DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERSANNUAL REPORT 2011

Directors

Year ended March 31, 2011
SECOM CO., LTD.

Makoto Iida

Juichi Toda

Founder

Co-Founder

Shohei Kimura

Kanemasa Haraguchi

Shuji Maeda

Chairman

Executive Vice Chairman

President andRepresentative Director

ANNUAL REPORT 2011

SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Koichi Sato

Fumio Obata

Katsuhisa Kuwahara

Yasuo Nakayama

Hiroshi Ito

Executive Vice President

Senior Executive
Director

Executive Director

Executive Director

Executive Director

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

Takayuki Ito
Director

Corporate Auditors

Executive Officers

Teruo Ogino

Shuji Maeda

Katsuhisa Kuwahara

Minoru Takaoka

Ryohei Komatsu

Keitaro Arai

President andRepresentative Director

Executive Director

Executive Officer

Executive Officer

Executive Officer

Yasuo Nakayama

Hideo Morishita

Yukio Tsunoda

Yasuyuki Yoshida

Executive Director

Executive Officer

Executive Officer

Executive Officer

Hiroshi Ito

Tsuneo Komatsuzaki

Masahiro Takeda

Tatsuro Fuse

Executive Director

Executive Officer

Executive Officer

Executive Officer

SECOM is working to realize its vision for

Shunji Ogahara

Takayuki Ito

Teruhisa Yoshimura

Hiromichi Sonoda

the future—the Social System Industry—Managing Executive
Officer

Director

Executive Officer

Executive Officer

Seiji Sakamoto
Ken Tsunematsu
Hiroshi Yasuda
Kohei Yamashita

Koichi Sato
Executive Vice
President

Fumio Obata
Senior Executive
Director

In response to changing customer needs,

by providing comprehensive, integrated
services and systems that make life more

Naohide Nakamura
Managing Executive
Officer

secure, convenient and comfortable.

(As of July 31, 2011)

Printed in Japan85

Secom Co., Ltd.
Annual Report 2011

PROFILE

SECOM GROUP’S BASIC BUSINESS AREAS
SECOM offers a wide range of services and ­productswith the aim of realizing the Social System Industry.

Centralized Security Systems

Security Services

S

SECOM AXSECOM AX is an on-line security ­system with advanced on-site image sensors
that incorporate microphones to enable the SECOM control center staff to checkthe subscriber’s premises by listening and viewing.
SECOM IXSECOM IX is a remote imaging security system for ­commercial facilities offeringround-the-clock services.
Intelligent Emergency Alert System
The 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.

industry, has sought to contribute to a safe society by developing innovative security
services and systems, in line with its mission to provide security and peace of mind

through its business activities, as well as to achieve steady growth. Beginning with Japan’s
first on-line security system, developed in 1966, SECOM has endeavored to create a variety ofsystems that respond to changing social imperatives. These include an on-line home security
system in 1981—which this year celebrated its 30th anniversary—and COCO-SECOM, a mobile
personal security system for outdoor use in 2001. At the same time, SECOM has worked tosecure 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 wherevernecessary. With this in mind, SECOM is pressing ahead with efforts to realize its vision for
the future, the Social System Industry, which describes a framework of distinctive, integrated
products and services that make life more secure, convenient and comfortable. To this end,

Residential Use:

SECOM is capitalizing on its broad business portfolio—which has expanded to include security

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

services, fire protection services, medical services, insurance services, geographic information
services, real estate development and sales, and information and communication related andother services—to drive growth.
SECOM continues striving to provide distinctive service systems that encourage people to

Subscriber

PoliceDept.

Centralized Security Systems
Commercial Use:

ince its establishment in 1962, SECOM CO., LTD., a pioneer in Japan’s security services

Merchandise

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

offered through SECOM Medical Club and have access to SECOM Home Service,a suite of lifestyle support services.
SECOM CONDOMINIUM SECURITY SYSTEMSSECOM condominium security systems provide comprehensive building­management functions for condominiums and total safety with a centralized­security sys­tem for each unit in the building. SECOM MS-3, the top-of-the-line
system, can be used for buildings of any size, either as a retrofit or a new
installation.

Large-Scale Proprietary Security Systems

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

COCO-SECOM

COCO-SECOM is an innovative system that uses signals from Global Positioning
System (GPS) satellites and cellular telephone base stations to locate moving

objects, such as people, vehicles and property. As an option, customers canalso request to have emergency response personnel dispatched to the locationof 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.

SECOM AED Package Service

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.

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.

turn to SECOM to help resolve security and other problems. With the aim of rallying Group
strengths and maximizing synergies to realize its Social System Industry vision and to accelerateFire Protection Services

growth, the Company recently declared the Group slogan “ALL SECOM.”

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.

SECOM has also established operations in 12 countries and territories outside of Japan.
In these markets, SECOM is aiming to further grow its operations by providing customers
with security services of the same high quality as it does in Japan.

83

Secom Co., Ltd.
Annual Report 2011

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.
HOSPINET
Hospinet, a remote image diagnosis support service, transmits magnetic
resonance imaging (MRI), computerized tomography (CT) and other images to
SECOM’s Hospinet center, where 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.

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 c­ onsulting 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.

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

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

Secom Co., Ltd.
Annual Report 201184

CONTENTS

SECOM’S VISION....................................................................................................................

2

A MESSAGE TO SHAREHOLDERS.........................................................................................

4

SPECIAL FEATURE:
THE CONTINUING EVOLUTION OF SECOM’S ON-LINE SECURITY SYSTEMS..................

8

SECOM TODAY. ..................................................................................................................... 14
TOPICS..................................................................................................................................... 30

FINANCIAL REVIEW . ................................................................................................................. 31
AUDITED FINANCIAL STATEMENTS . .......................................................................................... 35
OTHER FINANCIAL DATA . ......................................................................................................... 66
CONSOLIDATED FINANCIAL DATA (BASED ON JAPANESE GAAP) [REFERENCE] .......................... 71
NONCONSOLIDATED FINANCIAL DATA (BASED ON JAPANESE GAAP) [REFERENCE] .................. 75
CORPORATE INFORMATION ...................................................................................................... 79
SECOM GROUP’S BASIC BUSINESS AREAS................................................................................. 83
DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERS .............................................. 85
Note: Unless specified otherwise, all figures contained in this annual report are based on the financial statements,
which have been calculated and are presented in accordance with accounting principles generally acceptedin the United States (U.S. GAAP).

Secom Co., Ltd.
Annual Report 2011

1

HIGHLIGHTS

Pursuant to the applicable Japanese law, SECOM is required to publish results in line with accounting principles­generally accepted in Japan (Japanese GAAP). Key financial highlights calculated using Japanese GAAP are shown
below for reference.
			
U.S. GAAP		In millions of yen
SECOM CO., LTD. and Subsidiaries			
Three years ended March 31, 2011		Years ended March 31

Year ended
March 31

2011

2010

2009

2011

¥ 751,868
100,432¥ 670,644
97,178¥ 684,016
76,259$ 9,058,651
1,210,024

62,665
1,171,152

46,9891,138,147

30,5601,143,141755,000
14,110,265

593,495

569,799

528,721

7,150,542

In yenIn U.S. dollars

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

In thousandsof U.S. dollars

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

¥ 287.41
85.00¥ 215.51
85.00¥ 137.42
85.00$ 3.461.02

2,722.08

2,613.34

2,424.91

32.80

			
Japanese GAAP		In millions of yen
SECOM CO., LTD. and Subsidiaries			
Three years ended March 31, 2011		Years ended March 31

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

2010

2009

2011

¥ 663,887
99,141
109,674
60,846
1,094,400
654,055¥ 654,678
98,53998,32747,611
1,081,679
625,153¥ 678,400
87,63490,92421,502
1,090,483
582,608$ 7,998,639
1,194,470
1,321,373
733,084
13,185,542
7,880,181

In yenIn U.S. dollars

96.69
85.00
2,380.12$ 3.36
1.02
32.73¥ 279.07
85.00
2,716.35¥

218.3785.00
2,561.94

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

(In billions of yen)

80

80

60

60

40

40

20

20

0
06

07

08

09

10

11

Note: Net income attributable to SECOM CO., LTD. in the year ended March 31, 2011, rose ¥15.7 billion, to ¥62.7
billion. This result was attributable to operating income in the real estate development and sales segment,
compared with an operating loss in the previous period, and to 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 estate development and sales segment.
		 Net income attributable to SECOM CO., LTD. in the year ended March 31, 2009, declined ¥31.2 billion,to ¥30.6 billion. This result was due mainly to an increase in loss on other-than-temporary impairment ofinvestment securities, reflecting a ­stagnant stock market, and an operating loss in the real estate­development and sales segment, owing to flagging conditions in the condominium market.

¥

Note: Cash dividends per share of common stock shown are based on dividends approved and paid in each period.
Subsequent to March 31, 2011, cash dividends of ¥90.00 per share were approved at the general shareholders’meeting held on June 24, 2011.

Notes: 1. Yen amounts have been translated into U.S. dollars, solely for the convenience of the reader, at the rate of¥83=US$1, the rate prevailing on the Tokyo ­Foreign Exchange Market on March 31, 2011.
2. Net income attributable to SECOM CO., LTD. per share of common stock is based on the average number ofshares ­outstanding during each period, less treasury stock.
3. SECOM CO., LTD. shareholders’ equity per share of common stock is based on the number of shares o­ utstandingat the end of each period, less treasury stock.
4. Cash dividends per share of common stock shown are based on dividends approved and paid in each period.
Subsequent to March 31, 2011, cash dividends of ¥90.00 per share were approved at the general shareholders’­meeting held on June 24, 2011 (see Note 18 of the accompanying Notes to Consolidated Financial Statements).

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

Year ended
March 312011		

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

In thousandsof U.S. dollars

0
06

07

08

09

10

11

SECOM’S VISION

Security
services
Information andcommunication
related andother services

Fire protection
services

Real estatedevelopment
and sales
Geographic
information
services2

Secom Co., Ltd.
Annual Report 2011

Medicalservices

Insuranceservices

Realizing the Social System Industry

Targeting New Growth

Since first declaring our Social System Industry vision in 1989,
we have continued working to make this vision a reality by creating a framework of distinctive, integrated products and services that make life more secure, convenient and comfortable.
Our business portfolio today comprises security services,
fire protection services, medical services, insurance services,
geographic information services, real estate development andsales, and information and communication related and otherservices. In these businesses, we strive not only to provide
individual products and services, but also to combine theminto distinctive packages, in line with our overarching mission,
which is to provide safety and security for people whenever
and wherever necessary. This approach encourages people toturn to SECOM with the confidence that doing so will help
resolve security and various other problems.
In all our efforts, we are guided by our corporate philosophy, which also governs the conduct of every SECOM
employee. This philosophy emphasizes a refusal to be content
with the status quo and a commitment to doing what is appropriate. The former means seeking constantly to provide innovative products and services by challenging accepted norms,
while the latter means judging the legitimacy of our actions bywhether they are just, fair and beneficial, not to SECOM but tosociety as a whole. As we press forward with efforts to realize
the Social System Industry by growing our businesses and winning ever-broader public acceptance, we recognize the increasingly vital nature of our role in society. This philosophy, sharedby everyone at SECOM, drives our efforts to realize the Social
System Industry vision and in so doing to be a corporate groupthat makes an important contribution to society by providing
comprehensive security and peace of mind.

To hasten the realization of the Social System Industry, in
November 2010 we declared a new Group slogan, “ALLSECOM,” to convey a shift in our strategic approach. While
our approach to date has focused on maximizing synergies
between our core security services business and each of ourvarious other businesses, under the ALL SECOM banner, we
will strive to advance cooperation among our various businesses with the aim of strengthening the Group as a wholeand building new synergies. To this end, we are encouraging
SECOM employees everywhere to push forward by actively
sharing information, ideas and objectives. We will also continue
to create new products and services that accommodate
evolving security needs, thereby earning the satisfaction ofcustomers and encouraging people to turn to SECOM with theconfidence that doing so will help resolve their problems andenhance peace of mind.
Since our establishment, we have sought to keep abreastof social trends, patterns of criminal activity and technologicaladvances, ensuring our ability to develop and market innovative products, services and systems that are needed andwelcomed by society. This approach has enabled us to build
a wealth of proprietary technologies and operational knowhow. Our technological capabilities are supported by our
R&D department, comprising the Secom Intelligent Systems
Laboratory, which conducts research in the area of basic technologies, and the Development Center, which is responsible forthe timely development of highly reliable products and services
that leverage these technologies. Our emphasis on R&D reflects
our recognition of technological capabilities as a crucial management resource that gives us a key competitive advantage inthe security services market.
Collaboration among our R&D department, sales teams
and operations teams makes it possible for us to promptly
incorporate feedback obtained from customers throughday-to-day sales and service activities into R&D efforts. This, inturn, enables us to create products, services and systems that
respond swiftly and effectively to customer needs.
Looking ahead, we will continue working to provide
products, services and systems that respond to evolving needs
for security and peace of mind, as well as to win ever-broader
acceptance of the concept of security services. Through these
efforts, we will work to further elucidate our Social System
Industry vision, as well as to encourage the unfailing loyalty ofcustomers, thus positioning ourselves to secure new growth
into the future.

Secom Co., Ltd.
Annual Report 20113

A MESSAGE TO SHAREHOLDERS

Working to gain the unfailing loyalty of customers

Consolidated Operating Results
Despite lingering economic uncertainty, owing to persistently
high unemployment rates, the continued appreciation of
the yen and gradual deflation, Japan’s economy had begun
showing signs of recovery as both corporate earnings andprivate-sector capital investment improved, bolstered by global
economic recovery and the positive impact of government
stimulus packages. However, as a result of the Great East Japan
Earthquake of March 11, 2011, the economic outlook is­currently unclear.
We at SECOM continue doing our utmost to actively assist
relief and recovery efforts in areas affected by the earthquakeand subsequent tsunami. In light of deteriorating sanitation
at evacuation centers, we provided five million hygienic masks
and 10,000 liters of disinfectant in the days immediately following the disaster. Consolidated subsidiary Secom Medical
System Co., Ltd., and its associated hospitals dispatched a
medical team to help provide vital health care services. Goingforward, we will continue to provide assistance as needed ateach stage of recovery.
Operating in such an environment, we continued working
toward the realization of our Social System Industry vision,
responding to the needs of customers by providing high-grade
products and services in our mainstay security services segment, as well as in our other business segments: fire protection
services, medical services, insurance services, geographic
information services, real estate development and sales, andinformation and communication related and other services.
Consolidated net sales and operating revenue for theyear ended March 31, 2011, rose 12.1%, or ¥81.2 billion, to¥751.9 billion. This result was attributable to newly consolidated organizations managing hospitals and health care-related
institutions, which were determined to be variable interest
entities, as well as to robust sales of units in large-scale condominium complexes in the real estate development and sales
segment. Operating income advanced 3.3%, or ¥3.3 billion,to ¥100.4 billion, owing to operating income in the real estatedevelopment and sales ­segment, compared with an operating
loss in the previous period, and to an increase in operating
income in the geographic information services segment, reflecting efforts to promote in-house manufacturing and stringent
process control. Net income attributable to SECOM CO., LTD.,

4

Secom Co., Ltd.
Annual Report 2011

advanced 33.4%, of ¥15.7 billion, to ¥62.7 billion, bolstered by
the increase in operating income and a gain on private equity
investments, compared with a loss in the previous period, andby an increase in equity in net income of affiliated companies.

Distribution of Dividends
Recognizing the provision of a fair return to shareholders as animportant management task, we determined the consolidated
dividend payout ratio based on an overall assessment of trends
in our consolidated operating performance, in line with ourpolicy of ensuring a consistent, stable distribution of profits. At
the general shareholders’ meeting on June 24, 2011, management proposed and shareholders approved the payment ofannual cash dividends of ¥90.00 per share, an increase of¥5.00 per share from the previous period.

Understanding and Responding to Change
Social change and the increasing diversity and sophistication ofpeople’s needs for security and peace of mind continue to drivechange and growth in the security services market. Evolvingsocial imperatives, changing patterns of criminal behavior,technological advances and improvements in social infrastructure are among the many factors that influence the needs ofcustomers for service systems that provide greater security andpeace of mind.
In the security services business, we continued to introduce
innovative new systems with the aim of cultivating new
subscribers, as well as offering existing subscribers ever-greaterlevels of security. New offerings in this business included theIntelligent Emergency Alert System, which applies our image
recognition and voice processing technologies. The system
automatically detects abnormal or suspicious situations, suchas a robbery, and alerts a SECOM control center without theneed for anyone to press an emergency alarm button. We
also introduced a new external sensor featuring a laser beam,facilitating the detection of intrusions over a wide area andensuring effective monitoring at sites where physical impediments would hamper the performance of conventional sensors.
In addition to being suitable for installation at the premises of
new customers, these systems—both of which are examplesof our application of pioneering proprietary technologies to
respond to demand from customers seeking more advanced

security—can be added as upgrades to the systems of existing
subscribers.
Other new launches include SECOM LX, an on-line security
system for businesses that not only monitors unauthorizedaccess at night, but also limits and records daytime access;
SECOM AS, a security system for small-scale apartmentbuildings that boasts the same performance features as ouron-line home security systems, thereby responding to security
needs in the rental housing market; and the SECOM On-Line
AED Management Service, which ensures automated external
defibrillators (AEDs) are kept in proper working order.
The introduction of new products and services also
increased opportunities for us to propose new ideas to customers, enabling us to maintain close communication with subscribers and ­reinforce relationships by enhancing trust. We also
created a new position, placing individuals in charge of improving ­customer satisfaction nationwide. This new position has
enhanced our basic approach, whereby sales personnel visit
each subscriber in person, thus enabling us to accurately interpret needs and expectations and to respond effectively and in atimely manner. We will continue to promote meticulous­communication with subscribers as we work to encourage theinstallation of up-to-date security systems and to ensure
greater customer satisfaction.
On another front, to optimize the allocation of management
resources, we implemented key organizational and administrative reforms. Of particular note, at a meeting of the Board of
Directors on May 11, 2011, we resolved to absorb security
equipment installation and maintenance subsidiary, Secom
Techno Service Co., Ltd., in July 2011.
Overseas, we took steps to encourage broad acceptanceof security services and advance our presence in key markets,with an emphasis on the developing economies of the People’s
Republic of China (PRC) and Southeast Asia. Throughout Asia,
economic growth continues to spur increased demand for
security services. To reinforce our capabilities in key growthmarkets, we revised our organizational structure to facilitate
the development and implementation of consistent, comprehensive strategies, and the further expansion of our overseas
operations. In the PRC, which is expected to continue seeing
exceptional economic growth, we have already expanded ourservice areas, previously limited to the country’s important

Makoto Iida

Shohei KimuraFounder

ChairmanKanemasa Haraguchi

Shuji Maeda

Executive Vice Chairman

President and Representative Director

Secom Co., Ltd.
Annual Report 20115

A MESSAGE TO SHAREHOLDERS

coastal regions, to include major inland cities, and haveestablished a network of bases, through which we are actively
marketing our products and services. In addition, we commenced operations in New Zealand, broadening our geographical coverage to 12 countries and territories. With subsidiaries
in both Australia and New Zealand, we are well-positioned tobroaden our operations in Oceania.
In line with our vision for the future—the Social System
Industry—we also implemented key measures in businesses
other than security services. In the fire protection services, thedeterioration of older office buildings has stimulated replacement demand for fire alarms and other systems. Accordingly,
consolidated subsidiary Nohmi Bosai Ltd., Japan’s leading provider of fire protection services, is focusing on the renovations
market, leveraging its wealth of experience and the solid trustof its customers to respond to the needs of building owners
and secure replacement orders.
In the medical services business, the rapid aging of Japanesesociety and an expanding market for home health care arebolstering demand for our home medical services, which
include home nursing services and pharmaceutical dispensing
and home delivery services. In October 2010, we opened Alive
Setagaya Nakamachi, our 12th residence for seniors, in Tokyo.
Our insurance services business emphasizes distinctive
non-life insurance policies. These include a fire insurance
policy for commercial premises and SECOM Anshin My Home,a comprehensive fire insurance policy for residences, both ofwhich take into account the risk-mitigating factor of on-line
security systems, offering discounts; SECOM Anshin My Car,a comprehensive automobile insurance policy that includes
access to on-site support services by emergency response
personnel; and MEDCOM, an unrestricted cancer treatment
policy that provides coverage for all treatment costs. With
competition in the comprehensive home insurance market
intensifying, we are revising SECOM Anshin My Home toenhance flexibility, enabling subscribers to set terms that suit
their particular needs. MEDCOM continues to earn acclaim forproviding access to the best treatment available, prompting
steady growth in the number of subscriptions.
In the area of geographic information services, we offer avariety of geospatial information that makes use of advanced
measuring devices and technologies. In the period under

6

Secom Co., Ltd.
Annual Report 2011

review, this business continued to generate robust results. We
also continued to actively expand our overseas operations,securing orders for major mapping projects, as well as for thecreation of national land maps in developing countries.
In our real estate development and sales business, wepressed forward with efforts to develop and sell condominiums
equipped with sophisticated security systems and contingency
planning features.
Efforts in the information and communication related andother services business focused on reinforcing our information
security services, as well as our comprehensive informationand network services, designed to ensure the security of
subscribers’ information and communication in the event of anatural disaster. In response to increasing needs for assistancein the formulation of business continuity plans (BCPs), in
August 2010, we established a new Secure Data Center. We
also worked to expand sales of our highly rated SECOM Safety
Confirmation Service.

