DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERS
Corporate Auditors

Directors

Seiji Sakamoto
Katsuhisa Kuwahara
Ken Tsunematsu
Kohei Yamashita
SECOM CO., LTD.

Hideki Kato

Executive Officers
Shuji Maeda

Takayuki Ito

Makoto Iida

Juichi Toda

President andExecutive Officer

Founder

Co-Founder

Representative Director

Minoru Takaoka
Koichi Sato

Executive Officer

Executive Vice President

Hideo Morishita
Yasuo Nakayama

Executive Officer

Executive Director

Tsuneo Komatsuzaki
Hiroshi Ito

Executive Officer

Executive Director

Ryohei Komatsu
Executive Officer

SECOM CO., LTD.

Yukio Tsunoda

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

Executive Director

Shohei Kimura

Shuji Maeda

ChairmanPresident andShunji Ogahara

Representative Director

Managing Executive
Officer

Executive Officer

Masahiro Takeda

ANNUAL REPORT 2012

Kazuaki Anzai

Tokyo 150-0001, Japan
http://www.secom.co.jp/

Executive Officer

Naohide Nakamura

Koichi Sato

Yasuo Nakayama

Hiroshi Ito

Kazuaki Anzai

Executive Vice President

Executive Director

Executive Director

Executive Director

Managing Executive

Teruhisa Yoshimura

Officer

Executive Officer

Yasuyuki Yoshida

Keitaro Arai

Director

Executive Officer

Junzo Nakayama

Tatsuro Fuse

Director

Executive Officer

Hiromichi Sonoda
Executive Officer

Toshiyuki Mukai
Executive Officer

Hiroshi Ishikawa
Executive Officer

Kenichi Furukawa
Kanemasa Haraguchi

Yasuyuki Yoshida

Junzo Nakayama

Director

Director

Director

ANNUAL REPORT 2012

Executive Officer

Year ended March 31, 2012

Yoichi Sugimoto
Executive Officer

In response to changing customer needs,
SECOM is working to realize its vision for(As of July 31, 2012)

the future—the Social System Industry—by providing comprehensive, integrated
services and systems that make life moresecure, convenient and comfortable.
Printed in Japan

89

SECOM Annual Report 2012

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

PROFILE

Since its establishment in 1962, SECOM CO., LTD.,
has sought to develop distinctive, integrated services andconvenient and comfortable, in line with its belief in theits business activities. Such efforts have enabled SECOM toa pioneer in Japan’s security services industry,
systems that make life more secure,importance of contributing to society throughachieve steady growth.
CONTENTS
2 SECOM’s VISION
4 FINANCIAL HIGHLIGHTSOn July 7, 2012, SECOM celebrated its 50th anniversary. Beginning with Japan’s first on-line security system, SECOM has developed

6 A MESSAGE TO

a wide range of systems over the years that respond promptly to changing social imperatives. These include an on-line home

SHAREHOLDERS

security system and COCO-SECOM, a mobile personal security system for outdoor use. At the same time, SECOM has worked to

10 STRATEGIC HIGHLIGHTS

encourage broad acceptance of the concept of security services in Japan.

12 SPECIAL FEATURE:

Today, the overarching mission of SECOM—comprising the parent company and the companies of the SECOM Group—is to provide safety and security for people whenever and wherever necessary. Accordingly, SECOM is pressing ahead with efforts to realize

Reinforcing Competitive
Advantages and New Growth

its vision for the future, the Social System Industry, which describes a framework of distinctive, integrated services and systems that

16 SECOM TODAY

make life more secure, convenient and comfortable. To this end, SECOM is leveraging its extensive business portfolio—which has

32 ENVIRONMENTAL MANAGEMENT

expanded to include security services, fire protection services, medical services, insurance services, geographic information services,

33 FINANCIAL REVIEW

real estate development and sales, and information and communication related and other services—to create a solid foundation for

37 AUDITED FINANCIAL STATEMENTS

future growth, and working not only to enhance individual businesses but also to integrate services and systems, thereby yielding

70 OTHER FINANCIAL DATA

considerable synergies to drive future growth.
With the aim of maximizing these synergies, SECOM is promoting a new concept, dubbed “ALL SECOM,” which focuses on
rallying SECOM’s comprehensive strengths to create distinctive packages of services and systems that encourage people to turn to
SECOM with the confidence that doing so will help them resolve security and various other concerns.
SECOM has expanded into 19 countries and territories outside of Japan: Taiwan, the Republic of Korea (ROK), the People’s
Republic of China (PRC), Thailand, Malaysia, Singapore, Indonesia, Vietnam, the Philippines, India, the United Arab Emirates, theUnited Kingdom, Belgium, Sweden, Finland, Australia, New Zealand, the United States and Brazil. SECOM continues striving tofurther grow its operations in all of these markets.

75 CONSOLIDATED FINANCIAL DATA (BASED ON
JAPANESE GAAP) [REFERENCE]
79 NONCONSOLIDATED FINANCIAL DATA (BASEDON JAPANESE GAAP) [REFERENCE]
83 CORPORATE INFORMATION
87 SECOM’s BASIC BUSINESS AREAS
89 DIRECTORS, CORPORATE AUDITORS ANDEXECUTIVE OFFICERSSECOM Annual Report 2012

1

SECOM’s VISION
Realizing the Social System Industry Vision
We first declared our Social System Industry vision in 1989. This vision describes a frame-ystem Indu
S
l
str
ia
c
y
So

work of distinctive, integrated services and systems that make life more secure, convenientand comfortable. Since then, we have continued working to make this vision a reality bybuilding a broad business portfolio that now encompasses security services, fire protection
services, medical services, insurance services, geographic information services, real estatedevelopment and sales, and information and communication related and other services. We
strive to combine services and systems in these businesses into distinctive packages, in linewith our overarching mission, which is to provide safety and security for people whenever
and wherever necessary. This approach encourages people to turn to SECOM with theconfidence that doing so will help them resolve security and various other issues.

Information andcommunication
related andother services

To hasten the realization of our Social System Industry vision, in 2010 we introduced the

Security
services

ALL SECOM concept. Under the ALL SECOM banner, we will promote cooperation among
our various businesses, as well as build new synergies. To this end, we are encouraging

Fire protection
services

employees everywhere to actively share information, ideas and objectives, with the aim ofstrengthening the SECOM Group as a whole and maximizing our comprehensive capabilities, thereby helping to achieve new growth.

Advancing the ALL SECOM Concept

Real estatedevelopment
and sales

In all our efforts, we are guided by our corporate philosophy, which also governs the con-

Medicalservices

duct of every SECOM employee. This philosophy emphasizes a refusal to be content withthe status quo and a commitment to doing what is appropriate. The former means seeking
constantly to provide innovative services and systems by challenging accepted norms, while
the latter means judging the legitimacy of our actions by examining whether they are just,Geographic
information
servicesfair and beneficial, not to SECOM but to society as a whole. This philosophy continues to be

Insuranceservicesa major driving force behind our growth and evolution.
As we press forward with efforts to grow our businesses and further broaden the scopeof our business portfolio, society’s expectations of us will continue to increase. By advancing
the ALL SECOM concept, which is shared by everyone at SECOM, we will continue working
to develop high-grade services and systems and in so doing ensure our standing as a company that makes an important contribution to society by providing comprehensive security
and peace of mind. Through these efforts, we will work to encourage the unfailing loyalty ofcustomers by further rallying our collective strengths and sharpening our competitive edge.

2

SECOM Annual Report 2012

SECOM Annual Report 2012

3

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

Three years ended March 31, 2012

Years ended March 31

Year ended March 31

Three years ended March 31, 2012

Years ended March 31

Year ended March 31

2010

2012

2010

2012

670,644$ 9,420,512

654,678$ 8,282,598

2012

¥

Net sales and operating revenue

2011

772,482¥

751,868

¥

2012

¥

Revenue

679,1732011¥

663,887¥

Operating income

78,826

100,432

97,178961,293

Operating profit

81,07899,141

98,539988,756

Net income attributable to SECOM CO., LTD.

41,23762,66546,989502,890

Ordinary profit

87,839109,674

98,327

1,071,207

1,179,824

1,171,152

1,138,147

14,388,098

Net income

35,48960,846

47,611

432,793

612,855

593,495

569,799

7,473,841

Total assets

1,101,884

1,094,400

1,081,679

13,437,610

671,517654,055

625,153

8,189,232

In yenIn U.S. dollars
In yenIn U.S. dollars

287.41¥ 215.51$ 2.30

90.00

85.00

85.00

1.10

Net income

279.07¥ 218.37$ 1.982,807.77

2,722.08

2,613.34

34.24

Cash dividends

90.00

85.00

85.00

1.10

2,785.56

2,716.35

2,561.94

33.97

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

Total net assets
Per share of common stock:
Net income attributable to SECOM CO., LTD.

¥

Cash dividends
SECOM CO., LTD. shareholders’ equity

188.97¥

Notes: 1. Yen amounts have been translated into U.S. dollars, solely for the convenience of the reader, at the rate of ¥82=US$1, the rate prevailing on theTokyo ­Foreign Exchange Market on March 31, 2012.
2. Net income attributable to SECOM CO., LTD. per share of common stock is based on the average number of shares o­ utstanding during each period,
less treasury stock.
3. SECOM CO., LTD. shareholders’ equity per share of common stock is based on the number of shares o­ utstanding at the end of each period, less­treasury stock.
4. Cash dividends per share of common stock shown are based on dividends approved and paid in each period. Subsequent to March 31, 2012, cash
dividends of ¥90.00 per share were approved at the general shareholders’ m­ eeting held on June 26, 2012 (see Note 18 of the accompanying Notes
to Consolidated Financial Statements).

Per share of common stock:¥

Net assets

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

(In billions of yen)

80

80

55.9

60

62.7

61.8
47.0

40

41.2

¥

Note: Cash dividends per share of common stock shown are based on dividends approved and paid in each period. Subsequent to March 31, 2012, ­cash­dividends of ¥90.00 per share were approved at the general shareholders’ meeting held on June 26, 2012.

Net income attributable to
SECOM CO., LTD. (U.S. GAAP)60

162.63

58.3

61.5

60.8
47.6

40

35.5

30.6
20

0

20

2007

2008

2009

2010

2011

2012

0

21.5

2007

2008

2009

2010

2011

2012

Note: Net income attributable to SECOM CO., LTD. in the year ended March 31, 2012, fell ¥21.4 billion, to ¥41.2 billion, as the Company wrote
down real estate inventories in light of dwindling demand in the condominium market, which prompted a dramatic reorganization of its
related business, while flagging economic conditions resulted in the recognition of an impairment loss on long-lived assets, principallyreal estate.
		 Net income attributable to SECOM CO., LTD. in the year ended March 31, 2011, rose ¥15.7 billion, to ¥62.7 billion. This result primarilyreflected operating income in the real estate development and sales segment, compared with an operating loss in the previous period,
and a gain on private equity investments, ­compared with a loss in the previous period.
		 Net income attributable to SECOM CO., LTD. in the year ended March 31, 2010, increased ¥16.4 billion, to ¥47.0 billion. Principal factors
behind this result were decreases in loss on other-than-temporary impairment of investment securities and operating loss in the real estatedevelopment and sales segment.
80

60
4

SECOM Annual Report 2012

SECOM Annual Report 2012

5

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

A MESSAGE TO SHAREHOLDERS

Having positioned the fiscal year ending March 31, 2013, as the first year ofwith efforts to realize our Social System Industry vision, thereby ensuring
doing so will help them resolve security and other concerns.
Consolidated Operating Resultsa new stage of growth, we continued to press forward
customers can turn to SECOM with the confidence thatIn the security services business, we continued to introduce new systems in the period under

Despite signs of a gradual recovery from the temporary lull in economic activity that followed thereview with the aim of cultivating new subscribers and of offering existing subscribers higher

Great East Japan Earthquake, which struck in March 2011, prospects for the Japanese economy

levels of security. Capitalizing on the lessons of the Great East Japan Earthquake, we launchedremained uncertain throughout the fiscal year ended March 31, 2012, owing to a host of factors,

SECOM Home Security G-Custom, an advanced new residential security system that combines

including the European sovereign debt crisis, rising oil prices, the appreciation of the yen andfeatures of our popular SECOM Home Security system with, among others, a storage service for

deflation.

important personal data and My Page, a customized user information page that includes infor-

In this environment, we continued working toward the realization of our Social System

mation from selected collaborating companies. We also reinforced our sales capabilities for secu-

Industry vision by responding to the needs of customers through the provision of high-graderity services designed for rental apartments, a sector that is seeing growth in demand. Other new

Makoto Iida

services and systems in our security services segment, as well as in our other segments: fire pro-offerings that maximize the comprehensive capabilities of the SECOM Group include SECOM

Shohei KimuraFounder

tection services, medical services, insurance services, geographic information services, real estate

Remote Monitoring for Seniors, which brings together on-line security services, medical services

Chairmandevelopment and sales, and information and communication related and other services. We also

and SECOM Home Service to help safeguard the safety and wellbeing of seniors living apart frompressed forward with efforts to promote the ALL SECOM concept, which emphasizes cooperation

relatives. In addition, we took steps to reinforce our meticulous basic approach, whereby sales

among our various independent businesses to strengthen the Group as a whole with a view topersonnel visit each commercial and home security service subscriber in person, thus enabling us

hastening our advance to a new stage of growth.

to accurately interpret needs and expectations and propose the most appropriate products andConsolidated net sales and operating revenue for the period under review rose 2.7%, or

services from our extensive lineup and enhance customer satisfaction.

¥20.6 billion, to ¥772.5 billion. This result reflected higher net sales and operating revenue in the

On another front, in an effort to integrate our security services and related installation andsecurity services segment—due to increases in revenue from subscriptions for our core electronic

maintenance businesses, as well as to enhance our ability to provide optimal services to custom-

security services and in sales of merchandise—as well as in the medical services, geographic

ers, in July 2011 we absorbed consolidated subsidiary Secom Techno Service Co., Ltd., a provider

information services and fire protection services segments. Operating income declined 21.5%,of on-line security system installation and maintenance services.

or ¥21.6 billion, to ¥78.8 billion, as we wrote down real estate inventories in light of dwindlingOverseas, the acquisition of a local firm facilitated our entry into the New Zealand security

demand in the condominium market, which prompted a dramatic reorganization of our related

services market, while in the United Kingdom we took steps to increase subscriptions by financial

business, while flagging economic conditions resulted in the recognition of an impairment loss

institutions. In the rapidly developing economies of the PRC and Southeast Asia, efforts toon long-lived assets, principally real estate. Owing mainly to the decline in operating income, net

encourage broad acceptance of SECOM-style security services contributed to the expansion ofincome attributable to SECOM CO., LTD., fell 34.2%, or ¥21.4 billion, to ¥41.2 billion.

our subscriber base. “SECOM-style security services” is a term used to describe comprehensive

Shuji Maeda
President and Representative Director

security services that encompass installing security equipment at the subscriber’s premises

Distribution of Dividends

and providing around-the-clock monitoring from a SECOM control center, as well as promptly

Recognizing the provision of a fair return to shareholders as a crucial management task, we set

dispatching highly trained emergency response personnel should an irregularity be detected.

consolidated dividend levels based on an overall assessment of trends in our consolidated operat-

To accelerate efforts to expand our overseas operations, in December 2011 we established theing performance, in line with our policy of ensuring a consistent, stable distribution of profits. At

International Business Headquarters, which is charged with coordinating overseas operations

the Ordinary General Meeting of Shareholders, held on June 26, 2012, management proposed

across the Group, as well as with promoting the sharing of management resources and expertiseand shareholders approved the payment of annual cash dividends of ¥90.00 per share, the sameamong all our overseas businesses, including security services, fire protection services andas in the previous fiscal year.

­geographic information services, to further strengthen our capabilities in overseas markets.

Understanding Change and Responding with New Products and Services

measures in areas other than security services. In the fire protection services business, consoli-

Increasingly diverse and sophisticated needs for security and peace of mind—a consequence ofdated subsidiary Nohmi Bosai Ltd., Japan’s leading provider of such services, continued working

changes in the social fabric and in peoples’ lifestyles—continue to drive growth in the security

to provide high-grade automatic fire alarm systems, fire extinguishing equipment and other fireservices market. Other factors influencing security needs include social infrastructure-related issues

protection systems that suit the requirements of customers.

Guided by our vision for the future—the Social System Industry—we also implemented key

and business continuity risks, both revealed to a devastating degree by the Great East Japan

6

SECOM Annual Report 2012

In the medical services business, we pressed ahead with efforts to enhance our services for

Earthquake. We continue to provide service systems that respond to evolving social imperatives,seniors, including taking steps to increase occupancy in recently opened residences for seniors

changing patterns of criminal behavior, technological progress and efforts to improve the socialand expanding our network of day service facilities for seniors. We also sought to reinforce ourinfrastructure to deliver greater security and peace of mind. At the same time, we acknowledge

home medical services. Ahead of changes to the nursing care insurance system in Japan in April

the importance of developing new service systems that maximize our ability to contribute to2012, we established SECOM Home Health Care Center Kugayama, which provides a full range­society through our business activities.

of services combining conventional home nursing with home personal care.

SECOM Annual Report 2012

7

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

A MESSAGE TO SHAREHOLDERS

Efforts in our insurance services business focused on marketing our distinctive non-life insur-of SECOM and domestic fire protection market leader Nohmi Bosai with those of Nittan, Japan’s

ance policies. These include the Security Fire Discount Policy, a fire insurance policy for commer-

third-largest provider of fire protection services, will position us well to rise to the challenge ofcial premises, and SECOM Anshin My Home, a comprehensive fire insurance policy for homes,

developing next-generation fire and disaster protection systems that will safeguard both premises

both of which offer discounts for subscribers with on-line security systems, recognizing theand people even in the event of a major catastrophe.

risk-mitigating nature of such systems. We also expanded efforts to market SECOM Anshin My

One of the principal themes influencing our domestic business development in the years

Car, a comprehensive automobile insurance policy that includes access to on-site support services

ahead will be the rapid aging of Japan’s population. Particularly promising new offerings include

provided by our emergency response personnel, and MEDCOM, an unrestricted cancer treatment

the launch of SECOM Remote Monitoring for Seniors, which takes full advantage of Group

policy that extends coverage for all treatment costs.

management resources, and Seikatsu Tasuke, a comprehensive lifestyle support service provided

In geographic information services, we offer geospatial information services that make use

through a joint venture with a top building materials and housing equipment manufacturer.

of advanced measuring devices and technologies. We also collect and process high-resolution

Going forward, we will continue to devote considerable efforts to developing a wide range ofdata from satellites and other sources, which we combine with other crucial information to meet

uniquely SECOM services that anticipate and respond to the future needs of an aging society.

customers’ needs in such areas as map preparation, environmental monitoring, firefighting anddisaster mitigation.
Our real estate development and sales business continued to emphasize the development andsale of condominiums with sophisticated security and contingency planning features.

With operations in 19 countries and territories outside of Japan, we will also actively promote
the ALL SECOM concept overseas, encouraging our various businesses to work together tocapitalize on new opportunities in key global markets. In security services, we will expand theprovision of SECOM-style on-line security systems, customized to reflect local needs and cultural

In the information and communication related and other services business, we focused onsensibilities, through local partners, firms acquired through M&A deals and joint ventures.

providing wide-ranging information and network services, which encompass information security

In medical services, we proceeded with plans for the construction of a seniors’ residence inservices, the construction and operation of business systems and assistance in preparing for large-

Shanghai, which has seen a sharp increase in the number of seniors in its population, symbolic

scale disasters. New offerings included the Total Support Service of Emergency Management,of the overall demographic trend in the PRC. We expect the new facility to open its doors inwhich leverages the comprehensive strengths of the Group to assist companies in formulating2015. Additionally, in India, which lacks medical facilities in many areas, we established a hospitalbusiness continuity plans (BCPs). The period under review also brought an increase in subscrip-

management company in cooperation with a Japanese trading company and a local firm. The

tions for Secure Data Center services from companies seeking to develop or improve BCPs.

company is scheduled to open a hospital in Bangalore in Spring 2013.
Our 50th anniversary, while an occasion for celebration, is merely a transit point. Guided by

Advancing to a New Stage of Growth: ALL SECOM

the ALL SECOM concept, we will continue working to provide services and systems that respond

Our Social System Industry vision depicts a framework of distinctive products and services—bothto customers’ needs for greater security and peace of mind, encouraging them to turn to SECOM

individually and in tailored packages—that deliver security and peace of mind and help make life

with the confidence that doing so will help resolve security and other concerns. Through such

more secure, convenient and comfortable. One recent measure taken to hasten the realization ofefforts, we will move ever closer toward the realization of our Social System Industry vision. At

this vision was the introduction and promotion of the ALL SECOM concept. ALL SECOM empha-

a recent event held to celebrate our first half century, many customers expressed high hopes

sizes advancing cooperation among our various businesses to anticipate and respond swiftly tofor greater security and peace of mind in the near future as envisioned under the ALL SECOM

evolving social imperatives by developing service systems worthy of our customers’ trust.

concept.

The fiscal year ending March 31, 2013, marks the 50th anniversary of SECOM’s founding. We

As always, our ability to earn the trust of customers will depend on our ability to respond tohave positioned this year as the first year of a new stage of growth. To drive this growth, in our

their expectations. In line with our corporate message—“Providing reliable peace of mind”—wemainstay security services business we will launch next-generation on-line security systems that

pledge to work as one to advance to a new stage of growth. We look forward to the ongoingdeliver a higher level of security than ever before, as well as such offerings as the Walkthroughsupport of all our shareholders in these and all of our endeavors.

Face Recognition System, a distinctive access control system that works by automatically constructing a 3D image of each individual from a registered photograph of the person’s face, and a next-

June 26, 2012

generation surveillance camera system that sends images recorded by surveillance cameras to oneof our Secure Data Center facilities for storage.
In fire protection services, in April 2012 we acquired a 100% stake in LIXIL NITTAN Co. Ltd.,
which was subsequently renamed Nittan Co., Ltd. This move reflected our belief—arising fromlessons learned in the wake of the Great East Japan Earthquake—that we must expand the scopeof our fire protection services beyond the provision of systems aimed at minimizing the impact offires on structures, to offer broad-based disaster mitigation services. Coordinating the operations

8

SECOM Annual Report 2012

Makoto Iida

Shohei Kimura

Shuji Maeda

Founder

ChairmanPresident and Representative Director

SECOM Annual Report 2012

9

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

STRATEGIC HIGHLIGHTS

Services begin in New ZealandIn New Zealand, we acquired a new subsidiary, subsequently renamed
Secom Guardall NZ Ltd. that boasts an overwhelming share of
the local market for security services for major financial institutions
and retail chains. Today, Secom Guardall NZ is leveraging a broad­service menu—which combines its specialized maintenance andinspection services with our distinctive on-line security systems—
and the extensive subscriber baseit shares with neighboring Secom
Australia Pty. Ltd., to promote thebroad ­acceptance of SECOM-style­security services.

Total Support Service of Emergency
Management is launched

Next-generation on-line security system
is developed

Capitalizing on the comprehensive strengths of Group
companies in this field, we launched Total Support
Service of Emergency Management, which encompasses assistance with the formulation of BCPs and,in the event of a disaster, full support at the time ofoccurrence, prompt ­initial response services and help
with recovery.

By leveraging our sensor, image recognition andpersonal identification technologies, as well as
our remote monitoring
expertise, we developed
a new on-line security
system that eliminates
the need for someone tomanually turn the system
on and off, thus facilitating around-the-clockmonitoring whether or
not anyone is on thepremises.

SECOM Remote Monitoring for Seniors
is ­introduced
In response to rising demand for services that
help monitor the safety and wellbeing ofseniors living alone and respond appropriately
when needed, we introduced SECOM Remote
Monitoring for Seniors, which enables subscribers to bundle services provided by Group
companies Secom
Medical System Co.,
Ltd. and Secom
Home Service Co.,
Ltd. with an alarmsystem that alerts
a SECOM control
center in the eventof a problem.

U.K. subsidiary acquires providerof security services for financial
institutions
Secom plc, in the United
Kingdom, took steps toenhance its security services
for financial institutions,which demand superior­technological ­capabilities
and responsiveness.

2011

Sales of SECOM Home Security
G-Custom begin
This convenient new residential security
system combines features of SECOM Home
Security, which emphasizes crime prevention and fire protection, with data storagefor important personal data and information
on services offeredsubscribers by Group
companies and otherselected providers,among others.

April

DecemberJanuary

November

Nittan joins the SECOM Group

September
November

June

June

March

July

SECOM Home Health Care Center
Kugayama is established
Located in Suginami-ku, Tokyo, this facility provides a full range of services thatcombine conventional home nursing withhome personal care, in cooperation with
community medical care facilities.

Corporate organization is revised
With the aim of integrating and streamlining security and related services, weabsorbed security and equipment installationand maintenance subsidiary Secom Techno
Service Co., Ltd.

Pasco secures rights to distribute
image data from the Pléiades
high-resolution optical satellite
Subsidiary Pasco Corporation secured rights
to send requests directly to Pléiades, aFrench high-resolution observation satellite, as well as to receive image data directlyfrom the satellite for sale to its customers.
Focusing on the impact of disasters andenvironmental change, Pasco will continue
working to swiftly acquire and provide satellite image data, as well as to reinforce its
operating foundation, with the aimof expanding its
satellite imagebased geospatial ­information
business.

2012
March

Company is established to offer­comprehensive lifestyle support services
In April 2012, Kurashi-TEL Co., Ltd., beganoffering Seikatsu Tasuke, a comprehensive suiteof lifestyle support services, in major urban
areas. These services encompass everythingfrom assistance in resolving minor concernsthat arise in everyday life to the development offorward-looking
plans that help
ensure worryfree lifestyles, allof which can beaccessed simply
by telephoning
the company’s
call center.

Reflecting our belief—arising from lessons
learned in the wake of the Great East Japan
Earthquake—in the need to urgently develop
next-generation fire and disaster protection
systems, as well as to accelerate our cultivationof overseas markets, we acquired Japanese fire
protection services firm LIXIL NITTAN, which was
subsequently renamed Nittan, thereby reinforcing our fire protection business.

Next-generation surveillance camera
system is developed
Given expanding needs for surveillance camera systems and telecommunications infra­
structure improvements, we took advantage
of our accumulated know-how in security­services and information security to develop
a next-­generation surveillance camera system.
With this system, camera images are stored at
a Secure Data Center, eliminating the need forsubscribers to have their own image storage
equipment.

©DLR

10

SECOM Annual Report 2012

SECOM Annual Report 201211

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Reinforcing Competitive Advantages
and New Growth
SECOM on-line security systems include the dispatch of
emergency response personnel, a feature that earns
high marks from subscribers in Japan and overseas.

offering comprehensive on-line security
systems, whereby we take full responsibility for everything from R&D to equipment manufacturing, sales, security
planning, installation, around-the-clockmonitoring, emergency response
services and maintenance. This scheme
enables us to maintain control over all

SECOM On-Line Security Systems

aspects of our services, underpinning
both our reputation for reliability and

R&D
Emergency
response services

the potency of the SECOM brand andIntelligent Systems Laboratory
Development Center

Emergency response
personnel

Production andassembly of systems
Secom Industries Co., Ltd.

Providing reliable peace of mind

ensuring consistent excellence.
We have also built a distinctive R&D
organization. The Intelligent Systems
Laboratory conducts research in thearea of core technologies, while theDevelopment Center applies thesetechnologies to the development of

Monitoring

Marketing

SECOM control center

Security planning teamInstallation

new security systems. This configuration
enables us to swiftly and accurately
incorporate feedback from customers
into the development process, further

Techniciansenhancing quality.
To facilitate around-the-clock monitoring and emergency response services,
we design systems that merge the4Comprehensive On-Line Security
Systems

meaning one company manufactures

speed and accuracy of sensors in detect-equipment, while another is responsible

ing irregularities and communications

Our on-line security systems encompass

for installation and yet another handles

equipment transmitting information

the placement of sensors at subscribers’monitoring.

with the analytical skills and capacity

premises, around-the-clock monitor-

for prompt decision-making and quick

ing from a SECOM control center

gency response services, as well as

action of humans. In particular, we

via telecommunications circuits andequipment installation and monitoring,

strive to maximize our accumulated

the dispatch of emergency responsereflects our deeply held belief that only

experience, reflected in the swift

personnel from the nearest emergency

by thus guaranteeing subscribers’ safety

decision-making capabilities of SECOM

depot in the event the sensors detect

can we honestly claim to be providing

control center staff and the fast reac-

an irregularity. If necessary, the SECOM

security. Appreciation for a distinctive

tions of our highly trained emergency

control center also notifies the police

approach, as well as for our lineup of

response personnel. Another key factor

and/or fire departments.

high-grade on-line security systems

behind our ability to respond swiftly andThis inclusive approach differs signifi-

12

Our insistence on providing emer-

backed by emergency response services,

accurately is our nationwide network

cantly from that of security service pro-continues to grow not only in Japan,of emergency depots—the most exten-

viders based in Europe and the United

but also in overseas markets. Today,

sive network of any security services

States, where on-line security services

we are the world’s leading provider ofcompany in Japan. This combination ofexist but do not as a rule include

such on-line security systems in terms ofhuman and technological capabilities is

emergency response services. Moreover,subscriber base.

what ensures our ability to provide a full

European and U.S. on-line security ser-Our ability to offer high-grade secu-

vices providers are generally specialized,

rity services reflects our commitment to

SECOM Annual Report 2012

range of security solutions that are a cut
above the competition.

Just as crucial to our ability to provide
comprehensive on-line security systems
is the training and management ofEfforts to realize our Social System Industry vision arebacked by innovation and solid R&D capabilities

human resources. Four SECOM training
centers in Japan conduct training forCenter, which is responsible for theistrative positions, transmitting knowl-

4R&D facilities that enable us torespond promptly to the needsof subscribers

edge as well as techniques and instilling

R&D plays an essential role in enhancing

these technologies. Our emphasis

awareness of our corporate philosophy

our comprehensive on-line security

on R&D reflects our recognition ofand the code of conduct that oursystems, with insights from frontline

technological capabilities as a crucial

employees, as security professionals, areemployees and feedback from subscrib-

management resource that gives us

required to observe. The effectivenessers obtained through day-to-day sales

a key competitive advantage in theof training is thus equally crucial to ourand service activities incorporated fully­security services market.

ability to provide high-grade services.

into R&D efforts, thus ensuring that

Since our establishment, we havedomestic emergency response personnel
and for individuals in sales and admin-

timely development of highly reliableequipment and systems that leverage

To make SECOM on-line security

both equipment modifications andsought to keep abreast of social trends,

services available to an ever-greater

newly developed systems respond topatterns of criminal activity and techno-

number of customers, we recognize

customers’ needs.

logical advances, thereby ensuring our

the need to offer optimal prices. To thisOur R&D organization is anchoredability to develop and market a broadend, we retain ownership of securityby the Intelligent Systems Laboratory,

range of systems that are needed andequipment, which we rent—rather thanwhich conducts research in the area of

welcomed by society. One example

sell—to subscribers. As a consequence,core technologies, and the Developmentof such a system is our on-line image

initial costs for subscribers are lower
than would otherwise be the case. The
rental format also allows us to takeresponsibility for maintenance andupkeep, ensuring prompt replacement
should a unit malfunction or when an
upgrade is needed, thus enabling us toguarantee the quality of our services.

The Intelligent
Systems
Laboratory’s
broad focus
ranges fromphysical security
to medicalcare and social­welfare services.

“SECOM-style” is a term used worldwide to describe security services thatencompass emergency response services. One reason for this is the fact thatsince launching overseas in 1978, we
have sought to customize our services toreflect local needs and cultural sensibilities. We currently offer SECOM-styleon-line security services in 11 countries
and territories other than Japan and willcontinue to promote recognition of ourdistinctive approach in markets aroundthe world.

The Development Center conducts development in line with SECOM’s own
stringent standards.
SECOM Annual Report 201213

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Reinforcing Competitive Advantages
and New Growthrecognition system, SECOM AX. Japan’s
first such system, SECOM AX uses
sophisticated on-site image sensors thatenable it to detect and capture images,
even if the premises are in darkness, andHaving positioned fiscal 2012 as the first year of a newstage of growth under the banner of ALL SECOM,
we are seeking to redefine perceptions of safety andpeace of mind

record sound. Should an irregularity be
detected, SECOM AX transmits images

4Rallying Group capabilities

and sound to a SECOM control center.

To drive forward the consummation of

together services from our real estate

Our image recognition technology

our Social System Industry vision, wedevelopment and sales business and ouris also employed in SECOM IX, ourhave positioned the year ending March

medical services business to create aremote imaging security system for

31, 2013, as the first year of a new­system that gives individuals who havecommercial facilities offering around-stage of growth under the banner ofpurchased condominiums in our Glorio

the-clock services; SECOM Robot X, an

ALL SECOM and are seeking to redefine

Roka-koen condominium complex

outdoor patrol robot; and the Intelligent

perceptions of safety and peace of mind.

