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ANNUAL REPORT 2003
Year ended March 31, 2003

Table of contents

  • Page 1
    ANNUAL REPORT 2003 Year ended March 31, 2003

  • Page 2
    ... of Success 4 At a Glance 8 Review of Operations 10 Musical Instruments 10 AV/IT 14 Lifestyle-Related Products 16 Electronic Equipment and Metal Products 18 Recreation 19 Others 20 Environmental Activities 21 Financial Section 23 Board of Directors and Corporate Auditors 45 Worldwide Network 46...

  • Page 3
    ...1897, Nippon Gakki Co., Ltd., was incorporated (the corporate name was changed to YAMAHA CORPORATION on occasion of its 100th anniversary), and YAMAHA celebrated its 100th year of manufacturing pianos in 2000. YAMAHA is one of the world's leading manufacturers of pianos, digital musical instruments...

  • Page 4
    ... 2003 • Piano/guitar factory will begin operating in April 2004 • Yamaha Electronics (Suzhou) Ltd., an audio-visual plant in China, began production on schedule in March 2003 ̈ Development of adult clientele in Japan • Opening of "MuseClub Sapporo," a music club for adults • Music schools...

  • Page 5
    ...innovative products and services while maintaining the value of the YAMAHA brand. In this annual report, we will discuss our medium-term plan for reinforcing our core businesses and the progress we have made thus far. Please take the time to read this report and give YAMAHA your full support. Thank...

  • Page 6
    ... its resources with the medium-term goal of strengthening its professional audio business for the music production fields while capitalizing on synergies among its hardware, software, and content businesses. In AV/IT products, to reinforce our number one position in the home theater market, which...

  • Page 7
    ... Synergy 3. Electronic Parts & Materials Technology Synergy Lifestyle-Related AV & IT Recreation Semiconductors Golf Products Media-Related Electronic Metals Automotive Components repdnagits Factory Automation/ Metallic Molds In- House Services Yamaha Motor Co., Ltd. ANNUAL REPORT 2003 5

  • Page 8
    ...sales and marketing activities in China, we established Yamaha Music & Electronics (China) Co., Ltd., in Beijing in August 2002, and that company began full-scale operations in April 2003. Our audiovisual plant in Suzhou came on line in March 2003. A piano and guitar factory in Hangzhou is scheduled...

  • Page 9
    ... to close its struggling Sunza Villa resort in June 2003 and will terminate golf course operations at the Kiroro ski resort at the end of October 2003. In lifestyle-related products, we are aiming to improve profits by tying up with other companies to cut manufacturing costs. Electronic Parts and...

  • Page 10
    ... recent years, the Company has made efforts to enhance its line of silent musical instruments and other products. The Company has a global network of music schools that helps create demand for musical instruments. YAMAHA's home theaters draw on the Company's original cinema DSP technology to provide...

  • Page 11
    ... instruments (Clavinovas™, Electones™, portable keyboards, synthesizers) •Wind instruments (trumpets, flutes, saxophones, etc.) •String instruments (guitars, violins) •Audio products (AV amplifiers and receivers, speaker systems, on-line karaoke, etc.) •Visual products (digital cinema...

  • Page 12
    ... euro and steady sales in the United States and Europe. Piano sales decreased in Japan but remained strong overseas. Digital musical instruments, including professional audio equipment and portable keyboards and synthesizers, saw sales increases in the United States and Europe, but Electoneâ„¢ sales...

  • Page 13
    ... the professional musician MOTIF 8 ̈ Next-generation synthesizer that meets the needs of professionals through enhanced flexibility and functionality DM2000 ̈ Based on the latest digital technologies, this digital production console is used for music and sound production. ANNUAL REPORT 2003 11

  • Page 14
    ... in Japan, which will help reduce personnel and fixed expenses. Music Schools ̈ A children's group lesson at a YAMAHA music school keyboard factory; Guangzhou YamahaPearl River Piano Inc., a piano factory; and Xiaoshan Yamaha Musical Instruments Co., Ltd., a piano parts factory; the Company has...

  • Page 15
    ... complements home interiors YAS-82Z ̈ Customized alto saxophone with a tone that is both highly flexible and expressive SLG-100S ̈ Compared with a normal folk guitar, the Silent Guitar acoustically produces only 1/10th the volume of sound (tested in-house). CVP-209 ̈ Clavinova™ digital piano...

  • Page 16
    ...unit prices, the proliferation of DVD equipment, and the increasing availability of personal computers with built-in CDR-RW drives. Strategies and Forecasts In fiscal 2004, in our home theater business, we will strive to boost sales of AV amplifiers and receivers, two of our strongest product lines...

  • Page 17
    RX-Z1 ̈ Top-of-the-line digital home theater receiver with a high-quality eight-channel amplifier and latest surround decoder AVX-S80, DVD-S80 ̈ "Cinema Station" home theater for easy, enjoyable household use packaged together with 5.1 channel speakers and a DVD player MCII Series ̈ High-end ...

