New Medium-Term Business Plan April 2007 – March 2010 April 6, 2007 Yamaha Corporation 1 1. YSD50 Review 2 Review of YSD50 Results Although the Company’s financial position improved, growth and profitability targets could not be met FY2007.3 YSD50 Target Results Announced Feb. 7, 2007 ¥590 billion ¥542.5 billion Operating income ¥50 billion ¥26.0 billion Net income ¥34 billion ¥30.5 billion Net sales ROE FCF (3-year) Actual interest-bearing debt Inventory 10.0% 9.2% ¥60 billion ¥40.3 billion zero - ¥9.4 billion 2.9 months 2.9 months 3 Review of YSD50 Results Sales growth targets not achieved Net Sales (billions of yen) 700 600 YSD50 results/projections Others Electronic equipment & metal products AV/IT Musical instruments Change Change from from FY2004.3 YSD50 results targets + 3.0 YSD50 targets 590.0 - 47.5 539.5 534.1 534.1 542.5 500 90.9 84.8 87.9 93.5 + 2.6 - 9.5 69.0 56.2 55.0 - 21.9 ±0 400 76.9 - 26.0 98.0 72.0 - 6.3 + 28.6 - 12.0 334.0 300 78.3 77.7 75.9 200 293.4 302.6 314.1 322.0 FY2004.3 FY2005.3 FY2006.3 FY2007.3 103.0 55.0 100 0 (Projections announced Feb. 7, 2007) FY2007.3 4 Review of YSD50 Results Although musical instrument profitability is improving, overall targets were not met Operating Income (billions of yen) 50 45 Electronic equipment & metal products AV/IT Musical instruments YSD50 results/projections Others YSD50 targets 50.0 45.1 Change Change from from FY2004.3 YSD50 targets results 35.7 40 35 30 30.0 20.0 25 24.1 20 7.9 15 3.7 5 0 -5 0.2 FY2004.3 - 2.2 FY2005.3 - 27.0 - 2.9 - 4.5 - 5.0 6.5 26.0 3.0 1.5 31.0 21.0 10 14.2 - 24.0 2.1 4.4 10.5 - 19.1 7.5 + 10.5 - 10.0 + 0.3 - 4.5 14.1 0 FY2006.3 0.5 FY2007.3 (Projections announced Feb.7, 2007) 5.0 FY2007.3 5 YSD50 Review Reasons sales growth targets not achieved - Target for piano sales not met in Japanese & North American markets - Growth in demand for Electones below target - Slow response to changes in guitar market Net Sales (billions of yen) Musical instruments 590.0 - 12.0 AV/IT - 26.0 - Target for increase of home theater sales not met - Weak progress with launch of new products (video equipment/MusicCAST) - Sluggish sales in Japanese, Chinese and European markets Electronic equipment & metal products ±0 Others - 9.5 542.5 YSD50 target FY2007.3 projection (Feb. 7, 2007) 6 YSD50 Review Reasons income growth target not achieved Operating Income - Decline in gross profits due to sales and production targets not being met (Billions of yen) Musical instruments 50.0 - 10.0 AV/IT - 5.0 Electronic equipment & metal products - 4.5 - Unit prices and volumes of LSI sound chips for mobile phones lower than anticipated Others - 4.5 26.0 •Recreation sales targets not met •Slow to improve profitability of lifestyle-related products YSD50 target FY2007.3 projection 7 YSD50 Review Summary - There is no denying that sales and income targets were over-optimistic. - Sales finished at decline of ¥47.5 billion (estimated), well below target. As a result, operating income was ¥24.0 billion (estimated) below target, half of the figure set in the medium-term business plan. - Percentage of target achieved Net sales: 92% (estimated) Operating income: 52% (estimated) - All business segments except electronic equipment and metal products failed to meet sales targets. All business segments failed to meet operating income targets. - Although the musical instrument business failed to meet targets, it is becoming more profitable. - Operating income: Doubled to ¥21.0 billion (estimated) vs. FY2004.3 - Operating income margin: Improved approx. 3 points to 6.5% (estimated) vs. FY2004.3 8 YSD50 Review by Topic Musical instrument business operating income target: ¥30 billion Reasons Medium-Term Business Plan targets not achieved - Decline in gross profits due to sales and production targets not being met - Slow in taking steps to drop prices and differentiate products amid polarizing demand trends - Products made in China has penetrated into market more quickly than anticipated and the measures to the situation is behind. - Although efforts to expand sales of high-added-value products showed results for wind instruments, they were insufficient overall - Pianos: While new products were launched, targets were not met due to shrinking demand in North