­priority access later in life to rooms in

Emergency Alert System, which

The aim of the ALL SECOM concept is

one of our residences for seniors or care

automatically detects intruders or otherto go beyond the barriers separating ourhomes. This system is operated by our

suspicious circumstances and transmits

various businesses, enabling us to offer

medical services business, with the aim

images and audio without the need for

new services and systems that respondof offering peace of mind in a manner

anyone to press a button.

to evolving social imperatives as well asthat suits the life stage of the subscriber.

the expectations of customers.

As these new offerings show, our efforts

Going forward, we will continue

In addition, we have broughtto draw on our outstanding technolo-

We are also advocating cooperation

to encourage collaboration among ourgies to develop and market systems

among the companies of the Group tovarious businesses on various fronts

that respond swiftly and effectively to

encourage mutual understanding andhave begun to yield solid results.

customers’ needs, as we press forward

strengthen the Group as a whole. With

toward the realization of our Social

these objectives in mind, we recently

doing our utmost under the ALL

System Industry vision.

established the ALL SECOM Promotion

SECOM banner to create new services

Department. The new department isand s­ ystems that meet changing

charged with formulating strategic­customers’ needs.

­measures and proposals that will help

Looking ahead, we will continue

Guided by the ALL SECOM concept,

us provide far-reaching security andwe will remain committed to providing

peace of mind.

comprehensive services that ensure our

One outcome of these initiatives

customers see us as a partner they canis Total Support Service of Emergency

turn to at any time for solutions that will

Management, which rallies the diverse

remove sources of unease and deliver

strengths of our security services, fire

security and peace of mind. In so doing,

protection services, geographic informa-

we will strive to reinforce our foundation

tion services, and information and com-

for growth.

munication related and other services,
SECOM AX on-line image recognition system

combining the BCP support services
previously provided independently bythese various businesses in a single,
inclusive system. We also introduced
SECOM Remote Monitoring for Seniors,
which bundles security services, SECOM
Home Service and medical s­ ervices into
a convenient package designed to help

SECOM AX

14

SECOM Annual Report 2012protect the wellbeing of seniors.

SECOM image monitoring center

ALL SECOM:
The future of security and peace of mind
4Proposing solutions for security
and peace of mind in the years
ahead

was not limited to security services, but

emergency medicine and medical carealso introduced systems and services

for seniors, an increasing concern in

related to our other businesses, namely,

today’s aging society.

With a view to promoting future

fire protection services, medical services,

Going forward, we pledge to devote

growth, we recently held the ALL

insurance services, geographic informa-

our utmost efforts to responding effec-

SECOM-themed SECOM Fair 2012, ation services, real estate development

tively to the expectations of customers,

major event with exhibits representing

and sales, and information and com-

as well as to achieving further growth.

our vision, our outlook for security andmunication related and other services.

peace of mind in the future and theThese exhibits, which sought to give visi-

appreciation we feel for our customers.

tors a glimpse of how we will contribute

Planned as part of the celebrations forto society in the years ahead, included

our 50th anniversary, the fair visited

futuristic security systems that evoke our

five cities in Japan, welcoming tens ofdesire to help free society of crime, as

thousands of visitors in each location.

well as next-generation fire and disasterIn line with the ALL SECOM theme

protection systems and medical servicesof the SECOM Fair 2012, the fair’s focus

ranging from everyday healthcare to

Ceremonial tape cutting marking the­opening of the ALL SECOM-themed
SECOM Fair 2012 in Tokyo

Presentation on SECOM’s projections for security services in the near future

SECOM Annual Report 201215

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Commercial Security Services

Drawing on our advanced technologies and our wealth ofexpertise, we continue to actively promote
the development of innovative security systems.

16

SECOM Annual Report 2012

SECOM control center

Changing the game: Our newly
developed next-generation on-line
security system

on and off and remaining on full alert

authority to enter—employees or familyaround the clock.

members, for example—carry IC tags

In addition to image recognition

for authentication when they come andTraditionally, security systems have­technologies developed for SECOM AX,

go. The external image sensor provides

been seen as systems that are installeda next-generation on-line security system

around-the-clock monitoring to detectin places requiring protection and thatleverages sensing technologies employed

unauthorized entry. When an individual

need to be turned on and off at desig-

in Laser Sensor, an external monitoring

carrying an IC tag enters, the system

nated times or as needed. In the case of

system that uses lasers and automaticallyreads the data from the tag and autho-

a company, such systems are generally

resets the monitoring range when neces-rizes entry. Conversely, when someone

turned off during operating hours, while

sary, and authentication technologies

without an IC tag attempts to enter, thein a house they are turned off whenused in the SECOM Active IC Tag

system assumes an intrusion and imme-

occupants are at home.

System, an access control system. The

diately alerts a SECOM control center,system, which emphasizes external mon-transmitting an emergency signal andincrease in break-ins even when people

itoring, also benefits from our opera-

images taken by the external sensor. The

are on the premises, sparking greatertional expertise in the area of remotesystem thus provides security around-demand for security systems that aremonitoring for on-line security systems.

the-clock, regardless of whether anyone

continuously in operation. In response,

The system involves installing an

is on the premises, a marked departure

we recently developed a next-generation

external image sensor—an integrated

from conventional on-line security

on-line security system that essentiallyunit featuring a camera and a sen-systems, which are turned on and off asredefines the purpose of security systems

sor—outside the subscriber’s placeneeded and only provide security whenby eliminating the need for turningof business or home. Individuals withthey are on.

However, recent years have seen an

SECOM Annual Report 201217

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Commercial Security Services

Centralized (On-Line) Security Systems

SECOM sticker

Flashing light

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

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

Subscriber

Police
Dept.
Fire
Dept.

using
1 Alerttelephone circuits

SECOM
3 Dispatch
emergency response

Gas
Company• Alertemergency
services asnecessary

personnel

SECOM
Control Center
SECOM
2 Alertemergency

SECOM
Emergency
Depot

SECOM’s next-generation
on-line security system operates
around the clock.

response personnel

Our next-generation on-line security

forgetting to turn systems on or setting

system that makes use of our propri-

system is particularly appropriate forthem incorrectly—and frustration withetary advanced security network, andpremises where access is limited to somethe need to regularly replace hard disc

capitalizes on our extensive expertise indegree, including warehouses, factories,

drive parts that wear out. In response,

on-line security systems and informa-

research facilities, dams, electric power

we developed a next-generation surveil-tion security. We will continue working

generating facilities, social welfare-lance camera system that stores camera

to respond to expanding demand for

related facilities and detached houses.

images at a Secure Data Center, elimi-

surveillance camera systems by keeping

Looking ahead, we are confident thatnating the need for subscribers to haveabreast of evolving needs and infrastruc-

this system will help redefine the pur-their own image storage equipment.

ture changes.

pose of security systems.

Additionally, this system improves safety

Debut of next-generation­surveillance camera system withremote image storage function

manipulation of image storage devices.

Stereoscopic Walkthrough Face
Recognition System developed

With no hard disc drive needed, the sys-

In recent years, the leakage of personaltem is a space saver. Customers may also

information has become an increasingly

Conventional surveillance camera

opt to install a hard disc drive, facilitatingwidespread problem, spurring needs

systems require the installation ofreal-time access using a smartphone orfor effective biometric control systems.

surveillance cameras and a hard disccomputer whenever and from whereverSince launching SESAMO ID, Japan’s

drive to store images taken of thethe subscriber is. This format thus greatly

first fingerprint-based access control

subscriber’s shop, office or other com-enhances security, peace of mind andsystem, we have devoted considerable

mercial premises. The growing popularity

convenience for subscribers who own oreffort to research in biometric controlof surveillance camera systems has also

manage several premises.

systems based on facial recognition. To

by alleviating concerns over theft or illicit

brought an increase in issues, such asrecording failures—a result of subscribers

18

SECOM Annual Report 2012

Our next-generation surveillancecamera system is a uniquely SECOM

date, drawbacks with facial recognition
systems have included the fact that

Contracts forCentralized Security Systems(As of March 31, 2012)

Home

Commercial

Service industries
11.1%
Retailing/wholesaling 6.6%
Financial services
6.4%
Manufacturing
5.7%
Government agencies 4.9%
Other
23.7%
Home
41.6%

SECOM’s Walkthrough Face Recognition System incorporates advanced technologies.

individuals must stand still or directly

features and posture—something not

face a dedicated camera. Responding topossible with existing facial recognition

perceived need, the Intelligent Systems

systems—and authenticate people

Laboratory has pushed for the develop-

as they walk past. The Walkthroughment of facial recognition systems that

Face Recognition System can process

use surveillance cameras to control

approximately 60 individuals per minute,access, enabling individuals to proceed inallowing it to function effectively during

a normal fashion, rather than having tohigh-traffic periods, such as the begin-follow specific procedures. In the periodning and the end of the workday. Easy

under review, these efforts yielded thehands-free operation means the system

Walkthrough Face Recognition System,

is suitable for access control and crime

which incorporates image process-prevention applications. Going forward,

ing technologies that build on those

we will continue working to develop andemployed in such offerings as SESAMO

commercialize highly reliable, easy-to-

ID, SECOM AX and SECURIFACE, a

use systems that respond to increasingly

residential intercom system with a facediverse and sophisticated security needs.

detection function.
The Walkthrough Face Recognition
System works by automatically constructing a 3D image of each registeredindividual from a single photographof his or her face, enabling it to easily
accommodate natural variations in

SECOM Annual Report 2012

19

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Home Security Services

To provide greater security, peace of mind and convenience for homeowners
and renters, we continue to offer a variety of residential security services andsystems, centering on the growing SECOM Home Security system.

20

Redefining home security:
The newly launched SECOM
Home Security G-Custom

notifying the police and/or the fire

the system’s home controller—to us for

department.

storage at a Secure Data Center. OtherWith the aim of not only provid-

services include My Page, a custom-

Since first introducing our residential

ing security and peace of mind forized information page that displays

home security system in 1981, we havehomeowners, but also enhancing

information from selected collaborating

expanded and modernized the system’s­convenience, we recently launched­companies on services available tocapabilities in response to evolving social

SECOM Home Security G-Custom, an­subscribers, on the system’s home

imperatives and lifestyles, as well as toadvanced system that draws on les-controller; a data sharing service thatchanging patterns of criminal activity.

sons taken from the Great East Japan

enables subscribers to share photo-

SECOM Home Security comprises

Earthquake, including the necessity ofgraphs and messages among SECOM

sensors and other security equipment,

safe storage for important data. SECOM

Home Security G-Custom subscribers;

which are installed in and around

Home Security G-Custom combines

a memo service whereby short memos

subscribers’ homes, providing around-features of SECOM Home Security

can be recorded and displayed on thethe-clock monitoring for intruders, fires

with, for example, a storage service

home controller and confirmed via

and gas leaks and sending out alertsthat enables subscribers to entrust key

e-mail to registered mail addresses; andand emergency signals when required.

data—such as family photographs andan ALL SECOM function, which enables

In the event an irregularity is detected,

contact information for family members

subscribers to sign up for a variety ofthe system alerts a SECOM control

and relatives, as well as photographs ofother SECOM services using the home

center, where staff respond by assessing

health insurance cards, drivers’ licenses

controller.

the situation, dispatching emergency

and information on prescription medica-

response personnel and if necessary

tions taken using the camera built into

SECOM Annual Report 2012

We will continue working to advancethe adoption of SECOM Home Security

SECOM Home Security G-Custom’s touch
screen ensures easy operation.

SECOM Remote Monitoring for Seniors

G-Custom among existing and potential

convenient package of services designed

overseas or otherwise living far away

home security system subscribers.

to help protect the wellbeing of seniors.

from elderly parents.

In doing so, we will strive to deliver

Security services provided as part of

Owing to the rapid aging of Japan’s

high-grade services and provide greater

SECOM Remote Monitoring for Seniors

population and the growth of the

security, peace of mind and convenience

center on emergency alert services.

nuclear family, we expect to see greaterfor homeowners.

Lifestyle support services include assis-

demand for such services in the years

tance with basic housework, provided

ahead. Accordingly, we will continue

New SECOM Remote Monitoringfor Seniors combines security, lifestyle support and medical services

by SECOM Home Service staff. Medical

to expand efforts to market SECOM

services include regular checks by staff

Remote Monitoring for Seniors.

This service is the outcome of a request

family members regularly and reportfrom a Japanese trading company forback to the subscriber. By providing

Responding to demand for security
services for multifamily dwellingsa system that would help relieve thehelpful support to elderly family

Until recently, very few multifamily

concerns employees posted overseas

members who may live alone or require

dwellings in Japan, including rental

have about the everyday needs andnursing care, this system ensures peaceapartments, had security systems.

health of elderly parents left behindof mind for individuals receiving sup-However, with the number of seniors

in Japan. In response, the ALL SECOM

port, as well as for subscribers. SECOM

living alone on the rise, the need for

Promotion Department bundled security

Remote Monitoring for Seniors has

home security systems for multifamily

services, SECOM Home Service andattracted a diverse range of subscribers,

dwellings to help prevent crimes andmedical services to create SECOM

including companies that have sig-

fires is growing. With this in mind, we

Remote Monitoring for Seniors, anificant numbers of employees posted

launched SECOM AS, a home securityof a SECOM nurse center, who call the

SECOM Annual Report 201221

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Home Security Services

SECOM AS, a home security system designed
especially for small-scale multifamilydwellings
Subscribers to SECOM
Home Security canseek the advice ofSECOM home nurses
on health-related
matters.

SECOM emergency response personnel are dispatched promptly inthe event of an irregularity.

system developed for small-scale (30for security systems for multifamily

units or less) multifamily dwellings thatdwellings continuing to grow, we arehelps provide peace of mind for occu-

taking steps to reinforce our marketing

pants. Security by SECOM is a distinc-

capabilities in this important market.

tion that also offers significant benefits
to building owners, enhancing appeal topotential renters, a factor that helped todrive up subscriptions to SECOM AS.
Recently, we expanded our lineup forthe rental housing market by introducing SECOM Security R, a security systemdeveloped especially for rental complexes built by major Japanese housingdevelopers. Being able to advertise
units fitted with SECOM Security R has
helped such companies attract single
women and other potential renters forwhom security systems are a particularly
important consideration. With demand

22

SECOM Annual Report 2012

SECOM Today

Other Security Services
We are actively promoting both the SECOM AED Package Service
and the SECOM On-Line AED Management Service. COCO-SECOM
continues to find new and more diverse applications.

mamorino 2

COCO-SECOM Mobile Security System(Location and Emergency Response)
Notification of police(if warranted)

GPS satellite

Positioning
information

COCO-SECOM
Operations
CenterCellular phonebase station

SECOM AED Package Service

SECOM
Emergency
Depot

Request forsearch(telephone/Internet)

Dispatchemergency
response
personnel(if requested)

COCO-SECOM Transmitter
Device (vehicle-mounted)
Subscriber
COCO-SECOM
Transmitter
Device (portable)

COCO-SECOM

Policedepartment,
emergency
services

SECOM AED Package Service:­Helping to save lives

On-Line AED Management Service,

is now attracting attention for a broader

which encompasses around-the-clock

range of applications, including prevent-We currently offer SECOM AED Package

maintenance. We actively continue to

ing the theft of handbags and construc-

Service, a full-service AED rental pack-market this and other AED services withtion equipment, and the removal ofage. The rental format means that wethe aim of helping to save more lives.

automated teller machines (ATMs) andare responsible for providing batteries

safes, as well as managing taxi andbus fleets.

theft, thereby ensuring AEDs are always

Expanding marketing of
COCO-SECOM to individual
subscribers

in operating order.

The COCO-SECOM mobile security

school-age children, which come with

However, with the installation of­system, originally launched in 2001, uses

COCO-SECOM as a standard feature

AEDs expanding in Japan, there has

signals from Global Positioning S­ ystem

and are mounted with a security alarm

been a rise in the incidence of devices(GPS) satellites and cellular phone basethat the child can sound if he or she

failing at a critical moment as a result of

stations to pinpoint the location offeels threatened.

maintenance lapses. In 2009, the Ministry

portable transmitter devices with superb

Newer model mamorino 2 comesof Health, Labour and Welfare issued a

precision. Simply by pushing the alertwith expanded performance features,notice regarding the implementation of

button on the device, a user can notify

including a security alarm that remains

appropriate management and mainte-

the COCO-SECOM operations center,on, even when the phone is off, andnance of AEDs to prefectural authorities

which is on call around the clock anda function that enables parents andacross the country, as a result of which

if requested will dispatch emergency

guardians to keep an eye on their child’s

responsibility for daily inspections andresponse personnel.

movements.

and other expendables and servicing or
replacing in the event of malfunction or

the replacement of depleted or expired

Developed initially as a way to foil

We also offer mamorino cellular
phones for preschool- and primary

Looking ahead, we will step up

expendables became the responsibility ofchild abductions, locate seniors who

efforts to adapt COCO-SECOM to thethe facility where the device is installed.

have wandered off and avert the theftneeds of an increasingly diverse

In response, we launched SECOM

of cars and motorcycles, COCO-SECOM­customer base.

SECOM Annual Report 201223

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Overseas Security Services

We currently have operations in 19 countries and territories outside of Japan.
We continue to grow our overseas security services businesses, which offer
high-grade services in 11 of these markets.

Rising demand for security services
overseas

monitoring. Our approach differs signifi-

These achievements are testament to thecantly in that it is all-inclusive, enablinghigh marks given SECOM-style security

Our overseas operations—which

us to better provide customers with secu-

services by big banks, which haveencompass security services, as well asrity and peace of mind. This approach­notoriously stringent standards. Having

fire protection services and geographic­continues to be evaluated highly by

reinforced its ability to provide security

information services—currently span 19

local customers, underscoring steadyservices for financial institutions throughcountries and territories. In the security

growth in demand.

the aforementioned acquisition, Secomplc expects this business to continue toservices business, our first inroads into

grow in the years ahead.

we began operating in Taiwan. Since

Secom plc begins providing services
for two leading U.K. banks

then, we have established security

The third-largest security services firm inservices operations in the ROK, the PRC,

the United Kingdom, Secom plc offers

Responding to increasingly diverse
subscriber needs in the PRC

Thailand, Malaysia, Singapore, Indonesia,

SECOM-style services for commercial

Recognizing tremendous market

Vietnam, the United Kingdom, Australia

and public sector facilities, as well as forpotential in the PRC, we began offer-and New Zealand.

homes. In April 2011, the company won

ing services there in 1992. Initially, we

The distinguishing feature of oura contract to provide security services

offered on-line security systems in cities

overseas security services is that we offer

for one of the U.K.’s four largest banks,

in the PRC’s high-growth coastal areas.

SECOM-style on-line security systems,

while in June 2011 it acquired anotherIn the years since, we have broadened

including emergency response services,

U.K. security services firm, as a result

our focus to include inland cities. Today,

customized to reflect local needs andof which it now also provides security

our network, which encompasses 18

sensibilities. European and U.S. security

services for most branches of another

cities—Beijing, Tianjin, Dalian, Shenyang,services companies g­ enerally specializeof the country’s four largest banks that

Qingdao, Shanghai, Suzhou, Wuxi,

in one area, i.e., sales, installation oris a customer of the acquired company.

Kunshan, Hangzhou, Ningbo, Fuzhou,

overseas markets were in 1978, when

24

SECOM Annual Report 2012

Control center (Secom plc, United Kingdom)

Xiamen, Shenzhen, Guangzhou,
Dongguan, Chengdu, and Xi’an—is
one of the largest among private-sector­security services providers in the country.
In the PRC, heightened awareness ofControl center (Beijing Jingdun Secom Electronic Security Co., Ltd.)the need for effective security systems
continues to spur demand for high-grade
services. In this environment, recognition

home security services to comprehensive

equipment. In Singapore, we haveof the intrinsic value of SECOM-stylesecurity services for large-scale com-achieved growth by focusing on on-line

on-line security systems is rising. In recent

mercial facilities, which continue tosecurity systems, static guard services andyears, we established an equipment

support steady growth in the company’s

fire protection services. As the leading

manufacturing base in Shanghai, thereby

subscriber base.

provider of security services in Indonesia,

positioning ourselves better to accom-

In the ROK, joint venture S1

we continue to be the first choice ofmodate customer expectations by offer-

Corporation is that country’s leading

major local and foreign financial institu-

ing equipment suited to local market

security services provider in terms oftions, despite intensifying competition,needs. Going forward, we will continue

market share and is listed on the Korea

which has accompanied economic

to refine our service organization in the

Exchange. So well recognized are

growth. In Vietnam, economic develop-

PRC with the aim of enhancing both our

SECOM-style security services in the ROK

ment is expected to bring broad accep-

responsiveness to the increasingly diversethat local parlance for the act of subscrib-

tance of the idea of security services.

needs of local subscribers and our ability

ing to security services is “to secom.”

In Australia, we have earned positive

to provide high-grade services, and of

Thanks to its solid performance record

reviews from a broad range of subscrib-

achieving further growth.

and the power of the SECOM brand, S1’s

ers, including major corporations andsubscriber base continues to expand.

government agencies, since securing a

Posting solid results in key overseas
markets

Our presence in Southeast Asia began

contract to provide static guard and secu-

in Thailand, where we have been operat-rity patrol services for a building owned

In Taiwan, where we have been operat-

ing since 1987. In the years since, subsid-

by an asset management firm affiliateding since 1978, joint venture Taiwan

iary Thaisecom Pitakkij Co., Ltd., haswith one of that country’s four leading

Secom Co., Ltd., enjoys the leading sharegrown in tandem with the Thai economy.

banks. In New Zealand, we are striving toof the local security services market andIn Malaysia, we are growing our business

cultivate new demand by offering pack-is listed on the Taiwan Stock Exchange.

by supplying on-line security systems, asages combining SECOM-style on-line

Like SECOM in Japan, Taiwan Secom

well as customized security systems com-security systems with maintenance andoffers a lineup of services ranging frombining static guard services and security

inspection and static guard services.

SECOM Annual Report 201225

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Fire Protection Services
We continue to offer high-grade fire protection systems by capitalizing on
our capabilities as an integrated services provider.

Testing of fire extinguishing system

renamed Nittan. The addition ofthis company, which engages in the
Water spray system installed in road tunnel

construction of comprehensive fire
protection systems, equipment sales

Providing comprehensive fire
­protection systems worldwide

The deterioration of older office build-and inspection services, to the Groupings has stimulated replacement demand

has positioned us to offer systems that

Subsidiary Nohmi Bosai is a leading

for fire alarm systems and other fire pro-leverage the strengths of both Nohmi

name in automatic fire alarms, firetection equipment. In response, Nohmi

Bosai and Nittan, as well as to develop

extinguishing equipment and other fireBosai is drawing on its solid record in

next-generation systems to mitigate theprotection systems for a wide range ofthis field and on the solid trust of its

impact of major disasters.

applications, including office buildings,

customers to expand orders for systems

tunnels, plants, cultural properties, ships

to be installed in buildings undergoingand homes. In particular, the company

renovation.

enjoys a high share of the market for such

26

Nohmi Bosai also provides fireContributing to the expansion ofJapan’s transportation infrastructure
Nohmi Bosai installed a fire protection

systems for tunnels, plants and ships. An

protection systems that protect lives andsystem in the new Kanmon Tunnel, an

integrated services provider, Nohmi Bosai

property from fires and other disasters

undersea tunnel linking the main island

takes responsibility for R&D, assembly,

in markets around the world. In theof Honshu with the island of Kyushu thatplanning, installation and maintenance,

PRC, the company has established aopened in 1958. This was the first time

an approach that has ensured its ability to

production and sales organization thatfor a tunnel in Japan to be equippedprovide high-grade systems and earned it

has enabled it to supply fire protection

with a fire protection system. Since then,

the trust of customers nationwide.

systems for key commercial facilities in

the company has provided fire protection

Nohmi Bosai has leveraged its

Shanghai and Beijing, while in Southeast

systems for a wide variety of tunnels,

technological prowess and wealth of

Asia it has supplied systems to major

enabling it to secure a leading share ofexpertise to develop and launch offerings

airports, helping it to establish a solid ser-this market. Road tunnels for whichthat respond to evolving needs. These

vice record. In India, which continues to

Nohmi Bosai has supplied fire protection

include PROTECVIEW, a fire detection

see remarkable economic growth, Nohmi

systems include the extra long Enasan

and alarm system that monitors for early

Bosai has filled orders for comprehensive

and Shin Kobe tunnels, the Yamate

signs of fire, thereby minimizing damage;fire protection systems for the city of

Tunnel on the Shuto Expressway’s Chuo

Group Home Sprinkler System, a dry-pipe

Delhi’s subway system and for Hyderabad

Circular Route and several tunnels on thefire extinguishing system designed for

Airport in the south of the country.

Shin-Tomei Expressway. Rail tunnels

designated social welfare facilities; andIn April 2012, we acquired LIXIL

equipped with such advanced fire pro-Dry Mist, which uses sprinkler technol-

NITTAN, a leading fire protection services

tection systems include the Seikan Tunnel

ogy to reduce ambient temperature.

provider, which was subsequently

and the Hokuriku Tunnel.

SECOM Annual Report 2012

SECOM Today

Medical Services
By offering extensive services in this field, notably our Home Medical Services,
as well as support for hospitals, we are giving new form to our ideal of providing
security and peace of mind.
Home Medical Services

Medical Care
Institution

Prescription

Physician’s guidelines
Nurse’s report

Coordination
Pharmaceutical
Dispensing andHome Delivery Service

SECOM Pharmacy’s clean room

Home Nursing
Services(SECOM Visiting
Nurse Station)(SECOM Pharmacy)

Consultation
Prescription
Nurse visit

Pharmaceutical delivery

Patient

Artist’s impression of Golden Sunshine, a
new residence for seniors scheduled forconstruction in Shanghai

Home Medical Services also include
pharmaceutical dispensing services,Strengthening Home Medical Services
in response to growing needs

Outpatient care

Medical Services, together with theirfamilies, while still in hospital.

which encompass filling of prescriptions
and delivery to the patient’s home.

Seniors’ residence in Shanghai
Since 1996, we have established a

Our decision to diversify into medical

network of residences for seniors,

the health and lives of people is a natural

Contributing to better community
medical careextension of our commitment to provid-

We currently provide support for 18

the SECOMFORT series.

ing security and peace of mind. The coreassociated hospitals across Japan.

services reflects our belief that protecting

including Sacravia Seijo in Tokyo andHaving formulated a plan to lever-of this business is Home Medical Services.

In Suginami-ku, Tokyo, we recently

age our accumulated expertise in the

A mainstay of our Home Medical

established SECOM Home Health Care

­operation of seniors’ residences in Japan

Services is home nursing services, which

Center Kugayama, a facility providing

to establish similar facilities in overseas

we began providing in 1991. Thesecomprehensive services combining

markets, we resolved to pursue a joint

services involve regular visits by nurses­conventional home nursing with home

venture with a local firm in the PRC,

to patients in their homes to provide

personal care. This move was undertaken

through which we will build and open

expert nursing services and treatment as

as part of our efforts to prepare forGolden Sunshine, slated to be one of thedirected by the patient’s physician. Thechanges to Japan’s nursing care insur-

most luxurious such facilities in Shanghai.

success of these services is attributableance system scheduled for fiscal 2012

Demographic change in the PRC has led

to a number of factors, including ourthat will usher in the establishment

to a particularly sharp increase in the­rigorous proprietary training program.

of a ­comprehensive around-the-clocknumber of seniors living in Shanghai.

care system.

Beginning with Golden Sunshine,

The rapid aging of Japan’s population
is driving greater need for home medical

To provide home medical services

services. Accordingly, we are taking steps

that take into account the patient’s

establishment of a hospital management

to reinforce our home nursing services,perspective, the SECOM Community

company in India, we will capitalize on

including establishing our 31st visiting

Medical Liaison Center in Toyonaka,know-how accumulated in Japan to offer

nurse station, in the city of Sendai, in

Osaka, offers a highly rated service

medical services in overseas markets.

Miyagi Prefecture.

whereby patients can test run Home

scheduled to open in 2015, and the

SECOM Annual Report 201227

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Insurance Services
Sales of our distinctive non-life insurance policies are expanding favorably.

SECOM Anshin My Home support center

also offers discounts for houses with

Despite 10 years having passed since

exclusively electrical—i.e., no gas—­

its launch, MEDCOM continues to enjoy

appliances or improved fire resistance. In

solid support for making it possible forthe months since, contract volumes forpatients to access the best treatments

both of these policies have increased. We

available, whether covered by NHI or

also continue to benefit from considerable

otherwise, for permitting both inpatientsynergies between our insurance andand outpatient treatment and for placing

Head office of Secom General InsuranceCo., Ltd.

security services businesses, and the deci-no limits on the number of days of treat-sion to purchase insurance increasingly

ment. Persevering with efforts to fulfill our

Sales of SECOM Anshin My Home
are on the riseencourages customers to sign up for

mission of providing insurance that truly

security services.

benefits policyholders, we will continue
striving to make this policy available to

Our diversification into the non-life

security services, which provide prior

Subscriptions for MEDCOM
unrestricted cancer treatment­insurance continue to expand

protection, with insurance, which looks

MEDCOM, an unrestricted cancer treat-

after people in the event of misfortune,

ment policy, provides full coverage forEnhancing our unique SECOM
Anshin My Car automotive­insurance policy

is a positive way to reinforce security andhospitalization and medical treatment

SECOM Anshin My Car is a distinctive

peace of mind.

costs, both those covered under Japan’s

policy that includes, among others,

insurance business came about as a resultof our conviction that augmenting ourmore people.

National Health Insurance (NHI) schemearound-the-clock access to on-site sup-of distinctive non-life insurance policies

and those not, for which the patient bears

port by SECOM emergency responsethat capitalize on the strengths of thethe full cost. MEDCOM subscribers are

personnel in the event of an accident.

SECOM Group. Our highly rated offerings

thus able to take advantage of advanced

In certain circumstances, applications

include the Security Discount Fire Policy,

treatments without having to worry about

for this policy, as well as others—withfor commercial customers, and SECOM

costs. MEDCOM also offers a referral

the exception of the Security DiscountAnshin My Home, for residential custom-

service to hospitals with well-establishedFire Policy—can now be submitted via

ers. Both offer a discount on regular pre-reputations in the treatment of cancer.

a designated website, further enhanc-miums to subscribers who have installed

In light of the rising prevalence ofing the choices available to customers.

on-line security systems, reflecting thecancer treatment administered on an out-

Improved convenience is expected to yieldrisk mitigating nature of such systems.

patient basis, in April 2009 we enhanced

an increase in policies in force. Going

coverage under MEDCOM to include

forward, we will step up efforts to market

a revised, more competitive version of

outpatient treatment, with no restrictions

this policy by highlighting the distinctive

SECOM Anshin My Home with expandedon the number of days required for such

benefits of insuring with SECOM.

content that enables customers to choose

treatment and coverage up to ¥10 million

from among various options. The policy

per five-year period.

We have developed an extensive lineup

In January 2011, we began offering

28

SECOM Anshin My Car

SECOM Annual Report 2012

SECOM Today

Geographic Information Services
Capitalizing on our geospatial information capabilities, we are striving to contributeto the development of social systems that enhance security and peace of mind.