  • Page 18
    ... with packaging materials, distribution, and procurement. In the medium term, with the downward trend in new housing starts expected to persist, YAMAHA is focusing on developing products and showroom displays for the remodeling market, which is expected to grow steadily. 16 YAMAHA CORPORATION

  • Page 19
    ...an interior decorating statement with unique materials, color schemes, and designs. Door REGARD ̈ Real wood front doors developed using our leadingedge scientific data gathering and analysis capabilities as well as our high-precision wood processing and coating technologies ANNUAL REPORT 2003 17

  • Page 20
    ...the United States, where demand for terminals with built-in polyphony sound chips is projected to increase. In electronic metals, as part of our efforts to increase sales and improve profitability, we are increasing the production of copper lead frames and mobile phone parts. 18 YAMAHA CORPORATION

  • Page 21
    ...year under review, we did succeed in reducing net loss thanks to the implementation of cost-cutting measures during the previous term. YAMAHA has decided to close its Sunza Villa resort at the end of June 2003, having concluded that there is little chance of restoring profitability and positive cash...

  • Page 22
    ... parts, mainly for mobile phones, increased dramatically. In golf clubs, sales and income increased thanks to the introduction of popular new products and cost reductions due to the outsourcing Strategies and Forecasts TR057AC ̈ Tool grip deburring equipment priced to encourage rapid market...

  • Page 23
    ... Report 2002 at http://www.yamaha. co.jp/english/yamaha/environment2002. pdf. Printed copies are also available. YAMAHA has developed a broad range of products-including musical instruments, audio equipment, electronic devices, and automobile interior components and fittings-and employs a product...

  • Page 24
    The Six Principles of YAMAHA's Corporate Environmental Activities (1) Make efforts to develop technology and provide products that will be as sensitive as possible to the earth's animals, plants, and environment. (2) Promote energy-saving activities and make effective use of resources in the areas ...

  • Page 25
    SIX-YEAR SUMMARY YAMAHA CORPORATION and Consolidated Subsidiaries At March 31 Millions of Yen 2003 2002 2001 2000 1999 1998 For the year: Net sales...Cost of sales...Gross profit...Selling, general and administrative expenses ...Operating income (loss) ...Income (loss) before income taxes and...

  • Page 26
    ... in the U.S. market for home theater-related products. Cost of Sales and Other Expenses While net sales increased, the cost of sales decreased ¥2.1 billion, to ¥338.3 billion. As a result, the cost of sales ratio improved 3.0 percentage points compared with the previous year, to 64.5%. The...

  • Page 27
    ...: Interest-bearing liabilities= loans + convertible bonds - cash and bank deposits Calculated using the average exchange rate prevailing during the term, the yen increased ¥3 against the U.S. dollar and weakened ¥11 against the euro, causing a ¥4.5 billion rise in net sales. The Company recorded...

  • Page 28
    ...E E T S YAMAHA CORPORATION and Consolidated Subsidiaries At March 31, 2003 and 2002 Thousands of U.S. Dollars (Note 2) Millions of Yen ASSETS 2003 2002 2003 Current assets: Cash and bank deposits (Notes 5 and 17)...Marketable securities (Notes 5 and 16) ...Notes and accounts receivable ...Less...

  • Page 29
    Millions of Yen Thousands of U.S. Dollars (Note 2) LIABILITIES AND SHAREHOLDERS' EQUITY 2003 2002 2003 Current liabilities: Short-term loans (Note 5) ...Convertible bonds scheduled for redemption within one year ...Current portion of long-term debt (Note 5) ...Notes and accounts payable ......

  • Page 30
    ...L I D AT E D S TAT E M E N T S O F O P E R AT I O N S YAMAHA CORPORATION and Consolidated Subsidiaries Years ended March 31, 2003 and 2002 Thousands of U.S. Dollars (Note 2) Millions of Yen 2003 2002 2003 Net sales ...Cost of sales (Note 7) ...Gross profit ...Selling, general and administrative...

  • Page 31
    ... U.S. Dollars (Note 2) Millions of Yen 2003 2002 2003 Common stock: Balance at beginning of year (2003 and 2002-206,523,263 shares)...Balance at end of year (2003 and 2002-206,523,263 shares)...Capital surplus: Balance at beginning of year ...Add: Capital surplus arising from mergers...Balance...

  • Page 32
    ... and affiliates...Gain on sale of marketable and investment securities ...Loss on sale or disposal of properties, net...Loss on foreign exchange, net ...Structural reform expenses ...Changes in operating assets and liabilities: Accounts and notes receivable-trade...Inventories ...Accounts and...

  • Page 33
    ... YAMAHA CORPORATION and Consolidated Subsidiaries Years ended March 31, 2003 and 2002 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of presentation YAMAHA CORPORATION (the "Company") and its domestic subsidiaries maintain their accounting records and prepare their financial statements in...