Advancing to the Next Stage of Growth
Our Social System Industry vision depicts a framework of
distinctive products and services—both individually and in
tailored packages—that deliver security and peace of mind andmake life more secure, convenient and comfortable. To this end,
we will continue responding to changing customer needs bycreating service systems that leverage our unique capabilities.
We also recognize the need to anticipate and respond swiftly to
evolving social imperatives by developing and marketing service
systems worthy of our customers’ trust. One recent measuretaken with the aim of hastening realization of the Social System
Industry is the introduction of the ALL SECOM concept.
Having established a broad business portfolio encompassing 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 are pursuing a variety of initiatives in each business with the aim of further consummating
our vision. ALL SECOM emphasizes advancing cooperation
among such businesses to strengthen the Group as a wholeand build new synergies, and enabling us to better grasp whatcustomers expect from us so as to respond with products
and services that make a meaningful contribution to society.

These initiatives include the creation of a team comprising key
individuals appointed from each business, which is charged
with spearheading projects aimed at developing solutions
that enable us to respond swiftly and effectively as a Group to
needs for greater security and peace of mind. By facilitating
the sharing of information among our various businesses,
ALL SECOM will help enhance the efficiency of Group service
system sales efforts.
We will also actively promote this concept overseas. The
defining feature of our overseas security services businessis that we provide SECOM-style on-line security systems of
the same high quality as in Japan, customized to reflect local
needs and cultural sensibilities. SECOM-style security services
encompass the installation of security equipment at a subscriber’s premises, around-the-clock monitoring from a SECOM
control center and the prompt dispatch of emergency response
personnel should an abnormality be detected. As previously
mentioned, in March 2011, we began offering such services
in New Zealand. In the years ahead, we will continue working
to expand into new markets overseas, primarily by seeking out
promising M&A opportunities and forming joint ventures withlocal firms.
The development of new products and services will be
crucial to expanding the scale of our operations. The Great East
Japan Earthquake has caused tremendous upheaval in Japan,
fundamentally altering lifestyles and accepted norms. Suchan event inevitably transforms peoples’ values. Social systems
must evolve in response to new values. Recognizing that there

is considerable scope for us to make unique and meaningful
contributions, we will push ahead with efforts to realize ourSocial System Industry vision by capitalizing on latent capabilities in our seven existing businesses, as well as by taking boldsteps to foster new businesses.
Furthermore, to accelerate growth, we will implement
measures aimed at reinforcing our operating foundation andincreasing productivity and at cultivating new markets, keeping
an eye open for beneficial M&A opportunities both in Japanand overseas. Through such measures, we seek to drive growthby positioning ourselves to better grasp the needs of customers
in different markets for security and peace of mind, as well as
to accelerate the development and provision of reliable products and services.
As always, our success depends on earning the trust ofcustomers. In line with our corporate message—“Providing reliable peace of mind”—we pledge to work as one to contributeto society through our business activities and to prove SECOM
worthy of the trust of our customers.
Guided by the ALL SECOM concept, we are committed
to maintaining a corporate culture that emphasizes cultivating new businesses that challenge accepted norms and toaccelerating efforts to realize our Social System Industry vision,
thereby enabling us to advance to the next stage of growth. In
these and all of our endeavors, we look forward to the continued support of our shareholders.
June 24, 2011

Makoto Iida

Shohei KimuraFounder

ChairmanKanemasa Haraguchi

Shuji Maeda

Executive Vice Chairman

President and Representative Director

Secom Co., Ltd.
Annual Report 20117

SPECIAL FEATURE:
THE CONTINUING EVOLUTION OF SECOM’S ON-LINE SECURITY SYSTEMS

at Public
Facilities
By analyzing global technological trends andthe changing nature of criminal activity, we
strive to combine appropriate infrastructurewith advanced technologies to offer systems thatdeliver improved efficiency and provide security andpeace of mind in a wide range of settings.

TOTAX ZETA
g TOTAX ZETA (comprehensive

local control system)
Developed to provide total security forcommercial complexes and production
facilities, TOTAX ZETA combines ouraccumulated expertise in security forlarge-scale facilities with the latest
networking technologies to provide
an optimal security environment
for customers.

>> P15

JR Hakata City

8

Secom Co., Ltd.
Annual Report 2011

Secom Co., Ltd.
Annual Report 20119

SPECIAL FEATURE:
THE CONTINUING EVOLUTION OF SECOM’S ON-LINE SECURITY SYSTEMSat Offices
Guided by our corporate philosophy, whichemphasizes challenging accepted norms, we
continue to incorporate our vision of the
security needs and lifestyles of the future into ourefforts to realize advanced security systems that areboth innovative and reliable and that will define
ideals of security and peace of mind.

SECOM AXg SECOM AX (on-line image

recognition system)
SECOM AX is an advanced system
employing proprietary image recognition technology that enables it todetect and capture clear images ofan intruder, even when the premises
are in darkness. This technology
plays a key role in a variety of
SECOM systems.

10

Secom Co., Ltd.
Annual Report 2011>> P16
Secom Co., Ltd.
Annual Report 201111

SPECIAL FEATURE:
THE CONTINUING EVOLUTION OF SECOM’S ON-LINE SECURITY SYSTEMS

in HomesWe work to provide products and services
that deliver security and peace of mind for
all types of homes, from detached houses tocondominiums, customized to meet the diverse needsof a wide range of customers across all age groups.

g SECOM Home Security (on-line

SECOM Home Security

security system for residential
applications)
SECOM Home Security provides aroundthe-clock protection for residences,encompassing services that go beyond
the confines of security to provide
support from a variety of perspectives.
These include support services that help
resolve problems occurring in everyday
life and services designed to protect thehealth of subscribers.

12

Secom Co., Ltd.
Annual Report 2011>> P19
Secom Co., Ltd.
Annual Report 201113

SECOM TODAY

Security Services
Our distinctive approach enables us to offer high-grade on-line security systems.
SECOM’s on-line security systems encompass the placement ofsensors at its subscribers’ premises, around-the-clock monitoring from a SECOM control center via telecommunications
circuits, the dispatch of emergency response personnel fromthe nearest emergency depot, should the sensors detect anirregularity, and, if necessary, the notification of the police
and/or fire department. Our insistence on providing emergency
response services, as well as security equipment installationand monitoring, reflects our deep-seated belief that only byguaranteeing subscribers’ safety can we honestly claim to beproviding security.
Appreciation for SECOM on-line security systems continues
to grow not only in Japan, but also in overseas markets where
we offer the same SECOM-style security services. Support
for SECOM on-line security systems reflects a number of key
competitive advantages, namely:•	Swift emergency response capabilities: Capitalizing on our
extensive experience, reflected in the prompt decision-making
capabilities of our control center staff and the fast reactions of
our highly trained emergency response personnel, we are well
positioned to respond swiftly and effectively in the event of an
emergency. Another key factor underscoring our responsivenessis our nationwide network of approximately 2,750 emergency
depots—more than any other security services company inJapan—each of which looks after only a limited geographic
area. The swift response capabilities of our control center staff
and emergency response personnel continue to earn highmarks from subscribers nationwide.
•	Comprehensive security systems that combine the capabilities of humans and equipment: Our on-line security systems
combine the speed and accuracy of sensors and communications equipment in detecting irregularities and transmitting
information with the analytical capabilities and quick action ofhumans, thereby delivering superb service quality. We give priority to fostering expert emergency response personnel capableof responding effectively in various situations through trainingthat capitalizes on our unique know-how. Highly trained staff,
together with reliable, technologically advanced security equipment, ensure our ability to provide comprehensive security
solutions that are a cut above the competition.
•	Integrated services scheme: We maintain control over every
aspect of our security services, from R&D to manufacturing,sales, security planning, installation, around-the-clock monitoring, emergency response services and equipment maintenance.
This integrated scheme underpins both our reputation for reliability and the potency of the SECOM brand, ensuring stable,
high-grade services.

14

Secom Co., Ltd.
Annual Report 2011•	In-house R&D capabilities: Our R&D organization encompasses the Secom Intelligent Systems Laboratory, which
conducts research in the area of basic technology, and theDevelopment Center, which applies basic technology to develop
new security systems. This configuration enables us to incorporate feedback from customers swiftly and accurately into
the development process, as well as to act promptly in making
modifications that enhance existing products and systems.
•	Effective training and management of human resources:
Four SECOM training centers in Japan provide training for
emergency response personnel, as well as for individuals in sales
and administrative positions, designed to transmit knowledge
and techniques. These facilities also strive to impart the SECOM
corporate philosophy and standards of conduct that employees,
as security professionals, are expected to observe. The effective
training and management of human resources is essential to
our ability to provide high-grade services.
• Ability to provide comprehensive peace of mind: In addition
to security services, we provide fire protection services, medical
services, insurance services, geographic information services,
real estate development and sales, and information and communication related and other services, which we can combine
into unique, tailored ALL SECOM packages that enable us to go
beyond simply installing security systems, ensuring our customers
feel they can turn to us anytime for solutions that will remove
sources of unease and deliver security and peace of mind.
•	Security services adapted to local markets: SECOM-styleon-line security systems continue to earn high marks in overseas
markets. One reason for this is that since launching operations
overseas in 1978, our approach has been to customize products
and services to reflect local needs and cultural sensibilities. In
April 2011, we commenced operations in New Zealand, which
is our 12th overseas market. We will continue promoting
broader market acceptance of SECOM-style security services inmarkets around the world.

With the aim of making SECOM on-line security systems available to an ever-greater number of customers, we recognize theneed to offer optimal prices. To this end, we retain ownershipof security equipment, which we rent—rather than sell—to
subscribers. As a consequence, initial costs for subscribers are
significantly lower than would be the case if they were required
to purchase equipment outright. The rental format also allows
us to take responsibility for maintenance and upkeep, facilitating prompt replacement in the event of a malfunction, or an
upgrade, and ensuring stable high-grade services.
In the years ahead, our distinctive approach and the key
competitive advantages of our on-line security systems willcontinue to support our ability to provide services of the­highest quality.

Commercial Security Services
We are promoting greater market
acceptance of SECOM security services bydrawing on our advanced technologies
and our wealth of expertise.

Responding to the diverse security needs oflarge-scale commercial facilities
Large-scale commercial facilities require sophisticated security
systems that help deter crimes and prevent accidents fromoccurring and ensure secure operation and management.
Leveraging our extensive expertise, we provide proprietary
security systems customized to suit each customer’s requirements. Orders for such security systems remain firm. Of note,
we recently signed a contract to provide a security system
for Tokyo International Air Terminal, the new internationalterminal at Haneda Airport in Tokyo’s Ota City, which openedin October 2010. Under this contract, we currently assist in
the safe operation of the terminal by providing static guard
services, airport security checks for employees and the SECOM
AED Package Service, a full-service package that encompasses
leasing, installation and maintenance of AEDs in public areas.
For JR Hakata City, the building housing Fukuoka’s main
railway terminal, which opened in March 2011, we provide
comprehensive support to help ensure the station’s secure andsafe operation. Rebuilt to accommodate the inauguration offull services on the Kyushu Shinkansen’s Kagoshima Route,
JR Hakata City has a total floor space of 200,000 m2, making
it one of Japan’s largest railway station building complexes.
Our package for JR Hakata City includes TOTAX ZETA, acomprehensive local control system for large-scale commercial
facilities; static guard services (provided by joint venture JR
Kyushu Secom, Inc.); SECOM Security Gates, which prevents
unauthorized access through building entrances; a surveillancecamera system; and TOMAHAWK JET fire extinguishing systems
for restaurant kitchens.
As these examples show, one of our greatest strengths is
our ability to combine various service systems into unique packages tailored to customers’ diverse needs. Moreover, rather
than simply selling automated security services, we also offer
static guard services provided by highly trained professionals,
thereby realizing a quality of security services only possible byintegrating systems and human capabilities. Looking ahead, we
will continue to respond to the sophisticated needs of largescale commercial facilities by capitalizing on our high-grade
security services and comprehensive human capabilities.

JR Hakata City
Secom Co., Ltd.
Annual Report 201115

SECOM TODAY

Commercial Security Services

Developing systems that facilitate automatic
detection of crimes and accelerate responses
With robberies committed by perpetrators armed with knives
or firearms on the rise in Japan, we see more situations where
victims are unable to press the emergency alarm button to
notify SECOM because they feel physically threatened. Taking
action, in the period under review, we launched the Intelligent
Emergency Alert System, which automatically detects abnormal or suspicious occurrences and alerts a SECOM control
center without the need for anyone to press a button. This
newly developed system employs a number of exclusive image
and sound processing technologies, including those usedin SECOM AX, an on-line image recognition system, and in
SECURIFACE, an intercom system equipped with a novel facialrecognition function.
Installed in critical areas, such as near a safe, the Intelligent
Emergency Alert System automatically detects, for example,
individuals wearing masks or trying otherwise to hide theirfaces, groups of individuals approaching the safe together
and someone screaming. The system simultaneously transmits
images and audio, together with an emergency signal, to a
SECOM control center and image monitoring center, where
staff promptly dispatches emergency response personnel and,if necessary, notifies the police.
The Intelligent Emergency Alert System’s ability to swiftly
detect potential robberies, break-ins and other crimes andto issue an automatic alert, expedites our response, thereby

SECOM AX

16

Secom Co., Ltd.
Annual Report 2011

helping to prevent such acts from actually occurring. Thissystem is designed for use with the SECOM IX remote imaging
security system to provide an advanced security solution. We
continue working to introduce systems that are a cut above thecompetition to a wider range of customers.

Next-generation external sensor technologies
that facilitate highly sensitive externalmonitoring of a premises
External intrusion detection systems generally involve theplacement of infrared illuminators and photodetectors aroundthe perimeter of a subscriber’s premises, wherein if the beam isinterrupted by a person in its path, an alert is issued. However,for wide areas, multiple illuminators and photodetectors are
required and physical obstacles such as trees and sheds often
make installation unfeasible. Recently, we introduced Laser
Sensor, a new sensor that resolves such problems, facilitating
effective detection of intrusions over a broad area with onlya single unit. Performance is not affected by physical impediments and the size of the area monitored can be programmed
according to requirements. The sensor also boasts an autonomous learning function, enabling it to automatically reset itself
if objects are shifted in the monitored area. Used in tandemwith a SECOM on-line security system, the sensor automaticallysends an emergency signal to a SECOM control center should
an intrusion be detected.

Intelligent Emergency Alert System

Laser Sensor is particularly appropriate for monitoring large
premises, including factories, offices, stores, schools, construction sites and materials storage yards. We will continue actively
to market this system as an attractive alternative for locations
where conventional detection systems are unsuitable.

Development of a stereoscopic facial recognition
access control system using 3D images
In recent years, intrusions and personal information leaks
attributable to the loss or copying of employee ID cards havebecome issues of paramount concern for companies. To
preclude such intrusions, many companies have introduced
access control systems employing biometric authentication
based on, for example, fingerprint, palm vein identification
or facial recognition. Drawbacks to conventional facialrecognition-based access control systems include the fact that
individuals must stand still facing a camera and the need for
manual system operation.

Responding to perceived needs, Secom Intelligent Systems
Laboratory has for some time been promoting the development of facial recognition systems that use surveillancecameras to manage access control and detect suspicious
persons. Individuals do not need to follow specific procedures,
but can simply proceed in a normal fashion. In 2011, we
expect to launch a stereoscopic facial recognition system,
the Walkthrough Face Recognition System. The new systembuilds on our exclusive image processing technologies, which
are integral to such offerings as SECOM AX, SECURIFACE andSESAMO IDs, our fingerprint-based access control system.

SECOM control center

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 anabnormality to warn people in thevicinity and to guide
SECOM emergency
response personnel
dispatched to thecustomer’s premises.

Subscriber

Police
Dept.
Fire
Dept.

Alert using
1 telephone
circuits

Dispatch SECOM emergency
3 response
personnel

Gas
Company• Alert emergency
services asnecessary

SECOM
Control Center

SECOM
Emergency
Depot
Alert SECOM emergency
2 response
personnel

Laser Sensor
Secom Co., Ltd.
Annual Report 201117

SECOM TODAY

Commercial Security Services

The Walkthrough Face Recognition System works byautomatically constructing a 3D image of each individual froma registered photograph of the face. Surveillance camera footage is then matched to this image to identify the individual.
Because this system uses 3D images, it easily accommodates
natural variations in features and posture—something notpossible with existing facial recognition systems. Moreover, thesystem can process approximately 60 individuals per minute,allowing it to function effectively during high-traffic periods,
such as the beginning and end of the workday. In addition toemployee access control, the system is suited for identifying
visitors who have previously called and been registered. By
facilitating accurate, speedy facial recognition, the system
will greatly enhance the convenience and efficiency of access
control. Going forward, we will continue to develop andcommercialize groundbreaking service systems that reflect our
distinctive capabilities.

