ANNUAL REPORT 2003

Year ended March 31, 2003

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CONTENTS Div
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Letter to Shareholders 2 Inte

The Key Ingredient of Success 4 Da

Oct
At a Glance 8
Sta
Review of Operations 10
¥28
Musical Instruments 10
Nu
AV/IT 14 Au
Issu
Lifestyle-Related Products 16
Nu
Electronic Equipment and Metal Products 18 12,
Recreation 19
Nu
23,
Others 20

Environmental Activities 21 Nu
84
Financial Section 23
Nu
Board of Directors and Corporate Auditors 45 by
2
Worldwide Network 46
Sto
Investor Information 47
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 PROFILE
The forerunner of YAMAHA CORPORATION was founded in 1887 by

Torakusu Yamaha. On October 12, 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, and wind, string, and percussion instruments. At the same time,

the Company has grown through a broad spectrum of business activities,

including electronic devices and equipment, professional audio equipment,

and audio-visual equipment. To continue growing in the 21st century, the

YAMAHA Group will make a concerted effort to become a truly global

enterprise that fulfills its corporate mission of contributing to enriching the

quality of life of people worldwide.

Norah Jones
Norah Jones, who is under contract with Yamaha Corporation
of America in the United States, was awarded eight Grammys
at the 45th Grammy Awards.

Forward-looking statements
Statements contained in the Annual Report 2003 regarding business results for fiscal 2003 represent judgements based on currently avail-
able information. It should be noted that there is a possibility that actual results could differ significantly from those anticipated due to such
factors as exchange rate fluctuations.

ANNUAL REPORT 2003 1

Letter to
LETTER TO SHAREHOLDERS

Shareholders Performance
 Operating income and net income reached record highs.
 Net sales increased for the first time in five years, rising 4.0%. The main factor behind the
increase was growth in sales of electronic equipment, particularly mobile phone sound chips.
 An extraordinary loss on the revaluation of investment securities was recorded (¥7.7 billion).
This reflected the sharp drop in Japanese stock prices, particularly prices of bank stocks.
 An extraordinary loss was recorded due to structural reform-related expenses (¥2.3 billion).
 Inventories were reduced to close to optimal levels (down ¥4.2 billion during the year, to
¥80.1 billion at the end of fiscal 2003).
Operations
 Progress in Chinese market strategies
• Local holding company began operating on schedule in April 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 for adults established in 52 locations (goal of 100 schools in three years)
 Growth in sales of mobile phone sound chips
 Restructuring measures
• Withdrawal from CDR/RW drive business (March 31, 2003)
• Closure of Sunza Villa resort (June 30, 2003)
• Closure of Kiroro golf course (October 31, 2003)
 Comprehensive operational tie-up with Air Water Living Inc. (November 2002)
 Alliance with FANUC LTD. in the field of robots for finishing processes (December 2002)

Financial Highlights
YAMAHA CORPORATION and Consolidated Subsidiaries
At March 31, 2003 and 2002
Thousands of
Millions of Yen U.S. Dollars
2003 2002 2003
For the year:
Net sales ............................................................................................................. ¥524,763 ¥504,406 $4,365,749
Operating income................................................................................................ 32,043 11,043 266,581
Net income (loss) ................................................................................................ 17,947 (10,274) 149,309
At year-end:
Total assets ......................................................................................................... ¥512,716 ¥509,663 $4,265,524
Total shareholders’ equity................................................................................... 214,471 201,965 1,784,285
Yen U.S. Dollars
Per share data:
Net income per share .......................................................................................... ¥ 86.65 ¥ (49.75) $0.72
Shareholders’ equity per share............................................................................ 1,040.06 978.15 8.65
Dividends per share ............................................................................................ 10.00 8.00 0.08
Number of employees at year-end .................................................................. 23,563 23,020
Notes: 1. U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥120.20=U.S.$1.00, the approximate rate prevailing on
March 31, 2003.
2. Number of employees at year-end includes 153 employees of newly consolidated companies.

2 YAMAHA CORPORATION
Message from the President
In fiscal 2003, ended March 31,
2003, YAMAHA CORPORATION
posted strong sales and income despite
being faced with global economic
stagnation. Fiscal 2004 is the third
and final year of YAMAHA’s medium-
term management plan. Under the
plan, the entire YAMAHA Group has
worked hard to ensure healthy con-
solidated operating income, promote
and strengthen global operations,
and improve business ethics and
compliance.
Against a background of rising
economic uncertainty around the
globe, YAMAHA is primarily con-
cerned with securing operating income throughout Japan, and similar In this annual report, we will
and pursuing the targets set forth in committees and services will be discuss our medium-term plan for
the medium-term management plan. launched on a global basis throughout reinforcing our core businesses and
To this end, we have established the entire Group as soon as possible. the progress we have made thus far.
holding companies in Europe and At YAMAHA, we want our busi- Please take the time to read this
China and are working to achieve ness to contribute to the richness report and give YAMAHA your
growth in both of these regions. In of the world’s culture. To help gener- full support. Thank you.
particular, the Company is working ate unique products and services,
to establish a framework for growth YAMAHA is drawing on the knowl-
in the promising Chinese market. edge and creativity of its employees
YAMAHA has established a full- and striving to create a working envi-
time advisory body, called the ronment in which individuals can
“Compliance Committee,” and a spe- turn their ideas into real businesses. President and Representative
cialist organization. The Company As a result of these efforts, we have Director
has distributed compliance guides, produced a number of hit products, Shuji Ito
heightened awareness about the including our “EZ-EG: electronic
importance of adhering to the law, guitar with twelve lighted frets,” and
and provided instruction and guid- succeeded in making YAMAHA a
ance to employees at every level of more stimulating place to work.
operations. We have also launched YAMAHA’s primary strength lies in
a counseling hot line and are making its technologies and its passion born
every effort to preserve the YAMAHA of sound and music. We remain com-
brand and its traditions. In April mitted to producing innovative prod-
2003, the Compliance Committee ucts and services while maintaining
and counseling hot line will begin the value of the YAMAHA brand.
operations at Group companies

ANNUAL REPORT 2003 3

The Key Ingredient
THE KEY INGREDIENT OF SUCCESS

of Success
Focus on Core Business
YAMAHA has continued to diversify
its business operations, aware that
demand for musical instruments
market. Moreover, against a back-
ground of increasing digitization and
network connectivity, the Company is
will decline as the domestic market aiming for growth in media-related
becomes saturated. Faced with per- fields while capitalizing on synergies
sistent deflation and a business envi- among its hardware, software, and
ronment in which continuous growth content businesses.
has become difficult to achieve, In AV/IT products, to reinforce
YAMAHA is selectively allocating our number one position in the home
resources among its various business- theater market, which promises even
es to ensure survival and enhance further growth, we are exerting
the value of its brand. Under the considerable efforts to market and
medium-term management plan, develop products that draw on the
which covers the period from April strengths of our “sound” technologies.
2001 through March 2004, we have In semiconductors, focusing on its
divided our operations into three sound and network devices, YAMAHA
business groups based on common is seeking to expand its business by
characteristics—Core Businesses, enlarging its mobile phone sound chip
Lifestyle-Related and Leisure, and business, developing new applications
Electronic Parts and Materials—and for sound chips, and increasing sales
have implemented growth strategies of semiconductors for communications
for each of these groups. and amusement devices.
The Core Businesses group, cen- In these ways, YAMAHA is
tered on sound and music, includes capitalizing on the sound and music-
our musical instruments, AV/IT, and related technologies and expertise
semiconductor businesses. We believe that it has developed over many years
that the seeds of growth lie in sound to bolster the growth and earning
and music, our strongest business power of its Core Businesses.
area, and are therefore working to In the Lifestyle-Related and
cultivate new markets for this group. Leisure group, we are selectively
In musical instruments, in addition allocating resources to strengthen
to cultivating the market for adults in our operating base and increase
Japan and the fast-growing market in profitability.
China, YAMAHA is aiming for stable In the Electronic Parts and
sales growth and concentrating its Materials group, we are using the
resources with the medium-term goal technologies developed in our Core
of strengthening its professional audio Businesses group in an effort to
business for the music production achieve balanced growth.

4 YAMAHA CORPORATION
Achieving a Genuine Profit Recovery
Restoring Profitability Domestic Music Market for Adults To this end, in Sapporo, Japan, we
Under our medium-term management Birthrates are continuing to fall, have established the first “MuseClub”
plan, we set goals calling for net sales undermining demand for products facilities where members can learn
of ¥560 billion and operating income and services targeting children, a seg- and perform music. And we have
of ¥25 billion by March 31, 2004. ment that has traditionally comprised opened 52 music schools for adults,
Here, we would like to discuss the our primary market for music and bringing the total to 100 over a three-
progress we have made under the musical instruments. To cover losses year period. Furthermore, we have set
plan thus far. in this area, YAMAHA is working to up a musical instrument rental sys-
cultivate the market for adults with tem, presently encompassing 550
In musical instruments, part of the aim of reinvigorating its domestic outlets, to help promote the market
our Core Businesses group, we remain musical instrument business. for adults. Finally, we are continuing
committed to targeting the market In particular, we are developing to focus on stimulating latent demand
for adults in Japan, cultivating the products and services that target among adults by developing such
Chinese market, and expanding our those in the “Beatles generation,” new concept products as the “EZ-EG:
business in the music production many of whom love music and have electronic guitar with twelve lighted
equipment market. time and money to spare. frets” and the “Sound Sketcher:
MP3 recorder.”