  • Page 34
    ... cost of customers' claims relating to after-sales service and repairs. The amount of this reserve is estimated based on a percentage of the amount or volume of sales and after considering historical experience with repairs of products under warranty. (k) Leases Non-cancelable leases are accounted...

  • Page 35
    ... prices in accordance with the relevant regulations of the Corporate Tax Law of Japan with certain necessary adjustments. 2. U.S. DOLLAR AMOUNTS For the convenience of the reader, the accompanying financial statements with respect to the year ended March 31, 2003 have been presented in U.S. dollars...

  • Page 36
    ... debt and certain other current liabilities at March 31, 2003 were as follows: Millions of Yen March 31, 2003 2002 Thousands of U.S. Dollars 2003 Bank deposits...Marketable securities ...Property, plant and equipment, net of accumulated depreciation...Investment securities... 30 1,112 2,440 1,315...

  • Page 37
    ...the years ended March 31, 2003 and 2002 were as follows: Millions of Yen 2003 2002 Thousands of U.S. Dollars 2003 Loss on sale of shares of common stock of affiliates ...Loss on revaluation of capital invested in subsidiaries ...Loss on foreign exchange...Additional retirement benefits paid...Other...

  • Page 38
    ... benefits from basing these on basic salary level and years of service, to adopting a system under which points are awarded based on an assessment of each employee's performance. As a result, additional past service cost was incurred and the related liability increased. 36 YAMAHA CORPORATION

  • Page 39
    ...-line method) 10 years (straight-line method) 2.5% 4.0% 10 years (straight-line method) 10 years (straight-line method) 13. CONTINGENT LIABILITIES The Company had the following contingent liabilities at March 31, 2003: Millions of Yen Thousands of U.S. Dollars Export bills discounted with banks...

  • Page 40
    ... balance sheets if finance leases currently accounted for as operating leases had been capitalized. Millions of Yen Tools and equipment Thousands of U.S. Dollars Tools and equipment Year ended March 31, 2003 Other Total Other Total Acquisition costs ...Accumulated depreciation...Net book value...

  • Page 41
    ... and the net book value of the leased assets relating to finance leases accounted for as operating leases as of March 31, 2003 and 2002: Millions of Yen Years ending March 31, 2003 2002 Thousands of U.S. Dollars 2003 Acquisition costs ...Accumulated depreciation...Net book value ... ¥5,328 3,643...

  • Page 42
    ... Other securities with determinable market value Millions of Yen Year ended March 31, 2003 Acquisition costs Carrying value Unrealized gain (loss) Thousands of U.S. Dollars Acquisition costs Carrying value Unrealized gain (loss) Securities whose carrying value exceeds their acquisition costs: Stock...

  • Page 43
    ... segments and overseas sales for the Company and its consolidated subsidiaries for the years ended March 31, 2003 and 2002 are outlined as follows: Business Segments Millions of Yen Lifestylerelated products ¥46,031 - 46,031 45,569 ¥ 461 Electronic equipment and metal products ¥60,554 2,599...

  • Page 44
    ...use AV/IT Audio products, IT equipment Lifestyle-related products System kitchens, bathtubs, washstands, furniture, parts for housing components Electronic equipment LSIs, special metals and metal products Recreation Management of leisure facilities Others Golf equipment, car interior parts, factory...

  • Page 45
    ... been reflected in the accompanying consolidated financial statements for the year ended March 31, 2003, were approved at a general meeting of the shareholders of the Company held on June 26, 2003: Millions of Yen Thousands of U.S. Dollars Cash dividends ... ¥1,031 $8,577 ANNUAL REPORT 2003 43

  • Page 46
    REPORT OF INDEPENDENT AUDITORS 44 YAMAHA CORPORATION

  • Page 47
    ... Kunihiro Maejima Managing Director Hirokazu Kato Director Toru Hasegawa Director Yoshihiro Umeda Director Shinya Hanamoto Director Tsuneo Kuroe Director Tokihisa Makino Corporate Auditors Naomoto Ota Michio Horikoshi Kunio Miura Haruhiko Wakuda (As of June 26, 2003) ANNUAL REPORT 2003 45

  • Page 48
    ... íPT. Yamaha Electronics Manufacturing Indonesia „Siam Music Yamaha Co., Ltd. íYamaha Music Australia Pty., Ltd. íYamaha Music Gulf FZE ̈Yamaha Motor Co., Ltd. ̈KORG Inc. (As of March 31, 2003) South Korea China Taiwan United States of America Canada Mexico United Kingdom Germany France Spain...

  • Page 49
    ...84 Number of Companies Accounted for by the Equity Method 2 Stock Exchange Listings Tokyo First Section, Code No. 7951 Transfer Agent and Registrar The Chuo Mitsui Trust and Banking Co., Ltd. Nagoya Branch Stock Transfer Agency Department Address: 3-15-33, Sakae, Naka-ku, Nagoya 460-8685, Japan Tel...

  • Page 50
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