Contracts forCentralized Security Systems(As of March 31, 2011)

Home

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

Walkthrough Face Recognition System

18

Secom Co., Ltd.
Annual Report 2011

Commercial

11.2%
6.8%
6.6%
5.9%
5.0%
23.4%
41.1%

Home Security Services

By capitalizing on our distinctive­capabilities, we continue responding
to the increasingly diverse needs of­homeowners for security and peace ofmind by providing residential security
products and services, centering on thegrowing SECOM Home Security system.
SECOM Home Security: Leveraging a wealth ofexperience and know-how accumulated overthree decades
In 2011, we celebrated the 30th anniversary of SECOM Home
Security, which we first introduced in 1981. Over the past three
decades, we have expanded and modified the system’s products and services in response to evolving social imperatives andlifestyles, as well as to changing patterns of criminal activity.
SECOM Home Security comprises sensors and other security
equipment, which are placed in and around subscribers’
homes, providing around-the-clock monitoring for intruders,fires and gas leaks, sending emergency alerts and calling for
emergency medical attention. In the event an irregularity isdetected, the system alerts a SECOM control center, where
staff respond by assessing the situation, dispatching emergency
response personnel and, if necessary, notifying the police and/or
fire department.
In 1982, we introduced My Doctor, a pendant-style emergency medical alert system as an option for SECOM Home
Security subscribers that, when activated, sends an emergency
signal to a SECOM control center. In 2003, we added SECOM
Medical Club, which gives subscribers access to telephone-based

SECOM Home Security

health counseling and lifestyle assessments. Two years later, we
inaugurated SECOM Home Service, further enhancing our ability
to provide homeowners with security and peace of mind.
In light of the rising incidence of vicious crimes in Japan, in
recent years we have reinforced the products and services weoffer to SECOM Home Security subscribers. Examples include
our External Image Monitoring service, which detects intruders
and transmits images to a SECOM control center; SECURIFACE,
an intercom system equipped with facial recognition; andSECOM Anshin Glass, a high-impact, breakage-resistantwindow glass that prevents break-ins. Looking ahead, we willcontinue striving to provide ever-greater security and peace ofmind for SECOM Home Security subscribers.
In December 2011, we plan to launch SECOM Home
Security G-Custom, a system that brings together a variety ofservices that enhance security and peace of mind and make life
more convenient. One of these services allows subscribers, forexample, to entrust family photographs, emergency contact
information, information on prescription medications, to us
for storage at a SECOM Secure Data Center, thereby ensuring
such information is available in the event of an earthquake orother major disaster. A new function enables subscribers tocheck on the safety of elderly parents living far away, as well as
to share photographs and messages with family members andother relatives using the
SECOM Home Security
network. This new
home security service
system, which combines
our extensive expertisein crime ­prevention andother security services
and in information
SECOM Home Security G-Custom
Secom Co., Ltd.
Annual Report 201119

SECOM TODAYHome Security Services
security, is evidence of the excellence of our R&D capabilities.
By continuing to develop such attractive new home security
services, we will work to promote greater awareness of theconcept of home security.

Expanding SECOM Home Service’s geographic
coverage and service menu
Launched in 2005, SECOM Home Service is a suite of close to
100 convenient, high-grade lifestyle support services developed
for SECOM Home Security subscribers. Demand for these
popular services has grown steadily since. In June 2010, we
expanded the availability of all but a few of these services
to include nonsubscribers, a move that has further spurreddemand.
At present, the SECOM Home Service menu includes Anshin
Support Service, whereby SECOM staff assist in resolving
concerns that arise in everyday life by, for example, patrolling around subscribers’ homes when occupants are away.
Troubleshooting Support Service includes assistance in resolving
unforeseen problems, such as lost keys. Housework Support
Service provides help with housekeeping and around-the-housejobs. The SECOM Home Service Pack is a special plan thatallows customers to sign up for services that suit their lifestyles
on an annual basis. We continue to promote the expansion ofthis menu. Recent additions include Family Support Service,
which provides short-term assistance with such tasks as tidying,cooking meals, doing laundry and airing bedding, and Family
Grave Management, whereby we look after maintenance of thefamily grave on behalf of customers. We have also expanded
our service area, as a result of which SECOM Home Service is
now available in almost all parts of Japan.
Owing to the rapid aging of Japan’s population andthe growth of the nuclear family, we expect to see further
growth in demand from seniors for lifestyle support services.
Accordingly, we will continue to broaden our service menu toaccommodate the needs of this important market.

SECOM Home Service (Family Support Service)

20

Secom Co., Ltd.
Annual Report 2011

SECOM AS: Responding to needs in the rental
housing market
One of the most important considerations for many individuals
renting apartments or small multifamily dwellings is the building’s security.
In Japan, the number of seniors living alone is on the rise,
underscoring an increase in the need for home security systems
that help prevent crime and fires. With this in mind, and withthe aim of providing security and peace of mind for such individuals, as well as providing systems that help property owners
enhance the appeal of their units, recruit potential tenants andensure the stability of building management, we developed
SECOM AS, a home security system designed especially forsmall-scale rental housing complexes with a built-in intercom
system. Separate controls in each apartment not only enable
tenants to use both the intercom and security functions, thus
providing protection against burglary, but also enable themto alert a SECOM control center, should they feel ill at ease or
require emergency medical services, greatly enhancing peace ofmind. With the launch of SECOM AS, which offers significant
benefits to both building owners and tenants, we are steppingup efforts to promote security for the rental housing market
and bolster demand.

SECOM AS home security system forsmall-scale rental housing complexesOther Security Services

mamorino 2

COCO-SECOM continues tofind new applications. With the aimof helping to save lives, we are working to promote wider
acceptance of the SECOM On-Line AED Management Service.
Expanding applications for COCO-SECOM­continue to drive sales
The launch of the COCO-SECOM mobile security systemfor outdoor use in 2001 marked our expansion into thearea of location tracking systems for individual subscribers.
COCO-SECOM uses signals from Global Positioning System(GPS) satellites and cellular phone base stations to pinpoint
the location of portable transmitter devices with outstanding
precision. Simply by pushing the alert button on the device,an individual in danger can instantly notify the COCO-SECOM
operations center. The operations center will dispatch emergency response personnel whenever needed.
Initially advanced as a way to prevent child abductions,locate elderly people who had wandered off and avert thetheft of cars and motorcycles, today’s COCO-SECOM is
attracting attention for a wider range of applications, including preventing the theft of handbags or construction equipment, managing taxi and bus fleets and thwarting vandalism
and removal of automated teller machines (ATMs).

Cellular phones for children with COCO-SECOM asa standard feature (mamorino and mamorino 2)
earn high marks
Designed to provide security for preschool- and primaryschool-age children, mamorino was developed in collaboration
COCO-SECOM Mobile Security System(Location and Emergency Response)

GPS satellite
Positioning
information

COCO-SECOM
Operations
CenterNotification of police(if warranted)

Cellular phonebase station

SECOM
Emergency
Depot

Request forsearch(telephone/Internet)

Subscriber

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

Policedepartment,
emergency
serviceswith a major telecommunications company. If a child feels
threatened, all he or she has to do is sound the phone’s
security alarm to alert the COCO-SECOM operations center,
which then tracks the child’s location. The operations center
then makes contact with the child and a parent or guardianand, if requested, dispatches emergency response personnel to ensure the child’s safety. Because it does not have a
web browser function and allows only a limited number of
telephone/email contacts, mamorino also protects children
from potential trouble arising from Internet and e-mail use.
In March 2011, we launched mamorino 2, with expanded
performance features, including a function that ensures location tracking and security alarm services remain active evenwhen the phone is turned off during class hours, as well as afunction that enables parents and guardians to keep an eye on
their child’s movements using a smartphone or a computer.

New around-the-clock AED management services
We currently offer the SECOM AED Package Service, a fullservice package for automated external defibrillators (AEDs).
However, with the installation of AEDs expanding in Japan,
there have been a number of incidents recently in which
devices have failed at a critical moment as a result of maintenance lapses. In response, we developed the SECOM On-Line
AED Management Service, an automated daily maintenanceservice that ensures AEDs are kept in proper working orderaround-the-clock.
One of our principal goals as a corporate entity is tocontribute to a society free from apprehension. Accordingly,
we see promoting further market
acceptance of AEDs as an importantmission. Going forward, we will
actively market the SECOM On-Line
AED Management Service with theaim of further helping to save lives.

Dispatchemergency
response
personnel(if requested)

SECOM On-Line AED
Management Service
Secom Co., Ltd.
Annual Report 201121

SECOM TODAY

Overseas Security Services
We continue to grow our overseas
operations by offering comprehensive,high-grade security services customized toreflect local needs and cultural sensibilities.

Emergency response personnel (Thaisecom Pitakkij Co., Ltd.)

Solid results from overseas security businesses
Our first inroads into overseas markets were in 1978, when
we began operating in Taiwan. In the years since, we have alsoestablished operations in the Republic of Korea (ROK), the PRC,
Thailand, Malaysia, Singapore, Indonesia, Vietnam, the United
Kingdom, Australia, New Zealand and the United States.
The distinguishing feature of our overseas security services isthat we offer SECOM-style on-line security systems customized
to reflect local needs and sensibilities. By this, we mean not
only installing equipment and monitoring customers’ premises
from a control center, but also dispatching highly trained emergency response personnel and, if necessary, contacting thepolice and/or fire department. This is the same comprehensive
approach we use in Japan, which differs significantly from theon-line security systems offered by European and U.S. security
service providers—which, as a rule, specialize in sales, installation or monitoring—in that it enables us to better provide
customers with security and peace of mind. Demand for suchservices continues to grow steadily in overseas markets.

Expanding operations in key markets
Recognizing the tremendous potential of the local market,
we began offering services in the PRC in 1992. Initially, ourfocus was on offering on-line security systems in the citiesof the PRC’s high-growth coastal areas. Since then, we havebroadened our service network to include inland cities. Today,
our services encompass 18 cities—Beijing, Tianjin, Dalian,
Shenyang, Qingdao, Shanghai, Suzhou, Wuxi, Kunshan,
Hangzhou, Ningbo, Fuzhou, Xiamen, Shenzhen, Guangzhou,
Dongguan, Chengdu and Xi’an—and we continue to see solid
growth in our subscriber base.

The PRC has approximately 2,400 state-operated security
services companies, as well as numerous internal private firms
and foreign-affiliated firms, as a result of which the local
market is intensely competitive. At the same time, heightenedawareness of the need for effective security has spurreddemand for high-grade services. In this environment, recognition of the intrinsic value of SECOM-style on-line security
systems is rising. In 2008, we established an R&D center inShanghai, better positioning ourselves to develop the products
and services suited to local market needs.
In Taiwan, subsidiary Taiwan Secom Co., Ltd., enjoys theleading share of the Taiwanese security services market. Taiwan
Secom is also publicly listed on the Taiwan Stock Exchange.
Maintaining the SECOM business model, Taiwan Secom rents
security equipment and enters into long-term contracts with
subscribers. The company’s subscriber base continues toincrease steadily.
In the ROK, joint venture S1 Corporation is currently thecountry’s top security services company and is listed on the
Korea Exchange. S1 provides an extensive selectionof security services toan increasing numberof subscribers, including
homeowners, companies
and large-scale commercial
facilities.

Emergency response personnel(Shanghai Secom Security Co., Ltd.)

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Secom Co., Ltd.
Annual Report 2011

Control center (Secom Australia Pty. Ltd.)We are also expanding SECOM-style on-line security systems
in Southeast Asia by providing products and services that
respond to local needs in individual markets. A market leader inThailand, we are not only active in the private sector, but also
participate in large-scale public sector projects, reinforcing ourposition in the Thai market as a comprehensive security services
firm. In Malaysia, we supply security systems combining static
guard services and security equipment to local companies, aswell as to the local subsidiaries of foreign companies, including
those from Japan, and enjoy a strong competitive advantage.
In Singapore, we are developing distinctive products and providing broad-based services that accommodate a trend toward
the outsourcing of social services. Our focus in Indonesia is on
antiterrorism security products suitable for airports, harbors,
major facilities and high-rise office buildings, among others,
and we have grown to become a leader in the local security
services market.
In the United Kingdom, our track record as a provider ofhigh-grade on-line security systems has earned us a solid reputation. Our expanding U.K. subscriber base currently includes
major financial institutions, retail chains, companies, public
facilities and large-scale facilities, as well as private homes.

Broadening our geographical coverage to
12 countries and territories
Our presence in Australia dates back to 1990, when we beganproviding a full menu of services, including on-line security
systems, static guard services, equipment installation andmaintenance, among others, earning solid praise from customers. Our subscriber base in Australia currently comprises major
corporations, financial institutions and public offices. Many of
our Australian customers also have bases in New Zealand.
Having thus recognized significant demand in New Zealand,
we acquired a local company and began offering SECOM-stylesecurity services. Prior to the acquisition, the company—which
has since been renamed Secom Guardall Ltd.—specialized in
the sale of security equipment and maintenance and inspection
services, and enjoyed a significant share of the local market
for security services for major financial institutions and retailchains. Today, Secom Guardall is leveraging its broad service
menu, which integrates its predecessor’s security equipment
sales and maintenance and inspection services with SECOM’son-line security systems and static guard services, to cultivate
new demand nationwide.

Head office and local staff (Secom Guardall Ltd., New Zealand)
Secom Co., Ltd.
Annual Report 201123

SECOM TODAY

Fire Protection Services
Nohmi Bosai’s technological capabilities andwealth of expertise are enabling us to develop
new systems and respond to rising demandin the renovations market.
High-rise fire prevention center

Providing comprehensive fire protection systems
Subsidiary Nohmi Bosai is a leading name in fire alarms andother fire protection systems, with an extensive lineup that
includes products for office buildings, plants, tunnels, culturalproperties, ships and homes. A provider of integrated services,
Nohmi Bosai takes responsibility for R&D, assembly, planning,
installation and maintenance, an approach that has earned it
the trust of customers nationwide.
In recent years, the deterioration of older office buildings
has stimulated demand for renovations to update automatic
fire alarm systems and other equipment. Responding to
demand in this market, Nohmi Bosai is drawing on its achievements, and on the solid trust of its customers, to bolster
orders from those undertaking renovations. With many older
high-rises due to be renovated, demand for replacement offire alarm systems is expected to expand in the future. Nohmi
Bosai has established a department dedicated to the aim of
improving its ability to provide solutions to customers in therenovations market and bolstering orders.
In the area of fire extinguishing equipment, Nohmi
Bosai’s product lineup includes sprinkler systems, foam fire
extinguishers, such as those found in parking lots, and gas
fire suppression systems for locations that preclude the use ofwater-based systems. Boasting advanced technologies in thearea of fire extinguishing systems for industrial plants, factories and road tunnels, the company continues to capitalize on
its reputation for excellence in customized fire extinguishingsystems to cultivate new orders.
As an integrated services provider, Nohmi Bosai views
maintenance services as a crucial responsibility. Regular
maintenance calls are also opportunity to strengthen relations and enhance customer satisfaction because they enableNohmi Bosai to keep abreast of the condition of its customers’
systems. This approach also gives Nohmi Bosai a distinct
competitive advantage when it comes time for customers
to replace existing systems, a key factor in securing orders
for new installations and another reason for the company’semphasis on maintenance services.

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Secom Co., Ltd.
Annual Report 2011

Leveraging a solid record in the provision ofsystems for large-scale facilities to develop
innovative fire protection systems
A pioneer in Japan’s fire protection services industry, Nohmi
Bosai has built a solid record in the provision of systems
for large-scale facilities, achieving growth and securing its
position as the first choice of customers who place a highemphasis on safety. Recognizing the importance of adding
value in distinguishing its products and services from those of
its competitors, Nohmi Bosai has leveraged its technologicalcapabilities and wealth of expertise to develop and launchsuch innovative offerings as PROTECTVIEW, a fire detection
and alarm system that monitors for early signs of fire, thereby
minimizing damage; Group Home Sprinkler System, a dry-pipe
extinguishing system that is connected directly to a water pipe,
for designated social welfare facilities; and Dry Mist, whichuses sprinkler technology to reduce ambient temperature.
Going forward, Nohmi Bosai’s development prowess andaccumulated technologies will continue to underpin its efforts
to respond to evolving social imperatives and shape the fire
protection services industry, adding new value to products andsystems that enable it to further bolster orders.

Clean room testing of fire
extinguishing system

Water spray system installedin road tunnel

Medical Services
By providing comprehensive services in the medicalcare, personal care, social welfare, health care andpreventative care fields, we are giving new form to
our ideal of providing security and peace of mind.
Alive Setagaya Nakamachi

Home Medical Services: An expanding businessOur decision to diversify into medical services reflected ourbelief that protecting the health and lives of people is a naturalextension of our commitment to provide security and peaceof mind. Today, our medical services business encompasses awide range of services in the medical care, personal care, social
welfare, health care and preventative care fields.
Home Medical Services—a mainstay of this business—centerson home nursing, which involves regular visits by nurses topatients in their homes to provide expert nursing services andtreatment in accordance with the instructions of the patient’s physician, and pharmaceutical dispensing and home delivery services.
Our home nursing services, which began in 1991, are rated
favorably by customers. This reflects a number of factors, including our rigorous proprietary training program, which is designed
to further hone the skills of our visiting nurses and enable themto provide highly professional services. Our pharmaceuticaldispensing and home delivery services range from the dispensing
and delivery of common oral and topical medications to theprovision of specialized services for home health care patients.
These include the dispensing of nutrient solutions for parenteralnutrition, pain relief injections and home visits by pharmacists toprovide guidance on the use of prescribed medications.
In June 2011, we opened SECOM Home Health Care Center
Kugayama, a facility providing total services that combine conventional home nursing with homepersonal care. The same month, we
introduced Karada ViBI, a new brandof products in our mail-order healthfoods business, which we launched in
1998. We are currently marketing thisnew brand, highlighting its emphasison safety and quality.
Home nursing services

Expanding our service menu to respond to theneeds of an aging society
In October 2010, we opened Alive Setagaya Nakamachi, our12th residence for seniors, in Tokyo’s Setagaya City. Equippedwith the SECOM IX remote imaging security system, as well

as SECOM Active IC Tag System, which controls access to thefacility using IC tags, eliminating the need to swipe cards over acard reader, the new facility makes full use of SECOM’s capabilities in the security services field to ensure the safety of residents.
In April 2011, we opened SECOM Senior Club Fujigaoka, a
day service center. This is the fourth facility in the SECOM SeniorClub series, conceived to help seniors enjoy more fulfilling lifestyles. The new facility has received high marks from local seniors.

Collaboration among 17 associated hospitals toenhance operating efficiency and quality of care
We have established an association with 17 local hospitals,
enabling us to ensure top-level care and earning us a reputation
for reliability.
New Tokyo Hospital, in Matsudo, Chiba, is recognized forexcellence in the treatment of cardiovascular disease. Seeking tocater to international patients, New Tokyo Hospital is currently
building a new facility, completion of which is scheduled for 2013.
We also provide a variety of support services for hospitals andclinics that help enhance operating efficiency and the quality ofcare provided. Particularly notable are Hospinet, a remote image
diagnosis support service, and SECOM Ubiquitous Electronic
Medical Report, a medical report system that ensures safe storage of medical records and common access by all members of apatient’s medical team.
Home Medical Services
Prescription

Medical Care
Institution

Physician’s guidelines
Nurse’s report

Coordination
Home Nursing
Services

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

Consultation
Prescription
Nurse visit

Pharmaceutical delivery

Patient

Outpatient care

Secom Co., Ltd.
Annual Report 2011

25

SECOM TODAY

Insurance Services
Sales of our distinctive non-life insurance policies
continue to expand.

