Analyst and Investor Briefing on the Third Quarter of the Fiscal Year Ending March 31, 2005 February 10, 2005 YAMAHA CORPORATION Overview of Performance in the Third Quater T In 3Q, sales of musical instruments and AV/IT products fell below the target levels, and overall sales were down about 4% from the November 2, 2004, projections announced along with the release of the interim results. Boosted by "STAGEA“ ElectoneTM effects, 3Q musical instrument sales were higher year on year, but a sizeable decline in semiconductors caused an overall decline of about 3%. T Except for recreation, all segments increased operating income to above previous projections. Overall income were up from the previous projections, but income declined substantially year on year. T In the first three quarters (Apr. 1 to Dec. 31), sales and income of musical instruments and AV/IT products rose year on year. However, other segments showed lower sales and income. Especially large were those of semiconductors, lifestyle-related products, and recreation. T Inventories at the end of the period were ¥8.4 billion over the projection and rose ¥6.0 billion year on year because of higher stocks in the musical instruments and AV/IT business. T Actual interest-bearing debt amounted to ¥22 billion at the end of the period. Performance in the Third Quarter of FY2005 ¾ ¾ ¾ Net sales and income were below the same period of the previous fiscal year. Net income increased due to gain on a reimbursement for the payment of the prior-year obligations associated with the substitutional portion of the employee welfare pension fund. A decrease in sales and an increase in income compared with November 2 projections were recorded. Billions of Yen) FY2005 (3Q) Change from Previous Previous Projections Projections FY2004 (3Q) FY2005 (3Q) Change from FY2004(3Q) 149.1 144.9 (2.8)% 150.9 (4.0)% Operating Income 18.7 13.9 (25.7)% 12.2 +13.9 % Recurring Profit 21.5 16.4 (23.7)% 14.4 +13.9 % Net Income 19.5 16.4 +30.3% 23.6 +7.6 % Net Sales Equity Method Income 4.0 Currency Exchange Rate Net Sales Operating Income US$ EUR US$ EUR 3.5 3.7 106 137 107 134 110 127 110 127 (Yen) 109 129 110 130 Net Sales by Business Segment in the Third Quarter of FY2005 149.1 144.9 -2.8% 9.9 -13.2 9.9 22.1 16.5 -25.3 16.5 12.0 12.0 0 12.0 Recreation & Others 11.4 Electronic Equipment and Metal Products Lifestyle-Related Products AV/IT Musical Instruments 150.9 144.6 -3.0% 9.7 16.9 11.7 (Billions of Yen) 143.7 -4.8% 9.9 +2.1 16.5 -2.4 12.0 +2.6 24.7 -7.1 80.6 -6.3 26.6 24.8 25.1 +1.2 25.0 +0.8 78.7 81.4 +3.4 81.2 +3.2 86.0 Figures in parentheses represent changes from the Nov. 2 projections Figures in parentheses represent changes from same period of the previous year FY2004 (3Q) FY2005 (3Q) FY2005 (3Q) FY2005 (3Q) FY2005 (3Q) After translation adjustment = ¥0.3 bn. (Nov. 2 projections) After translation adjustment = ¥1.2 bn. Compared with Same Period of the Previous Year Compared with the Nov. 2 Projections Operating Income/Loss by Business Segment in the Third Quarter of FY2005 Billions of Yen) FY2004 FY2005 3Q) (3Q) Musical Instruments AV/IT Lifestyle-Related Products Electronic Equipment and Metal Products Recreation Others TOTAL 5.5 7.4 3.2 2.4 0.3 0.6 9.6 4.6 (0.3) (0.8) 0.1 0.1 18.7 13.9 Currency Actual Exchange Increase/ Impact (Decrease) Nov. 2 Projections +1.9 +0.2 + 1.7 (0.8) +0.1 (0.9) (0.3) (0.3) (5.0) (5.0) (0.5) (0.5) 0.0 0.0 (4.8) +0.3 (5.1) 6.7 2.1 0.2 3.8 (0.5) (0.1) 12.2 Increase/ (Decrease) Represents an increase of ¥1.7 billion compared with Nov. 2 projections. In 3Q, changes in foreign currency rates made a positive contribution of ¥0.9 billion (¥0.5 billion for musical instruments and ¥0.4 billion for AV/IT.) Therefore on an actual basis, this represents an increase in operating income of ¥0.8 billion compared with the