Yamaha 2010 Annual Report Download

Download and view the complete annual report

Please find the complete 2010 Yamaha annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 82

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82

ANNUAL REPORT 2010
Year ended March 31, 2010
Composing Harmonies for Growth

Table of contents

  • Page 1
    Composing Harmonies for Growth ANNUAL REPORT 2010 Year ended March 31, 2010

  • Page 2
    Yamaha Brings Together Harmonies That Resonate With A Trusted and Admired Brand Become even more customer-oriented and quality-conscious to further increase brand value

  • Page 3
    ... Group is staunchly committed to maximizing its corporate value. Corporate Objective "CREATING 'KANDO' TOGETHER" Yamaha will continue to create 'kando'* and enrich culture with technology and passion born of sound and music, together with people all over the world. Management Philosophy Customer...

  • Page 4
    ... Networks History of the Yamaha Group Organization Chart Investor Information Forward-looking statements The plans and strategies regarding Yamaha's future prospects presented in this annual report have been drawn up by the Company's management based on information available at the current time and...

  • Page 5
    ... Region (Year ended March 31, 2010) (Millions of Yen) â- Japan 218,406 (52.7%) â- North America 57,668 (13.9%) â- Europe 70,284 (16.9%) â- Asia, Oceania and Other Areas 68,452 (16.5%) 400,000 200,000 0 06/3 07/3 08/3 09/3 10/3 â- Net Sales of Other Business Segments â- Net Sales of Musical...

  • Page 6
    ... ended. 04 Yamaha Corporation There were achievements as well, though. In China, our annual piano sales rose above 30,000 units, representing double-digit annual growth during YGP2010, and we advanced musical instrument manufacturing site realignment. Specifically, we closed down piano factories...

  • Page 7
    ....6 - +23.2 414.8 45.0 40 200 13.8 20 Operating Income ROE 6.8 0 08/3 â- Net Sales (Left) 09/3 10/3 YGP2010 Targets â- Operating Income (Right) 0 Free Cash Flows (over three years) * Musical Instruments, Audio, Music Entertainment, AV/IT and Semiconductors Annual Report 2010 05 Management

  • Page 8
    ...formulating the new medium-term management plan that began in April 2010, we clarified our vision for Yamaha's future, setting three goals: being a trusted and admired brand, being a company with "operations centered on sound and music," and growing through both products and services. In order to be...

  • Page 9
    ...Yamaha Music Schools in Japan and over 40 countries and regions around the world, as well as by helping to enrich people's lives through a variety of music events. We are very fortunate to be able to meet so many needs, from providing a full range of musical instruments to high-quality music-related...

  • Page 10
    ... products and magnesium molded parts businesses from net sales Professional audio equipment Combo Strategy Net sales (Billions of Yen) Operating income (Billions of Yen) Total Piano Strategy 500 30 ¥45.3 billion (+14%) China (+47%) North America/ Europe/ Japan (+10%) Others (+21%) 400...

  • Page 11
    ...time G Expand and enhance sales channels G Establish comprehensive support structure, including artist and customer services G Increase the music playing population Management G Develop and launch products suited to the market Expand Market Share in Developed Markets Through Product Strategy Total...

  • Page 12
    ... in 2002, as a holding company to manage sales and marketing activities. In the years since, this company has expanded the sales network, primarily in the large cities. Currently, the sales network has grown to 1,500 sales outlets across the country, carrying pianos, digital keyboards and AV...

  • Page 13
    ..., education, socializing, customer services and sales) Priority Measures of New Medium-Term Management Plan Sales Networks: Expand and Strengthen Outlets G Develop multiple levels of outlets in response to market polarization Establish specialty stores (grand pianos, AV products, high-end wind...

  • Page 14
    .... In order to raise the level of customer satisfaction via after-sales services, the Group will enhance the schools for training piano technicians and wind instrument engineers. The Company will also focus on establishing a variety of support systems for music institutes and the increasing number of...