Integrated Mobile Ground Station(1/12 scale model)

value of commercial satellites and the

Hokkaido Ground Station

importance of obtaining topographicalGrowth remains firm in services forboth the public and private sector

preparing maps for automotive navigation

information for affected areas as swiftly

systems.

as possible. Pasco has reinforced its service capabilities by increasing the number

Subsidiary Pasco Corporation collectsof commercial satellites for which it has

photography, which it integrates andServices for overseas customers
show robust growth

analyzes to provide geospatial information

Pasco is working assiduously to expand

has also secured rights to send requests

services. Since 2008, Pasco has provided

its services to overseas customers anddirectly to the Pléiades high-resolution

image data offered by the operator ofhas established operating bases in 18

observation satellite, as well as to receive

TerraSAR-X, a German commercial satellite

countries outside Japan. Services forimage data directly from the satellitethat delivers images with outstanding

overseas customers center on thefor sale to its customers. Capitalizing

resolution. While services for the public

preparation of basic topographical survey

on these capabilities, and on access tosector continue to account for the bulk ofdata essential for the construction of a

TerraSAR-X, Pasco will continue to assist

its sales, Pasco is also focusing on services

nation’s infrastructure. Pasco’s strengthwith efforts to ensure a swift, accurate

for private sector and for overseas custom-

is its ability to provide comprehensive

grasp of conditions on the ground anders, satellite monitoring services and otherservices, from the shooting of images toprovide crucial information.

promising areas.

the processing, analysis and provision ofgeographic data based on primary aerial

rights to sell images from 15 to 17. Pasco

In Japan, Pasco is a participant in thedata. The company is building on that

ASNARO (Advanced Satellite with New

further evolve its measuring technologies

strength to assist efforts aimed at advanc-system ARchitecture for Observation),and has recently deployed a mobile map-

ing economic development, including the

an initiative for developing an advanced

ping system (MMS), which uses devices

preparation of mapping data for national

small satellite that can be built andmounted on vehicles to facilitate swift,

land development in Indonesia and thelaunched for short periods and at low

low-cost high-precision measurement ofPhilippines, and is also participating in acost. ASNARO is scheduled for launchroads and surroundings.

project to survey forests in Africa, part ofin December 2012. Pasco is in charge ofa global effort to counter the impact ofdeveloping a compact integrated mobile

global warming.

receiving station for the satellite thatIn the public sector, Pasco is working to

In the private sector, Pasco maximizes its
technological expertise, accumulated in theprovision of services for the public sector,

will ensure a highly effective reception

to assist customers in creating shop devel-

Satellite monitoring services expand

framework capable of functioning even in

opment plans and retail strategies; select-

In the wake of the Great East Japanthe event of damage to the communica-

ing optimal transport routes; formulating

Earthquake, Pasco analyzed image data

tions infrastructure, enabling Pasco to go

systems for ensuring business continuity

from TerraSAR-X to create mapping data

to affected areas and receive, process andin the event of a major disaster; managing

to help pinpoint areas devastated byprovide satellite image data.

rail, road and electric power facilities; andthe disaster, thereby demonstrating the
SECOM Annual Report 201229

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Real Estate Development and Sales
Guided by the ALL SECOM concept, we are building
condominiums that provide security and peace of mind.
Providing peace of mind tailoredto different life stages

should they feel unable to continue living

generators, an emergency supply stor-

alone at a later point in life.

age warehouse, portable emergency-use
toilets, AEDs and a helicopter landing

In recent years, the rapid aging ofto health and nursing care services, has

Providing safe, secure condominiums
equipped with advanced disasterprotection featuresintensified concerns related to the pos-

Having stepped up efforts

sibility of living alone as a senior at someto develop safe, secure con-time in the future. Guided by the ALL

dominiums that also offer

SECOM concept, we introduced a system

protection in the event of athat brings together services from ourdisaster, in September 2012

real estate development and sales busi-

we will complete construc-ness and our medical services businesstion of Glorio Koshigaya

to offer individuals who have purchased

Station Tower in Koshigaya,

condominiums in our Glorio Roka-koen

Saitama Prefecture. This

complex priority access to one of our

new complex, which willresidences for seniors or care homes

boast emergency-use

the Japanese population, which hasheightened awareness of issues relatedpad, has already attracted considerable
attention.

Glorio Koshigaya Station Tower

SECOM Today

Information and Communication Related
and Other Services
We are capitalizing on our proprietary expertise and sophisticated­telecommunications technologies to assist in the formulation of effective BCPs.
Rising demand for Secure Data
Center services

initial response operations services, which

continuity plans (BCPs), the aim of which

ensure subscribers’ systems are back up

is to facilitate the prompt restart of oper-

We currently operate five Secure Dataand running as soon as possible in theations in the event of a major disaster.

Center facilities across Japan, all of which

event of an untoward development; andOur Secure Data Center facilities onceboast top-level security capabilities anda wide range of proprietary cloud-based

again proved their worth in the wake ofa variety of advanced systems. These

services, including the SECOM Safety

the Great East Japan Earthquake by oper-

facilities house servers and important

Confirmation Service.

ating without interruption despite thedata entrusted to us by an extensive list

30

Recent years have brought increased

disaster, thus ensuring that subscribers’of subscribers, including several promi-

demand for secure data centers withvaluable information assets were securely

nent financial institutions. By providing

highly sophisticated security featuresprotected. This and other factors havehousing, hosting and other services, weto assist in the formulation of solutions

contributed to an increase in applications

extend support for subscribers’ servers,

that prevent the leakage of confidential

by companies looking to formulate BCPs

as well as for data and other informationand personal information and that canand seeking solutions to negate theassets. We also provide around-the-clock

assist with the formulation of business

impact of electric power outages.

SECOM Annual Report 2012

and exit points. In addition to protecting
against virus attacks, this service alsooffers communications monitoring,on-site response services and everyday
oversight and security planning,­depending on the subscriber’s needs.

Disaster monitoring center

Demand increases for
SECOM Home Service

Seikatsu Tasuke: Targeting thehome renovations market

Since its launch in 2005, the scope

Taking advantage of the popularity of

New comprehensive risk­management service that­capitalizes on diverse
Group strengthsof SECOM Home Service—a suite of

SECOM Home Service, in April 2012

convenient lifestyle support services forKurashi-TEL Co., Ltd., a joint venture

SECOM Home Security subscribers—haswith a major household equipment

expanded, earning widespread support

manufacturer, launched Seikatsu Tasuke,

In line with the ALL SECOM concept, weand attracting steady growth in demand.

a comprehensive suite of lifestyle sup-recently launched Total Support Service

Today, the SECOM Home Service menu

port services for customers who areof Emergency Management, which rallies

includes Anshin Support Service, which

not SECOM Home Security subscribers,

the strengths of the Group in, among

includes patrolling subscribers’ homes

leveraging our know-how in this area—­others, security services, fire protection

when occupants are away, as well asaccumulated through the provision ofservices and geographic information

Housework Support Service, which

SECOM Home Service—and our joint

services, as well as in information andprovides assistance with housekeep-

venture partner’s expertise in building

communication services, to provide com-

ing and around-the-house jobs, andmaterials and household equipment

prehensive support for the formulation

Troubleshooting Support Service, which­solutions. With Seikatsu Tasuke, custom-and implementation of BCPs. This service

includes assistance in resolving unfore-

ers can contact Kurashi-TEL’s call center

bundles pertinent services provided byseen problems, such as lost keys. We also

to communicate their needs, in responseGroup companies into packages thatoffer the SECOM Home Service Pack, ato which the company develops a cus-

provide optimal solutions, assisting withspecial plan that allows customers to sign

tomized plan, taking responsibility forprior preparations, providing support

up for services that suit their lifestyles on

everything from arranging schedules towhen disaster occurs, ensuring prompt

an annual basis.

providing services.

initial response services and helping with
post-event recovery. This service also
protects subscribers from the impact ofeveryday breakdowns and issues with thepotential to disrupt operations.

SECOM Cyber Attack Protection
Service: Protecting confidential
information
Cyber attacks today generally involve
viruses undetectable by commerciallyavailable anti-virus software and compromise computers and servers, facilitating,among others, the illegal gathering ofconfidential information. In response,
we developed SECOM Cyber Attack
Protection Service, which prevents leakage by providing protection at both entry
SECOM Home Service

SECOM Annual Report 201231

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

ENVIRONMENTAL MANAGEMENT
Environmental Initiatives Guided by the ALL SECOM Concept
A recycling-oriented, low-carbon business model
As a provider of on-line security systems since 1966, wehave consistently sought to incorporate consideration for theenvironment into all aspects of our operations. Such systems
provide advance protection against the loss of valuable
resources to theft or fire, thus making a significant contribution
to environmental preservation. Moreover, we are committed togreen procurement, which precludes the use of harmful chemical substances in the development, design and manufacturingof security equipment, as well as to environment-friendly

design, which ensures such equipment is energy- andresource-efficient.
We provide the security equipment used in our on-line
security systems on a rental basis, rather than selling it tosubscribers, and take full responsibility for its management,from installation to maintenance, replacement and collection
after use. This relieves subscribers of the burden of disposal
and facilitates efficient reuse and recycling.

Environmental management configuration
Environmental philosophy (formulated in 2005)
In accordance with our mission, which is to contribute tosociety through our business activities, and with the belief
that protecting the environment is essential to our ability toprovide security and peace of mind, we continue to promote
environmental initiatives in all areas of our operations.

General Affairs
Division

Environmental
Management Department

Intelligent
Systems Laboratory

Eco Design Group

Development Center

Environmental
Management Group

President
SECOM CO., LTD.
Head officeBusiness departments

Environmental
management committees
SECOM Eco Team
initiatives

Group companies

Contributing to the prevention of global warming
Medium-term target: We are striving to achieve a 1.5% reduction in our emissions of carbon dioxide (CO2)—
which peaked in fiscal 2007—each year until fiscal 2020.
Lowering CO2 emissions at offices

Lowering CO2 emissions from vehicles

 educing energy consumption and introducing efficientRequipment
Our facility management strategy emphasizes ongoingmeasures to improve environmental soundness, cost
reductions and efficiency.
• We are contributing to global environmental protection
efforts by introducing energy-efficient equipment, whichhelps reduce CO2 emissions, into our offices, as well as bypromoting green procurement.
• With the aim of achieving total cost reductions, we are­striving to lower both procurement costs and running costs,
including costs for energy, for equipment and fixtures usedin our offices.
• We are pursuing improvements in efficiency to motivate
employees and bolster productivity.

We are currently implementing an initiative aimed atenhancing our environmental performance by replacing theapproximately 5,000 vehicles currently used in our security
services business in Japan with models that meet standards
for low-emission vehicles set by Japan’s Ministry of Economy,
Trade and Industry, Ministry of Land, Infrastructure, Transport
and Tourism and Ministry of the Environment. As of March 31,
2012, this initiative was approximately 90% complete.

Environmental management committee initiatives
We have established environmental management committees at each of our 28 offices across Japan, each of which
is charged with promoting initiatives aimed at advancing
environment-friendly operations. Thanks to initiatives implemented under the guidance of each committee chairman andrepresentatives from the front lines, our offices continue toachieve steady reductions in CO2 emissions.

32

SECOM Annual Report 2012

Promoting the reduction of CO2 emissions by SECOM
Home Security subscribers
In fiscal 2011, we began participating in an initiative set upby the Ministry of the Environment as part of its infrastructure
maintenance program. We assist customers in implementing
measures to reduce CO2 emissions in their homes and lower
energy consumption.

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

FINANCIAL REVIEW
Operating Results
Overview
In the year ended March 31, 2012, SECOM CO., LTD. and its
subsidiaries (collectively, “the Company”) sought to provide
high-quality products and services that respond to the needs ofcustomers in the core security services segment, as well as in thefire protection services, medical services, insurance services, geographic information services, real estate development and sales,and ­information and communication related and other services
segments.
Consolidated net sales and operating revenue rose 2.7%, or¥20.6 billion, to ¥772.5 billion. This result reflected higher net
sales and operating revenue in the security services s­ egment—due
to increases in revenue from subscriptions for the Company’s coreelectronic security services and in sales of merchandise—as wellas in the medical services, geographic information services andfire protection services segments. In contrast, operating income
declined 21.5%, or ¥21.6 billion, to ¥78.8 billion, as the Company
wrote down real estate inventories in light of dwindling demandin the condominium market, which prompted a dramatic reorganization of its related business, while flagging economic conditions
resulted in the recognition of an impairment loss on long-lived
assets, principally real estate. Net income attributable to SECOM
CO., LTD. fell 34.2%, or ¥21.4 billion, to ¥41.2 billion, a­consequence mainly of the decline in operating income.
Net Sales and Operating Revenue
Consolidated net sales and operating revenue rose 2.7%, or ¥20.6
billion, to ¥772.5 billion. Net sales and operating revenue increasedin the security services, medical services, insurance services, geographic information services, and information and communication
related and other services segments, but declined in the real estatedevelopment and sales segment. (For further details, please see
Segment Information below.)
Costs and Expenses
Total costs and expenses increased 6.5%, or ¥42.2 billion, to¥693.7 billion. Cost of sales, at ¥536.3 billion, was up 7.5%,
or ¥37.3 billion, and was equivalent to 69.4% of net sales andoperating revenue, up from 66.4% in the previous period. Thiswas due mainly to an increase in the write-down on real estate
inventories, to ¥20.7 billion, from ¥1.5 billion, as the Company
wrote down real estate inventories in light of dwindling demandin the condominium market, which prompted a dramatic­reorganization of its related business.
Selling, general and administrative (SG&A) expenses edged
down 0.7%, or ¥1.0 billion, to ¥146.7 billion. SG&A expenses
were equivalent to 19.0% of net sales and operating revenue, an
improvement from 19.6% in the previous period. These results
were attributable primarily to declines in research and development
expenses and advertising costs. Having taken into account flagging
economic conditions, the Company also recognized an impairment
loss on long-lived assets, principally real estate, of ¥8.1 billion.

Operating Income
Operating income declined 21.5%, or ¥21.6 billion, to ¥78.8
billion, equivalent to 10.2% of net sales and operating revenue,
down from 13.4% in the previous period. This result was due
mainly to increases in the write-down on real estate inventories andimpairment loss on long-lived assets, principally real estate, whichcountered the positive impact of higher net sales and operating
revenue and lower SG&A expenses. Segments contributing tooperating income were—in order of size of contribution—security
services, medical services, fire protection services and geographic
information ­services. (For further details, please see Segment
Information below.)
Other Income and Expenses
Other income decreased ¥4.3 billion, to ¥7.5 billion, while otherexpenses rose ¥775 million, to ¥5.2 billion, resulting in net otherincome of ¥2.3 billion, down ¥5.1 billion from the previous period.
Principal factors behind this result included a ¥2.5 billion decline
in gain on private equity investments, to ¥3.5 billion, and anincrease in loss on other-than-temporary impairment of investment
securities.
Income from Continuing Operations before Income Taxes
and Equity in Net Income of Affiliated Companies
Income from continuing operations before income taxes and equity
in net income of affiliated companies fell 24.8%, or ¥26.7 billion,to ¥81.1 billion, reflecting declines in operating income and net
other income.
Income Taxes
Income taxes declined ¥5.1 billion, to ¥38.2 billion, equivalent to47.1% of income from continuing operations before income taxes
and equity in net income of affiliated companies, up from 40.1%
in the previous period. This result was due primarily to changes
to Japanese tax regulations, which resulted in decreases in certain
components of net deferred tax assets.
Equity in Net Income of Affiliated Companies
Equity in net income of affiliated companies slipped ¥148 million,to ¥4.9 billion.
Net Income Attributable to Noncontrolling Interests
Net income attributable to noncontrolling interests amounted to¥6.6 billion, down ¥369 million.
Net Income Attributable to SECOM CO., LTD.
Net income attributable to SECOM CO., LTD. fell 34.2%, or ¥21.4
billion, to ¥41.2 billion, equivalent to 5.3% of net sales and operating revenue, compared with 8.3% in the previous period. Net
income attributable to SECOM CO., LTD. per share was ¥188.97,
down from ¥287.41. A proposal to pay cash dividends of ¥90.00
per share, level with the previous period, was approved at thegeneral shareholders’ meeting held on June 26, 2012.

SECOM Annual Report 201233

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

FINANCIAL REVIEW
Segment Information(For further information, please see Note 28 of the accompanying Notes to the Consolidated Financial Statements)

Security Services
The security services segment comprises electronic security services,other security services, and merchandise and other. In the period
under review, net sales and operating revenue in this segment
increased 2.3%, or ¥9.7 billion, to ¥436.5 billion. Excludingintersegment transactions, net sales and operating revenue in thissegment amounted to ¥434.7 billion, representing 56.3% of overall
net sales and operating revenue, down slightly from 56.5% in theprevious period.
Electronic security services include on-line commercial and home
security systems (centralized systems) and large-scale proprietary
security systems, which center on surveillance services at the subscriber’s premises. On-line commercial and home security systems,
the core of the Company’s electronic security services, use sensors
installed at the subscriber’s premises to detect events, including
intrusions, fires and equipment malfunctions. Sensors are linked toa 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 take appropriate measures. Control center employees 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 0.6%, or ¥1.9 billion, to ¥304.4 billion, owing
to, among others, the inclusion of the net sales and operating
revenue of newly consolidated subsidiaries overseas.
Other security services include static guard services and armoredcar services. The former is provided by highly trained professional
security guards for situations requiring human judgment andflexible responsiveness. The latter involves the transport of cash,
securities and other valuables using specially fitted armored cars
and security professionals. Net sales and operating revenue fromstatic guard services edged up 0.7%, or ¥317 million, to ¥46.7 billon, and that from armored car services rose 2.4%, or ¥480 million,to ¥20.6 billion.
The merchandise and other category encompasses sales of a wide
range of security products, including access control systems, CCTV
surveillance systems, automated fire extinguishing systems andexternal monitoring systems, which can be freestanding or linked
to on-line security systems. Net sales and operating revenue in thiscategory increased 13.1%, or ¥7.3 billion, to ¥63.0 billion, mainlyreflecting efforts to expand sales of security systems for rental
apartments and an increase in sales of CCTV surveillance systems.
Operating income in the security services segment rose 1.6%, or¥1.6 billion, to ¥101.4 billion, owing to the increase in segment net
sales and operating revenue. The operating margin edged down to
23.2%, from 23.4% in the previous period.
Fire Protection Services
This segment focuses on tailored automatic fire alarm systems, fire
extinguishing systems and other fire protection systems for a wide
range of applications, including office buildings, plants, tunnels,
cultural properties, ships and residences.
Net sales and operating revenue from the fire protection services
segment advanced 5.9%, or ¥4.7 billion, to ¥84.8 billion, primarilyreflecting higher sales of specialized fire protection systems forplants, factories and other facilities, and of fire extinguishingsystems for roads, as well as the increase in revenue from inspection
and maintenance services. Operating income was ¥4.4 billion, an
increase of 40.7%, or ¥1.3 billion, and the operating margin, 3.9%in the previous period, improved to 5.2%. These results were due
mainly to the increase in segment net sales and operating revenue,

34

SECOM Annual Report 2012

as well as to efforts to reduce cost of sales and an improvement in
the segment SG&A ratio.
Medical Services
The medical services segment encompasses home medical services,comprising pharmaceutical dispensing and home nursing services,
as well as the operation of residences for seniors, electronic medical
report systems, sales of medical equipment, personal care services,
the leasing of real estate for hospitals and health care-related
institutions and others. The segment also includes the operationsof 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 7.6%, or ¥9.5 billion, to ¥134.7 billion. The principal factors behind this result wereincreases in revenue from variable interest entities, which manage
hospitals and health care-related institutions, and from the pharmaceutical dispensing business. Owing largely to the improved resultsof these entities, operating income soared 345.2%, or ¥6.1 billion,to ¥7.9 billion. The segment’s performance in the previous period
reflected a loss of ¥3.2 billion on settlement of pre-existing relationship related to the settlement of a lease contract between the
Company and the aforementioned variable interest entities.
Insurance Services
In addition to security services, which are preventative by nature,
the Company offers non-life insurance, which looks after customers
in the event of misfortune, and has developed and marketed abroad range of distinctive non-life insurance policies, including
Security Discount Fire Policy, a commercial fire insurance policy,
and SECOM Anshin My Home, a comprehensive fire insurance
policy for homes—both of which offer discounts on premiums tocustomers who have installed on-line security systems, recognizing
this as a risk-mitigating factor. Other offerings include SECOM
Anshin My Car, a comprehensive automobile insurance policy thatoffers on-site support services—provided by emergency response
personnel—should the subscriber be involved in an accident, and
MEDCOM, an unrestricted cancer treatment policy that covers theentire cost of medical treatment for cancer.
Despite a decline in net realized investment gains, net sales andoperating revenue in this segment increased 1.5%, or ¥540 million,to ¥36.3 billion, owing primarily to firm sales of fire insurance policies and the MEDCOM unrestricted cancer treatment policy, whichstrengthened revenue from net premiums written. The segment’s
operating loss narrowed to ¥80 million, from ¥180 million in theprevious period.
Geographic Information Services
The geographic information services segment includes the use ofhighly advanced measuring equipment and surveying technologies
to provide a variety of GIS services to national and local governments, as well as to public- and private-sector entities in Japan.
The Company also provides geospatial information services togovernment agencies in foreign countries, including emerging
economies and developing countries. In the period under review,
the Company procured high-resolution satellite data and, leveraging its processing technologies, provided geographic information
services that responded to a wide variety of customer needs in areas
ranging from map production to environmental monitoring andfire and disaster prevention. In the wake of the Great East Japan
Earthquake, the Company analyzed data from several satellites
to help pinpoint areas devastated by the disaster, enabling it toprovide crucial information to the national government and related
agencies in a timely manner.
Segment net sales and operating revenue rose 15.3%, or¥6.7 ­billion, to ¥50.4 billion, owing to increased sales of satellitemonitoring services to public-sector customers and the inclusion ofa full year of net sales and operating revenue from a consolidated
subsidiary acquired in December 2010, as well as to the progress of
system development projects for overseas customers.
Operating income edged up 1.7%, or ¥56 million, to ¥3.4 billion.
Despite higher production efficiency in services for public- andprivate-sector customers in Japan, the operating margin slipped to
6.8%, from 7.8% in the previous period, reflecting the impact of
unfavorable weather conditions, which resulted in significant delays
and cost increases for certain projects for overseas customers.
Real Estate Development and Sales
The real estate development and sales segment comprises the development and sales of condominiums equipped with advanced security and contingency planning systems. Amidst sluggish conditions in
the condominium market, the Company continued to promote thecareful selection of properties for development and sales.
Net sales and operating revenue in this segment dropped 50.8%,
or ¥12.7 billion, to ¥12.3 billion, as the condominium market failed
to improve noticeably. The segment reported an operating loss of¥21.6 billion, compared with ­operating income of ¥525 million in

the previous period, owing to a ¥20.7 billion write-down on realestate inventories, a consequence of dwindling demand in thecondominium market, which prompted a dramatic reorganizationof this business.
Information and Communication Related and Other Services
This segment consists mainly of information and communication
related services—including information security systems and network services, which protect subscribers’ information in the eventof a major disaster—and real estate leasing.
Segment net sales and operating revenue advanced 6.0%, or¥1.9 billion, to ¥33.9 billion, shored up by an increase in subscriptions for Secure Data Center services, part of the information andcommunication related services business. Despite higher incomein the information and communication related services category,
the Company recognized an ¥8.1 billion impairment loss on longlived assets, principally real estate, having reassessed the potential
profitability of its businesses in light of flagging economic conditions. As a consequence, the segment reported an operating loss of¥4.0 billion, compared with operating income of ¥3.2 billion in theprevious period.

Financial Position
Total assets as of March 31, 2012, amounted to ¥1,179.8 billion,¥8.7 billion higher than at the end of the previous period.
Total current assets, at ¥535.6 billion, rose ¥14.2 billion, andaccounted for 45.4% of total assets. Cash and cash equivalents
totaled ¥213.0 billion, an increase of ¥19.1 billion, owing to thefact that net cash provided by operating activities exceeded net
cash used in investing and financing activities. (For further details,
please see Cash Flows, which follows this section.) Notes andaccounts receivable, trade, rose ¥13.2 billion, to ¥99.7 billion,
pushed up primarily by increases in net sales and operating revenue
in the fire protection services and geographic information services
segments. Inventories, at ¥67.1 billion, were down ¥14.7 billion,
reflecting a decline in real estate for sale, a consequence of salesof condominiums and the write-down on real estate inventories.
Short-term investments amounted to ¥17.3 billion, up ¥10.9 billion,
largely as a result of the reclassification of investment securities in
the insurance services segment. Time deposits were ¥7.7 billion, adecline of ¥9.5 billion, as certain deposits reached maturity. With
both current assets and current liabilities up, the current ratio
remained level at 2.1 times.

Investments and long-term receivables were down ¥10.6 billion,to ¥235.7 billion, or 20.0% of total assets. This was mainly aconsequence of the aforementioned reclassification of investment
securities as short-term investments, which pushed investment
securities down ¥9.0 billion, to ¥140.0 billion.
Property, plant and equipment, less accumulated depreciation,rose ¥8.3 billion, to ¥310.8 billion, equivalent to 26.3% of total
assets. Land increased ¥6.7 billion, to ¥103.1 billion, a result of thepurchase of a rental property in the information and communication related and other services segment. Additionally, a higher
number of security services subscribers necessitated an increase in
security equipment and control stations, although this was offset bydepreciation.
Other assets were down ¥3.3 billion, to ¥97.7 billion, andaccounted for 8.3% of total assets. Deferred charges, that is,service charges for the installation of security equipment related
to on-line security systems that have been deferred, declined¥2.5 billion, to ¥43.1 billion.

Percentage of Consolidated
Net Sales and Operating Revenue*

SECOM CO., LTD.
Shareholders’ Equity per ShareTotal Assets

1.5%
6.5%
4.4%

3,000

1,500

2,400

1,200

1,800

900

1,200

600

600

300

(Year ended March 31, 2012)

3.5%

56.3%

17.4%
10.4%

Security Services
Fire Protection Services
Medical Services
Insurance Services
Geographic Information Services
Real Estate Development and Sales
Information and Communication Related and Other Services(In billions of yen)

(In yen)0

08 09 10 11 12

0

08 09 10 11 12* Pie chart shows percentage of consolidated net sales and operating revenue(Excluding intersegment transactions)

SECOM Annual Report 201235

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

FINANCIAL REVIEW

Total liabilities declined ¥14.2 billion, to ¥502.2 billion, equivalent
to 42.6% of total liabilities and equity. Total current liabilities rose
¥13.7 billion, to ¥256.3 billion, and accounted for 21.7% of total
liabilities and equity. This was due primarily to an increase in notes
and accounts payable. Long-term debt, at ¥37.0 billion, was down
¥16.0 billion. Investment deposits by policyholders declined ¥10.9
billion, to ¥30.8 billion, as insurance policies with maturity refunds
reached maturity.
Interest-bearing debt, comprising bank loans, long-term debt
and the current portion of long-term debt, declined ¥12.8 billion,to ¥99.8 billion. This result reflected the effective use of available
funds to reduce interest-bearing debt.

Total SECOM CO., LTD. shareholders’ equity rose ¥19.4 billion,
to ¥612.9 billion, and was equivalent to 51.9% of total liabilities
and equity. This was attributable to a ¥21.5 billion increase inretained earnings, to ¥572.7 billion, owing to net income attributable to SECOM CO., LTD. and to the payment of cash dividends.
Accumulated other comprehensive loss, at ¥37.3 billion, was up¥2.5 billion. The loss resulting from foreign currency translation
adjustments rose ¥3.4 billion, to ¥28.5 billion, a consequence of
the appreciation of the yen. As a result, the equity ratio increased to51.9%, from 50.7% at the end of the previous period.

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, the Company is also firmly
committed to financing strategic investments with cash generated
by its ­operating activities.
In the period under review, net cash provided by operating activities amounted to ¥112.2 billion. Significant factors contributing tothis result included net income of ¥47.8 billion and non-cash items,
notably depreciation and amortization of ¥58.1 billion, a ¥20.7­billion write-down on real estate inventories and an ¥8.1 billion
impairment loss on long-lived assets. Cash used in operating activities included ¥15.7 billion in deferred charges and a ¥12.3 billion inreceivables and due from subscribers, net of allowances. At ¥413
million less than in the previous period, net cash provided by operating activities was essentially level. This was despite an increasein the aggregate of net income and reconciliation items—namely,
write-down on real estate inventories, impairment loss on longlived assets and other gains and losses generated by operating
activities—and reflected an increase in inventories, a consequenceof condominium development, compared with a decrease in theprevious period.
Net cash used in investing activities came to ¥45.0 billion.
Principal items behind this result included payments for purchasesof property, plant and equipment of ¥53.5 billion—namely, the­purchase of a rental property, and security equipment and control­stations, necessitated by an increase in the number of security­services subscribers—and a decrease in time deposits of ¥9.2
billion, as certain deposits reached maturity. Owing to a review
of investment assets in the insurance services segment, and to

gains attributable to private equity investments in the United States,
net proceeds from the sales and redemption of short-term investments and investment securities amounted to ¥3.1 billion. Despite
the absence of proceeds from sales in investments in affiliated­companies and an increase in payments for purchases of property,
plant and equipment, the fact that time deposits reflecting efforts
to strengthen relations with subscribers reached maturity resulted ina ¥1.9 billion decrease in net cash used in investing ­activities fromthe previous period.
Net cash used in financing activities amounted to ¥47.7 billion.
This included dividends paid to SECOM CO., LTD. shareholdersof ¥19.6 billion, repayments of long-term debt of ¥11.7 billion, adecrease in investment deposits by policyholders of ¥10.9 billion
and a decrease in bank loans, net, of ¥6.9 billion. Repayments oflong-term debt and the decrease in bank loans reflected efforts
during the period to reduce long-term debt by promoting theeffective use of available funds. Net cash used in financing activities
was down ¥7.6 billion from the previous period, when an increasein the use of cash to reduce interest-bearing debt was counteredby payments for acquisition of shares of consolidated subsidiaries
from noncontrolling interests, owing to a tender offer to acquire
shares of common stock issued by consolidated subsidiary Secom
Techno Service Co., Ltd., which has since been merged into
SECOM CO., LTD.
The Company’s operating, investing and financing activities in
the period under review resulted in net cash and cash equivalents
at end of year of ¥213.0 billion, an increase of ¥19.1 billion fromnet cash and cash equivalents at beginning of year, which were¥193.9 billion.

Depreciation andAmortization

Capital Expenditures

Cash Flows

60

60

150

48

48

36

36

24

24

12

12

(In billions of yen)

(In billions of yen)

(In billions of yen)

100
50
0

0

08 09 10 11 12

0

–50
–100

08 09 10 11 12

–150

10

11

12

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

36

SECOM Annual Report 2012

AUDITED FINANCIAL STATEMENTSCONTENTSCONSOLIDATED FINANCIAL STATEMENTS .................................................................. 38
CONSOLIDATED BALANCE SHEETS.......................................................................... 38
CONSOLIDATED STATEMENTS OF INCOME............................................................. 40
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY.......................................... 41
CONSOLIDATED STATEMENTS OF CASH FLOWS .................................................... 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.............................................. 43
INDEPENDENT AUDITOR’S REPORT............................................................................... 69

SECOM Annual Report 201237

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Consolidated Financial Statements

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETSSECOM CO., LTD. and Subsidiaries
March 31, 2012 and 2011

		In millions of yen

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

March 31

March 31

2011

2012

Current assets:
Cash and Cash equivalents (Notes 5 and 23)................................................................ ¥ 213,040 ¥ 193,942
Time deposits (Note 13)...............................................................................................
7,731
17,185
Cash deposits (Note 6).................................................................................................
54,01156,546
Short-term investments (Notes 7 and 23)......................................................................
17,294
6,393
Notes and accounts receivable, trade............................................................................
99,73886,511
Due from subscribers....................................................................................................
34,41635,886Inventories (Note 8)......................................................................................................
67,094
81,769
Short-term receivables (Notes 9, 13 and 21).................................................................
14,655
14,063
Allowance for doubtful accounts (Note 9)....................................................................
(1,335)(1,855)
Deferred insurance acquisition costs (Note 14)..............................................................
5,132
5,456
Deferred income taxes (Note 17)..................................................................................
12,853
15,438Other current assets.....................................................................................................
10,971
10,042
			Total current assets................................................................................................
535,600
521,376$ 2,598,049
94,280658,671
210,902
1,216,317
419,707818,220
178,720(16,280)
62,585
156,744
133,793
6,531,708

ASSETS

Investments and long-term receivables:
Investment securities (Notes 2 (7), 7, 13 and 23)...........................................................
Investments in affiliated companies (Note 10)...............................................................
Long-term receivables (Notes 9, 13 and 21)..................................................................
Lease deposits..............................................................................................................
Other investments........................................................................................................
Allowance for doubtful accounts (Note 9)....................................................................
			

140,014
39,73941,831
13,281
8,262(7,449)235,678

148,990
38,97842,672
13,636
9,842(7,858)
246,260

1,707,488
484,622510,134
161,963
100,756(90,841)2,874,122

Property, plant and equipment (Notes 11, 13, 20 and 21):Land.............................................................................................................................
Buildings and improvements.........................................................................................
Security equipment and control stations.......................................................................
Machinery, equipment and automobiles.......................................................................
Construction in progress..............................................................................................
			Accumulated depreciation............................................................................................
			103,127
193,245
273,645
87,1905,054
662,261(351,413)
310,848

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

1,257,646
2,356,646
3,337,134
1,063,293
61,634
8,076,353(4,285,524)
3,790,829

Other assets:
Deferred charges (Note 2 (12)).....................................................................................
43,127
Goodwill (Note 12).......................................................................................................
14,235
Other intangible assets (Notes 12 and 13)....................................................................
22,305Prepaid pension and severance costs (Note 15).............................................................
7,846
Deferred Income taxes (Note 17)..................................................................................
10,185
			
97,698
			Total assets............................................................................................................ ¥1,179,824

45,634
14,45022,5936,500
11,824
101,001¥1,171,152

525,939
173,598
272,012
95,683
124,207
1,191,439$14,388,098

See accompanying notes to consolidated financial statements.