SECOM Anshin My Home call center

Revision of SECOM Anshin My Home enhancescompetitiveness

MEDCOM unrestricted cancer treatment policy
subscriptions are on the rise

Diversification into the non-life insurance business came about
as a result of our conviction that augmenting our security
services, which provide prior protection, with insurance, whichlooks after people in the event of misfortune, would reinforce
security and peace of mind.
We have developed a lineup of distinctive non-life insurance policies that capitalize on the strengths of the Group.
Notable offerings include the Security Discount Fire Policy, forcommercial customers, and SECOM Anshin My Home, for­residential customers. These policies are aimed primarily at
on-line security services subscribers that take into account therisk-mitigating nature of on-line security systems and offer a
discount on regular premium rates to such customers, thereby
reducing their costs.
In January 2011, we began offering a new, more competitive version of SECOM Anshin My Home. As a consequence,customers can now choose from among three versions of thispolicy—Wide, Basic or Slim—which they can configure to suit
their own needs by adding options, which include special­policy conditions, tailoring the policies to their requirements.
Additionally, we offer discounts for houses with exclusively
electrical—i.e., no gas—appliances and improved fire resistance. Such efforts contributed to an increase in thenumber of ­policies. We also
continue to benefit from­considerable s­ ynergies among
our businesses. In some cases,
the drawing up of a security
system contract prompts a
subscriber to purchase insurance, while in others the decision to purchase insurance
encourages a customer to sign
up for security services.

One of our most popular insurance policies is MEDCOM,an unrestricted cancer treatment policy that provides fullcoverage for hospitalization and medical treatment costs, forboth those covered under Japan’s National Health Insurance
scheme and those that are not, for which the patient normallybears the full cost. In April 2009, we enhanced coverage
under MEDCOM to include outpatient treatment, placing norestrictions on the number of days of outpatient treatment
allowed and providing coverage for outpatient treatment of
up to ¥10 million for each five-year period. This improvement
has supported steady growth in subscriptions. MEDCOM
continues to earn high acclaim not only from subscribers,
but also from insurance industry experts. Looking ahead, we
will continue to actively market MEDCOM with the aim ofenabling people to take advantage of the most appropriate
treatment options available.

Head office ofSecom General Insurance Co., Ltd.

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Secom Co., Ltd.
Annual Report 2011

Enhancing our unique SECOM Anshin My Car
automotive insurance policy
SECOM Anshin My Car is a unique policy that includes
on-site support by SECOM emergency response personnel if
requested by the policyholder. In the event of an accident, thisservice plays a significant role in easing the anxiety of vehicle
owners in the immediate aftermath of an accident.
Looking ahead, we will step up efforts to market these­policies by highlighting the distinctive benefits of insuringwith SECOM.

Geographic Information Services
We are making use of our geospatial information
capabilities to expand our services in such areas
as satellite image data, as well as to strengthen
our overseas operations.
Section of a national land map

Broadening geographic information services thatutilize satellite data
Subsidiary Pasco Corporation began as a provider of measuring
and geographic data services based primarily on aerial photography. Today, the company is leveraging its capabilities toprovide geospatial information services for the development ofsocial infrastructure crucial to both public-sector planning andprivate-sector corporate management.
Since 2008, Pasco has provided image data offered by theoperator of TerraSAR-X, a German commercial satellite thatdelivers images with higher resolution than other commercial
satellites. To reinforce its satellite image-based geospatial
information services, in January 2011 Pasco completed the
PASCO Hokkaido Ground Station, a receiving station in
Chitose, Hokkaido. This is its second such facility, joining thecompany’s first domestic receiving station in Itoman, Okinawa.
The addition of a new receiving station has facilitated extension of the usable pass time—the length of time the satellite is
contactable when it is above a certain location—to 16 minutes,
from 10 minutes, an achievement that will make a crucial difference when applied to disaster prevention and environmental
monitoring, ­contributing to greater security and peace of mind.
Pasco enjoys exclusive rights in Japan and nonexclusive
rights worldwide to sell image data generated by the operatorof TerraSAR-X. The image capturing ability of TerraSAR-X is
not affected by the weather, ensuring high-grade, timely data.
At present, with rights to utilize data from a total of 14 commercial satellites, Pasco works tirelessly to enhance the quality

PASCO Hokkaido Ground Stationof the data it provides. A proponent of the importance ofsatellites in monitoring natural disasters, Pasco analyzed image
data from TerraSAR-X from before and immediately after theGreat East Japan Earthquake to pinpoint the devastated areas.
Pasco also prepared map data, which it distributed to relatedorganizations and government agencies, helping ensure aswift, accurate grasp of the situation on the ground, as wellas assisted relief efforts, bolstering awareness of the value andeffectiveness of satellite monitoring in times of disaster.
In Japan, Pasco has participated in the ASNARO (Advanced
Satellite with New system ARchitecture for Observation)
project, an initiative for developing an advanced small satellitethat can be built and launched for short periods and at a low
cost. Pasco is in charge of developing a compact integrated
mobile receiving station for the satellite. This system will ensure
a highly effective reception framework capable of functioning
even in the event of damage to the communications infrastructure, enabling Pasco to go to affected areas and receive,
process and provide satellite image data.

International orders continue to grow
Pasco has established subsidiaries in a number of countries,
including Finland, Brazil and Belgium, with the aim of submitting tenders for overseas projects. Demand for better infrastructure is rising in developing countries, resource-rich nations andemerging economies. Beginning in the period under review,
Pasco is assisting in the preparation of mapping data for theisland of Sumatra, in Indonesia, a project that is expected totake three anda half years
to complete.
Looking ahead,
Pasco will makeuse of its group
network in Asia,
Europe and Brazil
to broaden thegeographic scopeof its services.
Integrated Mobile Station(1/12 scale model)
Secom Co., Ltd.
Annual Report 201127

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

Glorio Roka-koen

Glorio Roka-koen honored with an award forexcellence in condominium complexes
In line with our emphasis on peace of mind and comfortableliving, we develop and sell condominiums in the Glorio series,
which are equipped with advanced SECOM security systems.
A notable example is Glorio Roka-koen, in Tokyo’s Setagaya
City. This complex combines SECOM MS-3, a security systemdeveloped specially for condominiums, with around-the-clock
access control, as well as the SECOM IX remote imaging

security system and a sensor-equipped perimeter fence, toprovide quality homes that are safe and secure. In the period
under review, Glorio Roka-koen was honored with an award
for excellence in condominium housing from the Japan
Residential Land Development Federation. In presenting thisaward, the organization praised the complex’s design concept,
which emphasizes harmony with nature, spacious freestanding
blocks and secure living.

Information and Communication Related and Other Services
We are enhancing our service menu to
respond to increasingly diverse needs for
effective information security and BCPs.

New Secure Data Center (left)

Services provided by new Secure Data Center
facility earn high marks
Our Secure Data Center has provided data security services
rated among the best in Japan since it opened in 2000. The
facility houses servers, as well as important data, entrusted to
us by subscribers, who include prominent financial institutions.
In recent years, we have seen a sharp increase in demand for
effective solutions that prevent the leakage of classified andpersonal information and for assistance in formulating BCPs
to facilitate the swift restart of operations in the event of amajor disaster. Responding to such needs, in August 2010, we
opened our fifth Secure Data Center facility, which provides
a highly secure environment, thanks to sophisticated SECOM
security features, including an access control system that
capitalizes on our extensive expertise in such systems, as well

28

Secom Co., Ltd.
Annual Report 2011as a biometric identification system and metal detectors. The
facility also offers around-the-clock information monitoring
provided by our highly trained information security staff,
ensuring instantaneous response in the event of a breach.
Other key features include a safe location and an advanced
seismically isolated design. In addition to data center services,which include housing servers, our Secure Data Center facilities
function as a base from which we provide operational andmanagement support for customers’ data systems, as well as
SECOM cloud computing-based services, including SECOM
Safety Confirmation Service. These and other features continue
to bolster the Secure Data Centers’ subscriber base.
Our Secure Data Center facilities once again proved theirworth in the Great East Japan Earthquake of March 11, 2011.
Despite the disaster and rolling blackouts implemented in its

Secure Data Center
server room

aftermath to save power, these facilities continued to operate
uninterrupted, thus ensuring customers’ valuable information
assets were securely
protected. Entrusting
servers to a SECOM
Secure Data Center
facility has recently
attracted the attention of companies
that recognize this asan effective way to
reduce their consumption of e­ lectric power.
Disaster monitoring center

Demand continues to expand for SECOM Safety
Confirmation Service
SECOM has acquired a significant reputation as a providerof services designed to support business continuity and help
ensure the prompt resumption of operations in the eventof a major disaster. Of particular note is SECOM Safety
Confirmation Service, which helps confirm the safety of
employees and assess the extent of damage. The service’s
effectiveness and ease of use continue to attract acclaim from
customers, who range from government agencies to privatesector corporations.
Support for SECOM Safety Confirmation Service reflects
broader awareness of the need for stringent risk management
following the Japanese government’s publication of guidelines
for BCPs. The service was effective in the wake of the Great
East Japan Earthquake, drawing considerable attention from avariety of quarters. Our technological prowess, which enables
us to customize products and services to suit the needs ofcustomers, together with our extensive consulting capabilities,
are key factors. In recent years, we have also offered SECOM
Safety Confirmation Service SCM, which enables subscribers to
confirm the safety of and the extent of damage to key suppliers, and SECOM Safety Confirmation Service GS, which enables
subscribers to confirm the safety of overseas employees. We
continue to develop and add new performance features to
SECOM Safety Confirmation Service in response to arisingneeds, including functions that assist companies to manage
exposure to new strains of influenza, make inquiries in English,
and gather together personnel with capabilities necessary tofacilitate a swift return to business.
We are further applying our know-how in security services
and the foundation we have established with SECOM Safety
Confirmation Service to provide risk management services. Oneof these is Initial Response Operations Service, whereby ourexpert staff provide around-the-clock services in the aftermathof a major accident or information leak, which encompasses
handling queries from employees and other involved parties
and swiftly notifying executives and other pertinent individuals
in charge on the customer side. Another is SECOM Emergency
Contact Network Service for everyday emergencies, whichfacilitates efficient contact via e-mail and enables an administrator to confirm collated responses, thus ensuring the swift
communication of information. Used together, Initial Response
Operations Service and SECOM Emergency Contact Network
Service ensure effective emergency communication from themoment a disaster occurs.
In the information security field, our offerings include
SECOM Information Leak Assessment Service, whereby ourexpert staff carefully examine the customer’s information systems and diagnose problems regarding risk of an information
leak. This service continues to find application in a wide range
of industries and fields.
Drawing on our accumulated expertise in information
security and our reputation as a professional in the field, we
have launched SECOM Professional Support, which provides
around-the-clock support in the event of a widespreadcomputer virus infection or unauthorized network access. This
service, whereby we dispatch SECOM information security professionals to the subscriber’s premises, has earned considerable
acclaim from customers.

New Secure Data Center monitoring room
Secom Co., Ltd.
Annual Report 201129

TOPICS

Environmental Initiatives
With the belief that protecting the environment is essential to our ability to provide security and peace ofmind, we continue to promote environmental initiatives in line with our basic environmental philosophy,
which is to incorporate consideration for the environment in all areas of our operations.

• A recycling-oriented, low-carbon businessmodel• Reducing the environmental impact of ouroperations

In our on-line security services business, we provide security
equipment on a rental basis, rather than selling it, and takefull responsibility for management, including the collection
after use. This enables us to minimize waste, as well as toreuse and recycle in an efficient manner. Our efforts to ensure
a recycling-oriented, low-carbon business model also encompass the promotion of green purchasing and environmentfriendly design.

We are currently implementing a
program aimed at replacing theapproximately 5,000 cars currently
used in our security services businesswith environment-friendly vehicles. Asof the date of this annual report, thiseffort was 84% complete. We have
Electric scooter
also begun using electric scooters inthis business, a move aimed at helping to reduce CO2 emissions from our operations. Additionally, we are implementing
the “Eco-Anzen Drive,” an initiative that aims to reduce theamount of fuel used by our vehicles when in operation, as wellas to promote safe driving. These initiatives were recognizedwith an award for contributions to the preservation of air
quality in 2010, from Japan’s Ministry of the Environment.
On another front, we are taking decisive steps to reduce
our environmental footprint through measures designed
to improve facility efficiency, including the installation of
low-power lighting, voluntary initiatives aimed at making ouroffices more environmentally sound, and the establishment of
SECOM Eco Team, which encourages environmental initiatives
at home. We will continue working to implement lifecycle
assessments (LCAs) with the aim of ensuring the environmental
soundness of our various products over their entire lifecycle.

• SECOM Eco Data System supports corporate
efforts to reduce energy consumption
The SECOM Eco Data System is the first product to come outof our new environmental protection business. The system­calculates and displays electric power, gas and other energy
consumed, and is aimed at the approximately 10,000 companies in Japan obliged to report such information under therevised Law Concerning the Rational Use of Energy, which wasenacted on April 1, 2010. By making energy use visible, thesystem assists the efforts of companies obligated under thelaw to achieve a 1% annual energy reduction to promoteenergy-saving initiatives.

Corporate Citizenship Efforts
In the aftermath of the Great East Japan Earthquake, which
struck on March 11, 2011, we took immediate action, rallying the entire Group with the aim of providing assistance topeople in areas devastated by the earthquake and subsequenttsunami. On March 15, we donated five million hygienic masks
and 10,000 liters of hand disinfectant to evacuation sites, withthe aim of helping prevent the spread of viral infections andto provide respiratory protection against dangerous particles
released during the post-disaster cleanup of destroyed homes
and buildings.
On March 26, subsidiary Secom Medical System andthe medical staff of its associated hospitals established theSecom Disaster Medical Assistance Team (SDMAT), a squadof doctors, nurses and other medical professionals. SDMAT
was promptly dispatched to help provide vital health careservices at evacuation sites, remaining in the area for three
weeks. Other associated hospitals also responded to a request

30

Secom Co., Ltd.
Annual Report 2011

from the All Japan Hospital
Association by dispatching
emergency medical teams
to affected areas in Miyagi
Prefecture.
With the aim of ensuring
a swift, accurate grasp of the
Health care services at
extent of the damage on theearthquake evacuation centerground, as well as to assist relief
efforts, subsidiary Pasco used image data from TerraSAR-X
on March 13, along with the data generated through analysis
from various perspectives and using a variety of processes, tocreate maps. These maps were published on Pasco’s website
and distributed to related organizations and government
agencies.
We will continue to draw on the capabilities of SECOM tocontribute to recovery efforts in the months and years ahead.

FINANCIAL REVIEW
Operating Results
Overview
In the year ended March 31, 2011, SECOM CO., LTD., and its
subsidiaries (collectively, “the Company”) sought to provide
high-quality products and services that respond to the needs ofcustomers in its core security services segment, as well as in fire
protection services, medical services, insurance services, geographic
information services, real estate development and sales, andinformation and communication related and other services segments. Consolidated net sales and operating revenue rose 12.1%,
or ¥81.2 billion, to ¥751.9 billion, a result that was attributable to
newly consolidated organizations managing hospitals and healthcare-related institutions, which were determined to be variableinterest entities, as well as to robust sales of units in large-scalecondominium complexes in the real estate development and sales
segment. Operating income increased 3.3%, or ¥3.3 billion, to¥100.4 billion, owing to operating income in the real estatedevelopment and sales segment, compared with an operating loss
in the previous period, and to an increase in operating income in
the geographic information services segment, reflecting efforts topromote in-house manufacturing and stringent process control.
Net income attributable to SECOM CO., LTD., advanced 33.4%, or¥15.7 billion, to ¥62.7 billion, bolstered by the increase in operating income, as well as by a gain on private equity investments,
compared with a loss in the previous period, and by an increase inequity in net income of affiliated companies.
Net Sales and Operating Revenue
Consolidated net sales and operating revenue increased 12.1%, or¥81.2 billion, to ¥751.9 billion. Increases in net sales and operating
revenue were reported in the security services, medical services,
real estate development and sales, insurance services and geographic information services segments, while the fire protection
services and information and communication related and otherservices segments saw declines. (For more details, please see
Segment Information below.)
Costs and Expenses
Total costs and expenses, at ¥651.4 billion, were up 13.6%, or¥78.0 billion. Cost of sales increased 15.2%, or ¥65.8 billion, to¥499.0 billion, equivalent to 66.4% of net sales and operating
revenue, up from 64.6% in the previous period. Among factors
behind this increase were newly consolidated organizations managing hospitals and health care-related institutions and restorationrelated costs incurred in the wake of the Great East Japan
Earthquake.
Selling, general and administrative (SG&A) expenses increased
7.2%, or ¥9.9 billion, to ¥147.7 billion. SG&A expenses wereequivalent to 19.6% of net sales and operating revenue, improvingfrom 20.5% in the previous period. The increase in SG&A expenses
was a result of such factors as an increase in research and development costs, while the improvement in SG&A expenses as a percentage of net sales and operating revenue was due to efforts to
reduce costs, including lowering advertising costs. The Company
also recognized a ¥3.2 billion loss on settlement of pre-existing
relationship, owing to the settlement of a lease contract between
the Company and newly consolidated organizations managing
hospitals and health care-related institutions in the medical
services segment.
Operating Income
Operating income rose 3.3%, or ¥3.3 billion, to ¥100.4 billion,
equivalent to 13.4% of net sales and operating revenue, downfrom 14.5% in the previous period. The increase in operating
income was attributable primarily to operating income in the realestate development and sales segment, compared with an operating loss in the previous period, coupled with an increase in operating income in the geographic information services segment and adecrease in the operating loss in the insurance services segment,
although these factors were partially offset by declines in operating
income in the security services, fire protection services, informationand communication related and other services and medical services
segments. Segments contributing to operating income were—in
order of size of contribution—security services, geographic information services, information and communication related and otherservices, fire protection services, medical services and real estatedevelopment and sales. (For more details, please see Segment
Information below.)
Other Income and Expenses
Other income advanced ¥6.5 billion, to ¥11.9 billion, while otherexpenses fell ¥3.4 billion, to ¥4.5 billion, resulting in net otherincome of ¥7.4 billion, compared with net other expenses of¥2.5 billion in the previous period. Principal factors behind thisresult included a gain on private equity investments of ¥6.0 billion,
compared with a loss of ¥1.4 billion in the previous period; aloss on other-than-temporary impairment of investment securitiesof ¥84 million, down ¥1.7 billion from the previous period; and theabsence of a ¥1.3 billion loss related to spectrum reallocation
recognized in the previous period.
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 rose 13.9%, or ¥13.2 billion,to ¥107.8 billion, reflecting the increase in operating income andthe fact that other income exceeded other expenses.
Income Taxes
Income taxes declined ¥2.4 billion, to ¥43.3 billion, equivalent to40.1% of income from continuing operations before income taxes
and equity in net income of affiliated companies, down from
48.2% in the previous period. This result was due mainly to thefact that unrecognized tax benefits from subsidiaries in loss
­positions were higher in the previous period.
Equity in Net Income of Affiliated Companies
Equity in net income of affiliated companies, at ¥5.0 billion, wasup ¥2.4 billion. The principal factor behind this result was anincrease in equity in net income of overseas affiliated companies.
Net Income Attributable to Noncontrolling Interests
Net Income attributable to noncontrolling interests amounted to¥6.9 billion, up ¥900 million.
Net Income Attributable to SECOM CO., LTD.
Net income attributable to SECOM CO., LTD., climbed 33.4%, or¥15.7 billion, to ¥62.7 billion, equivalent to 8.3% of net sales andoperating revenue, compared with 7.0% in the previous period.
Net income attributable to SECOM CO., LTD., per share was¥287.41, up from ¥215.51. A proposal to pay cash dividends of¥90.00 per share, an increase of ¥5.00 per share from the previous
period, was approved at the general shareholders’ meeting held on
June 24, 2011.