  • Page 15
    ...Yamaha Music Craft to specialize in high-end guitars (2) OEM guitar production shift to YMMI Build structures for increased production at overseas factories Added-value initiatives through in-house production YES (China) Establishing an Optimal Manufacturing Structure The Yamaha Group's strategy...

  • Page 16
    ... lines of communication among research engineers in order to generate more synergies. Under the new organization, the Corporate Research & Development Center, which handles projects for the entire Yamaha Group, is responsible for long-term themes and research involving new businesses. The Musical...

  • Page 17
    ... covers many perceptions of value. The Yamaha Group is devoted to offering value in a multitude of forms by bolstering R&D activities in the core businesses of musical instruments, music and audio. Direction for Product Development: Cater to Both Individual Preferences and Price-Oriented Customers...

  • Page 18
    ...Educational musical instruments (recorders, Pianicaâ„¢, etc.) G PA equipment (mixers, power amplifiers, etc.) G Soundproof rooms (AVITECSâ„¢) G Music schools, English language schools G Music entertainment business G Piano tuning AV/IT G Audio products (AV receivers, speaker systems, Digital Sound...

  • Page 19
    ...Fiscal 2010) 33.6% â- Pianos â- Digital musical instruments â- Wind and educational musical 23.8% instruments â- String and percussion instruments â- Professional audio equipment â- Music schools, etc. 11.2% 14.6% Sales by Region (Fiscal 2010) 14.9% 5.3% â- Japan â- North America â- Europe...

  • Page 20
    ... year. Piano sales were lower in Japan due to a decline in orders for grand pianos and other high-priced models. Sales decreased in Europe as well because of challenging market conditions. In China, by contrast, double-digit sales growth continued. Sales of digital pianos increased in North America...

  • Page 21
    ... Yamaha musical instruments â- Music schools, etc. 42.1 (Billions of Yen) Market Trends and Fiscal 2010 Performance G In the United States, sales of high-end grand pianos plummeted as housing demand fell sharply and the decline in the number of music stores accelerated. Guitars and drums account...

  • Page 22
    ...pianos Total Piano Strategy: Fulfill Diverse Customer Values Premium piano (price range) Total Piano Acoustic Finely differentiated products from individual preference-oriented to price-oriented end of the market Acoustic Upright piano Modern Grand piano Hybrid Reinforce premium piano business...

  • Page 23
    ... will also actively collaborate with other companies in order to achieve steady growth. Performance Digital mixing console M7CL-48ES Electronic drum DTX950K Electric acoustic guitar LJX26CP Steinbergâ„¢ software NUENDO 5 Mao Abe Artist managed by Yamaha Music Artist, Inc. Annual Report 2010 21

  • Page 24
    ... G Front surround sound technology for Digital Sound Projectorâ„¢ G Wireless music transmitting technology for audio players including iPod* G High-quality sound technology in AV components and HiFi audio products G Router solutions business G Signal processing technology for high sound quality and...

  • Page 25
    ...of medium- to high-end audio components, as well as develop moderately-priced theater systems. In other emerging markets, the Company will work to create products for the Brazilian market and establish and enhance sales networks there. In the commercial online karaoke equipment business, Yamaha will...

  • Page 26
    ... development and introducing new products. Digital amplifiers are increasingly being used in flat-panel TVs as well as mobile phones, and we will aim to expand such applications through DSP*3 sound enhancement and other unique functions that boost added value. In graphics controllers, new products...

  • Page 27
    ... further lower the breakeven point, while also developing new manufacturing methods and cultivating new customers in Japan and overseas. In the factory automation (FA) equipment business, the company will focus on developing products that better meet market needs. In the recreation business, Yamaha...

  • Page 28
    ... of sound and music to increase the value of the Yamaha brand and to stimulate new demand by developing and offering innovative, high-quality products and services. At the same time, the Company has earned an excellent global reputation for original design, providing a distinctive customer appeal...