38

2012

SECOM Annual Report 2012		In millions of yen

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

March 31

March 31

2011

2012

LIABILITIES AND EQUITY

2012

Current liabilities:
Bank loans (Notes 6 and 13)......................................................................................... ¥ 40,762 ¥ 47,698
Current portion of long-term debt (Notes 13, 20 and 22).............................................
22,053
11,918Notes and accounts payable, trade...............................................................................
33,163
27,882Other payables.............................................................................................................
29,121
24,348Deposits received (Note 6)............................................................................................
26,877
24,737
Deferred revenue.........................................................................................................
40,27140,899Accrued income taxes..................................................................................................
15,46820,358
Accrued payrolls...........................................................................................................
26,272
24,691Other current liabilities (Notes 17, 22, 23, and 24)........................................................
22,27420,065
			Total current liabilities............................................................................................
256,261
242,596
Long-term debt (Notes 13, 20 and 22).............................................................................
Guarantee deposits received ...........................................................................................
Accured pension and severance costs (Note 15)...............................................................
Deferred revenue.............................................................................................................
Unearned premiums and other insurance liabilities (Note 14)...........................................
Investment deposits by policyholders (Notes 14 and 22)...................................................
Deferred income taxes (Note 17)......................................................................................
Other liabilities (Notes 22, 23, and 24).............................................................................
			Total liabilities........................................................................................................

37,02336,337
21,421
17,32583,99830,755
9,115
9,956
502,191

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

497,098
268,939
404,427
355,134
327,768
491,110
188,634
320,390271,634
3,125,134
451,500
443,134
261,232
211,280
1,024,366
375,061
111,159
121,415
6,124,281

Commitments and contingent liabilities (Note 25)

Equity:SECOM CO.,LTD. shareholders’ equity (Note 18):
Common stock
		Authorized—900,000,000 shares		 issued 233,288,717 shares in 2012 and 2011.........................................................
66,37866,378Additional paid-in capital..............................................................................................
74,56175,555
Legal reserve................................................................................................................
10,175
10,104Retained earnings........................................................................................................
572,730
551,187
Accumulated other comprehensive income (loss):		 Unrealized gains on securities (Note 7)......................................................................
4,646
2,131
		 Unrealized losses on derivative instruments (Note 24)...............................................
—(6)
		 Pension liability adjustments (Note 15)......................................................................
(13,522)(11,909)
		 Foreign currency translation adjustments..................................................................
(28,453)(25,021)
			
(37,329)(34,805)
Common stock in treasury, at cost:
15,017,691 shares in 2012 and 15,258,553 shares in 2011.......................................
(73,660)(74,924)
			 Total SECOM CO., LTD. shareholders’ equity.........................................................
612,855
593,495
Noncontrolling interests...................................................................................................
64,77861,314
			Total equity...........................................................................................................
677,633
654,809
			 Total liabilities and equity...................................................................................... ¥1,179,824 ¥1,171,152

809,488909,280
124,085
6,984,512
56,659—(164,902)(346,988)(455,231)(898,293)
7,473,841
789,976
8,263,817$14,388,098

SECOM Annual Report 201239

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF INCOME
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2012
		In millions of yen

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

Years ended March 31

Year ended March 31

2012

2010

2012

Net sales and operating revenue (Notes 14 and 23)........................................... ¥772,482 ¥751,868 ¥670,644
Costs and expenses:
Cost of sales (Note 8).......................................................................................... 536,268 498,957 433,139
Selling, general and administrative expense (Notes 2 (18) and 19)....................... 146,663 147,667 137,720
Loss on settlement of pre-existing relationship (Note 2 (2))..................................
—
3,212
—
Impairment loss on long-lived assets (Note 11)....................................................
8,133
3
292
Impairment loss on goodwill (Note 12)................................................................
1,218
—
245
Loss on sales and disposal of fixed assets, net......................................................
1,374
1,597
2,070

$9,420,512
6,539,853
1,788,573—
99,183
14,854
16,756693,656

651,436

573,466

8,459,219

				Operating income.....................................................................................

78,826

100,432

97,178961,293

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

952
—
29
3,491
3,055

928
—
139
6,014
4,789

1,317
781
—
—
3,254

11,610—354
42,57337,256

7,527

11,8705,352

91,793

1,597
—
952
—
—
2,684

1,683
—
84
—
—
2,691

1,799
7
1,764
1,367
1,254
1,663

19,476—
11,610——32,732Other expenses:
Interest................................................................................................................
Loss on sales of securities, net (Note 7)................................................................
Loss on other-than-temporary impairment of investment securities (Note 23)......
Loss on private equity investments (Note 23).......................................................
Losses related to spectrum reallocation (Note 25)................................................
Other (Notes 16, 24 and 25)................................................................................

5,233

4,458

7,854

63,818				 Income from continuing operations before income taxes and				 equity in net income of affliated companies............................................

81,120107,844

94,676989,268

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

33,538
4,664

38,7654,512

38,7496,882

409,000
56,87838,202

43,27745,631

465,878				 Income from continuing operations before equity				 in net income of affiliated companies.....................................................
Equity in net income of affliated companies.....................................................

42,9184,880

64,567
5,028

49,0452,620

523,390
59,512				 Income from continuing operations..........................................................
Income from discontinued operations, net of tax (Note 26).............................

47,798—69,595—51,665
1,354

582,902—

				Net income...............................................................................................
Less: Net income attributable to noncontrolling interests...............................

47,798(6,561)

69,595(6,930)53,019(6,030)582,902(80,012)				 Net income attributable to SECOM CO., LTD............................................ ¥ 41,237 ¥ 62,665 ¥ 46,989$ 502,890

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

Years ended March 31

Year ended March 31

2012

2011

2010

2012

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

¥188.97 ¥287.41——
188.97287.41¥209.416.10
215.51

$2.30
—
2.30

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

¥ 90.00 ¥ 85.00¥ 85.00$1.10

See accompanying notes to consolidated financial statements.

40

2011

SECOM Annual Report 2012

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYSECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2012
In millions of yen										Accumulated					 Number of		
Additional			other com					shares Common
paid-in
Legal
Retainedprehensive
					issuedstock
capitalreserveearnings income (loss)

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

Total

Balance, March 31, 2009 .................................................... 233,288,717 ¥66,378 ¥79,995 ¥10,036¥482,488(¥35,280) (¥74,896)¥528,721
Comprehensive income:Net income.......................................................................
————
46,989——46,989Other comprehensive income (loss), net of tax (Note 18):
		 Unrealized holding gains on securities..........................
—
—
—
—
—
9,200
—
9,200
		 Unrealized gains on derivative instruments...................
—
—
—
—
—
169
—
169
		 Pension liability adjustments........................................
—
—
—
—
—
1,167
—
1,167
		 Foreign currency translation adjustments.....................
—
—
—
—
—
996
—
996
Total comprehensive income.............................................
							58,521
Cash dividends paid to SECOM CO., LTD. shareholders..........
————(18,533)——(18,533)
Cash dividends paid to noncontrolling interests......................
—
—
—
—
—
—
—
—
Transfer to legal reserve.........................................................
—
—
—
17
(17)
—
—
—
Equity transactions with noncontrolling interests and other(Note 18).............................................................................
—
—
1,101
—
—
—
—
1,101
Gains and losses on disposal of treasury stock........................
—
—
(0)
—
—
—
—
(0)
Net changes in treasury stock.................................................
—
—
—
—
—
—
(11)
(11)

¥61,069¥589,790

6,030

53,019

211
47
372
212
6,872
—
(1,759)
—

9,411
216
1,539
1,208
65,393(18,533)(1,759)—(1,517)
—
—

(416)
(0)
(11)

Balance, March 31, 2010 .................................................... 233,288,717
66,37881,096
10,053510,927(23,748)(74,907)569,799
Cumulative effect adjustments resulting from adoption ofa new accounting standard on variable interest entities,
net of tax (Note 2 (2))..........................................................
————(3,821)——(3,821)
Comprehensive income:Net income.......................................................................
————
62,665——62,665
Other comprehensive income (loss), net of tax (Note 18):
		 Unrealized holding losses on securities.........................
—
—
—
—
—
(3,472)—(3,472)
		 Unrealized gains on derivative instruments...................
—
—
—
—
—
12
—
12
		 Pension liability adjustments........................................
—
—
—
—
—
(972)
—
(972)
		 Foreign currency translation adjustments.....................
—
—
—
—
—
(6,399)—(6,399)Total comprehensive income.............................................
							51,834
Cash dividends paid to SECOM CO., LTD. shareholders..........
————(18,533)——(18,533)
Cash dividends paid to noncontrolling interests......................
—
—
—
—
—
—
—
—
Transfer to legal reserve.........................................................
—
—
—
51
(51)
—
—
—
Equity transactions with noncontrolling interests and other(Note 18).............................................................................
——(5,541)——(226)—(5,767)
Gains and losses on disposal of treasury stock........................
—
—
(0)
—
—
—
—
(0)
Net changes in treasury stock.................................................
—
—
—
—
—
—
(17)
(17)

64,665

634,464—(3,821)

6,930

69,595

(61)
5
(640)
(381)
5,853
—
(1,822)—(3,533)17(1,612)(6,780)57,687(18,533)(1,822)—(7,382)——(13,149)(0)(17)

Balance, March 31, 2011 .................................................... 233,288,717
66,37875,555
10,104551,187(34,805)(74,924)
593,495
Comprehensive income:Net income.......................................................................
————
41,237——
41,237
Other comprehensive income (loss), net of tax (Note 18):
		 Unrealized holding gains on securities..........................
—
—
—
—
—
2,515
—
2,515
		 Unrealized gains on derivative instruments...................
—
—
—
—
—
6
—
6
		 Pension liability adjustments........................................
—
—
—
—
—
(1,613)—(1,613)
		 Foreign currency translation adjustments.....................
—
—
—
—
—
(3,432)—(3,432)
Total comprehensive income.............................................
							38,713
Cash dividends paid to SECOM CO., LTD. shareholders..........
————(19,623)——(19,623)
Cash dividends paid to noncontrolling interests......................
—
—
—
—
—
—
—
—
Transfer to legal reserve.........................................................
—
—
—
71
(71)
—
—
—
Equity transactions with noncontrolling interests and other(Note 18).............................................................................
—
—
(642)
—
—
—
—
(642)
Gains and losses on disposal of treasury stock........................
—
—
(352)
—
—
—
—
(352)
Net changes in treasury stock (Note 18).................................
—
—
—
—
—
—
1,264
1,264

61,314

654,809

6,561

47,798

(29)
2
(340)
(264)
5,930
—
(1,851)—

2,486
8(1,953)(3,696)44,643(19,623)(1,851)
—

(615)
—
—

(1,257)
(352)
1,264

Balance, March 31, 2012 .................................................... 233,288,717¥64,778¥677,633¥66,378¥74,561¥10,175¥572,730(¥37,329) (¥73,660)¥612,855

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

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

Total

Balance, March 31, 2011........................................................................... $809,488 $921,402 $123,220 $6,721,793($424,451) ($913,707)$7,237,745
Comprehensive income:Net income.............................................................................................
———
502,890——502,890
Other comprehensive income (loss), net of tax (Note 18):
		 Unrealized holding gains on securities................................................
————
30,672—30,672
		 Unrealized gains on derivative instruments.........................................
—
—
—
—
73
—
73
		 Pension liability adjustments..............................................................
————(19,671)—(19,671)		 Foreign currency translation adjustments...........................................
————(41,854)—(41,854)
Total comprehensive income................................................................... 							472,110
Cash dividends paid to SECOM CO., LTD. shareholders................................
———(239,306)——(239,306)
Cash dividends paid to noncontrolling interests............................................
—
—
—
—
—
—
—
Transfer to legal reserve...............................................................................
—
—
865
(865)
—
—
—
Equity transactions with noncontrolling interests and other (Note 18)..........
—(7,829)————(7,829)Gains and losses on disposal of treasury stock..............................................
—(4,293)————(4,293)
Net changes in treasury stock (Note 18).......................................................
—
—
—
—
—
15,414
15,414$747,732 $7,985,477

Balance, March 31, 2012 .......................................................................... $809,488 $909,280 $124,085 $6,984,512$789,976 $8,263,817($455,231) ($898,293)$7,473,841

80,012582,902(354)
24(4,146)(3,220)72,316—(22,573)—(7,499)——30,31897(23,817)(45,074)
544,426(239,306)(22,573)—(15,328)(4,293)
15,414

See accompanying notes to consolidated financial statements.

SECOM Annual Report 201241

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF CASH FLOWSSECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2012
		In millions of yen

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

Years ended March 31

Year ended March 31

2012

2011

2010

Cash flows from operating activities:
Net income ........................................................................................................................... ¥ 47,798 ¥ 69,595 ¥ 53,019
Adjustments to reconcile net income to net cash provided by operating activities—
		 Depreciation and amortization, including amortization of deferred charges
58,11756,951
55,130		 (Notes 2 (11), 2 (12) and 12)............................................................................................
(3,268)(2,687)(3,723)
		 Accrual for pension and severance costs, less payments.....................................................
4,664
4,512
6,885
		 Deferred income taxes,including discontinued operations..................................................
1,374
1,597
2,070
		Loss on sales and disposal of fixed assets, net....................................................................
8,133
3
292
		Impairment loss on long-lived assets (Note 11)...................................................................
20,7231,482
1,285
		Write-down on real estate inventories (Note 8)..................................................................
(3,491)(6,014)
1,367
		(Gain) loss on private equity investments (Note 23)............................................................
—
—
(781)
		Reversal of reserve for litigation loss (Note 25)...................................................................
1,218
—
245
		Impairment loss on goodwill (Note 12)...............................................................................
(1,240)(1,658)(1,302)
		Gain on sales of securities, net (Notes 7,10 and 14)...........................................................
1,835
765
6,321
		Loss on other-than-temporary impairment of investment securities (Notes 14 and 23)........
(4,880)(5,028)(2,620)		Equity in net income of affiliated companies......................................................................
—
—
(777)
		Gain on sales of discontinued operations (Note 26)............................................................
—
3,212
—
		Loss on settlement of pre-existing relationship (Note 2 (2)).................................................
(799)(1,770)—		Payments for legal settlement (Note 25).............................................................................
				Changes in assets and liabilities, net of effects from acquisitions and disposals:..................
2,535(7,685)7,806
			(Increase) decrease in cash deposits...............................................................................
(12,306)(6,861)3,845
			(Increase) decrease in receivables and due from subscribers, net of allowances...............
(3,940)14,564(3,386)
			(Increase) decrease in inventories...................................................................................
(15,652)(15,097) (14,502)
			Increase in deferred charges..........................................................................................
10,030(182)(3,059)
			Increase (decrease) in notes and accounts payable.........................................................
2,123(4,236)(5,133)
			Increase (decrease) in deposits received..........................................................................
(1,332)(5,419)255
			Increase (decrease) in deferred revenue..........................................................................
(4,880)(1,231)
2,021
			Increase (decrease) in accrued income taxes...................................................................
161
1,367
2,541
			Increase in guarantee deposits received.........................................................................
383
9,148
5,598
			Increase in unearned premiums and other insurance liabilities........................................
4,906
7,297
3,292
			Other, net......................................................................................................................
112,625 116,689				 Net cash provided by operating activities................................................................... 112,212
Cash flows from investing activities:
9,230(9,665)
1,413(Increase) decrease in time deposits........................................................................................
179
780
1,765
Proceeds from sales of property, plant and equipment...........................................................
(53,496)(41,726) (38,283)
Payments for purchases of property, plant and equipment.....................................................
(5,887)(4,829)(7,231)
Payments for purchases of intangible assets...........................................................................
73,69337,18744,857
Proceeds from sales and redemptions of investment securities (Note 7)..................................
(66,283)(32,163) (24,585)
Payments for purchases of investment securities....................................................................
(4,357)(1,854)
3,776(Increase) decrease in short-term investments.........................................................................
—
—
5,185
Proceeds from sales in discontinued operations......................................................................
(1,275)(1,809)996
Acquisitions, net of cash acquired (Note 4).............................................................................
—
5,055
—
Proceeds from sales in investments in affiliated companies (Note 10).....................................
(1,680)164
250(Increase) decrease in short-term receivables ,net...................................................................
(1,741)(402)(5,014)
Payments for long-term receivables........................................................................................
4,322
1,965
6,043
Proceeds from long-term receivables......................................................................................
2,319
421
226
Other, net..............................................................................................................................
(44,976)(46,876) (10,602)
				Net cash used in investing activities...........................................................................
Cash flows from financing activities:
3,875
11,277
6,885
Proceeds from long-term debt...............................................................................................
(11,660)(11,597) (12,951)
Repayments of long-term debt..............................................................................................
(6,935)(312) (35,156)
Decrease in bank loans ,net...................................................................................................
(10,888)(20,583) (23,838)
Decrease in investment deposits by policyholders...................................................................
(19,623)(18,533) (18,533)
Dividends paid to SECOM CO., LTD. shareholders..................................................................
(1,851)(1,822)(1,759)Dividends paid to noncontrolling interests..............................................................................
Payments for acquisition of shares of consolidated subsidiaries from noncontrolling(466)(13,703)(399)
interest holders....................................................................................................................
(292)
(17)
(11)
Increase in treasury stock, net................................................................................................
124—
75
Other, net..............................................................................................................................
(47,716)(55,290) (85,687)
				Net cash used in financing activities...........................................................................
Cumulative effect adjustments resulting from adoption of a new accounting
—
3,905
—
standard on variable interest entities (Note 2 (2))...............................................................
(422)
(566)
351
Effect of exchange rate changes on cash and cash equivalents.........................................
19,098
13,79820,751
Net increase in cash and cash equivalents............................................................................
180,144 159,393
Cash and cash equivalents at beginning of year.................................................................. 193,942
Cash and cash equivalents at end of year............................................................................ ¥213,040 ¥193,942 ¥180,144
See accompanying notes to consolidated financial statements.

42

SECOM Annual Report 20122012

$ 582,902
708,744(39,854)
56,87816,75699,183
252,720(42,573)—
14,854(15,122)
22,378(59,512)——(9,744)30,915(150,073)(48,049)(190,878)
122,31725,890(16,244)(59,512)
1,963
4,671
59,8291,368,439
112,5612,183(652,390)(71,793)
898,695(808,329)(53,134)—(15,549)—(20,488)(21,232)
52,70728,281(548,488)
47,256(142,195)(84,573)(132,780)(239,306)(22,573)(5,683)(3,561)
1,513(581,902)—(5,146)
232,9032,365,146$2,598,049

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SECOM CO., LTD. and Subsidiaries
Three years ended March 31, 2012

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

In December 2009, the Financial Accounting Standards Board(“FASB”) issued Accounting Standards Update (“ASU”) No. 200917, “Improvements to Financial Reporting by Enterprises Involved
with Variable Interest Entities,” which amends the AccountingStandards Codification (“ASC”) 810, “Consolidation.” Thisaccounting standard requires the reporting entity to consolidate avariable interest entity (“VIE”) as its primary beneficiary when it isdeemed to have a controlling financial interest in a VIE, meeting
both of the following characteristics:• The power to direct activities of a VIE that most significantly
impact the VIE’s economic performance.
• The obligation to absorb losses of the VIE that could potentiallybe significant to the VIE or the right to receive benefits fromthe VIE that could potentially be significant to the VIE.
This accounting standard is effective for fiscal years beginning
after November 15, 2009 and was adopted by the Company inthe fiscal year ended March 31, 2011. Due to the adoption of thisaccounting standard, certain organizations managing hospitals andhealth care-related institutions that were not consolidated prior to
March 31, 2010 were included in the scope of consolidation as ofApril 1, 2010. As a result, assets of ¥22,907 million and liabilities of¥26,728 million, after elimination of intercompany balances, were
included in the consolidated balance sheet at April 1, 2010. The
cumulative effect adjustments resulting from the adoption of thisaccounting standard decreased the beginning retained earnings forthe year ended March 31, 2011 by ¥3,821 million, net of tax. In
addition, the Company recognized ¥3,212 million as a loss on settlement of pre-existing relationship in the medical services segment,
related to the settlement of a lease contract between the Company
and an entity newly included in the scope of c­ onsolidation according
to the adoption of this accounting standard.
The Company provides investments, loans and guarantees to­organizations managing hospitals and health care-related institutions, to a company holding real estate, and to a PFI (Private FinanceInitiative) organization which was established to build, maintain andoperate correctional facilities. Certain 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 ¥64,469 million ($786,207 thousand)and ¥71,268 million ($869,122 thousand), respectively, at March
31, 2012, and ¥67,860 million and ¥77,277 million, respectively, atMarch 31, 2011. Total assets and liabilities held by VIEs of which
the Company holds ­significant variable interests but is not the primary beneficiary were ¥33,735 million ($411,402 thousand) and¥34,908 million ($425,707 thousand), respectively, at March 31,
2012, and ¥31,642 million and ¥32,574 million, respectively, atMarch 31, 2011. The Company’s assets in the consolidated balance
sheets and the Company’s maximum exposure to losses related to
VIEs at March 31, 2012 and 2011 were ¥4,621 million ($56,354
thousand) and ¥4,568 million, ­respectively.
(3) Revenue Recognition
The Company generates revenue principally through sales of
security services, merchandise and software, and insurance services
under separate contractual arrangements. The Company recognizes
revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, title and risk ofloss have been transferred to the customer, the sales price is fixed
or determinable, and collectibility is probable.

SECOM Annual Report 201243

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Consolidated Financial Statements

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

44

SECOM Annual Report 2012

(5) Cash Equivalents
For the purpose of the consolidated statements of cash flows, theCompany considers all highly liquid investments purchased withinitial ­maturities of three months or less to be cash equivalents.
(6) Investments in Debt and Equity Securities
The Company classifies investments in debt and equity securities
as “available-for-sale” or “held-to-maturity.” The Company has no
securities classified as “trading.” “Held-to-maturity” securities arethose securities in which the Company has the ability and intent tohold the security until maturity. All securities not included in­“trading” or “held-to-maturity” are classified as “available-for-sale”
securities. Market­able debt and equity securities which are classified
as “available-for-sale” are recorded at fair value. Unrealized holding
gains and losses on securities classified as “available-for-sale” arereported as part of other comprehensive income (loss), net of tax.
Debt securities classified as “held-to-maturity” are reported at­amortized cost.
A decline in the fair value of any available-for-sale ­securities
below cost that is deemed to be other-than-­temporary results in a
reduction in carrying amount to fair value. The impairment ischarged to income and a new cost basis for the securities is established. To determine whether an impairment is other-than-­temporary, the Company considers the length of time and extent towhich the market value of the security has been less than its original cost, the financial condition, other specific factors affecting themarket value, deterioration of the credit condition of the issuers,
and whether or not the Company is able to retain the investment
for a period of time sufficient to allow for the ­anticipated recovery
in market value.
Other investments in non-public companies are recorded at cost
as fair value is not readily determinable. The Company periodicallyevaluates the values of other investments in ­non-public companies
for possible impairment by taking into consideration the financial
and operating conditions of the issuer, the general market conditions in the issuer’s industry and the period of the decline in theestimated fair value and other relevant factors. If the impairment isdetermined to be other-than-temporary, other investments in
non-public companies are written down to their impaired value
through a charge to income.
Realized gains or losses on the sale of investments are based on
the moving-average cost method and are credited or charged toincome.
(7) Private Equity Investments
The Company accounts for private equity investments in accordance with ASC 946, “Financial Services—Investment Companies,”in which investments are accounted for at fair value based on the
Company’s assessment of each underlying investment. The investments, by their nature, have little or no price transparency.
Investments are initially carried at cost as an approximation of fairvalue. Adjustments to carrying value are made if there is evidenceof a change in fair value. Downward adjustments are also made, in
the absence of third-party transactions, if it is determined that the
expected realizable value of the ­investment has declined below thecarrying value.
The carrying value of private equity investments was ¥26,149
million ($318,890 thousand) and ¥25,980 million at March 31,
2012 and 2011, respectively.
Private equity investments are included in investment securities in
the consolidated balance sheets.

(8) Inventories
Inventories, consisting of security-related products, fire
­protection-related products, real estate and information and otherrelated products, are stated at the lower of cost or market. Cost isdetermined, in the case of real estate, based on the specific identification method and, in the case of other inventories, primarily using
the ­moving-­average method.
(9) Allowance for Doubtful Accounts
The Company recognizes an allowance for doubtful accounts toensure trade, 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 o­ bligations, 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 r­ ecoverability 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 c­ ontracts
issued to applicable unearned ­premiums throughout the period of
the contract.
(11) Property, Plant and Equipment and Depreciation
Property, plant and equipment, including significant l­easehold
improvements, are carried at cost and depreciated at rates based on
the estimated useful lives of the assets. Depreciation is computed
using the straight-line method for assets other than security equipment and control stations. Security equipment and control stations
are depreciated by using the declining-balance method. Assets
leased to others under operating leases are depreciated using thestraight-line method over the estimated useful lives. Depreciation
expense was ¥37,120 million ($452,683 thousand), ¥35,634 mil­lionand ¥34,033 million for the years ended March 31, 2012, 2011 and2010, respectively. Maintenance, repairs and renewals are charged
to income as incurred.
The estimated useful lives of depreciable assets are as f­ ollows:		 Buildings
22 to 50 years
		 Security equipment and control stations
5 to 8 years
		 Machinery, equipment and automobiles
2 to 20 years(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 ¥14,877 million ($181,427 thousand), ¥15,081 million and¥15,312 million for the years ended March 31, 2012, 2011 and2010, respectively.
(13) Impairment or Disposal of Long-Lived Assets
In accordance with ASC 360, “Property, Plant and Equipment,”
the Company reviews the carrying amount of its long-lived assets
held and used, other than goodwill and intangible assets withindefinite lives, and assets to be disposed of, whenever events orchanges in circumstances ­indicated that the carrying amount may
not be recoverable. Long-lived assets to be held and used arereviewed for impairment by comparing the carrying amount of theassets with their estimated future undiscounted cash flows. If it isdetermined that an impairment loss has occurred, the loss would berecognized during the period, and calculated as the difference
between the assets’ carrying amount and the fair value. Long-lived
assets that are to be disposed of other than by sale are considered
held and used until they are disposed of. Long-lived assets that are
to be disposed of by sale are reported at the lower of their ­carrying
amount or fair value less cost to sell. Reductions in the carrying
amount are ­recognized in the period in which the long-lived assets
are classified as held for sale.
(14) Goodwill and Other Intangible Assets
Goodwill represents the excess of costs over the fair value of
assets of business acquired. Pursuant to ASC 350, “Intangibles—
Goodwill and Other,” goodwill and ­intangible assets acquired in apurchase business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment
at least annually. This accounting standard also requires that intangible assets with estimable ­useful lives be amortized over theirrespective estimated useful lives to their estimated residual ­values,
and reviewed for impairment in accordance with ASC 360. The
Company conducts its annual impairment test at the end of eachfiscal year.
(15) Unearned Premiums and Other Insurance Liabilities
Unearned premiums are related to unexpired periods of insurance
contracts and are earned on a pro-rata basis over the remaining
contract period. Other insurance liabilities consist principally of liabilities for unpaid claims and adjustment expenses, which are estimates of payments to be made on reported claims and incurred but
not reported claims, which are computed based on past ­experience
for unpaid losses.

The Company recognizes an asset retirement liability if the fairvalue of the obligation can be reasonably estimated. Asset retirement obligations include those for which an entity has a legal obligation to perform an asset retirement activity, however, the timing
and/or method of settling the obligation are conditional on a future
event that may or may not be within the control of the entity.

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Financial Review

Financial Section

Consolidated Financial Statements(16) Income Taxes
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between thefinancial statement carrying amounts of existing assets and liabilities
and their respective tax bases, and operating loss carryforwards.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in whichthose temporary differences and carryforwards are expected to berealized or settled. The effect on deferred tax assets and liabilities ofa change in tax rates is recognized in income in the period that
includes the enactment date. Valuation allowances are recorded toreduce deferred tax assets when it is more likely than not that a tax
benefit will not be realized.
The Company recognizes in the consolidated financial statements
the impact of a tax position, if any, based on the technical meritsof the position, when that position is more likely than not to besustained upon examination. The benefit of the tax position ismeasured at the largest amount of benefit that is greater than
50 percent likely of being realized upon settlement with the­appropriate tax authority.
The Company recognizes interest and penalties accrued related
to unrecognized tax benefits in income taxes in the consolidated
statements of income.
(17) Research and Development
Research and development costs are charged to income
as incurred.
(18) Advertising Costs
Advertising costs are charged to income as incurred, except forthe costs related to insurance policies. Advertising costs for acquiring new insurance policies are deferred and amortized as part of
insurance acquisition costs. Advertising expenses included in selling,
general and administrative expenses for the years ended March 31,
2012, 2011 and 2010 were ¥3,541 million ($43,183 thousand),¥4,034 million and ¥4,665 million, respectively.
(19) Derivative Financial Instruments
The Company accounts for derivative financial instruments inaccordance with ASC 815, “Derivatives and Hedging.”
The Company recognizes all derivative financial instruments inthe consolidated financial statements at fair value regardless of the
purpose or intent for holding them. Changes in the fair value ofderivative financial instruments are either recognized periodically inincome or in equity as a component of other comprehensive
income (loss) depending on whether the derivative financial instruments qualify for hedge accounting, and if so, whether they qualify
as a fair value hedge or a cash flow hedge. Changes in the fair values of derivative financial instruments accounted for as a fair value
hedge are recorded in income along with the portion of the change
in the fair value of the hedged item that relates to the hedged risk.
Changes in the fair value of derivative financial instruments
accounted for as a cash flow hedge, to the extent it is effective as ahedge, are recorded in other comprehensive income (loss), net oftax. Changes in the fair value of derivative financial instruments not
qualifying as a hedge are reported in income.
The Company meets the documentation requirements necessaryfor effective hedges which include their risk management objective and strategy for undertaking various hedge transactions. In
addition, formal assessment is made at inception of the hedge andperiodically on an on-going basis, as to whether the derivatives

46

SECOM Annual Report 2012used in hedging activities are highly effective in off-setting changes
in fair values or cash flow of hedged items. Hedge accounting is
discontinued for ineffective hedges, if any. Discontinued hedges arerecognized in income.
(20) Per Share Data
Basic Earnings per Share (“EPS”) is computed based on the average number of shares of common stock outstanding for the period.
The average number of shares of common stock outstanding forthe years ended March 31, 2012, 2011 and 2010 was 218,217
thousand shares, 218,032 thousand shares and 218,035 thousand
shares, respectively. There were no potentially dilutive shares outstanding during the years ended March 31, 2012, 2011 or 2010.
Cash dividends per share shown in the accompanying consolidated statements of income are computed based on dividends
approved and paid in each fiscal year.
(21) Use of Estimates
The preparation of the consolidated financial statements requires
management of the Company to make a number of estimates andassumptions relating to the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts ofrevenues and expenses during the period. Actual results could differ
from those estimates. Significant items subject to such estimatesand assumptions include the carrying amounts of inventories,
deferred insurance acquisition costs, investment securities, otherinvestments, property, plant and equipment, goodwill, other intangible assets, and unearned premiums and other insurance liabilities;
valuation of receivables; valuation allowances for deferred income
taxes; valuation of derivative instruments; assets and obligations
related to employee benefits; income tax uncertainties; and othercontingencies.
(22) Recent Pronouncements
In September 2009, the FASB issued ASU No. 2009-13,­“Multiple-Deliverable Revenue Arrangements, a Consensus of
the FASB Emerging Issues Task Force.” This accounting standard
addresses the accounting for multiple-deliverable arrangements toenable the vender to account for products or services separately
rather than as a combined unit, and also addresses how to separate
deliverables and how to measure and allocate arrangement
consideration to one or more units of accounting. This accounting
standard is effective prospectively for revenue arrangements
entered into or materially modified in fiscal years beginning on orafter June 15, 2010, and was adopted by the Company in the fiscal
year ended March 31, 2012. The adoption of this accounting standard did not have a material impact on the Company’s consolidated
results of operations and financial position.
In October 2009, the FASB issued ASU No. 2009-14, “Certain
Revenue Arrangements That Include Software Elements, aConsensus of the FASB Emerging Issues Task Force.” Thisaccounting standard modifies the scope of the software revenue
recognition guidance and excludes tangible products containing
software components and nonsoftware components that function
together to deliver the tangible product’s essential functionality
from the scope. This accounting standard is effective for fiscal years
beginning on or after June 15, 2010, and was adopted by theCompany in the fiscal year ended March 31, 2012. The adoptionof this accounting standard did not have a material impact on the
Company’s consolidated results of operations and financial position.