Secom Co., Ltd.
Annual Report 2011

31

FINANCIAL REVIEW
Segment Information(For more detailed 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 0.1%, or ¥441 million, to ¥426.8 billion. Excludingintersegment transactions, net sales and operating revenue inthis segment amounted to ¥424.7 billion, representing 56.5% of
overall net sales and operating revenue, down from 63.3% 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 our electronic security services, use sensors installedat the subscriber’s premises to detect events, including intrusions,fires and equipment malfunctions. Sensors are linked to a SECOM
control center via telecommunications circuits to facilitate aroundthe-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 staff also notify the police or fire department, if necessary. We have established an integrated approach,whereby we take full responsibility for all aspects of our on-line
security commercial and home security systems, from R&D throughto equipment manufacturing, sales, security planning, installation,
monitoring, emergency response services and equipment maintenance. Net sales and operating revenue from electronic security
services slipped 0.4%, or ¥1.3 billion, to ¥297.8 billion, owing
primarily to declines in the installation of both on-line commercial
and home security systems and large-scale proprietary security
systems.
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 0.3%, or ¥159 million, to ¥46.4
billon, and that from armored car services rose 1.5%, or ¥306
million, to ¥20.1 billion.
The merchandise and other category encompasses sales of awide range of security products, including access control systems,
CCTV surveillance systems, automated fire extinguishing systems
and external monitoring systems, which can be free-standing or
linked to on-line security systems. Net sales and operating revenue
in this category increased 1.9%, or ¥1.1 billion, to ¥60.4 billion,
mainly reflecting an increase in sales of large-scale equipment.
Operating income in the security services segment declined
1.7%, or ¥1.8 billion, to ¥99.9 billion. The operating margin
slipped to 23.4%, from 23.8% in the previous period, owing primarily to an increase in operating expenses, a result of restoration
efforts in areas affected by the Great East Japan Earthquake, andto an increase in R&D expenses.
Fire Protection Services
The fire protection services segment focuses on tailored automatic
fire alarm systems, fire extinguishing systems and other fire protection systems for a wide range of applications, including officebuildings, plants, tunnels, cultural properties, ships and residences.
Net sales and operating revenue from the fire protection services
segment declined 5.2%, or ¥4.4 billon, to ¥80.1 billion. Operating
income was ¥3.2 billion, down 24.7%, or ¥1.0 billion, while theoperating margin was 3.9%, compared with 5.0% in the previous
period. These results were attributable largely to the absence oflarge-scale replacement sales of fire protection systems, which­bolstered results in the previous period, despite efforts to enhance

32

Secom Co., Ltd.
Annual Report 2011

the segment’s earnings base by securing renovations-relatedorders, as persistently unfavorable economic conditions further
intensified competition for orders.
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, personalcare services, the leasing of real estate for hospitals and healthcare-related institutions and others. The segment also includes theoperations of variable interest entities of which the Company is
the primary beneficiary, which manage hospitals and health carerelated institutions.
Segment net sales and operating revenue climbed 121.8%,
or ¥68.7 billion, to ¥125.2 billion. The principal factor behind
this result was the newly consolidated organizations managing
hospitals and health care-related institutions, which were determined to be variable interest entities. Operating income declined
21.4%, or ¥483 million, to ¥1.8 billion, owing primarily to a lossof ¥3.2 billion on settlement of pre-existing relationship related tothe settlement of a lease contract between the Company and theaforementioned newly consolidated organizations.
Insurance Services
In addition to security services, which are preventative by nature,
we offer non-life insurance, which looks after customers in theevent of misfortune. We have developed and marketed a broad
range of distinctive non-life insurance policies, including Security
Discount Fire Policy, a commercial fire insurance policy, and SECOM
Anshin My Home, a comprehensive fire insurance policy forhomes—both of which offer discounts on premiums to customers
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 that offers
on-site support services—provided by our emergency response­personnel—should the subscriber be involved in an accident, and
MEDCOM, an unrestricted cancer treatment policy that covers theentire cost of medical treatment for cancer.
Net sales and operating revenue in the insurance services­segment rose 11.3%, or ¥3.6 billion, to ¥35.8 billion. The segment’s operating loss improved to ¥180 million, from ¥1.5 billion
in the previous period. This result was due primarily to a decreasein loss on other-than-temporary impairment of investment
securities.
Geographic Information Services
This segment includes the use of highly advanced measuring
equipment and surveying technologies to provide a variety ofgeospatial information services to national and local governments
and public- and private-sector entities in Japan. We also provide
geospatial information services to foreign countries, including
emerging economies and developing countries. During the period,
we procured high-resolution data and, leveraging our processing
technologies, provided geographic information services that
responded to a wide variety of customer needs in areas ranging
from map production to environmental monitoring and fireand disaster prevention. We also provided a variety of pertinent
information in the wake of the Great East Japan Earthquake.
Net sales and operating revenue in this segment rose 3.9%, or¥1.6 billion, to ¥43.7 billion, reflecting increased sales to overseas
customers, as well as contributions from newly consolidated
subsidiaries. Operating income advanced 55.9%, or ¥1.2 billion, to¥3.4 billion, bolstered by efforts to promote in-house manufacturing and stringent process control. The operating margin was 7.8%,
up from 5.2% in the previous period.

Information and Communication Related and Other Services
This segment consists primarily of information and communication
services—including information security systems and network
services, which protect subscribers’ information in the event of amajor disaster—and real estate leasing.
Segment net sales and operating revenue declined 4.5%, or¥1.5 billion, to ¥32.0 billion, owing primarily to the impact of theGreat East Japan Earthquake. Operating income fell 15.9%, or¥611 million, to ¥3.2 billion. The operating margin was 10.1%,
compared with 11.5% in the previous period. These results werelargely attributable to the opening of a new Secure Data Center
facility, which began providing services in August 2010.

Real Estate Development and Sales
This segment comprises the development and sales of condominiums equipped with advanced security and contingency planningfeatures. Amidst a slump in the market for condominiums, we
actively promoted sales to customer groups we had not been able
to approach in the past. For condominiums on the market since
the previous period, we also sought to adjust prices in response to
flagging market conditions.
Net sales and operating revenue in this segment climbed 85.1%,
or ¥11.5 billion, to ¥24.9 billion, bolstered by an increase in salesof units in large-scale condominium complexes. Operating income
was ¥525 million, compared with a ¥3.7 billion operating loss inthe previous period, owing to an increase in net sales and operating revenue and other factors.

Financial Position

organizations managing hospitals and health care-related institutions; in buildings and improvements as a result of the opening ofa new Secure Data Center facility in the information and commu­
nication related and other services segment; and in land as a resultof the purchase of land for the new hospital facilities in the medical
services segment. Additionally, an increase in the number of security
services subscribers necessitated an increase in security equipment
and control stations, although this was offset by depreciation.
Other assets were up ¥3.5 billion, to ¥101.0 billion. This
primarily reflected increases in prepaid pension and severance
costs—a result of the investment of plan assets—as well as indeferred charges and goodwill, the latter due to acquisitions in the
security services and geographic information services segments.
These increases were partially offset by a decline in deferredincome taxes.
Total liabilities rose 2.5%, or ¥12.7 billion, to ¥516.3 billion.
Total current liabilities amounted to ¥242.6 billion, up ¥7.1 billion.
Long-term debt, at ¥53.0 billion, was up ¥11.4 billion. These
increases were attributable largely to newly consolidated organizations managing hospitals and health care-related institutions.
In addition, unearned premiums and other insurance liabilities
increased ¥9.1 billion. These factors were offset to a certain extent
by a ¥20.6 billion decline in investment deposits by policyholders.

Total assets as of March 31, 2011, amounted to ¥1,171.2
billion, 2.9%, or ¥33.0 billion, higher than at the end of theprevious period.
Total current assets, at ¥521.4 billion, increased ¥20.6 billion.
The principal factors behind this result were increases in cash andcash equivalents (for more details, please see Cash Flows, which
follows this section), time deposits and notes and accounts receivable, trade, the latter due to newly consolidated organizations
managing hospitals and health care-related institutions, whichwere determined to be variable interest entities. These increases
were partially offset by a decline in inventories, owing to favorable
sales of condominiums in the real estate development and sales
segment. With both current assets and current liabilities up, thecurrent ratio remained level at 2.1 times.
Investments and long-term receivables were down ¥30.3 billion,to ¥246.3 billion, a consequence primarily of a decline in long-term
receivables. Long-term loans receivable to organizations managing
hospitals and health care-related institutions were eliminated, as
these entities were newly consolidated.
Property, plant and equipment less accumulated depreciation,rose ¥39.2 billion, to ¥302.5 billion. This was due mainly toincreases in land, buildings and improvements, and machinery,equipment and automobiles related to newly consolidated
Percentage of Consolidated
Net Sales and Operating Revenue*

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

3.3%
5.8%
4.4%

3,000

1,500

2,400

1,200

1,800

900

1,200

600

600

300

(Year ended March 31, 2011)

3.4%

56.5%

16.6%
10.0%

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

07 08 09 10 11

0

07 08 09 10 11* Pie chart shows percentage of consolidated net sales and operating revenue(Excluding intersegment transactions)

Secom Co., Ltd.
Annual Report 2011

33

FINANCIAL REVIEW

Total SECOM CO., LTD. shareholders’ equity rose 4.2%, or¥23.7 billion, to ¥593.5 billion. This was due primarily to anincrease in retained earnings, which was partially offset by anincrease in the loss resulting from foreign currency translation
adjustments—owing to the appreciation of the yen—and by

a decrease in additional paid-in capital resulting from a tender
offer to acquire shares of common stock issued by consolidated
subsidiary Secom Techno Service Co., Ltd. As a consequence, theshareholders’ equity ratio rose to 50.7%, from 50.1% at the endof 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 related strategic investments with cash
generated by its operating activities.
Net cash provided by operating activities amounted to ¥112.6
billion. Cash provided by operating activities included net incomeof ¥69.6 billion, depreciation and amortization of ¥57.0 billion anda decrease in inventories of ¥14.6 billion. Cash used in operating
activities included increases of ¥15.1 billion in deferred charges,¥7.7 billion in cash deposits and ¥6.9 billion in receivables and duefrom subscribers, net of allowances. The decrease in inventories
was attributable largely to favorable sales of condominiums in thereal estate development and sales segment, which pushed down
inventories of real estate for sale. The increase in deferred charges
was due to the deferral of installation service charges for security
equipment related to on-line security systems, which are recognized over the contractual period for the security services. The
increase in cash deposits primarily reflected the Company’s business expansion efforts. The increase in receivables and due fromsubscribers, net of allowances, arose mainly as a result of newly
consolidated organizations managing hospitals and health-careinstitutions, which were determined to be variable interest entities.
Net cash provided by operating activities was ¥4.1 billion lower
than in the previous period, owing principally to the increases incash deposits and in receivables and due from subscribers, netof allowances, which were partially offset by the increase in
net income.
Net cash used in investing activities came to ¥46.9 billion.
Principal uses of cash included payments for purchases of property,
plant and equipment of ¥41.7 billion—a result of the purchaseof security equipment and control stations necessitated by anincrease in the number of security services subscribers—andincrease in time deposits of ¥9.7 billion. Cash was provided mainly
by net proceeds from sales and redemption of short-term investments and investment securities of ¥3.2 billion. This was due mainly
to a reassessment of investment assets in the insurance services
segment and investment results of U.S. investment companies. The
increase in time deposits was attributable to the expansion of shortterm deposits, the purpose of which was to reinforce relations with
subscribers. Net cash used in investing activities was ¥36.3 billion
higher than in the previous period, owing to net proceeds fromsales and redemption of short-term investments and investment
securities of ¥3.2 billion, down considerably from ¥24.0 billion in
the previous period, and an increase in time deposits of ¥9.7
­billion, compared with a decrease of ¥1.4 billion.
Net cash used in financing activities amounted to ¥55.3 billion.
This included a decrease in investment deposits by policyholders of¥20.6 billion, dividends paid to SECOM CO., LTD. shareholders of¥18.5 billion and payments for acquisition of shares of consolidated subsidiaries from noncontrolling interest holders of ¥13.7
billion, the result of a tender offer to acquire shares of common
stock issued by consolidated subsidiary Secom Techno Service. Net
cash used in financing activities was down ¥30.4 billion, a consequence of efforts to reduce both bank loans and long-term debt
implemented in earlier periods.
The Company also posted cumulative effect adjustments resulting from the adoption of a new accounting standard on variableinterest entities of ¥3.9 billion, owing to newly consolidated organizations managing hospitals and health care-related institutions.
As a result of the aforementioned factors, net cash and cash
equivalents at end of year were ¥193.9 billion, an increase of ¥13.8
billion from net cash and cash equivalents at beginning of year of¥180.1 billion.

Depreciation andAmortization

Capital Expenditures

Cash Flows

60

50

150

48

40

36

30

24

20

12

10

(In billions of yen)

(In billions of yen)

(In billions of yen)

100
50
0

0

07 08 09 10 11

0

–50
–100

07 08 09 10 11

–150

09

10

11

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

34

Secom Co., Ltd.
Annual Report 2011

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

Secom Co., Ltd.
Annual Report 201135

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

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

March 31

March 31

2010

2011

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

ASSETS

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

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

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

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

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

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

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

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

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

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

See accompanying notes to consolidated financial statements.

36

2011

Secom Co., Ltd.
Annual Report 2011

		
In millions of yen

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

March 31

March 31

2010

2011

LIABILITIES AND EQUITY

2011

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

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

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

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

Commitments and contingent liabilities (Note 25)

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

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

Secom Co., Ltd.
Annual Report 201137

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

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

Years ended March 31

Year ended March 31

2011

2009

2011

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

				

651,436

573,466

607,757

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

100,432

97,17876,2591,210,024

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

928
—
139
6,014
4,789

1,317
781
—
—
3,254

2,232
—
—
1,403
2,124

11,181—
1,675
72,45857,698

				

11,870

5,352

5,759

143,012

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

1,683
—
84
—
—
—
2,691

1,799
7
1,764
1,367
1,254
—
1,663

2,022
231
8,831
—
—
2,415
5,356

20,277
—
1,012
—
—
—
32,422

				

4,458

7,854

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

107,844

94,676

63,163

1,299,325

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

38,7654,512

38,7496,882

41,682(5,423)

467,048
54,361

				43,27745,631

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

64,567
5,028

49,0452,620

26,904
8,733

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

69,595—51,665
1,354

35,637(149)

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

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

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

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

Years ended March 31

Year ended March 31

2011

2010

2009

2011

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

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

$3.46
—
3.46

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

¥ 85.00 ¥ 85.00¥ 85.00$1.02

See accompanying notes to consolidated financial statements.

38

2010

Secom Co., Ltd.
Annual Report 2011

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

Accumulated
other comprehensive
income (loss)

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

Total

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

30,5604,928

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

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

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

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

528,72161,069589,790

46,9896,030

53,019

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

211
47
372
212
6,872
—
(1,759)
—

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

1,101
(0)
(11)

(1,517)
—
—

(416)
(0)
(11)

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

569,799

64,665

634,464

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

62,665

6,930

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

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

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

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

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

$6,865,048

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

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

83,494

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

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

$738,723 $7,889,265

See accompanying notes to consolidated financial statements.

Secom Co., Ltd.
Annual Report 201139

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

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

Years ended March 31

Year ended March 31

2011

2010

2009

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

40

Secom Co., Ltd.
Annual Report 20112011

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

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

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

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

Secom Co., Ltd.
Annual Report 201141

CONSOLIDATED FINANCIAL STATEMENTS

Revenue from security services is recognized over the contractual
period or, in the case of specific services, when such services are
rendered. Subscribers are generally requested to prepay a portion ofservice charges which are credited to deferred revenue and recognized in income ratably over the ­covered service period. Revenue
from installation services of security equipment related to on-line
centralized security ­services is deferred and recognized over thecontractual period of security services after completion of the installation. The related installation costs are also deferred and amortizedover the ­contractual period (Note 2 (12)).
The Company enters into arrangements with multiple elements,
which may include any combination of security equipment, installation and security service. The Company allocates revenue to eachelement based on its relative fair value if such ­element meets criteria for treatment as a ­separate unit of accounting as prescribed in
ASC 605, “Revenue Recognition.” Otherwise, revenue is deferred
until the undelivered ­elements are fulfilled as a single unit ofaccounting.
Revenue from sales of merchandise and software is r­ ecognizedwhen the merchandise and software are received by the customer
and, in the case of installations, when such installations arecompleted.
Revenue from construction contracts is principally recognizedwhen construction is completed.
Revenue from long-term contracts for fire protection services andgeographic ­informa­tion services is principally recognized under thepercentage-of-­completion method.
Property and casualty insurance premiums are earned ­ratably over
the terms of the related insurance contracts. Unearned ­premiums
are earned ratably over the terms of the unexpired portion ofpremiums written.
Revenue from sales of real estate is recognized when the t­ itle of
the real estate is transferred to the customer.
Revenue from sales of equipment under sales-type leases isrecognized at the inception of the lease. Unearned income onsales-type leases and direct-financing leases is recognized over thelife of each respective lease using the interest method. Leases not
qualifying as sales-type leases or direct-financing leases areaccounted for as operating leases and the related ­revenue is­recognized over the lease term.
Taxes collected from customers and remitted to ­governmental
authorities on revenue-producing transactions are accounted for on
a net basis and therefore are excluded from net sales and operating
revenue in consolidated ­statements of income.
(4) Foreign Currency Translation
All asset and liability accounts of foreign subsidiaries and affiliates
are translated into Japanese yen at the rates of exchange in effectat year-end and all income and expense accounts are translated ataverage rates of exchange during the year. The resulting translation
adjustments are accumulated and reported as part of other­comprehensive income (loss).
Foreign currency receivables and payables of the Company aretranslated into yen at the rate in effect at the balance sheet date
and the resulting translation gains and losses are credited or
charged to income for the year.