  • Page 29
    ... promote Yamaha's intellectual property strategy from both a Company-wide and business domain perspective. Patents Owned by Yamaha (as of March 31, 2010) (Number of patents) 6,000 â- Others â- Electronic devices â- AV/IT â- Musical instruments Performance Japan U.S. China Other Areas Designs...

  • Page 30
    .... In order to clarify responsibilities, directors are appointed for a term of one year. Yamaha also employs an executive officer system, with the purpose of strengthening consolidated Group management and business execution functions by divisions. As of June 25, 2010, the executive officer system...

  • Page 31
    ...June 25, 2010) is under the direct control of the President and Representative Director. Its role is to closely examine and evaluate systems pertaining to management and operations, as well as operational execution, for all management activities undertaken by the Company and Group companies from the...

  • Page 32
    ... and accounting, as well as business management. In my message in last year's annual report, I noted that Yamaha is a renowned company with a long history, and that the Yamaha brand is highly prized. From my position as outside director, I intend to exercise supervision over Yamaha's management so...

  • Page 33
    ...: customer-oriented and quality-conscious management, transparent and sound management, valuing people, and harmony with society. In February 2010, we created the Yamaha Corporation Group CSR Policy, a summary of our approach to CSR. Based on this policy, we will further promote CSR activities...

  • Page 34
    ...Senior Executive Officer Musical Instruments & AV Products Marketing Group Takuya Nakata Senior Executive Officer President of Yamaha Corporation of America Masaaki Koshiba Senior Executive Officer Musical Instruments Business Group Tatsumi Ohara Executive Officer General Manager of Sound Network...

  • Page 35
    ... and Analysis 45 Risk Factors 48 Consolidated Balance Sheets 50 Consolidated Statements of Operations 51 Consolidated Statements of Changes in Net Assets 52 Consolidated Statements of Cash Flows 53 Notes to Consolidated Financial Statements 73 Report of Independent Auditors Annual Report 2010 33

  • Page 36
    Eleven-Year Summary Yamaha Corporation and Consolidated Subsidiaries Years ended March 31 2010 2009 2008 Millions of Yen 2007 2006 2005 For the year: Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating income Income (loss) before income taxes and ...

  • Page 37
    ... 4.46 115.5 - â- Operating Income (Left) - 08/3 09/3 10/3 Operating Income to Net Sales (Right) Total Assets (Millions of Yen) 600,000 559,031 500,000 519,977 540,347 400,000 408,974 402,152 300,000 200,000 100,000 0 06/3 07/3 08/3 09/3 10/3 Annual Report 2010 35 Financial Section

  • Page 38
    ... environment in fiscal 2010, the Yamaha Group engaged in technological development, implemented initiatives to enhance quality, and launched high-value-added products including new models of hybrid pianos. In addition, in order to build demand, the Group enhanced and actively marketed its lineup of...

  • Page 39
    ... year on year, to ¥19,745 million. Sales of digital amplifiers for flat-panel TVs and mobile phones and LSIs for automobile devices were up, but sound generators for mobile phones fell, reflecting the ongoing shift to soundgeneration software for mobile phones in overseas markets and lower sales...

  • Page 40
    ... of the market both in Japan and overseas. In the magnesium molded parts business, from which Yamaha withdrew on March 31, 2010, sales were also down because of a drop in sales for mobile phone applications. Sales in the factory automation (FA) business dropped as corporate capital investments fell...

  • Page 41
    ...operating income of ¥365 million, an improvement of ¥670 million from the operating loss of ¥305 million in the previous year. Although sales dropped significantly, the return to profitability was attributable to a decline in cost of sales due to lower manufacturing costs, as well as decreased SG...

  • Page 42
    ... million. During fiscal 2010, Yamaha transferred 85.1% of its shares in subsidiary Yamaha Livingtec Corporation to a limited investment partnership managed and operated by Japan Industrial Partners, Inc. and to other investors, resulting in a net loss on sales of subsidiaries' and affiliates' stock...