In October 2010, the FASB issued ASU No. 2010-26,“Accounting for Costs Associated with Acquiring or Renewing
Insurance Contracts, a Consensus of the FASB Emerging Issues Task
Force.” This accounting standard redefines the definition of acquisition costs qualifying for deferral to be costs that are related directly
to the successful acquisition of new or renewal insurance contracts.
This accounting standard is effective for fiscal years beginning
after December 15, 2011, and will be adopted by the Company inthe fiscal year beginning April 1, 2012. The Company is currently
evaluating the effect of adopting this accounting standard on its
consolidated financial statements.
In April 2011, the FASB issued ASU No. 2011-02, “A Creditor’s
Determination of Whether a Restructuring Is a Troubled Debt
Restructuring.” This accounting standard provides the criteria
as to whether a loan modification constitutes a troubled debt
restructuring and requires additional disclosures about troubled
debt restructurings. This accounting standard is effective for fiscal
years beginning on or after June 15, 2011, and will be adopted by
the Company in the fiscal year beginning April 1, 2012. It is not
anticipated that the adoption will have a material impact on the
Company’s consolidated results of operations or financial position.
In May 2011, the FASB issued ASU No. 2011-04, “Amendments
to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRSs.” This accounting standard
amends current U.S. GAAP to create more commonality with IFRSs
by changing the wording used to describe requirements in U.S.
GAAP for measuring fair value and for disclosing information about
fair value measurements. This accounting standard is effective
for fiscal years beginning after December 15, 2011, and will be
adopted by the Company in the fiscal year beginning April 1, 2012.
It is not anticipated that the adoption will have a material impact
on the Company’s consolidated results of operations or financial
position.
In June 2011, the FASB issued ASU No. 2011-05, “Presentationof Comprehensive Income.” In presenting other comprehensive
income and its components in financial statement, this accounting
standard eliminates the current option to present the components
of other comprehensive income as part of the statement of changes
in equity. This accounting standard also requires reclassifications
between other comprehensive income and net income to bedisclosed on the face of financial statements. Furthermore, in
December 2011, the FASB issued ASU No. 2011-12, “Deferralof the Effective Date for Amendments to the Presentation of
Reclassifications of Items Out of Accumulated Other Comprehensive
Income in Accounting Standards Update No. 2011-05.” These
accounting standards are effective for fiscal years beginning after
December 15, 2011, and will be adopted by the Company in thefiscal year beginning April 1, 2012. As these accounting standards
are a provision for presentation, the adoption will not have impact
on the Company’s consolidated results of operations or financial
position.
In September 2011, the FASB issued ASU No. 2011-08, “Testing
Goodwill for Impairment.” This accounting standard permit anentity to first assess qualitative factors to determine whether it ismore likely than not that the fair value of a reporting unit is lessthan its carrying amount as a basis for determining whether it isnecessary to perform the two-step goodwill impairment test. An
entity is not required to calculate the fair value of a reporting unit
unless the entity determines that it is more likely than not that its
fair value is less than its carrying amount. This accounting standard

is effective for fiscal years beginning after December 15, 2011,
and will be adopted by the Company in the fiscal year beginning
April 1, 2012. It is not anticipated that the adoption will havea material impact on the Company’s consolidated results of­operations or financial position.
In December 2011, the FASB issued ASU No. 2011-11,“Disclosures about Offsetting Assets and Liabilities.” This accounting standard requires entities to disclose both gross information andnet information about both instruments and transactions eligible
for offset in the statement of financial position and instruments andtransactions subject to an agreement similar to a master netting
arrangement. This accounting standard is effective for fiscal years
beginning on or after January 1, 2013, and will be adopted by
the Company in the fiscal year beginning April 1, 2013. As thisaccounting standard is a provision for disclosure, the adoption
will not have impact on the Company’s consolidated results of­operations or financial position.
(23) Reclassifications
The accompanying consolidated financial statements for the years
ended March 31, 2011 and 2010 have been ­reclassified to conformto the presentation used for the year ended March 31, 2012.
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 ¥82=US$1, therate ­prevailing on the Tokyo Foreign Exchange Market on March 31,
2012. These ­translations should not be construed as representingthat the yen amounts actually represent, or have been or could be
converted into U.S. dollars at that rate.
4. Acquisitions
In July 2009, the Company acquired all outstanding shares of
MAC International Co., Ltd. by foreclosing on the Company’s longterm receivables of ¥3,733 million and other short-term receivablesof ¥1,000 million due from MAC International Co., Ltd. The
following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition. Shortterm borrowing of ¥5,684 million and long-term debt of ¥868
million from domestic subsidiaries were eliminated in consolidation.
In millions of yen

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

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

In February 2010, MAC International Co., Ltd. was merged into
Secom Medical System Co., Ltd., a subsidiary of the Company.
The pro-forma results related to this acquisition are not disclosed
because the impact on the consolidated financial statements is
not material.

SECOM Annual Report 201247

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Special Feature

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Financial Review

Financial Section

Consolidated Financial Statements

5. Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2012 and 2011 werecomprised of the following:

In millions of yen
March 31, 2011
Gross unrealizedCost
		In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

2011

2012

¥145,450 ¥120,371
36,94841,42728,00029,5002,642
2,644¥213,040 ¥193,942$1,773,781
450,585
341,463
32,220$2,598,049

2012

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

Investment securities include negotiable certificates of deposit
and money management funds. These agreements mature within
three months and their carrying values approximate f­ air value. The
Company has not experienced any losses through default of thefinancial institutions and does not ­anticipate default of any­outstanding agreements.
6. Cash Deposits
The Company operates cash collection and deposit services forfinancial institutions relating to cash dispensers located outside offinancial institution facilities and also operates cash collection­service for entities other than financial institutions. Cash deposit
balances of ¥54,011 million ($658,671 thousand) and ¥56,546­million at March 31, 2012 and 2011, respectively, are segregatedfrom cash and cash equivalents and are restricted as to use by theCompany. The Company funds most of the cash for such operations through bank overdrafts and deposits. Bank loans and deposits received, which relate to these operations, were ¥27,659 million($337,305 thousand) and ¥21,921 million ($267,329 thousand),
respectively, at March 31, 2012, and ¥29,387 million and ¥20,659
million, respectively, at March 31, 2011. As part of its fee arrangement, the Company is reimbursed for the interest cost of therelated overdrafts.
7. Short-Term Investments and Investment Securities
Short-term investments (current) and investment securities(noncurrent) include debt and equity securities. The related aggregate fair value, gross unrealized gains, gross unrealized losses andcost pertaining to “available-for-sale” and “held-to-maturity”
investments at March 31, 2012 and 2011 were as ­follows:
In millions of yen
March 31, 2012
Gross unrealized
Cost

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

48

Gains

¥17,245¥17,245¥¥¥28,606
60,406
7,461¥96,473

SECOM Annual Report 201252
52

Losses¥¥Fair value

33¥ 17,294¥ 17,294¥6,015
1,749

¥ 87
41

¥ 34,534
62,11455¥7,819

4
¥132

7,512
¥104,160

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

Gains

LossesFair value

6,358

¥

27

¥

2

¥

6,383

10
6,368

¥

0
27

¥

—
2

¥

10
6,393

Investment securities:
Available-for-sale:		Equity securities............ ¥ 29,930
		Debt securities..............
71,170
Held-to-maturity:
		Debt securities..............
7,473
		
¥108,573¥4,4602,289¥2,059660¥ 32,331
72,79920¥6,76949¥2,7687,444¥112,574

In thousands of U.S. dollars
March 31, 2012
Gross unrealized
Cost

Gains

Short-term investments:
Available-for-sale:		Debt securities............. $ 210,305 $		$ 210,305 $

634
634

Investment securities:
Available-for-sale:		Equity securities........... $ 348,853 $73,354
		Debt securities.............
736,659 21,329
Held-to-maturity:
		Debt securities.............
90,988671
		
$1,176,500 $95,354

Losses$$Fair value

37 $ 210,902
37 $ 210,902$1,061 $ 421,146
500
757,48849
91,610$1,610 $1,270,244

Gross unrealized losses on, and fair value of, “available-for-sale”
and “held-to-maturity” securities, aggregated by invest­ment­category and the length of time that individual securities have been
in a continuous unrealized loss position, at March 31, 2012 wereas follows:		

In millions of yen

		March 31, 2012
Less than 12 months

12 months or longer

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

¥ 729
18,220¥18,949

¥ 87
44
¥131

¥—
—
¥—

¥—
—
¥—

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

¥

¥

¥—

¥—

49

4

In thousands of U.S. dollars
March 31, 2012
Less than 12 months

12 months or longer

		 Gross		Gross		 unrealized		unrealized
Fair value
lossesFair value
lossesProceeds from the sale of “available-for-sale” securities for theyears ended March 31, 2012, 2011 and 2010 were ¥72,223 million($880,768 thousand), ¥17,187 million and ¥31,328 million, respectively. On those sales, the gross r­ ealized gains and gross realized
losses, using moving-­average cost basis, for the years ended March
31, 2012, 2011 and 2010 were as follows:

Available-for-sale:
Equity securities............ $ 8,890
Debt securities.............. 222,195		
$231,085$1,061537$1,598

$—
—
$—

$—
—
$—

		
In thousands of

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

$

$—

$—

2012

2011

2010

2012

Gross realized gains............ ¥1,950
Gross realized losses...........
662¥2,916752¥1,499383$23,780
8,073

598

49

Based on the Company’s ability and intent to hold the investment
for a reasonable period of time sufficient for a recovery of fairvalue, the credit condition of the issuers and other relevant factors,
the Company does not consider these investments to be otherthan-temporarily impaired at March 31, 2012.
At March 31, 2012, debt securities principally consisted of shortterm investments in monetary trusts, Japanese ­govern­ment bonds,
corporate bonds, U.S. treasury securities and U.S. Government
Agency Bonds.
The cost and fair value of “available-for-sale” and ”held-to-­maturity” debt securities by contractual maturity at March 31, 2012
are as follows:

Available-for-sale
Cost

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

		In thousands ofFair value¥17,294

23,941

24,686——27,896
8,569¥77,651

28,446
8,982¥79,408

1,499
5,962
¥7,461

1,511
6,001¥7,512—¥—In thousands of U.S. dollars
March 31, 2012
Available-for-sale
Fair value

Due within 1 year............ $210,305
Due after 1 year
through 5 years............. 291,964
Due after 5 years
through 10 years........... 340,195
Due after 10 years .......... 104,500
		.................................. $946,964$210,902
301,049
346,902109,537$968,390

Held-to-maturity
Cost$

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 ¥9,756 million ($118,976
thousand) and ¥10,407 million at March 31, 2012 and 2011,
respectively. The corresponding fair value at that date was not­computed as such estimation was not practical.

March 31, 2012¥17,245

Cost

Year ended
March 31

In millions of yen

Cost

¥

U.S. dollars

Years ended
March 31

8. Inventories
Inventories at March 31, 2012 and 2011 were comprised of the­following:

Held-to-maturity

Fair value

In millions of yen

Fair value

— $

—

—

—

18,280 18,427
72,708 73,183$90,988 $91,610

In millions of yen

U.S. dollars

March 31

March 31

		
2012
2011
2012

Security-related products................... ¥ 7,473 ¥ 5,596
Fire protection-related products......... 11,942 10,518
Real estate......................................... 42,359 59,913
Information and other-related
products..........................................
5,320
5,742
			 .............................................. ¥67,094 ¥81,769$ 91,134
145,634
516,573
64,879$818,220

Work in process for real estate inventories at March 31, 2012 and2011, amounting to ¥33,277 million ($405,817 thousand) and¥48,432 million, respectively, are included in real estate.
Costs on uncompleted construction contracts at March 31, 2012
and 2011, amounting to ¥5,872 million ($71,610 thousand) and¥4,468 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, 2012, 2011 and 2010
were ¥20,723 million ($252,720 thousand), ¥1,482 million and¥1,285 million, respectively.

During the years ended March 31, 2012, 2011 and 2010, the net­ nrealized gains and losses on “available-for-sale” securitiesu
included as part of other comprehensive income (loss), net of tax,
increased by ¥2,515 million ($30,672 thousand), decreased by¥3,472 million and increased by ¥9,200 million, respectively.

SECOM Annual Report 201249

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Consolidated Financial Statements

9. Credit Quality of Financing Receivables and Allowance for
Doubtful Accounts
The Company has financing receivables and classifies them into
five categories; “lease receivable,” “loans receivable resulting frommedical services,” “loans receivable resulting from insurance services,” “other loans receivable” and “other.” Financing receivables
classified as “lease receivable” are resulting from lease transactions of
security equipment and real estate for office and medical institutions.
The Company continuously monitors overdue financing receivables, which the Company considers as uncollectible risk receivables. For financing receivables with specific customer collection
issues, the Company individually evaluates their collectability inorder to determine the amount of allowance for doubtful accounts.
For other financing receivables, the Company categorizes thesereceivables into groups by their nature and characteristics. The
Company collectively evaluates the collectability by each group,
using its historical experience of write-off and determines theamount of allowance for doubtful accounts.
Financing receivables and allowance for doubtful accounts at
March 31, 2012 and 2011 are as follows:

Other

Total

41

¥2,629 ¥ 874 ¥2,957 ¥1,180 ¥ 7,681

386
427

—
149
70
—
605
¥2,629 ¥1,023 ¥3,027 ¥1,180 ¥ 8,286

Financing receivables:
Individually
evaluated............... ¥44 ¥12,326 ¥1,417 ¥3,128 ¥1,218 ¥18,133
Collectively
evaluated............... 25,551
413 6,659 3,165
196 35,984¥25,595 ¥12,739 ¥8,076 ¥6,293 ¥1,414 ¥54,117
In thousands of U.S. dollars
Year ended March 31, 2012

Other

Total

384

2,512

671

3,165

893

7,625

62

2,512

626

3,165

893

7,258

—

¥ 367

— ¥

Allowance for
doubtful accounts:
Individually
evaluated............... ¥Collectively
evaluated...............
¥In millions of yen¥ 427 ¥ 2,629 ¥1,023 ¥3,027 ¥1,180 ¥ 8,286
112
(117)
(41)
(71)
80
(37)
(169)
—
(311)
(50)
(125)
(655)
14
—
—
259
(242)
31

¥ 322 ¥March 31, 2011		 LoansLoans		 receivable receivable		 resulting resulting		 from
from
Other
Lease
medical insurance
loans
receivable
services
services receivableYear ended March 31, 2012
		 LoansLoans		 receivable receivable		 resulting resulting		 from
from
Other
Lease
medical insurance
loans
receivable
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...............

In millions of yen

45 ¥

—

¥

		 LoansLoans		 receivable receivable		 resulting resulting		 from
from
Other
Lease
medical insurance
loans
receivable
services
services receivable

Other

Total

Allowance for
doubtful accounts:
Balance at
beginning of year........ $ 5,207 $ 32,061 $12,476 $36,915 $14,390 $101,049
Provision (Reversal)...
1,366 (1,427)
(500)
(866)
976
(451)
Charge off............... (2,061)— (3,793)(610) (1,524) (7,988)
Other*.....................
171—— 3,159 (2,952)
378
Balance at endof year........................
4,683 30,634 8,183 38,598 10,890 92,988
Individually
evaluated...............
756 30,634 7,634 38,598 10,890 88,512
Collectively
evaluated............... $ 3,927 $— $ 549 $— $— $ 4,476

26,251
507 3,912 4,160
180 35,010¥26,318 ¥13,946 ¥4,799 ¥7,522 ¥1,100 ¥53,685

Financing receivables:
Individually
evaluated...............
$817 $163,890 $10,817 $41,000 $11,220 $227,744
Collectively
evaluated............... 320,134
6,183 47,707 50,732 2,195 426,951$320,951 $170,073 $58,524 $91,732 $13,415 $654,695* “Other” principally includes the effect of changes in foreign currency exchange rates.

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

Financing receivables:
Individually
evaluated...............
Collectively
evaluated...............

67

13,439

887

3,362

920

18,675The Company ascribes the fact of past due and the financial position of the debtor to credit quality indicators and classifies financing
receivables into Overdue and Current. Financing receivables determined to have no prospects for collecting contractual interest on
the basis of past due date and other factors are no longer recorded
as accruing interest.

50

SECOM Annual Report 2012

Analysis of the age of the recorded financing receivables andfinancing receivables on nonaccrual status at March 31, 2012 and2011 are as follows:

Impaired receivables and the related allowance for doubtful
accounts at March 31, 2012 and 2011 are as follows:

In millions of yen

In millions of yen

March 31, 2012
		 LoansLoans		 receivable receivable		 resulting resulting		 from
from
Other
Lease
medical insurance
loans
receivable
services
services receivable

Other

Total

Current.......................... ¥26,251 ¥13,642 ¥3,912 ¥4,308 ¥ 679 ¥48,792
Overdue.........................
67304
887 3,214
421
4,893
Total:
  Financing receivables... ¥26,318 ¥13,946 ¥4,799 ¥7,522 ¥1,100 ¥53,685
Financing receivables
on nonaccrual status.... ¥— ¥ 4,318 ¥ 887 ¥3,362 ¥— ¥ 8,567
In millions of yen
March 31, 2011		 LoansLoans		 receivable receivable		 resulting resulting		 from
from
Other
Lease
medical insurance
loans
receivable
services
services receivable

Other

Total

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

In thousands of U.S. dollars
March 31, 2012
		 LoansLoans		 receivable receivable		 resulting resulting		 from
from
Other
Lease
medical insurance
loans
receivable
services
services receivable— $ 52,659 $10,817 $41,000 $Impaired receivables.......
Related allowance for
doubtful accounts........

Other

Total

¥67 ¥13,439¥887 ¥3,362¥920 ¥18,675

62

626

893

2,512

3,165

7,258

In millions of yen
March 31, 2011		 LoansLoans		 receivable receivable		 resulting resulting		 from
from
Other
Lease
medical insurance
loans
receivable
services
services receivable

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

Other

Total

¥44 ¥12,326 ¥1,417 ¥3,128 ¥1,218 ¥18,133
41

2,629

874

2,957

1,180

7,681

In thousands of U.S. dollars
March 31, 2012
		 LoansLoans		 receivable receivable		 resulting resulting		 from
from
Other
Lease
medical insurance
loans
receivable
services
services receivable

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

Other

Total

$817 $163,890 $10,817 $41,000 $11,220 $227,744
756

30,634

7,634 38,598 10,890

88,512

The average amounts of impaired receivables for the year ended
March 31, 2012 are as follows:
Other

In millions of yen

Total

Current.......................... $320,134 $166,366 $47,707 $52,537 $ 8,280 $595,024
Overdue.........................
817
3,707 10,817 39,195 5,135 59,671
Total:
  Financing receivables... $320,951 $170,073 $58,524 $91,732 $13,415 $654,695
Financing receivables
on nonaccrual status.... $March 31, 2012
		 LoansLoans		 receivable receivable		 resulting resulting		 from
from
Other
Lease
medical insurance
loans
receivable
services
services receivable— $104,476

		 LoansLoans		 receivable receivable		 resulting resulting		 from
from
Other
Lease
medical insurance
loans
receivable
services
services receivable

Average amounts of
impaired receivables.....

Other

Total

¥56 ¥12,883 ¥1,152 ¥3,245 ¥1,068 ¥18,404
In thousands of U.S. dollars

		 LoansLoans		 receivable receivable		 resulting resulting		 from
from
Other
Lease
medical insurance
loans
receivable
services
services receivable

Average amounts of
impaired receivables.....

Other

Total

$683 $157,110 $14,049 $39,573 $13,024 $224,439

SECOM Annual Report 2012

51

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Consolidated Financial Statements

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

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

U.S. dollars

Years ended
March 31

Year ended
March 31

2012

2011

2010

2012

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

¥2,113¥1,669¥1,597$25,768

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

¥6,125¥5,128¥6,504$74,695

		In thousands of		In thousands ofIn millions of yen

U.S. dollars

In millions of yen

U.S. dollars

March 31

March 31

March 31

March 31

		
2012
2011
2012

		
2012
2011
2012

Current assets................................. ¥ 91,723 ¥ 72,049
Noncurrent assets........................... 102,770 111,349$1,118,573
1,253,293

Notes and accounts
receivable, trade.............................. ¥ 457¥ 460$ 5,573

Total assets................................. ¥194,493 ¥183,398$2,371,866

Loans receivable................................. ¥ 375¥

81$ 4,573

Current liabilities............................. ¥ 39,545 ¥ 34,272
Noncurrent liabilities.......................
34,50632,458Equity............................................. 120,442 116,668$ 482,256
420,805
1,468,805

Notes and accounts payable............... ¥2,884¥2,261$35,171

Guarantees for bank loans................. ¥ 127¥ 150$ 1,549

Total liabilities and equity............ ¥194,493 ¥183,398 $2,371,866
The Company's equity in undistributed income of affiliates at
March 31, 2012 and 2011 included in retained earnings was		In thousands of¥30,112 million ($367,220 thousand) and ¥26,319 million,
In millions of yen
U.S. dollars
respectively.
Years ended
Year ended
March 31

March 31

2010

2012

Net sales........................ ¥144,730 ¥129,551 ¥153,990$1,765,000

Gross profit.................... ¥ 48,439 ¥ 46,156 ¥ 44,395$ 590,720

Net income
attributable toaffiliated companies..... ¥ 16,683 ¥ 16,933 ¥ 14,105$ 203,451

2012

2011

Dividends received from affiliated companies for the years ended
March 31, 2012, 2011 and 2010 were ¥2,324 million ($28,341
thousand), ¥2,175 million and ¥2,295 million, respectively.
Three listed affiliated companies accounted for under the equity
method with an aggregated carrying amount of ¥27,738 million($338,268 thousand) and ¥27,555 ­million at March 31, 2012 and2011, respectively, had a quoted market value of ¥60,164 million($733,707 thousand) and ¥61,259 ­million at March 31, 2012 and2011, respectively.
The amounts of goodwill were ¥2,931 million ($35,744 thousand) and ¥3,254 million at March 31, 2012 and 2011, respectively.
In June 2010, the parent company sold the outstanding share ofTokyo Biso Kogyo Corporation, a 36.6 percent owned affiliate, to
TB Holdings Corporation for ¥5,055 million. The sale resulted in aloss of ¥513 million.

52

SECOM Annual Report 2012

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 on realestate of the other services for the year ended March 31, 2012. The
fair value was determined by the estimated present value of future
cash flows or appraisal value.
Impairment loss on long-lived assets by ­business segment for theyears ended March 31, 2012, 2011 and 2010 was as follows:		In thousands ofIn millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2012

2011

2010

—
48
—
—

¥—
—
1
—

¥ 83
15
—
—

18

2

149

220

—

—

—

—

8,067
—

—
—

45
—

98,378—¥8,133¥ 3¥292$99,183

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

¥

		

2012

$

—
585
—
—

12. Goodwill and Other Intangible Assets
The components of acquired intangible assets excluding goodwill
at March 31, 2012 and 2011 were as ­follows:

The changes in the carrying amount of goodwill by businesss­ egment for the years ended March 31, 2012 and 2011 were as
follows:

In millions of yen
March 31, 2012
Gross		Netcarrying Accumulated
carrying
amountamortization
amountAmortized intangible assets:
Software........................................ ¥40,480
Other.............................................
4,091
		
¥44,571(¥24,229)(2,165)(¥26,394)¥16,251
1,926¥18,177

Unamortized intangible assets............ ¥ 4,128¥¥ 4,128—

In millions of yen
March 31, 2011
Gross		Netcarrying Accumulated
carrying
amountamortization
amountAmortized intangible assets:
Software........................................ ¥38,234
Other.............................................
5,104
		
¥43,338(¥21,933)(2,965)(¥24,898)¥16,301
2,139¥18,440

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

In thousands of U.S. dollars
March 31, 2012
Gross		Netcarrying Accumulated
carrying
amountamortization
amountAmortized intangible assets:
Software........................................ $493,659
Other............................................. 49,890
		$543,549($295,476) $198,183(26,402)23,488($321,878) $221,671

Unamortized intangible assets............ $ 50,341$

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

Goodwill................ ¥2,322
Accumulated
impairment
losses...................
(406)
March 31, 2010..... 1,916
Goodwill acquired
during the year....
675
Disposal.................
—
Impairment
losses...................
—
Translation
adjustment..........
(99)
Goodwill................ 2,898
Accumulated
impairment
losses...................
(406)
March 31, 2011..... 2,492
Goodwill acquired
during the year.... 1,021
Disposal.................
—
Impairment
losses...................
(793)
Translation
adjustment..........
(99)
Goodwill................ 3,820
Accumulated
impairment
losses................... (1,199)
March 31, 2012.... ¥2,621

Total

¥—

¥9,970¥4,269¥135¥2,002 ¥18,698——(4,338)
5,632

(492)
3,777

(135)
—

(175)
1,827

(5,546)
13,152

81
—

—
—

711
—

—
—

—
—

1,467
—

—

—

—

—

—

—

—
81

—
9,970

(70)
4,910

—
135

—
2,002

(169)
19,996—81(4,338)
5,632

(492)
4,418

(135)
—

(175)
1,827

(5,546)
14,450

—
—

—
—

102
—

—
—

—
—

1,123
—

—

(269)

(156)

—

—

(1,218)

—
81

—
9,970

(21)
4,991

—
135

—
2,002

(120)
20,999(4,607)(648)¥5,363 ¥4,343

(135)
¥ —

(175) (6,764)¥1,827 ¥14,235—¥ 81

In thousands of U.S. dollars— $ 50,341

Aggregate amortization expense for the years ended March 31,
2012, 2011 and 2010 was ¥6,120 million ($74,634 thousand),¥6,236 million and ¥5,785 million, respectively. Amortized intangible assets are amortized using the straight-line method over theestimated useful lives. The weighted average amortization period
for internal use software is approximately five years.
The estimated aggregate amortization expense for ­intangible
assets for the next five years is as follows:		Years ending March 31
In millions of yen

2013......................................................
2014......................................................
2015......................................................
2016......................................................
2017......................................................

¥5,167
4,741
3,563
2,361
1,430

In thousands of
U.S. dollars$63,01257,81743,451
28,793
17,439							Information and			Fire		 Geographic Real estate communication
		
Security protection
Medical information development
related and		services
services
services
servicesand sales other services

Goodwill................ $35,341
Accumulated
impairment
losses................... (4,951)
March 31, 2011..... 30,390
Goodwill acquired
during the year.... 12,451
Disposal.................
—
Impairment
losses................... (9,671)
Translation
adjustment.......... (1,206)
Goodwill................ 46,586
Accumulated
impairment
losses................... (14,622)
March 31, 2012.... $31,964

Total$988 $121,585 $59,878$1,646$24,414 $243,852—
988(1,646)—(2,134) (67,633)
22,280 176,219(52,902) (6,000)
68,683 53,878

—
—

—
—

1,244
—

—
—

—
—

13,695——(3,281)(1,902)——(14,854)——988 121,585(256)
60,866—
1,646—(1,462)
24,414 256,085— (56,183) (7,902) (1,646)$988 $ 65,402 $52,964 $ —(2,134) (82,487)$22,280 $173,598

SECOM Annual Report 201253

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Consolidated Financial Statements

The Company recognized impairment losses primarily related togoodwill allocated to reporting units in the security services segment of ¥793 million ($9,671 thousand) for the year ended March
31, 2012, due to decreases in the estimated fair value of thesereporting units mainly caused by decreases of projected cash flows.
In addition, the Company recognized impairment losses of ¥269
million ($3,281 thousand) and ¥156 million ($1,902 thousand) inthe medical services segment and the geographic information­services segment, respectively.
The fair value is deter­mined by the estimated present value of
future cash flows.
13. Bank Loans and Long-Term Debt
Bank loans of ¥40,762 million ($497,098 thousand) and ¥47,698
million at March 31, 2012 and 2011, respectively, are generallycomprised of 30 to 365 day notes. The weighted average interest
rate was 1.24 percent and 1.19 percent at March 31, 2012 and2011, 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 such­additional security.
At March 31, 2012, Nohmi Bosai Ltd., a subsidiary of the parent
company, had an unused committed line of credit from a short-termarrangement of ¥4,000 million ($48,780 thousand). The line ofcredit expires in March 2013. Under the agreement, Nohmi Bosai
Ltd. is required to pay committed fees at an annual rate of 0.15
percent, on the unused portion of the line of credit. At March 31,
2012, the Company had overdraft agreements with 18 banks andits unused lines of credit amounted to ¥16,905 million ($206,159
thousand). The Company incurs no fee on the unused portion of
the lines of credit. The overdraft agreements expire in the period
from April 2012 to March 2013. The Company has the ability andintent to extend these overdraft agreements under similar terms
and conditions.
Long-term debt at March 31, 2012 and 2011 comprisedthe ­following:

Assets pledged as collateral for bank loans and long-term debt at
March 31, 2012 and 2011 were as follows:		In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

		
2012
2011
2012

Time deposits........................................ ¥ 2,210 ¥ 1,993
Short-term and long-term receivables.... 5,472 5,334
Investment securities..............................
695
606
Property, plant and equipment............... 55,101 55,755
Other intangible assets...........................
818
818$ 26,951
66,7328,476
671,963
9,976

The aggregate annual maturities on long-term debt at March 31,
2012 are as follows:		Years ending March 31
In millions of yen

2013.....................................................
2014.....................................................
2015.....................................................
2016.....................................................
2017.....................................................
Thereafter..............................................
............................................................

¥22,053
11,216
8,621
3,199
3,416
10,571¥59,076

In thousands of
U.S. dollars$268,939
136,780
105,134
39,012
41,659128,915$720,439

14. Insurance-Related Operations
Secom General Insurance Co., Ltd. (“Secom Insurance”), a­subsidiary of the parent company, maintains accounting records as
noted in Note 2 in accordance with Japanese GAAP, which vary incertain respects from U.S. GAAP. Those differences are principally,(a) that insurance acqui­sition costs are charged to expense whenincurred under Japanese GAAP whereas under U.S. GAAP, thosecosts are deferred and amortized generally over the premium-­
paying period of the insurance policies, (b) that liabilities related toincurred but not reported claims are computed based on related
regulations in Japan whereas under U.S. GAAP, those liabilities arecomputed based on past experience for unreported losses, and(c) that unearned premiums are calculated based on the documents
authorized by the Supervisory Authorities in Japan whereas under
U.S. GAAP, unearned premiums are reflected based on the lapseand ­surrender over the contract period.
In addition, under certain property and casualty insurance con		
In thousands oftracts with a refund clause and long-term insurance policies that
In millions of yen
U.S. dollars­provide refunds at maturity, such as personal accident and fire, theMarch 31
March 31
policyholder receives a refund if premiums have been fully paid
		
2012
2011
2012
unless a substantial settlement (as defined in the ­policy) has
Loans, principally from banks
occurred. The Company has provided for such refundable amounts
due 2011–2033 with interestby classifying a portion of the net pre­mi­ums written, together with
rates ranging from 0.60% tointerest thereon, as investment deposits by policyholders. Contract
10.05% in 2012 and 2011:and policy terms are ­principally five years.
Secured............................................. ¥22,619 ¥25,205$275,841
For purposes of preparing the consolidated financial ­state­ments,
Unsecured......................................... 9,174 10,160
111,878
appropriate adjustments have been made to reflect such items in
1.14% unsecured bonds due 2013....... 3,060
3,570
37,317
accordance with U.S. GAAP.
1.13% unsecured bonds due 2014....... 1,557
1,644
18,988
Unsecured bonds due 2011–2017
The net equity of Secom Insurance at March 31, 2012 and 2011
with floating interest rates basedwas ¥44,541 million ($543,183 thousand) and ¥45,838 million,on 6-month TIBOR plus
respectively.