America and Japan - Electronic pianos: Market share of volume fell amid lower unit prices and expanding market Launched high-added-value initiatives aimed at sparking new demand such as design pianos, but full-scale roll-out was delayed - Guitars: Yamaha lacked presence and lost market share amid growing overall demand - Delay in taking steps to expand demand for keyboard products in the Japanese market led to sluggish sales 9 YSD50 Review by Topic Musical instrument business operating income target: ¥30 billion Progress during Medium-Term Business Plan period 51% growth in 3 years, sales increased ¥10.4 billion (PA products) - Growth in professional audio (PA) equipment business - Progress in building platform for business expansion, e.g. alliance with Nexo, acquisition of Steinberg and Fuji Sound 33% growth in 3 years, sales increased ¥2.6 billion - Growth in Chinese market - Progress in building sales network and music school platforms, continuing steady growth -Growth in other regions (outside of Japan, Europe, North America and China) 40% growth in 3 years, sales increased ¥11.6 billion - In addition to expansion in emerging markets, took a larger share of the mature Korean market - Revitalization of Japanese market - Steady investment in driving future growth through music schools and stores designed to draw in customers - Manufacturing reforms - Reorganization of production bases to strengthen manufacturing capabilities is largely progressing according to plan 10 YSD50 Review by Topic Stabilization of income base in other core businesses AV Business Reasons Medium-Term Business Plan targets not achieved - Shrinking home theater market and slow responses to market changes such as lower prices and fiercer competition - Home theater systems: No sales growth in the face of lower price competitiveness and shrinking market - Video equipment/MusicCAST: Weak progress with launch of new products - Sluggish sales in Japan, Europe and China - Japan: Slow response to expansion of audio market in conjunction with growing market for flat-panel TVs - Europe: Slow in taking steps to compete with rivals in a highly competitive environment - China: Lack of market penetration for Yamaha brand Progress during Medium-Term Business Plan period - Improved profitability due to increased YSP sales and growth in sales of AV receivers and hi-fi equipment - Sales growth with development of mass merchandiser in the North American market Sales grew 14% in 3 years, increased ¥3.1 billion 11 YSD50 Review by Topic Stabilization of income base in other core businesses Semiconductor business - Sales volumes and unit prices of LSI sound chips for mobile phones lower than anticipated - Insufficient growth in other product areas All business units becoming profitable Lifestyle-related products business - Business restructuring reforms have begun and although targets were not met profitability has been achieved Recreation business - Although costs are being reduced, profitability could not be achieved due to targets for increased sales not being met Golf products business - Profitability has been achieved - Greater recognition of the "inpres" brand 12 2. New Medium-Term Business Plan 13 New Medium-Term Business Plan New Medium-Term Business Plan (April 2007-March 2010) Yamaha Growth Plan 2010 - Act & Change! - The entire company acts as one to steadily implement growth strategies and changes to shift into a growth phase! Shift into a growth phase based on a stronger financial position 14 YGP2010: Redefining Business Domains Before April 2007 Core businesses (sound & music) Musical Instruments/Audio AV/IT Semiconductors Media-Related After April 2007 Lifestylerelated/ leisure Parts & materials businesses businesses (technology synergy) (brand synergy) LifestyleLifestyle-Related Products Recreation Golf Products The Sound Company •Musical Instruments/ Audio/Music Entertainment •AV Equipment •Sound Networks •Semiconductors Business fields aiming for active growth Electronic Metals FA/Metallic Molds Automobile Interior Wood Components Diversification businesses LifestyleLifestyle-Related Products PT Aim at growth focused on sound/music/audio field PT: Productive Technology (FA/metallic molds/automobile interior wood components) Recreation