENKO

SECOM SMASH
hospital management support service

introduces flexible corporate
memberships
SECOM Health Care Club KENKO is a­membership-based club established in 2005
through an alliance with Yotsuya Medical
Cube in Tokyo. Companies that purchase theclub’s recently introduced flexible corporate
memberships gain access to a variety ofhealth management services for their employees. These include detailed physical examinations for senior executives at Yotsuya Medical
Cube and around-the-clock health and medical consultation by telephone for employees.
Going forward, we will continue working toprovide a wide range of high-value-added,
high-grade medical services.

Home Medical Services
Medical Care
Institution

Prescription

Physician’s guidelines
Nurse’s report

Coordination
Home Nursing
Services

Pharmaceutical
Dispensing andHome Delivery Service(SECOM Visiting
Nurse Station)(SECOM Pharmacy)

Consultation
Prescription
Pharmaceutical delivery

Patient

Nurse visit
Outpatient care

患者

SECOM Annual Report 201525

Insurance Services

We continue to leverage the comprehensive capabilities of
the SECOM Group to provide distinctive fire, medical andautomobile insurance policies.

g Contracts for SECOM Anshin

My Home remain robust

Head office of Secom General
Insurance Co., Ltd.

Call center (Secom General Insurance)

SECOM Anshin My Car on-site support

26

SECOM Annual Report 2015

Our diversification into non-life insurance
came about as a result of our convictionthat augmenting security services, which arepreventative by nature, with insurance, whichlooks after people should misfortune strike,
was a way to further enhance security andpeace of mind.
SECOM Anshin My Home is a comprehensive policy for residential customers that offers
a discount on regular premiums to subscribers
who have installed on-line security systems,
taking into account the fire risk-mitigating
nature of such systems, as well as for houses
that have exclusively electrical appliancesand houses built with fire-resistant materials.
Customers can choose a basic plan fromamong several alternatives and select special
options, enabling them to tailor policies totheir own specific needs. Contract volume
for SECOM Anshin My Home continues torise in tandem with the installations of home
security systems, and we will continue working to expand sales of this attractive product.
Our lineup also includes the Security DiscountFire Policy, a similar policy for commercial
customers.

g 
MEDCOM, an unrestricted

cancer treatment policy that covers
all treatment-related costs
MEDCOM is an unrestricted cancer treatment
policy that provides full coverage for all
hospitalization and medical treatment costs,
both those covered under Japan’s National
Health Insurance (NHI) scheme and those forwhich the patient usually bears the burden,
which include costs for advanced medical
treatments. In addition to a one-time lumpsum payment of ¥1 million if cancer is diagnosed, MEDCOM also extends to outpatient
treatment, providing coverage for up to ¥10
million per five-year period. Subscribers arethus able to focus on treatment without having to worry about costs. Given the high costof many new cancer treatments, the fact that
MEDCOM significantly lightens the economic
burden on patients is attracting attention tothis ­innovative policy.
g 
SECOM Anshin My Car: Backed byour reliable emergency response
personnel
Another attractive SECOM non-life insurance
product is SECOM Anshin My Car, a distinctive policy that includes around-the-clock
access to on-site support by SECOM emergency response personnel in the event of an
accident.
In addition to stepping up efforts to market our policies via banks and the Internet,
we have equipped sales personnel with tablet
computers, enabling them to propose solutions to customers, with the aim of assistingsales efforts.

Geographic Information Services

By capitalizing on our geospatial information capabilities, which
include collecting, integrating and analyzing geographic datafrom satellite images and ground surveying, among others, we
contribute to safe and secure societies.

g 
Helping private and public sector

entities enhance operational­efficiency© Airbus Defence and Space GEO S.A.

SECOM Today

Subsidiary Pasco Corporation collects geographic data from satellite images, aerial photography, and vehicle/ground and shipborne
surveying, which it integrates, processes andanalyzes to provide geospatial information
services.
In Japan, services for customers in the­private sector include area marketing, which
involves analysis of catchment areas, logistics
and corporate disaster planning. Pasco’s highly
specialized geospatial information ­services for
public-sector entities include ­services for local
governments provided via the Local Government Wide-Area Network (LGWAN), which
protects confidential information and guarantees security, and cloud-based services. In
addition to reinforcing its business foundation,
Pasco will promote stable growth throughthe extension of services that ­facilitate the­accurate assessment and comprehensive,­integrated management of assets held by
local governments—­thereby contributing
to regional revitalization and financial­soundness—­and through support for facility
management aimed at optimizing costs andenhancing convenience.

to make predictions regarding road closures,
railway operation interruptions and otherdamage up to six hours in advance, which itthen emails to customers.
In recent years, Japan has seen a­significant rise in damage due to natural
events, including road closures due to flooding and landslides caused by localized torrential rainfall, raising companies’ awareness of
the importance of implementing effective
countermeasures. In addition to brisk orders
from manufacturers, trading companies andother private sector firms, DR-Info is ­attracting
attention from public sector entities.

SPOT 6 and SPOT 7
Earth observation satellites

g 
Enhancing access to geospatial

information from satellite images
Pasco recently signed a contract with a leading
multinational aerospace and defence company
to acquire general distribution rights for GeoIntelligence products in the Japanese market
and image data distribution rights for the
SPOT 6 and SPOT 7 Earth observation satellites. As a consequence, Pasco now distributes
data from a total of 25 commercial satellites.
Pasco will continue to strengthen its ability tocollect geospatial information by expanding
and enhancing its access to satellite data.

DR-Info disaster risk information service(This service uses Google Maps. Google Maps
is a registered trademark of Google Inc.)g 
Advanced technologies help Pascog 
Sales of DR-Info disaster risk

­information service commence
Pasco recently began offering DR-Info, acloud-based disaster risk information service
that capitalizes on its geospatial information
technologies and know-how. DR-Info uses
proprietary information gathered by Pasco
that can be plotted on a map, from which thecustomer can extract the required information
at any time to perform various simulations.
For example, Pasco combines information onrail line and road conditions with forecasts
for rainfall and wind speed, among others,
provided by the Japan Meteorological Agency

cultivate new businesses
Pasco is promoting research and developmentusing highly accurate 3D geospatial information collected using its vehicle-mounted
Mobile Mapping System (MMS) to createhigh-precision basic road information for use
in advanced driver assistance systems (ADASs).
By contributing to the creation of accurate yetcompact basic road information for ADASs
that helps improve technologies for brake
control, lane guidance, eco-driving support
and other features, Pasco is broadening thescope of its MMS-based services business.

High-precision basic road informationcollected using Pasco’s MMS is being
considered for use in ADASs.

SECOM Annual Report 201527

Information and Communication Related Services

Our extensive portfolio encompasses disaster response,
information security and cloud-based services, underpinnedby our data center facilities, enabling us to respond to diverse
needs for safety and protection.
SECOM Anshin Information Centerg 
SECOM Safety Confirmation Service,

Japan’s leading risk management
service, and an extensive range ofrelated services
A spate of earthquakes, devastating localized
torrential rainfall and other natural disasters
in the past few years has encouraged anincreasing number of companies in Japan toreassess their business continuity plans (BCPs).
Our core offering in this area, SECOM Safety
Confirmation Service, which helps subscribers
ascertain the safety of employees and theirfamilies in the event of a disaster, is one ofJapan’s leading risk management services. In
tandem with this system, we also offer suchhighly rated services as SECOM Emergency
Call Out Service, which is designed to facilitate
the swift deployment of personnel crucial tobusiness continuity and the prompt resumptionof operations in the aftermath of a disaster,and the Real-Time Disaster Information Service,whereby we collect and analyze available
information, including emergency warnings
and evacuation orders, information fromTwitter and other social networking sites, andexclusive SECOM Group information, which
we customize to meet the specific needs ofeach customer.
Secure Data Center facilityg 
SECOM Premium Net enhanced andequipped with protection for
online trading transactions

SECOM Premium Net provides protection
against online banking scams

28

SECOM Annual Report 2015

With an unprecedented number of online banking scams, including those involving illegal trans­
fers of funds, being reported in recent years,
addressing such fraudulent activity has emerged
as an urgent social imperative. SECOM Premium
Net is a system designed for financial institutions to protect corporate customers against
such scams. We have also introduced a versionof this system for consumers. SECOM Premium
Net centers on a proprietary dedicated USB
flash drive that permits connection only to theinstitution’s secure online banking site to ­protect
against phishing attacks, and encrypts communication to ensure safe online banking. Even if
an individual customer’s computer has been
infected with a malicious virus, the USB is writeprotected, preventing it from propagating thevirus and guaranteeing the security of onlinetransactions. Orders for the commercial versionof SECOM Premium Net continue to risesteadily, while the scope of application for the
consumer version has been expanded to include
protection for online trading transactions, which
has earned high marks. Looking ahead, we willcontinue to expand our range of products
designed to ensure security and peace of mind
in an increasingly Internet-driven society.
g 
SECOM Minutes Digitization Service:

Japan’s first service for
digitizing the minutes ofboard of directors’ meetings
One of many services that leverages thecapabilities of our Secure Data Center facilities
is SECOM Anshin Eco Document Digitization
Service, which assists companies in digitizing
and storing the thousands of documents they
deal with, including pay stubs and invoices,helping customers enhance information security and operational efficiency and reinforce
competitiveness. A recent addition to our
lineup is the SECOM Minutes Digitization
Service, which enables companies to digitize
the minutes of board of directors’ meetings,
greatly simplifying procedures by making it
possible for directors and auditors to accessthe minutes at a dedicated website, thereby
eliminating the need to pass around the original minutes. The system, which complies withJapan’s Companies Act, also facilitates thestorage of digitized minutes for 10 years andthe online registration of changes in directors.

g 
SECOM Anshin My Number Service

is introduced
In advance of the launch of Japan’s new My
Number social security and tax identity system
in October 2015, which will require companies
to collect and manage employee ID ­numbers,
we recently introduced the SECOM Anshin
My Number Service, a service that securesthe collection and storage of numbers andensures they can be used safely. Employee
ID numbers entrusted to us are stored at a

Secure Data Center facility, which provides
robust around-the-clock physical and cybersecurity. To use an employee ID number, companies provide the ID and a dedicated password, specifies the computer on which thenumber will be used with a digital certificate.
The service facilitates access management bykeeping a record of access. We also suggest
the installation of security cameras and access
control systems to fortify physical security at
the customer’s premises.

Real Estate and Other Servicesg 
Uniquely SECOM condominiums thatdeliver safety and peace of mind
In line with our goal of providing living spacesthat deliver reliable security and peace ofmind, we develop and provide high-grade
uniquely SECOM condominiums under
the Glorio brand. We recently commenced
sales of units in Glorio Toshimaen, Glorio
Koenji, Glorio Eifuku-cho Izumi and othercomplexes in the Tokyo metropolitan area. In
addition to MS-4, an on-line security systemfor condominiums, in each individual unit,
SECOM IX remote imaging security system incommon areas and a seismic grade 2 rating
under Japan’s three-grade system of ranking
earthquake resistance, these condominiums
feature Glorio Support 24, an around-theclock telephone-based support service.
Guided by the ALL SECOM concept, we
will continue to promote the development
and sale of quality condominiums withadvanced contingency planning features.
g 
New support package forindividuals transferred overseas
The number of Japanese citizens currently
living abroad, estimated at approximately

1.29 million, continues to rise steadily.
Japanese companies require transferred
employees to move relatively quickly to their
new posting, before which they must ensurethat the successor is fully briefed on his or her
new responsibilities and that various company
procedures are completed, as well as prepare
to move. To help address the concerns ofsuch individuals, we recently began offering
the SECOM Overseas Transfer Support
Package. Services offered as part of this package, a quintessential ALL SECOM offering,
include security for and arranging to rent out
the individual’s home temporarily and sellhis or her vehicle, taking care of insurance
formalities and monitoring the safety offamily members remaining in Japan. We also
added a general home maintenance service
for individuals who are away for an extended
period to SECOM Home Service, an optional
suite of lifestyle support services available
to SECOM Home Security subscribers. We
market these services through companies
with large numbers of employees on overseas
assignment and through travel agents.

SECOM Today

We develop and sell high-grade condominiums offering
exceptional security and earthquake resistance.
Other services include a support package for individuals
who have been transferred overseas.

Glorio Toshimaen

SECOM Overseas Transfer Support Package
housekeeping service

SECOM Annual Report 2015

29

CSR

SECOM’s CSR
Basic policies

g Strategic CSR:

g Basic CSR: Earning theAddressing evolvingsocial imperatives

Having always acknowledged the importance of ensuring sustainability for ourselves and for society, we actively seek to• contribute to society through ourbusiness activities,• identify and cultivate businesses
that enable us to fulfill our
responsibility to contribute tosociety, and• drive ongoing innovation.
We promote a variety of CSR initiatives, which we classify as either “strategic” or “basic.” We also promote active
dialogue with our many stakeholders withthe aim of further expanding our efforts.
Going forward, we will continue working
to respond to society’s expectations.

trust of stakeholders

As a company that seeks to provide
security and peace of mind, we­recognize the importance of ensuringthat both our corporate philosophy
and our business conduct are correctly
understood and positively evaluatedby society, thereby assuring that our
stakeholders continue to see us as atrusted partner. To this end, we havealways adhered to stringent internal
standards for compliance and risk management that exceed those mandatedby laws and regulations in Japan.

Our strategic CSR initiatives emphasize
capitalizing on the principal sourcesof our competitiveness, namely, our­technologies, human resources and operating organization, and on our ability tomake effective use of Big Data, madepossible by our network of data center
facilities, which underpins our business
infrastructure. Guided by the ALL SECOM
concept, which focuses on rallying
Group strengths, we continue working
to develop and provide a wide range ofservices and systems in line with three
key themes—security, a super-aged­society and disaster preparedness/BCP/
environmental preservation.

Guided by the ALL SECOM concept, we are working to provide security and peace of mind
and to make life more comfortable and convenient by
responding to social imperatives and helping to resolve everyday concerns
Strategic CSR: Addressing evolving social imperatives
Super-aged society
Data Center

Disaster preparedness/BCP/
environmental preservation

Security

Basic CSR: Earning the trust of stakeholders
Consumer issues

Human rights and labor practices
Community involvement and development

Environment

Fair operating practices

Organizational governanceCommunication with stakeholders
Shareholders andinstitutional
investors

30

Customers

SECOM Annual Report 2015

Employees

Suppliers

Communities

Media

Local
governments

Nonprofit andnongovernmentalorganizations

g Basic CSR initiatives
provide training aimed at enhancing
employees’ understanding thereof.
We also place a priority on ensuringsafety and a favorable work–life balancefor our employees. Accordingly, we
have put in place generous health­management and leave programs.

Consumer issues
To ensure the quality of our services
is consistently worthy of the SECOM
name we have established a frameworkin our security services business that
ensures exceptional safety and reliability
across all processes, from R&D throughto maintenance, and conduct practicaltraining for employees that aims toenhance know-how and skill levels,
thereby contributing directly to improvements in quality and reliability. We work
to further enhance the quality of ourservices by paying heed to feedback
received by SECOM customer service
centers, as well as by speaking directly
to customers.

Environment
In the belief that protecting theenvironment is essential to our ability
to provide security and support comfortable lifestyles, we continue to promoteawareness of our environmental
philosophy—which is to incorporate
consideration for the environment into
all areas of our operations—and ourbasic environmental policy among all
employees. We are also implementing
measures aimed at addressing such key
issues as global warming and resource
depletion and ensure our operations
conform with pertinent laws andregulations.

Fuel-efficient SECOM service vehicle
SECOM customer service center

Human rights and labor practices
In line with our belief that creating
working environments conducive to job
satisfaction and helping employees fulfill
their potential are key to driving growthfor SECOM, we have established a­variety of unique employee training programs designed to maximize individual
talents and hone skills. We recognize
respect for human rights as an essential
aspect of corporate management andCommunity involvement anddevelopment
We recognize contributing to the­community through the provision of

security and peace of mind, as well as
through the creation of employment
opportunities and support for local
development, as an important respon­
sibility. Accordingly, we promote a­variety of efforts designed to contributeto communities. These include offering
programs for children, women andseniors designed to raise crime­prevention awareness.
Fair operating practices
Efforts to strengthen our cooperation
with suppliers, as well as to promotemutual understanding and compliancewith laws and regulations, have enabled
us to create a solid framework for providing high-grade services and systems.
We also work to promote awareness of
key components of CSR, including thesafeguarding of human rights, ensuringindustrial safety and employee wellbeing, and protecting the environment,
across our entire value chain.
Organizational governanceTo increase the efficiency and transparency of management practices, thereby
enabling us to consistently increase ourcorporate value, we have taken steps toenhance our corporate governance system, including appointing independent
outside directors. We are also promoting decisive management-led efforts tostrengthen our compliance frameworkand improve disclosure.

Corporate Social Responsibility

We have aligned our basic CSR initiatives with ISO 26000, the international
standard for social responsibility. Taking
into account the key areas of focus outlined in ISO 26000, we have identified
and continue to emphasize efforts in thefollowing categories.

Crime prevention awareness program featuringskits and other activities

SECOM Annual Report 201531

Close-up

Support for Competitive Sports
By providing support for competitive sports in Japan,
we will continue to bolster our corporate value.
g Helping to ensure the safety

and security of long-distancerunning events
SECOM is a company that has pushed
tirelessly forward since its founding torealize its mission. The image of thelong-distance runner pushing himself
or herself to the limit to reach the finish
line is thus one that resonates withus. This affinity has encouraged us tobecome a corporate sponsor of andprovide wide-ranging support for longdistance running events across Japan.
As a corporate sponsor of the 91stedition of the Hakone Ekiden, Japan’s
premier university ekiden (long-distanceroad relay), in January 2015, we were
responsible for, among others, ensuring
runner security, creating a safe environment for the thousands of spectators
lining the course and providing AEDs,

all of which helped ensure a smoothand safe race.
The Boston Marathon bombingof April 2013 prompted a significant
tightening of security at international
marathons around the world. As an
official partner of the Tokyo Marathon
2015, one of six races in the annual
Abbot World Marathon Majors series
and Japan’s largest marathon, which washeld in February 2015, we contributed
to the safety of the event by providing
static guard services at start area gatesto check baggage and direct spectatorsand by installing roadside network
security cameras over the entire course.
We were recently named the official
provider of security for the first Saitama
Marathon, which is scheduled for
November 2015, where we will be incharge of ensuring the safety of runners

and spectators. Going forward, we will
expand our support for such events withthe aim of contributing to the growthand success of these and other longdistance running events in Japan.
g Official sponsorship of the Japan

women’s national rugby teams
We also identify strongly with the­stubborn determination of rugby
players to play on no matter what, a
trait that echoes our determination
to always move forward. Since 2014,
we have been an official sponsor of theJapan women’s national seven-a-sideand ­fifteen-a-side rugby teams, having
signed an agreement with Japan Rugby
Football Union, the governing body forrugby in Japan.

SECOM is an official sponsor of the Sakura Sevens and
Sakura Fifteen©Japan Rugby Football Union

SECOM helped ensure the safetyof runners and spectators©Tokyo Marathon Foundation
As a corporate sponsor, SECOM also
contributed to the safety of the 2015
Hakone Ekiden (relay race)©Gekkan Rikujyo Kyogi(Monthly Track & Field )32

SECOM Annual Report 2015

Financial Review
Operating Results

Overview
In the year ended March 31, 2015,
SECOM CO., LTD. and its subsidiaries(collectively, “the Company”) sought toprovide high-quality products and services
that respond to the needs of customers in
its core security services segment, as wellas in its fire protection services, medical
services, insurance services, geographic
information services, information andcommunication related services, and realestate and other services segments.
Consolidated net sales and operating
revenue advanced 2.6%, or ¥24.1 billion,to ¥945.2 billion. Principal contributing
factors included higher net sales andoperating revenue in the security services
and medical services segments—theformer underpinned by increased revenue
from on-line security systems and higher
sales of large-scale security systems andsecurity camera systems and the latter by
the expansion and rebuilding of hospitals
and a robust performance by the pharmaceuticals dispensing services business—andthe inclusion of a full year of operating
results for a subsidiary newly consolidated
in the fourth quarter of the fiscal year
ended March 31, 2014. Operating income
rose 1.6%, or ¥1.9 billion, to ¥122.0
billion, bolstered by gains in the insurance
services and the security services segments
ascribed to, respectively, a decline in losses
incurred due to damage caused by natural
disasters and the increase in net sales andoperating revenue. Net income attributable to SECOM CO., LTD., was up 8.4%,
or ¥6.2 billion, to ¥80.2 billion, owing
mainly to the increase in operating income
and to lower income taxes, which primarilyreflected a statutory tax rate reduction that
resulted from tax reform in Japan.

Costs and Expenses
Total costs and expenses were up 2.8%,
or ¥22.2 billion, to ¥823.2 billion. Costof sales, at ¥644.2 billion, was up 2.4%,
or ¥15.3 billion, and was equivalent to68.2% of net sales and operating revenue,
an improvement from 68.3% in the­previous fiscal year.

Operating Income
Operating income rose 1.6%, or ¥1.9
billion, to ¥122.0 billion, equivalent to12.9% of net sales and operating revenue,compared with 13.0% in the previous
fiscal year. The Company’s segments, inorder of size of contribution to operating
income, were security services, fire protection services, insurance services, real estateand other services, geographic information
services, medical services, and informationand communication related services.
(For further details, please see Segment
Information below.)
Other Income and Expenses
Other income declined ¥2.4 billion,to ¥9.3 billion, while other expenses
increased ¥448 million, to ¥3.4 billion,
resulting in net other income of ¥5.9 billion, down ¥2.8 billion from the previous
fiscal year. Principal factors behind thisresult included decreases of ¥1.5 billion ingain on private equity investments, to ¥4.1
billion, and ¥879 million in loss on gain on
sales of securities, net, to ¥56 million.
Income Before Income Taxes andEquity in Net Income of AffiliatedCompanies
Income before income taxes and equity
in net income of affiliated companies
decreased 0.7%, or ¥884 million, to¥127.9 billion, reflecting the gain in
operating income and the decline in net
other income.
Income Taxes
Income taxes were down ¥3.7 billion,to ¥46.0 billion, equivalent to 36.0% ofincome before income taxes and equity
in net income of affiliated companies,
compared with 38.6% in the previous
fiscal year. This result was due mainly toa decline in the statutory tax rate as aconsequence of tax reform in Japan.

Equity in Net Income of AffiliatedCompanies
Equity in net income of affiliatedcompanies increased ¥1.7 billion from theprevious fiscal year, to ¥5.8 billion, owing
primarily to increases in equity in the net
income of certain overseas affiliates.
Income from Discontinued Operations
Discontinued operations include any
component of an entity with its own
identifiable operations and cash flows thathas been disposed of or is to be sold andin which the Company has no significant
continuous involvement. As a result of thedivestiture of a business in the real estateand other services segment, the Company
reported income from discontinued
operations, net of tax, of ¥814 million,
compared with a loss from such operationsof ¥132 million in the previous fiscal year.
Net Income Attributable to
Noncontrolling Interests
Net income attributable to noncontrollinginterests amounted to ¥8.3 billion, down
¥678 million from the previous fiscal year.
Net Income Attributable to
SECOM CO., LTD.
Net income attributable to SECOM CO.,LTD., advanced 8.4%, or ¥6.2 billion, to¥80.2 billion, equivalent to 8.5% of net
sales and operating revenue, up from
8.0% in the previous fiscal year. Net
income attributable to SECOM CO., LTD.
per share was ¥367.37, up from ¥338.94.
At the general shareholders meeting heldon June 25, 2015, a proposal to pay a
year-end cash dividend of ¥65.0 per share
was approved. Dividends for the year
ended March 31, 2015—¥125.00 per
share, an increase of ¥10.00 from the previous fiscal year—comprise the year-end
dividend and a newly inaugurated interim
dividend of ¥60.00, determined by the
Board of Directors. However, because boththe ¥115.0 per share annual dividend forthe year ended March 31, 2014, approvedat the general shareholders’ meeting heldon June 25, 2014, and the ¥60.00 fiscal
2014 interim dividend for the year ended
March 31, 2015, determined by the Boardof Directors and paid to shareholders ofrecord as of September 30, 2014, were
paid during the period, dividends paid toshareholders in the period under review
amounted to ¥175.0 per share.

SECOM Annual Report 2015

Financial Review

Net Sales and Operating Revenue
Consolidated net sales and operating
revenue increased 2.6%, or ¥24.1 billion,to ¥945.2 billion, bolstered by increases
in the security services, medical services,
real estate and other services, insurance
services and information and communication related services segments, although
the geographic information services andfire protection services segments reported
declines. (For further details, please see
Segment Information below.)

Selling, general and administrative(SG&A) expenses rose 1.5%, or ¥2.5
billion, to ¥168.6 billion. SG&A expenses
were equivalent to 17.8% of net sales andoperating revenue, an improvement from
18.0% in the previous fiscal year.
Due to the recognition of impairment
losses on certain business-related assets
in the information and communication
related services segment, impairment loss
on long-lived assets rose to ¥6.6 billion,
an increase of ¥3.8 billion, while an
impairment loss on goodwill in the medical
services business pushed impairment loss
on goodwill up ¥1.2 billion, to ¥1.3 billion.
In contrast, loss on sales and disposal of
fixed assets, net, declined ¥627 million, to¥2.6 billion.

33

Financial Review

Segment Information(For further information, please see Note 27 of
the accompanying Notes to the Consolidated
Financial Statements.)