0.00%–0.20%.................................... 10,992 11,793
Obligations under capital leases,
due 2011–2040 (Note 20)................... 11,674 12,566
			................................................. 59,076 64,938
Less: Portion due within one year.......... (22,053) (11,918)
			 ................................................. ¥37,023 ¥53,020

54

SECOM Annual Report 2012

134,049

142,366
720,439(268,939)$451,500

Net sales and operating revenue of Secom Insurance include
net realized investment gains and losses, including the results onsales of securities, loss on other-than-temporary impairment ofinvestment securities and impairment loss on long-lived assets.
Net realized investment gains and losses, including loss on otherthan-temporary impairment, for the years ended March 31, 2012,2011 and 2010 were gains of ¥328 million ($4,000 thousand) and¥838 million, and losses of ¥3,309 million, respectively. Loss onother-than-temporary impairment of investment securities for theyears ended March 31, 2012, 2011 and 2010 were ¥883 ­million($10,768 thousand), ¥681 million and ¥4,558 ­million, respectively.
15. Pension and Severance Costs
Employees of the parent company and its domestic s­ ubsidiaries
whose services are terminated are, under most ­circumstances,­eligible for lump-sum benefits and/or ­eligible for pension benefits.
The parent company and certain domestic subsidiaries haveadopted a cash balance pension plan and a defined contribution
pension plan. Benefits under the cash balance pension plan are calculated by the amount equal to a certain percentage of employee’s
annual income over their period of service, plus interest calculatedby the 3-year average yield for 10-year government bonds. The
defined contribution pension plan was established in April 2003, bytransferring a portion equivalent to 20 percent of the cash balance
pension plan, including portions funded in prior periods. Specified
percentage of employees’ annual income is contributed to thedefined contribution pension plan.
In April 2005, the parent company and certain domestic subsidiaries transferred an additional portion of the cash balance pension
plan to the defined contribution pension plan. Accord­ingly, the ratioof the accumulated amount in the cash balance pension plan andthe amount of contributions to the defined contribution pension
plan changed to 70 percent and 30 percent, including portions
funded in prior periods.
In July 2011, Secom General Insurance Co., Ltd., a subsidiary of
the parent company, settled and transferred a portion of the taxqualified non-­contributory pension plan to the defined contribution
pension plan. In accordance with ASC 715, “Compensation—
Retirement Benefits,” the Company accounted for these transfers as
a partial settlement of benefit obligation. The amount of s­ ettlement
loss was immaterial for the year ended March 31, 2012.
Net periodic pension and severance costs for the years ended
March 31, 2012, 2011 and 2010 were as follows:

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

U.S. dollars

Years ended
March 31

Year ended
March 31

		
2012
2011
2012

Change in benefit obligation:
Benefit obligation
at beginning of year.................. ¥82,500 ¥72,524 $1,006,098
Effect of adopting
ASU No. 2009-17.....................
—
4,244
—
Service cost.................................
5,560
6,313
67,805Interest cost................................
1,572
1,610
19,171
Actuarial loss..............................
1,487
2,173
18,134
Prior service benefit.....................
(25)
(263)
(305)
Benefits paid...............................
(4,957)(4,941)(60,451)
Acquisition..................................
—
840—
Settlement..................................
(352)—(4,293)
Benefit obligation
at end of year...........................
85,78582,5001,046,159
Change in plan assets:
Fair value of plan assets
at beginning of year..................
67,831
60,763
827,207
Effect of adopting
ASU No. 2009-17.....................
—
2,200
—
Actual return on plan assets........
1,831
1,975
22,329
Employer contribution.................
6,439
5,829
78,525
Benefits paid...............................
(3,537)(3,342)(43,134)
Acquisition..................................
—
406—
Settlement..................................
(354)—(4,317)
Fair value of plan assets
at end of year...........................
72,21067,831880,610
Funded status
at the end of year......................... (¥13,575) (¥14,669) ($ 165,549)

Amounts recognized in the consolidated balance sheet at March
31, 2012 and 2011 consist of:		
In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

		
2012
2011
2012

Prepaid pension andseverance costs............................. ¥ 7,846 ¥ 6,500
Accrued pension and		
In thousands ofseverance costs............................. (21,421) (21,169)
In millions of yen
U.S. dollars
			Net amount recognized....... (¥13,575) (¥14,669)
Years ended
Year ended
2012

2011

March 31

March 31

2010

2012

Net periodic pension andseverance costs:
Service cost.......................... ¥5,560 ¥6,313 ¥4,424
Interest cost......................... 1,572 1,610 1,476
Expected return onplan assets......................... (2,130) (2,065) (1,997)
Amortization of priorservice benefit.................... (1,649) (1,687) (1,682)
Recognized actuarial loss...... 1,222
924
901
		 Net periodic pension
		 and severance costs....... ¥4,575 ¥5,095 ¥3,122$ 95,683(261,232)($165,549)$67,805
19,171(25,976)(20,110)
14,903$55,793

SECOM Annual Report 2012

55

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Consolidated Financial Statements

Other changes in plan assets and benefit obligations ­recognizedin other comprehensive income (loss) for the year ended March 31,
2012 were summarized as follows:

Weighted-average assumptions used to determine the benefit
obligation at March 31, 2012 and 2011 were as follows:		 March 31

		In thousands ofIn millions of yen

Current year actuarial loss........................
Amortization of actuarial loss...................
Settlement of actuarial loss......................
Current year prior service benefit.............
Amortization of prior service benefit........
			¥1,786(1,222)
59
(25)
1,649
¥2,247

U.S. dollars$21,781(14,903)
720(305)
20,110$27,403

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

2012

2011

1.8%
2.6%

2.1%
2.6%

Weighted-average assumptions used to determine net ­pension
and severance costs for the years ended March 31, 2012, 2011 and2010 were as follows:
Years ended March 31

Amounts recognized in accumulated other comprehensive
income (loss) at March 31, 2012 and 2011 consist of:

2012

2011

2010

2.1%
3.0%
2.6%

2.2%
3.0%
2.6%

2.1%
3.0%
2.7%

Discount rate..............................................
Expected return on plan assets....................
		In thousands ofRate of compensation increase....................
In millions of yen
U.S. dollars
March 31

March 31

The Company determines the expected long-term rate of return
based on the expected long-term return of the various asset categories in which it invests. The Company considers the current
expectations for future returns and the actual ­historical returns ofeach plan asset category.
The Company’s investment policy is designed to ensure that sufficient plan assets are available to provide future ­payments of pension benefits to the eligible plan participants. The policy does not
use target allocations for the individual asset catego­ries. Plan assets
are invested primarily in equity and debt securities, and pooled
funds with the objective to minimize risk and achieve the expected
rate of return. The investment results are periodically checked andasset allocation is adjusted as necessary.
The following table represents the fair value of the Company’s
pension plan assets at March 31, 2012 and 2011. The three levels of
input used to measure fair value are more fully described in Note 23.

		
2012
2011
2012

Actuarial loss...................................... ¥32,652 ¥32,029
Prior service benefit............................. (7,806) (9,430)
			Net amount recognized........... ¥24,846 ¥22,599$398,195(95,195)$303,000

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 ¥1,627 million ($19,841 thousand) and¥1,407 million ($17,159 thousand), respectively.
The accumulated benefit obligation for the pension plan was¥78,805 million ($961,037 thousand) and ¥75,894 million at March
31, 2012 and 2011, 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 ¥35,768 million($436,195 thousand), ¥32,102 million ($391,488 thousand) and¥14,555 million ($177,500 thousand), respectively, at March 31,
2012, and ¥34,647 million, ¥31,206 million and ¥13,644 million,
respectively, at March 31, 2011.
The Company uses March 31 as the measurement date for thedomestic pension plan.

		In millions of yen
March 31, 2012

Level 1

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

¥ 1,720

Level 2¥—¥

Level 3

Total—

¥ 1,720

9,420

—

—

9,420

5,772

66

1

5,839

—
794
23,15016,669
6,630
—
6,349
—
(341)
450
¥35,854 ¥17,914

2,324
39,819
6,630
6,349
109
¥72,210

1,530
—
—
—
—
¥18,442* The plan’s equity securities include common stock of the parent company and its
domestic subsidiaries in the amount of ¥182 million at March 31, 2012.
* The plan’s government bonds invest approximately 95% in Japanese bonds and
5% in foreign bonds. The nongoverment bonds invest approximately 65% inJapanese bonds and 35% in foreign bonds.
* The pension investment trust fund included in the plan’s pooled funds is classified as level 2, and invests approximately 40% in equity securities, 55% in debt
securities and 5% in other investments. The unquoted beneficial certificate of
security investment trust included in the plan’s pooled funds is classified as level 3.

56

SECOM Annual Report 2012		In millions of yen
March 31, 2011

Level 1

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

¥ 1,053
6,963

Level 2

¥

—
50

¥

Level 3

Total—

¥ 1,053

—

7,013

5,978

938

6

6,922

2,333
741
—
—
—
¥17,068—
20,607
6,646
5,652
100
¥33,993651
16,113———¥16,770

2,984
37,461
6,646
5,652
100
¥67,831* The plan’s equity securities include common stock of the the parent company inthe amount of ¥40 million at March 31, 2011.
* The plan’s government bonds invest approximately 95% in Japanese bonds and
5% in foreign bonds. The nongoverment bonds invest approximately 80% inJapanese bonds and 20% in foreign bonds.
* The pension investment trust fund included in the plan’s pooled funds is classified as level 2, and invests approximately 50% in equity securities, 45% in debt
securities and 5% in other investments. The unquoted beneficial certificate of
security investment trust included in the plan’s pooled funds is classified as level 3.
In thousands of U.S. dollars
March 31, 2012
Level 1

Level 2

Level 3

Cash and cash
equivalents................ $ 20,976 $— $—Equity securities
Japanesecompanies............. 114,878——
Debt securities
Government
bonds....................
70,390805
12Nongovernment
bonds....................
18,658—
9,683
Pooled fund.................
—
282,317 203,281
Call loans.....................
—
80,854—
Insurance contracts......
—
77,427—
Other...........................
—(4,159)5,488$224,902 $437,244 $218,464

Total$ 20,976
114,878
71,20728,341
485,598
80,85477,4271,329$880,610* The plan’s equity securities include common stock of the parent company and its
domestic subsidiaries in the amount of $2,220 million at March 31, 2012.
* The plan’s government bonds invest approximately 95% in Japanese bonds and
5% in foreign bonds. The nongoverment bonds invest approximately 65% inJapanese bonds and 35% in foreign bonds.
* The pension investment trust fund included in the plan’s pooled funds is classified as level 2, and invests approximately 40% in equity securities, 55% in debt
securities and 5% in other investments. The unquoted beneficial certificate of
security investment trust included in the plan’s pooled funds is classified as level 3.

The following table represents the changes in level 3 investments
for the years ended March 31, 2012 and 2011.

In millions of yen

Year ended March 31, 2012
		Debt		securities					Non		 Government government
Pooled		bonds
bonds
funds

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

Other

Total

¥ 6

¥651

¥16,113¥ —¥16,770

—

273

298

—

571

(3)

143

179

—

319

(2)
—
¥ 1

(273)
79
—
—
¥794 ¥16,669

450
—
¥450

254
—
¥17,914

In millions of yen
Year ended March 31, 2011
Equitysecurities

Debt
securities

			NonJapanese Government government
companies
bonds
bonds

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

Pooled
funds

Other

Total

¥ 7

¥61

¥702

¥ 9,790¥ 8¥10,568

—

—

48

198

—

246

—

—

896

(214)

—

682

(7)
—
¥—

(55)
—
¥ 6

(995)
4,563
—
1,776
¥651 ¥16,113

(8)
3,498
—
1,776
¥— ¥16,770

In thousands of U.S. dollars
Year ended March 31, 2012
		Debt		securities					Non		 Government government
Pooled		bonds
bonds
funds

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

Other

Total

$73

$7,939 $196,500 $— $204,512

—

3,329

3,634

—

6,963

(37)

1,744

2,183

—

3,890

(24)
—
$12

(3,329)964 5,488
3,099
—
—
—
—
$9,683 $203,281 $5,488 $218,464

SECOM Annual Report 201257

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Consolidated Financial Statements

The Company expects to contribute ¥5,784 million ($70,537
thousand) to its domestic defined benefit plans in the year ­ending
March 31, 2013.
The following benefit payments, which reflect future s­ ervices, as
appropriate, are expected to be paid.
		 In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2013.....................................................
2014.....................................................
2015.....................................................
2016.....................................................
2017.....................................................
2018–2022............................................

¥ 4,572
4,830
3,974
4,731
4,466
26,195$ 55,756
58,902
48,46357,69554,463
319,451

The parent company and certain subsidiaries have defined contribution pension plans. The contributions to the defined contributionpen­sion plans for the years ended March 31, 2012, 2011 and 2010
were ¥1,613 million ($19,671 thousand), ¥1,596 million and¥1,468 million, respectively.
16. Exchange Gains and Losses
Other expenses for the years ended March 31, 2012 and 2011
include net exchange losses of ¥145 million ($1,768 thousand) and¥635 million, respectively. Other income for the year ended March
31, 2010 includes net exchange gains of ¥552 million.
17. Income Taxes
Total income taxes for the years ended March 31, 2012, 2011
and 2010 were allocated as follows:

The parent company and its domestic subsidiaries were ­subject toa corporate tax of 30 percent, an inhabitants tax of approximately
20.3 percent, and a deductible enterprise tax of approximately 7.4
percent, which, in the aggregate, results in a statutory tax rate inJapan of approximately 40.5 ­percent for the years ended March 31,
2012, 2011 and 2010.
Due to the promulgation on December 2, 2011 of the Act for
Partial Amendment of the Income Tax Act, etc. for the Purpose of
Creating a Taxation System Responding to Changes in Economic
and Social Structures and the Act on Special Measures for Securing
Financial Resources Necessary to Implement Measures for Reconstruction Following the Great East Japan Earthquake, the statutory
tax rate used to calculate the deferred tax assets and liabilities forthe year ended March 31, 2012 changed mainly from 40.5 percent
to 37.8 percent for those scheduled for collection or payment­during the period from April 1, 2012 to March 31, 2015, and to
35.4 percent for those scheduled for collection or payment on orafter April 1, 2015. As a result, income taxes for the year ended
March 31, 2012 increased by ¥2,464 million ($30,049 thousand).
Reconciliations of the differences between income taxes­computed at statutory tax rates and income taxes from continuing
operations were as follows:		In thousands of2012

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2011

2010

Income taxes computed
at statutory tax rate of
40.5%................................. ¥32,853 ¥43,677 ¥38,344
		In thousands ofIn millions of yen
U.S. dollars
Increase (decrease)resulting from:Years ended
Year ended
March 31
March 31
Unrecognized tax
benefits from
2012
2011
2010
2012
subsidiaries in loss
Income frompositions.......................... 7,905
97
7,280
continuing operations.......... ¥38,202 ¥43,277 ¥45,631$465,878
Reversal of valuation
Income fromallowance due todiscontinued operations.......
—
—
(317)
—
utilization of operating
Shareholders’ equity—
loss carryforwards............ (6,000)
(736)
(955)
accumulated otherNet effect of changes incomprehensive
the corporate tax rates..... 2,464——
income (loss):
Per capita tax.....................
806
831
817
Unrealized holding gains
Other, net..........................
174
(592)
145
(losses) on securities......... 1,236 (1,946) 5,401
15,072
		Income
taxes
Unrealized gains
		 from continuing
on derivative		 operations.................... ¥38,202 ¥43,277 ¥45,631
instruments......................
—
—
107
—
Pension liability
adjustments.....................
(763)
(654)
857
(9,304)Foreign currencytranslation
adjustments.....................
—— 1,020—
Equity transactions with
noncontrolling interest
and other ............................
—
(154)
—
—
		...................................... ¥38,675 ¥40,523 ¥52,699$471,646

58

SECOM Annual Report 20122012

$400,646

96,403(73,171)
30,0499,829
2,122$465,878

The significant components of deferred tax assets and liabilities
at­March 31, 2012 and 2011 were as follows:

making this assessment. Based upon the level of historical taxable
income and projec­tions for future taxable income over the periods
in which the deferred tax assets are deductible, the Company man		
In thousands ofagement believes it is more likely than not that the Company will
In millions of yen
U.S. dollars
realize the benefits of these deductible differences, net of the
March 31
March 31
­existing valuation allowance at March 31, 2012 and 2011.
		
2012
2011
2012
Net deferred tax assets at March 31, 2012 and 2011 are reflected
Deferred tax assets:in the accompanying consolidated balance sheets under the
Loss carryforwards.......................... ¥11,137 ¥19,372$135,817­following captions:Deferred revenue............................ 10,015 11,580
Property, plant andequipment...................................
7,454
5,528
Accrued pension andseverance costs.............................
7,357
8,164
Adjustment of book value atthe date of acquisition—
		 Land and buildings......................
7,033
7,546
		Other assets................................
285
361
Accrued bonus................................
5,770
5,704
Write-down on real estate
inventories....................................
5,371
1,823
Vacation accrual..............................
3,545
3,806
Allowance for doubtful
accounts.......................................
2,825
3,611
Investment securities.......................
1,941
1,902
Intangible assets.............................
1,594
1,969
Other..............................................
7,241
9,394
		 Gross deferred tax assets............. 71,568 80,760
		 Less: Valuation allowance............ (29,928) (33,699)
		 Total deferred tax assets.............. 41,640 47,061
Deferred tax liabilities:
Deferred installation costs............... (7,920) (9,494)
Adjustment of book value atthe date of acquisition—
		 Land and buildings...................... (5,143) (5,544)
		Other assets................................ (1,357) (1,614)
Investments in affiliatedcompanies.................................... (5,057) (5,111)
Prepaid pension andseverance costs............................. (2,710) (2,543)
Unrealized holding gains on
securities....................................... (2,236) (1,042)
Unearned premiums andother insurance liabilities...............
—(774)
Other.............................................. (4,468) (5,362)
		 Gross deferred tax liabilities......... (28,891) (31,484)
			 Net deferred tax assets ........... ¥12,749 ¥15,577

122,134
90,90289,72085,7683,476
70,36665,50043,232

34,451
23,671
19,43988,305
872,781(364,976)
507,805(96,585)(62,720)(16,549)(61,671)(33,049)(27,268)—(54,488)(352,330)$155,475

The valuation allowance principally relates to deferred tax assetsof the subsidiaries with operating loss carryforwards, for tax purposes, that are not expected to be realized. The net change in the
total valuation allowance for the years ended March 31, 2012,2011 and 2010 was a decrease of ¥3,771 million ($45,988­thousand), an increase of ¥1,604 million and ¥5,232 million,
respectively.
In assessing the realizability of deferred tax assets, the Company
management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those
temporary differences become deductible. The Company management considered the sched­uled reversal of deferred tax liabilities,
projected future taxable income and tax planning strategies in		In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

		
2012
2011
2012

Deferred income taxes(Current assets)................................ ¥12,853 ¥15,438
Deferred income taxes(Other assets)................................... 10,185 11,824
Other current liabilities.......................
(1,174) (1,858)
Deferred income taxes(Liabilities)........................................
(9,115) (9,827)
		 Net deferred tax assets .............. ¥12,749 ¥15,577$156,744
124,207(14,317)(111,159)$155,475

The Company has not recognized deferred tax liabilities of ¥704
million ($8,585 thousand) for a portion of undistributed earnings offoreign subsidiaries totaling ¥16,212 million ($197,707 thousand)at March 31, 2012 as they are not expected to be remitted in theforeseeable future.
At March 31, 2012, the operating loss carryforwards of domestic
subsidiaries amounted to ¥27,859 million ($339,744 thousand) andare available for offsetting against future taxable earnings of such
subsidiaries for up to nine years, as follows:		 In thousands ofExpires in the years ending March 31
In millions of yen
U.S. dollars

2013......................................................
2014......................................................
2015......................................................
2016......................................................
2017......................................................
2018......................................................
2019......................................................
2020......................................................
2021......................................................
..............................................................

¥ 1,339
3,504
2,938
—
—
9,151
7,135
2,244
1,548
¥27,859$ 16,329
42,73235,829——111,598
87,01227,366
18,878$339,744

The operating loss carryforwards of overseas subsidiaries at
March 31, 2012 amounted to ¥3,887 million ($47,402 thousand), apart of which will begin to expire in the year ending March 31, 2013.
The total amount of unrecognized tax benefits for the years
ended March 31, 2012, 2011 and 2010 were insignificant. Also
there were no movements of the gross amounts in unrealized tax
benefits and the amounts of interest and penalties recognized dueto the unrecognized tax benefits during the years ended March 31,
2012, 2011 and 2010.
Although the Company believes its estimates of unrecognized tax
benefits are reasonable, uncertainties regarding the final determination of income tax audit settlements and any related litigation
could affect the total amount of unrecognized tax benefits in the
future periods. Based on the information available as of March 31,
2012, the Company does not expect significant changes to theunrecognized tax ­benefits within the next twelve months.

SECOM Annual Report 201259

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Consolidated Financial Statements

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 2011 with few 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,
2012, 2011 and 2010 were as follows:

The Company may repurchase its common stock from the market
pursuant to the Japanese Companies Act.
(4) Other Comprehensive Income (Loss)
Components of other compre­hensive income (loss) for the years
ended March 31, 2012, 2011 and 2010 are as follows:
In millions of yen
Pre-tax
amount

For the year ended March 31, 2012:
Unrealized holding gains on
securities—
		 Unrealized holding gains or losses
		 arising during the period.............. ¥3,230
		Less: Reclassification
		Less: adjustment for gains
		In thousands ofIn millions of yen
U.S. dollars
		Less: or losses included in		Less: net income..........................
521
Years ended
Year ended
March 31
March 31
Unrealized gains on derivative
instruments—
		
2012
2011
2010
2012
		 Unrealized gains or losses
Net income attributable		 arising during the year.................
—
to SECOM CO., LTD............... ¥41,237 ¥62,665 ¥46,989$502,890
		Less: Reclassification
Transfers from (to)		Less: adjustment for gains
noncontrolling interests:
		Less: or losses included in		 Decrease in additional
		Less: net income..........................
6		 paid-in capital related toPension liability adjustments—
		 the acquisition of Secom		 Unrealized gains or losses
		 Techno Service Co., Ltd.’s		 arising during the period.............. (1,867)
		 ownership interests..........
(476) (5,692)—(5,805)
		Less: Reclassification
		Other, net...........................
(166)
151 1,101(2,024)		adjustment for gains
		or losses realized
Net transfers from (to)		in net income.......................
(509)
noncontrolling interests.......
(642) (5,541) 1,101(7,829)Foreign currency
Change from net income
translation adjustments.................... (3,432)
attributable to SECOM CO.,			Othercomprehensive
LTD. and transfers from (to)			 income (loss)............................ (¥2,051)
noncontrolling interests......... ¥40,595 ¥57,124 ¥48,090$495,061
For the year ended March 31, 2011:(2) Retained Earnings
Unrealized holding losses on
securities—
The Japanese Companies Act provides that an amount equal to		 Unrealized holding gains or losses
10 percent of surplus distributed by the parent company and its
		 arising during the period.............. (¥ 4,760)
Japanese subsidiaries be appropriated as a legal reserve until the		Less: Reclassification
aggregate amount of additional paid-in capital and legal reserve
		Less: adjustment for gains
equals 25 percent of the ­common stock account.
		Less: or losses included in
The amount available for dividends under the Japanese		Less: net income..........................
(658)
Companies Act ­is based on the amount recorded in the p­ arent
Unrealized gains on derivative
instruments—
company’s nonconsolidated statutory financial statements in accor		 Unrealized gains or losses
dance with Japanese GAAP. Such amount was ¥408,267 million
		 arising during the year.................
3($4,978,866 thousand) at March 31, 2012.
		Less: Reclassification
Subsequent to March 31, 2012, the parent company’s Board of
		Less: adjustment for gains
Directors declared an annual cash dividend of ¥90.00 ($1.10) per		Less: or losses included inshare, totaling ¥19,644 million ($239,561 thousand), to sharehold		Less: net income..........................
9ers of record on March 31, 2012. The dividend declared was
Pension liability adjustments—
		 Unrealized gains or losses
approved at the general shareholders’ meeting held on June 26,
		 arising during the period..............
(1,052)
2012. Dividends are recorded in the year they are declared.
		Less: Reclassification
The Japanese Companies Act provides that a company can make		
adjustment for gains
dividends of surplus anytime with resolution of the shareholders.
		or losses realized		in net income.......................
(574)(3) Common Stock in Treasury
Foreign currency
For the year ended March 31, 2012, common stock in treasurytranslation adjustments....................
(6,399)decreased by ¥1,264 million ($15,415 thousand), primarily due to			Other comprehensive
allotment with respect to the absorption-type merger of Secom			 income (loss)............................ (¥13,431)

Techno Service Co., Ltd.

60

SECOM Annual Report 2012

Tax
(expense)or benefit

Net-of-tax
amount(¥1,009)¥2,221

(227)

294

—

—

—

6

489

(1,378)

274

(235)

—

(3,432)(¥ 473) (¥2,524)¥1,719 (¥ 3,041)

227

(431)

—

3

—

9

424

(628)

230

(344)

—

(6,399)¥2,600 (¥10,831)

In millions of yen
Tax(expense)or benefit

Pre-tax
amount

For the year ended March 31, 2010:
Unrealized holding gains on
securities—
		 Unrealized holding gains or losses
		 arising during the period.............. ¥11,598
		Less: Reclassification
		Less: adjustment for gains
		Less: or losses included in		Less: net income..........................
3,003
Unrealized gains on derivative
instruments—
		 Unrealized gains or losses
		 arising during the year.................
(5)
		Less: Reclassification
		Less: adjustment for gains
		Less: or losses included in		Less: net income..........................
281
Pension liability adjustments—
		 Unrealized gains or losses
		 arising during the period..............
2,724
		Less: Reclassification		adjustment for gains
		or losses realized		in net income.......................
(700)
Foreign currencytranslation adjustments....................
2,016
			Other comprehensive
			 income (loss)............................ ¥18,917

Net-of-tax
amount(¥4,382) ¥ 7,216(1,019)

1,984

—

(5)

(107)

174

(1,140)

1,584

283

(417)

(1,020)996

20. Lessee
The Company leases certain office space, employee residen­tial
facilities, computer and transportation equipment. Some leased
buildings, computer and transportation equipment are held undercapital leases. Other leases are classified as o
­ perating leases.
On April 23, 1996, the Company entered into a long-term leaseagreement for a building and land in Mitaka, Tokyo. The lease term
is 30 years beginning May 1, 1996. On July 15, 2010, the Company
also entered into a long-term lease agreement for the building andland adjoining. The lease term is also 30 years beginning July 15,
2010. For ­financial reporting purposes, the portion of these leasearrangements relating to the building has been classified as a­capital lease; accordingly, an asset of approximately ¥7,209 million($87,915 thousand) has been recorded in the building and improvements account. The portion of the lease relating to the land has
been classified as an operating lease. The future minimum lease
payments for the site at March 31, 2012 were ¥6,652 ­million($81,122 thousand).
A summary of leased assets under capital leases at March 31,
2012 and 2011 is as follows:		In thousands of(¥7,385) ¥11,532

In thousands of U.S. dollars
Pre-tax
amount19. Research and Development Expenses
Research and development expenses included in selling, generaland administrative expenses for the years ended March 31, 2012,2011 and 2010 were ¥6,083 million ($74,183 thousand), ¥6,755
million and ¥5,952 million, respectively.

Tax(expense)or benefit

Net-of-tax
amount

For the year ended March 31, 2012:
Unrealized holding gains on
securities—
		 Unrealized holding gains
		 or losses arising during
		 the period.................................... $39,390 ($12,304) $27,086
		Less: Reclassification
		Less: adjustment for gains
		Less: or losses included in		Less: net income..........................
6,354(2,768)
3,586
Unrealized gains on derivative
instruments—
		 Unrealized gains or losses
		 arising during the year.................
———
		Less: Reclassification
		Less: adjustment for gains
		Less: or losses included in		Less: net income..........................
73—
73
Pension liability adjustments—
		 Unrealized gains or losses
		 arising during the period.............. (22,768)
5,963 (16,805)
		Less: Reclassification		adjustment for gains
		or losses realized		in net income....................... (6,207)
3,341(2,866)
Foreign currencytranslation adjustments.................... (41,854)— (41,854)
			Other comprehensive
			 income (loss)............................ ($25,012) ($ 5,768) ($30,780)

In millions of yen

U.S. dollars

March 31

March 31

		
2012
2011
2012

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

¥ 8,235 ¥ 8,209$100,427

10,349 14,072
127
306(8,215) (10,996)¥10,496 ¥11,591

126,207
1,549(100,183)$128,000

Depreciation expenses for assets under capital leases for the years
ended March 31, 2012, 2011 and 2010 were ¥2,630 million($32,073 thousand), ¥3,368 million and ¥3,402 million,­respectively.
The following is a schedule by year of future minimum lease­payments under capital leases and the present value of the net­minimum lease payments at March 31, 2012:
		 In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2013........................................................
2014........................................................
2015........................................................
2016........................................................
2017........................................................
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..........................................

¥ 2,664
2,078
1,674
1,098
793
8,755
17,062(5,388)$ 32,488
25,341
20,415
13,3909,671
106,768
208,073(65,707)

11,674(2,253)

142,366(27,476)¥ 9,421$114,890

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Financial Review

Financial Section

Consolidated Financial Statements

Rental expenses under operating leases for the years ended
March 31, 2012, 2011 and 2010 were ¥16,419 million ($200,232
thousand), ¥16,504 million and ¥14,290 million, respectively. A­significant portion of such rentals relates to cancelable short-termleases for office space and employee residential facilities, many ofwhich are renewed upon ­expiration.
On December 8, 2000, the Company entered into a lease­agreement for a building and land in Shibuya, Tokyo. The leaseterm is 20 years beginning December 8, 2000. For financial­reporting purposes, the lease has been classified as an operatinglease. Based on the agreement, annual lease payments for the site
are approximately ¥1,299 million ($15,841 thousand) over a
20-year period.
The future minimum lease payments required under operat­ing
leases that have initial or remaining noncancelable lease terms inexcess of one year at March 31, 2012 are as follows:

The following is a schedule by year of future minimum lease­ ayments to be received under sales-type leases and direct-­pfinancing leases at March 31, 2012:

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

		In thousands of2013........................................................
2014........................................................
2015........................................................
2016........................................................
2017........................................................
Thereafter.................................................
Total future minimum lease
payments............................................

¥ 2,312
2,259
2,228
2,207
2,205
13,444$ 28,195
27,54927,171
26,91526,890163,951¥24,655$300,671

21. Lessor
The Company’s leasing operations consist principally of leasingof security merchandise and real estate for office and medical
institutions. Most of the security merchandise and certain realestate for medical institutions on lease are classified as sales-typeleases or direct-financing leases. Other leases are ­classified as­operating leases.
A summary of lease receivables under sales-type and directfinancing leases at March 31, 2012 and 2011 is as follows:		 In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2013........................................................
2014........................................................
2015........................................................
2016........................................................
2017........................................................
Thereafter.................................................
Total future minimum lease
payments to be received.....................

March 31

March 31

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

¥34,950 ¥34,327(2,982) (2,980)$426,220(36,366)

1,261 1,261(6,911) (7,013)
26,318 25,595(7,882) (7,748)¥18,436 ¥17,847

15,378(84,281)
320,951(96,122)$224,829$109,916
86,70765,634
44,58520,92798,451¥34,950$426,220

A summary of investment in property under operating leases andproperty held for lease at March 31, 2012 and 2011 is as follows:
In millions of yen

U.S. dollars

March 31

March 31

		
2012
2011
2012

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

¥36,950 ¥29,820
29,426 26,255
662
662(9,190) (8,519)¥57,848 ¥48,218$450,610
358,854
8,073(112,074)$705,463

The future minimum rentals under noncancelable operatingleases at March 31, 2012 are as follows:		 In thousands ofYears ending March 31
In millions of yen
U.S. dollars

2013........................................................
2014........................................................
2015........................................................
2016........................................................
2017........................................................
Thereafter.................................................
		In thousands ofTotal future minimum rentals................
In millions of yen
U.S. dollars
		
2012
2011
2012

¥ 9,013
7,110
5,382
3,656
1,716
8,073

¥2,295
597
425
297
297
5,745
¥9,656$ 27,988
7,280
5,183
3,622
3,622
70,061$117,756

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

62

SECOM Annual Report 2012

(4) Long-Term Debt Including Current Portion
The fair value of long-term debt including the current p­ ortion
was estimated based on the discounted amounts of future cash
flows of each instrument at the Company’s current incremental­borrowing rates for similar liabilities.
(5) Investment Deposits by Policyholders
The fair values of investment deposits by policyholders are­estimated by discounting future cash flows using the interest rates
currently being offered for similar contracts.
(6) Derivatives
The fair values of interest rate swaps are estimated using
current market pricing models by obtaining quotes from ­financial
institutions.
The carrying amounts and estimated fair values of finan­cial instruments, excluding debt and equity securities, which are d­ isclosed in
Notes 2 (7) and 7 at March 31, 2012 and 2011 are as follows:		

In millions of yen

		March 31

2012
Carrying
amountNon-derivatives:
Liabilities—
		Long-term debt
		 including current		 portion............................ ¥59,076
		Investment deposits
		 by policyholders.............. 30,755
Derivatives:
Liabilities—
		 Forward exchange contract		 (Other current liabilities)...
—		 Interest rate swaps
		 (Other liabilities)..............
160

Estimated
fair value

2011
Carrying
amountEstimated
fair value¥59,205 ¥64,938¥65,078

31,171

41,643

41,671

—

286

286

160

160

160

In thousands of U.S. dollars
March 31, 2012
Carrying
amountNon-derivatives:
Liabilities—
		 Long-term debt including current		 portion....................................................
		Investment deposits
		 by policyholders......................................
Derivatives:
Liabilities—
		 Interest rate swaps (Other liabilities)..........