Golf Products Business domains utilizing original Yamaha technology and sense, whose sound operation helps boost group corporate value 15 YGP2010 Business Vision “The “TheSound SoundCompany” Company”business businessdomain domain Use Usesound/music/network sound/music/networktechnologies technologiesas asaaplatform platformto todrive drive group-wide group-widegrowth growthby bydeepening, deepening,expanding expandingand andcreating creating business businessin inthe thefields fieldsof ofmusical musicalinstruments/audio/music instruments/audio/music entertainment, entertainment,AV/IT AV/ITand anddevices devices “Diversification” “Diversification” business businessdomain domain Inspired Inspiredby bythe thebrand brandslogan slogan"Creating "Creating‘Kando’* ‘Kando’*Together," Together," contribute contributeto toincreasing increasinggroup groupcorporate corporatevalue valueby byutilizing utilizingthe the original originaltechnologies technologiesand andsense sensebuilt builtup upin inthe thecourse courseof ofYamaha Yamaha operations operationsto tosecure secureaastrong strongposition positionin ineach eachindustry industryand and achieve achievesound soundbusiness businessmanagement management *Kando *KandoisisaaJapanese Japaneseword wordthat thatsignifies signifiesan aninspired inspiredstate stateof ofmind mind 16 Identifying Identifying “The “The Sound Sound Company” Company” as as aa growth growth domain domain Achieve growth by further reinforcing areas of strength focusing on musical instruments and expanding business in fields utilizing sound at their core (audio, sound/networks) Examples of "Sound Company" products and keywords relating to sound Internet Existing business domains Sound/networks Create new business and expand business fields Mobile devices communities Enjoy Routers Silicon microphones Connect Pick up sound Connect Audio IP Conferencing systems Expand business around sound/music Soundproofing systems AV equipment PA Listen Karaoke Communicate Silence Music/musical instruments Enjoy Acoustic design Create Connect New device products New Sound Network products Further expand existing business Music and health Comfort Music schools Study Commercial Music spaces Musical New business instruments production Play Process New business Media/content Enjoy 17 17 Key Areas for Growth Music/Musical Instruments z Piano business (Total Piano Strategy) z Guitar business z Music entertainment business Audio Achieving growth in "The Sound Company" business domain Market measures z Emerging markets - China - Russia z Professional audio business z AV equipment business Sound networks z IP conferencing system business z Semiconductor business (development of new devices) Active commitment of management resources Including strategic M&A and alliances 18 Trends for Musical Instrument Products Growth in music/musical instruments field - Growth in various pianos - Customer-oriented sales plans/marketing Yamaha sales share (%) High growth potential 50 45 40 35 30 25 20 15 10 5 0 Electronic pianos 15% Wind instruments 4% - Achieve stable growth - Increase volume in China - Strengthen development of nextgeneration top-of-line models Acoustic pianos 2% - Achieve stable growth - Boost share of high-level - Rebuild platform for growth products Electronic - Prioritize quality and stable supply - Maintain share of lowerdrums 14% - Target electric-acoustic guitar priced products market in North America ($180 - Achieve stable growth million market, 20% annual growth) - Strengthen position of mid- and high-level products Guitars Large-scale market Drums 5% - Focus resources on electronic 10% drums 0 50 100 150 % indicates 3-year market growth rate assumed in new medium-term plan 200 250 300 Market scale (Billions of yen) (wholesale basis) *Market share and scale are the year 2006 estimation. 