previous projections. Forecast for Business Performance in FY 2005 (Full Year) ¾ ¾ Exchange rates for 4Q are set at ¥110/USD and ¥134/euro (previously ¥127). Full-year projections are for lower sales and income than previous projections. Billions of Yen) 1Q to 3Q Actual Net Sales Operating Income Recurring Profit Net Income 413.5 Operating Income FY2005 New Projections FY2005 Previous Projections 127.5 541.0 546.5 539.5 FY2004 Actual Change from Previous Projections Change from FY2004 (1.0)% +0.3% 36.0 38.0 (9.2%) (2.1) 45.1 (6.7%) (7.0%) (8.4%) (5.3)% (20.2)% 44.7 41.0 (7.6%) 42.5 51.0 (10.8%) (3.7) (7.8%) (9.5%) (3.5) (19.6)% 19.3 0.2 19.5 19.5 43.5 (3.6%) (3.6%) (8.1%) 0 (55.2)% 109 135 109 134 110 130 110 129 38.1 (4.7%) Currency Exchange Rate Net Sales 4Q Projections US$ EUR US$ EUR 108 135 109 133 (Yen) 110 134 110 134 113 133 114 129 Forecast for Net Sales by Business Segment in FY2005 (Full Year) (Billions of Yen) 539.5 541.0 +0.3% 543.7 Recreation & Others 46.2 43.0 -6.9 Electronic Equipment and Metal Products 76.9 70.0 Lifestyle-Related Products 44.8 AV/IT Musical Instruments 546.5 538.5 43.0 42.5 43.0 +1.2 -9.0 70.0 72.0 70.0 -2.8 43.0 -4.0 43.0 42.0 43.0 +2.4 78.3 82.0 +4.7 82.5 +5.4 83.5 81.3 -2.6 293.4 303.0 +3.3 305.2 +4.0 306.5 301.2 -1.7 +0.8% Figures in parentheses represent changes from the Nov. 2 projections Figures in parentheses represent changes from the previous year FY2004 (3Q) -1.5% FY2005 FY2005 FY2005 FY2005 (New projection) After translation adjustment = ¥(2.7) bn. (Nov. 2 projections) (New Projections) After translation adjustment = ¥2.5 bn. Compared with the Previous Fiscal Year Compared with the Nov. 2 Projections Forecast for Operating Income/Loss by Business Segment in Fiscal 2005 (Full Year) (Billions of Yen) FY2004 Musical Instruments AV/IT Lifestyle-Related Products Electronic Equipment and Metal Products Recreation Others TOTAL FY2005 Increase/ (New projections) (Decrease) Currency Actual Exchange Increase/ Impact (Decrease) 10.5 14.0 +3.5 +0.3 +3.2 4.4 4.5 +0.1 +1.2 (1.1) 1.5 (0.5) (2.0) (2.0) (10.0) 30.0 20.0 (10.0) (1.1) (2.0) (0.9) (0.9) +0.2 (0.2) 0.0 +0.2 45.1 36.0 (9.1) +1.5 (10.6) Nov. 2 Projections 15.5 4.5 (0.5) 20.0 (1.5) 0.0 38.0 Represents a decline of ¥2.0 billion compared with the previous projections issued on Nov 2, 2004. Changes in foreign currency rates made a positive contribution of ¥1.5 billion (¥1.0 billion for musical instruments and ¥0.5 billion for AV/IT.) Therefore on an actual basis, this represents a decline in operating income of ¥3.5 billion compared to projections. Musical Instruments Propriety Policies for 4Q 3Q Overview z In 3Q, higher sales and income from the same period of previous year z Actual sales increased 3.2% compared with the same period of previous year. (Down by 6.3% from previous projections) z U.S. sales were up year on year, driven by Disklavier “Mark IV” z and portable keyboards. European sales were flat. z Domestically, ElectoneTM sales jumped, but pianos continued to decline. Overall sales increased slightly compared with the same period of previous year. z Sales of new products (Disklavier, CVP and digital mixers) were strong. z Inventories at the end of 3Q exceeded the level for the same period of the previous year and the previous projections. z 4Q sales expected higher than the previous projections and year on year, due to sales expansion of Disklavier “Mark IV” and new CVP mainly in the U.S. market. z Operating income will be down from the previous projection due to higher TVCM advertising expenses to stimulate domestic demand and to production cutbacks. z Domestically, emphasize on conducting the spring student recruiting campaign (target: 103% year on year) and maintaining ElectoneTM effect in the coming years z Reduce inventories by cutting production, centering on