Security Services
The security services segment comprises
electronic security services, which centeron on-line security systems; other security
services; and merchandise and other. In the
period under review, net sales and operating revenue in this segment increased
3.1%, or ¥14.8 billion, to ¥490.0 billion.
Excluding intersegment transactions, net
sales and operating revenue in this segment
amounted to ¥487.1 billion, representing
51.5% of overall net sales and operating
revenue, up from 51.3% in the previous
fiscal year.
In addition to on-line commercial
and home security systems, electronic
security services include large-scale
proprietary security systems, which centeron surveillance services for the subscriber’s
premises. On-line commercial and home
security systems use sensors, controllers
and other equipment installed at thesubscriber’s premises to detect events,
including intrusions, fires and equipment
malfunctions. Equipment is linked to a
SECOM control center via telecommunications circuits to facilitate around-the-clock
remote monitoring. Should an irregularity
be detected, relevant information is relayed
to the control center, where staff dispatch
emergency response personnel to takeappropriate measures. Control center staff
also notify the police or fire department, if
necessary. The Company has established an
integrated approach, whereby it takes full
responsibility for all aspects of its on-line
commercial and home security systems,
from R&D through to equipment manufacturing, sales, security planning, installation,
monitoring, emergency response services
and equipment maintenance. Net sales
and operating revenue from electronic
security services rose 2.6%, or ¥8.2 billion,to ¥326.3 billion, owing to an increasein net sales and operating revenue in thissegment in Japan, reflecting an expanded
lineup of value-added services that respondto diverse security needs, as well as to thepositive impact of yen depreciation andhigher sales of large-scale security systems
on the net sales and operating revenue ofoverseas subsidiaries.
Other security services include static
guard services and armored car services.
Static guard services, which are provided byhighly trained professional security guards
for situations requiring human judgment
and flexible responsiveness, generated
net sales and operating revenue of ¥53.8
billion, up 4.1%, or ¥2.1 billion, as legal
and regulatory changes reinforced needs

34

SECOM Annual Report 2015

for effective security. Armored car services,which involve the transport of cash, securities and other valuables using specially fitted armored cars and security professionals,
reported net sales and operating revenueof ¥21.0 billion, up 1.2%, or ¥243 million.
The merchandise and other category
encompasses sales of a wide range of
security products, including security
camera systems, access control systems,
automated fire extinguishing systems andexternal monitoring systems, which can be
freestanding or linked to on-line security
systems. Net sales and operating revenue inthis category increased 5.0%, or ¥4.1 billion, to ¥86.0 billion, bolstered by increases
in leases of large-scale security systems andsales of security camera systems.
Operating income in the security
services segment increased 2.9%, or ¥3.0
billion, to ¥107.1 billion. The operating
margin was level at 21.9%. This result was
attributable to the increase in net sales
and operating revenue for on-line security
systems in Japan and the positive impact ofyen depreciation and higher sales of largescale security systems on the operating
income of overseas subsidiaries.
Fire Protection Services
This segment focuses on high-grade,tailored, automatic fire alarm systems,
fire extinguishing systems and other fire
protection systems for a wide range ofapplications, including office buildings,
plants, tunnels, cultural properties, ships
and residences. In the period under review,
Nohmi Bosai and Nittan, two of Japan’s
leading domestic fire protection services
providers, sought to leverage their respective business foundations and productdevelopment capabilities to secure orders
for fire protection systems.
Net sales and operating revenue inthis segment edged down 0.7%, or ¥841
million, to ¥126.3 billion. In contrast,
operating income advanced 19.5%, or¥2.0 billion, to ¥12.5 billion, and theoperating margin improved to 9.9%, from
8.2%, a consequence largely of efforts toboost operating efficiency, which reduced
both cost of sales and SG&A expenses, andto a decrease in loss-making orders thanks
to an improved order environment.
Medical Services
The medical services segment encompasses
home medical services, which center onhome nursing and pharmaceutical dispensing services, as well as the operation ofresidences for seniors, electronic medical
report systems, sales of medical equipment,
personal care services, and support forthe management of hospitals and healthcare-related institutions. The segment also
includes the operations of variable interest

entities of which the Company is the primary beneficiary, which manage hospitals
and health care-related institutions.
Segment net sales and operating
revenue rose 3.6%, or ¥5.4 billion, to¥156.0 billion. The principal factors behind
this result were an increase in contributions
from operations of the aforementioned
variable interest entities arising from the
expansion and modification of hospitals,
and a robust performance in the pharmaceuticals dispensing services business.
Operating income fell 43.8%, or ¥1.2
billion, to ¥1.5 billion, while the operating
margin slipped to 1.0%, from 1.8%, owing
mainly to the aforementioned expansion
and refurbishment of hospitals and to
the recognition of impairment losses on
goodwill of certain variable interest entities.
Insurance Services
The insurance services segment offers anextensive lineup that includes the Security
Discount Fire Policy, a commercial fire insurance policy, and SECOM Anshin My Home,a comprehensive fire insurance policy forhomes—both of which offer discounts onpremiums to customers who have installed
on-line security systems, recognizing
this as a risk-mitigating factor—and
SECOM Anshin My Car, a comprehensive
automobile insurance policy that offers
onsite support services provided by SECOM
emergency response personnel should thepolicyholders be involved in an accident.
Other offerings include MEDCOM, anunrestricted cancer treatment policy thatcovers the entire cost of medical treatment
for cancer.
Net sales and operating revenue in thissegment increased 3.9%, or ¥1.5 billion,to ¥41.5 billion, despite a decline in net
realized investment gains, spurred by anincrease in insurance premiums due toexpanded sales of fire insurance policies
and the MEDCOM unrestricted cancer
treatment policy. Operating income climbed
300.7%, or ¥6.0 billion, to ¥8.0 billion,
and the operating margin improved to
19.4%, from 5.0% in the previous fiscal
year, thanks to a decline in losses incurred
as a result of damage caused by natural
disasters.
Geographic Information Services
The geographic information services segment includes the collection of geographic
data from satellite images, aerial photography and vehicle-based ground surveying,
which it integrates, processes and analyzes
to provide a variety of geospatial information services to public sector entities,
including national and local governments,
and private sector customers in Japan. The
Company also extends geospatial information services to government agencies

overseas, including in emerging economies
and developing countries.
Segment net sales and operating
revenue declined 3.3%, or ¥1.8 billion, to¥52.9 billion, reflecting declines in net sales
and operating revenue from services forthe public sector in Japan and for overseas
customers. Operating income fell 34.4%,
or ¥1.3 billion, to ¥2.4 billion, as the cost
ratio increased. The operating margin was
4.6%, compared with 6.8% in the previous
fiscal year.
Information and Communication
Related Services
Information and communication related
services focus on data center services,

Real Estate and Other Services
The real estate and other services segment
encompasses the development and sales ofcondominiums equipped with sophisticatedsecurity and disaster-preparedness features,
as well as real estate leasing, construction
and installation and other services.
Segment net sales and operating
revenue increased 13.2%, or ¥5.3 billion,to ¥44.9 billion, despite falling sales of condominiums, thanks to the inclusion of a fullyear of results for a construction and installation subsidiary consolidated in the fourth
quarter of the preceding period. Owing
to an increase in operating income in theconstruction and installation business, segment operating income advanced 8.6%, or¥402 million, to ¥5.1 billion, although theoperating margin edged down to 11.3%,
from 11.8% in the previous fiscal year.

as of March 31, 2015, compared with 2.0
times at the previous fiscal year-end.
Investments and long-term receivablesrose ¥32.9 billion, to ¥357.6 billion, equivalent to 23.4% of total assets. Investment
securities increased ¥26.1 billion to ¥230.7
billion, a consequence primarily of thepurchase of bonds in the insurance services
and other businesses, an upturn in the fairvalue of investment securities held and anincrease in the fair value of private equity
investments. Investments in affiliatedcompanies, at ¥56.2 billion, were up ¥6.4
billion, underpinned by expanded earnings
at overseas affiliated companies and thedepreciation of the yen.
Property, plant and equipment, lessaccumulated depreciation, rose ¥2.3 billion,to ¥396.7 billion, or 26.0% of total assets.
The purchase of real estate adjacent to a
hospital operated as part of the medical
services segment and of a site for a firepro­tection services segment production
facility pushed land up ¥4.8 billion, to¥118.0 billion. Security equipment andcontrol stations advanced ¥10.5 billion, to¥302.7 billion, owing to an increase in contract ­volume in the security services business. The completion of work to expand
and modify certain hospitals managed byvariable interest entities led to a decline in­construction in progress and a commensurate increase in buildings and improvements as well as an increase in machinery,equipment and automobiles.
Other assets totaled ¥155.6 billion, up¥12.0 billion, and represented 10.2% of
total assets. Prepaid pension and severance
costs rose ¥13.0 billion, to ¥35.0 billion,
reflecting increases in the fair value ofplan assets.
Total liabilities as of March 31, 2015,
amounted to ¥586.7 billion, an increaseof ¥6.3 billion, and accounted for 38.5%

as well as uniquely SECOM BCP support
services, information security services andcloud-based services.
Net sales and operating revenue in thissegment rose 1.1%, or ¥566 million, to¥53.9 billion. In contrast, operating income
dropped 86.0%, or ¥5.5 billion, to ¥894
million, pushing the operating margin
down to 1.7%, from 11.9% in the previous
fiscal year, owing to the recognition of
impairment losses on certain businessrelated assets and an increase in operating
costs for data center facilities.

Financial Position
Total assets as of March 31, 2015,
amounted to ¥1,525.9 billion, ¥85.2 billion
higher than at the end of the previous fiscal
year. Total current assets, at ¥616.0 billion,
were up ¥38.0 billion, and accounted
for 40.4% of total assets. Cash and cash
equivalents totaled ¥248.6 billion, an
increase of ¥17.9 billion, owing to the factthat net cash provided by operating activities exceeded net cash used in investing
and financing activities. (For further details,
please see Cash Flows, which follows thissection.) Notes and accounts receivable,
trade, decreased ¥8 million, to ¥128.0 billion. Inventories, at ¥60.6 billion, were up¥8.8 billion, reflecting an increase in workin process in the real estate business andother factors. Short-term investments rose
¥15.0 billion, to ¥25.0 billion, as bonds due
within one year formerly included in investment securities were reclassified to thiscategory. The current ratio was 2.1 times

SECOM CO., LTD.
Shareholders’ Equity per ShareTotal Assets(Year ended March 31, 2015)(In yen)
4,000(In billions of yen)

3,000

1,200

2,000

800

1,000

400

5.0%

4.5%

5.6%
4.1%

16.5%

51.5%

12.8%

Security Services
Medical Services
Geographic Information Services
Real Estate and Other Services

Fire Protection Services
Insurance Services
Information andCommunication
Related Services

Financial Review

Percentage of Consolidated
Net Sales and Operating Revenue*

1,600

0

0

11 12 13 14 15

11 12 13 14 15* Pie chart shows percentage of consolidated net sales andoperating revenue (excluding intersegment transactions)

SECOM Annual Report 201535

Financial Review

of total liabilities and equity. Total current
liabilities, at ¥286.6 billion, were down
¥8.6 billion, and represented 18.8% of
total liabilities and equity. Bank loans
declined ¥8.6 billion, to ¥43.9 billion, anddeposits received decreased ¥1.5 billion,to ¥20.9 billion, largely because of a temporary shift in the balance of bank loans
and deposits received for cash collection
and deposit services. Notes and accounts
payable, trade, declined ¥5.7 billion, to¥44.3 billion, owing to the settlement ofaccounts related to the purchase of assets
for lease and construction orders in the
security services business, which rose at theprevious fiscal year-end.

Total long-term liabilities increased¥14.9 billion, to ¥300.1 billion, and represented 19.7% of total liabilities and equity.
Deferred income taxes, at ¥28.4 billion,
were up ¥9.3 billion, a consequence mainlyof increases in the fair value of pension
plan assets and investment securities. Longterm debt rose ¥6.0 billion, to ¥53.8 billion,
with contributing factors including thepurchase of assets for lease in the security
services business.
Total SECOM CO., LTD. shareholders’equity advanced ¥72.9 billion, to ¥826.0
billion. Net income attributable to SECOM
CO., LTD., less the payment of cash dividends, resulted in a ¥41.9 billion increase

in retained earnings, to ¥716.5 billion.
Accumulated other comprehensive income
was ¥33.0 billion, up ¥31.2 billion fromthe previous fiscal year, as unrealized gains
on securities rose ¥13.0 billion, to ¥25.6
billion, and foreign currency translation
adjustments yielded income of ¥9.5 billion,
compared with a loss of ¥1.9 billion in theprevious fiscal year. As a result, the equity
ratio was 54.1%, compared with 52.3% asof March 31, 2014.

fiscal year. Contributing factors included
decreases in receivables and due from sub­scribers, net of allowances, owing to thecollection of amount due, and in cash
deposits for cash collection and deposit
services, and an increase in accrued consumption tax arising from a consumption
tax rate hike in the period under review.
Net cash used in investing activities
amounted to ¥69. 3 billion. This result
reflected payments for purchases ofproperty, plant and equipment of ¥56.3
billion—reflecting outlays for security
equipment and control stations attributable
to an increase in the number of security
services subscribers and for the expansion
and modification of hospitals managed byvariable interest entities—and payments forpurchases of investment securities of ¥51.6
billion, including outlays for purchasesof investment securities in the insurance
services business and for private equity
investments in the United States, which
was partially offset by proceeds from sales
and redemption of investment securitiesof ¥38.2 billion. Net cash used in investing
activities was down ¥26.0 billion fromthe previous fiscal year, owing mainly toa decrease in payments for purchases ofinvestment securities.
Net cash used in financing activities
amounted to ¥49.1 billion. In addition todividends paid to SECOM CO., LTD. shareholders of ¥38.2 billion, this included a
decrease in bank loans, net, of ¥8.6 billion.
Net cash used in financing activities was¥27.3 billion higher than in the previous fiscal year. Principal factors behind this result
were a decrease in bank loans for cash
collection and deposit services and the payment of an interim dividend—inaugurated
in the period under review—and a year-end
dividend.
The Company’s operating, investing
and financing activities in the period
under review yielded net cash and cash
equivalents at end of year of ¥248.6 billion,up ¥17.9 billion from net cash and cash
equivalents at beginning of year, whichwere ¥230.8 billion.

Cash Flows
The Company is committed to maintaining
sufficient liquidity to allow flexibility in its
operations and ensure a solid financial
foundation. To the best of its ability, theCompany is also firmly committed tofinancing strategic investments with cash
generated by its operating activities.
In the period under review, net cash
provided by operating activities amounted
to ¥134.9 billion. Significant factors contributing to this result included net incomeof ¥88.5 billion and non-cash items,
notably depreciation and amortization,
including amortization of deferred charges,of ¥68.9 billion, which were partially offset
by an increase in deferred charges of ¥17.2
billion, and an increase in inventories of¥11.1 billion. Deferred charges consisted
primarily of costs related to the installationof equipment as part of on-line security
systems. (For further details, please see
Note 2 (12) of the accompanying Notes toConsolidated Financial Statements.) Net
cash provided by operating activities was¥11.7 billion higher than in the previous

Capital Expenditures

Cash Flows(In billions of yen)

(In billions of yen)

(In billions of yen)

80

80

200

60

60

40

40

Depreciation andAmortization

150
100
50
0
20

–50

20

–100
0

11 12 13 14 150

11 12 13 14 15

–150

13

14

15

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities

36

SECOM Annual Report 2015

AUDITED FINANCIAL STATEMENTS

Contents
Consolidated Financial Statements ............................................ 38
Consolidated Balance Sheets ................................................. 38
Consolidated Statements of Income ...................................... 40
Consolidated Statements of Comprehensive Income.............. 40
Consolidated Statements of Changes in Equity ...................... 41
Consolidated Statements of Cash Flows ............................... 42
Notes to Consolidated Financial Statements........................... 43
Independent Auditors’ Report .................................................... 69

SECOM Annual Report 201537

Consolidated Financial Statements
Consolidated Balance Sheets
SECOM CO., LTD. and Subsidiaries
March 31, 2015 and 2014

In millions of yen

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

March 31

March 31

2014

2015

Current assets:
Cash and Cash equivalents (Notes 5 and 22) .............................................................. ¥ 248,627 ¥ 230,752
Time deposits (Note 13)..............................................................................................
9,550
9,524
Cash deposits (Note 6) ...............................................................................................
50,39558,597
Short-term investments (Notes 7 and 22)....................................................................
25,002
10,032
Notes and accounts receivable, trade..........................................................................
127,992
128,000
Due from subscribers..................................................................................................
37,927
38,618Inventories (Note 8) ....................................................................................................
60,621
51,865
Short-term receivables (Notes 9, 13, 20 and 21) .........................................................
25,461
21,333
Allowance for doubtful accounts (Note 9) ..................................................................
(1,867)(1,885)
Deferred insurance acquisition costs (Note 14)............................................................
5,953
5,015
Deferred income taxes (Note 17) ................................................................................
12,92914,021Other current assets ...................................................................................................
13,451
12,207$2,071,892
79,583419,958
208,350
1,066,600
316,058
505,175
212,175(15,558)
49,608
107,742
112,092

ASSETS

Total current assets .............................................................................................

616,041

578,079

5,133,675

Investments and long-term receivables:
Investment securities (Notes 2 (7), 7, 13 and 22).........................................................
Investments in affiliated companies (Note 10) .............................................................
Long-term receivables (Notes 9, 13, 20 and 21) ..........................................................
Lease deposits ............................................................................................................
Other investments ......................................................................................................
Allowance for doubtful accounts (Note 9) ..................................................................

230,728
56,20948,954
14,06914,822(7,201)

204,604
49,762
49,718
13,831
12,775(5,987)

1,922,733
468,408
407,950
117,242
123,517(60,008)

357,581324,7032,979,842

Property, plant and equipment (Notes 11, 13, 19 and 20):
Land...........................................................................................................................
Buildings and improvements.......................................................................................
Security equipment and control stations .....................................................................
Machinery, equipment and automobiles .....................................................................
Construction in progress ............................................................................................

117,952
300,769
302,659
113,114
3,827

113,159
297,349
292,114
107,820
7,840

982,933
2,506,408
2,522,158
942,617
31,892

Accumulated depreciation ..........................................................................................

838,321(441,652)

818,282(423,895)

6,986,008(3,680,433)

396,669

394,387

3,305,575

43,64831,70140,17535,011
5,037

42,53932,87239,01022,054
7,061

363,733
264,175
334,792
291,758
41,975

155,572

143,536

1,296,433

Total assets ......................................................................................................... ¥1,525,863 ¥1,440,705$12,715,525

Other assets:
Deferred charges (Note 2 (12)) ...................................................................................
Goodwill (Note 12) .....................................................................................................
Other intangible assets (Notes 12, 13, 19 and 20) ......................................................
Prepaid pension and severance costs (Note 15) ...........................................................
Deferred income taxes (Note 17) ................................................................................

See accompanying notes to consolidated financial statements.

38

2015

SECOM Annual Report 2015

LIABILITIES AND EQUITYCurrent liabilities:
Bank loans (Notes 6 and 13) ....................................................................................... ¥Current portion of long-term debt (Notes 13, 19 and 21) ...........................................
Notes and accounts payable, trade .............................................................................
Other payables ...........................................................................................................
Deposits received (Note 6) ..........................................................................................
Deferred revenue .......................................................................................................
Accrued income taxes ................................................................................................
Accrued payroll ..........................................................................................................
Other current liabilities (Note 17) ................................................................................

In millions of yen

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

March 31

March 31

2014

2015

2015

43,924 ¥13,36844,30034,95820,92939,737
21,102
29,05839,18052,542
15,39849,96132,22822,41639,487
28,10628,96426,016$

366,033
111,400
369,167
291,317
174,408
331,142
175,850
242,150
326,499

Total current liabilities .........................................................................................

286,556

295,118

2,387,966

Long-term liabilities:
Long-term debt (Notes 13, 19 and 21) .......................................................................
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 21) .............................................
Deferred income taxes (Note 17) ................................................................................
Other long-term liabilities (Notes 21, 22 and 23) ........................................................

53,80334,64225,648
16,591
99,58430,272
28,402
11,19847,85034,65728,27916,83598,71929,531
19,13910,221

448,358
288,683
213,733
138,258
829,867
252,267
236,683
93,317

Total long-term liabilities .....................................................................................

300,140

285,2312,501,166

Total liabilities .....................................................................................................

586,696580,349

4,889,132

66,37873,442
10,401
716,487

66,37873,781
10,316
674,585

553,150
612,017
86,6755,970,725

25,564
5(2,140)
9,533

12,5609(8,954)(1,894)

213,03342(17,833)
79,44232,962

1,721

274,684

Commitments and contingent liabilities (Note 24)
Equity:SECOM CO., LTD. shareholders’ equity (Note 18):
Common stock
Authorized—900,000,000 sharesissued 233,288,717 shares in 2015 and 2014 .......................................................
Additional paid-in capital............................................................................................
Legal reserve ..............................................................................................................
Retained earnings.......................................................................................................
Accumulated other comprehensive income (loss):
Unrealized gains on securities (Note 7) ....................................................................
Unrealized gains on derivative instruments (Note 23) ..............................................
Pension liability adjustments (Note 15) ....................................................................
Foreign currency translation adjustments ................................................................
Common stock in treasury, at cost:(73,701)(73,682)(614,175)

Total SECOM CO., LTD. shareholders’ equity .......................................................

825,969

753,099

6,883,076

Noncontrolling interests .................................................................................................

113,198

107,257

943,317

Total equity .........................................................................................................

939,167

860,356

7,826,393

Total liabilities and equity .................................................................................... ¥1,525,863 ¥1,440,705$12,715,525

Financial Section

15,024,812 shares in 2015 and 15,022,012 shares in 2014 .....................................

See accompanying notes to consolidated financial statements.

SECOM Annual Report 201539

Consolidated Statements of Income
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2015

Net sales and operating revenue (Notes 14 ,18 and 22)
Costs and expenses:
Cost of sales (Note 8) .........................................................................................................
Selling, general and administrative expenses (Notes 2 (17), 2 (18), 2 (19) and 4).................
Impairment loss on long-lived assets (Note 11) ...................................................................
Impairment loss on goodwill (Note 12) ...............................................................................
Loss on sales and disposal of fixed assets, net ....................................................................
Operating income..................................................................................................
Other income:Interest and dividends ........................................................................................................
Gain on sales of securities, net (Notes 7 and 18) ................................................................
Gain on private equity investments (Note 22) .....................................................................
Other (Notes 16, 18 and 23) ..............................................................................................
Other expenses:
Interest .............................................................................................................................
Loss on other-than-temporary impairment of investment securities (Notes 18 and 22) ........
Other (Note 23) .................................................................................................................
Income before income taxes and equity in net income of affliated companies ........
Income taxes (Note 17):
Current .............................................................................................................................
Deferred ............................................................................................................................
Income from continuing operations before equity in net income ofaffiliated companies.............................................................................................
Equity in net income of affliated companies (Note 18) ...................................................
Income from continuing operations .......................................................................
Income (loss) from discontinued operations, net of tax (Note 25) .................................
Net income............................................................................................................
Less: Net income attributable to noncontrolling interests .............................................
Net income attributable to SECOM CO., LTD. .......................................................

Per share data (Note 2 (21)):
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. ....................................................................
Cash dividends per share (Note 18) ...................................................................................

In millions of yen

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

Years ended March 31

Year ended March 31

2015

2014

2013

2015

¥945,238¥921,146¥858,406$7,876,983

644,196
168,563
6,591
1,314
2,567
823,231122,007628,916
166,018
2,789
151
3,194
801,068
120,078

580,154
161,085
381
1,052
2,185
744,857
113,549

5,368,299
1,404,692
54,925
10,95021,3926,860,258
1,016,725

1,412
56
4,062
3,763
9,293

1,310
935
5,564
3,849
11,658

903
150
5,095
3,800
9,948

11,767467
33,85031,35877,442

1,394
154
1,895
3,443
127,857

1,433
78
1,484
2,995
128,741

1,533
48
1,563
3,144
120,353

11,617
1,283
15,792
28,692
1,065,475

46,837(865)
45,97247,5442,151
49,69545,1401,557
46,697

390,308(7,208)383,100

81,88579,04673,656
5,759
4,017
3,895
87,644
83,06377,551
814
(132)
(908)
88,45882,931
76,643(8,274)(8,952)(6,063)¥ 80,184 ¥ 73,979 ¥ 70,580

682,375
47,992
730,367
6,783
737,150(68,950)$ 668,200

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

Years ended March 31

Year ended March 31

2015

2014

2013

2015

¥363.643.73
367.37¥175.00¥339.55(0.61)
338.94¥105.00¥327.02(3.66)
323.36¥ 90.00

$3.03
0.03
3.06
$1.46

In millions of yen

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

Years ended March 31

Year ended March 31

Consolidated Statements of Comprehensive Income
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2015

Comprehensive income:Net income ........................................................................................................................
Other comprehensive income (loss), net of tax:
Unrealized gains on securities ........................................................................................
Unrealized gains on derivative instruments .....................................................................
Pension liability adjustments ..........................................................................................
Foreign currency translation adjustments .......................................................................
Total comprehensive income ..............................................................................................
Less: Comprehensive income attributable to noncontrolling interests ..........................
Comprehensive income attributable to SECOM CO., LTD. ......................................................
See accompanying notes to consolidated financial statements.