19 Piano Business Growth in music/musical instruments field Efforts to expand piano business through Total Piano Strategy Rebuild piano line-up from customer perspective -- Supply the total range of pianos that customers want, regardless of acoustic/digital distinction - Merge acoustic and digital pianos to create new pianos that have the strengths of both - Acoustic pianos: aim even higher Digital pianos: offer value for money Increase total piano business sales by ¥10 billion (Current piano + electronic piano sales: approx ¥87.0 billion) 20 Guitar Business Growth in music/musical instruments field Rebuild platform for growth Prioritize stable quality and boost manufacturing capabilities - Increase and strengthen production at Hangzhou Yamaha (100,000 -> 200,000 units per year) - Ensure stable quality and on-time delivery - Restructure Indonesian plant to specialize in guitars (500,000 -> 600,000 units per year) - Boost capacity and manufacturing capabilities for mid-level products Utilize Yamaha Artist Services Hollywood in product plans and marketing Focus resources on development of elemental technologies for electric-acoustic guitars (pick-up, DSP, and etc.) 3-year milestone: increase sales by ¥2 billion (current sales: approx 12.0 billion) 21 Growth in North American Acoustic Guitar Market Field we can display strength in Market Scale Sales (wholesale) Growth rate (1992-2005 average) M$ Total acoustic 8.5% per year 360 Electric-acoustic only 21% per year Fusion of acoustic and digital technology 50% of market 20% of market Electricacoustic 118 Acoustic guitars 1992 1997 2005 22 Growth in music/musical instruments field Manufacturing Reforms Reorganize and reinforce acoustic musical instrument production bases China Aim for quality, cost control and supply capability z Hangzhou Yamaha - Increase piano production, establish integrated production systems - Upright pianos 50,000 units p.a. Grand pianos 5,000 units p.a. - Launch guitar manufacturing to meet increased demand for production - 200,000 units p.a. z Xiaoshan Yamaha - Establish systems for increased production of wind instruments - 128,000 units p.a. - Main factory for high-level drum products - 7,000 units p.a. Plants scheduled to finish production Japan Aim for mother factory functions, added value z Kakegawa: Complete integration of piano production bases (2010) z Toyooka/Saitama/Yamaha Music Craft, etc.: Continue pursuing creation of added value (wind, string & percussion) Indonesia Strengthen supply and manufacturing capabilities z Yamaha Indonesia (YI): Equip for increased piano production and integrate production processes - Upright pianos 25,000 units p.a. Grand pianos 7,500 units p.a. z Yamaha Music Manufacturing Indonesia (YMMI): Specialize in guitars, expand into mid-level products - 600,000 units p.a. z Taiwan: guitars (Feb. 2007) zNorth America: pianos (March 2007), wind instruments (April 2007) 23 Growth in music/musical instruments field Music Business Full-scale entry into music entertainment business, establish business unit for this purpose Expand business through realignment and integration of music entertainment related business - Full lineup of operations including support for amateur activities, identifying/nurturing/backing of artists, producing content and supplying music to the market Increase music entertainment business sales by ¥5 billion Create ¥30 billion business in 5 years’ time (current sales: approx. ¥12 billion) Music school sales is not included in above-mentioned figure (current sales: approx ¥43 billion) 24 Current Situation: Functions related to the music entertainment business are scattered across organization Scale of Japanese market (2006 estimate) Marketing YMM (publishing) Content (distribution) Sales ¥3.9 billion Music CDs approx. ¥500 billion YMC (CDs) Sales ¥6.0 billion Sales ¥1.5 billion Music distribution over Internet approx. ¥30 billion Music books/sheet music approx. ¥30 billion Incubation Artist management Content YMF ME Div. Content YMF ME Div. ＹＭＣ Digital Content Business Division ME Division, Yamaha Music Foundation Yamaha Music Media Corporation Yamaha Music Communications Co., Ltd. 25 Concentrate the total power of the Group! New artists New content, etc. Marketing Listening to/playing (enjoying) music Yamaha Music Entertainment Holdings Inc. Creating/distributing music Incubation Artist Management 26 Commercial Audio Equipment Business Achieving growth in "The Sound Company" business domain More growth through expansion of business fields - Speed up efforts to become a system solutions provider* *Build capability to provide solutions utilizing digital network technology Provision