42

Secom Co., Ltd.
Annual Report 2011

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

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

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

Secom Co., Ltd.
Annual Report 201143

CONSOLIDATED FINANCIAL STATEMENTS(16) Income Taxes
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between thefinancial statement carrying amounts of existing assets and liabilities
and their respective tax bases, and operating loss carryforwards.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in whichthose temporary differences and carryforwards are expected to berealized or settled. The effect on deferred tax assets and liabilities ofa change in tax rates is recognized in income in the period that
includes the enactment date. Valuation allowances are recorded toreduce deferred tax assets when it is more likely than not that a tax
benefit will not be realized.
The Company recognizes in the consolidated financial statements
the impact of a tax position, if any, based on the technical meritsof the position, when that position is more likely than not to besustained upon examination. The benefit of the tax position ismeasured at the largest amount of benefit that is greater than
50 percent likely of being realized upon settlement with the­appropriate tax authority.
The Company recognizes interest and penalties accrued related
to unrecognized tax benefits in income taxes in the consolidated
statements of income.
(17) Research and Development
Research and development costs are charged to income
as incurred.
(18) Advertising Costs
Advertising costs are charged to income as incurred, except forthe costs related to insurance policies. Advertising costs for acquiring new insurance policies are deferred and amortized as part of
insurance acquisition costs. Advertising expenses included in selling,
general and administrative expenses for the years ended March 31,
2011, 2010 and 2009 were ¥4,034 million ($48,602 thousand),¥4,665 million and ¥5,292 million, respectively.
(19) Derivative Financial Instruments
The Company accounts for derivative financial instruments inaccordance with ASC 815, “Derivatives and Hedging.”
The Company recognizes all derivative financial instruments inthe consolidated financial statements at fair value regardless of the
purpose or intent for holding them. Changes in the fair value ofderivative financial instruments are either recognized periodically inincome or in equity as a component of other comprehensive
income (loss) depending on whether the derivative financial instruments qualify for hedge accounting, and if so, whether they qualify
as a fair value hedge or a cash flow hedge. Changes in the fair values of derivative financial instruments accounted for as a fair value
hedge are recorded in income along with the portion of the change
in the fair value of the hedged item that relates to the hedged risk.
Changes in the fair value of derivative financial instruments
accounted for as a cash flow hedge, to the extent it is effective as ahedge, are recorded in other comprehensive income (loss), net oftax. Changes in the fair value of derivative financial instruments not
qualifying as a hedge are reported in income.
The Company meets the documentation requirements necessaryfor effective hedges which include their risk management objective and strategy for undertaking various hedge transactions. In
addition, formal assessment is made at inception of the hedge andperiodically on an on-going basis, as to whether the derivatives

44

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

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

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

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

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

U.S. dollars

March 31

March 31

2011

2010

2011

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

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

Secom Co., Ltd.
Annual Report 201145

CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

Cost

6,358
10
6,368

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

Gains

¥

27

¥

0
27

46

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

0
325 $

—
24 $

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

¥

2

¥

—
2

Fair value

¥

6,383

¥

10
6,393

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

March 31, 2010

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

24 $		Gross unrealized
Cost

325 $

March 31, 2011
Losses

Gains

LossesFair value

¥ 908

¥ —

¥ 13,287

—
¥ 908

¥

0
0

40
¥ 13,327¥7,153
2,446

¥330
—

¥ 43,996
63,8438¥9,607

0
¥330

6,094
¥113,933

Fair value

76,603 $In millions of yen

In millions of yen

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

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

Gross unrealized

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

Gains

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

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

¥—
—
¥—

¥—
—
¥—

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

¥ 6,961

¥

¥—

¥—

49

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

12 months or longer				
Fair value

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

$—
—
$—

$—
—
$—

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

$

$—

$—

590

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

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

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

Fair value¥ 6,358¥ 6,383

32,871

33,412——27,447
10,852¥77,528

28,015
11,372¥79,182

1,500
5,973
¥7,483

1,483
5,961¥7,454¥

Cost

Fair value

10

¥

10

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

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

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

U.S. dollars

March 31

March 31

Held-to-maturity

Cost

Cost

In millions of yen

Fair value

120 $

120

—

—

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

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

U.S. dollars

Years ended
March 31

Year ended
March 31

2011

2010

2009

2011

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

¥679
325

$35,133
9,060

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

		

2011

2010

2011

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

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

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

Loans
receivable
resultingfrommedicalservices

Loans
receivable
resultingfrominsuranceservices

Other
loans
receivable

Other

Total

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

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

Secom Co., Ltd.
Annual Report 201147

CONSOLIDATED FINANCIAL STATEMENTS

In thousands of U.S. dollars
		
		
		
		
Lease
receivable

Loans
receivable
resultingfrommedicalservices

Loans
receivable
resultingfrominsuranceservices

Other
loans
receivable

Other

Total

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

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

Loans
receivable
resultingfrommedicalservices

Loans
receivable
resultingfrominsuranceservices

Other
loans
receivable

Other

Total

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

In thousands of U.S. dollars
		
		
		
		
Lease
receivable

Loans
receivable
resultingfrommedicalservices

Loans
receivable
resultingfrominsuranceservices

Other
loans
receivable

Other

Total

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

Secom Co., Ltd.
Annual Report 2011

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

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

U.S. dollars

March 31

March 31

2011

2010

2011

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

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

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

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

		 In thousands of2011

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2009

2011

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

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

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

2010

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

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

U.S. dollars

Years ended
March 31

Year ended
March 31

2011

2010

2009

2011

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

¥1,669¥1,597¥1,737$20,108

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

¥5,128¥6,504¥8,293$61,783

		 In thousands ofIn millions of yen

U.S. dollars

March 31

March 31

2011

2010

2011

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

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

¥

$

		

81

87

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

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

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

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

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

		 In thousands ofIn millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2011

2010

2009

2011

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

¥—
—
1
—

¥ 83
15
—
—

¥34
—
—
—

$—
—
12
—

2

149

42

24

—

—

—

—

—
—

45
—

—
—

—
—

		

¥ 3

¥292

¥76

$36

—

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

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

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

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

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

976

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

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

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

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

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

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

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

¥5,739
4,516
3,554
2,392
1,166

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

Secom Co., Ltd.
Annual Report 2011

49

CONSOLIDATED FINANCIAL STATEMENTS

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

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

(492)
3,777

(135)
—

(653)
4,746

(6,109)15,440

—
—

702
—

—
—

—
—

—
(2,919)702(2,919)

—

(245)

—

—

—

(245)

—
—

—
9,970

—
4,269

—
135

—
2,002

174
18,698——(4,338)
5,632

(492)
3,777

(135)
—

(175)
1,827

(5,546)
13,152

81
—

—
—

711
—

—
—

—
—

1,467
—

—

—

—

—

—

—

—
81

—
9,970

(70)
4,910

—
135

—
2,002

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

(135)
¥ —

(175) (5,546)¥1,827 ¥14,450

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

In thousands of U.S. dollars

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

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

Total

Total

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

976
—

—
—

8,566
—

—
—

—
—

17,675
—

—

—

—

—

—

—

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

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

50

Secom Co., Ltd.
Annual Report 2011

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

		

In millions of yen

U.S. dollars

March 31

March 31

2010

2011

2011

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

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

U.S. dollars

March 31

March 31

2011

2010

2011

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

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

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

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

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

14. Insurance-Related Operations
Secom General Insurance Co., Ltd. (“Secom Insurance”), a­subsidiary of the parent company, maintains accounting records as
noted in Note 2 in accordance with Japanese GAAP, which vary incertain respects from U.S. GAAP. Those differences are principally,(a) that insurance acqui­sition costs are charged to income whenincurred under Japanese GAAP whereas under U.S. GAAP, thosecosts are deferred and amortized generally over the premium-­
paying period of the insurance policies, (b) that liabilities related toincurred but not reported claims are computed based on related
regulations in Japan whereas under U.S. GAAP, those liabilities arecomputed based on past experience for unreported losses, and(c) that unearned premiums are calculated based on the documents
authorized by the Supervisory Authorities in Japan whereas under
U.S. GAAP, unearned premiums are reflected based on the lapseand ­surrender over the contract period.
In addition, under certain property and casualty insurance contracts with a refund clause and long-term insurance policies that­provide refunds at maturity, such as personal accident and fire, thepolicyholder receives a refund if premiums have been fully paid
unless a substantial settlement (as defined in the p­ olicy) has
occurred. The Company has provided for such refundable amounts
by classifying a portion of the net pre­mi­ums written, together withinterest thereon, as investment deposits by policyholders. Contract
and policy terms are ­principally five years.
For purposes of preparing the consolidated financial ­state­ments,
appropriate adjustments have been made to reflect such items inaccordance with U.S. GAAP.
The net equity of Secom Insurance at March 31, 2011 and 2010was ¥45,838 million ($552,265 thousand) and ¥52,262 million,
respectively.
Net sales and operating revenue of Secom Insurance include net
realized investment gains and losses, including the results on salesof securities, loss on other-than-temporary impairment of investment securities and impairment loss on long-lived assets. Net realized investment gains and losses for the years ended March 31,
2011, 2010 and 2009 were gains of ¥838 million ($10,096 thousand), losses of ¥3,309 million and ¥10,152 million, respectively.
Loss on other-than-temporary impairment of investment securities
for the years ended March 31, 2011, 2010 and 2009 were ¥681
­million ($8,205 thousand), ¥4,558 million and ¥10,683 million,
respectively.
15. Pension and Severance Costs
Employees of the parent company and its domestic ­subsidiaries
whose services are terminated are, under most ­circumstances,­eligible for lump-sum benefits and/or ­eligible for pension benefits.
The parent company and certain domestic subsidiaries haveadopted a cash balance pension plan and a defined contribution
pension plan. Benefits under the cash balance pension plan are calculated by the amount equal to a certain percentage of employee’s
annual income over their period of service, plus interest calculatedby the 3-year average yield for 10-year government bonds. The
defined contribution pension plan was established in April 2003, bytransferring a portion equivalent to 20 percent of the cash balance
pension plan, including portions funded in prior periods. Specified
percentage of employees’ annual income is contributed to thedefined contribution pension plan.
In April 2005, the parent company and certain domestic subsidiaries transferred an additional portion of the cash balance pension
plan to the defined contribution pension plan. Accord­ingly, the ratioof the accumulated amount in the cash balance pension plan andthe amount of contributions to the defined contribution pension
plan changed to 70 percent and 30 percent, including portions
funded in prior periods.
In March 2009, Pasco Corporation, a subsidiary of the parent
company, and its domestic subsidiaries settled and transferred a
portion of the tax-qualified non-­contributory pension plan to thedefined contribution pension plan. In accordance with ASC 715,
“Compensation—Retirement Benefits,” the Company accounted
for these transfers as a partial settlement of benefit obligation. The
amount of settlement loss was immaterial for the year ended March
31, 2009.
Net periodic pension and severance costs for the years ended
March 31, 2011, 2010 and 2009 were as follows:		 In thousands of2011

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2009

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

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

Secom Co., Ltd.
Annual Report 2011

51

CONSOLIDATED FINANCIAL STATEMENTS

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

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

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2011

2011

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

In millions of yen

U.S. dollars

March 31

March 31

2010

2011

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

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

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

52

Secom Co., Ltd.
Annual Report 2011

¥2,263
(924)
(263)
1,687
¥2,763

March 31

2011

2010

2011

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

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

		 In thousands of2011

U.S. dollars

March 31($176,735)

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

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

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

2011

2010

2.1%
2.6%

2.2%
2.6%

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

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

2011

2010

2009

2.2%
3.0%
2.6%

2.1%
3.0%
2.7%

2.0%
3.0%
2.7%

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

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

Level 1

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

¥ 1,053

Level 2¥—¥

Level 3

Total—

¥ 1,053

6,963

50

—

7,013

5,978

938

6

6,922

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

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

Level 1

¥ 1,222

Level 2

¥

—

¥

Total

—

¥ 1,222

3,371

—

7

3,378

0

—

—

0

8,878

837

61

9,776

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

2,120
31,067
8,998
3,428
774
¥60,763

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

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

In millions of yen

Year ended March 31, 2011

In millions of yen
Level 3

Level 3

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

Equitysecurities

March 31, 2010

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

Level 2Debt
securities

			
NonJapanese Government government
companies
bonds
bonds

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

Pooled
funds

Other

Total

¥7

¥61

¥702

¥12,994¥397¥14,161

—

—

48

93

135

276

—

—

896

(370)

224

750

(7)
—
¥—

(55)
—
¥ 6

(995)
3,845
—
1,776
¥651 ¥18,338

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

Secom Co., Ltd.
Annual Report 2011

53

CONSOLIDATED FINANCIAL STATEMENTS

In millions of yen
Year ended March 31, 2010
Equitysecurities

Debt
securities

			
NonJapanese Government government
companies
bonds
bonds

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

¥—

¥26

		 In thousands ofPooledfunds¥ 55 ¥11,177

Other

Total

¥250 ¥11,508

—

(1)

—

(301)

—

(302)

—

5

647

431

181

1,264

4
3
¥ 7

31
—
¥61

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

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

Debt
securities

			
NonJapanese Government government
companies
bonds
bonds

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

$84

$735

—

—

578

—

—

10,795(84)—$—

Pooled
funds

Other

Total

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

1,120

1,627

3,325

(4,458) 2,699

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

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

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

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

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

54

Secom Co., Ltd.
Annual Report 2011

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

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2009

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

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

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

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2009

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

2011$526,229

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

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

U.S. dollars

March 31

March 31

2010

2011

2011

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

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

The valuation allowance principally relates to deferred tax assetsof the subsidiaries with operating loss carryforwards, for tax purposes, that are not expected to be realized. The net change in the
total valuation allowance for the years ended March 31, 2011,2010 and 2009 was an increase of ¥1,604 million ($19,325­thousand), ¥5,232 million and ¥9,795 million, respectively.
In assessing the realizability of deferred tax assets, the Company
management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those
temporary differences become deductible. The Company management considered the sched­uled reversal of deferred tax liabilities,
projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable
income and projec­tions for future taxable income over the periods
in which the deferred tax assets are deductible, the Company

		

In millions of yen

U.S. dollars

March 31

March 31

2010

2011

2011

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

The Company has not recognized deferred tax liabilities of ¥712
million ($8,578 thousand) for a portion of undistributed earnings offoreign subsidiaries totaling ¥14,526 million ($175,012 thousand)at March 31, 2011 as they are not expected to be remitted in theforeseeable future.
At March 31, 2011, the operating loss carryforwards of domestic
subsidiaries amounted to ¥45,981 million ($553,988 thousand) andare available for offsetting against future taxable earnings of such
subsidiaries for up to seven years, as follows:		 In thousands ofExpires in the years ending March 31
In millions of yen
U.S. dollars

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

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

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

Secom Co., Ltd.
Annual Report 2011

55

CONSOLIDATED FINANCIAL STATEMENTS

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

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2011

2011

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

56

Secom Co., Ltd.
Annual Report 2011

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

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

Tax(expense)or benefit

Net-of-tax
amount¥1,719 (¥ 3,041)

227

(431)

—

3

—

9

424

(628)

230

(344)

—

(6,399)¥2,600 (¥10,831)

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

In millions of yen
Pre-tax
amount

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

Tax(expense)or benefit

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

106

(157)

(4)

64

4,559

(7,043)

304

(109)

859

(19,544)¥6,276 (¥27,249)

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

Net-of-tax
amount

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

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

In millions of yen

U.S. dollars

March 31

March 31

2011

2010

2011

¥ 8,209 ¥ 5,243$ 98,904

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

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

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

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

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

12,566(2,792)

151,398(33,639)¥ 9,774$117,759

Secom Co., Ltd.
Annual Report 2011

57

CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

21. Lessor
The Company’s leasing operations consist principally of leasingof security equipment and real estate for office and medical
institutions. Most of the security equipment and certain realestate for medical institutions on lease are classified as sales-typeleases or direct-financing leases. Other leases are ­classified as­operating leases.
A summary of lease receivables under sales-type and directfinancing leases at March 31, 2011 and 2010 is as follows:		 In thousands of		Total minimum lease payments
to be received..................................
Estimated executory cost....................
Estimated unguaranteed
residual value...................................
Unearned income..............................
Lease receivables, net.........................
Less: Current portion.........................
Long-term lease receivables, net.....

In millions of yen

U.S. dollars

March 31

March 31

2010

2011

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

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

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

2011

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

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

¥ 8,850
6,982
5,036
3,285
1,560
8,614

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

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

In millions of yen

U.S. dollars

March 31

March 31

2011

2010

2011

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

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

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

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

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

58

Secom Co., Ltd.
Annual Report 2011

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

In millions of yen

		March 31

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

Estimated
fair value

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

41,671

62,22663,803

286

—

—

160

203

203

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

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

3,446
1,928

3,446
1,928

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

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

In millions of yen
March 31, 2011

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

Level 1

Level 235

¥ 2,609¥

88,643¥88,678

21,419¥24,028

27,431¥27,431

137,493¥140,137

¥

—

¥

286

¥

—

¥

286

¥

—
—

¥

160
446

¥

—
—

¥

160
446

¥

Level 3

—

		

Total

¥

2,644

In millions of yen
March 31, 2010

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

Level 1

Level 255

¥ 2,608¥

76,093¥76,148

39,398¥42,006

29,155¥29,155

144,646¥147,309

¥
¥

¥
¥

¥
¥

¥
¥

¥

—
—

203
203

Level 3

—

—
—

Total

¥

2,663

203
203

Secom Co., Ltd.
Annual Report 2011

59

CONSOLIDATED FINANCIAL STATEMENTS

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

Level 2

Level 3

Total

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

— $

3,446

—
—

1,928
$5,374 $

—
— $

1,928
5,374

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

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2011

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

Secom Co., Ltd.
Annual Report 20112011

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

Total gains or losses (realized or unrealized) related to short-term
investments and investment securities are included in net sales andoperating revenue or gain/loss on private equity investments, in the
consolidated statements of income.
Assets and Liabilities Measured at Fair Value on a
Nonrecurring Basis
Non-marketable equity securities with a carrying amount of¥10,687 million ($128,759 thousand) were written down to theirfair value of ¥10,407 million ($125,386 thousand), resulting in another-than-temporary impairment charge of ¥280 million ($3,373
thousand), which was included in earnings for the year ended
March 31, 2011. For the year ended March 31, 2010, non-marketable equity ­securities with a carrying amount of ¥10,973 million
were written down to their fair value of ¥10,623 million, resulting
in an other-than-­temporary impairment charge of ¥350 million,
which was included in earnings. All impaired non-marketable equity
securities were classified as Level 3 assets as the Company uses
unobservable inputs to value these investments.
Long-lived assets (Note 11) and goodwill (Note 12) are also­measured at fair value on a nonrecurring basis. All impaired longlived assets and goodwill were classified as Level 3 assets as theCompany uses u­ nobservable inputs to value these assets.
24. Derivative Financial Instruments(1) Risk Management Policy
The Company utilizes derivative financial instruments in thenormal course of business to reduce exposure to fluctuations incurrency rates and in interest rates. The Company assesses currency
rate risk and interest rate risk by con­tinually monitoring changes inthe exposure and by evaluating hedging opportunities. The
Company does not hold or issue derivative financial instruments for
trading purposes. The Company is also exposed to credit-related
losses in the event of non-­perfomance by counterparties to derivative financial instru­ments, but it is not expected that any counterparties will fail to meet their obligations, because most of thecounterparties are internationally recognized financial institutions
and contracts are diversified amongst a ­number of major financial
institutions.
(2) Risk Management
The Company has exposure to the market risk of changes incurrency rates which relates to time deposits. The Company enters
into forward exchange contracts to manage fluctuation resulting
from changes in currency rates. The Company also has exposure to
the market risk of changes in interest rates which relates ­primarily
to its debt obligations. The Company principally enters into interest
rate swap agreements to manage fluctuations in cash flows resulting from changes in interest rates. Interest rate swaps are used tochange floating rates on debt obligations to fixed rates by entering
into receive-floating, pay-fixed interest rate swaps under which theCompany receives floating interest rate ­proceeds and makes fixedinterest rate payments, thereby ­effectively creating fixed-rate debt.
(3) Cash Flow Hedge
The Company ­designates interest rate swap agreements as cash
flow hedges for variability of cash flows originated from floating
rate borrowings. The interest rate swap ­agreements mature atvarious dates through 2012. The ­effective portion of changes in fairvalues of derivative ­instruments designated as cash flow hedgesof these debt obligations are reported in other comprehensive

income (loss). These amounts are reclassified into current incomein the same period that hedged items affect current income. The
ineffective portion of changes in fair values are reported in income
immediately. The sum of the amount of the hedge ineffectivenessand net gains or losses excluded from the assessment of hedge
effectiveness is not material for the years ended March 31, 2011,2010 and 2009 as the critical terms of most of the interest rate
swap agreements match the terms of the hedged debt obligations.
Approximately ¥6 million ($72 thousand) of net derivative losses
included in other comprehensive income (loss), net of tax at March
31, 2011, will be reclassified into current income within 12 months
from that date. At March 31, 2011 and 2010, the notional principal
amounts of interest rate swap agreements designated as cash
flow hedges were ¥1,000 million ($12,048 thousand) and ¥2,000
million, respectively.
(4) Derivative Instruments Not Designated as Hedges
The Company enters into forward exchange contracts to reduce
exposure to fluctuations in currency rates relating to time deposits,
and interest rate swap agreements to reduce exposure to fluctuations in interest rates relating primarily to debt obligations. Changes
in fair value of the above noted derivative financial instruments,
which are not d­ esignated as hedges, are reported in current income.
Fair values of derivative instruments reflected in the consolidatedbalance sheet as of March 31, 2011 and 2010 are as follows:
Derivatives designated as hedging instruments
Liabilities:
		 In thousands ofLocationInterest rate swaps