Estimated
fair value

23. Fair Value Measurements
ASC 820, “Fair Value Measurements and Disclosures,” defines
fair value as the price that would be received to sell an asset or paid
to transfer a liability (an exit price) in the principal or most advantageous market for the asset or ­liability in an orderly transaction
between market participants at the measurement date. Thisaccounting standard establishes a three-level fair value hierarchy
that prioritizes the inputs used to measure fair value as follows:
Level 1— Inputs are quoted prices in active markets for identicalassets or liabilities.
Level 2— Inputs are quoted prices for similar assets or liabilities
in active markets, quoted prices for identical or similar
assets or liabilities in markets that are not active, inputs
other than quoted prices that are observable, andinputs that are derived principally from or corroborated
by observable market data by correlation or othermeans.
Level 3— Inputs are derived from valuation techniques in which
one or more significant inputs or value drivers areunobservable, which reflect the reporting entity’s own
assumptions about the assumptions that market­participants would use in establishing a price.
The following table represents the Company’s assets andliabilities that are measured at fair value on a recurring basis at
March 31, 2012 and 2011.
		

In millions of yen
March 31, 2012

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

Level 1

Level 233

¥ 2,609¥

96,716¥96,749

16,007¥18,616

27,368¥27,368

140,091¥142,733

¥
¥

¥
¥

¥
¥

¥
¥

¥

—
—

160
160

Level 3—

1,951

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

2,642

160
160

In millions of yen
March 31, 2011

$720,439 $722,012

1,951

¥

—
—

		

375,061 380,134

Total

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

Level 1

Level 235

¥ 2,609¥

88,643¥88,678

21,419¥24,028

27,431¥27,431

137,493¥140,137

¥

—

¥

286

¥

—

¥

286

¥

—
—

¥

160
446

¥

—
—

¥

160
446

¥

Level 3

—

Total

¥

2,644

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Financial Review

Financial Section

Consolidated Financial Statements

In thousands of U.S. dollars
March 31, 2012
Level 1

Level 2

Level 3

Total

Assets:Cash equivalents...... $403 $ 31,817 $— $ 32,220
Short-term
investments andinvestment
securities................ 1,179,463 195,207 333,756
1,708,426
Total assets.................. $1,179,866 $227,024 $333,756 $1,740,646
Liabilities:
Derivatives(Other liabilities)..... $Total liabilities.............. $

— $
— $

1,951 $
1,951 $

— $
— $

1,951
1,951

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 price in active markets with
sufficient volume and frequency of transactions.
Level 2 assets are comprised principally of debt securities, which
are valued using quoted prices for similar assets in active markets,or quoted price for identical or similar assets in markets that are
not active.
Non-marketable securities classified as Level 3 assets are valued
based on unobservable inputs as the market for the assets was not
active at the measurement date.
Derivative Financial Investments
Derivative financial instruments are comprised of forward exchange
contracts and interest rate swaps. These derivative instruments arevalued using observable market data and classified as Level 2
liabilities.

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 ¥9,801
million ($119,525 thousand) were written down to their fair valueof ¥9,756 million ($118,976 thousand), resulting in an other-thantemporary impairment charge of ¥45 million ($549 thousand),
which was included in earnings for the year ended March 31, 2012.
For the year ended March 31, 2011, non-marketable equity­securities with a carrying amount of ¥10,687 million were written
down to their fair value of ¥10,407 million, resulting in an otherthan-­temporary impairment charge of ¥280 million, which was
included in earnings. All impaired non-marketable equity securities
were classified as Level 3 assets as the Company uses unobservable
inputs to value these investments.
Long-lived assets (Note 11) and goodwill (Note 12) are also­measured at fair value on a nonrecurring basis. All impaired longlived assets and goodwill were classified as Level 3 assets as theCompany uses u­ nobservable inputs to value these assets.
24. Derivative Financial Instruments(1) Risk Management Policy
The Company utilizes derivative financial instruments in thenormal course of business to reduce exposure to fluctuations 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.

The following table represents the changes in Level 3 assets(2) Risk Management­ easured on a recurring basis for the years ended March 31, 2012m
The Company has exposure to the market risk of changes inand 2011.
interest rates which relates ­primarily to its debt obligations. The
		In thousands ofCompany principally enters into interest rate swap agreements to
In millions of yen
U.S. dollars
manage fluctuations in cash flows resulting from changes in interest
Years ended
Year ended
rates. Interest rate swaps are used to change floating rates on debt
March 31
March 31
obligations to fixed rates by entering into receive-floating, pay-fixed
		
2012
2011
2012
interest rate swaps under which the Company receives floating
Balance at beginning of year............... ¥27,431 ¥29,155$334,524
interest rate ­proceeds and makes fixed interest rate payments,
Total gains or losses
thereby ­effectively creating fixed-rate debt.

64(realized or unrealized):		 Included in earnings....................
3,998 5,242
		 Included in other		 comprehensive income..............
19
975
Purchases........................................
4,055 1,941
Sales...............................................
(6,662) (5,385)
Redemptions...................................
(235) (1,311)
Foreign currency translation
adjustments..................................
(1,238) (3,186)
Balance at end of year........................ ¥27,368 ¥27,431(15,097)$333,756

Changes in unrealized gains
or losses relating to instruments
still held at end of year:
		 Included in earnings.................... ¥ 1,736 ¥ 5,806$ 21,171

SECOM Annual Report 2012

48,756232
49,451(81,244)(2,866)(3) Cash Flow Hedge
The Company ­designates interest rate swap agreements as cash
flow hedges for variability of cash flows originated from floating
rate borrowings. All of the interest rate swap ­agreements havematured by March 31, 2012. The ­effective portion of changes infair values of derivative ­instruments designated as cash flow hedgesof these debt obligations are reported in other comprehensive
income (loss). These amounts are reclassified into current incomein the same period that hedged items affect current income. The

ineffective portion of changes in fair values are reported in income
immediately. The sum of the amount of the hedge ineffectivenessand net gains or losses excluded from the assessment of hedge
effectiveness is not material for the years ended March 31, 2012,2011 and 2010 as the critical terms of most of the interest rate
swap agreements match the terms of the hedged debt obligations.
At March 31, 2012 and 2011, the notional principal amount ofinterest rate swap agreements designated as cash flow hedges wasnil and ¥1,000 million, respectively.

Derivatives not designated as hedging instruments
		In thousands of
U.S. dollars

Years ended
March 31

Year ended
March 31

2011

2010

2012

Forward exchange Other expenses
contract		¥ — (¥286)
Interest rate swaps Other expenses ¥ 9 (¥ 31)

¥—
(¥81)

$ —
$110

Location

2012

In millions of yen(4) Derivative Instruments Not Designated as Hedges
The Company enters into forward exchange contracts to reduce
exposure to fluctuations in currency rates relating to time deposits,
and interest rate swap agreements to reduce exposure to fluctuations in interest rates relating primarily to debt obligations. Changes
in fair value of the above noted derivative financial instruments,
which are not d­ esignated as hedges, are reported in current income.

25. Commitments and Contingent Liabilities
The Company has commitments outstanding at March 31, 2012
for the ­purchase of property, plant and equipment of approximately¥6,227 million ($75,939 thousand).
The Company provides guarantees to third parties mainly withrespect to bank loans extended to its affiliated companies and otherentities. Such guarantees are provided to enhance the credit standing of the affiliated companies and other entities. For each guaranFair values of derivative instruments reflected in the consolidated
tee provided, the Company would have to per­form under thebalance sheet as of March 31, 2012 and 2011 are as follows:
guarantee, if the affiliated companies and other entities default ona payment within the guaranteed period of one to five years. The
Derivatives designated as hedging instruments
maximum amount of undiscounted pay­ments the Company would
Liabilities:
have to make in the event of default amounts to ¥1,686 million		In thousands of($20,561 thousand) at March 31, 2012. The carrying amounts ofIn millions of yen
U.S. dollars
the liabilities recognized for the Company’s obligations under these
March 31
March 31
­guarantees at March 31, 2012 and 2011 were deemed insignificant.
Location
2012
2011
2012
Loss related to spectrum reallocation is for disposal and replaceInterest rate swaps
Other liabilities¥—¥8$—
ment of equipment, since the allotted spectrum currently used in
COCO-SECOM will no longer be available after July 2012 as a result
Derivatives not designated as hedging instrumentsof spectrum reallocation by the government.
Liabilities:
Pasco Corporation, a subsidiary of the parent company, filed a		In thousands oflawsuit against Sumitomo Mitsui Banking Corporation asking for
In millions of yen
U.S. dollars
a confirmatory judgment to the effect that it does not owe an
March 31
March 31
obligation in the amount of ¥2,010 million to Sumitomo Mitsui
Location
2012
2011
2012
Banking Corporation with the Tokyo District Court on October
Forward exchange
Other current
31, 2005. Sumitomo Mitsui Banking Corporation alleged that it
contract
liabilities
¥ —
¥286
$ —
made a loan to a third party and acquired from the third party its
Interest rate swaps
Other liabilities
¥160
¥152
$1,951claim against Pasco Corporation for an alleged sale of equipment
to Pasco Corporation, as collateral for the loan, and demanded
Effects of derivative instruments on the consolidated statements
Pasco Corporation to pay such claim to Sumitomo Mitsui Banking
of income for the years ended March 31, 2012, 2011 and 2010 are
Corporation. On December 5, 2005, Sumitomo Mitsui Banking
as follows:
Corporation brought a cross action against Pasco Corporationin ­relation to a demand for payment of a transferred receivable.
Derivatives designated as cash flow hedging instruments
Subsequently, both actions were consolidated according to a court
Gains (losses) recognized in other comprehensive income
procedure. The oral argument was concluded on October 31, 2008,(effective portion)and on March 27, 2009 Tokyo District Court rendered the following		In thousands ofjudgement:
In millions of yen
U.S. dollars
Years ended
March 31

Year ended
March 31

Years ended
March 31

Year ended
March 31

1.		Pasco Corporation must pay money to Sumitomo Mitsui Banking
Corporation in an amount of ¥2,010 million as well as interest at
		
2012
2011
2010
2012
the rate of 6 percent per annum on ¥600 million, fromInterest rate swaps
¥—
¥4
(¥6)
$—
November 1, 2005, and on ¥1,410 million, from December 1,
2005, up to the full payment of the respective amounts;
Gains (losses) reclassified from accumulated other comprehensive
2.		Pasco Corporation incurs the cost of lawsuits including the costincome into income (effective portion)
caused by supplementary participation; and		In thousands of
3.		The judgement can be provisionally executed.
In millions of yen
U.S. dollars

LocationInterest rate swaps Other expenses

2012

2010

2012

(¥8) (¥12) (¥358)

($98)

2011

Pasco Corporation appealed the case to the Tokyo High Court on
April 6, 2009.
Following the decision, Pasco Corporation provided a reserve for
litigation loss of ¥2,415 million for the year ended March 31, 2009.

SECOM Annual Report 2012

65

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Special Feature

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Financial Review

Financial Section

Consolidated Financial Statements

On May 10, 2010, Pasco Corporation and Sumitomo Mitsui
Banking Corporation reached a settlement under which Pasco
Corporation will pay to Sumitomo Mitsui Banking Corporation an
amount of ¥1,750 million, after several oral proceedings and­settlement negotiations at the Tokyo High Court.
Pursuant to the settlement, Pasco Corporation accounted for¥781 million as a reversal of reserve for litigation loss in the year
ended March 31, 2010, and provided for ¥1,770 million, a sum of
the above settlement amount and related litigation expenses, in the
consolidated balance sheet as of March 31, 2010. These amounts
were paid in the year ended March 31, 2011.
In the year ended March 31, 2012, Pasco Corporation recognizedand paid ¥799 million ($9,744 thousand) for legal settlement
related to software.
Other than those above, it is not anticipated that damages, if any,
resulting from other legal actions will have a material impact on the
Company’s consolidated financial statements.
26. Discontinued Operations
The Company accounted for the sale of certain businesses inaccordance with ASC 205-20, “Discontinued Operations.” The
Company sold all of the shares of Japan Image Communications
Co., Ltd., and Asia Pacific Business Link Ltd., included in the information and communication related and other services segment, inAugust and December 2009, respectively. The Company reported
the operating results related to these ­operations as discontinued
operations.
Discontinued operations for the year ended March 31, 2010 wereas follows:
In millions of yen

Net sales and operating revenue........................................
Income from discontinued operations
before income taxes.........................................................
Gain on sales of discontinued operations...........................
Income taxes......................................................................
Income from discontinued operations, net of tax...............

¥2,135Attributable to noncontrolling interests..............................
Attributable to SECOM CO., LTD. ......................................

(¥ 23)¥1,331260
777
317¥1,354

Income from discontinued operations, net of tax, by businesssegment for the year ended March 31, 2010 were as follows:
In millions of yen

Security services.................................................................
Medical services.................................................................
Information and communication related
and other services............................................................
Income from discontinued operations, net of tax...............

66

SECOM Annual Report 2012

¥ 110
1
1,243
¥1,354

27. Supplemental Cash Flow Information
Supplemental cash flow information is as follows:		In thousands of2012

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2011

2012

2010

Cash paid during theyear for:
Interest................................ ¥ 1,601 ¥ 1,689 ¥ 1,830
Income taxes....................... 38,538 39,719 36,719
Non-cash investing andfinancing activities:
Additions to obligations
under capital leases........... 2,604 4,240 3,963
Acquisitions (Note 4)—
		 Fair value of		 assets acquired...............
—— 15,160
		 Fair value of		 liabilities assumed...........
—— 10,427
		Total considerations.......... ¥—¥— ¥ 4,733$ 19,524
469,976

31,756—$——

28. 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 m
­ anagement 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, real estate development and sales,
and information and communication related and other services.
The security services segment provides various types of secu­rity
services by utilizing the Company’s unique security systems andmanufacturing and selling security 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-based­nursing care services, medical data trans­mission services by utilizing
the Company’s network and leas­ing of real estate for medical institutions. In addition, the VIEs of which the Company is primary beneficiary manage hospitals and health ­care-related institutions. The
insurance services s­ egment represents non-life insurance-related
underwriting business in the Japanese market. The geographic
information services segment represents surveying and measuringservices and GIS services. The real estate development and sales­segment represents development and sales of condominiums thatreinforce security. The information and communication related andother services ­segment represents the Company’s network business,leasing of real estate and ­management of hotel business.
Corporate expenses consist principally of general and administrative expenses of the planning, personnel and admin­istrative departments of the parent company and administrative departments ofthe foreign holding company.
Intersegment sales are priced on a basis intended to ­approximate
amounts charged to unaffiliated customers.

Identifiable assets are those assets used exclusively in the operations of each segment or which are allocated when used jointly.
Corporate assets, which are held by the parent company and theforeign holding company for general and administra­tive facilities,­consist principally of cash and cash equivalents, short­-term investments, investment securities, land, buildings and improvements,
machinery and equipment.
Information by business and geographic segments for the years
ended March 31, 2012, 2011 and 2010 is as follows:		In thousands of2012

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2012

2011

Operating income (loss):
Security services............. ¥101,416 ¥ 99,855 ¥101,623$1,236,780
Fire protection
services........................
4,443
3,158
4,193
54,183
Medical services.............
7,884
1,771
2,254
96,146
Insurance services..........
(80)
(180)
(1,503)(975)(1) Business Segment Information
Geographic information
services........................
3,449
3,393
2,177
42,061		In thousands ofReal estate development
In millions of yen
U.S. dollars
and sales......................
(21,598)525(3,702)(263,390)
Years ended
Year ended
Information andMarch 31
March 31
communication related
2012
2011
2010
2012
and other services........
(4,037)3,239
3,850(49,232)
Net sales andTotal..............................
91,477111,761
108,892
1,115,573
operating revenue:
Corporate expenses
Security services—and eliminations..........
(12,651)(11,329)(11,714)(154,280)
		Customers.................... ¥434,667 ¥424,706 ¥424,385$5,300,817
Operatingincome..........
¥
78,826¥100,432¥
97,178$961,293
		Intersegment.................
1,791
2,095
1,975
21,841Other income.................
7,527
11,8705,352
91,793
			.................................. 436,458
426,801
426,360
5,322,658
Other expenses..............
(5,233)(4,458)(7,854)(63,818)
Fire protection services—		 Income from continuing		Customers.................... 80,678
75,17680,132
983,877		 operations before
		Intersegment.................
4,093
4,887
4,297
49,915		 income taxes
			.................................. 84,771
80,06384,4291,033,792
		 and equity in net
Medical services—		 income of affiliated		Customers.................... 134,550
125,020
56,3091,640,854
		 companies................ ¥ 81,120 ¥107,844 ¥ 94,676$ 989,268
		Intersegment.................
148
151
123
1,805
		
In thousands of			.................................. 134,698
125,171
56,432
1,642,659
In millions of yen
U.S. dollars
Insurance services—
March 31
March 31
		Customers.................... 33,558
33,13329,142409,244
2012
2011
2010
2012
		Intersegment.................
2,750
2,635
2,982
33,536
Assets:			.................................. 36,308
35,76832,124
442,780
Security services............. ¥ 418,333 ¥ 400,428 ¥ 398,333 $ 5,101,622
Geographic information
Fire protection
services—
services........................
85,78680,346
79,761
1,046,171
		Customers.................... 50,173
43,53941,918611,866
Medical services............. 167,644
161,877
131,061
2,044,439
		Intersegment.................
216
167
140
2,634
Insurance services.......... 167,436
177,571
190,329
2,041,902
			.................................. 50,389
43,70642,058614,500
Geographic
information services.....
65,96858,69758,092804,488
Real estate development
Real estateand sales—development
		Customers.................... 11,724
24,817
13,268142,976and sales......................
42,92760,431
77,948523,500
		Intersegment.................
526
95
188
6,415
Information and			.................................. 12,250
24,912
13,456
149,391
communication relatedInformation andand other services........
94,851
88,881
89,911
1,156,720
communication related
Total..............................
1,042,945
1,028,231
1,025,435
12,718,842
and other services—
Corporate items.............
97,140103,943
70,0991,184,634
		Customers.................... 27,132
25,47725,490330,878
Investments in		Intersegment.................
6,800
6,541
8,044
82,927
affiliated companies.....
39,73938,97842,613484,622
			.................................. 33,932
32,01833,534
413,805
		Total assets.................. ¥1,179,824 ¥1,171,152 ¥1,138,147 $14,388,098
Total................................ 788,806
768,439
688,3939,619,585
Eliminations..................... (16,324)(16,571)(17,749)(199,073)
		 Total net sales and		 operating revenue....... ¥772,482 ¥751,868 ¥670,644$9,420,512

SECOM Annual Report 2012

67

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Consolidated Financial Statements(2) Geographic Segment Information		In thousands ofIn millions of yen
U.S. dollars
Net sales and operating revenue attributed to countries based onYears ended
Year ended
location of customers and long-lived assets for the years ended
March 31
March 31
March 31, 2012, 2011 and 2010 were as follows:2012

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

2011

2010

2012

¥43,806¥44,604¥45,694$534,220

1,836
6,167
1,601

1,490
5,137
1,200

1,428
2,253
1,017

22,39075,207
19,524

1,812

1,666

1,857

22,098

42

48

46

512

		
In thousands ofIn millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2012

Net sales andoperating revenue:
Japan......................... ¥743,727 ¥726,381 ¥649,523
Other.........................
28,75525,487
21,121
		Total....................... ¥772,482 ¥751,868 ¥670,644$9,069,841
350,671$9,420,512

2012

2011

		
In thousands of
2,580
57,844273

2,587
56,732219

2,577
54,872258

31,464705,415
3,329¥58,117¥56,951¥55,130$708,744¥33,853¥27,643¥27,154$412,841

670
5,573
26

3,602
5,563
14

1,804
4,069
275

8,171
67,963
317

2,162

2,166

883

26,366

20,60920,12919,823

251,329

62,961

55,67654,890767,817¥434,667 ¥424,706 ¥424,385$5,300,817

In millions of yen

U.S. dollars

March 31

March 31

2010

2012

Long-lived assets:
Japan........................ ¥399,901 ¥395,884 ¥352,028
Other........................
5,857
5,161
3,834
		Total...................... ¥405,758 ¥401,045 ¥355,862$4,876,841
71,427$4,948,268

2012

2011

There are no individually material countries other than Japan withrespect to net sales and operating revenue and long-lived assets.

29. Subsequent Events
On January 10, 2012, the parent company entered into ashare transfer agreement with JS Group Corporation and LIXIL
17
19
2
207
Corporation, its consolidated subsidiary, to acquire 100% ofcommon shares outstanding (14,328,000 shares) of LIXIL NITTAN
Co., Ltd., held by LIXIL Corporation, on April 1, 2012. The parent
12,586
3,157
4,477
153,488
company purchased all of the shares for ¥12,700 million ($154,878
54,88742,164
38,664
669,353
thousand), financed with available cash. LIXIL NITTAN Co., Ltd.
107
34
55
1,305
changed its name to Nittan Co., Ltd. (“Nittan”) on April 1, 2012.
The Company, primarily through its consolidated subsidiary¥54,994¥42,198¥38,719$670,658
Nohmi Bosai Ltd., provides automatic fire alarm systems, fire
extinguishing systems and other fire protection systems. Nittan
The capital expenditures in the above table represent themainly provides installation, sales, maintenance and checks of vari­additions to property, plant and equipment of each segment.
ous fire alarms and extinguishers. As a result of this acquisition, the
The Company has no single customer that accounts for more
Company expects to enhance its fire protection services by utilizing
than 10 percent of total revenues.
marketing channels and the ability to develop new products, which
The following table is a breakdown of security services revenue toboth companies have developed. The acquisition also will enable
external customers by service category. The security services busithe Company to pursue research and development of future disasness is managed as a single operating segment by the ­Company’s
ter prevention systems to meet the change in awareness of disastermanagement.
prevention resulting from the Great East Japan Earthquake and		In thousands oflarge typhoon. Moreover, the acquisition supports the Company’s
In millions of yen
U.S. dollars
strategic plan to accelerate the expansion of the Company’s global
Years ended
Year ended
businesses.
March 31
March 31
Estimated fair values of certain assets acquired and liabilities
2012
2011
2010
2012
assumed at the date of acquisition have not been finalized.
Electronic security
Goodwill that may arise will be included in the fire protection
services........................ ¥304,408 ¥302,529 ¥303,459$3,712,293
services segment and will not be deductible for tax purposes.
Other security services:
The Company has evaluated subsequent events through July 30,
Static guard
2012, the date at which the financial statements were available toservices....................
46,68946,372
46,213569,378
be issued, and determined there are no other items to disclose.
Armored car
services....................
Merchandise andother ..........................
Total security
services....................

68

SECOM Annual Report 2012

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

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

We have audited the accompanying consolidated balance sheets of SECOM CO., LTD. and subsidiaries (the “Company”) as of March 31,
2012 and 2011, and the related consolidated statements of income, changes in equity and cash flows for each of the years in the three-year
period ended March 31, 2012, all expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company’s­management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material­misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, e­ vidence supporting theamounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by­management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis forour opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
SECOM CO., LTD. and subsidiaries as of March 31, 2012 and 2011, and the results of their operations and their cash flows for each of theyears in the three-year period ended March 31, 2012, in conformity with U.S. generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, the Company adopted Accounting Standards Update No. 2009-17,
Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, in the year ended March 31, 2011.
The accompanying consolidated financial statements as of and for the year ended March 31, 2012 have been translated into UnitedStates dollars solely for the convenience of the reader. We have audited the translation and, in our opinion, the consolidated financial­statements expressed in Japanese yen have been translated into United States dollars on the basis set forth in Note 3 to the consolidated
financial statements.

Tokyo, Japan
July 30, 2012

SECOM Annual Report 2012

69

OTHER FINANCIAL DATACONTENTSSUMMARY OF SELECTED FINANCIAL DATA................................................................. 71
COMMON STOCK DATA............................................................................................. 73

70

SECOM Annual Report 2012

SUMMARY OF SELECTED FINANCIAL DATASECOM CO., LTD. and Subsidiaries
Years ended March 31
In millions of yen
2012

2011

2010

2009

2008

2007

Composition of consolidated net sales andoperating revenue by segment
Net sales and operating revenue......................................................... ¥772,482 ¥751,868 ¥670,644 ¥684,016 ¥701,836 ¥631,945
424,706
424,385436,918
435,306
415,410
Security services:............................................................................. 434,667
56.5%
63.3%
63.9%
56.3%
62.0%
65.7%
				 As a percentage of net sales and operating revenue............
302,529
303,459
308,279
304,408
301,521291,393
		 Electronic security services—
40.2
45.2
45.1
39.4
43.0
46.1
				 As a percentage of net sales and operating revenue............
		 Other security services—
46,372
46,21347,99946,64842,144
			Static guard services................................................................ 46,689
6.2
6.9
7.0
6.0
6.6
6.7
				 As a percentage of net sales and operating revenue............
20,12919,823
20,31019,547
20,308
			Armored car services................................................................ 20,609
2.7
3.0
3.0
2.7
2.8
3.2
				 As a percentage of net sales and operating revenue............
66,501
66,03668,30966,19562,452					Subtotal........................................................................... 67,298
55,67654,89060,33067,59061,565
		 Merchandise and other............................................................... 62,961
7.4
8.2
8.8
8.2
9.6
9.7
				 As a percentage of net sales and operating revenue............
75,17680,132
84,17582,57227,448Fire protection services.................................................................... 80,678
10.0
11.9
12.3
10.4
11.8
4.3
				 As a percentage of net sales and operating revenue............
125,020
56,30952,22050,74145,852
Medical services.............................................................................. 134,550
16.6
8.4
7.6
17.4
7.2
7.3
				 As a percentage of net sales and operating revenue............
33,13329,142
21,53033,22931,978Insurance services........................................................................... 33,558
4.4
4.3
3.2
4.4
4.7
5.1
				 As a percentage of net sales and operating revenue............
43,53941,91840,20739,37636,438Geographic information services..................................................... 50,173
5.8
6.3
5.9
6.5
5.6
5.8
				 As a percentage of net sales and operating revenue............
24,817
13,26822,07229,92845,431
Real estate development and sales.................................................. 11,724
3.3
2.0
3.2
1.5
4.3
7.2
				 As a percentage of net sales and operating revenue............
Information and communication related
25,47725,49026,89430,68429,388and other services......................................................................... 27,132
3.4
3.8
3.9
3.5
4.4
4.6
				 As a percentage of net sales and operating revenue............
Net income attributable to SECOM CO., LTD., cash dividends
and SECOM CO., LTD. shareholders’ equity
Net income attributable to SECOM CO., LTD...................................... ¥ 41,237
Cash dividends (paid)(2)........................................................................ 19,623
SECOM CO., LTD. shareholders’ equity............................................... 612,855
Consolidated financial ratios
Percentage of working capital accounted for by:
Debt
		Bank loans..................................................................................
		 Current portion of long-term debt...............................................
		Straight bonds.............................................................................
		 Other long-term debt..................................................................
			Total debt................................................................................
SECOM CO., LTD. shareholders’ equity...........................................
			Total capitalization...................................................................
Return on total assets (percentage) (a)...................................................
Return on equity (percentage) (b)..........................................................
Percentage of net sales and operating revenue absorbed by (c):Depreciation and amortization........................................................
Rental expense under operating leases............................................
Ratio of accumulated depreciation to depreciable
assets (percentage)...........................................................................
Net property turnover (times) (c)...........................................................
Before-tax interest coverage (times) (c)(d)................................................

¥ 62,665
18,533
593,495¥ 46,989
18,533569,799¥ 30,560
19,122528,721¥ 61,756
17,998574,554¥ 55,889
13,499551,732

5.7
3.1
1.4
3.8
14.0
86.0
100.0
3.5
6.7

6.8
1.7
2.0
5.5
16.0
84.0
100.0
5.4
10.6

6.5
1.6
2.6
3.6
14.3
85.7
100.0
4.1
8.2

11.9
2.4
1.9
3.6
19.8
80.2
100.0
2.7
5.8

17.5
1.2
1.8
4.0
24.5
75.5
100.0
4.9
10.7

17.4
1.4
1.9
3.6
24.3
75.7
100.0
4.5
10.1

7.5
2.1

7.6
2.2

8.2
2.1

7.9
2.2

8.2
2.3

9.1
2.5

63.4
2.49
51.8

62.5
2.49
65.1

64.9
2.55
53.5

64.4
2.66
32.4

63.8
2.81
53.7

62.3
2.54
53.5

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

SECOM Annual Report 2012

71

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Summary of Selected Financial Data

2012

2011

2010

2009

2008

2007

Number of shares outstanding
233,288,717 233,288,717 233,288,717 233,288,717 233,288,717 233,288,717
Issued8,323,599
8,318,900
Owned by the Company........................................... 15,017,691 15,258,553 15,254,334 15,251,520
Balance..................................................................... 218,271,026 218,030,164 218,034,383 218,037,197 224,965,118 224,969,817
Per share information
Net income attributable to SECOM CO., LTD.
¥ 287.41¥ 215.51¥ 137.42¥ 274.51¥ 248.42¥ 188.97
per share (in yen) (1) .................................................
85.00
85.00
85.00
80.00
60.00
90.00
Cash dividends paid per share (in yen) (2) ...................
SECOM CO., LTD. shareholders’ equity
2,722.08
2,613.34
2,424.91
2,553.97
2,452.47
2,807.77
per share (in yen) (3) .................................................
458.62383.36299.72448.19427.34365.28Cash flow per share (in yen) (1) (e) ................................
1.42
1.57
1.50
1.90
2.23
1.44
Price/Book value ratio................................................
13.45
18.98
26.41
17.63
22.02
21.43
Price/Earnings ratio...................................................
8.43
10.67
12.11
10.80
12.80
11.09
Price/Cash flow ratio.................................................
3,865
4,090
3,630
4,840
5,470
4,050
Stock price at year-end (in yen).................................
Notes: (a) Net income attributable to SECOM CO., LTD. / Total assets(b) Net income attributable to SECOM CO., LTD. / SECOM CO., LTD.
shareholders’ equity(c) Including discontinued operations(d)		(Income before income taxes and equity in net income of affiliatedcompanies + Interest expense)/Interest expense(e) (Net income attributable to SECOM CO., LTD. + Depreciation andamortization - Dividends approved) / Average number of shares outstanding
during each period

72

SECOM Annual Report 2012

(1) Per share amounts are based on the average number of shares outstanding
during each period.
(2) Subsequent to March 31, 2012, cash dividends of ¥19,644 million (¥90.00
per share) were approved at the general shareholders’ meeting on June 26,
2012 (see Note 18 of the accompanying notes to consolidated financial
statements).
(3) Per share amounts are based on the number of shares outstanding at theend of each period, minus treasury stock.

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

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

2012

2011

2010

2009

2008

2007

29,11830,33831,48830,85928,51230,683

—%
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%

0.00%
35.67
2.55
3.76
38.17
13.31
6.54
100.00%

—%
33.84
3.86
3.81
41.71
13.21
3.57
100.00%

—%
32.21
3.68
3.86
42.43
14.26
3.56
100.00%

PRICE INFORMATION (TOKYO STOCK EXCHANGE)
2010
2011

2012

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

Price per share (in yen)

Nikkei Stock Average (in yen)

High

Low

High

Low

¥4,165
4,225
3,920
4,230
4,145
3,975
3,830
4,190

¥3,785
3,635
3,620
3,425
3,660
3,435
3,390
3,390

¥11,339.30
9,795.24
10,370.53
10,857.53
10,004.20
10,137.73
9,050.47
10,255.15¥9,382.64
8,824.06
9,154.72
8,605.15
9,351.40
8,374.13
8,160.01
8,378.36

SECOM Annual Report 201273

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Common Stock Data

COMMON STOCK ISSUES
			Shares
		
		
Date

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

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

Additional
shares issued(In thousands)

outstanding
after issue(In thousands)

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

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

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

Remarks

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

Notes: 1. The above is a record of SECOM’s common stock issues since the common stock was listed on the Tokyo Stock Exchange in June 1974.
2. As of March 31, 2012, 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 2012

CONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP) [REFERENCE]CONTENTSCONDENSED 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 201275

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Consolidated Financial Data
(Based on Japanese GAAP) [Reference]

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

ASSETS

2012

2011

2010

2009

2008

2007

Current assets:
Cash on hand and in banks................................................ ¥ 182,412 ¥ 172,958 ¥ 146,929 ¥0,127,476 ¥0,200,403 ¥ 181,266
54,01156,546
48,861
56,667
63,69675,328Cash deposits for armored car services...............................
28,00029,50036,50036,50019,00015,000Call loans...........................................................................
85,74473,956
73,844
77,39885,59583,397
Notes and accounts receivable, trade..................................
24,83022,754
20,824
20,13921,125
19,217
Due from subscribers..........................................................
19,936
7,313
15,98916,786
9,306
18,171
Short-term investments......................................................
14,605
15,433
14,742
14,993——
Lease receivables and investment in leased assets...............
————
27,08025,945Inventories.........................................................................
9,597
8,823
10,987
10,730——
Merchandises and products................................................
9,082
11,481
18,493
6,177
90,23071,724
Real estate inventories........................................................
2,527
2,249
1,427
2,174
—
—
Work in process.................................................................
5,671
4,233
5,312
9,534
—
—
Costs on uncompleted construction contracts....................
33,27648,29655,916
60,950——Work in process for real estate inventories..........................
5,950
5,750
5,932
5,840
—
—
Raw materials and supplies.................................................
11,383
12,216
11,684
11,135
11,84011,597
Deferred income taxes........................................................
4,389
3,908
3,088
4,125
7,246
5,097
Short-term loans receivable................................................
13,48912,566
15,275
15,57813,827
19,660
Other ...............................................................................
(1,428)(1,704)(2,207)(2,762)(1,813)(1,923)
Allowance for doubtful accounts........................................
503,479
486,284
483,600
473,445547,538
524,484
				Total current assets..................................................