pianos and portable keyboards (Billions of Yen) 78.7 Music Schools, etc. 81.4 22.6 23.9 (Billions of Yen) 86.0 65.9 23.7 22.4 70.4 69.3 22.4 22.1 48.0 47.2 Net Sales YAMAHA Musical Instruments 58.8 54.8 5.5 FY2004 (3Q) 7.4 FY2005 (3Q) 62.3 6.7 FY2005 (Nov. 2 projections) 43.5 Operating Income (4.7) FY2004 (4Q) (3.3) (1.1) FY2005 (4Q; New projections) FY2005 (Nov. 2 projections) AV/IT Propriety Policies for 4Q 3Q Overview z In 3Q, increase in sales but a decline in income compared with the same period of the previous year. z Actual sales of the AV/IT business were up slightly year on year. (Down 7.1% from previous projections) z North American sales continues strong in AV. Sales in Japan and Europe were slightly weak. Sales of routers were nearly in line with the target. z Operating income down year on year, due to price declines amid the stiffening competition. z Inventories at the end of the period exceeded those of the previous fiscal year and were above previous projections. z 4Q net sales will be in line with previous projections. z Most important theme is getting new product YSP-1 (Yamaha Sound Projector) on the right track z Smooth market rollout of new products: 9 Mid/high grade AV receivers, low-priced home theater system products, routers and others (26 new product models) z Strengthen sales network in China, Korea, and other Asia markets z Strict inventory reduction (Billions of Yen) 24.8 Routers 1.7 25.1 1.7 AV 23.4 23.1 3.2 FY2004 (3Q) 2.4 FY2005 (3Q) (Billions of Yen) 26.6 1.6 25.0 2.1 FY2005 (Nov.2 projections) 19.5 20.1 20.1 1.9 2.4 2.7 17.6 17.7 17.4 Net Sales Operating Income (0.2) FY2004 (4Q) (0.3) FY2005 (4Q; New projections) 0 FY2005 (Nov. 2 projections) Lifestyle-Related Products Propriety Policies for 4Q 3Q Overview z In 3Q, sales and income were up from previous projections. z Sales increased due to the success of new kitchen products launched in October and revised price policy for bathroom products. z Kitchen products marked a recovery in market share through higher sales of sinks made by marble. z Recovery in wholesale marketing routes z 4Q sales target ¥9.8 billion, above the same period of the previous year and previous projections. z Plan sales expansion based on concentration and specialization in bathrooms with mist functions and sinks made by marble z Narrow down details of Lifestyle-related products structural reform and implement reforms in and after April (Billions of Yen) Others System Kitchens 12.0 12.0 11.7 1.9 1.9 1.8 4.9 4.9 (Billions of Yen) 4.8 9.6 9.8 1.4 1.3 3.7 3.9 4.5 4.6 9.1 1.3 3.8 Net Sales Bathrooms 5.2 0.6 FY2004 (3Q) 5.2 0.3 FY2005 (3Q) 5.1 0.2 FY2005 (Nov.2 projections) Operating Income (0.2) FY2004 (4Q) (0.7) FY2005 (4Q; New projections) 4.0 (0.6) FY2005 (Nov. 2 projections) Essentials of Lifestyle-related Products Segment Structural Reform T Business selection and concentration z Concentrate on bathrooms and system kitchens z Staged withdrawal from unprofitable construction materials/doors business (in two years, for completion by the end of March 2007) z Use the space created by business withdrawal for added value measures of internal production of synthetic component materials T Establish a low-cost business model by unifying production, sales, technology and constructions Develop a low cost base model Manufacturing cost-down specification model, a model for easily constructed specifications, and standardizing specifications for related equipment Cost reductions through a seamless structure from distribution to construction Switch from shipments of some completed products to shipments of components and materials, establish a proprietary construction systems T Wholesale sales improvement z Marketing shift from push to pull and utilizing showrooms z Showroom repositioning, renovation, new construction, function