of full-system products/network technology System design proposals/technology support Maintain No.1 position for mixers and strengthen business for output-type products (power amplifiers, speakers, etc.) Expand business into commercial installed sound market＊ *Music facilities without specialist operators, where the main purpose is offering services other than music (exhibition spaces, schools, banquet halls, restaurants, etc.) Increase total professional audio (PA) product sales by ¥12 billion, with a focus on output-type products (current sales: approx ¥30 billion) 27 Estimated Market Scale for Commercial Audio (CA) Equipment (Worldwide wholesale value) Production applications Non-fixed live event applications Studios, broadcasters, etc. ¥50 billion ¥60 billion Specialist operator (Schools, hotel banquet halls, etc.) ¥80 billion ¥60 billion Speakers, power amplifiers, processors Current main business fields (focused on mixers) ¥50 billion No specialist operator (Theaters, U.S. churches, etc.) [1] Expand product fields B to B sales route (CA) Music store sales route Concerts, events, etc. Fixed facility applications ¥80 billion [1] Expand product fields [2] Expand target market Commercial installed sound market Speakers, power amplifiers Current main business fields (focused on mixers) 28 AV Equipment Business Growth in audio field Concentrate product development resources on growth areas Business Environment (2006 shipment figures) z Shrinking of existing home theater audio market - HT system market - AV amp/receiver market : 95% of previous year (11 million units) : 96% of previous year (3 million units) z Rebound of hi-fi market - German hi-fi amp/receiver market: 99% of previous year (100,000 units) 105% of previous year in value terms (€29M) - Japanese hi-fi amp/receiver market: 107% of previous year (88,000 units) z Expansion of market surrounding flat-panel TVs Aim for growth by concentrating development resources on hi-fi amplifier, AV components, front surround speaker for flat-panel TVs and new product fields (desktop audio, smallscale commercial spaces, etc.) 29 Growth in audio field AV Equipment Business Strengthen mid- and high-level products in the hi-fi market - No.1 share for mid- and high-level hi-fi amplifiers in terms of volume - Re-enter market for high-level hi-fi components - Lead with Soavo speakers and launch hi-fi amplifiers, CD players FY2007.3 FY2008.3 FY2009.3 FY2010.3 Focus Focus on on lower lower price price range range High-level High-level hi-fi hi-fi speakers speakers (Soavo (Soavo series) series) High-level High-level hi-fi hi-fi amps, amps, SACD SACD players players Mid-level Mid-level hi-fi hi-fi amps, amps, SACD SACD players players Increase sales by ¥3 billion (current sales: ¥10.5 billion) 30 Growth in audio field AV Equipment Business Growth in front surround speakers field - Increase sales by adding low-priced products with "AirSurround*" technology to existing YSP technology ＊Original sound field creation technology that uses two front speaker units to produce a natural and highly directional surround effect over a wide area FY2007.3 FY2008.3 FY2009.3 FY2010.3 YSP technology Aim for added value, develop new variations - Allow for various installation styles - Develop multifunctional units ＊ AirSurround technology＊ Aim for value for money, develop new products as HTiB replacements HTiB = Home Theater in a Box Increase sales by ¥6 billion (current sales: approx. ¥7 billion) 31 AV Equipment Business Growth in audio field Growth in new fields - Establish position in the desktop audio genre - Develop products utilizing compact, high-sound-quality technologies (SR-Bass, PowerStorage, etc.) Compact, stylish audio speakers for users of DAP and mobile music players Audio devices for business users of PCs - New advance into small commercial space business - Use core technologies (ArraySp, etc.) with theme of fusing sound and light Increase sales by ¥3 billion (current sales: approx. ¥0.3 billion) 32 IP Conferencing System Business Growth in sound network field Rapidly establish new business unit Focus on volume sales in Japan & North America - Develop sales network - Develop e-sales (Internet-based proposals/sales/support) Now In 3 years’ time Sales: ¥0.1 