Yamaha Music Foundation

1. Core Businesses 2. Lifestyle-Related 3. Electronic Parts & Materials

Sound & Music & Leisure Technology Synergy
Brand Synergy
Musical Instruments

Lifestyle-Related Electronic Metals

AV & IT

Recreation Automotive Components

Semiconductors repdnagits

Golf Products Factory Automation/

Media-Related Metallic Molds

In- House Services

Yamaha Motor Co., Ltd.

ANNUAL REPORT 2003 5

 Chinese Market Music Production Market
In addition to serving as a major The market for music production equip-
manufacturing region, China com- ment has strong growth prospects,
prises a significant market of 1.3 bil- particularly in the United States and
lion people. Given the Company’s Europe, and YAMAHA has achieved
traditional strengths in the area of steady sales growth in this area by
musical instruments and the Chinese focusing its investment on digital
population’s enthusiasm for educa- mixers and synthesizers. In addition,
tion, YAMAHA has high expecta- the Company is working to expand its
tions for this market. For the past 10 business through the establishment
years, YAMAHA has been operating of a strong sales organization.
electronic keyboard schools in China
and at present has 30,000 registered We are also making strong efforts
students. Building on this success, to develop businesses in the promis-
our goal is to broaden our music ing media-related market.
education offerings in China by
exporting the music school system Media-Related Business
we have developed in Japan and Working to create new ways of enjoy-
drawing on the expertise we have ing sound and music in the broadband
acquired providing music education age, we are promoting a comprehen-
under that system. sive media strategy that draws on syn-
To integrate our sales and market- ergies among our hardware, software,
ing activities in China, we established and content businesses.
Yamaha Music & Electronics (China) In fiscal 2000, we launched “Music
Co., Ltd., in Beijing in August 2002, Front,” which facilitates the discovery
and that company began full-scale and promotion of new artists via the
operations in April 2003. Our audio- Internet and has already enabled four
visual plant in Suzhou came on line groups to make performance debuts.
in March 2003. A piano and guitar In the three full years since the launch
factory in Hangzhou is scheduled to of our ringing melody distribution
start up next year. These moves have service, the number of subscribers
been undertaken in line with our goal has reached 3.5 million in Japan.
of complementing our three preexist- During the year, we added two
ing Chinese factories and sales units additional services to our ringing
with a comprehensive system that can melody distribution site, “guitar-hatsu”
handle everything from manufactur- (in May 2002) and “piano-hatsu” (in
ing to sales, thereby facilitating the March 2003). Also, in March 2003,
greater market penetration of the we launched a musical score printing
YAMAHA brand. service that allows users to purchase
at convenience stores actual printed
scores for ringing melodies ordered

6 YAMAHA CORPORATION
through the aforementioned distribu- chips contributed substantially to enabling a thorough reassessment
tion service. our business performance during of human resources—which, in turn,
In addition, in September 2002 the year under review. This suggests will reduce fixed expenses related
we established MUSIC E-NET Inc., that YAMAHA’s strengths lie not to employee remuneration—and a
an Internet sales company that pro- only in sound chips but also in the reexamination of each resort’s busi-
vides downloadable data and made- provision of software (music data ness operations. Moreover, YAMAHA
to-order musical instruments. formats designed for mobile phones) has decided to close its struggling
and content (distribution business). Sunza Villa resort in June 2003 and
In our AV/IT and semiconductor At present, most of these shipments will terminate golf course operations
businesses, we are striving to increase are going to Japan, South Korea, at the Kiroro ski resort at the end of
growth and profitability. and China; however, we expect the October 2003.
market for mobile phone polyphony
AV/IT sound chips to grow in the United In lifestyle-related products, we
In AV/IT, with the global market for States and Europe. YAMAHA will are aiming to improve profits by tying
home theaters expanding, YAMAHA continue to focus on the development up with other companies to cut manu-
is providing total solutions, including of sound and network-related devices. facturing costs.
visual products, and investing in
competitive products that draw on the Under the medium-term manage- Electronic Parts and
strengths of the Company’s technolo- ment plan, one of our major goals is Materials Group
gies to enable further sales growth. to improve the profitability of busi- In the Electronic Parts and Materials
Furthermore, we are strengthening nesses in the Lifestyle-Related and group, in addition to aiming for
our capacity to provide home music Leisure group and the Electronic steady profits in the strong growth
network systems, which are expected Parts and Materials group. To this potential magnesium mold business,
to become much more common in end, in addition to bolstering the we are working to achieve stable
the future. profitability of each viable business, earnings in automobile interior com-
In March 2003, responding to we are shutting down businesses with ponents and fittings by attracting new
falling prices overall, the prolifera- poor prospects for recovery. customers and reducing manufactur-
tion of DVDs, and the fact that CDR- ing costs. In line with this policy, we
RW drives are now standard built-in Lifestyle-Related and have decided to halt the production
features in most personal computers Leisure Group and sale of invar materials for shadow
and thus less profitable, YAMAHA In the Lifestyle-Related and Leisure masks used in cathode-ray tubes,
decided to close down its CDR-RW group, YAMAHA is selectively a segment of our electronic metals
drive business. The Company has allocating resources to improve business for which no profit recovery
made no forecast regarding the profitability. In our recreation busi- is expected.
contribution such operations would ness, we are aiming for profitability
have made to earnings if this decision by establishing a management sub- In these ways, YAMAHA is steadily
had not been reached. sidiary for each YAMAHA resort working to achieve the goals set
facility. In addition to clarifying forth in the Company’s medium-term
Semiconductors management responsibilities at management plan.
In semiconductors, a sharp increase each resort facility, this structure
in shipments of mobile phone sound is designed to improve earnings by

ANNUAL REPORT 2003 7

At a Glance
AT A GLANCE

Segment Business Areas Sales

Musical Instruments YAMAHA, which began as a piano manufacturer, Sales (Billions of Yen)
has secured an unassailable market position as the ’99
number one maker of musical instruments in the ’00
world. In recent years, the Company has made ’01
efforts to enhance its line of silent musical instru- ’02
ments and other products. The Company has a ’03
global network of music schools that helps create 0 100 200 300 400 500
Musical Instruments AV/IT
demand for musical instruments.

AV/IT YAMAHA’s home theaters draw on the Company’s Sales (Billions of Yen)
original cinema DSP technology to provide extraordi- ’99
narily realistic sound quality comparable to that of ’00
a movie theater. Recently, YAMAHA has begun ’01
employing visual technologies to provide total audio- ’02
visual solutions. ’03
0 50 100 150 200 250

Lifestyle-Related Drawing on existing wood processing and FRP Sales (Billions of Yen)
Products technologies developed for the production of musi- ’99
cal instruments and sporting goods, the Lifestyle- ’00
Related Products business is providing comfortable, ’01
luxurious living spaces through the sale of system ’02
bathrooms, system kitchens, and other residential ’03
facilities and equipment. 0 20 40 60 80 100

Electronic Equipment Initially, YAMAHA manufactured semiconductors Sales (Billions of Yen)

and Metal Products for use in its digital musical instruments. At present, ’99
the Company is developing semiconductors for use ’00
in sound chips and networks. Also, the Company ’01
manufactures electronic metal materials, such as LSI ’02
lead frame materials and mobile phone parts. ’03
0 10 20 30 40 50 60 70 80

Recreation Customers can enjoy themselves at the Company’s Sales (Billions of Yen)
six resorts, which are located throughout Japan ’99
and include ski, golf, and marine recreation facilities ’00
as well as hotels. ’01
’02
’03
0 10 20 30 40 50

Others In this segment we employ a range of technologies Sales (Billions of Yen)

developed in our various operations to produce ’99
automobile interior components and fittings, magne- ’00
sium parts for information terminals, FA products ’01
and metallic molds, and golf products. ’02
’03
0 10 20 30 40 50

8 YAMAHA CORPORATION
 Operating Income (Loss) Major Products & Services

Operating Income (Billions of Yen) •Pianos •Percussion instruments

’99 (upright pianos, grand pianos, etc.) (drums, vibraphones, etc.)
’00 •Digital musical instruments •Educational musical instruments
(Clavinovas™, Electones™, portable (recorders, Pianicas™, etc.)
’01
keyboards, synthesizers) •Professional audio equipment
’02 •Wind instruments (digital mixers, powered speakers)
’03 (trumpets, flutes, saxophones, etc.) •Soundproof rooms: Avitecs™
0 5 10 15 20 25 30 35 •String instruments •Music schools, English schools
Musical Instruments AV/IT
(guitars, violins) •Ringing melody distribution service