40

SECOM Annual Report 2015

2015

2014

2013

2015

¥ 88,458¥ 82,931¥76,643$ 737,150

13,588
1,120
(8)
2
7,194
5,543
12,17918,092
121,411
107,688(9,986)(10,802)¥111,425 ¥ 96,886

7,384
15
(708)
10,10593,439(7,113)¥86,326

113,234(66)
59,950101,492
1,011,760(83,218)$ 928,542

Consolidated Statements of Changes in Equity
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2015

In millions of yen

Commonstock

Additional
paid-in
capitalLegalreserve

Retainedearnings

Accumulated
other comprehensive
income (loss)

Balance, March 31, 2012 ..................................................... 233,288,717
Comprehensive income:Net income ........................................................................
—
Other comprehensive income (loss), net of tax (Note 18):
Unrealized gains on securities .......................................
—
Unrealized gains on derivative instruments ....................
—
Pension liability adjustments .........................................
—
Foreign currency translation adjustments ......................
—
Total comprehensive income ..............................................
Cash dividends paid to SECOM CO., LTD. shareholders ...........
—Cash dividends paid to noncontrolling interests .......................
—
Transfer to legal reserve ..........................................................
—
Equity transactions with noncontrolling interests and other(Notes 4 and 18) ...................................................................
—
Losses on disposal of treasury stock ........................................
—Net changes in treasury stock..................................................
—¥66,378¥74,561¥10,175¥572,730(¥37,329)———

70,580——70,5806,063

76,643

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

6,914
8
(522)
9,346

—
—
—
—

—
—
—

—
—
—

—
—
66

(19,645)
—
(66)

—
—
—

—
—
—

6,914
8
(522)
9,346
86,326(19,645)
—
—

470
7
(186)
759
7,113
—
(1,460)
—

7,384
15
(708)
10,10593,439(19,645)(1,460)
—

—
—
—

(752)
(0)
—

—
—
—

—
—
—

397
—
—

—
—
(5)

(355)
(0)
(5)

30,008——29,653(0)(5)

Balance, March 31, 2013 ..................................................... 233,288,717
Comprehensive income:Net income ........................................................................
—
Other comprehensive income (loss), net of tax (Note 18):
Unrealized gains on securities .......................................
—
Unrealized gains on derivative instruments ....................
—
Pension liability adjustments .........................................
—
Foreign currency translation adjustments ......................
—
Total comprehensive income ..............................................
Cash dividends paid to SECOM CO., LTD. shareholders ...........
—Cash dividends paid to noncontrolling interests .......................
—
Transfer to legal reserve ..........................................................
—
Equity transactions with noncontrolling interests and other(Note 18) ..............................................................................
—
Gains on disposal of treasury stock .........................................
—Net changes in treasury stock..................................................
—

66,37873,80910,241

623,599(21,186)(73,665)

679,176

100,439

779,615———

73,979——73,9798,952

82,931

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

1,000
1
5,090
16,816

—
—
—
—

—
—
—

—
—
—

—
—
75

(22,918)
—
(75)

—
—
—

—
—
—

1,000
1
5,090
16,81696,886(22,918)
—
—

120
1
453
1,276
10,802—(4,175)
—

1,120
2
5,543
18,092
107,688(22,918)(4,175)
—

—
—
—

(28)
0
—

—
—
—

—
—
—

—
—
—

—
—
(17)

(28)
0
(17)

191
—
—

163
0
(17)

Balance, March 31, 2014 ..................................................... 233,288,717
Comprehensive income:Net income ........................................................................
—
Other comprehensive income (loss), net of tax (Note 18):
Unrealized gains on securities .......................................
—
Unrealized gains on derivative instruments ....................
—
Pension liability adjustments .........................................
—
Foreign currency translation adjustments ......................
—
Total comprehensive income ..............................................
Cash dividends paid to SECOM CO., LTD. shareholders ...........
—Cash dividends paid to noncontrolling interests .......................
—
Transfer to legal reserve ..........................................................
—
Equity transactions with noncontrolling interests and other(Note 18) ..............................................................................
—
Gains on disposal of treasury stock .........................................
—Net changes in treasury stock..................................................
—

66,37873,781

10,316

674,585

1,721(73,682)753,099

107,257

860,356———

80,184——80,1848,274

88,458

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

13,004(4)
6,814
11,427

—
—
—
—

—
—
—

—
—
—

—
—
85

(38,197)
—
(85)

—
—
—

—
—
—

13,004(4)
6,814
11,427
111,425(38,197)
—
—

584
(4)
380
752
9,986
—
(3,763)—

13,588(8)
7,194
12,179121,411(38,197)(3,763)
—

—
—
—

(339)
0
—

—
—
—

—
—
—

—
—
—

—
—
(19)

(339)
0
(19)

(282)
—
—

(621)
0
(19)

Balance, March 31, 2015 ..................................................... 233,288,717¥66,378¥73,442¥10,401¥716,487¥32,962(¥73,701)¥825,969¥113,198¥939,167

Retainedearnings

Accumulated
other comprehensive
income (loss)

Commonstock intreasury,
at costNumber ofsharesissuedCommonstock intreasury,
at cost(¥73,660)¥612,855¥ 64,778¥677,633

Total
SECOM CO., LTD.
shareholders’ Noncontrolling
equityinterests

Total

Translation into thousands of U.S. dollars (Note 3)

Commonstock

Additional
paid-in
capitalLegalreserve$85,967 $5,621,542

Balance, March 31, 2015 ......................................................................... $553,150 $612,017$86,675 $5,970,725$ 14,342 $(614,017)

Total$6,275,826$893,808$7,169,634—

668,200——

668,200

68,950737,150

—
—
—
—

—
—
—
—

108,367(33)
56,783
95,225

—
—
—
—

—
—
708

(318,309)
—
(708)

—
—
—

—
—
—

108,367(33)
56,783
95,225928,542(318,309)
—
—

4,867
(33)
3,167
6,267
83,218—(31,358)—

113,234(66)
59,950101,492
1,011,760(318,309)(31,358)
—

—
—
—

—
—
—

—
—
—

—
—
(158)

(2,825)0(158)(2,351)——(5,176)0(158)$274,684 $(614,175)$6,883,076$943,317$7,826,393

Financial Section

Balance, March 31, 2014
$553,150 $614,842
Comprehensive income:Net income .............................................................................................
——
Other comprehensive income (loss), net of tax (Note 18):
Unrealized gains on securities ............................................................
——
Unrealized gains on derivative instruments .........................................
——
Pension liability adjustments ..............................................................
——
Foreign currency translation adjustments ...........................................
——
Total comprehensive income ...................................................................
Cash dividends paid to SECOM CO., LTD. shareholders ................................
——Cash dividends paid to noncontrolling interests ............................................
——
Transfer to legal reserve ...............................................................................
——
Equity transactions with noncontrolling interests and other(Notes 18) ..................................................................................................
—(2,825)
Gains on disposal of treasury stock ..............................................................
—
0
Net changes in treasury stock.......................................................................
—
—

Total
SECOM CO., LTD.
shareholders’ Noncontrolling
equityinterests

See accompanying notes to consolidated financial statements.

SECOM Annual Report 201541

Consolidated Statements of Cash Flows
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2015

2015

In millions of yen

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

Years ended March 31

Year ended March 31

2014

2013

Cash flows from operating activities:
Net income .......................................................................................................................... ¥ 88,458 ¥ 82,931 ¥ 76,643
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) ...........................................................................................
68,864
66,66160,674
Accrual for pension and severance costs, less payments ....................................................
(4,495)(2,907)(1,471)
Deferred income taxes, including discontinued operations ................................................
2,505
1,832
1,538
Loss on sales and disposal of fixed assets, net, including discontinued operations .............
958
3,182
2,166
Impairment loss on long-lived assets, including discontinued operations (Note 11) ............
6,591
2,821
579
Write-down on real estate inventories (Note 8) .................................................................
1,565
1,122
1,792
Gain on private equity investments (Note 22) ....................................................................
(4,062)(5,564)(5,095)
Impairment loss on goodwill (Note 12)..............................................................................
1,314
151
1,052
Gain on sales of securities, net (Notes 7 and 14) ...............................................................
(243)(2,177)(899)
Loss on other-than-temporary impairment of investment securities (Notes 14 and 22) .......
172
100
73
Equity in net income of affiliated companies .....................................................................
(5,759)(4,017)(3,895)
Changes in assets and liabilities, net of effects from acquisitions and disposals:(Increase) decrease in cash deposits ..............................................................................
8,202(2,508)(2,038)(Increase) decrease in receivables and due from subscribers, net of allowances..............
1,731(10,188)(5,838)(Increase) decrease in inventories .................................................................................. (11,120)
10,367
20,720
Increase in deferred charges ......................................................................................... (17,248) (16,375) (15,515)
Increase (decrease) in notes and accounts payable ........................................................
(3,900)
3,306
6,831
Increase (decrease) in deposits received .........................................................................
(1,601)(7,752)
2,328
Decrease in deferred revenue ........................................................................................
(251)
(595)
(1,558)
Increase (decrease) in accrued income taxes ..................................................................
(6,862)(3,028)13,470
Increase (decrease) in guarantee deposits received ........................................................
(147)
275
65
Increase in unearned premiums and other insurance liabilities .......................................
865
8,277
6,445
Increase (decrease) in accrued consumption tax ............................................................
8,891
(206)
515
Other, net .....................................................................................................................
479(2,498)(1,136)
Net cash provided by operating activities .................................................................. 134,907 123,210 157,446
Cash flows from investing activities:(Increase) decrease in time deposits.......................................................................................
538
(164)
3,500
Proceeds from sales of property, plant and equipment ..........................................................
3,580
1,114
2,603
Payments for purchases of property, plant and equipment .................................................... (56,303) (56,274) (64,321)
Payments for purchases of intangible assets ..........................................................................
(8,409)(7,113)(5,444)
Proceeds from sales and redemptions of investment securities (Note 7) .................................
38,23743,78237,443
Payments for purchases of investment securities ................................................................... (51,573) (76,342) (31,345)(Increase) decrease in short-term investments ........................................................................
2,039(1,611)
4,152
Acquisitions, net of cash acquired (Note 4)............................................................................
(58)(1,249) (63,701)(Increase) decrease in short-term receivables ,net ..................................................................
20
56
(39)
Payments for long-term receivables .......................................................................................
(1,076)(2,921)(1,057)
Proceeds from long-term receivables .....................................................................................
3,164
3,314
1,590
Other, net .............................................................................................................................
553
2,114
(1,976)
Net cash used in investing activities .......................................................................... (69,288) (95,294) (118,595)
Cash flows from financing activities:
Proceeds from long-term debt ..............................................................................................
17,47010,595
17,483
Repayments of long-term debt.............................................................................................. (16,029) (18,419) (22,341)
Increase (decrease) in bank loans, net ...................................................................................
(8,636)
13,483(3,630)
Increase (decrease) in investment deposits by policyholders ...................................................
740
48(1,272)
Dividends paid to SECOM CO., LTD. shareholders ................................................................. (38,197) (22,918) (19,645)
Dividends paid to noncontrolling interests .............................................................................
(3,763)(4,175)(1,460)
Payments for acquisition of shares of consolidated subsidiaries from noncontrollinginterest holders ...................................................................................................................
(735)
(618)
(252)
Proceeds from sales of shares of consolidated subsidiaries to noncontrolling interest holders ...
——651
Increase in treasury stock, net ...............................................................................................
(19)
(18)
(5)
Other, net .............................................................................................................................
24
131
86
Net cash used in financing activities .......................................................................... (49,145) (21,891) (30,385)
1,401
2,031
1,190
Effect of exchange rate changes on cash and cash equivalents .......................................
Net increase in cash and cash equivalents ..........................................................................
17,875
8,056
9,656
Cash and cash equivalents at beginning of year ................................................................ 230,752 222,696 213,040
Cash and cash equivalents at end of year .......................................................................... ¥248,627 ¥230,752 ¥222,696
See accompanying notes to consolidated financial statements.

42

SECOM Annual Report 20152015

$ 737,150
573,867(37,458)
20,875
7,983
54,925
13,042(33,850)
10,950(2,025)
1,433(47,992)
68,35014,425(92,667)(143,733)(32,500)(13,342)(2,092)(57,183)(1,225)
7,208
74,092
3,992
1,124,225
4,483
29,833(469,192)(70,075)
318,642(429,775)
16,992(483)
167(8,967)26,367
4,608(577,400)
145,583(133,575)(71,967)
6,167(318,308)(31,358)(6,125)—(158)
199(409,542)
11,676
148,959
1,922,933$2,071,892

Notes to Consolidated Financial Statements
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2015

1. Nature of Operations
The parent company and its subsidiaries (collectively “theCompany”) are engaged in the businesses of security services,
fire protection services, medical services, insurance services,
geographic information services, information and communication
related services, and real estate and other services. With these
services combined, the Company is focusing on the establishmentof a Social System Industry, a network of integrated services andsystems, 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 sales of security merchandise. The Company
has also been diversifying its services covering: fire protection services, including automatic fire alarm systems and fire extinguishingsystems; medical services, including home and other medical services; non-life insurance services; geographic information services
using geographic information system (GIS) and surveying andmeasuring technology; information and communication related
services, which center on data center services and also include
business continuity plan support, information security services andcloud-based services; real estate and other services, including thedevelopment and sale of condominiums equipped with security andcontingency planning features, lease of real estate, construction
and installation services and other 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 been
eliminated 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.

(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.
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 the installation of security equipment used to provide 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 services. 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 recognizedwhen 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.

SECOM Annual Report 2015

Financial Section(2) Consolidation of Variable Interest Entities
The consolidated financial statements also include variableinterest entities (“VIEs”) of which the Company is the primary
beneficiary.
The Accounting Standards Codification (“ASC”) 810,
“Consolidation,” issued by the Financial Accounting Standards
Board (“FASB”) 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.
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 of these organizations are
considered VIEs under ASC 810.
Total assets and liabilities held by VIEs of which the Company is
the primary beneficiary were ¥70,658 million ($588,817 thousand)and ¥77,868 million ($648,900 thousand), respectively, at March
31, 2015, and ¥68,024 million and ¥73,248 million, respectively, atMarch 31, 2014. The creditors of VIEs do not have recourse to theCompany’s general credit with the exception of debts guaranteedby the Company. Total assets and liabilities held by VIEs of which
the Company holds significant variable interests but is not the primary beneficiary were ¥31,328 million ($261,067 thousand) and¥31,021 million ($258,508 thousand), respectively, at March 31,
2015, and ¥31,991 million and ¥32,039 million, respectively, atMarch 31, 2014. The Company’s assets in the consolidated balance
sheets and the Company’s maximum exposure to losses related to
VIEs at March 31, 2015 and 2014 were ¥5,154 million ($42,950
thousand) and ¥4,840 million, respectively.

43

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 title 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 the 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.
(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 accumulated other comprehensive income (loss),
net of tax. Debt securities classified as “held-to-maturity” arereported at amortized cost.
A decline in the fair value of any available-for-sale securities
below cost that is deemed to be other-than-temporary results in a
reduction in the 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-thantemporary, 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, except for private
equity investments, are recorded at cost as fair value is not readily
determinable. The Company periodically evaluates the values of

44

SECOM Annual Report 2015

other investments in non-public companies for possible impairment
by taking into consideration the financial and operating conditionsof the issuer, the general market conditions in the issuer’s industry
and the period of the decline in the estimated fair value and otherrelevant factors. If the impairment is determined to be other-thantemporary, 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 ¥25,682
million ($214,017 thousand) and ¥33,083 million at March 31,
2015 and 2014, 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 other related products,
are stated at the lower of cost or market. Cost is determined, inthe case of real estate, based on the specific identification method
and, in the case of other inventories, primarily using the movingaverage method.
(9) Allowance for Doubtful Accounts
The Company recognizes an allowance for doubtful accounts toensure trade, short-term and long-term receivables, and otherreceivables are not overstated due to uncollectibility. Allowance for
doubtful accounts is maintained for all customers based on a variety
of factors, including the length of time receivables are past due,
macroeconomic conditions, significant one-time events and historical experience. An additional reserve for individual accounts isrecorded when the Company becomes aware of a customer’s
inability to meet its financial obligations, such as in the case ofbankruptcy filings or deterioration in the customer’s operating
results or financial position. If circumstances related to customers
change, estimates of the recoverability of receivables would befurther 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 using the declining-balance method. Assets leased
to others under operating leases are depreciated using the straightline method over the estimated useful lives. Depreciation expense
was ¥47,582 million ($396,517 thousand), ¥45,523 million and¥40,187 million for the years ended March 31, 2015, 2014 and2013, respectively. Maintenance, repairs and renewals are charged
to income as incurred.
The estimated useful lives of depreciable assets are as follows:
Buildings
22 to 50 years
Security equipment and control stations
5 to 8 years
Machinery, equipment and automobiles
2 to 20 years
The Company recognizes asset retirement obligations if the fairvalue of the obligations 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.
Performance of a contractual asset retirement obligation isrequired for the building leased by a certain subsidiary when thelease matures and the Company returns the leased building to its
owner. However, the Company plans not to relocate from the building and to continue to use it until it will be demolished without restoration. As such, the execution of such obligation is not expected.
The Company evaluated all the available evidence as of the fiscal
year ended March 31, 2015 and performed efforts to establish thebest estimate. However, the scope and the probability of executionof the obligation cannot be reasonably estimated. Therefore, anasset retirement obligation for that building lease is not recognized.
(12) Deferred Charges
Deferred charges primarily consist of costs related to installation
services of security equipment used to provide on-line security
systems. The installation costs are deferred and amortized using
the straight-line method over the contractual period of security
services after completion of the installation. Amortization expense
was ¥14,759 million ($122,992 thousand), ¥14,397 million and¥14,492 million for the years ended March 31, 2015, 2014 and2013, respectively.

(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.
(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 has greater than
50 percent likelihood 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. Research and development expenses included in selling,
general and administrative expenses for the years ended March 31,
2015, 2014 and 2013 were ¥7,354 million ($61,283 thousand),¥6,950 million and ¥6,479 million, respectively.
(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,
2015, 2014 and 2013 were ¥3,550 million ($29,583 thousand),¥3,823 million and ¥4,230 million, respectively.

Financial Section(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 indicate 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.

SECOM Annual Report 201545

(19) Shipping and Handling Costs
Shipping and handling costs included in selling, general andadministrative expenses for the years ended March 31, 2015, 2014
and 2013 were ¥1,223 million ($10,192 thousand), ¥1,160 millionand ¥1,296 million, respectively.
(20) 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 accumulated 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 theportion 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 theextent it is effective as a hedge, are recorded in accumulated othercomprehensive income (loss), net of tax. Changes in the fair valueof derivative financial instruments not qualifying as a hedge arereported 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
used in hedging activities are highly effective in offsetting changes
in fair values or cash flows of hedged items. Hedge accounting is
discontinued for ineffective hedges, if any. Changes in fair value of
discontinued hedges are recognized in income.
(21) Per Share Data
Basic Earnings per Share (“EPS”) is computed based on the average number of shares of common stock outstanding for the period.
The average number of shares of common stock outstanding forthe years ended March 31, 2015, 2014 and 2013 was 218,265
thousand shares, 218,268 thousand shares and 218,271 thousand
shares, respectively. There were no potentially dilutive shares outstanding during the years ended March 31, 2015, 2014 or 2013.
Cash dividends per share shown in the accompanying consolidated statements of income are computed based on dividends
approved and paid in each fiscal year.
(22) Use of Estimates
The preparation of the consolidated financial statements requires
management of the Company to make a number of estimates andassumptions relating to the reported amounts of assets andliabilities, the disclosures of contingent assets and liabilities at thedate of the consolidated financial statements and the reported
amounts of revenues and expenses during the period. Actual results
could differ from those estimates. Significant items subject to such
estimates and assumptions include the carrying amounts of inventories, deferred insurance acquisition costs, investment securities,
other investments, property, plant and equipment, goodwill, otherintangible assets, unearned premiums and other insurance liabilities, valuation of receivables, valuation allowances for deferredincome taxes, valuation of derivative instruments, assets and46

SECOM Annual Report 2015

obligations related to employee benefits, asset retirement
obligations, income tax uncertainties, and other contingencies.
(23) Recent Pronouncements
In March 2013, the FASB issued ASU No. 2013-05, “Parent’s
Accounting for the Cumulative Translation Adjustment upon
Derecognition of Certain Subsidiaries or Groups of Assets within
a Foreign Entity or of an Investment in a Foreign Entity.” Thisaccounting standard resolves diversity in practice and clarifies theapplicable guidance for the release of the cumulative translation
adjustment when the parent company sells a part or all of its
investment in a foreign entity, ceases to have a controlling financial interest in a subsidiary or group of assets that is a businesswithin a foreign entity, or obtains control in a business combinationachieved in stages involving an equity method investment that is aforeign entity. This accounting standard is effective for fiscal years
beginning after December 15, 2013 and was adopted by theCompany in the fiscal year beginning April 1, 2014. The adoption
did not have a material impact on the Company’s consolidated
results of operations or financial position.
In June 2013, the FASB issued ASU No. 2013-08, “Amendments
for the Scope, Measurement, and Disclosure Requirements.” Thisaccounting standard changes the approach to the investmentcompany assessment in ASC 946, clarifies the characteristics ofan investment company, and provides comprehensive guidance
for assessing whether an entity is an investment company. Thisaccounting standard also amends the measurement criteria fornoncontrolling ownership interests in other investment companies
and provides additional disclosure requirements. This accounting
standard is effective for interim and annual periods in fiscal years
beginning after December 15, 2013 and was adopted by theCompany in the fiscal year beginning April 1, 2014. The adoption
did not have a material impact on the Company’s consolidated
results of operations or financial position.
In April 2014, the FASB issued ASU No. 2014-08, “Reporting
Discontinued Operations and Disclosures of Disposals of
Components of an Entity.” This accounting standard changes thecriteria for reporting discontinued operations in ASC205-20. A
disposal of a component of an entity or a group of components
of an entity is required to be reported in discontinued operations
if the disposal represents a strategic shift that has (or will have) a
major effect on an entity’s operations and financial results. Thisaccounting standard is effective for fiscal years beginning after
December 15, 2014, and will be adopted by the Company in thefiscal year beginning April 1, 2015. As this accounting standard
is a provision for presentation only, the adoption will not have an
impact on the Company’s consolidated results of operations or
financial position.
In May 2014, the FASB issued ASU No. 2014-09, “Revenue fromContracts with Customers.” This accounting standard requires
an entity to depict the transfer of promised goods or services tocustomers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods orservices. This accounting standard also requires an entity to disclose
sufficient information to enable users of financial statements tounderstand the nature, amount, timing, and uncertainty of revenue
and cash flows arising from contracts with customers. Both qualitative and quantitative information is required. This accounting standard is effective for fiscal years beginning after December 15, 2016,
including interim periods within that reporting period. In April 2015,
the FASB proposed an ASU that would defer for one year the revenue recognition standard’s effective date. The Company is currently

evaluating the effect of adopting this accounting standard on its
consolidated financial statements.
In February 2015, the FASB issued ASU No. 2015-02“Amendments to the Consolidation Analysis.” This accounting
standard modifies the evaluation of whether reporting entities
should consolidate limited partnerships and similar legal entities,
fees paid to a decision maker or service provider are variable interests in a VIE, and variable interests in a VIE held by related partiesof the reporting entity require the reporting entity to consolidate
the VIE. A reporting entity may choose a modified retrospective
approach or a full retrospective approach to applying the amendments. This accounting standard is effective for fiscal years beginning after December 15, 2015, including interim periods within thatreporting periods and will be adopted by the Company in the fiscal
year beginning April 1, 2016. The Company is currently evaluating
the effect of adopting this accounting standard on its consolidated
financial statements.
In April 2015, the FASB issued ASU No. 2015-03, “Simplifying
the Presentation of Debt Issuance Costs.” This accounting standard requires that debt issuance costs related to a recognized debt
liability be presented in the balance sheets as a direct deduction
from the carrying amount of that debt liability, consistent withdebt discounts. This accounting standard is effective for fiscal years
beginning after December 15, 2015, including interim periods
within those reporting periods and will be adopted by the Company
in the fiscal year beginning April 1, 2016. The Company is currently
evaluating the effect of adopting this accounting standard on its
consolidated financial statements.
In May 2015, the FASB issued ASU No. 2015-09 “Disclosuresabout Short-Duration Contracts.” This accounting standard requires
an entity to disclose the liability for unpaid claims, claim adjustment
expenses, significant changes in methodologies and assumptions
used to calculate the liability for unpaid claims and claim adjustment expenses, including reasons for the change and the effects on
the financial statements. This accounting standard is effective forfiscal years beginning after December 15, 2015, including interim
periods within those reporting periods and will be adopted by theCompany in the fiscal year beginning April 1, 2016. The Company iscurrently evaluating the effect of adopting this accounting standard
on its consolidated financial statements.
(24) Discontinued Operations
ASC 205-20, “Discontinued Operations,” requires the operating
results of any component of an entity with its own identifiable
operations and cash flows which is disposed of or is classified asheld for sale, and with which the Company will not have significant
continuing involvement to be reported in discontinued operations.
The results of operations related to certain businesses classified
as discontinued operations in the years ended March 31, 2015,2014 and 2013 were reclassified in the accompanying consolidated
financial statements.

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 ¥120=US$1,

4. Acquisitions
Acquisition of Nittan Co., Ltd.
On April 1, 2012, the Company acquired 100% of commonshares outstanding of LIXIL NITTAN Co., Ltd. for ¥12,713 million in
cash and changed its name to Nittan Co., Ltd. The purpose of thisacquisition is (i) to enhance fire protection services, including flexible responses to environmental changes, such as increased awareness of disaster prevention due to the Great East Japan Earthquake(domestic) and increasing disaster prevention in emerging countries(overseas), and (ii) research and development of next-generation
systems for disaster prevention.
The following table summarizes the estimated fair values of theassets acquired and liabilities assumed at the date of acquisition.
In millions of yen

Cash and cash equivalents ................................................
Other current assets ..........................................................
Investments and long-term receivables ..............................
Property, plant and equipment ..........................................
Intangible assets, including goodwill .................................
Other assets ......................................................................
Total assets acquired .....................................................
Current liabilities ...............................................................
Long-term liabilities...........................................................
Total liabilities assumed .................................................
Noncontrolling interests ................................................
Net assets acquired .......................................................

¥ 2,937
17,954
1,650
6,014
2,080
1,018
31,653
13,446
5,359
18,805
135¥12,713

The goodwill of ¥1,872 million represents expected excess earning power based on future business operations. It is not deductible
for tax purposes and has been assigned to the fire protection
services segment.
Acquisition of At Tokyo Corporation
On October 31, 2012, the Company acquired 50.882% ofcommon shares outstanding of At Tokyo Corporation for ¥33,328
million in cash. The purpose of this acquisition is to accelerate thedata center business and realize a variety of business synergies byfurther improving data center service quality and new information
security services.
The following table summarizes the estimated fair values of theassets acquired and liabilities assumed at the date of acquisition.
In millions of yen

Cash and cash equivalents ................................................
Other current assets ..........................................................
Investments and long-term receivables ..............................
Property, plant and equipment ..........................................
Intangible assets, including goodwill .................................
Other assets ......................................................................
Total assets acquired .....................................................
Current liabilities ...............................................................
Long-term liabilities...........................................................
Total liabilities assumed .................................................
Noncontrolling interests ................................................
Net assets acquired .......................................................

¥

3,922
6,145
262
54,91733,5401,308
100,094
6,770
38,25845,02821,738¥ 33,328

SECOM Annual Report 2015

Financial Section(25) Reclassifications
Certain amounts in the accompanying consolidated financial
statements for the years ended March 31, 2014 and 2013 havebeen reclassified to conform to the presentation used for the year
ended March 31, 2015.

the approximate rate prevailing on the Tokyo Foreign Exchange
Market on March 31, 2015. These translations should not be
construed as representing that the yen amounts actually constitute,or have been or could be converted into U.S. dollars at that rate.