billion Sales: ¥5 billion From Japanese market entry to development of sales channels Establish marketing capability for North American market Build production infrastructure in China Become key business unit in Sound Network Division and achieve growth 33 Scale of IP Conferencing System Market (Estimate of Current Market) Conferences using special terminals PC/Web conferencing Video conferencing Audio conferencing Scale of world market for terminals ¥70 billion ¥30 billion Annual market growth rate 10% 0% Existing Yamaha products ¥5 billion (for microphones, speakers) 20% PJP-100H (IP connection) PJP-100UH (USB connection) PJP-300V PJP-50R 34 Semiconductor Business Growth in sound network field Rapidly develop new devices and markets - Turn business around by preserving strengths and attacking new areas - Reinforce foundations of LSI business for mobile phones - Strengthen integration of music replay and sound functions - Supply sound quality enhancement services to carriers and handset manufacturers Growth focused on "Smart AnaHyM" strategy - Concentrate investment on developing application devices in fields of strength - Develop full series of silicon microphones, boost competitiveness in digital amplifiers, etc. - Maximize use of Kagoshima Plant processes and strengthen manufacturing capabilities Increase sales by ¥６.４ billion (current sales: ¥38.6 billion) Aim for operating income of ¥5 billion 35 "Smart "Smart AnaHyM" AnaHyM" Develop superior devices by reinforcing analog (Ana), hybrid (Hy) and MEMS (M) technologies and adding value with Yamaha’s strengths in the Smart technology field "Smart" added value Signal processing Acoustic audio Mobile Mobile CODEC CODEC Magnetic Magnetic sensors sensors Analog technology MEMS/sensor technology Hybrid technology Digital Digital amps amps Digital amps TV, mobile phone, amusement applications Silicon Silicon microphones microphones Silicon microphones MEMS construction Mobile phone, video camera, PC applications 36 Semiconductor Business: Sales/Operating Income Targets (Billions of yen) 45.0 38.6 Growth in devices other than sound chips for mobile phones, with a focus on "Smart AnaHyM" Other devices LSI sound chips for mobile phones 40 30 20 2.1 5.0 10 0 FY2007.3 estimated FY2010.3 target 37 Growth in emerging markets Chinese Market Rapidly build musical instrument sales network and strengthen marketing Active investment - Quantitative expansion of piano retail network Piano sales targets for China (current levels) Share 10% (7%) Units 30,000 (16,000) - Core stores 200 -> 350 - "Yamaha Corners" 70 -> 200 - Create comprehensive stores with music schools in addition to sales of pianos/electronic keyboards/wind instruments Yamaha Piano Corner - Build platform for music school business - 40 schools with 10,000 students (currently 6 schools with 1,300 students) - Expand functions of YDACC (Beijing) - Set up PA demonstration rooms in Shanghai/Guangzhou Yamaha Digital Audio Creative Center 38 Growth in emerging markets Russian Market Increase sales by establishing subsidiary in Russia Increase sales by boosting market recognition/customer trust - Build sales network to start direct wholesaling - Expand lineup of products for Russian market and conduct aggressive promotion campaign - Comprehensive lineup of musical instrument, PA and AV products FY2008.3 z August Establish subsidiary FY2009.3 FY2010.3 Subsidiary sales ¥9 billion z September z April Kick off business Direct wholesaling of all products with CA products (musical instruments/PA/AV) (Current musical instrument + AV wholesale value: approx. ¥3.5 billion) 39 Active Approach to Strategic M&A and Business Alliances Active commitment of management resources Seek out growth opportunities focused on The Sound Company business domain Basic policy for M&A and alliances - Take the lead in examining/building optimum partnerships with a view to growth in The Sound Company business domain Existing examples - Complementing Yamaha technologies, sales networks and production bases NEXO: Strengthened ability to propose system solutions by adding Nexo speaker products Fuji Sound: Reinforced/expanded Japanese professional audio equipment business - Developing more comprehensive product portfolio in fields where