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

97,95566,900104,426
21,464

102,855
63,49097,73018,63897,692
63,03493,424
18,86985,41565,63189,29722,92384,54565,45081,71633,63687,306
63,67580,341
29,485Intangible assets.................................................................

25,04325,553

21,885

21,331

22,332

23,294

Investments and others:
177,655
188,001
187,777
201,923
241,957
243,148
		Investment securities.......................................................
46,19747,57650,48859,88054,59955,223
		 Long-term loans receivable.............................................
19,13018,73018,61818,876
17,834
15,817
		 Prepaid pension and severance costs...............................
14,793
20,11019,84824,41322,74015,654
		 Deferred income taxes....................................................
42,37643,422
44,63046,12947,57945,692
		Other..............................................................................
(17,584)(18,111)(18,403)(19,122)(17,455)(15,161)
		 Allowance for doubtful accounts....................................
598,359
607,998
597,864
616,698
654,936
644,478
				Total fixed assets......................................................
45
117
213
338
365
219
Deferred assets...................................................................
				Total assets ............................................................. ¥1,101,884 ¥1,094,400 ¥1,081,679 ¥1,090,483 ¥1,202,840 ¥1,169,182

76

SECOM Annual Report 2012

In millions of yen

LIABILITIES

2012

2011

2010

2009

2008

2007

Current liabilities:
Notes and accounts payable, trade...................................... ¥ 30,731 ¥ 25,959 ¥ 24,774 ¥0,028,374 ¥0,030,459 ¥0,028,469
47,98547,42648,09485,383136,034
129,169
Bank loans..........................................................................
5,983
2,914
1,761
5,036
1,936
3,356
Current portion of straight bonds........................................
354
354
247
202
—
—
Lease obligations.................................................................
27,62722,85723,35923,19528,98829,888
Payables—other..................................................................
14,68819,353
20,907
18,983
24,61024,973
Accrued income taxes.........................................................
3,833
2,850
3,302
2,932
3,456
3,366
Accrued consumption taxes.................................................
4,169
3,792
3,633
3,534
3,641
3,198
Accrued expenses................................................................
30,83430,58233,554
31,29832,061
31,188Deferred revenue................................................................
12,73911,925
12,13912,741
12,21011,409Accrued bonuses.................................................................
—
—
1,770
2,415
—
—
Reserve for litigation losses..................................................
—
—
—
—
—
80
Accrued bonuses to directors and corporate auditors..........
834
530
145
—
—
—
Reserve for losses on construction contracts........................
35,99733,52736,66042,55846,33758,665
Other..................................................................................
215,780
202,074
210,353
256,655
319,737
323,766
				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 andcorporate auditors.............................................................
Investment deposits by policyholders, unearned
premiums and other insurance liabilities............................
Other..................................................................................
				Total long-term liabilities...........................................
				Total liabilities...........................................................

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

12,673
15,338571
34,2103,740
13,807

13,52420,024—32,532
5,042
16,096

13,941
14,363—32,164
2,717
17,596

2,509

2,433

2,398

2,244

2,220

2,300

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

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

150,180
1,557
246,171456,525

167,0111,621
251,218
507,874

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

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

Net Assets
Shareholders’ equity:
Common stock.................................................................... ¥ 66,377 ¥ 66,377 ¥ 66,377 ¥ 66,377 ¥ 66,377 ¥ 66,377
83,054
83,054
83,054
83,054
83,056
83,056
Capital surplus....................................................................
565,261549,747
507,434
478,355
475,987432,696
Retained earnings...............................................................
(73,659)(74,923)(74,907)(74,896)(44,877)(44,850)
Common stock in treasury, at cost.......................................
641,034
624,255
581,959
552,891
580,543537,279
				Total shareholders’ equity.........................................
Accumulated other comprehensive income:Unrealized gains (losses) on securities..................................
Deferred losses on hedges...................................................
Foreign currency translation adjustments.............................
				 Total accumulated other comprehensive income.......

4,559
(28)
(37,556)(33,026)

2,192
(35)
(34,166)(32,010)

4,521
(17)
(27,871)(23,367)(3,901)(27)(30,008)(33,937)(3,306)(90)(9,907)(13,304)

10,157(51)(7,253)
2,853

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

63,50961,81066,562

63,65463,03560,983

671,517654,055
625,153582,608630,274
601,116
				Total net assets.........................................................
				 Total liabilities and net assets.................................... ¥1,101,884 ¥1,094,400 ¥1,081,679 ¥1,090,483 ¥1,202,840 ¥1,169,182

SECOM Annual Report 2012

77

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Consolidated Financial Data
(Based on Japanese GAAP) [Reference]

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (BASED ON JAPANESE GAAP)SECOM CO., LTD. and Subsidiaries
Years ended March 31
In millions of yen
2012

2011

2010

2009

2008

2007

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

¥679,173 ¥663,887¥654,678 ¥678,400 ¥682,619 ¥613,976
2.3%
1.4%
(3.5%)(0.6%)
11.2%
8.2%

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

458,452
67.5

423,98363.9

415,39063.4

444,77165.6

433,030
63.4

388,787
63.3

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

220,72032.5

239,904
36.1

239,28836.6

233,62834.4

249,58936.6

225,189
36.7

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

139,64220.6

140,76221.2

140,749
21.5

145,99421.5

144,883
21.3

127,348
20.7

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

81,07811.9

99,141
14.9

98,53915.1

87,63412.9

104,706
15.3

97,84015.9

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

12,9706,209

17,428
6,895

9,158
9,371

12,957
9,666

20,125
10,552

15,087
10,207

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

87,83912.9

109,674
16.5

98,32715.0

90,92413.4

114,278
16.7

102,720
16.7

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

287
11,558

1,717
5,749

3,370
5,463

482
27,875

2,748
4,984

2,601
3,317

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

76,567
11.3

105,642
15.9

96,233
14.7

63,531
9.4

112,043
16.4

102,005
16.6

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

32,0234,600

37,303
1,383

38,172
4,944

41,768(3,244)42,602
2,656

39,961(660)

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

39,943

66,955————

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

4,454

6,109

5,505

3,504

5,278

4,404

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

35,4895.2(41.7)

60,8469.2
27.8

47,611
7.3
121.4

21,5023.2(65.0)

61,506
9.0
5.5

58,2999.5
10.0

CONSOLIDATED STATEMENTs OF COMPREHENSIVE INCOME (BASED ON JAPANESE GAAP)SECOM CO., LTD. and Subsidiaries
Years ended March 31

78

In millions of yen
2012

2011

2010

2009

2008

2007

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

¥39,943¥66,955

¥—

¥—

¥—

¥—

2,318
8
(2,262)(2,970)16(5,191)

—
—
—

—
—
—

—
—
—

—
—
—

(1,281)(1,069)

—

—

—

—

		 Total other comprehensive income...................................

(1,217)(9,214)

—

—

—

—

Comprehensive income...........................................................

38,72657,740————Comprehensive income attributable to:Comprehensive income attributable to owners of
the parent company..........................................................
Comprehensive income attributable to minority interests.....

34,473
4,253

52,203
5,537

—
—

—
—

—
—

—
—

SECOM Annual Report 2012

NONCONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP) [REFERENCE]CONTENTSCONDENSED NONCONSOLIDATED BALANCE SHEETS(BASED ON JAPANESE GAAP).................................................................................... 80
CONDENSED NONCONSOLIDATED STATEMENTS OF INCOME(BASED ON JAPANESE GAAP).................................................................................... 82

SECOM Annual Report 2012

79

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Nonconsolidated Financial Data
(Based on Japanese GAAP) [Reference]

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

ASSETS

2012

2011

2010

2009

2008

2007

¥ 82,631
52,386720
14,324
10,039
2,159
456
5,152
1,470
2,253
4,269
369

¥ 74,680
54,641
221
11,563
6,074
2,385
456
4,279
1,167
2,051
4,938
277

¥ 44,607
46,957248
11,434
6,484
2,556
2,429
6,574
1,082
2,016
4,720
171

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

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

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

15,197
1,639(268)
192,804

4,040
1,857
(206)
168,428

3,669
2,129
(450)
134,634

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

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

13,9102,615(541)
191,111

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

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

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

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

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

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

22,124136
60,2841,364
4,216
32,0922,980
22Intangible assets:
		 Telephone and telegraph utility rights...............................
		Goodwill...........................................................................
		Software...........................................................................
		Other................................................................................

—
3,350
5,487
1,586

—
—
6,751
815

—
—
7,580
975

—
—
6,578
542

—
—
7,184
516

83
—
4,755
3,419

23,906

20,96921,76921,26728,66843,165

190,305

203,036

193,899

192,775

194,110

166,839

1,883
4,298
59

1,874
4,687
53

1,874
5,088
55

1,874
8,468
40

1,874
8,453
31

1,074
18,30824

123,716
113,536
8,147
8,047
24,01325,872
15,903
14,321130
13,865
4,181
4,181
2,713
2,831
(19,326)(12,995)
506,643526,227¥699,448 ¥694,656

128,727
8,583
25,816
14,364
14,0994,334
800(12,544)533,572¥668,207

134,636
8,702
26,412
14,561
14,763
4,896
1,065(13,354)545,056¥679,858

66,354
8,859
26,165
13,769
6,760
4,893
975
(6,812)478,710¥673,043

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

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

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

80

SECOM Annual Report 2012

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................................................
Accrued pension and severance costs..................................
Accrued retirement benefits for directors andcorporate auditors.............................................................
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.........................................
Valuation, translation adjustments and others:
Unrealized gains (losses) on securities..................................
				Total valuation, translation adjustments				 and others..............................................................
				Total net assets.........................................................
				 Total liabilities and net assets....................................

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

2009

¥

2,319
60,89343
10,981
3,742
11,8491,622
597
28,451
22,735
5,537
1,928
150,704

2008

2007

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

2,217
18,0993,945

2,253
18,2624,040

182
17,965
4,394

192
18,146
4,766—
18,174
5,087—
18,449
5,370

1,294
10
25,568
131,689

1,232
11
25,799136,238

1,174
272
23,989135,276

1,104
12
24,221
174,926

1,070—
24,333
151,513

1,268—
25,088160,637¥ 66,377¥ 66,377¥ 66,377¥ 66,377¥ 66,377¥ 66,377

83,054—
83,054

83,054—
83,054

83,054—
83,054

83,054—
83,054

83,054
1
83,056

83,054
1
83,056

9,028

9,028

9,028

9,028

9,028

9,028

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)532,145800
2,212
418,306
430,347(74,896)504,883

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

1,031

(201)

786

48

(82)

4,564

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

786
532,931¥668,20748
504,932¥679,858(82)
521,529¥673,043

4,564
494,154¥654,791

SECOM Annual Report 201281

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Nonconsolidated Financial Data
(Based on Japanese GAAP) [Reference]

CONDENSED NONCONSOLIDATED STATEMENTS OF INCOME (BASED ON JAPANESE GAAP)SECOM CO., LTD.
Years ended March 31
In millions of yen
2012

82

2011

2010

2009

2008

2007

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

¥345,476 ¥329,297¥328,773 ¥336,893 ¥337,611 ¥326,076
4.9%
0.2%
(2.4%)(0.2%)
3.5%
4.1%
299,523
290,252
291,325
294,386
291,350
282,247
3.2
(0.4)
(1.0)
1.0
3.2
3.4
45,952
39,04537,44742,506
46,261
43,82917.7
4.3(11.9)
(8.1)
5.5
9.0

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

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
28,352
75.7

193,84257.5
161,548
54.9
32,29476.0

192,41757.0
158,03154.2
34,386
74.3

183,34156.2
151,53253.7
31,80972.6

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

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

143,05042.5
132,83845.1
10,21224.0

145,19343.0
133,31845.8
11,87425.7

142,73443.8
130,71546.3
12,01927.4

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

71,89320.8

69,32421.0

68,54420.8

70,43420.9

71,03821.0

69,33021.3

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

70,196
20.3

68,68820.9

71,52721.8

72,61621.6

74,15522.0

73,40422.5

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

8,048
3,032

8,863
3,050

9,225
3,290

9,721
3,990

9,607
4,575

7,942
4,763

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

75,21221.8

74,501
22.6

77,462
23.6

78,34623.3

79,18723.5

76,58323.5

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

23,001
40,695

106
2,637

561
4,639

67
27,068

2,221
566

1,246
1,141

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

57,518
16.6

71,97021.9

73,38422.3

51,34515.2

80,842
23.9

76,688
23.5

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

30,69953.4

26,946
37.4

27,57837.6

18,93136.9

30,79538.1

29,44338.4

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

26,8187.8(40.4)

45,02313.7(1.7)

45,80613.9
41.3

32,4149.6(35.2)

50,04614.8
5.9

47,245
14.5
7.7

SECOM Annual Report 2012

CORPORATE INFORMATION(As of June 30, 2012)

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		Percentage
Issued capitalof equity/(In millions of yen)voting rights

Lines of business

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

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
Maintenance of equipment
Design, construction and maintenance of facilities
Manufacturing of security equipment
Manufacturing and sales of security systems
Sales of security and water-treatment equipment
Sales of air-conditioning equipment
Security services
Operation of PFI correctional facilities
Security services
Condominium management
Security services¥3,530		
201		
15		
50		
286		
30		
210		
40		
10		
10		
10		
10		
10		
50		
50		
50		
50		
24		
10		
100		
60		
23		
30		
15		
20		
100		
499		
200		
271		
80		
30		
10		
50		
40		
22		

(50.9)%
59.1
70.0
51.0
67.0
68.3
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
51.0(100.0)(100.0)66.7(100.0)
100.0
100.0
82.0
100.0
100.0
100.0
51.7
100.0
(100.0)(99.9)(As of June 30, 2012)

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)

SECOM Annual Report 2012

83

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Corporate Information

MAJOR CONSOLIDATED SUBSIDIARIES		Percentage
Issued capitalof equity/(In millions of yen)voting rights

Lines of business<Fire protection services>
Nohmi Bosai Ltd.
¥13,302		
(50.4)%
				
Ichibou Co., Ltd.
28		(73.2)
Kyushu Nohmi Co., Ltd.
30		(100.0)Chiyoda Service Co., Ltd.
20		(70.0)
Nohmi Engineering Corp.
40		
(100.0)Nohmi System Co., Ltd.
20		(100.0)
Iwate Nohmi Co., Ltd.
30		(100.0)
Tohoku Bosai Plant Co., Ltd.
12		(100.0)
Aomori Nohmi Co., Ltd.
20		(100.0)
Osaka Nohmi Co., Ltd.
20		(100.0)
Nissin Bohsai Co., Ltd.
50		(100.0)Chiba Nohmi Co., Ltd.
10		(100.0)Shikoku Nohmi Co., Ltd.
20		(100.0)Nohmi Techno Engineering Co., Ltd.
40		(100.0)Akita Nohmi Co., Ltd.
20		(100.0)Fukushima Nohmi Co., Ltd.
20		(100.0)
Tohoku Nohmi Co., Ltd.
20		(100.0)Nohmi Plant Niigata Co., Ltd.
20		(100.0)
Hokkaido Nohmi Co., Ltd.
20		(100.0)
Yashima Bosai Setsubi Co., Ltd.
20		
(81.8)
Nittan Co., Ltd.
2,303		100.0				Nittan Electronic Co., Ltd.
60		(90.4)
Nittan Denko Co., Ltd.
10		(100.0)Nittan Hokkaido Service Center Co., Ltd.
10		(100.0)Nittan Tohoku Service Center Co., Ltd.
10		(100.0)Nittan Nagoya Service Center Co., Ltd.
10		(100.0)Nittan Service Center Osaka Co., Ltd.
10		(100.0)Nittan Hiroshima Service Center Co., Ltd.
10		(100.0)Nittan Shikoku Service Center Co., Ltd.
10		(100.0)Nittan Fukuoka Service Center Co., Ltd.
10		(100.0)
Sogo Denki Trading Co., Ltd.
10		(100.0)
Shell beach Co., Ltd.
10		(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 fire protection equipment
Installation of environmental monitoring systems
Installation of f­ ire 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, 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<Medical services>
Secom Medical System Co., Ltd.
Mac Corp.
Yoshikikaku Co., Ltd.
Kensei Co., Ltd.
Ryomay Royal Life Co., Ltd.
Alive Medicare Co., Ltd.
Secom Medical Resource Co., Ltd.
Secomfort Co., Ltd.
Secomfort West Co., Ltd.
US Chemical Co., Ltd.

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
Medical staffing solutions
Management of nursing homes
Management of nursing homes
Management of pharmacies

6,545		
95		
20		
100		
210		
50		
10		
100		
100		
3		

100.0
(100.0)(100.0)(100.0)86.5(100.0)(100.0)(100.0)(100.0)(100.0)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 2012

(As of June 30, 2012)(Continued)

MAJOR CONSOLIDATED SUBSIDIARIES		Percentage
Issued capitalof equity/(In millions of yen)voting rights

Lines of business<Insurance services>
Secom Insurance Service Co., Ltd.
Secom General Insurance Co., Ltd.

¥(As of June 30, 2012)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.

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

69.8
(100.0)(100.0)(84.6)(52.6)(100.0)(60.0)(51.0)(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<Real estate development and sales>
Secom Home Life Co., Ltd.

3,700		

99.9<Information and communication related
and other services>
Secom Trust Systems Co., Ltd.
1,469		100.0				Arai & Co., Ltd.
3,000		86.7Arai Corporation, Inc.
10		
(100.0)
Secom Credit Co., Ltd.
400		
100.0
Secom Corp.
100		
100.0
Secom Auto Service Co., Ltd.
45		
100.0
Wonder Dream Co., Ltd.
490		
100.0
Secom Staff Service Co., Ltd.
50		(100.0)
The Windsor Hotels International Co., Ltd.
165		
90.0
Secom Business Plus Co., Ltd.
20		
100.0
Secom Home Service Co., Ltd.
32		
100.0
Kurashi-TEL Co., Ltd.
100		
60.0

Development of residential buildings

Information, communication, information security
services and software development
Real estate leasing
Management of real estate
Credit services
Printing services
Car maintenance
Employee welfare for SECOM Group
Employment agency
Hotel management
General office services
Lifestyle support services
Comprehensive lifestyle support services

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)

SECOM Annual Report 201285

The Management

Strategic Highlights

Special Feature

SECOM Today

Financial Review

Financial Section

Corporate Information

MAJOR CONSOLIDATED SUBSIDIARIES		Percentage		of equity/
Issued capitalvoting rights

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.
P.T. Secom Indopratama
Thaisecom Pitakkij Co., Ltd.
Secom Australia Pty. Ltd.
Secom Technical Services Unit Trust
Secom Australia (ACT) Unit Trust
Secom Guardall NZ Ltd.
Secom Vietnam Co., Ltd.

Lines of business£44,126 thousand¥5,550 million
US$2,000 thousand
US$3,500 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$2,000 thousand
Rmb7,000 thousand
Rmb10,000 thousand
Rmb6,000 thousand
Rmb15,000 thousand
Rmb10,000 thousand
Rmb2,000 thousand
US$3,950 thousand
THB378,857 thousand
AUD17,297 thousand
AUD5,951 thousand
AUD700 thousand
NZD1,604 thousand
US$600 thousand(80.0)(90.0)(95.0)(91.0)(85.0)(97.0)(60.0)(80.0)
94.9
70.0
100.0
(70.0)(100.0)(80.0)
80.0

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 services
Security service-related consulting<Other services>
Shanghai Nohmi Secom
US$14,300 thousand(100.0)Fire Protection Equipment Co., Ltd.				
Nohmi Taiwan Ltd.
NT$15,000 thousand(58.0)
				
Nittan Europe Ltd.
£1,194 thousand(100.0)Nittan Fire Protection System（Zhongshan）Co.,Ltd.
US$1,400 thousand(70.0)
Taiwan Nittan Fire & Safety Co.,Ltd.
NT$3,800 thousand(51.0)
Nittan Fire Prevention Technology (Beijing) Corp.
US$550 thousand(100.0)
Pasco Philippines Corp.
PHP20,400 thousand(100.0)
Pasco China Corp.
Rmb22,320 thousand(99.0)
Suzhou Super Dimension Earth Science Research
Rmb1,000 thousand(92.0)and Development Co., Ltd.
Shanghai Pasco China Corp.
Rmb800 thousand(100.0)
Pasco (Thailand) Co., Ltd.
THB129,000 thousand(100.0)P.T. Nusantara Secom InfoTech
US$3,304 thousand(100.0)				
FM-International Oy
EUR10,994 thousand(100.0)Aerodata International Surveys BVBAEUR67 thousand(74.9)
Pasco Europe B.V.
EUR5,500 thousand(100.0)
Pasco North America Inc.
US$2,671 thousand(100.0)
Keystone Aerial Surveys Inc.
US$7 thousand(70.0)
Airmag Surveys Inc.
US$15 thousand(100.0)Base Aerofotogrametria E Projetos S.A.
BRL5,000 thousand(51.0)The Westec Security Group, Inc.
US$0.3 thousand
100.0
ClearLight Partners, LLC
US$49,800 thousand(99.7)
ClearLight Partners II, LLC
US$222,659 thousand(99.0)

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
Sales of fire protection equipment
Sales of fire protection equipment
Geographic information services
Geographic information services
Geographic information services
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

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 2012

(As of June 30, 2012)

SECOM’s BASIC BUSINESS AREAS
SECOM offers a wide range of services and p­ roducts withthe aim of realizing its Social System Industry vision.

PROFILE

Centralized Security Systems

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.

Security Services
Centralized Security Systems
Commercial Use:

Since its establishment in 1962, SECOM CO., LTD.,
has sought to develop distinctive, integrated services andconvenient and comfortable, in line with its belief in theits business activities. Such efforts have enabled SECOM toSECOM AXSECOM AX is an on-line security ­system with advanced on-site image sensors
that incorporate microphones to enable the SECOM control center staff to checkthe subscriber’s premises by listening and viewing.
SECOM IXSECOM IX is a remote imaging security system for ­commercial facilities offeringround-the-clock services.
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.

Fire
Dept.
Gas
Company• Alert emergency
services asnecessary

Alert using
1 telephone

3 Dispatch SECOM emergency

circuits

response personnel

SECOM
Emergency
Depot

SECOM
Control Center

2 Alert SECOM

emergency
response personnel

SECURITY SYSTEMS FOR MULTIFAMILY DWELLINGSSECOM provides comprehensive building m­ anagement functions forcondominiums and total safety with a centralized ­security sys­tem for each unit
in the building. SECOM’s menu includes services for small-scale multifamilydwellings.
SECOM REMOTE MONITORING FOR SENIORSSECOM Remote Monitoring for Seniors monitors the safety and wellbeing ofseniors living alone and responds appropriately when needed. This convenientpackage bundles basic services, including fire protection, emergency alert,
medical emergency alert, everyday monitoring and consulting on health-related
matters, with a safety confirmation service whereby SECOM staff check regularly
by calling or visiting.

a pioneer in Japan’s security services industry,
systemsthat
Residential
Use: make life more secure,importance of contributing to society throughachieve steady growth.
Large-Scale Proprietary Security Systems
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
available from Group-selected collaborating companies.

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 c­ ommercial and industrial
facilities.
Fire Extinguishing Systems
SECOM offers an extensive lineup, including fire sprinklers and other water fire
extinguishing systems, foam fire extinguishing systems, dry chemical fire extinguishing systems and inert gas fire extinguishing systems, for applications­ranging from office buildings to chemical plants and tunnels.
Maintenance Services
This business centers on inspection, maintenance and repair services, as wellas round-the-clock on-line monitoring and other services provided through a­customer services center.
OthersThis category comprises the installation and maintenance of parking lot control
systems and the assembly and sale of printed circuit boards for manufacturers inother industries, including medical and electronics equipment.

On July 7, 2012, SECOM celebrated its 50th anniversary. Beginning with Japan’s first on-line security system, SECOM has developed
a wide range of systems over the years that respond promptly to changing social imperatives. These include an on-line home
security system and COCO-SECOM, a mobile personal security system for outdoor use. At the same time, SECOM has worked toencourage broad acceptance of the concept of security services in Japan.
Today, the overarching mission of SECOM—comprising the parent company and the companies of the SECOM Group—is to provide safety and security for people whenever and wherever necessary. Accordingly, SECOM 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 thatmake life more secure, convenient and comfortable. To this end, SECOM is leveraging its extensive business portfolio—which has
expanded to include security services, fire protection services, medical services, insurance services, geographic information services,
real estate development and sales, and information and communication related and other services—to create a solid foundation for
future growth, and working not only to enhance individual businesses but also to integrate services and systems, thereby yielding
considerable synergies to drive future growth.
With the aim of maximizing these synergies, SECOM is promoting a new concept, dubbed “ALL SECOM,” which focuses on
rallying SECOM’s comprehensive strengths to create distinctive packages of services and systems that encourage people to turn to
SECOM with the confidence that doing so will help them resolve security and various other concerns.
SECOM has expanded into 19 countries and territories outside of Japan: Taiwan, the Republic of Korea (ROK), the People’s
Republic of China (PRC), Thailand, Malaysia, Singapore, Indonesia, Vietnam, the Philippines, India, the United Arab Emirates, theUnited Kingdom, Belgium, Sweden, Finland, Australia, New Zealand, the United States and Brazil. SECOM continues striving tofurther grow its operations in all of these markets.

87

SECOM Annual Report 2012

Merchandise

Subscriber

PoliceDept.

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

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 d­ iagnostic experts examine them and provide
consultation to the primary physician.
MY SPOONMy Spoon is a robot that enables people with impaired upper body mobility to
eat with minimal assistance. This is the first robot of its kind in Japan.
RESIDENCES FOR SENIORS WITH FULL-TIME PERSONAL CARE SERVICESSECOM manages the Sacravia Seijo, Royal Life Tama, Comfort Garden Azamino,
Comfort Hills Rokko and Alive Care Home series of residences for seniors.
SECOM Health Care CLUBSECOM Health Care Club is a membership-based club that provides accessto 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.

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 p­ redetermined
telephone number.

Static Guard Services

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

Armored Car Services

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

Insurance 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 and­treatment-related ­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 equipped withantitheft 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.

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

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

Information and Communication Related and Other Services
SECURE DATA CENTER
Secure Data Center facilities provide a comprehensive service for e-business thatcombines SECOM’s expertise in both physical and information security.
DIGITAL AUTHENTICATION SERVICESSECOM offers public key infrastructure (PKI) services that provide an effectivemeans of establishing credibility among Internet users, including issuance ofdigital certificates and a set-up and operating service for organizations thatwish to establish their own digital certificate authority.
NETWORK SECURITY MONITORING SERVICESSECOM provides security and stability for clients’ IT systems around theclock. SECOM ­monitors and reports on threats to security, and on network
operating s­ tatus and network traffic.
Total Support Service of Emergency Management
Total Support Service of Emergency Management rallies the strengths of theGroup to provide comprehensive support for the formulation of BCPs, as well
as security services, fire protection services, geographic information services
and information and communication related and other services, among
others, when disaster occurs, ensuring prompt initial response services andhelping with post-event recovery.
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 2012

88

DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERS
Corporate Auditors

Directors

Seiji Sakamoto
Katsuhisa Kuwahara
Ken Tsunematsu
Kohei Yamashita
SECOM CO., LTD.

Hideki Kato

Executive Officers
Shuji Maeda

Takayuki Ito

Makoto Iida

Juichi Toda

President andExecutive Officer

Founder

Co-Founder

Representative Director

Minoru Takaoka
Koichi Sato

Executive Officer

Executive Vice President

Hideo Morishita
Yasuo Nakayama

Executive Officer

Executive Director

Tsuneo Komatsuzaki
Hiroshi Ito

Executive Officer

Executive Director

Ryohei Komatsu
Executive Officer

SECOM CO., LTD.

Yukio Tsunoda

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

Executive Director

Shohei Kimura

Shuji Maeda

ChairmanPresident andShunji Ogahara

Representative Director

Managing Executive
Officer

Executive Officer

Masahiro Takeda

ANNUAL REPORT 2012

Kazuaki Anzai

Tokyo 150-0001, Japan
http://www.secom.co.jp/

Executive Officer

Naohide Nakamura

Koichi Sato

Yasuo Nakayama

Hiroshi Ito

Kazuaki Anzai

Executive Vice President

Executive Director

Executive Director

Executive Director

Managing Executive

Teruhisa Yoshimura

Officer

Executive Officer

Yasuyuki Yoshida

Keitaro Arai

Director

Executive Officer

Junzo Nakayama

Tatsuro Fuse

Director

Executive Officer

Hiromichi Sonoda
Executive Officer

Toshiyuki Mukai
Executive Officer

Hiroshi Ishikawa
Executive Officer

Kenichi Furukawa
Kanemasa Haraguchi

Yasuyuki Yoshida

Junzo Nakayama

Director

Director

Director

ANNUAL REPORT 2012

Executive Officer

Year ended March 31, 2012

Yoichi Sugimoto
Executive Officer

In response to changing customer needs,
SECOM is working to realize its vision for(As of July 31, 2012)

the future—the Social System Industry—by providing comprehensive, integrated
services and systems that make life moresecure, convenient and comfortable.
Printed in Japan

89

SECOM Annual Report 2012

DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERS
Corporate Auditors

Directors

Seiji Sakamoto
Katsuhisa Kuwahara
Ken Tsunematsu
Kohei Yamashita
SECOM CO., LTD.

Hideki Kato

Executive Officers
Shuji Maeda

Takayuki Ito

Makoto Iida

Juichi Toda

President andExecutive Officer

Founder

Co-Founder

Representative Director

Minoru Takaoka
Koichi Sato

Executive Officer

Executive Vice President

Hideo Morishita
Yasuo Nakayama

Executive Officer

Executive Director

Tsuneo Komatsuzaki
Hiroshi Ito

Executive Officer

Executive Director

Ryohei Komatsu
Executive Officer

SECOM CO., LTD.

Yukio Tsunoda

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

Executive Director

Shohei Kimura

Shuji Maeda

ChairmanPresident andShunji Ogahara

Representative Director

Managing Executive
Officer

Executive Officer

Masahiro Takeda

ANNUAL REPORT 2012

Kazuaki Anzai

Tokyo 150-0001, Japan
http://www.secom.co.jp/

Executive Officer

Naohide Nakamura

Koichi Sato

Yasuo Nakayama

Hiroshi Ito

Kazuaki Anzai

Executive Vice President

Executive Director

Executive Director

Executive Director

Managing Executive

Teruhisa Yoshimura

Officer

Executive Officer

Yasuyuki Yoshida

Keitaro Arai

Director

Executive Officer

Junzo Nakayama

Tatsuro Fuse

Director

Executive Officer

Hiromichi Sonoda
Executive Officer

Toshiyuki Mukai
Executive Officer

Hiroshi Ishikawa
Executive Officer

Kenichi Furukawa
Kanemasa Haraguchi

Yasuyuki Yoshida

Junzo Nakayama

Director

Director

Director

ANNUAL REPORT 2012

Executive Officer

Year ended March 31, 2012

Yoichi Sugimoto
Executive Officer

In response to changing customer needs,
SECOM is working to realize its vision for(As of July 31, 2012)

the future—the Social System Industry—by providing comprehensive, integrated
services and systems that make life moresecure, convenient and comfortable.
Printed in Japan

89

SECOM Annual Report 2012