  • Page 43
    ... are loaned to Yamaha Corporation in an effort to promote efficient fund utilization for the entire Group. Moreover, a cash management system has been adopted for certain subsidiaries. Current assets at March 31, 2010 totaled ¥193,260 million, down ¥8,837 million, or 4.4%, from the end of the...

  • Page 44
    ...the removal of Yamaha Livingtec Corporation from the scope of consolidation. Minority interests increased by ¥7 million, or 0.2%, year on year to ¥2,852 million. The equity ratio was 62.6% at March 31, 2010, an increase of 1.7 percentage points from 60.9% at the previous year-end. Return on equity...

  • Page 45
    ... businesses. Specifically, the spending supported elemental technology research and product development for hybrid pianos that blend acoustic and digital technologies, development of various sound generators to make digital musical instruments more competitive, development of new professional audio...

  • Page 46
    ... remains in the developed markets of Europe, North America and Japan, and the yen seems set to remain strong. Rising prices for raw materials are also likely to have a negative impact on business performance. Business forecasts for fiscal 2011 assume exchange rates for the full year of ¥90 per...

  • Page 47
    ... various parts of the world and has developed its operations globally. Of the Group's 84 consolidated subsidiaries, 45 are foreign corporations, and, of this total, 18 companies are manufacturers located overseas, with principal manufacturing bases concentrated in China, Indonesia, and Malaysia, and...

  • Page 48
    ...set retirement age. Therefore, some important issues for the Company will be transferring skills for the manufacturing of musical instruments and other products to the next generation, recruiting and training the next group of employees, and dealing with changes in the Company's employment structure...

  • Page 49
    ... operating condition. 18. Items Related to Changes in Financial Position a. Valuation of Investment Securities The companies of the Yamaha Group hold available-for-sale securities with market value (representing acquisition costs of ¥16.7 billion and recorded on the consolidated balance sheets as...

  • Page 50
    Consolidated Balance Sheets Yamaha Corporation and Consolidated Subsidiaries At March 31, 2010 and 2009 Millions of Yen Thousands of U.S. Dollars (Note 3) 2009 2010 ASSETS Current assets: Cash and deposits (Notes 19 and 25) Notes and accounts receivable - trade (Note 25) Short-term investment ...

  • Page 51
    ...for-sale securities Deferred gains or losses on hedges Revaluation reserve for land (Note 9) Foreign currency translation adjustments Total valuation and translation adjustments Minority interests Total net assets Total liabilities and net assets See notes to consolidated financial statements. 2010...

  • Page 52
    Consolidated Statements of Operations Yamaha Corporation and Consolidated Subsidiaries Years ended March 31, 2010 and 2009 Millions of Yen 2010 2009 Thousands of U.S. Dollars (Note 3) 2010 Net sales Cost of sales (Notes 5, 6, and 11) Gross profit Selling, general and administrative expenses (...

  • Page 53
    Consolidated Statements of Changes in Net Assets Yamaha Corporation and Consolidated Subsidiaries Years ended March 31, 2010 and 2009 Millions of Yen Shareholders' Equity Capital stock (Note 18) Capital surplus Retained earnings (Note 18) Treasury stock (Note 18) Valuation and Translation ...

  • Page 54
    Consolidated Statements of Cash Flows Yamaha Corporation and Consolidated Subsidiaries Years ended March 31, 2010 and 2009 Millions of Yen 2010 2009 Thousands of U.S. Dollars (Note 3) 2010 Net cash provided by (used in) operating activities: Loss before income taxes and minority interests ...

  • Page 55
    ... which differs from the balance sheet date of the Company; however, a financial closing as of and for the year ended March 31 has been made and reported by these overseas subsidiaries for consolidation purposes. All assets and liabilities of subsidiaries are revalued at fair value on acquisition and...

  • Page 56
    ... estimate of specific probable doubtful accounts determined by a review of the collectability of individual receivables. (i) Provision for product warranties Provision for product warranties is provided to cover the cost of customers' claims relating to after-sales service and repairs. The amount of...