Other liabilities

In millions of yen

U.S. dollars

March 31

March 31

2011

2010

2011

¥8

¥25

$97

Derivatives not designated as hedging instruments
Liabilities:
		 In thousands of

Forward exchange
contract
Interest rate swaps

In millions of yen

U.S. dollars

March 31

March 31

Location

2011

2010

2011

Other current
liabilities
Other liabilities

¥286
¥152

¥ —
¥178

$3,446$1,831

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

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2011

2010

2011

¥4

(¥6)

$48

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

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

Location

2011

2010

2011

Other expenses(¥12)(¥358)($145)

Derivatives not designated as hedging instruments
		 In thousands ofLocation

Forward exchange
Other expenses
contract		Interest rate swaps
Other expenses

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2011

2010

2011

(¥286)
(¥31)

¥—
(¥81)

($3,446)($373)

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

Secom Co., Ltd.
Annual Report 2011

61

CONSOLIDATED FINANCIAL STATEMENTS

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

2009

¥2,135¥4,755

260
777
317

167
—
(316)

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

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

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

62

Secom Co., Ltd.
Annual Report 2011

2010

2009

¥ 110
1
—

¥231
3
0

1,243

(383)

¥1,354(¥149)

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

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2010

2011

2009

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

51,084—$——

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

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

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2009

2011

2010

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

		 In thousands of2011

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2009

2011

2010

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

		 In thousands of2011

In millions of yen

U.S. dollars

March 31

March 31

2009

2011

2010

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

Secom Co., Ltd.
Annual Report 2011

63

CONSOLIDATED FINANCIAL STATEMENTS

		 In thousands of2011

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

In millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2009

2011

2010

¥44,604¥45,694¥45,428$537,398

1,490
5,137
1,200

1,428
2,253
1,017

1,250
2,026
1,220

17,952
61,891
14,458

1,666

1,857

1,675

20,072

48

46

58

578

2,587
56,732219

2,577
54,872258

2,680
54,337288

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

3,602
5,563
14

1,804
4,069
275

1,524
2,153
309

43,39867,024
169

2,166

883

299

26,096

19

2

7

229

3,157
42,16434

4,477
38,66455

10,614
44,628227

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

		 In thousands ofIn millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2009

2011

¥297,802 ¥299,089 ¥303,505$3,587,976

2011

64

Secom Co., Ltd.
Annual Report 2011

		 In thousands ofIn millions of yen

U.S. dollars

Years ended
March 31

Year ended
March 31

2009

2011

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

2011

2010

		 In thousands of

The capital expenditures in the above table represent the­additions to property, plant and equipment of each segment.
The Company has no single customer that accounts for morethan 10 percent of total revenues.
The following table is a breakdown of security services revenue toexternal customers by service category. The security services business is managed as a single operating segment by the ­Company’s
management.

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

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

2010

46,372

46,21347,999558,699

20,12919,823

20,310242,518

60,40359,26065,104

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

In millions of yen

U.S. dollars

March 31

March 31

2009

2011

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

2011

2010

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

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

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

We have audited the accompanying consolidated balance sheets of SECOM CO., LTD. and subsidiaries (the “Company”) as of March 31,
2011 and 2010, and the related consolidated statements of income, changes in equity and cash flows for each of the years in the three-year
period ended March 31, 2011, all expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company’s­management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material­misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, e­ vidence supporting theamounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by­management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis forour opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
SECOM CO., LTD. and subsidiaries as of March 31, 2011 and 2010, and the results of their operations and their cash flows for each of theyears in the three-year period ended March 31, 2011, in conformity with U.S. generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, the Company adopted Accounting Standards Update No. 2009-17,
Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, in the year ended March 31, 2011.
The accompanying consolidated financial statements as of and for the year ended March 31, 2011 have been translated into UnitedStates dollars solely for the convenience of the reader. We have audited the translation and, in our opinion, the consolidated financial­statements expressed in Japanese yen have been translated into United States dollars on the basis set forth in Note 3 to the consolidated
financial statements.

Tokyo, Japan
June 24, 2011

Secom Co., Ltd.
Annual Report 201165

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

66

Secom Co., Ltd.
Annual Report 2011

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

2010

2009

2008

2007

2006

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

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

6.8
1.7
2.0
5.5
16.0
84.0
100.0
5.4
10.6

6.5
1.6
2.6
3.6
14.3
85.7
100.0
4.1
8.2

11.9
2.4
1.9
3.6
19.8
80.2
100.0
2.7
5.8

17.5
1.2
1.8
4.0
24.5
75.5
100.0
4.9
10.7

17.4
1.4
1.9
3.6
24.3
75.7
100.0
4.5
10.1

15.2
6.4
1.6
3.6
26.8
73.2
100.0
4.1
9.9

7.6
2.2

8.2
2.1

7.9
2.2

8.2
2.3

9.1
2.5

9.0
2.7

62.5
2.49
65.1

64.9
2.55
53.5

64.4
2.66
32.4

63.8
2.81
53.7

62.3
2.54
53.5

60.5
2.39
48.8

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

Secom Co., Ltd.
Annual Report 2011

67

SUMMARY OF SELECTED FINANCIAL DATA

2011

2010

2009

2008

2007

2006

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

68

Secom Co., Ltd.
Annual Report 2011

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

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

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

2011

2010

2009

2008

2007

2006

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

0.08%
30.76
4.75
3.71
41.27
19.43
100.00%

0.08%
31.34
4.28
3.73
40.77
19.80
100.00%

0.00%
35.67
2.55
3.76
38.17
19.85
100.00%

—%
33.84
3.86
3.81
41.71
16.78
100.00%

—%
32.21
3.68
3.86
42.43
17.82
100.00%

—%
33.04
2.16
3.92
43.40
17.48
100.00%

PRICE INFORMATION (TOKYO STOCK EXCHANGE)
2009
2010

2011

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

Price per share (in yen)

Nikkei Stock Average (in yen)

High

Low

High

Low

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

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

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

Secom Co., Ltd.
Annual Report 201169

COMMON STOCK DATACOMMON STOCK ISSUES
			
		
		
Date

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

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

Additional
shares issued(In thousands)

Sharesoutstanding
after issue(In thousands)

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

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

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

Remarks

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

Notes: 1. The above is a record of SECOM’s common stock issues since the common stock was listed on the Tokyo Stock Exchange in June 1974.
2. As of March 31, 2011, the number of shares outstanding was 233,289 thousand and share capital was ¥66,377,829 thousand.
*One share was split into two.

70

Secom Co., Ltd.
Annual Report 2011

CONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP) [REFERENCE]CONTENTSCONDENSED CONSOLIDATED BALANCE SHEETS(BASED ON JAPANESE GAAP).................................................................................... 72
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(BASED ON JAPANESE GAAP).................................................................................... 74
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(BASED ON JAPANESE GAAP).................................................................................... 74

Secom Co., Ltd.
Annual Report 201171

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

2011

2010

2009

2008

2007

2006

Current assets:
Cash on hand and in banks.................................................. ¥ 172,958 ¥ 146,929 ¥0,127,476 ¥0,200,403 ¥0,181,266 ¥ 271,780
Cash deposits for armored car services.................................
56,546
48,861
56,667
63,69675,328—Call loans.............................................................................
29,50036,50036,50019,00015,00025,000Notes and accounts receivable, trade....................................
73,956
73,844
77,39885,59583,39752,667
Due from subscribers............................................................
22,754
20,824
20,13921,125
19,217
17,678
Short-term investments........................................................
7,313
15,98916,786
9,306
18,171
83,809Lease receivables and investment in leased assets.................
15,433
14,742
14,993———Inventories...........................................................................
———
27,08025,94564,194Merchandises and products..................................................
8,823
10,987
10,730———Real estate inventories..........................................................
11,481
18,493
6,177
90,23071,724—Work in process...................................................................
2,249
1,427
2,174
—
—
—
Costs on uncompleted construction contracts......................
4,233
5,312
9,534
—
—
—
Work in process for real estate inventories............................
48,29655,916
60,950———Raw materials and supplies...................................................
5,750
5,932
5,840
—
—
—
Deferred income taxes..........................................................
12,216
11,684
11,135
11,84011,597
9,462
Short-term loans receivable..................................................
3,908
3,088
4,125
7,246
5,097
15,564
Other .................................................................................
12,566
15,275
15,57813,827
19,66013,419Allowance for doubtful accounts..........................................
(1,704)(2,207)(2,762)(1,813)(1,923)(1,617)				 Total current assets....................................................
486,284
483,600
473,445547,538
524,484
551,959

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

102,855
63,49097,73018,63897,692
63,03493,424
18,86985,41565,63189,29722,92384,54565,45081,71633,63687,306
63,67580,341
29,48577,27063,07065,542
28,183

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

25,553

21,885

21,331

22,332

23,294

24,384

Investments and others:
		 Investment securities.........................................................
188,001
187,777
201,923
241,957
243,148
231,096
		 Long-term loans receivable...............................................
47,57650,48859,88054,59955,22357,564
		 Prepaid pension and severance costs.................................
18,73018,61818,876
17,834
15,817
11,186
		 Deferred income taxes......................................................
20,11019,84824,41322,74015,654
11,256
		 Other................................................................................
43,422
44,63046,12947,57945,692
41,217
		 Allowance for doubtful accounts......................................
(18,111)(18,403)(19,122)(17,455)(15,161)(13,401)				 Total fixed assets........................................................
607,998
597,864
616,698
654,936
644,478
597,370
Deferred assets.....................................................................
117
213
338
365
219
47
				 Total assets ............................................................... ¥1,094,400 ¥1,081,679 ¥1,090,483 ¥1,202,840 ¥1,169,182 ¥1,149,377

72

Secom Co., Ltd.
Annual Report 2011

In millions of yen

LIABILITIES

2011

2010

2009

2008

2007

2006

Current liabilities:
Notes and accounts payable, trade...................................... ¥ 25,959 ¥ 24,774 ¥0,028,374 ¥0,030,459 ¥0,028,469 ¥ 18,652
Bank loans..........................................................................
47,42648,09485,383136,034
129,169
112,868
Current portion of straight bonds........................................
2,914
1,761
5,036
1,936
3,356
32,210
Lease obligations.................................................................
354
247
202
—
—
—
Payables—other..................................................................
22,85723,35923,19528,98829,88826,340Accrued income taxes.........................................................
19,353
20,907
18,983
24,61024,97322,159Accrued consumption taxes.................................................
2,850
3,302
2,932
3,456
3,366
2,588
Accrued expenses................................................................
3,792
3,633
3,534
3,641
3,198
2,085
Deferred revenue................................................................
30,58233,554
31,29832,061
31,18830,747
Accrued bonuses.................................................................
11,925
12,13912,741
12,21011,4098,981
Reserve for litigation losses..................................................
—
1,770
2,415
—
—
—
Accrued bonuses to directors and corporate auditors.............
—
—
—
—
80
—
Reserve for losses on construction contracts........................
530
145
—
—
—
—
Other..................................................................................
33,52736,66042,55846,33758,66546,805				 Total current liabilities...............................................
202,074
210,353
256,655
319,737
323,766
303,440
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...........................................................
Minority interests in subsidiaries . .................................
Shareholders’ equity
Common stock....................................................................
Capital surplus....................................................................
Retained earnings...............................................................
Unrealized gains (losses) on securities..................................
Foreign currency translation adjustments.............................
Common stock in treasury, at cost.......................................
				 Total shareholders’ equity.........................................
				 Total liabilities, minority interests in				 subsidiaries and shareholders’ equity ..................... ¥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

11,18013,444—28,982
1,079
11,362

2,433

2,398

2,244

2,220

2,300

1,565

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

245,644
1,043
314,303617,743

—

—

—

—

—

35,469

—
—
—
—
—
—
—

—
—
—
—
—
—
—

—
—
—
—
—
—
—

—
—
—
—
—
—
—

—
—
—
—
—
—
—

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

— ¥

— ¥

— ¥

— ¥

— ¥1,149,377

Net Assets
Shareholders’ equity:
Common stock.................................................................... ¥ 66,377 ¥ 66,377 ¥ 66,377 ¥ 66,377 ¥ 66,377 ¥Capital surplus....................................................................
83,054
83,054
83,054
83,056
83,056
Retained earnings...............................................................
549,747
507,434
478,355
475,987432,696
Common stock in treasury, at cost.......................................
(74,923)(74,907)(74,896)(44,877)(44,850)				 Total shareholders’ equity.........................................
624,255
581,959
552,891
580,543537,279—————

Accumulated other comprehensive income:Unrealized gains (losses) on securities..................................
Deferred losses on hedges...................................................
Foreign currency translation adjustments.............................
				 Total accumulated other comprehensive income.......

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

61,81066,562

63,65463,03560,983—				 Total net assets.........................................................
654,055
625,153582,608630,274
601,116				 Total liabilities and net assets.................................... ¥1,094,400 ¥1,081,679 ¥1,090,483 ¥1,202,840 ¥1,169,182 ¥——Secom Co., Ltd.
Annual Report 201173

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
2011

2010

2009

2008

2007

2006

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

¥663,887 ¥654,678¥678,400 ¥682,619¥613,976 ¥567,315
1.4%(3.5%)(0.6%)
11.2%
8.2%
3.7%

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

423,98363.9

415,39063.4

444,77165.6

433,030
63.4

388,78763.3

351,020
61.9

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

239,904
36.1

239,28836.6

233,62834.4

249,58936.6

225,18936.7

216,294
38.1

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

140,76221.2

140,749
21.5

145,99421.5

144,883
21.3

127,348
20.7

122,185
21.5

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

99,141
14.9

98,53915.1

87,63412.9

104,706
15.3

97,84015.9

94,10916.6

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

17,428
6,895

9,158
9,371

12,957
9,666

20,125
10,552

15,087
10,207

15,792
13,232

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

109,674
16.5

98,32715.0

90,92413.4

114,278
16.7

102,720
16.7

96,66917.1

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

1,717
5,749

3,370
5,463

482
27,875

2,748
4,984

2,601
3,317

9,349
11,189

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

105,642
15.9

96,233
14.7

63,531
9.4

112,043
16.4

102,005
16.6

94,829
16.7

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

37,303
1,383

38,172
4,944

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

39,961(660)

34,8883,131

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

66,955

—

—

—

—

—

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

6,109

5,505

3,504

5,278

4,404

3,815

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

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

52,994
9.3
9.2

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

74

In millions of yen
2011

2010

2009

2008

2007

2006

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...........

¥66,955

¥—

¥—

¥—

¥—

¥—

(2,970)16(5,191)

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

(1,069)

—

—

—

—

—

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

(9,214)

—

—

—

—

—

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

57,740

—

—

—

—

—

Comprehensive income attributable to:Comprehensive income attributable to owners of
the parent company..........................................................
Comprehensive income attributable to minority interests.....

52,203
5,537

—
—

—
—

—
—

—
—

—
—

Secom Co., Ltd.
Annual Report 2011

NONCONSOLIDATED FINANCIAL DATA(BASED ON JAPANESE GAAP) [REFERENCE]CONTENTSCONDENSED NONCONSOLIDATED BALANCE SHEETS(BASED ON JAPANESE GAAP).................................................................................... 76
CONDENSED NONCONSOLIDATED STATEMENTS OF INCOME(BASED ON JAPANESE GAAP).................................................................................... 78

Secom Co., Ltd.
Annual Report 201175

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

2011

2010

2009

2008

2007

2006

¥ 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

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

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

12,5872,314(604)
215,630

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

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
22

22,811
166
59,442
1,467
4,379
32,2001,919
32Intangible assets:
		 Telephone rights...............................................................
		 Telephone and telegraph utility rights...............................
		 Software...........................................................................
		 Other................................................................................

—
—
6,751
815

—
—
7,580
975

—
—
6,578
542

—
—
7,184
516

—
83
4,755
3,419

0
112
6,420
83

20,96921,76921,26728,66843,165

46,166

203,036

193,899

192,775

194,110

166,839

149,535

1,874
4,687
53

1,874
5,088
55

1,874
8,468
40

1,874
8,453
31

1,074
18,30824

974
18,63024

113,536
128,727
8,047
8,583
25,87225,816
14,321
14,364
13,865
14,099
4,181
4,334
2,831
800
(12,995)(12,544)526,227
533,572¥694,656 ¥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

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

76

Secom Co., Ltd.
Annual Report 2011

52,92940,085
8,973
9,006
24,85522,175
12,213
8,670
5,139
6,206
4,893
4,893
983
955
(7,200)(7,998)463,680
428,359¥654,791 ¥643,990

In millions of yen

LIABILITIESCurrent liabilities:
Accounts payable................................................................
Bank loans..........................................................................
Current portion of straight bonds........................................
Lease obligations.................................................................
Payables—other..................................................................
Payables—construction.......................................................
Accrued income taxes.........................................................
Accrued consumption taxes.................................................
Accrued expenses................................................................
Deposits received................................................................
Deferred revenue................................................................
Accrued bonuses.................................................................
Other..................................................................................
				 Total current liabilities...............................................
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...........................................................
Shareholders’ equity
Common stock....................................................................
Capital surplus:
		 Additional paid-in capital.................................................
				 Total capital surplus..................................................
Retained earnings:
		 Legal reserve....................................................................
		 Voluntary reserve:
			 Reserve for system developments.................................
			 Reserve for tax deferral on asset replacement...............
			 General reserve............................................................
				 Total voluntary reserve..............................................
		 Unappropriated retained earnings....................................
				 Total retained earnings.............................................
Unrealized gains on securities..............................................
Common stock in treasury, at cost.......................................
				 Total shareholders’ equity.........................................
				 Total liabilities and shareholders’ equity ...................
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....................................