Yamaha’s market share is low Steinberg: Enhanced product portfolio in the music production field Strengthen M&A unit responsible for this activities 40 Diversification businesses domain Select and Focus in Recreation Business Focus on two facilities and concentrate management resources Transfer four facilities (Toba Hotel International, Nemunosato, Kiroro and Haimurubushi) to Mitsui Fudosan Co., Ltd. for new development Aim to enhance profitability and contribute to Yamaha brand value by utilizing special Yamaha features at the two remaining facilities (Tsumagoi and Katsuragi-Kitanomaru) - Tsumagoi - Katsuragi-Kitanomaru - Create a facility that embodies the - Contribute to corporate value by concept of Yamaha as a sound and providing the highest levels of service music company 41 Diversification businesses domain Strengthen Lifestyle-Related Products Business Boost corporate competitiveness in line with the business environment Reorganize and enhance product structure into three business units (BUs) - Boost competitiveness of platform BU (80% of sales) - Reduce number of models and standardize parts and materials - Construct profitable business model with high-level easy-order BU and top-level order-made BU Fundamental reform of production structures - ¥3 billion cost reduction through improved productivity and reduced labor costs - Build up core competencies in manufacturing - Implement and develop marble craft strategy (artificial marble craftmanship) Sales reforms to boost customer numbers - Establish remodeling-oriented business - Enhance and make optimum use of showrooms (expand number of showrooms from 38 to 50) 42 Reorganize and Reinforce Productive Technology Business Diversification businesses domain Growth in FA/Mold/Component Businesses Concentrating the business on Yamaha Fine Technologies Co., Ltd. (YFT) - Expand business field through continual reduction of cost in component and metallic molds businesses and development of mass production technology for compound components - Start development of new fields in FA business - Generate synergy through transfer of automobile interior wood components business to YFT - Expand thermoelectric module (TEC) and lens businesses 43 YGP2010 Targets FY2010.3 Targets Yamaha Group Net sales ¥590.0 billion 3-year sales growth rate: 8.8% Operating income ¥45.0 billion Operating income margin: 7.6% ¥493.0 billion 3-year sales growth rate: 14.0% ¥39.5 billion Operating income margin: 8% 10% ROE FCF “The Sound Company” business domain 3-year ¥55.0 billion 44 YGP2010 Net Sales Targets Net Sales 590.0 (Billions of yen) 542.5 *Including ¥16.4 billion from electronic metal products business 46.4＊ 17.5 46.0 38.6 34.0 7.0 56.0 45.0 88.0 Diversification Others Recreation business domain Lifestyle-related products Semiconductors AV/IT 72.0 The Sound Company business domain 322.0 FY2007.3 (estimated) 360.0 Musical instruments FY2010.3 45 YGP2010 Operating Income Targets Operating Income 45.0 (Billions of yen) 2.5 3.0 5.0 26.0 4.5 Others Lifestyle-related products Semiconductors AV/IT 1.9 1.0 2.1 1.5 The Sound Company business domain 30.0 21.0 - 1.5 FY2007.3 (estimated) Diversification business domain Musical instruments 0 Recreation Diversification business domain FY2010.3 46 YGP2010 Capital Expenditure Targets Capital Expenditure (Billions of yen) 74.0 71.0 13.6 16.3 13.1＊ 3.8 ＊ Including ¥4.6 billion for 0.18μ process development/ responding to increased production 37.8 3-year YSD50 (estimated) 9.1 6.2 Diversification business domain Semiconductors AV/IT The Sound Company business domain Major investment 45.1 Musical instruments (Billions of yen) Piano production facilities/molds Expansion of Hangzhou plant Construction of new Ginza store Semiconductor production-related 5.6 0.8 7.0 3.3 3-year YGP2010 47 In this report, the figures forecast for the Company’s future performance have been calculated on the basis of information currently available to Yamaha and the Yamaha Group. Forecasts are, therefore, subject to risks and uncertainties. Accordingly, actual performance may differ greatly from our predictions depending on changes in our operating and economic conditions, demand trends, and the value of key currencies, such as the U.S. dollar and the euro.