Operating Income (Billions of Yen) •Audio products

’99 (AV amplifiers and receivers, speaker
’00 systems, on-line karaoke, etc.)
’01 •Visual products
’02 (digital cinema projectors)
’03 •Routers
0.0 2.5 5.0 7.5 10.0 12.5 15.0 17.5

Operating Income (Loss) (Billions of Yen) •System bathrooms, system kitchens,

’99 washstands, parts for housing facili-
’00 ties, wooden doors
’01
’02
’03
-3 -2 -1 0 1 2

Operating Income (Loss) (Billions of Yen) •Semiconductors

’99 (sound chips, etc.)
’00 •Specialty metals
’01 (lead frame materials, mobile
’02 phone parts)
’03
-30 -20 -10 0 10 20

Operating Loss (Billions of Yen) •Sightseeing facilities and •Golf courses

’99 accommodation facilities (Katsuragi Golf Club,
’00 (Tsumagoi, Nemunosato, Nemunosato Golf Club)
’01 Haimurubushi, Kiroro,
’02 Toba-Kokusai, Kitanomaru)
’03 •Ski resort
-3 -2 -1 0 1 2 (Kiroro ski resort)

Operating Income (Loss) (Billions of Yen) •Golf products

’99 •Automobile interior components
’00 and fittings
’01 •Industrial robots
’02 •Molds and magnesium parts
’03
-3 -2 -1 0 1 2

ANNUAL REPORT 2003 9

Review of
REVIEW OF OPERATIONS

Operations In the Musical Instruments Segment,

sales amounted to ¥292.6 billion, a
2.0% increase compared with the
previous term, while operating
income totaled ¥9.8 billion, a
Reflecting strong enthusiasm for
English-language education in Japan,
sales recorded by the English lan-
guage schools rose steadily owing to
growth in the number of students and
106.7% increase. income from the sale of homework
Despite being unable to halt the videos for students.
gradual decline in domestic sales, Sales from the ringing melody dis-
which were down from the previous tribution service were down from the
term, sales of musical instruments previous fiscal year, reflecting fierce
increased compared with the previ- domestic competition that put down-
ous term, reflecting the beneficial ward pressure on unit prices and the
effects of the strong euro and steady rate of growth in the number of new
Musical
sales in the United States and subscribers. Overseas, sales remained
Instruments Europe. insignificant, as mobile phone termi-
Piano sales decreased in Japan but nals with polyphony sound chips have
remained strong overseas. Digital yet to achieve substantial market
musical instruments, including penetration.
professional audio equipment and Operating income doubled com-
portable keyboards and synthesizers, pared with the previous term due to
saw sales increases in the United higher sales, gains on currency
States and Europe, but Electone™ exchange, and the adjustment of
sales declined in Japan, their primary inventories. At the end of the term
market. Sales of wind instruments under review, inventories had fallen
remained unchanged from the previ- to nearly optimal levels.
ous term despite faltering sales in
the United States. Sales of guitars Strategies and Forecasts
and drums were steady, especially In fiscal 2004, amid rising economic
overseas. uncertainty worldwide, YAMAHA will
Although YAMAHA increased the strive to boost growth by achieving
number of adult students by estab- steady growth in the North American
lishing the music club for adults and European markets and broadening
“MuseClub Sapporo,” intensifying its its PA business in the expanding mar-
student recruitment activities, and ket for music production equipment.
launching music schools for adults, In Asia, the Company expects to
low birthrates continued to place see substantial sales growth in South
downward pressure on the number of Korea, where it established a sub-
children enrolled in music classes, sidiary last year, and increased sales
resulting in an overall decrease in in Taiwan, where it has completed an
income from music schools. inventory adjustment. In China, which

10 YAMAHA CORPORATION
 C1ME
Limited model of our stylish
and compact grand piano
marking our 100th anniversary
of manufacturing grand pianos

TYROS
Advanced portable keyboard

with a new dimension in sound
for 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

 Musical Instruments has strong growth prospects, Yamaha In its ringing melody distribution
Music & Electronics (China) Co., service business, YAMAHA will
Ltd., a holding company established strengthen its advertising campaign
last year, has begun full-scale opera- designed to boost its share of the
tions, enabling YAMAHA to inte- Japanese market and continue advanc-
grate its Chinese manufacturing ing into the U.S. and European mar-
strategies, marketing, R&D, and kets. In its media-related businesses,
other business activities. To comple- YAMAHA will enhance its music
ment such existing manufacturing portals, strengthen its Internet busi-
facilities as Tianjin Yamaha Electronic nesses, which include e-businesses,
Musical Instruments, Inc., a portable and focus additional efforts on the
Music Schools  A children’s group
lesson at a YAMAHA music school keyboard factory; Guangzhou Yamaha- production of digital content.
Pearl River Piano Inc., a piano facto- In addition to boosting sales,
ry; and Xiaoshan Yamaha Musical YAMAHA is working to increase
Instruments Co., Ltd., a piano parts income by taking advantage of cur-
factory; the Company has decided to rency exchange gains arising from
establish Hangzhou Yamaha Musical the strong euro and reducing the
Instruments Co., Ltd., which will size of its workforce in Japan, which
begin manufacturing pianos and gui- will help reduce personnel and
Tianjin Yamaha Electronic Musical
Instruments  Production of tars in April 2004. In Japan, although fixed expenses.
portable keyboards
market conditions are expected to
remain harsh, the Company is mak-
ing strong efforts to develop value-
added products, expand the number
of music schools for adults, establish
a musical instrument rental business,
and strengthen sales activities target-
ing the market for adults.

12 YAMAHA CORPORATION
 YU50MhC  Upright piano featuring YAS-82Z  Customized alto saxo- SLG-100S  Compared with a normal
a beautifully grained wood that comple- phone with a tone that is both folk guitar, the Silent Guitar acoustically
ments home interiors highly flexible and expressive produces only 1/10th the volume of
sound (tested in-house).

CVP-209  Clavinova™ digital piano DTEXPRESS 2  Silent Session Drum Ringing Melody Distribution Service 
featuring built-in tone and rhythm with rich, expressive sound On-screen displays of mobile phones
options as well as automatic and a PC connection
accompaniment and multiple part
composition recording functions

ANNUAL REPORT 2003 13

 In fiscal 2003, sales in the AV/IT end of March 2003, recognizing
Segment amounted to ¥83.7 billion, that achieving sales growth would
a decrease of 12.1% compared with be difficult in the face of falling unit
the previous term, and operating prices, the proliferation of DVD
income totaled ¥3.2 billion, a equipment, and the increasing avail-
7.0% increase. ability of personal computers with
Driven by an expanding market, built-in CDR-RW drives.
sales of home theaters grew slightly
from the previous term. However, in Strategies and Forecasts
AV amplifiers and receivers, although In fiscal 2004, in our home theater
YAMAHA has a large share of the business, we will strive to boost sales
market, competition continues to of AV amplifiers and receivers, two
intensify, especially in the United of our strongest product lines; achieve

AV/IT States, as falling unit prices, the sales growth in line with our “strategy
increased availability of products to be number one in home theaters,”
with built-in DVDs, and other factors which calls for introducing home
continue to reshape the market. With music network systems; enhancing
these changes taking place, the visual products; and developing
Company is adapting products to inexpensive system products tailored
market needs in an effort to achieve to customer needs. In routers, we plan
growth in the market for home the- to expand sales of our competitive
aters. In CDR-RW drives, sales commercial-use products for system
decreased dramatically from the pre- integrators and SOHO.
vious term, reflecting not only a drop In China, where substantial growth
in sales volume, but also a fall in the is expected, Yamaha Electronics
price per unit sold due to fierce com- (Suzhou) Co., Ltd., launched manu-
petition. In routers, sales were con- facturing operations in March 2003
sistent with those of the previous and plans to spearhead the YAMAHA
term, thanks to the implementation Group’s penetration of the Chinese
of a new business model calling for market, thus contributing to further
products designed to accommodate growth.
the needs of corporations as well as
small offices and home offices
(SOHO).
Income increased from the previ-
ous term due to currency exchange
gains and other factors.
Due to the factors mentioned
above, YAMAHA decided to close
its CDR-RW drive business at the

14 YAMAHA CORPORATION
 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 speaker sys-

tem with multichannel capabilities
and high-quality sound

DPX-1000  Digital cinema projector

that enables high-quality home theaters
with newly developed, built-in,
high-performance optical engines
using DLP™

RT56v  All-in-one broadband router

for general household, SOHO,
and other small-scale network use

ANNUAL REPORT 2003 15

 Sales in the Lifestyle-Related
Products Segment amounted to
¥46.0 billion, a 0.7% increase com-
pared with the previous term, and
operating income totaled ¥0.5 billion,
a 55.9% decrease.
With the number of new housing
starts in decline, we made efforts to
differentiate our products from those
of our competitors and succeeded in
generating sales consistent with those
of the previous term.
Lifestyle- Income for the term fell due to

Related slow progress in trimming manufac-

turing costs, intensified competition
Products that drove down profit margins, and
other factors. In November 2002,
Yamaha Livingtec Corporation Strategies and Forecasts
reached agreement on a comprehen- With the number of housing starts
sive business tie-up with Air Water expected to decline further, we will
Living Inc., and plans are on track work to enhance the appeal of the
to boost growth and reduce costs by YAMAHA brand, drawing on our
working together in the production, technological strengths to develop
sale, distribution, and installation new materials for a differentiated line
of system bathrooms. of system kitchens and bathrooms
and lowering the breakeven point
for income by reviewing progress
made in working with Air Water
Living to reduce costs associated
with packaging materials, distribu-
tion, and procurement. In the medi-
um term, with the downward trend in
new housing starts expected to per-
sist, YAMAHA is focusing on devel-
oping products and showroom displays
for the remodeling market, which is
expected to grow steadily.