47

Intangible assets of ¥15,230 million subject to amortization
include customer relationships of ¥12,158 million with a 20-year
useful life and trademarks of ¥3,072 million with a 15-year usefullife. The goodwill of ¥17,468 million represents expected excess
earning power based on future business operations. It is not deductible for tax purposes and has been assigned to the Information andcommunication related services segment.
The Company recorded the acquisition cost of ¥212 million related
to these acquisitions in selling, general and administrative expenses
for the year ended March 31, 2013.
The fair value of noncontrolling interests is measured at theprice based on the acquisition price with an adjustment for control
premium.
The following unaudited pro forma information shows theCompany’s consolidated results of operations for the year ended
March 31, 2013 as if the newly consolidated subsidiaries acquired in
the year ended March 31, 2013, were consolidated on April 1, 2011.

restricted as to use by the Company. The Company funds most of
the cash for such operations through bank overdrafts and deposits.
Bank loans and deposits received, which relate to these operations,were ¥29,417 million ($245,142 thousand) and ¥16,946 million($141,217 thousand), respectively, at March 31, 2015, and ¥36,704
million and ¥17,765 million, respectively, at March 31, 2014. As
part of its fee arrangement, the Company is reimbursed for theinterest cost of the related overdrafts.
7. Short-Term Investments and Investment Securities
Short-term investments (current) and investment securities(noncurrent) include debt and equity securities. The related aggregate fair value, gross unrealized gains, gross unrealized losses andcosts pertaining to “available-for-sale” and “held-to-maturity”
investments at March 31, 2015 and 2014 are as follows:
In millions of yen
March 31, 2015
Gross unrealized

In millions of yen
Year ended March 31

Cost

2013

Short-term investments:
Available-for-sale:
Debt securities ............. ¥ 24,433¥ 24,433

Unaudited

Pro forma net sales and operating revenue...............
Pro forma net income attributable to
SECOM CO., LTD. .................................................

¥884,803
71,764
In yenYear ended March 31

Unaudited2013

Pro forma net income attributable to
SECOM CO., LTD. per share ...................................

¥328.79

The unaudited pro forma data is not necessarily indicative of theCompany’s consolidated results of operations that would actually
have been reported if the transactions in fact had occurred on
April 1, 2011, and is not necessarily representative of the Company’s
consolidated results of operations for any future period.
5. Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2015 and 2014 comprisethe following:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2014

2015

¥178,594 ¥170,032
51,01837,296
15,50020,5003,515
2,924¥248,627 ¥230,752$1,488,283
425,150
129,167
29,292$2,071,892

2015

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

Investment securities:
Available-for-sale:
Equity securities ........... ¥ 33,870
Debt securities ............. 111,050
Held-to-maturity:
Debt securities ............. 12,292¥157,212

¥
¥

Gains

Losses

570
570

¥
¥

Fair value

1
1¥ 25,002¥ 25,002¥29,154
9,725

¥ 59
69

¥ 62,965
120,706

1,165¥40,044—¥128

13,457¥197,128
In millions of yen
March 31, 2014

Gross unrealized
Cost

Short-term investments:
Available-for-sale:
Debt securities ............. ¥ 10,011¥ 10,011
Investment securities:
Available-for-sale:
Equity securities ........... ¥ 31,829
Debt securities ............. 99,182
Held-to-maturity:
Debt securities ............. 12,309¥143,320

Gains

¥
¥

Losses21
21¥¥

Fair value00¥ 10,032¥ 10,032¥15,141
4,831

¥338
72

¥ 46,632
103,941507¥20,47910¥420

12,806¥163,379

In thousands of U.S. dollars
March 31, 2015

48

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 any
outstanding agreements.

Short-term investments:
Available-for-sale:
Debt securities ......... $ 203,608 $$ 203,608 $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 collection
services for entities other than financial institutions. Cash deposit
balances are segregated from cash and cash equivalents and are

Investment securities:
Available-for-sale:
Equity securities ....... $ 282,250 $242,950 $ 492
Debt securities .........
925,417
81,041575
Held-to-maturity:
102,433
9,709—
Debt securities .........
$1,310,100 $333,700 $1,067

SECOM Annual Report 2015

Gross unrealized
Cost

Gains

4,750 $
4,750 $

LossesFair value

88$ 208,350$ 208,350$ 524,708
1,005,883
112,142$1,642,733

Gross unrealized losses on, and fair value of, “available-for-sale”
and “held-to-maturity” securities, aggregated by investment
category and the length of time that individual securities have been
in a continuous unrealized loss position at March 31, 2015 are as
follows:
In millions of yen
March 31, 2015
12 months or longer

Fair valueGrossunrealized
lossesFair valueGrossunrealized
losses¥ 1,392
30,531¥31,923

¥ 55
69
¥124

¥—
¥—
¥—

¥—
¥—
¥—

¥

¥ —

¥—

¥—

Available-for-sale:
Equity securities...........
Debt securities.............

Less than 12 months

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

—In thousands of U.S. dollars
March 31, 2015

Available-for-sale:
Equity securities...........
Debt securities.............
Held-to-maturity:
Debt securities.............

Less than 12 months

12 months or longer

Fair valueGrossunrealized
lossesFair valueGrossunrealized
losses$ 11,600
254,425$266,025

$ 458
$ 575
$1,033

$—
$—
$—

$—
$—
$—

$

$

$—

$—

—

—

Based on the Company’s ability and intent to hold the investments
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, 2015.
At March 31, 2015, 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-tomaturity” debt securities by contractual maturity at March 31, 2015
are as follows:
In millions of yen

In thousands of U.S. dollars
March 31, 2015
Available-for-sale
Cost

Held-to-maturity

Fair value

Due within 1 year ..... $ 203,608 $ 208,350
Due after 1 year
through 5 years ......
647,658
703,908
Due after 5 years
through 10 years ....
194,142
209,950
Due after 10 years ...
83,61792,025$1,129,025 $1,214,233

Cost

$

—

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

Cost

Fair value¥ 24,433¥ 25,002

Held-to-maturity
Cost

¥

—

25,142

12,58364,733$102,433

13,29273,708$112,142

During the years ended March 31, 2015, 2014 and 2013, the net
unrealized gains and losses on “available-for-sale” securities
included as part of accumulated other comprehensive income (loss),
net of tax, increased by ¥13,004 million ($108,367 thousand),¥1,000 million and ¥6,914 million, respectively.
Proceeds from the sale of “available-for-sale” securities for theyears ended March 31, 2015, 2014 and 2013 were ¥13,800 million($115,000 thousand), ¥14,475 million and ¥20,479 million, respectively. On those sales, the gross realized gains and gross realized
losses, using a moving-average cost basis, for the years ended
March 31, 2015, 2014 and 2013 are as follows:

Gross realized gains ...........
Gross realized losses ..........

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2015

2014

2013

2015

¥269
1

¥1,694212¥1,051144$2,242
8

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 ¥9,083 million ($75,692
thousand) and ¥8,639 million at March 31, 2015 and 2014,
respectively. The corresponding fair value at that date was notcomputed as such estimation was not practicable and no significant
events or changes that might have affected the fair value ofinvestments were observed.
8. Inventories
Inventories at March 31, 2015 and 2014 comprise the following:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

Fair value¥—

84,469

3,014

3,017

23,297
10,034¥135,483

25,194
11,043¥145,708

1,510
7,768
¥ 12,292

1,595
8,845
¥ 13,457

2015

2014

2015

Security-related products................... ¥ 8,489 ¥ 9,718
Fire protection-related products ........ 19,769
16,763
Real estate ........................................ 24,122
15,429Other-related products ...................... 8,241
9,955¥60,621 ¥51,865$ 70,742
164,742
201,017
68,674$505,175

SECOM Annual Report 2015

Financial Section

77,719—25,117

March 31, 2015
Available-for-sale

Fair value$

49

Work in process for real estate inventories at March 31, 2015 and2014, amounting to ¥21,059 million ($175,492 thousand) and¥15,396 million, respectively, are included in real estate.
Costs on uncompleted construction contracts at March 31, 2015
and 2014, amounting to ¥9,793 million ($81,608 thousand) and¥8,414 million, respectively, are included in fire protection-related
products.
The amount of write-down on real estate inventories included incost of sales for the years ended March 31, 2015, 2014 and 2013
were ¥1,565 million ($13,042 thousand), ¥1,122 million and¥1,792 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 receivables,” “loans receivable resulting frommedical services,” “loans receivable resulting from insurance services,” “other loans receivable” and “other.” Financing receivables
classified as “lease receivables” result from lease transactions of
security equipment and real estate for offices and medical institutions.
The Company continuously monitors overdue financing receivables which, the Company considers, have a risk of uncollectability.
For financing receivables with specific customer collection issues,
the Company individually evaluates their collectability in order todetermine the amount of allowance for doubtful accounts. For
other financing receivables, the Company categorizes these receivables into groups by their nature and characteristics. The Company
collectively evaluates the collectability of each group, using its historical experience of write-offs and determines the amount ofallowance for doubtful accounts.
Financing receivables and allowance for doubtful accounts at
March 31, 2015 and 2014 are as follows:
In millions of yen
Year ended March 31, 2015

Lease
receivables

Loans
Loans
receivable receivable
resulting resulting
from
from
Other
medical insurance
loans
services
services receivable

Allowance for
doubtful accounts:
Balance at
beginning of year....... ¥ 417 ¥ 1,721
Provision (Reversal) ..
110
483
Charge off...............
(104)—
Other* ....................
——
Balance at endof year .......................
Individually
evaluated ..............
Collectively
evaluated .............. ¥

¥ 75
(10)
(65)
—

Other

Total

¥3,074 ¥ 841 ¥ 6,128
11
731
1,325
—
(28)
(197)
17
74
91

423

2,204

0

3,102

1,618

7,347

71

2,204

—

3,102

1,618

6,995

—

¥ 0

352

¥

¥

— ¥

— ¥

352

Financing receivables:
Individually
evaluated .............. ¥88
Collectively
evaluated .............. 48,698¥10,008
998

159

1,728

¥48,786¥11,006¥159¥4,999 ¥5,120 ¥70,070

SECOM Annual Report 2015

Loans
Loans
receivable receivable
resulting resulting
from
from
Other
Lease
medical insurance
loans
receivables
services
services receivable

Allowance for
doubtful accounts:
Balance at
beginning of year....... ¥Provision (Reversal) ..
Charge off...............
Other* ....................
Balance at endof year .......................
Individually
evaluated ..............
Collectively
evaluated .............. ¥

Other

Total

406 ¥ 2,351 ¥ 121 ¥2,883 ¥ 820 ¥ 6,581
76
0
(46)
196
33
259
(65)
(630)
—
(22)
(20)
(737)
—
—
—
17
8
25
417

1,721

75

3,074

841

6,128

84

1,721

72

3,074

841

5,792

333 ¥

— ¥

3 ¥

— ¥

— ¥

336

Financing receivables:
Individually
evaluated .............. ¥ 102 ¥12,964 ¥ 74 ¥3,283 ¥ 869 ¥17,292
Collectively
evaluated .............. 42,422
510 2,223 2,450
157 47,762¥42,524 ¥13,474 ¥2,297 ¥5,733 ¥1,026 ¥65,054* “Other” principally includes the effect of changes in foreign currency exchange rates
and the scope of consolidation.
In thousands of U.S. dollars
Year ended March 31, 2015
Loans
Loans
receivable receivable
resulting resulting
from
from
Other
Lease
medical insurance
loans
receivables
services
services receivable

Other

Total

Allowance for
doubtful accounts:
Balance at
beginning of year....... $ 3,475 $14,342 $ 625 $25,617 $ 7,008 $ 51,067
Provision (Reversal) ..
917
4,025
(83)
92 6,091 11,042
Charge off...............
(867)
—
(542)
—
(233) (1,642)
Other* ....................
—
—
—
141
617
758
Balance at endof year .......................
3,525 18,367
Individually
evaluated ..............
592 18,367
Collectively
evaluated .............. $ 2,933 $— $Financing receivables:
Individually
evaluated .............. $733 $83,400
Collectively
evaluated .............. 405,817
8,317

0

25,850 13,483

61,225—25,850 13,483

58,292

0 $

$

— $

— $ 2,933— $27,258 $41,401 $152,792

1,325

14,4001,266 431,125$406,550 $91,717 $1,325 $41,658 $42,667 $583,917¥ —¥3,271 ¥4,968 ¥18,335
152

51,735* “Other” principally includes the effect of changes in foreign currency exchange rates
and the scope of consolidation.

50

In millions of yen
Year ended March 31, 2014

* “Other” principally includes the effect of changes in foreign currency exchange rates
and the scope of consolidation.

The Company considers receivables that are past due and thefinancial position of the debtor to be credit quality indicators andclassifies financing receivables into Overdue and Current. Financing
receivables determined to have no prospects for collecting contractual interest on the basis of being past due and other factors areplaced on nonaccrual status.

In millions of yen

The aging analysis of the recorded financing receivables andfinancing receivables on nonaccrual status at March 31, 2015 and2014 are as follows:

March 31, 2014
Loans
Loans
receivable receivable
resulting resulting
from
from
medical insurance
services
services

Other
loans
receivable

Other

¥102

¥12,964¥74¥3,283¥869 ¥17,292

84

1,721

72

3,074

841

In millions of yen
March 31, 2015

Lease
receivables

Loans
Loans
receivable receivable
resulting resulting
from
from
Other
medical insurance
loans
services
services receivable

Other

Total

Current ......................... ¥48,698 ¥10,966
Overdue........................
88
40¥159 ¥1,807 ¥2,417 ¥64,047— 3,192 2,703
6,023

Total:
Financing receivables .. ¥48,786 ¥11,006¥159 ¥4,999 ¥5,120 ¥70,070

Financing receivables
on nonaccrual status ... ¥¥ — ¥3,271— ¥ 3,719

¥

Loans
Loans
receivable receivable
resulting resulting
from
from
Other
medical insurance
loans
services
services receivable

Other

Total

Current ......................... ¥42,422 ¥13,434 ¥2,223 ¥2,551 ¥ 626 ¥61,256
Overdue........................
102
40
74 3,182
400
3,798
Total:
Financing receivables .. ¥42,524 ¥13,474 ¥2,297 ¥5,733 ¥1,026 ¥65,054— ¥ 3,719 ¥74 ¥3,282 ¥— ¥ 7,075

Leasereceivables

Impaired receivables ......
Related allowance for
doubtful accounts .......

Loans
Loans
receivable receivable
resulting resulting
from
from
medical insurance
services
services

Other
loans
receivable

Loans
Loans
receivable receivable
resulting resulting
from
from
Other
Lease
medical insurance
loans
receivables
services
services receivable

Total

Current ......................... $405,817 $91,383 $1,325 $15,058 $20,142 $533,725
Overdue........................
733
334— 26,600 22,525 50,192
Total:
Financing receivables .. $406,550 $91,717 $1,325 $41,658 $42,667 $583,917— $27,258 $— $ 58,250

Impaired receivables and the related allowance for doubtful
accounts at March 31, 2015 and 2014 are as follows:
In millions of yen
March 31, 2015—

18,36725,850 13,483

Other
loans
receivable¥88¥10,008¥—¥3,271 ¥4,968 ¥18,335

71

2,204

—

3,102

Lease
receivables

Impaired receivables ......
Related allowance for
doubtful accounts .......

Other

1,618

Total

6,995

58,292

The average amounts of impaired receivables for the year ended
March 31, 2015 are as follows:
In millions of yen

Leasereceivables

Average amounts of
impaired receivables ....

Loans
Loans
receivable receivable
resulting resulting
from
from
medical insurance
services
services¥95 ¥11,486

Other
loans
receivable

¥37

Other

Total

¥3,277 ¥2,919 ¥17,814
In thousands of U.S. dollars

Average amounts of
impaired receivables ....

Loans
Loans
receivable receivable
resulting resulting
from
from
medical insurance
services
services$792 $95,717

Other
loans
receivable

Other

Total

$308 $27,308 $24,325 $148,450

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, a28.8 percent owned affiliate, which is listed on the Korea Exchange;
and Toyo Tech Co., Ltd., a 27.4 percent owned affiliate, which islisted on the Second Section of the Tokyo Securities Exchange.
Combined financial information for the affiliated companies
accounted for under the equity method is as follows:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2015

2014

2015

Current assets ................................ ¥105,832 ¥114,922
Noncurrent assets .......................... 205,514 140,185$ 881,933
1,712,617

Total assets................................. ¥311,346 ¥255,107$2,594,550

Current liabilities ............................ ¥ 92,416 ¥ 59,268
Long-term liabilities........................
38,831
37,565Equity ............................................ 180,099 158,274$ 770,133
323,592
1,500,825

Total liabilities and equity ........... ¥311,346 ¥255,107$2,594,550

SECOM Annual Report 2015

Financial Section

Loans
Loans
receivable receivable
resulting resulting
from
from
medical insurance
services
services

Total

592

Lease
receivables
Other

Other

$— $27,258 $41,401 $152,792

March 31, 2015

— $30,992 $

5,792$733 $83,400

In thousands of U.S. dollars

Financing receivables
on nonaccrual status ... $Total

In thousands of U.S. dollars— ¥ 6,990
March 31, 2014

Financing receivables
on nonaccrual status ... ¥Impaired receivables ......
Related allowance for
doubtful accounts .......

March 31, 2015

In millions of yen

Leasereceivables

Lease
receivables

51

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2013

2015

Net sales ....................... ¥262,726 ¥198,890 ¥162,379$2,189,383

Gross profit ................... ¥ 82,753 ¥ 65,492 ¥ 52,691$ 689,608

Net income
attributable toaffiliated companies .... ¥ 17,825 ¥ 14,305 ¥ 15,056$ 148,542

2015

2014

Dividends received from affiliated companies for the years ended
March 31, 2015, 2014 and 2013 were ¥3,160 million ($26,333
thousand), ¥2,652 million and ¥2,403 million, respectively.
Three listed affiliated companies accounted for under the equity
method with an aggregated carrying amount of ¥47,409 million($395,075 thousand) and ¥41,903 million at March 31, 2015 and2014, respectively, had a quoted market value of ¥133,559 million($1,112,992 thousand) and ¥119,638 million at March 31, 2015
and 2014, respectively.
The amounts of goodwill included in the carrying amount ofinvestments in affiliated companies were ¥4,768 million ($39,733
thousand) and ¥4,589 million at March 31, 2015 and 2014,
respectively.
A summary of transactions and balances with the affiliated companies accounted for under the equity method is presented below:
In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2015

2014

2013

2015

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

¥1,774¥1,549¥1,924$14,783

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

¥4,417¥5,982¥6,573$36,808

In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2015

2014

2015

Notes and accounts
receivable, trade ............................. ¥ 544¥ 426$ 4,533

Loans receivable................................ ¥ 557¥ 563$ 4,642

Notes and accounts payable.............. ¥2,224¥2,494$18,533

Guarantees for bank loans ................ ¥1,039¥ 665$ 8,658

The Company's equity in undistributed income of affiliates at
March 31, 2015 and 2014 included in retained earnings was¥27,872 million ($232,267 thousand) and ¥25,668 million,
respectively.

52

SECOM Annual Report 2015

11. Long-Lived Assets
The Company has assessed the potential impairment of its longlived assets. As a result of a significant decrease in revenue forecasts, the Company principally recognized impairment losses oncertain business assets of the information and communication
related services segment for the year ended March 31, 2015, andon certain real estate of the medical services segment for the year
ended March 31, 2014, respectively. The fair value was determinedbased on the estimated present value of future cash flows orappraisal value.
Impairment losses on long-lived assets by business segment for
the years ended March 31, 2015, 2014 and 2013 are as follows:2015

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2014

2013

Security services ....................
Fire protection services ..........
Medical services ....................
Insurance services .................
Geographic information
services ...............................
Information andcommunication related
services ...............................
Real estate andother services ......................
Corporate items ....................

¥ 111 ¥ 296—
21— 1,871
—
—

¥ —
34
—
—

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

2015

$

925
—
—
—

154

164

297

1,283

4,796

40

50

39,967

132
1,398

—
397

—
—

1,100
11,650¥6,591 ¥2,789¥381$54,925

12. Goodwill and Other Intangible Assets
The components of acquired intangible assets, excluding goodwill,at March 31, 2015 and 2014 are as follows:
In millions of yen
March 31, 2015
Gross
carrying
amountAccumulated
amortization

Net
carrying
amountAmortized intangible assets:
Software ....................................... ¥46,045
Other ............................................ 20,610¥66,655(¥25,539)(5,007)(¥30,546)¥20,506
15,603¥36,109

Unamortized intangible assets........... ¥ 4,066¥¥ 4,066—

In millions of yen
March 31, 2014
Gross
carrying
amountAccumulated
amortization

Net
carrying
amountAmortized intangible assets:
Software ....................................... ¥43,907
Other ............................................ 21,415¥65,322(¥25,795)(4,515)(¥30,310)¥18,112
16,900¥35,012

Unamortized intangible assets........... ¥ 3,998¥¥ 3,998—

In thousands of U.S. dollars

In thousands of U.S. dollars

March 31, 2015
Gross
carrying
amountNet
carrying
amountAccumulated
amortization

Amortized intangible assets:
Software ....................................... $383,708
Other ............................................ 171,750$555,458($212,825) $170,883(41,725) 130,025($254,550) $300,908

Unamortized intangible assets........... $ 33,884$— $ 33,884

Aggregate amortization expense for the years ended March 31,
2015, 2014 and 2013 was ¥6,522 million ($54,350 thousand),¥6,741 million and ¥5,995 million, respectively. Amortized intangible assets are amortized using the straight-line method over theirestimated 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

In thousands of
U.S. dollars¥7,349
6,218
5,264
4,204
2,972

$61,242
51,81743,86735,03324,7672016......................................................
2017......................................................
2018......................................................
2019......................................................
2020......................................................

The changes in the carrying amount of goodwill by businesssegment for the years ended March 31, 2015 and 2014 are as
follows:
In millions of yen

Security
services

Fire
protection
services

Information
Geographic
andMedical information communication
services
services related services

Total¥17,643¥1,962 ¥39,642(175)
17,468

(135)
1,827

(6,906)32,736

—

—

(151)

—
17,643

—
1,962

287
39,679(175)
17,468

(135)
1,827

(6,807)32,872

—
—

—
—

37
(11)

—

—

(1,314)—
17,643

—
1,962

117
39,822Fire
protection
services

Real estateand otherservices

Total

Goodwill ............... $34,933 $16,275 $78,325 $37,750 $147,025 $16,350 $330,658
Accumulated
impairment
losses .................. (14,358)— (33,633) (6,150)(1,458) (1,125) (56,724)
March 31, 2014 .... 20,575 16,275 44,692 31,600 145,567 15,225 273,934
Goodwill acquired
during the year ...
—
—
—
308
—
—
308
Disposal ................
—
(92)
—
—
—
—
(92)
Impairment
losses ..................
—— (10,950)——— (10,950)
Translation
adjustment .........
867
—
—
108
—
—
975
Goodwill ............... 35,800 16,183 78,325 38,166 147,025 16,350 331,849
Accumulated
impairment
losses .................. (14,358)— (44,583) (6,150)(1,458) (1,125) (67,674)
March 31, 2015 ... $21,442 $16,183 $33,742 $32,016 $145,567 $15,225 $264,175

Impairment losses on goodwill recognized in the above table aremainly due to decreases in the estimated fair value of reporting
units in each segment mainly caused by decreases in projected cash
flows. The fair value is determined based on the estimated present
value of future cash flows.
13. Bank Loans and Long-Term Debt
Bank loans of ¥43,924 million ($366,033 thousand) and ¥52,542
million at March 31, 2015 and 2014, respectively, are generallycomprised of 30 to 365 day notes. The weighted average interest
rate was 1.09 percent and 1.17 percent at March 31, 2015 and2014, 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, 2015, Nohmi Bosai Ltd., a subsidiary of the parent
company, had an unused committed line of credit from a short-termarrangement of ¥4,000 million ($33,333 thousand). The line ofcredit expires in March 2016. Under the agreement, Nohmi Bosai
Ltd. is required to pay commitment fees, at an annual rate of 0.15
percent, on the unused portion of the line of credit. At March 31,
2015, the Company had overdraft agreements with 33 banks andits unused lines of credit amounted to ¥31,835 million ($265,292
thousand). The Company incurs no fee on the unused portion ofthese overdraft agreements. The overdraft agreements expire in
the period from April 2015 to March 2016. The Company has theability and intent to extend these overdraft agreements undersimilar terms and conditions.

Financial Section

Goodwill ............... ¥4,018 ¥1,953 ¥9,399 ¥4,667
Accumulated
impairment
losses .................. (1,667)— (4,036)(893)
March 31, 2013 .... 2,351
1,953 5,363
3,774
Impairment
losses ..................
(151)
—
—
—
Translation
adjustment .........
269
—
—
18
Goodwill ............... 4,192
1,953 9,399
4,530
Accumulated
impairment
losses .................. (1,723)— (4,036)(738)
March 31, 2014 .... 2,469
1,953 5,363
3,792
Goodwill acquired
during the year ...
———37
Disposal ................
—
(11)
—
—
Impairment
losses ..................
—— (1,314)—
Translation
adjustment .........
104
—
—
13
Goodwill ............... 4,296
1,942 9,399
4,580
Accumulated
impairment
losses .................. (1,723)— (5,350)(738)
March 31, 2015 ... ¥2,573 ¥1,942 ¥4,049 ¥3,842

Real estateand otherservices

Security
services

Information
Geographic
andMedical information communication
services
services related services(175)(135) (8,121)¥17,468 ¥1,827 ¥31,701
SECOM Annual Report 201553

Long-term debt at March 31, 2015 and 2014 comprises thefollowing:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2014

2015

2015

Loans, principally from banks due
2014–2033 with interest rates
ranging from 0.21% to 7.07%:
Secured............................................ ¥24,212 ¥20,834
Unsecured........................................ 20,431 16,949
1.13% unsecured bonds due 2014 ......
—
1,384
0.5% unsecured bonds due 2015 ........
100
100
0.81% unsecured bonds due 2016 ......
100
100
0.52% unsecured bonds due 2016 ......
104
168
0.43% unsecured bonds due 2018 ......
100—
Unsecured bonds due 2014–2025
with floating interest rates basedon 6-month Japanese yen TIBOR ........ 9,424 10,685
Obligations under capital leases,
due 2014–2043 (Note 19).................. 12,700 13,028................................................ 67,171 63,248
Less: Portion due within one year ......... (13,368) (15,398)................................................ ¥53,803 ¥47,850$201,767
170,258
—
833
833
867
833
78,534
105,833
559,758(111,400)$448,358

Assets pledged as collateral for bank loans and long-term debt at
March 31, 2015 and 2014 are as follows:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2015

2014

2015

Time deposits ....................................... ¥ 2,081 ¥ 2,315
Short-term and long-term receivables ... 5,636 5,591
Investment securities ............................. 1,133 1,525
Property, plant and equipment .............. 51,734 52,574
Other intangible assets.......................... ¥ 818 ¥ 818$ 17,342
46,9669,442
431,117$ 6,817

The aggregate annual maturities on long-term debt at March 31,
2015 are as follows:
Years ending March 31

2016.....................................................
2017.....................................................
2018.....................................................
2019.....................................................
2020.....................................................
Thereafter .............................................
............................................................