  • Page 57
    ... this change on profit and loss for the year ended March 31, 2009 was not material. (5) Application of Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements Effective the previous fiscal year, the Company has applied "Practical...

  • Page 58
    ...the consolidated balance sheets include the amounts corresponding to interest paid from total lease payments. For the middle-term financing purpose, the Company has line-of-credit arrangement with financial institutions for a maximum amount of ¥20,000 million ($214,961 thousand). At March 31, 2010...

  • Page 59
    ... table summarizes loss on impairment of fixed assets for the year ended March 31, 2010: Millions of Yen Group of Fixed Assets Location Impaired Assets 2010 Thousands of U.S. Dollars (Note 3) 2010 Idle assets, etc. Hamamatsu-shi, Shizuoka Prefecture, etc. Buildings and structures Machinery and...

  • Page 60
    ... table summarizes loss on impairment of fixed assets for the year ended March 31, 2009: Millions of Yen Group of Fixed Assets Location Impaired Assets 2009 Semiconductor business assets Aira-gun, Kagoshima Prefecture Iwata-shi, Shizuoka Prefecture Recreation business assets Katsuragi recreation...

  • Page 61
    ... follows: Millions of Yen 2010 2009 Thousands of U.S. Dollars (Note 3) 2010 Employment adjustment subsidy income Reversal of provision for business restructuring expenses Loss on valuation of investment securities Loss on valuation of stocks of subsidiaries and affiliates Loss on sales of stocks of...

  • Page 62
    ... Company recorded a net loss for the years. 18. INFORMATION FOR CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS The following tables present information related to the accompanying consolidated statements of changes in net assets for the years ended March 31, 2010 and 2009: (a) Common stock Number...

  • Page 63
    ... of Yamaha Livingtec Corporation and its two wholly owned subsidiaries (as of March 31, 2010), which is excluded from consolidation by the sales of its shares by the Company for the year ended March 31, 2010: Millions of Yen Thousands of U.S. Dollars (Note 3) Current assets Noncurrent assets Total...

  • Page 64
    ... expenses for the years ended March 31, 2010 and 2009 are outlined as follows: Millions of Yen 2010 2009 Thousands of U.S. Dollars (Note 3) 2010 Service cost Interest cost Expected return on plan assets Amortization of prior service cost Amortization of actuarial gain or loss Additional retirement...

  • Page 65
    ... 2010 and 2009. Net assets per share are based on the number of shares of common stock outstanding at each balance sheet date. The calculation of basic net loss per share was determined as follows: Millions of Yen Years ended March 31 2010 2009 Thousands of U.S. Dollars (Note 3) 2010 Basic net loss...

  • Page 66
    ...Amounts related to leased assets corresponding to the acquisition cost, accumulated depreciation and net book value at the end of the fiscal year Millions of Yen As of March 31, 2010 Buildings and structures Tools, furniture and fixtures Other Total Buildings and structures Thousands of U.S. Dollars...

  • Page 67
    ... the amount of accounts receivable denominated in foreign currencies at all times. For short-term investment securities and investment securities, the Group periodically reviews the market value and the financial position of the issuer; with which the company has business relationship. In addition...

  • Page 68
    ... of time, the carrying value approximates fair value. Short-term investment securities and investment securities The fair value of stocks is based on quoted market prices. The fair value of debt securities is based on either quoted market price or prices provided by the financial institutions making...

  • Page 69
    ...Securities whose estimated fair value does not exceed their carrying value: Government and municipal bonds Corporate bonds Other Total ¥ 670 199 399 1,269 ¥ 672 200 400 1,272 ¥ 2 0 0 2 99 200 99 400 ¥1,669 99 199 99 399 ¥1,671 (0) (0) (0) (0) ¥ 1 Annual Report 2010 67 Financial Section

  • Page 70
    ...¥32,791 (c) Available-for-sale securities sold during the years ended March 31, 2010 and 2009 Millions of Yen 2010 2009 Thousands of U.S. Dollars (Note 3) 2010 Sales of available-for-sale securities Gain on sales Loss on sales (d) Securities without fair market value ¥ 7 1 15 ¥15 5 0 $ 75 11...