16 YAMAHA CORPORATION
 System Bathroom BUAUT J 
YAMAHA’s system bathrooms turn
an ordinary bathroom into a soothing,
yet exuberant, space.

System Kitchen DOLCE 

Transcending mere culinary function,
YAMAHA’s system kitchens make an
interior decorating statement with
unique materials, color schemes,
and designs.

Door REGARD  Real wood front

doors developed using our leading-
edge scientific data gathering and
analysis capabilities as well
as our high-precision wood processing
and coating technologies

ANNUAL REPORT 2003 17

 Sales in this segment amounted to
¥60.6 billion, a 65.3% increase com-
pared with the previous term, while
operating income totaled ¥19.3 bil-
lion, a substantial 343.1% increase.
In semiconductors, sales of mobile
phone sound chips increased dramat-
ically. In Japan, as 40-note poly-
phony sound chips have become
widespread and demand for mobile
phones is largely restricted to
Lead Frames  Lead frames for
Electronic replacement due to market satura- semiconductors

tion, growth in sales of mobile phones

Equipment was negligible compared with the the invar materials now being manu-
and Metal previous term. However, shipments factured for large-screen desktop-
to China and South Korea increased computer shadow masks and, therefore,
Products dramatically. To meet this demand, sales, although virtually unchanged
during the second half of fiscal 2003 from the previous term, were lower
YAMAHA invested in its own facili- than projected. Furthermore, we
ties and began consignment produc- decided to withdraw from our invar
tion at nonaffiliated plants, thereby materials business in July 2003,
significantly raising its supply capac- as prospects for the restoration of
ity. In addition, buoyed by favorable profitability remain dim.
sales of LSI communication chips
for ISDN devices and LSI chips for Strategies and Forecasts
Mobile Phone Sound Chip YMU 762 
These 40-note polyphony sound chips amusement devices, the segment In fiscal 2004, with sound-chip sup-
include built-in ADPCM (Adaptive
Differential Pulse Code Modulation) recorded significant increases in ply capacity in place, we expect to
sound generators that
can play back human voices and other sales and income compared with increase sales in China, where
recorded sounds.
the previous term. mobile phones are becoming more
In electronic metals, sales increased widespread. In addition, sales are
compared with the previous term, expected to grow in Europe and the
benefiting from a partial recovery in United States, where demand for
the market for semiconductors and terminals with built-in polyphony
mobile phones, which led to the sound chips is projected to increase.
increased production of spring mate- In electronic metals, as part of our
rials and materials for use in semi- efforts to increase sales and improve
conductor lead frames. However, profitability, we are increasing the
during the term under review, we production of copper lead frames and
had some quality problems with mobile phone parts.

18 YAMAHA CORPORATION
 Sales in this segment amounted to
¥20.9 billion, a 3.2% decrease com-
pared with the previous term, while
operating loss totaled ¥1.1 billion,
compared with an operating loss of
¥1.7 billion in the previous term.
YAMAHA has worked to improve
sales by creating seven management
subsidiaries, each charged with the Kiroro  Deep in the pristine wilderness
of Hokkaido, this ski resort
comprehensive management of a offers comfortable accomodations
and spa facilities.
specific resort facility.
Sales from the Katsuragi Kitanomaru golf course at the Kiroro ski resort at
resort increased dramatically as it the end of October 2003, in light of

Recreation provided accommodations for Japan’s the resort’s poor business prospects.
national soccer team during the 2002
FIFA World Cup™. In addition, Strategies and Forecasts
strong marketing efforts succeeded In fiscal 2004, given that prospects
in attracting a higher number of for a domestic economic recovery
guests to YAMAHA resorts as a remain poor, our goal is to maintain a
whole. However, the absence of a full steady volume of customers and high
economic recovery in Japan resulted quality of service, pay full attention to
in decreased segment sales, as the safety, improve the efficiency of our
number of daytime visitors fell, and operations, and implement compre-
we were unable to halt the slide in hensive cost-cutting measures to lower
returns per guest. the breakeven point for profits, there-
Haimurubushi  The emerald green
ocean of Haimurubushi in Okinawa, Although no income for the seg- by helping return the segment to
Japan’s southernmost resort area
ment was recorded during the year profitability.
under review, we did succeed in In addition, we plan to selectively
reducing net loss thanks to the imple- allocate resources based on the regu-
mentation of cost-cutting measures lar inspection of operations at each
during the previous term. resort facility.
YAMAHA has decided to close its
Sunza Villa resort at the end of June
2003, having concluded that there is
Haimurubushi  In the restaurant, you
can enjoy original cuisine made from little chance of restoring profitability
fresh, local seafood and vegetables.
and positive cash flows from operat-
ing activities. On a similar note, we
have decided to shut down the Kiroro

ANNUAL REPORT 2003 19

 Despite faltering sales of FA prod-
ucts and metallic molds as well as
automobile interior components and
fittings, sales in the Others Segment
increased 14.3%, to ¥21.0 billion,
thanks to a rise in income from the
sale of magnesium parts and golf
clubs. The segment recorded operat- Magnesium parts used in
mobile phones
ing income of ¥0.4 billion, compared
with an operating loss of ¥0.4 billion
in the previous term, thus bringing
the segment into the black.
As few of our most important

Others clients made substantial model

changes, sales of automobile interior
components and fittings decreased.
In addition, with manufacturers of
completed products demanding ever-
lower prices, our profit margin fell,
resulting in decreased income. In FA TR057AC  Tool grip
deburring equipment priced
products and metallic molds, sales to encourage rapid market
penetration. These standard
fell as companies scaled back invest- finishing process systems
for robots are the first
ments in plant and equipment. products made through our
tie-up with FANUC.
Sales of magnesium parts, mainly
for mobile phones, increased dramat-
ically. In golf clubs, sales and income
increased thanks to the introduction Strategies and Forecasts
of popular new products and cost In fiscal 2004, to boost sales and
reductions due to the outsourcing income, YAMAHA plans to cut
Hiroyuki Fujita  Contracted YAMAHA of manufacturing. costs through the implementation of
professional golfer
In December 2002, YAMAHA improved manufacturing methods for
announced its intent to enter into a automobile interior parts and fittings,
business tie-up with FANUC LTD., a business tie-up with FANUC, and
the largest manufacturer of robots for the realization of higher production
finishing processes. yields for magnesium parts used in
mobile phones and digital cameras,
of which production is expected to

InpresV  Flagship model YAMAHA

rise significantly.
golf club. Even professional golfers are
satisfied with this club’s high-quality
shape and performance.