In millions of yen

In thousands of
U.S. dollars¥13,368
11,372
11,295
9,467
10,76910,900¥67,171$111,400
94,766
94,12578,892
89,742
90,833$559,758

14. Insurance-Related Operations
Secom General Insurance Co., Ltd. (“Secom Insurance”), a
subsidiary of the parent company, maintains accounting records as
noted in Note 2 in accordance with Japanese GAAP, which vary incertain respects from U.S. GAAP. Those differences are principally,(a) that insurance acquisition costs are charged to expense whenincurred under Japanese GAAP whereas under U.S. GAAP, thosecosts are deferred and amortized generally over the54

SECOM Annual Report 2015

premium-paying period of the insurance policies, (b) that liabilities
related to incurred but not reported claims are computed based onrelated regulations in Japan whereas under U.S. GAAP, those liabilities are computed based on past experience for unreported losses,and (c) that unearned premiums are calculated based on the documents authorized by the Supervisory Authorities in Japan whereas
under U.S. GAAP, unearned premiums are reflected based on thelapse and 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 policy) 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, 2015 and 2014was ¥67,633 million ($563,608 thousand) and ¥52,761 million,
respectively.
Net sales and operating revenue of Secom Insurance include net
realized investment gains and losses, including gains and losses onsales of securities, losses on other-than-temporary impairment ofinvestment securities and impairment losses on long-lived assets.
Net realized investment gains and losses, including losses on otherthan-temporary impairments, for the years ended March 31, 2015,2014 and 2013 were gains of ¥194 million ($1,617 thousand),¥1,221 million and ¥724 million, respectively. Losses on other-thantemporary impairments of investment securities for the years ended
March 31, 2015, 2014 and 2013 were ¥18 million ($150 thousand),¥22 million and ¥25 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 arecalculated as a certain percentage of employees’ annual income
over their period of service, plus interest calculated as the 3-year
average yield for 10-year government bonds. The defined contribution pension plan was established in April 2003, by transferring a
portion equivalent to 20 percent of the cash balance pension plan,
including portions funded in prior periods. A specified percentageof employees’ annual income is contributed to the defined
contribution pension plan.
In April 2005, the parent company and certain domestic subsidiaries transferred an additional portion of the cash balance pension
plan to the defined contribution pension plan. Accordingly, the 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.

Net periodic pension and severance costs for the years ended
March 31, 2015, 2014 and 2013 are as follows:2015

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2014

2013

Net periodic pension andseverance costs:
Service cost ......................... ¥5,357 ¥6,181 ¥8,269
Interest cost ........................
936 1,297 1,533
Expected return onplan assets ........................ (2,533) (2,299) (2,241)
Amortization of priorservice benefit ................... (1,584) (1,601) (1,600)
Recognized actuarial loss.....
989 1,581 1,407
Net periodic pension
and severance costs....... ¥3,165 ¥5,159 ¥7,368

2015$44,642
7,800(21,109)

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2014

2015

2015

$819,883
44,642
7,800
8,942(38,259)—
843,008

768,008
127,850
51,783(26,608)—
921,033$ 78,025

Amounts recognized in the consolidated balance sheets at March
31, 2015 and 2014 consist of:(¥11,736)
(989)
1,584
(¥11,141)

In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2015

2014

2015

¥35,011¥22,054$291,758(25,648) (28,279)¥ 9,363 (¥ 6,225)(213,733)$ 78,025($97,800)(8,242)
13,200($92,842)

Amounts recognized in accumulated other comprehensive
income (loss) at March 31, 2015 and 2014 consist of:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

Actuarial loss .....................................
Prior service benefit............................
Net amount recognized ..........

2014

2015

¥7,799 ¥20,524(2,549) (4,133)¥5,250 ¥16,391$64,992(21,242)$43,750

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 ¥1,505 million ($12,542 thousand) and¥788 million ($6,567 thousand), respectively.
The accumulated benefit obligation for the pension plan was¥100,995 million ($841,625 thousand) and ¥90,316 million atMarch 31, 2015 and 2014, 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 ¥42,389 million($353,242 thousand), ¥42,158 million ($351,317 thousand) and¥28,838 million ($240,317 thousand), respectively, at March 31,
2015, and ¥42,682 million, ¥38,220 million and ¥14,987 million,
respectively, at March 31, 2014.
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, 2015 and 2014 are as follows:
March 31

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

2015

2014

0.8%
1.6%

1.1%
2.7%

Weighted-average assumptions used to determine net pension
and severance costs for the years ended March 31, 2015, 2014 and2013 are as follows:
Years ended March 31

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

2015

2014

2013

1.1%
3.0%
2.7%

1.4%
3.0%
2.7%

1.8%
3.0%
2.6%

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.

SECOM Annual Report 2015

Financial Section

Prepaid pension andseverance costs ............................
Accrued pension andseverance costs ............................
Net amount recognized ......

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

2015$26,375

In thousands of
U.S. dollars

In millions of yen(13,200)
8,242

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

Change in benefit obligation:
Benefit obligation
at beginning of year ............... ¥ 98,386 ¥101,151
Service cost ..............................
5,357
6,181
Interest cost .............................
936
1,297
Actuarial (gain) loss ..................
1,073(4,933)
Benefits paid ............................
(4,591)(5,582)Acquisition ...............................
—
272
Benefit obligation
at end of year ........................ 101,161
98,386
Change in plan assets:
Fair value of plan assets
at beginning of year ...............
92,161
83,371
Actual return on plan assets .....
15,342
5,976
Employer contribution ..............
6,214
6,325
Benefits paid ............................
(3,193)(3,787)
Acquisition ...............................
—
276
Fair value of plan assets
at end of year ........................ 110,524
92,161
Funded status
at the end of year ...................... ¥ 9,363 (¥ 6,225)

Other changes in plan assets and benefit obligations recognizedin other comprehensive income (loss) for the year ended March 31,
2015 are summarized as follows:

55

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, 2015 and 2014. The three levels of
inputs used to measure fair value are more fully described in Note 22.
In millions of yen
March 31, 2015
Level 1

Cash and cash
equivalents ...............
Equity securities
Japanesecompanies ............
Debt securities
Government
bonds ...................
Non-government
bonds ...................
Pooled funds...............
Call loans ....................
Insurance contracts .....
Other ..........................

¥ 1,990

Level 2¥—

Level 3

¥

—

Total

¥

1,990

19,501——

19,501

4,742

681

—

5,423

—
141
—
—
—
¥26,374—
34,331
10,83010,856
240¥56,938

613
26,276——323¥27,212613
60,748
10,83010,856563¥110,524* The plan’s government bonds include approximately 5% Japanese bonds and
95% foreign bonds. The non-goverment bonds include 100% foreign bonds.
* The pension investment trust fund included in the plan’s pooled funds is classified
as Level 2, and invests approximately 50% in equity securities, 40% 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.

In thousands of U.S. dollars
March 31, 2015
Level 1

Level 1

Cash and cash
equivalents ...............
Equity securities
Japanesecompanies ............
Debt securities
Government
bonds ...................
Non-government
bonds ...................
Pooled funds...............
Call loans ....................
Insurance contracts .....
Other ..........................

¥ 1,750

Level 2¥—¥

Level 3

Total—

¥ 1,750

13,900——13,900

5,221

154

—

5,375

242
28
—
—
—
¥21,141

2,099
31,201
7,225
9,855
112
¥50,646729
18,885——760¥20,374

3,070
50,114
7,225
9,855
872
¥92,161* The plan’s equity securities include common stock of the parent company and its
domestic subsidiaries in the amount of ¥11 million at March 31, 2014.
* The plan’s government bonds include approximately 20% Japanese bonds and
80% foreign bonds. The non-goverment bonds include approximately 10%
Japanese bonds and 90% foreign bonds.
* The pension investment trust fund included in the plan’s pooled funds is classified
as Level 2, and invests approximately 50% in equity securities and 50% in debt
securities. The unquoted beneficial certificate of security investment trust
included in the plan’s pooled funds is classified as Level 3.

56

SECOM Annual Report 2015

Level 3

Total

Cash and cash
equivalents ............... $ 16,583 $— $—Equity securities
Japanesecompanies ............ 162,508——
Debt securities
Government
bonds ...................
39,517
5,675—
Non-government
bonds ...................
—
—
5,108
Pooled funds...............
1,175
286,091 218,967
Call loans ....................
—
90,250—Insurance contracts .....
—
90,467—
Other ..........................
—
2,000
2,692
$219,783 $474,483 $226,767$ 16,583
162,508
45,192
5,108506,233
90,25090,467
4,692$921,033* The plan’s government bonds include approximately 5% Japanese bonds and
95% foreign bonds. The non-goverment bonds include 100% foreign bonds.
* The pension investment trust fund included in the plan’s pooled funds is classified
as Level 2, and invests approximately 50% in equity securities, 40% 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.

The following table represents the changes in Level 3 investments
for the years ended March 31, 2015 and 2014.
Level 3 investments, mainly in the unquoted beneficial certificate
of security investment trust in the plan’s pooled funds, are at thediscretion of the administrator of the fund. Their fair values are estimated based on unobservable inputs provided by the administratorof the fund.
In millions of yen
Year ended March 31, 2015
Debt securities

In millions of yen
March 31, 2014

Level 2

Balance at
beginning of year...............
Actual return on plan assets:
Relating to assets soldduring the year ..............
Relating to assets heldat end of year ................
Purchases, sales andsettlements, net .................
Transfer to Level 3, net .........
Balance at end of year .........

Nongovernment
bonds

Pooled
funds

Other

Total

¥729

¥18,885¥760¥20,374

—

71

38

109

(116)

3,188

12

3,084

—
—
¥613

4,023
109
¥26,276

(487)
3,536
—
109
¥323 ¥27,212

In millions of yen
Year ended March 31, 2014
Debt securities
Nongovernment
bonds

Balance at
beginning of year...............
Actual return on plan assets:
Relating to assets soldduring the year ..............
Relating to assets heldat end of year ................
Purchases, sales andsettlements, net .................
Transfer from Level 3, net.....
Balance at end of year .........

¥911

Pooledfunds¥20,807

Other

¥768

Total

¥22,486

—

606

34

640

(182)

1,344

(8)

1,154

—
—
¥729

(3,559)(313)¥18,885(34)(3,593)—(313)¥760 ¥20,374

In thousands of U.S. dollars
Year ended March 31, 2015
Debt securities
Nongovernment
bonds

Balance at
beginning of year...............
Actual return on plan assets:
Relating to assets soldduring the year ..............
Relating to assets heldat end of year ................
Purchases, sales andsettlements, net .................
Transfer to Level 3, net .........
Balance at end of year .........

Pooled
funds

Other

Total

$6,075 $157,375 $6,333 $169,783
—

592

317

909

(967)

26,567100

25,700—33,525 (4,058) 29,467
—
908
—
908
$5,108 $218,967 $2,692 $226,767

The Company expects to contribute ¥5,399 million ($44,992
thousand) to its domestic defined benefit plans in the year ending
March 31, 2016.
The following benefit payments, which reflect future services, as
appropriate, are expected to be paid.
Years ending March 31

2016.....................................................
2017.....................................................
2018.....................................................
2019.....................................................
2020.....................................................
2021–2025 ...........................................

17. Income Taxes
Total income taxes for the years ended March 31, 2015, 2014
and 2013 are allocated as follows:

In millions of yen

In thousands of
U.S. dollars¥ 4,819
4,645
5,177
5,545
5,245
28,046$ 40,158
38,70843,142
46,20843,708
233,717

The parent company and certain subsidiaries have defined contribution pension plans. The contributions to the defined contribution
pension plans for the years ended March 31, 2015, 2014 and 2013
were ¥1,772 million ($14,767 thousand), ¥1,679 million and¥1,645 million, respectively.

2015

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2014

2013

Consolidated income taxes
from continuing
operations .......................... ¥45,972 ¥49,695 ¥46,697
Consolidated income taxes
from discontinued
operations ..........................
651
(169)
152
Shareholders’ equity—
accumulated othercomprehensive
income (loss):
Unrealized gains
on securities .................... 6,240
440 3,511
Unrealized gains
on derivative
instruments .....................
(5)
(0)
10
Pension liability
adjustments .................... 3,771
3,183
(184)
Foreign currencytranslation
adjustments .................... 1,020
121—..................................... ¥57,649 ¥53,270 ¥50,186

2015$383,100
5,425

51,999(42)
31,4258,500$480,407

The parent company and its domestic subsidiaries were subject toa corporate tax of 25.5 percent for the year ended March 31, 2015
and 28.05 percent for the years ended March 31, 2014 and 2013,
an inhabitant’s 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 in Japan of approximately 35.4
percent for the year ended March 31, 2015 and 37.8 percent for
the years ended March 31, 2014 and 2013.
Due to the promulgation on March 31, 2014 of the “Act for
Partial Amendment of the Income Tax Act, etc.,” the statutory
tax rate used to calculate the deferred tax assets and liabilities at
March 31, 2014 changed mainly from 37.8 percent to 35.4 percent
for those items scheduled for reversal during the period from
April 1, 2014 to March 31, 2015. As a result, income taxes for theyear ended March 31, 2014 increased by ¥1,119 million.
Due to the promulgation on March 31, 2015 of the “Act for
Partial Amendment of the Income Tax Act, etc.” and “Partial
Amendment of the Local Tax Act, etc.,” the statutory tax rate used
to calculate the deferred tax assets and liabilities at March 31, 2015changed mainly from 35.4 percent to 32.9 percent for those items
scheduled for reversal during the period from April 1, 2015 toMarch 31, 2016, and to 32.1 percent for those items scheduled
for reversal on or after April 1, 2016. As a result, income taxes
for the year ended March 31, 2015 decreased by ¥648 million($5,400 thousand).
Financial Section

16. Exchange Gains and Losses
Other income for the years ended March 31, 2015, 2014 and2013 includes net exchange gains of ¥574 million ($4,783
thousand), ¥408 million and ¥276 million, respectively.

SECOM Annual Report 201557

Reconciliations of the differences between income taxes computed
at statutory tax rates and consolidated income taxes from continuing
operations are as follows:2015

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2014

2013

Income taxes computed
at statutory tax rate ............ ¥45,261 ¥48,665 ¥45,494
Increase (decrease)resulting from:
Provision of valuation
allowance ....................... 1,152
832
477
Reversal of valuation
allowance .......................
(927) (1,234)(518)
Per capita tax ....................
863
857
850
Net effect of changes incorporate tax rates ..........
(648) 1,119—
Other, net .........................
271
(544)
394
Consolidated income
taxes from continuing
operations ................... ¥45,972 ¥49,695 ¥46,697

2015$377,175

9,600(7,725)
7,192(5,400)2,258$383,100

The valuation allowance principally relates to deferred tax assetsof 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, 2015, 2014 and2013 was a decrease of ¥3,410 million ($28,417 thousand) and¥255 million and an increase of ¥299 million, respectively.
In assessing the realizability of deferred tax assets, the Company’s
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’s management considered the scheduled reversal of deferred tax liabilities,
projected future taxable income and tax planning strategies inmaking 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’s
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, 2015 and 2014.
Net deferred tax assets at March 31, 2015 and 2014 are reflectedin the accompanying consolidated balance sheets under thefollowing captions:

The significant components of deferred tax assets and liabilities at
March 31, 2015 and 2014 are as follows:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2014

2015

2015

Deferred tax assets:
Loss carryforwards .......................... ¥ 8,715 ¥11,277$ 72,625
Accrued pension andseverance costs .............................
8,180
9,753
68,167
Deferred revenue ............................
8,152
8,958
67,933Adjustment of book value atthe date of acquisition—
Land and buildings ......................
6,871
7,869
57,258Other assets ................................
263
265
2,192
Property, plant and equipment ........
6,230
8,913
51,916
Accrued bonus ................................
5,709
6,014
47,575
Vacation accrual ..............................
3,186
3,495
26,550Allowance for doubtful accounts.....
2,889
2,635
24,075
Write-down on real estate
inventories ....................................
1,714
2,781
14,283
Intangible assets..............................
1,674
1,641
13,950Investment securities .......................
1,268
49
10,567
Other ..............................................
9,749
9,328
81,243Gross deferred tax assets ............. 64,600 72,978538,334
Less: Valuation allowance ............ (26,562) (29,972)(221,350)
Total deferred tax assets .............. 38,038 43,006
316,984
Deferred tax liabilities:(96,567)
Unrealized gains on securities.......... (11,588) (6,133)
Prepaid pension andseverance costs ............................. (11,128) (7,862)(92,733)
Adjustment of book value atthe date of acquisition—
Land and buildings ...................... (4,616) (5,201)(38,467)
Intangible assets .......................... (4,421) (5,160)(36,842)
Other assets ................................ (1,157) (1,332)(9,642)
Investments in affiliated companies .. (6,608) (5,506)(55,067)
Deferred installation costs ............... (5,710) (6,464)(47,583)
Other .............................................. (4,352) (3,749)(36,266)
Gross deferred tax liabilities ......... (49,580) (41,407)(413,167)
Net deferred tax assets ........... (¥11,542) ¥ 1,599 ($ 96,183)

58

SECOM Annual Report 2015

In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2014

2015

2015

Deferred income taxes(Current assets) ............................... ¥12,929 ¥14,021
Deferred income taxes(Other assets) ..................................
5,037
7,061
Other current liabilities(Current liabilities) ...........................
(1,106)(344)
Deferred income taxes(Long-term liabilities)....................... (28,402) (19,139)
Net deferred tax assets ............. (¥11,542) ¥ 1,599$107,742
41,975(9,217)(236,683)($ 96,183)

The Company has not recognized deferred tax liabilities of ¥674
million ($5,617 thousand) for a portion of undistributed earnings offoreign subsidiaries totaling ¥23,288 million ($194,067 thousand)at March 31, 2015 as they are not expected to be remitted in theforeseeable future.
At March 31, 2015, the operating loss carryforwards of domestic
subsidiaries amounted to ¥21,216 million ($176,800 thousand) andare available for offsetting against future taxable earnings of such
subsidiaries for up to nine years, as follows:
Expires in the years ending March 31

2016......................................................
2017......................................................
2018......................................................
2019......................................................
2020......................................................
2021......................................................
2022......................................................
2023......................................................
2024......................................................
..............................................................

In millions of yen

¥

—
—
2,829
6,588
1,730
1,220
3,337
2,048
3,464
¥21,216

In thousands of
U.S. dollars$——
23,57554,90014,417
10,16727,80817,06728,866$176,800

The operating loss carryforwards of overseas subsidiaries at
March 31, 2015 amounted to ¥6,638 million ($55,317 thousand), apart of which will begin to expire in the year ending March 31, 2016.

The total amount of unrecognized tax benefits for the years
ended March 31, 2015, 2014 and 2013 was insignificant. Also,
there were no significant movements in the gross amounts of unrealized tax benefits and the amounts of interest and penalties recognized due to the unrecognized tax benefits during the years ended
March 31, 2015, 2014 and 2013.
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 infuture periods. Based on the information available as of March 31,
2015, 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
2009. In other foreign tax jurisdictions, major subsidiaries are nolonger subject to income tax examinations by tax authorities foryears before 2014, with some exceptions.
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,
2015, 2014 and 2013 are as follows:2015

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2014

2013

Net income attributable
to SECOM CO., LTD. ............. ¥80,184 ¥73,979 ¥70,580
Net transfers from (to)noncontrolling interests ......
(339)
(28)
(752)
Change from net income
attributable to SECOM CO.,LTD. and transfers from (to)noncontrolling interests ........ ¥79,845 ¥73,951 ¥69,828

2015$668,200(2,825)$665,375(2) Retained Earnings
The Japanese Companies Act 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 JapaneseCompanies Act is based on the amount recorded in the parent
company’s nonconsolidated statutory financial statements in accordance with Japanese GAAP. Such amount was ¥485,321 million($4,044,342 thousand) at March 31, 2015.

Subsequent to March 31, 2015, the parent company’s Board of
Directors declared a year-end cash dividend of ¥65 ($0.54) per
share, totaling ¥14,187 million ($118,225 thousand), to shareholders of record on March 31, 2015. The dividend declared wasapproved at the general shareholders’ meeting held on June 25,
2015. Dividends are recorded in the year they are declared.
The Company has made it a basic rule to distribute a dividend
twice a year, the interim dividend whose record date is
September 30 each year and commenced from the year ended
March 31, 2015, and the year-end dividend whose record date is
March 31 each year. The interim dividend is determined by the
Board of Directors and the year-end dividend is determined by theGeneral Meeting of Shareholders.
Cash dividends per share are computed based on dividends paid
for the year. Cash dividends per share for the year ended March 31,
2015 include the year-end dividend of ¥115 whose record date is
March 31, 2014 and the interim dividend of ¥60 whose record dateis September 30, 2015.
(3) Common Stock in Treasury
The Company may repurchase its common stock from the market
pursuant to the Japanese Companies Act. There are certain restrictions on payment of dividends in connection with the treasury stock
repurchased.
(4) Other Comprehensive Income (Loss)
Components of other comprehensive income (loss) for the years
ended March 31, 2015, 2014 and 2013 are as follows:
In millions of yen
Pre-tax
amountTax(expense)or benefit

Net-of-tax
amountSECOM Annual Report 2015

Financial Section

For the year ended March 31, 2015:
Unrealized gains on securities—
Unrealized gains or losses
arising during the period ............. ¥20,020 (¥ 6,295) ¥13,725
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income..........................
(192)
55
(137)
Unrealized gains on derivative
instruments—
Unrealized gains or losses
arising during the year.................
12(3)
9
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income..........................
(25)
8
(17)
Pension liability adjustments—
Unrealized gains or losses
arising during the period ............. 11,461(3,620)7,841
Less: Reclassification
adjustment for gains
or losses realized
in net income ......................
(496)
(151)
(647)
Foreign currency(1,020) 12,179translation adjustments ................... 13,199
Other comprehensive
income (loss) ........................... ¥43,979 (¥11,026) ¥32,95359

In millions of yen
Pre-tax
amount

For the year ended March 31, 2014:
Unrealized gains on securities—
Unrealized gains or losses
arising during the period ............. ¥ 3,229
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income..........................
(1,669)Unrealized gains on derivative
instruments—
Unrealized gains or losses
arising during the year.................
19
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income..........................
(17)
Pension liability adjustments—
Unrealized gains or losses
arising during the period .............
8,471
Less: Reclassification
adjustment for gains
or losses realized
in net income ......................
255
Foreign currencytranslation adjustments ................... 18,213
Other comprehensive
income (loss) ........................... ¥28,501
For the year ended March 31, 2013:
Unrealized gains on securities—
Unrealized gains or losses
arising during the period ............. ¥11,607
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income..........................
(713)
Unrealized gains on derivative
instruments—
Unrealized gains or losses
arising during the year.................
10
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income..........................
15
Pension liability adjustments—
Unrealized gains or losses
arising during the period .............
(897)
Less: Reclassification
adjustment for gains
or losses realized
in net income ......................
5
Foreign currencytranslation adjustments ................... 10,105
Other comprehensive
income (loss) ........................... ¥20,132

Tax(expense)or benefit

Net-of-tax
amount(¥ 974) ¥ 2,255

534(1,135)

(6)

13

6

(11)

(3,153)

5,318

(30)

225

(121)

18,092(¥3,744) ¥24,757(¥3,740) ¥ 7,867

229

(4)

In thousands of U.S. dollars
Pre-tax
amount

(6)

9

117

(780)

67

72

—

10,105Net-of-tax
amount

For the year ended March 31, 2015:
Unrealized gains on securities—
Unrealized gains or losses
arising during the period ............. $166,833 ($52,457) $114,376
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income.......................... (1,600)
458(1,142)
Unrealized gains on derivative
instruments—
Unrealized gains or losses
arising during the year.................
100
(25)
75
Less: Reclassification
Less: adjustment for gains
Less: or losses realized in
Less: net income..........................
(208)
67
(141)
Pension liability adjustments—
Unrealized gains or losses
arising during the period ............. 95,509 (30,167) 65,342
Less: Reclassification
adjustment for gains
or losses realized
in net income ...................... (4,134)(1,258)(5,392)Foreign currencytranslation adjustments ................... 109,992(8,500) 101,492
Other comprehensive
income (loss) ........................... $366,492 ($91,882) $274,610

Reclassification adjustments for gains or losses realized in net
income (pre-tax amount) included in the consolidated statements
of income for the years ended March 31, 2015 and 2014 are
as follows:

(484)

6

Tax
(expense)or benefit

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2014

2015

(¥306) (¥1,221)
(33)
(483)

($2,550)
(275)

2015

Unrealized gains on securities—
Net sales and operating revenue .......
Gain on sales of securities, net ..........
Loss on other-than-temporary
impairment of investment
securities .........................................
Unrealized gains onderivative instruments—
Other income ....................................
Pension liability adjustments—
Net periodic pension andseverance costs (Note 15) ................
Equity in net income of affiliatedcompanies ..........................................

147

35

1,225

(25)

(17)

(208)

(595)

(20)

(4,958)

¥ 99

¥ 275

$ 824

(¥3,337) ¥16,795

19. Lessee
The Company leases certain office space, employee residential
facilities, and computer and transportation equipment. Some leased
buildings, and computer and transportation equipment are held
under capital leases. Other leases are classified as operating leases.

