April 6, 2007

Under the “YSD50” plan, Yamaha set goals for the final year of the plan of ¥590.0 billion for consolidated net sales, ¥50.0 billion for operating income, ¥34.0 billion for net income, and ROE of 10%. According to the outlook announced on February 7, Yamaha is expected to report performance below the plan targets with net sales of ¥542.5 billion, operating income of ¥26.0 billion, net income of ¥30.5 billion, and ROE of 9.2%. Regarding the goal of reducing interest-bearing debt effectively to zero, Yamaha attained this goal in the first year of the plan as progress was made toward improving its financial position.

In the musical instruments segment, both sales and operating income were below planned levels, but in the professional audio equipment business, where growth was anticipated, sales increased as planned. In addition, in the Chinese market, Yamaha made steady progress in strengthening its sales network, and was able to expand its market share in growing markets, mainly in Asia, and in the South Korean market, which is mature, as well. In the Japanese market, Yamaha made improvements in its stores to draw more customers and steadily strengthened its music teaching facilities, especially those for adults and music schools, located in suburban areas.
In the AV equipment segment, sales principally in Japan, Europe, and China were stagnant, and net sales and operating income were substantially below the plan’s targets. In other areas, in the semiconductor segment, the volume of sales and unit prices of LSI sound chips for mobile phones showed a larger decline than expected, and growth in other devices was below anticipated levels. On the other hand, in the recreation segment, lackluster sales performance continued, and recovery is not yet in sight. To reallocate its resources under the policy of focus and concentrating, Yamaha made the decision to sell four of its resort facilities.