20 YAMAHA CORPORATION
Environmental
Environmental Activities

Activities
Under the YAMAHA Global Environ-
mental Policy established in 1994,
YAMAHA identified environmental
protection as one of its most important
tasks and continues to pursue a broad
Green Procurement
To minimize the negative effects that
YAMAHA’s goods have on the envi-
ronment, there is a need to measure
and reduce the impact of the parts
3. Environment-Friendly Production
Preventing Global Warming
YAMAHA’s CO2 emissions per unit of
sales have been reduced 5.3%, to 49,276
tons (compared with fiscal 2002).
range of environmental activities. and materials procured from suppli- Protection of Ozone Layer
In the “Promise to Society” section ers. To this end, YAMAHA issued YAMAHA discontinued the use of
of its new corporate principles estab- the Green Procurement Standard specified CFCs by the end of 1993
lished in February 2001, YAMAHA Report in fiscal 2002 and continues and efforts are now under way to
reaffirmed its commitment to global to hold Green Procurement Information reduce the use of substitute CFCs.
environmental protection and the Sessions in an effort to encourage As a result of these efforts, the use
aggressive implementation of envi- cooperation between YAMAHA and of substitute CFCs in fiscal 2002 was
ronmental initiatives. its primary suppliers. 89% below the fiscal 1996 level.
Energy Conservation Waste Materials
1. ISO 14001 Certification Measures are being taken to improve Compared with fiscal 1995, we have
By acquiring ISO 14001 management- the energy efficiency of power ampli- achieved a 56% reduction in factory
system certification, the YAMAHA fiers and reduce the energy used by waste, with 72% of resources recycled,
Group has continued to work toward home theater systems when they are including as road surfacing materials,
reducing the environmental impact in standby mode. cement, ceramics, and compost.
of its business activities. Resource Conservation
In March 2003, YAMAHA had Measures are being taken to reduce 4. Social Contribution
obtained ISO 14001 certification for the amount of paint applied to The Environment Ministry has desig-
all factories belonging to affiliated acoustic guitars. nated June Environment Month, and
companies, both in Japan and abroad. In addition, YAMAHA has decreas- each year over 1,000 YAMAHA
In addition, the Company has already ed the weight of the materials used in employees team up to help clean
received certification for five of its soundproof rooms, switching from lakes in the region near the Com-
six Japanese resort facilities. particleboard to paulownia wood. pany’s head office as well as the areas
Toxic Materials surrounding each YAMAHA factory.
2. Environment-Friendly Products YAMAHA is actively working to use Moreover, YAMAHA provides
YAMAHA has developed a broad lead-free solder and has implemented educational institutions and work-
range of products—including musical a system to provide lead-free versions shops with materials that would oth-
instruments, audio equipment, elec- of LSI chips and lead frames. In erwise be discarded by its factories
tronic devices, and automobile interi- addition, we have eliminated the for use in handicrafts and art projects
or components and fittings—and use of chromium oxide in pre-paint and donates used instruments to chil-
employs a product assessment pro- processes for wind instruments. dren in countries around the world.
gram that reflects the distinctive Improved Recycling For more detailed information, please
characteristics of each product type. We are promoting recycling through refer to the YAMAHA Environmental
the elimination of grease used in Report 2002 at http://www.yamaha.
portable keyboards and are using co.jp/english/yamaha/environment2002.
fewer screws in the assembly of pdf. Printed copies are also available.
routers to reduce dismantling time.

ANNUAL REPORT 2003 21

 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.
Recorders were donated to Croatian orphanages
(2) Promote energy-saving activities and youth centers as part of donations of musical
instruments to the Kids Earth Fund.
and make effective use of
resources in the areas of R&D,
production, distribution, sales,
and service.
(3) Minimize and recycle waste prod-
ucts and simplify waste disposal
procedures at each stage of pro-
duction and distribution as well YAMAHA has been chosen for the 2003 Dow Jones Sustainability World
as during and after use. Index, a list of global corporations demonstrating excellent leadership not
(4) Strictly follow environment rules only in economic performance but also in environmental and social respon-
and regulations, encourage envi- sibility (business ethics and human rights).
ronmental protection activities, and In addition, since March 2002 YAMAHA has been included in the
ensure the well-being of employ- FTSE4Good Global Index, one of the world’s primary socially responsible
ees and citizens by practicing investment indices.
sound environmental management. As always, the Company intends to give first priority to safety and the
(5) In developing operations overseas, environment; YAMAHA will be a good corporate citizen and observe laws
make environmental protection a and work ethically, developing the economy and contributing to local and
priority through investigation and global culture.
understanding of the environmen-
tal standards of the host country.
(6) Actively distribute information,
contribute to the community, and
carry out educational activities
concerning environmental
preservation.

22 YAMAHA CORPORATION
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.......................................................... ¥524,763 ¥504,406 ¥519,104 ¥527,897 ¥563,751 ¥608,990
Cost of sales..................................................... 338,307 340,411 346,200 371,758 402,239 416,435
Gross profit...................................................... 186,456 163,994 172,904 156,140 161,511 192,556
Selling, general and administrative expenses .... 154,413 152,951 149,902 148,057 161,608 168,452
Operating income (loss) ................................... 32,043 11,043 23,001 8,082 (97) 24,103
Income (loss) before income taxes and
minority interests........................................... 22,612 (5,784) 23,491 (47,601) (6,532) 18,995
Net income (loss) ............................................. 17,947 (10,274) 13,320 (40,777) (15,879) 13,475

At year-end:
Total assets...................................................... ¥512,716 ¥509,663 ¥522,486 ¥543,088 ¥532,852 ¥544,465
Total shareholders’ equity, net......................... 214,471 201,965 196,733 221,750 214,896 231,940
Total current assets ......................................... 221,089 211,140 231,872 205,979 212,911 217,408
Total current liabilities .................................... 158,148 144,498 175,371 178,281 189,386 181,409

Yen
Amounts per share:
Net income (loss):
Primary........................................................ ¥ 86.65 ¥ (49.75) ¥ 64.50 ¥ (197.45) ¥ (76.89) ¥ 65.25
After full dilution......................................... 77.32 — 61.84 — — 62.86
Shareholders’ equity ........................................ 1,040.06 978.15 952.62 1,073.75 1,040.56 1,123.09

%
Ratios:
Current ratio .................................................... 139.8% 146.1% 132.2% 115.5% 112.4% 119.8%
Shareholders’ equity ratio ................................ 41.8 39.6 37.7 40.8 40.3 42.6
Return on assets .............................................. 3.5 (2.0) 2.5 (7.6) (2.9) 2.5
Return on equity.............................................. 8.6 (5.2) 6.4 (18.7) (7.1) 6.0
Notes: 1. Figures for net sales do not include national consumption tax.
2. Net income per share after full dilution (yen) for the fiscal years ended March 31, 2002, 2000 and 1999 is not presented because net
losses for the years then ended were recorded.

ANNUAL REPORT 2003 23

 M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S

Net Sales by Business Segment

(Billions of Yen)
INCOME ANALYSIS
’99
Net Sales
’00
’01
In fiscal 2003, net sales grew 4.0% from the previous year, to ¥524.8 billion,
’02
the first increase since fiscal 1998, when net sales reached a record ¥609.0 bil-
’03
lion. This was largely due to a sizeable increase in the sale of semiconduc-
0 100 200 300 400 500 600 700
tors, particularly sound chips for mobile phones, which grew 88.0%, to
Musical
instruments
Others Storage
heads
¥21.5 billion. Excluding currency exchange gains, semiconductor sales
and AV/IT increased 3.1%, to ¥15.8 billion.
Domestic sales amounted to ¥312.1 billion, a 7.6%, or ¥22.2 billion,
increase compared with the previous year. In addition to semiconductors,
sales of electronic metals, golf clubs, magnesium parts, and other products
increased. However, due to the decline in sales of pianos, Electones™, and
digital musical instruments, overall sales of musical instruments fell 2.0%
compared with the previous year. In addition, sales from the ringing melody
distribution service decreased, reflecting intensified competition and falter-
ing growth in the number of new subscribers to this service in Japan.
Overseas, increased musical instrument sales were offset by a drop in
Net Sales by Geographical Segment sales of CDR/RW drives, resulting in overall sales overseas of ¥212.6 bil-
(Billions of Yen) lion, a 0.8%, or ¥1.8 billion, decrease from the previous year. Overseas
’99 sales excluding currency exchange gains fell 2.9%, or ¥6.3 billion, to
’00 ¥208.1 billion. Calculated based on local currencies, sales of musical
’01 instruments, particularly digital keyboards, rose 7.0% in North America
’02 and approximately 5.0% in Europe.
’03 Sales in other regions increased only slightly despite considerable rises
0 100 200
Japan
300 400
North
500
Europe
600 700
Others
in China and South Korea. Sales of AV/IT products were lower than antici-
America
pated due to decreased sales of CDR/RW drives and intensified competi-
tion 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 improvement is
attributable to the fall in the cost of sales being countered by the increase
in sales of semiconductors, which have a high marginal profit ratio.
Depreciation expenses as a portion of cost of sales decreased ¥0.8 billion
from the previous year. In addition, personnel expenses increased only
Operating Income (Loss) and Operating Margin ¥1.9 billion, despite a ¥1.5 billion increase in expenses associated with
(Billions of Yen, %)
pension obligations, reflecting a decrease in the discount rate, from 3.5%
’99 –0.0
to 2.5%, and a fall in the burden of depreciation for differential losses on
’00 1.5
annual interest.
’01 4.4
Selling, general, and administrative (SG&A) expenses increased ¥1.5 bil-
’02 2.2
lion from the previous year, to ¥154.4 billion. This was mainly due to the
’03 6.1
aforementioned increase in expenses associated with pension obligations.
-5 0 5 10 15 20 25 30 35
Operating
income (loss)
Operating
margin
The ratio of SG&A expenses to net sales edged down 0.9 percentage point,
to 29.4%. The cost of sales and SG&A expenses associated with currency
exchange, particularly with regard to the weakness of the yen against the euro,
decreased approximately ¥4.9 billion compared with the previous year.

Operating Income and Net Income

Both operating income and net income broke records set in fiscal 1997.
Operating income amounted to ¥32.0 billion, reflecting not only higher
semiconductor sales and income, but also higher income from the sale of
musical instruments.