reinforcement T Convert to a structure of optimum necessary personnel for the business structure (personnel reallocation, change of job classification) Put the plan into reality as soon as details are decided Electronic Equipment and Metal Products Propriety Policies for 4Q 3Q Overview z Operating income for 3Q halved year on year, due to large falloff in semiconductor sales. z Semiconductor sales and profit decreased year on year due to inventory cutbacks in LSI sound chips for mobile phones and lower unit selling prices. z Electronic metal products continue to undergo adjustment due to the deceleration in digital home appliances. z Previous projections for sales and income have been adjusted downward in view of expected market conditions. z Will continue inventory cutbacks of LSI sound chips for mobile phones and decline of unit price. To respond to customer needs, plan to expand the lineup of LSI sound chips to cope with source diversified function and Chaku-utaTM(reproduction of brief portions of CDs using compressed music data). z Expect the recovery of electronic metals market in the latter half of 4Q. Strengthen cost competitiveness and sales promotion of new products in cooperation with Olin Metal Corporation. 22.1 Electronic Metals (Billions of Yen) 2.9 (Billions of Yen) 16.5 16.9 18.4 2.9 3.1 3.4 16.7 15.1 2.9 2.9 Semiconductors Net Sales 19.2 13.8 13.6 15.0 9.6 4.6 FY2004 (3Q) 13.8 12.2 FY2005 (3Q) 3.8 FY2005 (Nov.2 projections) Operating Income 6.2 FY2004 (4Q) 2.2 3.0 FY2005 (4Q; New projections) FY2005 (Nov. 2 projections) Recreation Propriety Policies for 4Q 3Q Overview z In 3Q, sales and income were below the previous year and under previous projections. z Number of customers decreased. Due to some facilities’ closure for repairs, typhoons, low snowfall, and other unsuitable weather, sales were far down year on year. Losses in the period increased. z 4Q sales will be slightly down from previous projections but profit/loss targets at breakeven. z Will continue efforts to improve income through measures to attract more customers and substantially increase operating efficiency. z Reach the target for drawing customers to “Kiroro” during the ski season z Boost sales by increases of guest rooms in "Haimurubushi“ (February) z Develop marketing plans for opening of the Chubu International Airport (Billions of Yen) (Billions of Yen) 4.7 Net Sales 4.0 4.4 5.1 Operating Income (0.3) FY2004 (3Q) (0.8) FY2005 (3Q) (0.5) FY2005 (Nov.2 projections) (0.3) FY2004 (4Q) 5.7 5.6 0 FY2005 (4Q; New projections) 0.2 FY2005 (Nov. 2 projections) Others Propriety Policies for 4Q 3Q Overview z In 3Q, this segment as a whole maintained profitability. z FA business activities reported a strong performance. Sales of magnesium components for mobile phones were in line with previous projections. Productivity was improved. z Automobile interior wood components increased over previous projections. Sales of golf products were up, compared with the same period of previous year and previous projections. z 4Q sales target of ¥6.6 billion, up year on year and above previous projections z Issue is cultivation of new customers for Mg components for mobile phones along with improvements in productivity. (Billions of Yen) 6.7 6.1 5.8 Other Businesses of YFT Golf clubs 5.3 3.2 2.8 Automobile Interior Wood Components 2.5 0.1 FY2004 (3Q) 2.8 0.1 FY2005 (3Q) 2.5 2.6 Net Sales 3.1 6.1 2.9 0.4 0.5 (Billions of Yen) 6.6 0.4 2.3 0.9 Operating Income 2.6 (0.1) FY2005 (Nov.2 projections) 1.0 0.6 (0.8) FY2004 (4Q) 2.9 2.6 0 FY2005 (4Q; New projections) 0.2 FY2005 (Nov. 2 projections) Non-Operating Income /Extraordinary Income (Loss) for the Third Quarter FY2004 (Q3) FY2005 (Q3) FY2005(Q3) (Nov. 2 projections) Billions of Yen) Non-Operating Income 4.0 (0.3) (0.9) + 2.8 3.4 (0.2) (0.7) + 2.5 3.7 (0.4) (1.1) + 2.2 Income from (loss on) disposal of fixed assets Other (0.1) (0.1) (0.1) 19.7 (0.1) 19.9 Total (0.2) Equity method income Net financial income (loss) Other Total Extraordinary Income(Loss) Welfare Pension Fundrelated Gains: 19.8 +19.6 +19.8 10.6 0.0 10.6 10.6 0.0 10.6 Corporate Income Tax and Other Expenses Corporate income tax, etc. Minority interests in consolidated subsidiaries Total 1.6 0.2 1.8 Welfare Pension Fund-related Gains: 19.7 Non-Operating Income /Extraordinary Income (Loss) for Fiscal 2005 (Full Year) FY2004 FY2005 FY2005 (New projections) (Nov. 2 projections) (Billions of Yen) Non-Operating Income Equity method income Net financial income (loss) Other Total 10.4 (1.0) (3.5) + 5.9 9.3 (0.5) (4.3) + 4.5 9.1 (0.4) (3.7) + 5.0 z Welfare Pension Extraordinary Income(Loss) Fund-related Gains: 19.8 z Profit on Sales of Investment Securities: 6.7 z Asset Impairment Loss: (32.5) z Welfare (0.8) (7.7) Income from (loss on) disposal of fixed assets Other (2.3) (1.2) (0.8) (7.2) Total (3.5) (8.0) (8.5) 13.1 0.4 13.5 14.1 0.4 14.5 Corporate Income Tax and Other Expenses Corporate income tax, etc. Minority interests in consolidated subsidiaries Total 3.5 0.5 4.0 Pension Fundrelated Gains: 19.7 z Gain on Sales of Assets: 5.2 z Asset Impairment Loss: (32.5) Inventories ¾Inventories at the end of 3Q were up year on year and above previous projections. ¾Including production cuts, compress inventories to previous-year levels by year end (Billions of Yen) At the end of 3Q 76.8 Goods in Process/ Materials Other Products AV/IT Products Musical Instruments 25.6 At the end of the year 82.8 74.4 72.1 73.7 25.2 25.0 25.1 3.2 7.7 1.4 8.2 2.1 8.3 1.8 6.7 38.3 37.5 38.2 36.3 FY2005 (Nov.2 projections) FY2004 FY2005 (New projections) FY2005 (Nov.2 projections) 69.5 27.6 1.9 8.4 1.1 10.7 40.9 43.4 FY2004 (3Q) FY2005 (3Q) 24.7 Interest-Bearing Liabilities (Actual Balance) （Billions of Yen） ） Free Cash Flows 37.7 24.2 1.8 FY2004 1H FY2004 2H (2.4) 2.6 FY2005 1H FY2005 3Q 23.2 22.0 FY2005 4Q (New projections) Interest-Bearing Liabilities 46.7 Convertible bonds Long- and shortterm borrowings, less cash and deposits Balance of resort security deposits (Not included in above) 243 16.8 224 168 232 220 Sept./03 Mar./04 Sept./04 Dec./04 Mar./05 (New projection） ） 36.1 30.8 29.5 29.2 28.7 0 Capital Expenditure/Depreciation/ R&D Expenses Capital Expenditure/Depreciation Billions of Yen) Others Electronic Equipment and Metal Products Musical Instruments/ AV/IT Products R&D Expenditures 16.9 3.0 3.3 10.6 17.6 5.0 21.2 4.9 FY2003 Billions of 22.4 Yen) 5.3 19.8 4.6 19.8 5.4 5.8 5.3 5.7 17.5 5.0 4.4 2.8 9.8 24.1 24.0 11.9 14.2 13.3 9.1 4.4 4.3 3.4 9.7 FY2004 FY2005 (New projection) 23.0 2.2 9.7 FY2005 (Previous projection) 22.7 2.1 Others 2.2 22.5 2.2 Electronic Equipment and Metal Products 3.2 3.4 4.4 4.1 Musical Instruments/ AV/IT Products 17.0 16.9 16.4 16.5 FY2003 FY2004 FY2005 (New projection) FY2005 (Previous projection) Balance Sheet Summary (Billions of Yen) At the end of 3Q Cash and Bank Deposits Accounts and Notes Receivable Inventories Other Current Assets Fixed Assets Total Assets Accounts and Notes Payable Short-and Long-Term Borrowings Convertible Bonds Other Liabilities* Shareholders’ Equity Total Liabilities and Shareholders’ Equity Dec. 03 46.0 100.1 76.8 19.1 301.5 543.5 40.0 62.6 24.3 156.8 259.8 543.5 Dec. 04 42.8 89.3 82.8 25.4 280.3 5206 40.7 64.8 0 137.9 277.2 520.6 *Other liabilities includes minority interests. Change (3.2) (10.8) 6.0 6.3 (21.2) (22.9) 0.7 2.2 (24.3) (18.9) 17.4 (22.9) At the end of fiscal year Mar. 04 32.1 78.7 72.1 18.8 307.0 508.7 39.9 48.9 0 160.2 259.7 508.7 Mar. 05 44.4 73.0 73.7 26.3 285.2 502.6 38.9 43.2 0 139.2 281.3 502.6 Change 12.3 (5.7) 1.6 7.5 (21.8) (6.1) (1.0) (5.7) 0 (21.0) 21.6 (6.1) $S SH QG L[ YAMAHA Musical Instrument Sales in the Japanese Market The piano market continued its downtrend, while the “STAGEA” Electone TM maintained strong sales (about 23,000 units shipped since rollout, of which about 20,000 shipped in this term up to end-December). This product uses the latest sound sources and is portable. 