60

SECOM Annual Report 2015

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 adjoining
land and buildings. The lease term is also 30 years beginning July
15, 2010. For financial reporting purposes, the portion of theselease arrangements relating to the building has been classified asa capital lease; accordingly, an asset of approximately ¥7,209 million ($60,075 thousand) has been recorded in the buildings andimprovements account. The portion of the lease relating to the landhas been classified as an operating lease. The future minimum lease
payment for the site at March 31, 2015 was ¥5,453 million($45,442 thousand).
A summary of leased assets under capital leases at March 31,
2015 and 2014 is as follows:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2015

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

2014

2015

¥ 8,348 ¥ 8,908$69,567

10,234 11,107
46
95(9,185) (9,776)¥ 9,443 ¥10,334

85,283
383(76,542)$78,691

The future minimum lease payments required under operatingleases that have initial or remaining noncancelable lease terms inexcess of one year at March 31, 2015 are as follows:
Years ending March 31

In millions of yen

In thousands of
U.S. dollars¥ 9,725
8,906
8,565
8,422
8,398
29,794$ 81,042
74,217
71,37570,18369,983
248,283¥73,810$615,083

2016........................................................
2017........................................................
2018........................................................
2019........................................................
2020........................................................
Thereafter ................................................
Total future minimum lease
payments ...........................................

20. Lessor
The Company’s leasing operations consist principally of leasingof security merchandise, security systems and real estate for offices
and medical institutions. Most of the security merchandise andsecurity systems on lease are classified as sales-type leases or directfinancing leases. Other leases are classified as operating leases.
A summary of lease receivables under sales-type and directfinancing leases at March 31, 2015 and 2014 is as follows:
In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2014

2015

¥58,045 ¥51,037(5,035) (3,869)(4,224) (4,644)
48,786 42,524(14,823) (12,769)¥33,963 ¥29,755$483,708(41,958)(35,200)
406,550(123,525)$283,025

2015

Depreciation and amortization expenses for assets under capitalleases for the years ended March 31, 2015, 2014 and 2013 were
¥2,746 million ($22,883 thousand), ¥2,668 million and ¥2,688
million, respectively.
The following is a schedule by year of future minimum lease
payments under capital leases and the present value of the net
minimum lease payments at March 31, 2015:
Years ending March 31

2016........................................................
2017........................................................
2018........................................................
2019........................................................
2020........................................................
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 .........................................

In millions of yen

In thousands of
U.S. dollars¥ 2,535
2,020
1,601
1,324
1,100
11,793
20,373(7,673)$ 21,125
16,833
13,342
11,033
9,167
98,275
169,775(63,942)

12,700(2,033)

105,833(16,942)¥10,667$ 88,891

The following is a schedule by year of future minimum lease
payments to be received under sales-type leases and directfinancing leases at March 31, 2015:
Years ending March 31

In millions of yen

In thousands of
U.S. dollars¥17,043
14,28911,864
8,768
4,760
1,321

$142,025
119,075
98,86773,067
39,667
11,007¥58,045$483,708

2016........................................................
2017........................................................
2018........................................................
2019........................................................
2020........................................................
Thereafter ................................................
Total future minimum lease
payments to be received ....................

A summary of investment in property under operating leases andproperty held for lease at March 31, 2015 and 2014 is as follows:
In millions of yen

In thousands of
U.S. dollars

March 31

March 312015

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

2014

2015

¥34,892 ¥32,944
32,150 31,659
662
662(10,882) (10,441)¥56,822 ¥54,824$290,767
267,917
5,517(90,684)$473,517

SECOM Annual Report 2015

Financial Section

Rental expenses under operating leases for the years ended
March 31, 2015, 2014 and 2013 were ¥22,898 million ($190,817
thousand), ¥21,774 million and ¥18,264 million, respectively. A
significant 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 financial
reporting purposes, the lease has been classified as an operatinglease. Based on the agreement, the annual lease payment for thesite is approximately ¥1,299 million ($10,825 thousand) over a
20-year period.

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

61

The future minimum rentals under noncancelable operatingleases at March 31, 2015 are as follows:
Years ending March 31

2016........................................................
2017........................................................
2018........................................................
2019........................................................
2020........................................................
Thereafter ................................................
Total future minimum rentals ...............

In millions of yen

In thousands of
U.S. dollars¥1,945
162
162
162
162
3,234
¥5,827$16,208
1,350
1,350
1,350
1,350
26,950$48,558

21. 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. The three levels of inputs used to measure fair value
are more fully described in Note 22.
(1) Cash and Cash Equivalents; Time Deposits; Cash Deposits;
Notes and Accounts Receivable, Trade; Due from Subscribers;
Short-Term Receivables; Bank Loans; Notes and Accounts
Payable, Trade; Other Payables; Deposits Received; Accrued
Income Taxes; and Accrued Payroll
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 investment
securities are principally based on quoted market prices.
(3) Long-Term Receivables Including Current PortionLong-term receivables, including the current portion, areclassified as Level 2 and fair value is estimated based on the present
value of future cash flows through estimated maturity, discounted
using estimated market discount rates.
(4) Long-Term Debt Including Current PortionLong-term debt, including the current portion, is classified as
Level 2 and fair value is estimated based on the present valueof future cash flows of each instrument discounted using theCompany’s current incremental borrowing rates for similar liabilities.
(5) Investment Deposits by Policyholders
The fair values of investment deposits by policyholders areclassified as Level 3 and estimated based on the present value of
future cash flows, discounted using the interest rates currently
being offered for similar contracts.
(6) Derivatives
The fair values of derivatives are estimated using current market
pricing models by obtaining quotes from financial institutions.

62

SECOM Annual Report 2015

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, 2015 and 2014 are as follows:
In millions of yen
March 31
2015
Carrying
amountNon-derivatives:
Assets—Long-term receivables
including current
portion (Less allowancefor doubtful accounts) .... ¥58,743
Liabilities—
Long-term debt
including current
portion ........................... 67,171
Investment deposits
by policyholders ............. 30,272
Derivatives:
Liabilities—
Interest rate swaps(Other long-term
liabilities) ........................
118

Estimated
fair value

2014
Carrying
amountEstimated
fair value¥59,061 ¥58,235¥58,457

67,191

63,24863,29731,70929,53130,710

118

165

165

In thousands of U.S. dollars
March 31, 2015
Carrying
amountNon-derivatives:
Assets—Long-term receivables including current
portion (Less allowance for doubtful
accounts) ...............................................
Liabilities—
Long-term debt including current
portion ...................................................
Investment deposits
by policyholders .....................................
Derivatives:
Liabilities—
Interest rate swaps (Other long-term
liabilities) ................................................

Estimated
fair value$489,525 $492,175
559,758 559,925
252,267 262,242

983

983

Limitation:
Fair value estimates are made at a specific point in time based on
relevant market information and information about financial
instruments. These estimates are subjective 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.

22. Fair Value Measurements
ASC 820, “Fair Value Measurements and Disclosures,” defines fairvalue as the price that would be received to sell an asset or paid totransfer 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. This accounting 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 market
participants 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, 2015 and 2014. Transfers between levels are recognizedat the end of the respective reporting periods.
In millions of yen
March 31, 2015
Level 1

Level 2

Level 3

Total

Assets:Cash equivalents ..... ¥844
Short-term
investments andinvestment
securities ...............
171,162
Total assets ................. ¥172,006¥ 2,671¥

35,853¥38,524

27,340¥ 27,340

234,355¥237,870

Liabilities:
Derivatives(Other long-term
liabilities) ............... ¥Total liabilities ............. ¥

¥
¥

¥
¥

¥
¥

—
—

118
118

—

—
—

¥

3,515

118
118

In millions of yen
March 31, 2014
Level 1

Liabilities:
Derivatives(Other long-term
liabilities) ............... ¥Total liabilities ............. ¥——Level 3

¥ 2,671¥

24,600¥27,271

34,980¥34,980

¥
¥

165
165

¥
¥

—

—
—

March 31, 2015
Level 1

Level 2

Level 3Liabilities:
Derivatives(Other long-term
liabilities) ............... $Total liabilities ............. $

— $
— $

983 $
983 $

2,924

193,688¥196,612

¥
¥

165
165

— $
— $

983
983

Cash Equivalents
All highly liquid investments with initial maturities of three months orless are considered to be cash equivalents, and principally valued
using quoted prices for identical assets in markets that are not active.
Short-Term Investments and Investment Securities
Equity securities and debt securities classified as Level 1 assets arevalued using unadjusted quoted market prices in active markets
with sufficient volume and frequency of transactions.
Level 2 assets comprise principally debt securities, which arevalued using quoted prices for similar assets in active markets,or quoted prices 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. The fair value is determined byusing a valuation technique, such as the discounted cash flow
model, which best reflects the nature, characteristics and risks ofeach asset. These significant unobservable inputs contain discountrates, exit timing and an EBITDA multiple. An increase (decrease) inthe discount rates, the later (earlier) exit and a decrease (increase)in the EBITDA multiple would result in a decrease (increase) in thefair value of non-marketable securities.
The Company’s Level 3 investment securities that are measured
at fair value on a recurring basis at March 31, 2015 and 2014,
amounting to ¥27,340 million ($227,833 thousand) and ¥34,980
million, respectively, are primarily private equity investments.
The valuation technique and significant unobservable inputs
are as follows:
March 31, 2015

Total

¥

Total

Assets:Cash equivalents ..... $7,034 $ 22,258 $— $ 29,292
Short-term
investments andinvestment
securities ............... 1,426,350 298,775 227,833
1,952,958
Total assets ................. $1,433,384 $321,033 $227,833 $1,982,250

Valuation techniqueSignificant unobservable inputs

Range

Discounted cash flows

Discount rate
Exit timing
EBITDA multiple

20%–30%
2016–2019
4.5x–10.7x

Valuation techniqueSignificant unobservable inputs

Range

Discounted cash flows

Discount rate
Exit timing
EBITDA multiple

20%–30%2014–2019
3.7x–8.5x

March 31, 2014

For the year ended March 31, 2014, ¥1,401 million of debt
securities were transferred from Level 1 to Level 2 because theobservable markets in which these instruments were tradedbecame inactive.

SECOM Annual Report 2015

Financial Section

Assets:Cash equivalents ..... ¥253
Short-term
investments andinvestment
securities ...............
134,108
Total assets ................. ¥134,361

Level 2In thousands of U.S. dollars

63Derivative Financial Investments
Derivative financial instruments comprise forward exchange
contracts, interest rate swaps and others. These derivative instruments are valued using observable market data and classified as
Level 2 liabilities.
The following table represents the changes in Level 3 assets
measured on a recurring basis for the years ended March 31, 2015
and 2014.
In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2014

2015

Balance at beginning of year .............. ¥34,980 ¥39,588
Total gains or losses(realized and unrealized):
Included in earnings ...................
4,920 7,102
Included in othercomprehensive income .............
(38)
89
Purchases .......................................
3,619 2,132
Sales .............................................. (19,099) (19,977)
Redemptions ..................................
(327)
(367)
Foreign currency translation
adjustments .................................
3,285 6,413
Balance at end of year ....................... ¥27,340 ¥34,980

2015$291,500

Changes in unrealized gains
or losses relating to instruments
still held at end of year:
Included in earnings ................... ¥ 1,065 ¥ 6,388

41,000(317)
30,158(159,158)(2,725)27,375$227,833$

8,875

Total gains or losses (realized or unrealized) related to short-term
investments and investment securities are primarily included in
net sales and operating 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¥9,104 million ($75,867 thousand) were written down to their fairvalue of ¥9,083 million ($75,692 thousand), resulting in an otherthan-temporary impairment charge of ¥21 million ($175 thousand),
which was included in earnings for the year ended March 31, 2015.
For the year ended March 31, 2014, non-marketable equity
securities with a carrying amount of ¥8,684 million were written
down to their fair value of ¥8,639 million, resulting in an otherthan-temporary impairment charge of ¥45 million, which was
included in earnings. All impaired non-marketable equity securities
were classified as Level 3 assets as the Company uses unobservable
inputs such as future cash flows 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 unobservable inputs to value these assets. These
Level 3 assets are not significant.

64

SECOM Annual Report 201523. Derivative Financial Instruments(1) Risk Management Policy
The Company utilizes derivative financial instruments in thenormal course of business to reduce exposure to fluctuations ininterest rates. The Company assesses interest rate risk by continuallymonitoring changes in the 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 bycounterparties to derivative financial instruments, but it is notexpected that any counterparties will fail to meet their obligations,because most of the counterparties are internationally recognizedfinancial institutions and contracts are diversified amongst anumber of major financial institutions.
(2) Risk Management
The Company has exposure to the market risk of changes ininterest rates which relates primarily to its debt obligations. The
Company principally enters into interest rate swap agreements tomanage fluctuations in cash flows resulting from changes in interest
rates. Interest rate swaps are used to change floating rates on debt
obligations to fixed rates by entering into receive-floating, pay-fixedinterest rate swaps under which the Company receives floatinginterest rate proceeds and makes fixed interest rate payments,
thereby effectively creating fixed-rate debt.
(3) Cash Flow Hedges
The Company designates interest rate swap agreements as cash
flow hedges for variability of cash flows originating from floating
rate borrowings. The interest rate swap agreements mature atvarious dates through 2015. 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 hedge ineffectivenessand net gains or losses excluded from the assessment of hedge
effectiveness is not material for the years ended March 31, 2015,2014 and 2013 as the critical terms of most of the interest rate
swap agreements match the terms of the hedged debt obligations.
Approximately ¥5 million ($42 thousand) of net derivative income
included in accumulated other comprehensive income, net of tax at
March 31, 2015, will be reclassified into current income within 12
months from that date. At March 31, 2015 and 2014, the notional
principal amounts of interest rate swap agreements designated as
cash flow hedges were ¥726 million ($6,050 thousand) and ¥2,153
million, respectively.
(4) Derivative Instruments Not Designated as Hedges
The Company enters into interest rate swap agreements to reduce
exposure to fluctuations in interest rates relating primarily to debt
obligations and other agreements. Changes in fair value of thesederivative financial instruments, which are not designated ashedges, are reported in current income.

Fair values of derivative instruments reflected in the consolidatedbalance sheets as of March 31, 2015 and 2014 are as follows:
Derivatives designated as hedging instruments

Location

Liabilities:
Interest rate swaps

Other current
liabilities
Other long-term
liabilities

In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2015

2014

2015

¥ 5

¥—

$42

¥—

¥28

$—

In millions of yen

In thousands of
U.S. dollars

Derivatives not designated as hedging instruments

Liabilities:
Interest rate swaps

March 31

March 31

Location

2015

2014

2015

Other long-term
liabilities

¥113

¥137

$941

Effects of derivative instruments on the consolidated statements
of income for the years ended March 31, 2015, 2014 and 2013 are
as follows:

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 ¥4,582 million($38,183 thousand) at March 31, 2015. The carrying amounts of
the liabilities recognized as the Company’s obligations under theseguarantees at March 31, 2015 and 2014 were deemed insignificant.
It is not anticipated that damages, if any, resulting from legal
actions will have a material impact on the Company’s consolidated
financial statements.
25. Discontinued Operations
The Company accounted for the sale of certain businesses inaccordance with ASC 205-20, “Discontinued Operations.”
The Company sold certain businesses included in the real estateand other services segment, during the years ended March 31, 2015
and 2013, 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, 2015,2014 and 2013 are as follows:

Derivatives designated as cash flow hedging instruments
Gains recognized in accumulated other comprehensive income (loss)(effective portion)

Interest rate swaps

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2015

2014

2013

2015

¥6

¥10

¥5

$50

Gains (losses) reclassified from accumulated other comprehensive
income (loss) into income (effective portion)

Location

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2015

2014

2013

2015

Interest rate swaps Other income¥25
Other expenses ¥—

¥17
¥—

¥—
(¥15)

$208
$ —

Derivatives not designated as hedging instruments

Location

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2014

2013

2015

¥—
¥33
¥—

¥59
¥—
(¥13)

$ —
$192
$ —

24. Commitments and Contingent Liabilities
The Company has commitments outstanding at March 31, 2015
for the purchase of property, plant and equipment of approximately¥3,759 million ($31,325 thousand).

Attributable tononcontrolling interests ....
Attributable to
SECOM CO., LTD ..............

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2014

2013

2015

¥ 598 ¥3,272 ¥3,479$ 4,983

(149)

(301)

(771)

(1,242)

1,614
(651)

—
169

15
(152)

13,450(5,425)¥ 814 (¥ 132) (¥ 908)

$ 6,783¥$— ¥— (¥ 110)¥ 814 (¥ 132) (¥ 798)—

$ 6,783

Income (loss) from discontinued operations, net of tax, by business segment for the years ended March 31, 2015, 2014 and 2013is as follows:

Real estate andother services ....................
Income (loss) fromdiscontinued operations,net of taxes.......................

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2015

2014

2013

2015

¥814

(¥132)(¥908)$6,783¥814(¥132)(¥908)$6,783

SECOM Annual Report 2015

Financial Section

2015

Equity swaps
Other income¥—
Interest rate swaps Other income¥23
Other expenses ¥—2015

Net sales andoperating revenue.............
Income (loss) fromdiscontinued operations
before income taxes..........
Gain on sales of
discontinued operations ....
Income taxes.......................
Income (loss) fromdiscontinued operations,net of taxes.......................

In millions of yen

6526. Supplemental Cash Flow Information
Supplemental cash flow information is as follows:2015

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2014

2013

Cash paid during theyear for:
Interest ............................ ¥ 1,403 ¥ 1,459 ¥ 1,568
Income taxes ................... 50,673 50,676 31,761
Non-cash investing andfinancing activities:
Additions to obligations
under capital leases .......
2,318
4,503
2,381
Increase in land, buildings
and improvements byoffsetting long-term
receivables ....................
3,179
—
—
Significant acquisitions(Note 4)—
Assets acquired .............
—— 131,747
Liabilities assumed ........
—— (63,833)
Noncontrollinginterests ......................
—— (21,873)
Considerations forequity .........................
—— 46,041
Repayment oflong-term debt ...........
—— 27,000
Cash and cash
equivalents on hand ...
——(6,859)Total considerations ...... ¥— ¥— ¥ 66,182

2015$ 11,692
422,275

19,317

26,492
—
—
—
—
—

$

—
—

27. Segment Information
The Company discloses 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 which operating profit/loss amounts are evaluated regularly by management indeciding 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, information and communication
related services, and real estate and other services.
The Company recognizes that the significance of information andcommunication related services is increasing, resulting from theacquisition of At Tokyo Corporation, a subsidiary newly consolidated
from October 2012. Therefore, during the year ended March 31,
2014, the Company decided to separately disclose the informationand communication related services segment, formerly included in
the information and communication related and other services

66

SECOM Annual Report 2015

segment, to disclose business activities more adequately andimprove the effectiveness of segment information. Since thesignificance of the real estate development and sales segment as
a reportable segment has decreased, it was reclassified to the otherservices segment and its name was changed to the real estate andother services segment. In addition, during the year ended March
31, 2014, due to the increase in significance, construction andinstallation services, formerly included in the security services segment, was reclassified to the real estate and other services segment
to disclose business activities more adequately and improve theeffectiveness of segment information. Accordingly, segment information of all prior periods has been restated to conform to thepresentation used for the year ended March 31, 2014.
The security services segment provides various types of security
services by utilizing the Company’s unique security systems andmanufacturing and selling security merchandise. 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-based
nursing care services, medical data transmission services by utilizing
the Company’s network and leasing of real estate for medical institutions. In addition, the VIE, of which the Company is the primary
beneficiary manage hospitals and health care-related institutions.
The insurance services segment includes the non-life insurancerelated underwriting business in the Japanese market. The geographic information services segment includes surveying andmeasuring services and GIS services. The information and communication related services segment includes data center services,business continuity plan support, information security services andcloud services. The real estate and other services segment includes
development and sales of condominiums equipped with security
and contingency planning features, leasing of real estate,
construction and installation services and other services.
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, equipment and automobiles.

Information by business and geographic segments for the years
ended and as of March 31, 2015, 2014 and 2013 is as follows:

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2013

2015

(1) Business Segment Information

2015

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2013

2015

2014

Net sales andoperating revenue:
Security services—
External customers ....... ¥487,063 ¥472,449 ¥443,231
Intersegment ................
2,963
2,811
2,343
................................. 490,026
475,260
445,574
Fire protection services—
External customers ....... 121,189
122,046
114,130
Intersegment ................
5,127
5,111
4,308
................................. 126,316
127,157
118,438
Medical services—
External customers ....... 155,884
150,535
140,957
Intersegment ................
153
150
165
................................. 156,037
150,685
141,122
Insurance services—
37,01135,864External customers ....... 38,259
Intersegment ................
3,226
2,936
2,816
................................. 41,485
39,947
38,680Geographic information
services—
54,697
51,194External customers ....... 52,760
Intersegment ................
177
72
128
................................. 52,937
54,76951,322
Information andcommunication related
services—
External customers ....... 47,412
46,99229,541
Intersegment ................
6,527
6,381
5,286
................................. 53,939
53,37334,827
Real estate andother services—
37,41643,489External customers ....... 42,671
Intersegment ................
2,245
2,249
5,904
................................. 44,916
39,66549,393
Total................................ 965,656
940,856879,356
Eliminations .................... (20,418)(19,710)(20,950)
Total net sales andoperating revenue ...... ¥945,238 ¥921,146 ¥858,406$4,058,858
24,692
4,083,550
1,009,908
42,725
1,052,633
1,299,033
1,275
1,300,308
318,825
26,883345,708

439,667
1,475
441,142

395,100
54,392449,492

355,592
18,708374,300
8,047,133(170,150)$7,876,983

2015

2014

Operating income:Security services ............ ¥107,073 ¥104,089 ¥102,377
Fire protection
services .......................
12,51010,467
5,981
Medical services ............
1,521
2,707
5,458
Insurance services..........
8,042
2,007
2,712
Geographic information
services .......................
2,442
3,723
2,302
Information andcommunication
related services............
894
6,373
3,914
Real estate and
5,080
4,678
4,618
other services ..............
Total.............................. 137,562
134,044
127,362
Corporate expenses
and eliminations..........
(15,555)(13,966)(13,813)
Operating income ......... ¥122,007 ¥120,078 ¥113,549
Other income ................
9,293
11,658
9,948
Other expenses .............
(3,443)(2,995)(3,144)
Income before income
taxes and equity in net
income of affiliatedcompanies ............... ¥127,857 ¥128,741 ¥120,353

104,250
12,67567,017
20,3507,450
42,333
1,146,350(129,625)$1,016,725
77,442(28,692)$1,065,475

In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2014

2015

¥ 477,138 ¥ 471,949$ 3,976,150

2015

Assets:Security services ............
Fire protection
services .......................
Medical services ............
Insurance services..........
Geographic information
services .......................
Information andcommunication related
services .......................
Real estate andother services ..............
Total..............................
Corporate items ............
Investments inaffiliated companies ....
Total assets....................

$ 892,275

135,381
178,721215,278

127,911
171,288
190,005

1,128,175
1,489,342
1,793,983

69,54470,952579,533

120,038

127,174

1,000,317

128,503
116,539
1,324,603 1,275,818
145,051
115,125

1,070,859
11,038,359
1,208,758

56,20949,762¥1,525,863 ¥1,440,705

468,408$12,715,525

Financial Section

SECOM Annual Report 2015

67

2015

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

In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2013

2015

2014

¥47,425¥45,679¥44,715$395,208

1,694
7,209
1,140

1,667
6,658
1,280

1,739
5,953
895

14,11760,075
9,500

3,022

2,511

2,293

25,183

6,746

7,373

3,824

56,217992
68,228636

1,004
66,172489

957
60,376
298

8,267
568,567
5,300¥68,864¥66,661¥60,674$573,867¥35,632¥35,641¥36,003$296,933

3,449
20,895
3

1,364
9,899
30

1,306
13,83436

28,742
174,125
25

1,377

2,723

1,328

2,924

5,127

204
64,484375¥64,859

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.
In millions of yen

In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2013

2015

¥326,300 ¥318,116 ¥307,477$2,719,167

2015

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

2014

53,78851,68147,877448,233

21,01020,767

20,532

175,083

85,96581,88567,345716,375¥487,063 ¥472,449 ¥443,231$4,058,858(2) Geographic Segment Information
Net sales and operating revenue attributed to countries basedon the geographical location of customers for the years ended
2015, 2014 and 2013 and long-lived assets as of March 31, 2015
and 2014 were as follows:
In millions of yen

In thousands of
U.S. dollars

11,475

Years ended
March 31

Year ended
March 31

2013

2015

10,01424,367427
55,211806

648
63,169181

1,700
537,367
3,125

Net sales andoperating revenue:
Japan ........................ ¥901,079 ¥881,782 ¥825,356
Other ........................
44,15939,36433,050Total ...................... ¥945,238 ¥921,146 ¥858,406$7,508,991
367,992$7,876,983¥56,017¥63,350$540,492

In millions of yen

In thousands of
U.S. dollars

March 31

March 31

2014

2015

¥523,504 ¥519,038
7,559
6,650
¥531,063 ¥525,688$4,362,533
62,992$4,425,525

2015

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.

2014

2015

Long-lived assets:
Japan .......................
Other .......................
Total .....................

There are no individually material countries other than Japan withrespect to net sales and operating revenue and long-lived assets.
28. Subsequent Events
The Company has evaluated subsequent events through July 30,
2015, the date at which the financial statements were available tobe issued, and determined there is no item to disclose.

68

SECOM Annual Report 2015

Independent Auditors’ Report

The Board of Directors and Shareholders
SECOM CO., LTD.:

We have audited the accompanying consolidated financial statements of SECOM CO., LTD. and its subsidiaries, which comprise theconsolidated balance sheets as of March 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income,changes in equity, and cash flows for each of the years in the three-year period ended March 31, 2013, and the related notes to theconsolidated financial statements.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to
the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits inaccordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatementof the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal
control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentationof the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
SECOM CO., LTD. and its subsidiaries as of March 31, 2015 and 2014, and the results of their operations and their cash flows for eachof the years in the three-year period ended March 31, 2013, in accordance with U.S. generally accepted accounting principles.
Convenience Translations
The accompanying consolidated financial statements as of and for the year ended March 31, 2015 have been translated into
United States dollars solely for the convenience of the reader. We have audited the translation and, in our opinion, the consolidated
financial statements expressed in Japanese yen have been translated into United States dollars on the basis set forth in Note 3 to theconsolidated financial statements.