24 YAMAHA CORPORATION
Capital Expenditures Despite the Company recording a sizeable extraordinary loss, net income
and Depreciation (Billions of Yen) amounted to ¥17.9 billion, reflecting income from equity in earnings of
’99 36.4 unconsolidated subsidiaries and affiliates. The extraordinary loss of ¥11.6
’00 28.6 billion included a ¥7.7 billion devaluation loss on the Company’s holdings
’01 17.3 in banks and other companies and ¥2.3 billion in expenses incurred in the
’02 18.8
restructuring of the recreation and CDR/RW businesses.
’03 17.6
0 10 20 30 40 50
Capital Depreciation
expenditures FINANCIAL POSITION
Thanks to YAMAHA’s strong inventory reduction efforts throughout the year,
overall inventories, which were larger than desired at the beginning of the
year, fell ¥4.1 billion, to ¥80.1 billion, which is close to optimal size.
Although we reduced inventories and holdings of investment securities in
banks and other companies compared with the previous year-end, total
assets were up ¥3.1 billion, to ¥512.7 billion, due to gains on the revalua-
tion of investment securities held in equity-method affiliates as well as
increased accounts receivable thanks to higher sales of semiconductors
to corporate clients.
Despite a rise in notes and accounts payable, total liabilities were down
Total Shareholders’ Equity ¥8.7 billion, to ¥294.3 billion, owing to decreased pension obligations and
and ROE (Billions of Yen, %) reduced borrowings due to a fall in working capital. Current assets grew
’99 –7.1
¥9.9 billion, to ¥221.1 billion, while current liabilities amounted to ¥158.1
’00 –18.7
billion, up ¥13.6 billion from the previous year-end. As a result, working
’01 6.4
capital declined ¥3.7 billion, to ¥62.9 billion. The liquidity ratio was
’02 –5.2
139.8%, down 6.3 percentage points from the previous year-end. Buoyed
’03 8.6
0 50 100 150 200 250
by higher earnings, total shareholders’ equity increased ¥12.5 billion, to
Total shareholders’
equity
ROE ¥214.5 billion.

CASH FLOWS
Cash and cash equivalents at the end of year were up ¥2.4 billion, to ¥43.0 bil-
lion. Net cash provided by operating activities was ¥33.0 billion, reflecting
increased income and reduced inventories. Net cash used in investing activi-
ties, reflecting the acquisition of investment securities and capital investment,
amounted to ¥21.6 billion, while free cash flow totaled ¥11.4 billion.

INTEREST-BEARING LIABILITIES
Interest-Bearing Liabilities (Billions of Yen, %) The balance of interest-bearing liabilities, after the deduction of cash and
’99 14.9
bank deposits, improved ¥9.1 billion compared with the previous year-end,
’00 10.0
to ¥46.0 billion, reflecting increased income and reduced inventories.
’01 13.5
In addition, the debt-to-equity ratio was 0.42 times.
’02 10.8

’03 8.9
EXCHANGE RATES
0 20 40 60 80
Interest-bearing Interest-bearing liabilities Calculated using the average exchange rate prevailing during the term, the
liabilities to total assets ratio
Note: Interest-bearing liabilities= yen increased ¥3 against the U.S. dollar and weakened ¥11 against the euro,
loans + convertible bonds – cash and bank deposits
causing a ¥4.5 billion rise in net sales.
The Company recorded ¥4.9 billion in foreign currency exchange gains
thanks to the strong euro and other factors.
Sales conversion rates and settlement rates were as follows:
Sales conversion rates: US$1=¥121.97 (¥124.97 in fiscal 2002)
Euro 1=¥120.88 (¥110.44 in fiscal 2002)
Settlement rates: US$1=¥121.87 (¥123.74 in fiscal 2002)
Euro 1=¥116.54 (¥106.82 in fiscal 2002)

ANNUAL REPORT 2003 25

 C O N S O L I D AT E D B A L A N C E S H E E T S
YAMAHA CORPORATION and Consolidated Subsidiaries
At March 31, 2003 and 2002

Thousands of
Millions of Yen U.S. Dollars (Note 2)
ASSETS 2003 2002 2003
Current assets:
Cash and bank deposits (Notes 5 and 17)..................................................... ¥ 44,485 ¥ 41,074 $ 370,092
Marketable securities (Notes 5 and 16) ........................................................ 1,370 356 11,398
Notes and accounts receivable ..................................................................... 81,755 74,519 680,158
Less: Allowance for doubtful accounts ......................................................... (2,625) (2,675) (21,839)
Inventories ................................................................................................... 80,144 84,264 666,755
Deferred income taxes (Note 10) .................................................................. 10,489 9,332 87,263
Prepaid expenses and other current assets (Note 6) ..................................... 5,469 4,267 45,499
Total current assets...................................................................................... 221,089 211,140 1,839,343

Property, plant and equipment, net of accumulated depreciation

(Notes 4 and 5):
Land............................................................................................................. 76,835 78,069 639,226
Buildings and structures .............................................................................. 67,166 70,745 558,785
Machinery and equipment............................................................................ 33,639 35,440 279,859
Construction in progress............................................................................... 1,082 1,003 9,002
Property, plant and equipment, net of accumulated depreciation...... 178,724 185,261 1,486,889

Investments and other assets:

Investment securities (Notes 3, 5 and 16) .................................................... 77,622 76,307 645,774
Long-term loans receivable .......................................................................... 694 1,733 5,774
Lease deposits.............................................................................................. 5,013 5,087 41,705
Deferred income taxes (Note 10) .................................................................. 24,663 26,384 205,183
Excess of cost over net assets acquired ........................................................ 107 173 890
Other assets.................................................................................................. 4,800 3,573 39,933
Total investments and other assets............................................................ 112,902 113,260 939,285

Total assets ................................................................................................... ¥512,716 ¥509,663 $4,265,524

See notes to consolidated financial statements.

26 YAMAHA CORPORATION
 Thousands of
Millions of Yen U.S. Dollars (Note 2)
LIABILITIES AND SHAREHOLDERS’ EQUITY 2003 2002 2003
Current liabilities:
Short-term loans (Note 5) ............................................................................. ¥ 27,078 ¥ 47,871 $ 225,275
Convertible bonds scheduled for redemption within one year ...................... 24,317 — 202,304
Current portion of long-term debt (Note 5) ................................................... 10,090 4,363 83,943
Notes and accounts payable ......................................................................... 39,462 36,880 328,303
Accrued expenses ........................................................................................ 42,501 41,987 353,586
Income taxes payable ................................................................................... 3,101 1,224 25,799
Advances received ....................................................................................... 3,428 3,742 28,519
Deferred income taxes (Note 10) .................................................................. 92 65 765
Other current liabilities................................................................................ 8,074 8,360 67,171
Total current liabilities................................................................................ 158,148 144,498 1,315,707

Long-term liabilities:
Long-term debt (Note 5) ............................................................................... 28,951 43,932 240,857
Deferred income taxes (Note 10) .................................................................. 266 316 2,213
Deferred income taxes on land revaluation (Note 1 (p))................................ 13,577 14,638 112,953
Accrued employees’ retirement benefits (Note 12) ....................................... 53,988 59,074 449,151
Directors’ retirement benefits....................................................................... 965 859 8,028
Long-term deposits received ........................................................................ 36,848 38,472 306,556
Other long-term liabilities............................................................................ 1,572 1,191 13,078
Total long-term liabilities............................................................................ 136,171 158,486 1,132,870

Minority interests.......................................................................................... 3,925 4,712 32,654

Contingent liabilities (Note 13)

Shareholders’ equity (Note 11):

Common stock:
Authorized—700,000,000 shares;
Issued —206,523,263 shares ............................................................ 28,533 28,533 237,379
Capital surplus............................................................................................. 40,052 26,924 333,211
Earned surplus............................................................................................. 162,344 157,589 1,350,616
Reserve for land revaluation (Note 1 (p))...................................................... 16,152 16,482 134,376
Net unrealized holding gain on other securities ........................................... 378 766 3,145
Translation adjustments ............................................................................... (32,753) (28,280) (272,488)
Treasury stock, at cost.................................................................................. (236) (49) (1,963)
Total shareholders’ equity, net .................................................................. 214,471 201,965 1,784,285
Total liabilities and shareholders’ equity ................................................. ¥512,716 ¥509,663 $4,265,524

ANNUAL REPORT 2003 27

 C O N S O 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
Millions of Yen U.S. Dollars (Note 2)
2003 2002 2003
Net sales ......................................................................................................... ¥524,763 ¥504,406 $4,365,749
Cost of sales (Note 7) ..................................................................................... 338,307 340,411 2,814,534
Gross profit.......................................................................................... 186,456 163,994 1,551,215
Selling, general and administrative expenses (Note 7) ..................................... 154,413 152,951 1,284,634
Operating income ............................................................................... 32,043 11,043 266,581

Other income (expenses):

Interest and dividend income....................................................................... 582 736 4,842
Interest expense ........................................................................................... (2,015) (2,911) (16,764)
Sales rebates ................................................................................................ (4,347) (4,477) (36,165)
Gain on sale of marketable and investment securities.................................. — 3,694 —
Loss on revaluation of investment securities ................................................ (7,746) (14,857) (64,443)
Loss on sale or disposal of properties, net .................................................... (974) (1,672) (8,103)
Equity in earnings of unconsolidated subsidiaries and affiliates .................. 7,608 2,993 63,295
Structural reform expenses (Note 8) ............................................................. (2,271) — (18,894)
Other, net (Note 9) ....................................................................................... (266) (334) (2,213)
......................................................................................................................... (9,429) (16,829) (78,444)
Income (loss) before income taxes and minority interests.................... 22,612 (5,784) 188,120
Income taxes (Note 10):
Current......................................................................................................... 3,962 1,507 32,962
Deferred ....................................................................................................... 65 2,429 541
..................................................................................................................... 4,027 3,936 33,502
Income (loss) before minority interests............................................................. 18,585 (9,720) 154,617

Minority interests.......................................................................................... 636 551 5,291

Net income (loss)................................................................................. ¥ 17,947 ¥ (10,274) $ 149,309
See notes to consolidated financial statements.