150 Billions of Yen) *Numbers in parentheses refer to the previous fiscal year/period 107.6 107.2 (100%) 142.8 104.0 (97%) 139.4 134.4 (98%) (96%) 140.1 (104%) 107.6 Music schools, etc. (103%) 100 50 3Q 33.5 33.9 2Q 32.0 33.9 59.2 1Q 38.5 FY2002 FY2003 FY2004 1Q to 3Q 39.8 FY2005 FY2002 Yamaha musical instruments 51.7 56.4 (94%) (92%) (109%) FY2003 FY2004 FY2005 (New Projection) 55.9 Full Year YAMAHA Musical Instrument Sales in the U.S. Market Christmas season shipments were strong for Disklavier “Mark IV”, while electronic pianos were slightly weak. But portable keyboards trended well, centering on volume retailers. Wholesale Amount Millions of U.S. Dollars) 500 369 400 300 200 532 357 3Q (103%) 383 501 470 (106%) 553 (104%) (107%) 399 (104%) (104%) 2Q FY2002 FY2003 FY2004 FY2005 100 1Q 0 1Q to 3Q FY2002 FY2003 FY2004 Full Year FY2005 (New projection) YAMAHA Musical Instrument Sales in the German Market General retailing trended strongly, in particular the overall electronic piano market. Low priced portable keyboard models had difficulties, while special offers maintained sales of wind instruments. 194 Wholesale Amount Millions of EURO) 200 153 190 155 150 (101%) (97%) 150 (102%) 188 (97%) 182 (97%) 143 (95%) 3Q 61 59 56 2Q 47 51 51 44 1Q 45 45 43 43 FY2002 FY2003 FY2004 FY2005 56 100 50 0 1Q to 3Q FY2002 FY2003 FY2004 Full Year FY2005 (New projection) YAMAHA Musical Instrument Sales in the U.K. Market Although Christmas sale retailing fell short of expectations, sales trended strongly for grand pianos, electronic pianos and portable keyboards. Wind instruments were weak and special offers are planned. 80 Wholesale Amount Millions of ) 60 40 20 0 50 51 (102%) 3Q 21 21 23 22 2Q 16 18 17 18 1Q 11 11 11 12 FY2004 FY2005 1Q to 3Q FY2002 FY2003 (103%) (100%) FY2004 FY2005 (New projection) 52 (104%) FY2003 (102%) 65 (101%) 48 FY2002 63 62 65 Full Year Scale of Global Market for Home Theater Products (Home theater systems + AV amplifiers/receivers) <AV amplifiers/receivers> <Home theater systems > The growth rate becomes duller, but annual growth in the 10% range is expected in 2005. North America:Sales growth of the HTiB type and DVDDVD-mounted models will continue. Overall sales is expected to grow about 10%. Europe:High growth close to 20%, centering on DVDDVD-mounted models Japan: Home theater market is week. Growth foreseen for HTiB type in 2005. Overall markets continue to shrink. North America: Downtrend of 10% annually Europe/Japan: Decline of around 5% Growth in China and other Asian Markets 11.55 10.22 Others: Growth in China and other Asian Markets Others Japan 8.35 (Million Units) Europe 5.70 4.39 3.43 3.51 3.25 North America FY2001 FY2002 FY2003 FY2004 FY2005 (projection) 3.05 2.97 Others Japan Europe North America FY2001 FY2002 FY2003 Calendar year basis FY2004 FY2005 (projection) YAMAHA’s AV Amplifier Market Share Japan AV amplifiers Home theater systems: Share of Total Sales Amount GfKJ) 20% Share of Total Sales Amount GfKJ) 40% 30% 10% 14 11 10 14 ‘03 ’04 20% 10% ‘01 ‘02 ‘03 ’04 0% 0% ‘01 ‘02 U.S. AV receivers Share of Total Sales Amount INTELECT) Home theater systems: 10% 40% Share of Total Sales Amount INTELECT) 30% 20% 5% 7 5 6 8 10% 25 24 ‘01 ‘02 27 34 0% 0% ‘01 ‘02 ‘03 ’04 Calendar year basis ‘03 ’04 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, our actual performance may differ greatly from our predictions depending on changes in our operating and economic environments, demand trends, and the value of key currencies, such as the U.S. dollar and the EURO.