Financial Section

Tokyo, Japan
July 30, 2015

SECOM Annual Report 2015

69

OTHER FINANCIAL DATA

Contents
Summary of Selected Financial Data ........................................... 71
Common Stock Data.................................................................. 73

70

SECOM Annual Report 2015

Summary of Selected Financial Data
SECOM CO., LTD. and Subsidiaries
Years ended/as of March 31

In millions of yen
2015

2014

2013

2012

2011

2010

Composition of consolidated net sales andoperating revenue by segment
Net sales and operating revenue ........................................................ ¥945,238 ¥921,146 ¥858,406 ¥769,609 ¥748,847 ¥667,302
472,449443,231425,427
417,350
415,794
Security services: ............................................................................ 487,063
As a percentage of net sales and operating revenue ...........
51.5%
51.3%
51.6%
55.3%
55.7%
62.3%
Electronic security services .......................................................... 326,300
318,116
307,477
300,208
299,783
300,063
As a percentage of net sales and operating revenue ...........
34.5
34.5
35.8
39.0
40.0
45.0
Other Security services—
Static guard services ............................................................... 53,788
51,68147,877
46,68946,372
46,213As a percentage of net sales and operating revenue ...........
5.7
5.6
5.6
6.1
6.2
6.9
Armored car services............................................................... 21,010
20,767
20,532
20,61020,12919,823As a percentage of net sales and operating revenue ...........
2.2
2.3
2.4
2.7
2.7
3.0
Subtotal .......................................................................... 74,798
72,44868,40967,29966,501
66,036Merchandise and other .............................................................. 85,965
81,88567,34557,92051,066
49,695
As a percentage of net sales and operating revenue ...........
9.1
8.9
7.8
7.5
6.8
7.4
Fire protection services ................................................................... 121,189
122,046
114,130
80,67875,17680,132
As a percentage of net sales and operating revenue ...........
12.8
13.3
13.3
10.5
10.1
12.0
Medical services ............................................................................. 155,884
150,535
140,957
134,550
125,020
56,309As a percentage of net sales and operating revenue ...........
16.5
16.3
16.4
17.4
16.7
8.4
Insurance services........................................................................... 38,259
37,01135,86433,55833,13329,142
As a percentage of net sales and operating revenue ...........
4.1
4.0
4.2
4.4
4.4
4.4
Geographic information services .................................................... 52,760
54,697
51,19450,17343,53941,918As a percentage of net sales and operating revenue ...........
5.6
5.9
6.0
6.5
5.8
6.3
Information and communication related services ............................ 47,412
46,99229,541
17,735
16,662
16,211
As a percentage of net sales and operating revenue ...........
5.0
5.1
3.4
2.3
2.2
2.4
Real estate and other services ........................................................ 42,671
37,41643,48927,48837,967
27,796
As a percentage of net sales and operating revenue ...........
4.5
4.1
5.1
3.6
5.1
4.2
Net income attributable to SECOM CO., LTD., cash dividends
and SECOM CO., LTD. shareholders’ equity
Net income attributable to SECOM CO., LTD ..................................... ¥ 80,184
Cash dividends paid (2) ........................................................................ 38,197
SECOM CO., LTD. shareholders’ equity .............................................. 825,969
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 ..................................................................

¥ 70,580
19,645679,176¥ 41,237
19,623612,855¥ 62,665
18,533
593,495¥ 46,989
18,533569,799

4.7
1.4
0.9
4.9
11.9
88.1
100.0

6.0
1.8
0.9
4.6
13.3
86.7
100.0

5.0
2.2
1.1
5.1
13.4
86.6
100.0

5.7
3.1
1.4
3.8
14.0
86.0
100.0

6.8
1.7
2.0
5.5
16.0
84.0
100.0

6.5
1.6
2.6
3.6
14.3
85.7
100.0

5.3
9.7

5.1
9.8

5.3
10.4

3.5
6.7

5.4
10.6

4.1
8.2

7.3
2.4

7.2
2.4

7.0
2.1

7.5
2.1

7.6
2.2

8.2
2.1

61.6
2.38
93.8

60.8
2.34
90.4

60.0
2.24
78.8

63.4
2.49
51.8

62.5
2.49
65.1

64.9
2.55
53.5

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

SECOM Annual Report 2015

Financial Section

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)...............................................

¥ 73,979
22,918753,099

71

2015

2013

2012

2011

2010

Number of shares outstanding
Issued ....................................................................
Owned by the Company ........................................

233,288,717 233,288,717 233,288,717 233,288,717 233,288,717 233,288,717
15,024,812 15,022,012 15,018,951 15,017,691 15,258,553 15,254,334

Balance ..................................................................

218,263,905 218,266,705 218,269,766 218,271,026 218,030,164 218,034,383

Per share information
Net income attributable to SECOM CO., LTD.
per share (in yen) (1) ..............................................
Cash dividends paid per share (in yen) (2) .................
SECOM CO., LTD. shareholders’ equity
per share (in yen) (3) ..............................................
Cash flow per share (in yen) (1) (e) ..............................
Price/Book value ratio.............................................
Price/Earnings ratio ................................................
Price/Cash flow ratio ..............................................
Stock price at year-end (in yen) ..............................

¥ 367.37
175.00¥ 338.94
105.00¥ 323.36
90.00¥ 188.97
90.00¥ 287.41
85.00¥ 215.51
85.00

3,784.27
557.88
2.12
21.84
14.38
8,025

3,450.36
529.35
1.72
17.54
11.23
5,946

3,111.64
496.34
1.56
15.00
9.77
4,850

2,807.77
365.28
1.44
21.43
11.09
4,050

2,722.08
458.62
1.42
13.45
8.43
3,865

2,613.34
383.36
1.57
18.98
10.67
4,090

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

72

2014

SECOM Annual Report 2015

(1) Per share amounts are based on the average number of shares outstanding
during each period.
(2) Subsequent to March 31, 2015, cash dividends of ¥14,187 million (¥65
per share) were approved at the general shareholders' meeting on June 25,2015 (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, less treasury stock.

Common Stock Data
SECOM 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............................................
Treasury stock........................................................
Total ..................................................................

2015

2014

2013

2012

2011

2010

24,852

27,054

27,62829,11830,33831,488

—%
29.89
3.43
3.16
44.95
12.13
6.44
100.00%

—%
31.28
4.88
2.56
42.32
12.52
6.44
100.00%

—%
30.86
5.58
3.63
41.33
12.16
6.44
100.00%

—%
29.88
6.08
3.68
41.25
12.67
6.44
100.00%

0.08%
30.76
4.75
3.71
41.27
12.89
6.54
100.00%

0.08%
31.34
4.28
3.73
40.77
13.26
6.54
100.00%

PRICE INFORMATION (TOKYO STOCK EXCHANGE)
2013

2014

2015

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

Price per share (in yen)

Nikkei Stock Average (in yen)

High

Low

High

Low

¥5,770
6,310
6,430
6,300
6,502
6,640
7,247
8,318

¥4,620
5,320
5,700
5,370
5,554
6,130
5,764
6,530

¥15,627.26
14,808.50
16,291.31
16,121.45
15,376.24
16,374.14
17,935.64
19,754.36¥12,003.43
13,338.46
13,853.32
14,008.47
13,910.16
14,778.37
14,532.51
16,795.96

Financial Section

SECOM Annual Report 201573

COMMON STOCK ISSUES

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.

Date

Additional
shares issued(In thousands)

Sharesoutstanding
after issue(In thousands)

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

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

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, 2015, the number of shares outstanding was 233,289 thousand and share capital was ¥66,377,829 thousand.
*One share was split into two.

74

SECOM Annual Report 2015

CONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP) [REFERENCE]

Contents
Condensed Consolidated Balance Sheets(Based on Japanese GAAP)....................................................... 76
Condensed Consolidated Statements of Income(Based on Japanese GAAP)....................................................... 78
Consolidated Statements of Comprehensive Income(Based on Japanese GAAP)....................................................... 78

SECOM Annual Report 201575

Condensed Consolidated Balance Sheets (Based on Japanese GAAP)SECOM CO., LTD. and Subsidiaries
As of March 31

In millions of yen

ASSETS

2015

2014

2013

2012

2011

2010

Current assets:
Cash on hand and in banks ............................................... ¥ 232,221 ¥ 210,514 ¥ 175,427 ¥ 182,412 ¥ 172,958 ¥ 146,929
50,39558,59756,08954,01156,546
48,861
Cash deposits for armored car services ..............................
15,50020,50046,50028,00029,50036,500Call loans ..........................................................................
114,071
115,318
106,638
85,74473,956
73,844
Notes and accounts receivable, trade.................................
26,31625,17424,05924,83022,754
20,824Due from subscribers.........................................................
28,517
12,955
14,723
19,936
7,313
15,989
Short-term investments .....................................................
39,242
33,18827,56914,605
15,433
14,742
Lease receivables and investments in leased assets .............
14,163
14,186
12,321
9,597
8,823
10,987
Merchandise and products ................................................
3,063
33
12,944
9,082
11,481
18,493
Real estate inventories .......................................................
4,031
4,602
4,526
2,527
2,249
1,427
Work in process ................................................................
9,460
8,983
7,563
5,671
4,233
5,312
Costs on uncompleted construction contracts ...................
21,05815,396
13,34833,27648,29655,916Work in process for real estate inventories .........................
7,913
7,573
6,430
5,950
5,750
5,932
Raw materials and supplies................................................
12,80813,254
14,384
11,383
12,216
11,684
Deferred income taxes.......................................................
2,268
2,699
4,158
4,389
3,908
3,088
Short-term loans receivable ...............................................
21,111
17,62318,453
13,48912,566
15,275
Other ..............................................................................
(1,997)(2,026)(2,302)(1,428)(1,704)(2,207)
Allowance for doubtful accounts .......................................
600,146558,574
542,836
503,479
486,284
483,600
Total current assets .................................................

Fixed assets:
Tangible assets:
Buildings and improvements, net ...................................
Security equipment and control stations, net .................
Land ..............................................................................
Other, net ......................................................................
Total tangible assets................................................

148,375
70,478
119,604
23,702
362,161

153,278
68,759113,946
24,849360,833

155,839
67,200115,652
22,839361,532

97,95566,900104,426
21,464
290,747

102,855
63,49097,73018,638282,715

97,692
63,03493,424
18,869273,020

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

49,41153,59655,07925,04325,553

21,885Investments and others:
284,322
246,233
189,042
177,655
188,001
187,777
Investment securities......................................................
42,90445,70142,33846,19747,57650,488Long-term loans receivable ............................................
Prepaid pension and severance costs..............................
——
19,572
19,13018,73018,618Net defined benefit asset ...............................................
35,01017,612
—
—
—
—
4,874
13,521
11,711
14,793
20,11019,848Deferred income taxes ...................................................
Other.............................................................................
49,382
48,48643,70642,37643,422
44,630Allowance for doubtful accounts ...................................
(17,525)(16,352)(16,742)(17,584)(18,111)(18,403)398,969
355,203289,629
282,568
299,729
302,959
Total investments and others ..................................
810,541
769,633
706,241
598,359
607,998
597,864
Total fixed assets.....................................................
Deferred assets ..................................................................
26
17
32
45
117
213
Total assets ............................................................. ¥1,410,715 ¥1,328,226 ¥1,249,110 ¥1,101,884 ¥1,094,400 ¥1,081,679

76

SECOM Annual Report 2015

In millions of yen

LIABILITIES

2015

2014

2013

2012

2011

2010

Current liabilities:
Notes and accounts payable, trade ..................................... ¥ 43,160 ¥ 49,409 ¥ 43,684 ¥ 30,731 ¥ 25,959 ¥ 24,774
44,96552,12042,35047,98547,42648,094
Bank loans .........................................................................
1,414
4,640
4,487
5,983
2,914
1,761
Current portion of straight bonds .......................................
503
579
537
354
354
247
Lease obligations ................................................................
27,62722,85723,359
Payables—other .................................................................
33,84931,316
31,406
21,06327,74429,282
14,68819,353
20,907
Accrued income taxes ........................................................
12,878
4,151
4,377
3,833
2,850
3,302
Accrued consumption taxes................................................
4,169
3,792
3,633
Accrued expenses...............................................................
4,653
4,625
4,571
31,34831,02730,88030,83430,58233,554
Deferred revenue ...............................................................
14,652
14,437
14,031
12,73911,925
12,139Accrued bonuses ................................................................
—
—
—
—
—
1,770
Reserve for litigation losses .................................................
1,612
1,981
1,714
834
530
145
Reserve for losses on construction contracts .......................
Other
37,65334,64940,55435,99733,52736,660247,755
256,684
247,879
215,780
202,074
210,353
Total current liabilities ..............................................
Long-term liabilities:
Straight bonds....................................................................
Long-term loans .................................................................
Lease obligations ................................................................
Guarantee deposits received...............................................
Deferred income taxes........................................................
Accrued pension and severance costs .................................
Accrued retirement benefits for directors andaudit and supervisory board members ..............................
Net defined benefit liability.................................................
Investment deposits by policyholders, unearned
premiums and other insurance liabilities ...........................
Other
Total long-term liabilities ..........................................
Total liabilities ..........................................................

8,413
20,602
3,712
36,00013,554—

7,796
17,256
4,183
36,542
11,169—8,847
19,8283,438
36,125
13,40017,137

9,625
10,7002,884
38,235
8,415
12,585

14,091
21,586
3,080
38,091
8,909
13,097

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

1,415
18,504

1,635
18,569

2,443
—

2,509
—

2,433
—

2,398
—

150,119
3,295
255,618
503,374

141,099
2,918
241,171497,856

133,627
2,242
237,091
484,970

127,812
1,817
214,586
430,366

135,498
1,481
238,270
440,344

150,180
1,557
246,171456,525

NET ASSETS
Shareholders’ equity:
Common stock................................................................... ¥ 66,377 ¥ 66,377 ¥ 66,377 ¥ 66,377 ¥ 66,377 ¥ 66,377
80,26583,054
83,054
83,054
83,054
83,054
Capital surplus ...................................................................
694,688656,286
609,275
565,261549,747
507,434
Retained earnings ..............................................................
(73,701)(73,682)(73,664)(73,659)(74,923)(74,907)
Common stock in treasury, at cost ......................................
767,630
732,036
685,042
641,034
624,255
581,959
Total shareholders’ equity ........................................

26,981
(34)
1,477
4,390
32,815

12,504(33)(10,885)(3,506)(1,921)

11,783(41)(27,760)—(16,018)

4,559
(28)
(37,556)—(33,026)

2,192
(35)
(34,166)—(32,010)

4,521
(17)
(27,871)—(23,367)

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

106,895

100,253

95,11463,50961,81066,562907,341
830,369
764,139
671,517654,055
625,153
Total net assets ........................................................
Total liabilities and net assets ................................... ¥1,410,715 ¥1,328,226 ¥1,249,110 ¥1,101,884 ¥1,094,400 ¥1,081,679

SECOM Annual Report 2015

Financial Section

Accumulated other comprehensive income:Unrealized gains on securities .............................................
Deferred losses on hedges ..................................................
Foreign currency translation adjustments ............................
Remeasurements of defined benefit plans ..........................
Total accumulated other comprehensive income ......

77

Condensed Consolidated Statements of Income (Based on Japanese GAAP)SECOM CO., LTD. and Subsidiaries
Years ended March 31

In millions of yen
2015

2014

2013

2012

2011

2010

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

¥840,722 ¥822,228 ¥765,635 ¥679,173 ¥663,887 ¥654,678
2.2%
7.4%
12.7%
2.3%
1.4%
(3.5%)

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

557,884
66.4

542,94966.0

504,006
65.8

458,452
67.5

423,98363.9

415,390
63.4

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

282,83733.6

279,278
34.0

261,62934.2

220,72032.5

239,904
36.1

239,288
36.6

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

159,22218.9

159,259
19.4

153,258
20.0

139,64220.6

140,76221.2

140,749
21.5

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

123,61514.7

120,018
14.6

108,370
14.2

81,07811.9

99,141
14.9

98,53915.1

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

18,366
5,293

13,1006,441

11,171
5,922

12,9706,209

17,428
6,895

9,158
9,371

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

136,68816.3

126,677
15.4

113,618
14.8

87,83912.9

109,674
16.5

98,32715.0

Extraordinary profit ................................................................
Extraordinary losses................................................................

1,962
11,384

2,025
3,876

984
2,623

287
11,558

1,717
5,749

3,370
5,463

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

127,265
15.1

124,82615.2

111,980
14.6

76,567
11.3

105,642
15.9

96,233
14.7

Income taxes—current ...........................................................
Income taxes—deferred .........................................................

43,156(37)

48,485(2,110)43,211(252)

32,0234,600

37,303
1,383

38,172
4,944

Net income before minority interests in subsidiaries................

84,14678,451

69,021

39,943

66,955—

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

8,754

8,574

5,363

4,454

6,109

5,505

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

75,3929.0
7.9

69,8768.5
9.8

63,6588.3
79.4

35,4895.2(41.7)

60,8469.2
27.8

47,611
7.3
121.4

Consolidated Statements of Comprehensive Income (Based on Japanese GAAP)SECOM CO., LTD. and Subsidiaries
Years ended March 31

78

In millions of yen
2015

2014

2013

2012

2011

2010

Net income before minority interests in subsidiaries................
Other comprehensive income (loss):
Unrealized gains (losses) on securities .................................
Deferred gains on hedges...................................................
Foreign currency translation adjustments ............................
Remeasurements of defined benefit plans ..........................
Share of other comprehensive gains (losses) of affiliatedcompanies accounted for under the equity method ..........

¥ 84,146¥78,451¥69,021¥39,943¥66,955¥—

15,058
—
9,527
8,581

543
—
11,787
—

7,500
—
6,222
—

2,318
8
(2,262)—(2,970)16(5,191)
—

—
—
—
—

3,676

6,649

4,402

(1,281)(1,069)—Total other comprehensive income (loss) .........................

36,843

18,98018,124(1,217)(9,214)—Comprehensive income..........................................................

120,990

97,43187,14638,72657,740—Comprehensive income attributable to:
Owners of the parent company ..........................................
Minority interests ...............................................................

110,128
10,861

87,4809,950

80,666
6,480

34,473
4,253

52,203
5,537——

SECOM Annual Report 2015

NONCONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP) [REFERENCE]

Contents
Condensed Nonconsolidated Balance Sheets(Based on Japanese GAAP)....................................................... 80
Condensed Nonconsolidated Statements of Income(Based on Japanese GAAP)....................................................... 82

SECOM Annual Report 2015

79

Condensed Nonconsolidated Balance Sheets (Based on Japanese GAAP)SECOM CO., LTD.
As of March 31

In millions of yen

ASSETS

2015

2014

2013

2012

2011

2010

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

¥ 93,569
48,396640
16,066
11,202
3,054
437
6,694
1,379
2,210
4,415
20,4231,772(216)
210,048¥ 80,908
56,818683
14,991
9,960
2,699
437
5,489
1,303
2,109
4,382
20,6532,031(221)
202,248¥ 54,136
53,551700
14,856
9,691
2,528
1,048
5,585
1,012
2,332
5,268
19,237
4,819(248)
174,521¥ 82,631
52,386720
14,324
10,039
2,159
456
5,152
1,470
2,253
4,269
15,574
1,632(268)
192,804¥ 74,680
54,641
221
11,563
6,074
2,385
456
4,279
1,167
2,051
4,938
4,356
1,818
(206)
168,428¥ 44,607
46,957248
11,434
6,484
2,556
2,429
6,574
1,082
2,016
4,720
3,943
2,026
(450)
134,634

Fixed assets:
Tangible assets:
Buildings and improvements, net .....................................
Automobiles, net .............................................................
Security equipment and control stations, net ...................
Machinery and equipment, net ........................................
Tools, furniture and fixtures, net ......................................
Land ................................................................................
Construction in progress ..................................................
Other, net ........................................................................
Total tangible assets..................................................

16,458824
67,715
192
3,326
28,303
1,714
12
118,548

17,466865
66,683232
2,922
29,5201,848
105
119,644

17,059521
65,329288
2,979
29,802
1,719
235
117,936

16,409231
65,341361
3,301
28,5551,710
374
116,286

22,310243
61,461565
3,151
28,3901,743
513
118,379

22,360368
60,860828
3,519
28,352
1,203
654
118,147

Intangible assets:
Goodwill..........................................................................
Software..........................................................................
Other...............................................................................
Total intangible assets ...............................................

—
4,644
730
5,375

2,607
3,910
1,768
8,286

2,978
4,269
2,061
9,308

3,350
5,487
1,586
10,424

—
6,751
815
7,566

—
7,580
975
8,555

29,72523,78921,58323,906

20,96921,769239,120

239,008

236,309

190,305

203,036

193,899

1,938
150,955
7,526
22,126
21,530
—
4,294
2,534
(17,946)
461,806
585,730¥795,778

1,827
143,741
7,553
20,78016,962
—
3,988
2,777
(17,698)442,730
570,662¥772,910

1,827
155,813
7,747
21,594
16,263
—
3,991
2,728
(20,307)447,551574,796¥749,317

1,883
128,074
8,147
24,013
15,903
130
4,181
2,713
(19,326)
379,933
506,643¥699,448

1,874
118,276
8,047
25,872
14,321
13,865
4,181
2,831(12,995)
400,281526,227¥694,656

1,874
133,871
8,583
25,816
14,364
14,0994,334
800(12,544)406,869
533,572¥668,207

Investments and others:
Investment securities........................................................
Investment securities in subsidiaries andaffiliated companies.......................................................
Investments in subsidiaries andaffiliated companies.......................................................
Long-term loans receivable ..............................................
Lease deposits .................................................................
Long-term prepaid expenses ............................................
Prepaid pension and severance costs................................
Deferred income taxes .....................................................
Insurance funds ...............................................................
Other...............................................................................
Allowance for doubtful accounts .....................................
Total investments and others ....................................
Total fixed assets.......................................................
Total assets ...............................................................

80

SECOM Annual Report 2015

In millions of yen

LIABILITIESCurrent liabilities:
Accounts payable ...............................................................
Bank loans .........................................................................
Lease obligations ................................................................
Payables—other .................................................................
Payables—construction ......................................................
Accrued income taxes ........................................................
Accrued consumption taxes................................................
Accrued expenses...............................................................
Deposits received ...............................................................
Deferred revenue ...............................................................
Accrued bonuses ................................................................
Other .................................................................................
Total current liabilities ..............................................
Long-term liabilities:
Lease obligations ................................................................
Guarantee deposits received...............................................
Deferred income taxes........................................................
Accrued pension and severance costs .................................
Accrued retirement benefits for directors andaudit and supervisory board members ..............................
Other .................................................................................
Total long-term liabilities ..........................................
Total liabilities ..........................................................

NET ASSETS
Shareholders’ equity:
Common stock...................................................................
Capital surplus:
Additional paid-in capital ................................................
Other capital surplus .......................................................
Total capital surplus .................................................
Retained earnings:
Legal reserve...................................................................
Other retained earnings:
Reserve for system developments ................................
General reserve ...........................................................
Accumulated earnings carried forward ........................
Total retained earnings ............................................
Common stock in treasury, at cost ......................................
Total shareholders’ equity ........................................

¥

3,172
29,416
185
15,675
4,480
10,826
7,088
800
16,784
21,2696,296
2,651
118,647

2014

¥

3,429
36,703
176
14,546
4,218
12,3661,478
802
17,87021,3016,246
1,834
120,976

2013

¥

3,044
26,598121
15,042
4,333
19,5102,538
726
24,131
21,671
6,089
365
124,174

2012

¥

2,400
27,65980
13,756
4,343
3,938
2,062
716
22,06622,3406,116
640106,121

2011

¥

1,672
29,38671
10,824
3,719
12,4501,422
722
20,362
22,2295,468
2,107
110,439

2010

¥

2,009
24,49251
10,811
3,425
14,637
1,491
555
23,62522,5585,493
2,133
111,287

2,661
17,286
3,400
3,241

2,747
17,622
307
3,555

2,449
17,859
788
4,051

2,217
18,099
—
3,945

2,253
18,262—4,040

182
17,965
—
4,394

—
408
26,998145,646—459
24,692
145,668857
25
26,031150,205

1,294
10
25,568
131,689

1,232
11
25,799136,238

1,174
272
23,989135,276¥ 66,377¥ 66,377¥ 66,377¥ 66,377¥ 66,377¥ 66,377

83,0540
83,054

83,0540
83,054

83,054—
83,054

83,054—
83,054

83,054—
83,054

83,054—
83,054

9,028

9,028

9,028

9,028

9,028

9,028

800
2,212
556,013568,053(73,701)
643,784

800
2,212
536,978
549,018(73,682)
624,768800
2,212
508,398
520,439(73,664)596,206

800
2,212
478,914490,954(73,659)
566,727800
2,212
472,070
484,110(74,923)558,619800
2,212
445,579
457,620(74,907)532,145

6,347

2,473

2,905

1,031

(201)

786

6,347
650,132¥795,778

2,473
627,242¥772,910

2,905
599,112¥749,317

1,031
567,758¥699,448(201)
558,417¥694,656

786
532,931¥668,207

SECOM Annual Report 2015

Financial Section

Valuation, translation adjustments and others:
Unrealized gains (losses) on securities .................................
Total valuation, translation adjustments
and others .............................................................
Total net assets ........................................................
Total liabilities and net assets ...................................

2015

81

Condensed Nonconsolidated Statements of Income (Based on Japanese GAAP)SECOM CO., LTD.
Years ended March 31

In millions of yen
2015

82

2014

2013

2012

2011

2010

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

¥370,663 ¥364,280 ¥355,393 ¥345,476 ¥329,297 ¥328,773
1.8%
2.5%
2.9%
4.9%
0.2%
(2.4%)
314,068
309,499
305,300
299,523
290,252
291,325
1.5
1.4
1.9
3.2
(0.4)
(1.0)
56,59454,78150,09245,952
39,04537,447
3.3
9.4
9.0
17.7
4.3
(11.9)

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

221,44159.7
180,850
57.6
40,59071.7

215,849
59.3
177,33957.3
38,50970.3

210,790
59.3
174,33157.1
36,45872.8

203,38658.9
169,92856.7
33,45872.8

191,28458.1
160,20355.2
31,081
79.6

188,701
57.4
160,349
55.0
28,35275.7

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

149,22140.3
133,21742.4
16,00328.3

148,43140.7
132,159
42.7
16,272
29.7

144,60340.7
130,969
42.9
13,63427.2

142,08941.1
129,595
43.3
12,49427.2

138,01341.9
130,048
44.8
7,964
20.4

140,07242.6
130,976
45.0
9,095
24.3

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

76,04620.5

75,521
20.7

74,651
21.0

71,89320.8

69,32421.0

68,544
20.8

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

73,17419.8

72,90920.0

69,952
19.7

70,196
20.3

68,68820.9

71,527
21.8

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

11,714
3,316

10,2694,295

10,173
3,789

8,048
3,032

8,863
3,050

9,225
3,290

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

81,57222.0

78,884
21.7

76,33621.5

75,21221.8

74,501
22.6

77,462
23.6

Extraordinary profit ................................................................
Extraordinary losses................................................................