28 YAMAHA CORPORATION
C O N S O L I D AT E D S TAT E M E N T S O F S H A R E H O L D E R S ’ E Q U I T Y
YAMAHA CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2003 and 2002

Thousands of
Millions of Yen U.S. Dollars (Note 2)
2003 2002 2003
Common stock:
Balance at beginning of year
(2003 and 2002—206,523,263 shares).................................................... ¥ 28,533 ¥ 28,533 $ 237,379
Balance at end of year
(2003 and 2002—206,523,263 shares).................................................... ¥ 28,533 ¥ 28,533 $ 237,379

Capital surplus:
Balance at beginning of year ........................................................................ ¥ 26,924 ¥ 26,924 $ 223,993
Add:
Capital surplus arising from mergers........................................................ 13,127 — 109,210
Balance at end of year............................................................................. ¥ 40,052 ¥ 26,924 $ 333,211
Earned surplus:
Balance at beginning of year ........................................................................ ¥157,589 ¥170,496 $1,311,057
Add:
Effect of changes in scope of consolidation .............................................. 849 474 7,063
Effect of changes in interests in subsidiaries ........................................... — 15 —
Reversal of reserve for land revaluation ................................................... 869 0 7,230
Reversal of reserve for land revaluation arising from
change in interest in a consolidated subsidiary ...................................... 88 82 732
Net income (loss)...................................................................................... 17,947 (10,274) 149,309
Deduct:
Effect of changes in scope of consolidation .............................................. — (607) —
Effect of changes in interests in subsidiaries ........................................... 13 (945) 108
Cash dividends paid................................................................................. 1,857 (1,652) 15,449
Bonuses to directors and statutory auditors .............................................. 0 (1) 0
Decrease due to merger............................................................................ 13,127 — 109,210
Balance at end of year............................................................................ ¥162,344 ¥157,589 $1,350,616
Reserve for land revaluation:
Balance at beginning of year ........................................................................ ¥ 16,482 ¥ 8,269 $ 137,121
Add:
Gain on land revaluation .......................................................................... — 8,295 —
Gain on land revaluation resulting from effect of
change in statutory tax rate .................................................................... 627 — 5,216
Deduct:
Reversal of reserve for land revaluation ................................................... (869) 0 (7,230)
Reversal of reserve for land revaluation resulting from
change in interest in a consolidated subsidiary ...................................... (88) (82) (732)
Balance at end of year............................................................................ ¥ 16,152 ¥ 16,482 $ 134,376
Unrealized holding gains on other securities:
Balance at beginning of year ........................................................................ ¥ 766 ¥ 308 $ 6,373
Net change during the year ...................................................................... (388) 458 (3,228)
Balance at end of year............................................................................ ¥ 378 ¥ 766 $ 3,145
Translation adjustments:
Balance at beginning of year ........................................................................ ¥ (28,280) ¥ (37,794) $ (235,275)
Net change during the year ...................................................................... (4,473) 9,514 (37,213)
Balance at end of year............................................................................ ¥ (32,753) ¥ (28,280) $ (272,488)
Treasury stock, at cost:
Balance at beginning of year
(2003—46,038 shares; 2002—5,136 shares)............................................. ¥ (49) ¥ (5) $ (408)
Net change during the year ...................................................................... (187) (44) (1,556)
Balance at end of year
(2003—391,160 shares; 2002—46,038 shares)......................................... ¥ (236) ¥ (49) $ (1,963)
See notes to consolidated financial statements.

ANNUAL REPORT 2003 29

 C O N S O L I D AT E D S TAT E M E N T S O F C A S H F L O W S
YAMAHA CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2003 and 2002

Thousands of
Millions of Yen U.S. Dollars (Note 2)
2003 2002 2003
Cash flows from operating activities:
Income (loss) before income taxes and minority interests .............................. ¥22,612 ¥ (5,784) $188,120
Adjustments to reconcile income (loss) before income taxes
and minority interests to net cash provided
by operating activities:
Depreciation and amortization ................................................................... 17,699 18,919 147,246
Allowance for doubtful accounts ................................................................ 395 (507) 3,286
Loss on revaluation of investment securities .............................................. 7,746 14,857 64,443
Employees’ retirement benefits, net of payments ....................................... (5,150) (8,210) (42,845)
Interest and dividend income..................................................................... (583) (736) (4,850)
Interest expense......................................................................................... 2,015 2,911 16,764
Equity in earnings of unconsolidated subsidiaries and affiliates................ (7,608) (2,993) (63,295)
Gain on sale of marketable and investment securities ............................... — (3,694) —
Loss on sale or disposal of properties, net.................................................. 974 1,672 8,103
Loss on foreign exchange, net .................................................................... 242 63 2,013
Structural reform expenses ........................................................................ 1,509 — 12,554
Changes in operating assets and liabilities:
Accounts and notes receivable—trade....................................................... (8,509) 18,794 (70,790)
Inventories ................................................................................................. 3,233 18,532 26,897
Accounts and notes payable—trade........................................................... 2,894 (15,715) 24,077
Other, net....................................................................................................... (1,413) (4,748) (11,755)
Subtotal.................................................................................................. 36,061 33,360 300,008
Interest and dividends received ..................................................................... 1,181 746 9,825
Interest paid................................................................................................... (2,067) (2,918) (17,196)
Income taxes, net of payments ....................................................................... (2,123) (2,171) (17,662)
Net cash provided by operating activities .................................................. 33,052 29,016 274,975
Cash flows from investing activities:
Purchases of time deposits, net ...................................................................... (1,125) — (9,359)
Purchases of property .................................................................................... (15,730) (14,876) (130,865)
Proceeds from sale of property ....................................................................... 2,674 888 22,246
Purchases of investment securities ................................................................ (6,541) (858) (54,418)
Proceeds from sale of investment securities................................................... 187 4,074 1,556
Other, net....................................................................................................... (1,110) 336 (9,235)
Net cash used in investing activities ............................................................ (21,645) (10,437) (180,075)
Cash flows from financing activities:
Decrease in short-term loans ......................................................................... (20,887) (13,241) (173,769)
Proceeds from long-term debt ........................................................................ 18,908 8,178 157,304
Repayment of long-term debt......................................................................... (3,065) (5,665) (25,499)
Cash dividends paid ...................................................................................... (1,857) (1,652) (15,449)
Repayment of resort membership deposits..................................................... (1,297) — (10,790)
Cash dividends paid to minority shareholders ............................................... (268) (468) (2,230)
Other, net....................................................................................................... (114) (31) (948)
Net cash used in financing activities ........................................................... (8,582) (12,880) (71,398)
Effect of exchange rate changes on cash and cash equivalents ............. (504) 1,122 (4,193)
Net increase in cash and cash equivalents ................................................. 2,319 6,821 19,293
Cash and cash equivalents at beginning of year........................................ 40,571 32,725 337,529
Increase in cash and cash equivalents arising from inclusion
of subsidiaries in consolidation ................................................................. 85 1,025 707
Cash and cash equivalents at end of year (Note 17)................................... ¥42,976 ¥40,571 $357,537
See notes to consolidated financial statements.