  • Page 71
    ...,173 Prices provided by financial institution *2 Market prices Accounts receivable 141 21 1,750 ¥14,671 Notional amount - - - ¥- *1 ¥ - Thousands of U.S. dollars (Note 3) As of March 31, 2010 Hedged items Total Over one year Estimated fair value Calculation of fair value Foreign exchange...

  • Page 72
    ...Business Segments Millions of Yen Musical instruments Electronic devices Lifestylerelated products Eliminations or unallocated amounts Year ended March 31, 2010 AV/IT Others Total Consolidated I. Sales and operating income (loss) Sales to external customers Intersegment sales...Yamaha Corporation

  • Page 73
    ... the year ended March 31, 2009. Geographical Segments Millions of Yen Asia, Oceania and other areas Eliminations or unallocated amounts Year ended March 31, 2010 Japan North America Europe Total Consolidated I. Sales and operating income (loss) Sales to external customers Intersegment sales...

  • Page 74
    ...of U.S. Dollars (Note 3) Asia, Oceania and other areas Year ended March 31, 2010 Japan North America Europe Total Consolidated I. Sales and operating income (loss) Sales to external customers Intersegment sales or transfers Total Operating expenses Operating income (loss) Total assets $2,442...

  • Page 75
    Annual Report 2010 73 Financial Section

  • Page 76
    ...Indonesia Bangkok, Thailand Gurgaon, India Dubai, U.A.E. Moscow, Russia Melbourne, Australia Yamaha Corporation of America Yamaha Electronics Corporation, USA Yamaha Commercial Audio Systems, Inc. Yamaha Music InterActive, Inc. YMH Digital Music Publishing, LLC*1 Yamaha Artist Services, Inc. Yamaha...

  • Page 77
    ...Yamaha Media Works Corporation Yamaha Ai Works Co., Ltd.*2 Yamaha Business Support Corporation Yamaha Insurance Service Co., Ltd. Yamaha Travel Service Co., Ltd. Yamaha Facility Management Corporation Yamaha Office Link Co., Ltd. Yamaha Music Tokai Co., Ltd. Yamaha Music Osaka Co., Ltd. Yamaha Music...

  • Page 78
    ... organ Sound synthesis technology Digital musical instruments Analog modeling 1966 Drums Air-seal system 1969 VA-120 vocal amplifier system PA equipment Wood processing Coating AV products 1922 High-quality hand-cranked phonographs Acoustic technology 1954 HiFi products HiFi Audio Speaker...

  • Page 79
    ... CD player 1986 DSP-1 digital sound field processor DSP 1988 AST-1 speaker incorporated Yamaha Active Servo Technology (YST) YST 1972 Sound generator LSIs for the Electone electronic organ LSI for musical instruments 1983 FM synthesizer LSIs 1983 Graphics controller LSIs LSI for PC/video games 1983...

  • Page 80
    ... Corporate Auditors' Office Sound & IT Development Division Musical Instruments & AV Products Marketing Group President Domestic Sales & Marketing Division Asia-Pacific Sales & Marketing Division Yamaha Corporation of America Board of Directors Yamaha Music Europe GmbH Yamaha Music & Electronics...

  • Page 81
    ...: 6,383) Shareholder Composition (Number of shares) Securities companies 4.3% Japanese corporations 9.2% Individuals 10.7% National and local governments 0.0% Number of Consolidated Subsidiaries 84 Account Settlement Date March 31 Financial institutions 52.4% Dividends Year-end: Interim: To the...

  • Page 82
    Corporate Planning Division URL: http://www.yamaha.com/ Printed in Japan on FSC-approved paper using soy-based inks and waterless printing processes. 2010/8 - CM102