1,670
2,805

491
1,604

1,219
1,052

23,001
40,695

106
2,637

561
4,639

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

80,43721.7

77,771
21.3

76,502
21.5

57,518
16.6

71,97021.9

73,384
22.3

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

22,94528.526,27333.8

27,37435.8

30,69953.4

26,946
37.4

27,57837.6

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

57,492
15.5
11.6

51,49714.1
4.8

49,128
13.8
83.2

26,8187.8(40.4)

45,02313.7(1.7)

45,806
13.9
41.3

SECOM Annual Report 2015

Corporate Information(As of June 30, 2015)

Headquarters:
Independent auditors:
Administrator of the registerof shareholders:

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

MAJOR CONSOLIDATED SUBSIDIARIES

Domestic<Security services>
Secom Joshinetsu Co., Ltd.
Secom Hokuriku Co., Ltd.
Secom Yamanashi Co., Ltd.
Secom Mie Co., Ltd.
Secom Sanin Co., Ltd.
Secom Kochi Co., Ltd.
Secom Miyazaki Co., Ltd.
Secom Ryukyu Co., Ltd.
Secom Jastic Co., Ltd.
Secom Jastic Joshinetsu Co., Ltd.
Secom Jastic Hokuriku Co., Ltd.
Secom Jastic Yamanashi Co., Ltd.
Secom Jastic Sanin Co., Ltd.
Secom Jastic Kochi Co., Ltd.
Secom Jastic Miyazaki Co., Ltd.
Secom Static Hokkaido Co., Ltd.
Secom Static Tohoku Co., Ltd.
Secom Static Nishi-Nihon Co., Ltd.
Secom Static Kansai Co., Ltd.
Secom Static Ryukyu Co., Ltd.
Secom Sado Co., Ltd.
JK. Siress Co., Ltd.
Japan Safety Guard Co., Ltd.
Japan Nuclear Security System Co., Ltd.
Meian Co., Ltd.
Secom Tech Sanin Co., Ltd.
Secom Techno Joshinetsu Co., Ltd.
Secom Win Co., Ltd.
Secom Industries Co., Ltd.
Otec Electronics Co., Ltd.
Secom Alpha Co., Ltd.
Secom Mine Security Co., Ltd.
Social Rehabilitation Support Kitsuregawa Co., Ltd.
Secom Kitsuregawa Security Co., Ltd.
Home Life Kanri Co., Ltd.

Issued capital(In millions of yen)

Percentageof equity/
voting rights¥3,530
201
15
50
290
50
30
76
210
40
10
10
10
10
10
50
50
50
50
10
24
10
100
200
60
23
30
15
499
200
271
30
10
50
40

(50.9)%
59.1
70.0
51.0
64.3
40.0
68.3
50.0
100.0
(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)
100.0
100.0
100.0
100.0
(100.0)(54.5)(100.0)
60.0
50.0
51.0
(100.0)(100.0)
66.7
100.0
82.0
100.0
100.0
51.7
100.0
(100.0)Lines of business(As of June 30, 2015)

Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Security services
Installation of security equipment
Installation of security equipment
Installation of security equipment and facilities
Manufacturing of security equipment
Manufacturing and sales of security systems
Sales of security and water-treatment equipment
Security services
Operation of PFI correctional facilities
Security services
Condominium management(Continued )Financial Section

SECOM Annual Report 2015

83

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

MAJOR CONSOLIDATED SUBSIDIARIES
Issued capital(In millions of yen)<Fire protection services>
Nohmi Bosai Ltd.
Ichibou Co., Ltd.
Kyushu Nohmi Co., Ltd.
Chiyoda Service Co., Ltd.
Nohmi Engineering Corp.
Nohmi System Co., Ltd.
Iwate Nohmi Co., Ltd.
Tohoku Nohmi Co., Ltd.
Aomori Nohmi Co., Ltd.
Nissin Bohsai Co., Ltd.
Chiba Nohmi Co., Ltd.
Shikoku Nohmi Co., Ltd.
Nohmi Techno Engineering Co., Ltd.
Akita Nohmi Co., Ltd.
Fukushima Nohmi Co., Ltd.
Niigata Nohmi Co., Ltd.
Hokkaido Nohmi Co., Ltd.
Yashima Bosai Setsubi Co., Ltd.
Nittan Co., Ltd.
Nittan Electronic Co., Ltd.
Nittan Denko Co., Ltd.
Nittan Hokkaido Service Center Co., Ltd.
Nittan Tohoku Service Center Co., Ltd.
Nittan Nagoya Service Center Co., Ltd.
Nittan Service Center Osaka Co., Ltd.
Nittan Hiroshima Service Center Co., Ltd.
Nittan Shikoku Service Center Co., Ltd.
Nittan Fukuoka Service Center Co., Ltd.
Sogo Denki Trading Co., Ltd.
Shell beach Co., Ltd.
<Medical services>
Secom Medical System Co., Ltd.
Mac Corp.
Yoshikikaku Co., Ltd.
Kensei Co., Ltd.
Secomfort Tama Co., Ltd.
Alive Medicare Co., Ltd.
Secomfort Co., Ltd.
Secomfort West Co., Ltd.
US Chemical Co., Ltd.
Secom Medipharma Co., Ltd.

¥13,302

Percentageof equity/
voting rights(50.4)%

Lines of business

28
30
20
40
20
30
32
20
50
10
20
40
20
20
20
20
20
2,303

(73.2)(100.0)(70.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(81.8)
100.0

60
10
10
10
10
10
10
10
10
10
10

(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)

Manufacturing and sales of fire protection equipment
and facilities
Installation of fire protection equipment
Installation and maintenance of fire protection equipment
Building management
Installation of fire protection equipment
Maintenance of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of environmental monitoring systems
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation of fire protection equipment
Installation, sale and maintenance of fire protection
equipment
Manufacturing of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment
Installation and maintenance of fire protection equipment

6,650
95
20
100
210
50
100
100
3
10

100.0
(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)Home health/nursing care and other medical-related services
Sales of medical equipment
Operation of restaurants and shops at medical facilities
Management of pharmacies
Management of nursing homes
Management of nursing homes
Management of nursing homes
Management of nursing homes
Management of pharmacies
Wholesaling of pharmaceuticals

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

84

SECOM Annual Report 2015

(As of June 30, 2015)(Continued )MAJOR CONSOLIDATED SUBSIDIARIES
Issued capital(In millions of yen)

Percentageof equity/
voting rights¥ 225
16,809(100.0)%97.1

Non-life insurance agency
Non-life insurance<Geographic information services>
Pasco Corp.
Pasco Space Mapping Technology Co., Ltd.
GIS Hokkaido Co., Ltd.
GIS Tohoku Co., Ltd.
GIS Kanto Co., Ltd.
GIS Kansai Co., Ltd.
Mid Map Tokyo Corp.
RIIC Corp.
Higashi-Nihon Sogo Keikaku Co., Ltd.
Satellite Vision Corp.
Satellite Image Marketing Corp.

8,758
25
190
50
40
99
15
20
200
2
60

69.8
(100.0)(100.0)(84.6)(52.6)(100.0)(60.0)(100.0)(100.0)(100.0)(100.0)Geographic information services
Geographic information services
Geographic information services
Geographic information services
Geographic information services
Geographic information services
Geographic information services
Geographic information services
Geographic information services
Geographic information services
Geographic information services<Information and communication related services>
Secom Trust Systems Co., Ltd.

1,469

100.0

At Tokyo Corp.

13,37950.9

Information, communication, information security
services and software development
Data center business<Real estate and other services>
Secom Home Life Co., Ltd.
Arai & Co., Ltd.
Arai Corporation, Inc.
Secom Credit Co., Ltd.
Secom Corp.
Secom Auto Service Co., Ltd.
Wonder Dream Co., Ltd.
Secom Staff Service Co., Ltd.
Secom Business Plus Co., Ltd.
Secom Home Service Co., Ltd.
Kurashi-TEL Co., Ltd.
Secom Engineering Co., Ltd.
Yanoshin Air Conditioning Co., Ltd.
Toko Create Co., Ltd.

3,700
3,000
10
400
100
45
490
50
20
32
100
100
80
50

99.9
86.7
(100.0)
100.0
100.0
100.0
100.0
(100.0)
100.0
100.0
60.0
100.0
100.0
96.6

Development of residential buildings
Real estate leasing
Management of real estate
Credit services
Printing services
Car maintenance
Employee welfare for SECOM Group
Employment agency
General office services
Lifestyle support services
Comprehensive lifestyle support services
Design, construction and maintenance of facilities
Sales of air-conditioning equipment
Electrical engineering<Insurance services>
Secom Insurance Service Co., Ltd.
Secom General Insurance Co., Ltd.

Lines of business(As of June 30, 2015)

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

(Continued )Financial Section

SECOM Annual Report 201585

MAJOR CONSOLIDATED SUBSIDIARIES

Overseas<Security services>
Secom plc
Secom (China) Co., Ltd.
Dalian Secom Security Co., Ltd.
Shanghai Secom Security Co., Ltd.
Beijing Jingdun Secom
Electronic Security Co., Ltd.
Qingdao Secom Security Co., Ltd.
Guangdong Jinpeng Secom Security Co., Ltd.
Fujian Secom Security Co., Ltd.
Sichuan Secom Security Co., Ltd.
Shaanxi Secom Security Co., Ltd.
Zhejiang Secom Security Co., Ltd.
Liaoning Secom Security Co., Ltd.
Tianjin Secom Property Management Co., Ltd.
PT. Secom Indonesia
Thaisecom Pitakkij Co., Ltd.
Secom Australia Pty. Ltd.
Secom Technical Services Unit Trust
Secom Guardall NZ Ltd.
Secom Vietnam Co., Ltd.
Secom Trading Co., Ltd.
Secom Vietnam Security Service Joint Stock Company<Other services>
Shanghai Nohmi Secom
Fire Protection Equipment Co., Ltd.
Nohmi Taiwan Ltd.

Issued capital

Percentageof equity/
voting rights

Lines of business£44,126 thousand¥5,550 million
US$2,000 thousand
Rmb50,000 thousand
US$2,500 thousand

100.0%
100.0(95.0)(85.0)(80.0)

Security services
Holding company
Security services
Security services
Security services

US$1,000 thousand
US$4,500 thousand
Rmb15,000 thousand
Rmb10,000 thousand
Rmb10,000 thousand
Rmb15,000 thousand
Rmb10,000 thousand
Rmb2,000 thousand
US$4,111 thousand
THB378,857 thousand
AUD17,297 thousand
AUD5,951 thousand
NZD1,604 thousand
US$600 thousand¥120 million¥181 million(80.0)(90.0)(95.0)(100.0)(100.0)(97.0)(60.0)(80.0)
49.0
70.0
100.0
(70.0)(80.0)
80.0
100.0(49.0)

Security services
Security services
Security services
Security services
Security services
Security services
Security services
Comprehensive building management services
Security services
Security services
Security services
Security services
Security services
Security service-related consulting
Sales of security equipment
Security services

US$14,300 thousand(100.0)

NT$15,000 thousand(82.3)

Manufacturing and sales of fire protection equipment
and facilities
Manufacturing and sales of fire protection equipment
and facilities
Sales of fire protection equipment
Sales of fire protection equipment
Holding company
Geographic information services
Geographic information services
Geographic information services

Nittan Europe Ltd.
Nittan Fire Protection System (Zhongshan) Co.,Ltd.
Secom Medical System (Singapore) Pte. Ltd.
Pasco Philippines Corp.
Pasco China Corp.
Suzhou Super Dimension Earth Science Researchand Development Co., Ltd.
Shanghai Pasco China Corp.
Pasco (Thailand) Co., Ltd.
PT. Nusantara Secom InfoTech£1,194 thousand
US$1,400 thousand
S$12,703 thousand
PHP20,400 thousand
Rmb22,320 thousand
Rmb1,000 thousand(100.0)(70.0)(100.0)(100.0)(99.0)(92.0)

Rmb800 thousand
THB129,000 thousand
US$3,304 thousand(100.0)(100.0)(100.0)

Pasco Lao Sole Co., Ltd.
FM-International Oy
Aerodata International Surveys BVBA
Pasco Europe B.V.
Pasco North America Inc.
Keystone Aerial Surveys Inc.
Airmag Surveys Inc.
The Westec Security Group, Inc.
ClearLight Partners, LLC
ClearLight Partners II, LLC
ClearLight Partners III, LLC

LAK3,878 million
EUR10,994 thousand
EUR87 thousand
EUR4,000 thousand
US$5,621 thousand
US$0.6 thousand
US$15 thousand
US$0.3 thousand———(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)(100.0)100.0(99.7)(99.0)(98.0)

Geographic information services
Geographic information services
Geographic information services andsoftware development
Geographic information services
Geographic information services
Geographic information services
Geographic information services
Geographic information services
Geographic information services
Geographic information services
Holding company
Investment
Investment
Investment

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

86

SECOM Annual Report 2015

(As of June 30, 2015)

Profile

SECOM CO.,

Since its establishment in 1962,sought to develop and encourage broad acceptanceconvenient and comfortable and provide security andcontributing to society through its business activities.

SECOM’s Basic Business Areas

LTD., a pioneer in Japan’s security services industry, has
SECOM offers a wide range of services and ­products withthe aim of realizing its Social System Industry vision.

Armored Car Services

On-Line Security Systems

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

of pioneering
Security Services services and systems that make life more
On-Line Security Systems
Use: in line with its belief in the importance ofpeaceCommercialof mind,
SECOM AXSECOM AX is an on-line security ­system with advanced on-site image sensors
that incorporate microphones to enable the SECOM control center staff to checkthe subscriber’s premises by listening and viewing.
SECOM IXSECOM IX is a remote imaging security system for ­commercial facilities offering
around-the-clock services.
INTELLIGENT EMERGENCY ALERT SYSTEMThe Intelligent Emergency Alert System automatically recognizes robberies or othersuspicious situations and alerts a SECOM control center without the need foranyone to push an emergency alarm button, applying advanced image recognitionand voice processing technologies to aid in the early detection of irregularities.
SECOM DXSECOM DX is an on-line security system developed to meet the needs of shops,
offices, warehouses, factories and other commercial and industrial
establishments.
SECOM TXSECOM TX is an on-line security system for commercial ­buildings with more than
one tenant.
HANKS SYSTEMHANKS SYSTEM is an on-line security system for financial institutions, including
automated banking facilities.
SECOM CXSECOM CX offers a comprehensive building management system that monitorsand manages large building complexes.
SECOM LX
SECOM LX is an on-line security system that includes an access control function.
SECOM FXSECOM FX is a system that combines monitoring for intruders and fire withfacility control functions.

Beginning with Japan’s first on-line security system for commercial use, launched in 1966, SECOM hascontinued to grow its businesses by developing and popularizing advanced services and systems that
respond to evolving social imperatives and benefit society. These include an on-line home security
system, introduced in 1981, and COCO-SECOM, a mobile personal security system for outdoor use,which debuted in 2001.
The overarching mission of SECOM, which comprises the parent company and the companies of the
SECOM Group, is to provide safety and security and make life more convenient and comfortable­whenever and wherever necessary. Accordingly, the Company is pressing ahead with efforts to realize
its vision for the future, the Social System Industry, which describes a framework of distinctive, ­integrated
services and systems. To this end, we have capitalized on our extensive business portfolio—which has
expanded to include security services, fire protection services, medical services, insurance services,­geographic information services, information and communication related services, and real estate andother services—to create a solid foundation for future growth, working not only to enhance individual
businesses but also to integrate services and systems, thereby yielding considerable synergies that will
drive future growth.

Residential Use:

SECOM HOME SECURITY
SECOM Home Security is a comprehensive home security system combining
around-the-clock ­intrusion- and fire-prevention services, emergency call services,
gas leak monitoring and medical emergency call ­services. SECOM Home Security
G-Custom combines these features with other useful services, including astorage service for important personal data and information on other services

Fire Protection Services
Fire Alarm Systems
This business encompasses the assembly, installation and sale of a broad rangeof equipment and systems, including automatic fire alarm systems, environmental monitoring systems, and fire and smoke control systems, suited to buildingsof varying sizes and uses, from homes to large-scale ­commercial and industrial
facilities.
Fire Extinguishing Systems
SECOM offers an extensive lineup, including fire sprinklers and other water fire
extinguishing systems, foam fire extinguishing systems, dry chemical fire extinguishing systems and inert gas fire extinguishing systems, for applications­ranging from office buildings to chemical plants and tunnels.
Maintenance Services
This business centers on inspection, maintenance and repair services, as well
as around-the-clock on-line monitoring and other services provided through a­customer services center.
OthersThis category comprises the installation and maintenance of parking lot control
systems and the assembly and sale of printed circuit boards for manufacturers inother industries, including medical and electronics equipment.

87

SECOM Annual Report 2015

SECOM AED Package Service

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

3

PoliceDept.

Dispatch SECOM
emergency response
personnel

Fire
Dept.

using
1 Alerttelecommunications

Gas
Company

circuits

SECOM
Emergency
Depot

Merchandise

SECOM
2 Alertemergency

SECOM
Control Center

response personnel

available from Group-selected collaborating companies. Optional services­available to SECOM Home Security subscribers include the Keeping in Touchcall ­and the Keeping in Touch visiting services for seniors, both of which involve
SECOM staff checking in regularly with seniors living far away from their
loved ones.
SECURITY SYSTEMS FOR CONDOMINIUMS AND APARTMENTS
SECOM provides comprehensive building ­management functions forcondominiums and total safety with a centralized ­security sys­tem for each unit
in the building. SECOM’s menu includes services for small-scale apartments.
SECOM MY DOCTOR PLUS
SECOM My Doctor Plus is an emergency medical alert system for seniors
featuring an exclusive portable device that incorporates a GPS locator and acellular phone. Whether indoors or out, the device, when activated, sends anemergency signal to SECOM. If requested, SECOM dispatches emergency
response personnel. If deemed necessary, SECOM staff also contacts emergency
services and sends preregistered emergency information to the subscriber’s
device, thereby ensuring it is immediately available to ambulance attendants andhospital staff. Other services include telephone health consultation. SECOM will

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

• Alert emergency
services asnecessaryalso act as go-between with nursing care providers for individuals who have
independently contracted care services.

Large-Scale Proprietary Security Systems

TOTAX ZETATOTAX ZETA integrates networking capabilities and a security system into acomprehensive local control ­system for industrial ­complexes and buildings.

COCO-SECOM

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

Static Guard Services

SECOM CCTV SYSTEMThe SECOM CCTV system is a multifunctional, cost-effective closed-circuit
security camera system. The system provides stable monitoring even in places
where insufficient light makes clear images difficult and allows the combined
use of digital and analog cameras. It is also capable of detecting attempts todisable or destroy the camera. The system offers an optional service whereby
camera images are transmitted via a network to a SECOM data center facility
for storage.
SECURILOCK SERIESThe SECURILOCK series uses identification numbers, integrated circuit (IC)pass cards and other methods to control access to restricted areas.
SESAMO SERIESThe SESAMO series comprises access-control systems for use in ­corporate
offices, factories, parking facilities and any other security-sensitive areas.
These systems employ such technologies as contactless IC pass cards,
magnetic cards, personal identification numbers, f­ingerprint identificationand palm vein identification.
TOMAHAWK SERIESThe Tomahawk series is an extensive lineup of innovative ­extinguishingsystems, including Tomahawk Mach II residential-use fire extinguisher
and Tomahawk III high-speed automated fire extinguishing system withgas suppression.
PYTHAGORAS SERIESPYTHAGORAS is a series of security vaults with superior protection, heat­resistance and performance.
SECURIFACESECURIFACE is a residential intercom system that combines a face detection
function with SECOM Home Camera System, enhancing security for people
at home.
LASER SENSOR
Laser Sensor is an external monitoring sensor that uses a laser beam tofacilitate effective detection of intrusions over a broad area. The sensor is
flexible and can be programmed to accommodate various monitoring areas.

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

Insurance Services

Information and Communication Related Services

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

Geographic Information Services
PasCAL Series
Designed for local governments, the PasCAL series of comprehensive GIS
services facilitates the effective use of GIS in a variety of situations.
MarketPlanner Series
The MarketPlanner series uses a variety of data sorting and presentation­methods to support the efforts of growing companies to establish area
­marketing strategies.
Safe Route Mapping Service
This service helps companies ensure their employees are able to reach homesafely and assists crisis management efforts in the event of a major
earthquake. A version of this service is also available to individuals.

DATA CENTERS
Robust facility construction, stable electric power supplies, dependable
networks and top-grade SECOM security enable SECOM to provide safe
storage for information assets, as well as a variety of other services.
LARGE-SCALE DISASTER RESPONSE SERVICESSECOM provides solutions encompassing everything from services that
optimize companies’ preparedness for disasters to services that assist
companies when disaster strikes and during post-disaster reconstruction.
These include SECOM Safety Confirmation Service, which helps companies
confirm the safety of employees in the event of a disaster, as well as to gather
and share crucial information on conditions on the ground.
INFORMATION SECURITY SERVICESSECOM provides a variety of services designed to protect subscribers’
information against cyber attacks and other dangers, including diagnosing
and analyzing network problems, monitoring for system and network viruses
and emergency on-site response services in the event an irregularity isdetected.
CLOUD-BASED SERVICES
Capitalizing on its data center, information security, computer network andother service capabilities, SECOM provides a wide range of cloud-based
services, including SECOM Anshin Eco Document Digitization Service, whichhelps improve customers’ business processes.

Real Estate and Other Services
REAL ESTATE DEVELOPMENT AND SALESSECOM offers Glorio condominiums.
Secom Home Service/Seikatsu Tasuke
SECOM Home Service is a suite of convenient lifestyle support services for
SECOM Home Security subscribers ranging from patrolling subscribers’ homes
when occupants are away to assistance with housekeeping. Seikatsu Tasuke is
a comprehensive suite of lifestyle and household support services.

SECOM Annual Report 2015

セコムアニュアルレポート2015（英語版）表紙

ウラ

88

再校

Directors, Audit and Supervisory Board Members
and Executive Officers
Directors

Shuji Maeda

Hiroshi Ito

Founder

Chairman and
Representative Director

President andRepresentative Director

SECOM CO., LTD.

Makoto Iida

Yasuo Nakayama

Kazuaki Anzai

Junzo Nakayama

Kenichi Furukawa

5-1, Jingumae 1-chome, Shibuya-ku,

Executive Director

Executive Director

Executive Director

Executive Director

Tokyo 150-0001, Japan

ANNUAL REPORT 2015

SECOM CO., LTD.

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

Yasuyuki Yoshida

Tatsuro Fuse

Takaharu Hirose

Takashi Sawada

Director

Director

Outside Director

Outside Director

Audit andSupervisory
Board Members

Executive Officers

Takayuki Ito

Shuji Maeda

Toshiyuki Mukai

Yasuyuki Yoshida

Tatsuya Izumida

Ichiro Ozeki

Ryohei Komatsu

Chairman and
Representative Director

Managing Executive Officer

Director

Executive Officer

Executive Officer

Masahiro Takeda

Tatsuro Fuse

Shokichi Ishimura

Yasufumi Kuwahara

Managing Executive Officer

Director

Executive Officer

Executive Officer

Teruhisa Yoshimura

Hiroshi Ishikawa

Sumiyuki Fukumitsu

Noriyuki Fukuoka

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Hideo Morishita

Yoichi Sugimoto

Kensuke ShindoManaging Executive Officer

Executive Officer

Executive Officer

Hideki Kato*
Kenichi Sekiya*
Makoto Yasuda*

Hiroshi Ito
President andRepresentative Director

Yasuo Nakayama
Executive Director*OutsideKazuaki Anzai
Executive Director

Junzo Nakayama
Executive Director

Kenichi Furukawa
Executive Director

ANNUAL REPORT 2015
Year ended March 31, 2015

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

Tsuneo Komatsuzaki
Managing Executive Officer

Toshiaki Mizuno
Managing Executive Officer(As of July 31, 2015)
Printed in Japan

89

SECOM Annual Report 2015

セコムアニュアルレポート2015（英語版）表紙

オモテ

初校（FSC貼込み済）

Directors, Audit and Supervisory Board Members
and Executive Officers
Directors

Shuji Maeda

Hiroshi Ito

Founder

Chairman and
Representative Director

President andRepresentative Director

SECOM CO., LTD.

Makoto Iida

Yasuo Nakayama

Kazuaki Anzai

Junzo Nakayama

Kenichi Furukawa

5-1, Jingumae 1-chome, Shibuya-ku,

Executive Director

Executive Director

Executive Director

Executive Director

Tokyo 150-0001, Japan

ANNUAL REPORT 2015

SECOM CO., LTD.

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

Yasuyuki Yoshida

Tatsuro Fuse

Takaharu Hirose

Takashi Sawada

Director

Director

Outside Director

Outside Director

Audit andSupervisory
Board Members

Executive Officers

Takayuki Ito

Shuji Maeda

Toshiyuki Mukai

Yasuyuki Yoshida

Tatsuya Izumida

Ichiro Ozeki

Ryohei Komatsu

Chairman and
Representative Director

Managing Executive Officer

Director

Executive Officer

Executive Officer

Masahiro Takeda

Tatsuro Fuse

Shokichi Ishimura

Yasufumi Kuwahara

Managing Executive Officer

Director

Executive Officer

Executive Officer

Teruhisa Yoshimura

Hiroshi Ishikawa

Sumiyuki Fukumitsu

Noriyuki Fukuoka

Managing Executive Officer

Executive Officer

Executive Officer

Executive Officer

Hideo Morishita

Yoichi Sugimoto

Kensuke ShindoManaging Executive Officer

Executive Officer

Executive Officer

Hideki Kato*
Kenichi Sekiya*
Makoto Yasuda*

Hiroshi Ito
President andRepresentative Director

Yasuo Nakayama
Executive Director*OutsideKazuaki Anzai
Executive Director

Junzo Nakayama
Executive Director

Kenichi Furukawa
Executive Director

ANNUAL REPORT 2015
Year ended March 31, 2015

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

Tsuneo Komatsuzaki
Managing Executive Officer

Toshiaki Mizuno
Managing Executive Officer(As of July 31, 2015)
Printed in Japan

89

SECOM Annual Report 2015

セコムアニュアルレポート2015（英語版）表紙

オモテ

初校（FSC貼込み済）