2011

¥

1,672
29,386—71
10,824
3,719
12,4501,422
722
20,362
22,2295,468
2,107
110,439

2010

¥

2,009
24,492—51
10,811
3,425
14,637
1,491
555
23,62522,5585,493
2,133
111,287

2009

¥

2,319
60,893—43
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

¥

2006

¥

3,168
26,06930,000—12,987
3,634
15,312
1,509
651
34,442
22,371
5,232
1,938
157,317

2,253
18,2624,040

182
17,965
4,394

192
18,146
4,766—
18,174
5,087—
18,4495,370—
18,244
5,581

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

1,201—
25,027
182,344

—

—

—

—

—

66,377

—
—

—
—

—
—

—
—

—
—

83,054
83,054

—

—

—

—

—

9,028

—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—

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

¥

¥

¥

¥

¥

¥ 66,377¥ 66,377¥ 66,377¥ 66,377¥ 66,377

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

—

800
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

—
—
—
—
—
—

(201)

786

48

(82)

4,564

—

(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 Co., Ltd.
Annual Report 201177

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
2011

78

2010

2009

2008

2007

2006

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

¥329,297 ¥328,773¥336,893 ¥337,611¥326,076 ¥313,096
0.2%(2.4%)(0.2%)
3.5%
4.1%
5.1%
290,252
291,325
294,386
291,350
282,247
272,876
(0.4)
(1.0)
1.0
3.2
3.4
4.2
39,04537,44742,506
46,261
43,82940,220
4.3(11.9)
(8.1)
5.5
9.0
12.1

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

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

171,80354.9
142,473
52.2
29,32972.9

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

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

141,29345.1
130,40247.8
10,89027.1

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

69,32421.0

68,54420.8

70,43420.9

71,03821.0

69,33021.3

69,121
22.0

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

68,68820.9

71,52721.8

72,61621.6

74,15522.0

73,40422.5

72,17223.1

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

8,863
3,050

9,225
3,290

9,721
3,990

9,607
4,575

7,942
4,763

6,299
7,506

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

74,501
22.6

77,462
23.6

78,34623.3

79,18723.5

76,58323.5

70,96422.7

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

106
2,637

561
4,639

67
27,068

2,221
566

1,246
1,141

6,147
5,615

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

71,97021.9

73,38422.3

51,34515.2

80,842
23.9

76,68823.5

71,496
22.8

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

26,946
37.4

27,57837.6

18,93136.9

30,79538.1

29,443
38.4

27,617
38.6

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

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

43,87914.0
16.4

Secom Co., Ltd.
Annual Report 2011

CORPORATE INFORMATION(As of July 1, 2011)

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		Issued capital(In millions of yen)

Percentageof equity/
voting rights

Lines of business

Security services(As of July 1, 2011)

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

¥3,530		(50.9)%

Secom Hokuriku Co., Ltd.

201		

59.1

Security services

Secom Yamanashi Co., Ltd.

15		

70.0

Security services
Security services

Secom Mie Co., Ltd.

50		

51.0

Secom Sanin Co., Ltd.

286		

67.0

Security services

Secom Miyazaki Co., Ltd.

30		

68.3

Security services

Secom Jastic Co., Ltd.

210		

100.0

Security services

Secom Jastic Joshinetsu Co., Ltd.

40		(100.0)

Security services

Secom Jastic Hokuriku Co., Ltd.

10		(100.0)

Security services

Secom Jastic Miyazaki Co., Ltd.

10		(100.0)

Security services

Secom Jastic Akita Co., Ltd.

10		

100.0

Security services

Secom Jastic Sanin Co., Ltd.

10		(100.0)

Security services

Secom Jastic Yamanashi Co., Ltd.

10		(100.0)

Security services

Secom Static Hokkaido Co., Ltd.

50		

100.0

Security services

Secom Static Tohoku Co., Ltd.

50		

100.0

Security services

Secom Static Nishi-Nihon Co., Ltd.

50		

100.0

Security services

Secom Static Kansai Co., Ltd.

50		

100.0

Security services

Secom Sado Co., Ltd.

24		(54.5)

Security services

JK. Siress Co., Ltd.

10		(100.0)

Security services

Japan Safety Guard Co., Ltd.

100		

60.0

Security services

Meian Co., Ltd.

60		

51.0

Security services

Secom Tech Sanin Co., Ltd.

23		(100.0)

Secom Techno Joshinetsu Co., Ltd.

30		(100.0)

Secom Win Co., Ltd.

15		

66.7

Installation of security equipment
Installation of security equipment
Installation of security equipment and facilities

TES Co., Ltd.

20		(100.0)

Maintenance of equipment

Secom Tohoku Enterprise Co., Ltd.

100		

100.0

Design, construction and maintenance of facilities

Secom Industries Co., Ltd.

499		

100.0

Manufacturing of security equipment

Otec Electronics Co., Ltd.

200		

82.0

Manufacturing and sales of security systems

Secom Alpha Co., Ltd.

271		

100.0

Sales of security and water-treatment equipment

Yanoshin Air Conditioning Co., Ltd.

80		

100.0

Sales of air-conditioning equipment

Secom Mine Security Co., Ltd.

30		

100.0

Security services

Social Rehabilitation Support Kitsuregawa Co., Ltd.

10		

51.7

Operation of PFI correctional facilities

Secom Kitsuregawa Security Co., Ltd.

50		

100.0

Security services

Home Life Kanri Co., Ltd.

40		(100.0)Condominium management

Secom Home Service Co., Ltd.

32		

100.0

Lifestyle support services

Japan Security System, Inc.

22		

(99.9)

Security 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 Co., Ltd.
Annual Report 201179

CORPORATE INFORMATION

MAJOR CONSOLIDATED SUBSIDIARIES		Issued capital(In millions of yen)

Percentageof equity/
voting rights

Lines of business(As of July 1, 2011)<Fire protection services>
Nohmi Bosai Ltd.

¥13,302		

(50.4)%

Manufacturing and sales of fire protection equipment

				and facilities

Nohmi Setsubi Co., Ltd.

30		(100.0)Installation of fire protection equipment

Ichibou Co., Ltd.

28		(73.2)

Installation of fire protection equipment

Kyushu Nohmi Co., Ltd.

30		(100.0)Installation and maintenance of fire protection equipment

Chiyoda Service Co., Ltd.

20		(70.0)

Building management

Bosai Engineering Corporation40		

(100.0)Installation of fire protection equipment

Nohmi System Co., Ltd.

20		(100.0)

Maintenance of fire protection equipment

Iwate Nohmi Co., Ltd.

30		(100.0)Installation of fire protection equipment

Tohoku Bosai Plant Co., Ltd.

12		(100.0)Installation of fire protection equipment

Aomori Nohmi Co., Ltd.

20		(100.0)Installation of fire protection equipment

Osaka Nohmi Co., Ltd.

20		(100.0)Installation of fire protection equipment

Nissin Bohsai Co., Ltd.

50		(100.0)Installation of fire protection equipment

Chiba Nohmi Co., Ltd.

10		(100.0)Installation of fire protection equipment

Shikoku Nohmi Co., Ltd.

20		(100.0)Installation of fire protection equipment

Nohmi Techno Engineering Co., Ltd.

40		(100.0)Installation of environmental monitoring systems

Akita Nohmi Co., Ltd.

20		(100.0)Installation of f­ ire protection equipment

Fukushima Nohmi Co., Ltd.

20		(100.0)Installation of fire protection equipment

Tohoku Nohmi Co., Ltd.

20		(100.0)Installation of fire protection equipment

Nohmi Plant Niigata Co., Ltd.

20		(100.0)Installation of fire protection equipment

Hokkaido Nohmi Co., Ltd.

20		(100.0)Installation of fire protection equipment

Yashima Bosai Setsubi Co., Ltd.

20		

(81.8)

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

6,545		

100.0Home health/nursing care and other medical-related services

95		(100.0)

Sales of medical equipment

Yoshikikaku Co., Ltd.

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

Kensei Co., Ltd.

100		(100.0)Management of pharmacies

Ryomay Royal Life Co., Ltd.

210		

86.5

Management of nursing homes

Alive Medicare Co., Ltd.

50		(100.0)Management of nursing homes

Secom Medical Resource Co., Ltd.

10		(100.0)

Medical staffing solutions

Secomfort Co., Ltd.

100		(100.0)Management of nursing homes

Secomfort West Co., Ltd.

100		(100.0)Management of nursing homes3		

(100.0)Management of pharmacies

Secom Insurance Service Co., Ltd.

225		(100.0)

Secom General Insurance Co., Ltd.

16,809		

97.1

Mac Corporation

US Chemical Co., Ltd.
<Insurance services>

Non-life insurance agency
Non-life insurance

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

80

Secom Co., Ltd.
Annual Report 2011

(Continued)

MAJOR CONSOLIDATED SUBSIDIARIES		Issued capital(In millions of yen)

Percentageof equity/
voting rights

Lines of business(As of July 1, 2011)<Geographic information services>
Pasco Corporation¥8,758		

69.8%

Geographic information services

Pasco Space Mapping Technology Co., Ltd.

25		(100.0)Geographic information services

GIS Hokkaido Co., Ltd.

190		(100.0)Geographic information services

GIS Tohoku Co., Ltd.

50		(84.6)

Geographic information services

GIS Kanto Co., Ltd.

40		(52.6)

Geographic information services

GIS Kansai Co., Ltd.

99		(100.0)Geographic information services

Tokyo Digital Map Corporation

10		(100.0)Geographic information services

Mid Map Tokyo Corporation15		

(60.0)

Geographic information services

Grafica Co., Ltd.

20		

(51.0)

Geographic information services

Tobu Keikaku Co., Ltd.

200		(100.0)Geographic information services

3,700		

99.9Development of residential buildings

1,469		

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

				

services and software development

Arai & Co., Ltd.

Real estate leasing

3,000		

86.7Arai Corporation, Inc.

10		

(100.0)Management of real estate

Secom Credit Co., Ltd.

400		

100.0

Credit services

Secom Corporation

100		

100.0

Printing services

Secom Auto Service Co., Ltd.

45		

100.0

Car maintenanceWonder Dream Co., Ltd.

490		

100.0

Employee welfare for SECOM Group

Secom Staff Service Co., Ltd.

50		(100.0)

Employment agency

The Windsor Hotels International Co., Ltd.

165		

90.0

Hotel management

Secom Business Plus Co., Ltd.

20		

100.0

General office 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 Co., Ltd.
Annual Report 201181

CORPORATE INFORMATION

MAJOR CONSOLIDATED SUBSIDIARIES				Issued capital

Percentageof equity/
voting rights

Lines of business(As of July 1, 2011)

Overseas<Security services>
Secom Plc
Capital Q High Security Service Ltd.
Secom (China) Co., Ltd.

£44,126 thousand£1 thousand

100.0%

Security services(100.0)

Security services¥5,550 million

100.0

Holding company

Dalian Secom Security Co., Ltd.

US$2,000 thousand(95.0)

Security services

Shanghai Secom Security Co., Ltd.

US$3,500 thousand(65.0)

Security services

Beijing Jingdun Secom

US$2,500 thousand(80.0)

Security services

Qingdao Secom Security Co., Ltd.

US$1,000 thousand(80.0)

Security services

Guangdong Jinpeng Secom Security Co., Ltd.

US$2,000 thousand(90.0)

Security services

Fujian Secom Security Co., Ltd.

Rmb7,000 thousand(95.0)

Security services

Sichuan Secom Security Co., Ltd.

Rmb6,000 thousand(85.0)

Security services

Shaanxi Secom Security Co., Ltd.

Rmb6,000 thousand(85.0)

Security services

Zhejiang Secom Security Co., Ltd.

Rmb7,000 thousand(97.0)

Security services

Liaoning Secom Security Co., Ltd.

Rmb10,000 thousand(60.0)

Security services

Tianjin Secom Property Management Co., Ltd.

Rmb2,000 thousand(80.0)

Comprehensive building management services

P.T. Secom Indopratama

US$3,950 thousand

94.9

Security services

Electronic Security Co., Ltd.

Thaisecom Pitakkij Co., Ltd.

THB378,857 thousand

70.0

Security services

Secom Australia Pty. Ltd.

AUD17,297 thousand

100.0

Security services

Secom Technical Services Unit Trust

AUD5,951 thousand(70.0)

Security services

Secom Australia (ACT) Unit Trust

AUD700 thousand(100.0)

Security services

Secom Guardall Ltd.

NZD1,604 thousand(80.0)

Security services

US$600 thousand

80.0

Security service-related consulting

US$14,300 thousand(100.0)

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

Manufacturing and sales of fire protection equipment

Fire Protection Equipment Co., Ltd.				

and facilities

Nohmi Taiwan Ltd.

Manufacturing and sales of fire protection equipment

NT$15,000 thousand(52.0)

				and facilities

P.T. Nusantara Secom InfoTech

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

software development

Pasco Philippines Corp.

(100.0)Geographic information services

PHP20,400 thousand

Pasco China Corporation

Rmb22,320 thousand(99.0)

Geographic information services

Pasco (Thailand) Co., Ltd.

THB129,000 thousand(100.0)Geographic information services

FM-International Oy

EUR10,994 thousand(100.0)Geographic information services

Base Aerofotogrametria E Projetos S.A.

BRL5,000 thousand(51.0)

Geographic information services

Aerodata International Surveys BVBAEUR56 thousand(70.0)

Geographic information services

Pasco International Europe B.V.

EUR2,000 thousand(100.0)Geographic information services

The Westec Security Group, Inc.

US$0.3 thousand

100.0

Holding company

ClearLight Partners, LLC

US$122,059 thousand(99.7)

Investment

ClearLight Partners II, LLC

US$133,974 thousand(99.0)

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.

82

Secom Co., Ltd.
Annual Report 2011

PROFILE

SECOM GROUP’S BASIC BUSINESS AREAS
SECOM offers a wide range of services and ­productswith the aim of realizing the Social System Industry.

Centralized Security Systems

Security Services

S

SECOM AXSECOM AX is an on-line security ­system with advanced on-site image sensors
that incorporate microphones to enable the SECOM control center staff to checkthe subscriber’s premises by listening and viewing.
SECOM IXSECOM IX is a remote imaging security system for ­commercial facilities offeringround-the-clock services.
Intelligent Emergency Alert System
The 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.

industry, has sought to contribute to a safe society by developing innovative security
services and systems, in line with its mission to provide security and peace of mind

through its business activities, as well as to achieve steady growth. Beginning with Japan’s
first on-line security system, developed in 1966, SECOM has endeavored to create a variety ofsystems that respond to changing social imperatives. These include an on-line home security
system in 1981—which this year celebrated its 30th anniversary—and COCO-SECOM, a mobile
personal security system for outdoor use in 2001. At the same time, SECOM has worked tosecure 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 wherevernecessary. With this in mind, SECOM is pressing ahead with efforts to realize its vision for
the future, the Social System Industry, which describes a framework of distinctive, integrated
products and services that make life more secure, convenient and comfortable. To this end,

Residential Use:

SECOM is capitalizing on its broad business portfolio—which has expanded to include security

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

services, fire protection services, medical services, insurance services, geographic information
services, real estate development and sales, and information and communication related andother services—to drive growth.
SECOM continues striving to provide distinctive service systems that encourage people to

Subscriber

PoliceDept.

Centralized Security Systems
Commercial Use:

ince its establishment in 1962, SECOM CO., LTD., a pioneer in Japan’s security services

Merchandise

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

offered through SECOM Medical Club and have access to SECOM Home Service,a suite of lifestyle support services.
SECOM CONDOMINIUM SECURITY SYSTEMSSECOM condominium security systems provide comprehensive building­management functions for condominiums and total safety with a centralized­security sys­tem for each unit in the building. SECOM MS-3, the top-of-the-line
system, can be used for buildings of any size, either as a retrofit or a new
installation.

Large-Scale Proprietary Security Systems

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

COCO-SECOM

COCO-SECOM is an innovative system that uses signals from Global Positioning
System (GPS) satellites and cellular telephone base stations to locate moving

objects, such as people, vehicles and property. As an option, customers canalso request to have emergency response personnel dispatched to the locationof 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.

SECOM AED Package Service

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.

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.

turn to SECOM to help resolve security and other problems. With the aim of rallying Group
strengths and maximizing synergies to realize its Social System Industry vision and to accelerateFire Protection Services

growth, the Company recently declared the Group slogan “ALL SECOM.”

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.

SECOM has also established operations in 12 countries and territories outside of Japan.
In these markets, SECOM is aiming to further grow its operations by providing customers
with security services of the same high quality as it does in Japan.

83

Secom Co., Ltd.
Annual Report 2011

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.
HOSPINET
Hospinet, a remote image diagnosis support service, transmits magnetic
resonance imaging (MRI), computerized tomography (CT) and other images to
SECOM’s Hospinet center, where 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.

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 c­ onsulting 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.

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

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

Secom Co., Ltd.
Annual Report 201184

DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERSANNUAL REPORT 2011

Directors

Year ended March 31, 2011
SECOM CO., LTD.

Makoto Iida

Juichi Toda

Founder

Co-Founder

Shohei Kimura

Kanemasa Haraguchi

Shuji Maeda

Chairman

Executive Vice Chairman

President andRepresentative Director

ANNUAL REPORT 2011

SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Koichi Sato

Fumio Obata

Katsuhisa Kuwahara

Yasuo Nakayama

Hiroshi Ito

Executive Vice President

Senior Executive
Director

Executive Director

Executive Director

Executive Director

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

Takayuki Ito
Director

Corporate Auditors

Executive Officers

Teruo Ogino

Shuji Maeda

Katsuhisa Kuwahara

Minoru Takaoka

Ryohei Komatsu

Keitaro Arai

President andRepresentative Director

Executive Director

Executive Officer

Executive Officer

Executive Officer

Yasuo Nakayama

Hideo Morishita

Yukio Tsunoda

Yasuyuki Yoshida

Executive Director

Executive Officer

Executive Officer

Executive Officer

Hiroshi Ito

Tsuneo Komatsuzaki

Masahiro Takeda

Tatsuro Fuse

Executive Director

Executive Officer

Executive Officer

Executive Officer

SECOM is working to realize its vision for

Shunji Ogahara

Takayuki Ito

Teruhisa Yoshimura

Hiromichi Sonoda

the future—the Social System Industry—Managing Executive
Officer

Director

Executive Officer

Executive Officer

Seiji Sakamoto
Ken Tsunematsu
Hiroshi Yasuda
Kohei Yamashita

Koichi Sato
Executive Vice
President

Fumio Obata
Senior Executive
Director

In response to changing customer needs,

by providing comprehensive, integrated
services and systems that make life more

Naohide Nakamura
Managing Executive
Officer

secure, convenient and comfortable.

(As of July 31, 2011)

Printed in Japan85

Secom Co., Ltd.
Annual Report 2011

DIRECTORS, CORPORATE AUDITORS AND EXECUTIVE OFFICERSANNUAL REPORT 2011

Directors

Year ended March 31, 2011
SECOM CO., LTD.

Makoto Iida

Juichi Toda

Founder

Co-Founder

Shohei Kimura

Kanemasa Haraguchi

Shuji Maeda

Chairman

Executive Vice Chairman

President andRepresentative Director

ANNUAL REPORT 2011

SECOM CO., LTD.
5-1, Jingumae 1-chome, Shibuya-ku,
Koichi Sato

Fumio Obata

Katsuhisa Kuwahara

Yasuo Nakayama

Hiroshi Ito

Executive Vice President

Senior Executive
Director

Executive Director

Executive Director

Executive Director

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

Takayuki Ito
Director

Corporate Auditors

Executive Officers

Teruo Ogino

Shuji Maeda

Katsuhisa Kuwahara

Minoru Takaoka

Ryohei Komatsu

Keitaro Arai

President andRepresentative Director

Executive Director

Executive Officer

Executive Officer

Executive Officer

Yasuo Nakayama

Hideo Morishita

Yukio Tsunoda

Yasuyuki Yoshida

Executive Director

Executive Officer

Executive Officer

Executive Officer

Hiroshi Ito

Tsuneo Komatsuzaki

Masahiro Takeda

Tatsuro Fuse

Executive Director

Executive Officer

Executive Officer

Executive Officer

SECOM is working to realize its vision for

Shunji Ogahara

Takayuki Ito

Teruhisa Yoshimura

Hiromichi Sonoda

the future—the Social System Industry—Managing Executive
Officer

Director

Executive Officer

Executive Officer

Seiji Sakamoto
Ken Tsunematsu
Hiroshi Yasuda
Kohei Yamashita

Koichi Sato
Executive Vice
President

Fumio Obata
Senior Executive
Director

In response to changing customer needs,

by providing comprehensive, integrated
services and systems that make life more

Naohide Nakamura
Managing Executive
Officer

secure, convenient and comfortable.

(As of July 31, 2011)

Printed in Japan85

Secom Co., Ltd.
Annual Report 2011