30 YAMAHA CORPORATION
N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
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 accordance with accounting principles and practices generally accepted in
Japan, and its foreign subsidiaries maintain their books of account in conformity with those of their countries of domi-
cile. The Company and all consolidated subsidiaries are referred to as the “Group.” The accompanying consolidated
financial statements have been prepared from the financial statements filed with the Ministry of Finance as required
by the Securities and Exchange Law of Japan. Accordingly, the accompanying consolidated financial statements may
differ in certain significant respects from accounting principles and practices generally accepted in countries and
jurisdictions other than Japan. For the purposes of this document, certain reclassifications have been made to
present the accompanying consolidated financial statements in a format which is familiar to readers outside Japan.
As permitted, amounts of less than one million yen have been omitted. As a result, the totals shown in the
accompanying consolidated financial statements (both in yen and U.S. dollars) do not necessarily agree with the
sum of the individual amounts.
(b) Basis of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates
The consolidated financial statements include the accounts of the parent company and all its subsidiaries over which
substantial control is exerted either through majority ownership of voting stock and/or by other means. As a result,
the accompanying consolidated financial statements include the accounts of the Company and 84 and 82 consolidated
subsidiaries for the years ended March 31, 2003 and 2002, respectively.
Investments in affiliates (other than subsidiaries as defined above) whose decision-making and control over their
own operations is significantly affected by the Group in various ways are accounted for by the equity method. Investments
in two and three affiliates have been accounted for by the equity method for the years ended March 31, 2003 and 2002,
respectively.
Investments in unconsolidated subsidiaries and affiliates not accounted for by the equity method are carried at cost.
Certain foreign subsidiaries are consolidated on the basis of fiscal periods ending December 31, which differ from
that of the Company; however, necessary adjustments are made when the effect of the difference is material.
All assets and liabilities of the subsidiaries are revalued at fair values on acquisition, if applicable, and the excess
of cost over underlying net assets at the date of acquisition is amortized over a period of five years on a straight-line
basis.
Change in Method of Accounting
Effective April 1, 2002, Yamaha Motor Co., Ltd. (“Yamaha Motor”), an affiliate of the Company, changed its
method of amortization of the excess of cost over net assets acquired for its subsidiaries from amortizing it over a
20-year period by the straight-line method to charging it to income as incurred. This change was made in order to
facilitate Yamaha Motors’ implementation of its new three-year medium-term management plan (from April 2002
to March 2005), which focuses on such management issues as “improving the profitability of existing businesses”
and “solidifying the foundation of businesses in Asian countries.” Furthermore, this change corresponds with similar
changes in its market structure in response to the intensifying global competition in the motorcycle business and other
businesses and to avoid any future risk arising from fluctuations in the investment market, particularly in strategically
targeted areas. In this way, Yamaha Motor aims to further strengthen its financial position.
The effect of this change was to decrease equity in earnings of unconsolidated subsidiaries and affiliates, income
before income taxes and minority interests and net income by ¥2,360 million ($19,634 thousand) from the corre-
sponding amounts which would have been recorded if the method applied in the previous year had been followed.
(c) Foreign currency translation
Monetary assets and liabilities of the Company and its domestic consolidated subsidiaries denominated in foreign
currencies are translated at the current exchange rates in effect at each balance sheet date if not hedged by forward
exchange contracts or at the contracted rates of exchange when hedged by forward exchange contracts. The resulting
foreign exchange gain or loss is recognized as other income or expense.
Assets and liabilities of the foreign consolidated subsidiaries are translated at the current exchange rates in effect
at each balance sheet date and revenue and expense accounts are translated at the average rate of exchange in effect
during the year. Translation adjustments are presented as a component of shareholders’ equity in the accompanying
consolidated financial statements.
(d) Cash and cash equivalents
All highly liquid investments, generally with a maturity of three months or less when purchased, which are readily
convertible into known amounts of cash and are so near maturity that they represent only an insignificant risk of any
change in value attributable to changes in interest rates, are considered cash equivalents.

ANNUAL REPORT 2003 31

 (e) Securities
Securities owned by the Group have been classified into two categories, held-to-maturity and other, in accordance
with the accounting standard for financial instruments which was announced by the Business Accounting Deliberation
Council on January 22, 1999 and adopted by the Group effective the year ended March 31, 2002. Under this stan-
dard, held-to-maturity debt securities are either amortized or accumulated to face value on a straight-line basis.
Marketable securities classified as other securities are carried at fair value with any changes in unrealized holding
gain or loss, net of the applicable income taxes, included directly in shareholders’ equity. Non-marketable securities
classified as other securities are carried at cost. Under this accounting standard, if the fair value of the marketable
securities classified as other securities has declined significantly, such securities are written down to fair value, thus
establishing a new cost basis. The amount of each write-down is charged to income as an impairment loss unless the
fair value is deemed to be recoverable. The Company has established a policy for the recognition of an impairment
loss if the total declines more than 30% unless the fair value is deemed to be recoverable.
Cost of securities sold is determined by the weighted average method.
(f) Inventories
Inventories of the Company and its domestic consolidated subsidiaries are stated principally at the lower of cost or
market, cost being determined by the last-in, first-out method. Inventories of the Company’s foreign consolidated sub-
sidiaries are stated principally at the lower of cost or market, cost being determined by the moving average method.
(g) Depreciation and amortization
Depreciation of property, plant and equipment is calculated mainly by the declining-balance method (except that
certain of the Company’s facilities related to its recreation business and certain consolidated subsidiaries employ
the straight-line method) at rates based on the estimated useful lives of the respective assets.
Estimated useful lives: Buildings 31–50 years (Leasehold improvements: 15 years)
Structures 10–30
Machinery and equipment 4–11
Tools, furniture and fixtures 5–6 (Molds: 2 years)
(h) Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amount sufficient to cover possible losses on the collection of
receivables. For the Yamaha Group, the amount of the allowance is determined based on the historical experience
with write-offs plus an estimate of specific probable doubtful accounts based on a review of the collectibility of the
individual receivables.
(i) Retirement benefits
Accrued employees’ retirement benefits: Accrued employees’ retirement benefits have been provided based on the pro-
jected retirement benefit obligation and the pension fund assets.
Prior service cost is being amortized as incurred by the straight-line method over a period (10 years) which is short-
er than the average remaining years of service of the employees participating in the plans.
Actuarial gain and loss are amortized in the year following the year in which the gain or loss is recognized primarily
by the straight-line method over a period (10 years) which is shorter than the average remaining years of service of the
employees participating in the plans.
Directors’ and statutory auditors’ retirement benefits: The Company’s directors and statutory auditors are customarily
entitled to receive lump-sum retirement payments based on the Company’s internal rules. The Company provides a
100% allowance for retirement benefits for its directors and statutory auditors under its own internal regulations.
(j) Warranty reserve
A warranty reserve is provided to cover the 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 for as operating leases regardless of whether such leases are classified as oper-
ating or finance leases, except that leases which stipulate the transfer of ownership of the leased assets to the lessee
are accounted for as finance leases.

32 YAMAHA CORPORATION
(l) Income taxes
Deferred income taxes are recognized by the liability method. Under the liability method, deferred tax assets and liabilities
are determined based on the differences between financial reporting and the tax basis of the assets and liabilities and
are measured using the enacted tax rates and laws which will be in effect when the differences are expected to
reverse.
(m) Derivative financial instruments
Derivative financial instruments are carried at fair value with any changes in unrealized gain or loss charged or credited
to operations, except for those which meet the criteria for deferral hedge accounting under which the unrealized gain or
loss is deferred as an asset or a liability. Forward foreign exchange contracts that meet certain criteria are accounted
for by the allocation method, which is utilized to hedge against risk arising from fluctuations in foreign exchange rates.
The Group does not make an assessment of the effectiveness of its hedging activities because the relationship
between the anticipated cash flows fixed by hedging activities and the avoidance of market risk is so clear that there
is no need to evaluate the effectiveness of each hedge against the respective underlying hedged item.
(n) Accounting standard for treasury stock and reduction of legal reserve
Effective the year ended March 31, 2003, the Company and consolidated subsidiaries adopted a new accounting
standard for treasury stock and the reduction of legal reserve (Accounting Standard No. 1 issued by the Accounting
Standards Board of Japan; “ASBJ”) which took effect on April 1, 2002. The effect of the adoption of this new stan-
dard was immaterial.
(o) Appropriation of retained earnings
Under the Commercial Code of Japan (the “Code”), the appropriation of retained earnings with respect to a given
financial period is made by resolution of the shareholders at a general meeting held subsequent to the close of such
financial period. The accounts for that period do not, therefore, reflect such appropriation.
(p) Land revaluation
Pursuant to the “Law Concerning the Revaluation of Land,” land used for the business operations of the Company,
two consolidated subsidiaries and an affiliate was revalued. The excess of the revalued carrying amount over the book
value before revaluation which has been included in shareholders’ equity amounted to ¥16,152 million ($134,376
thousand) and ¥16,482 million as a reserve for land revaluation, net of the related tax effect, at March 31, 2003 and
2002, respectively.
The land revaluation was determined based on the official standard notice 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 by translating all yen amounts at ¥120.20=U.S.$1.00, the exchange rate
prevailing on March 31, 2003. This translation should not be construed as a representation that yen have been, could
have been or could in the future be converted into U.S. dollars at the above or any other rate.

3. INVESTMENT SECURITIES
Investment securities at March 31, 2003 and 2002 were as follows:
Thousands of
Millions of Yen U.S. Dollars
2003 2002 2003
Investments in and advances to unconsolidated subsidiaries and affiliates........................... ¥55,563 ¥51,026 $462,255
Others ................................................................................................................................... 22,059 25,281 183,519
Investment securities ............................................................................................................ ¥77,622 ¥76,307 $645,774

ANNUAL REPORT 2003 33

 4. ACCUMULATED DEPRECIATION
Accumulated depreciation at March 31, 2003 and 2002 amounted to ¥221,380 million ($1,841,764 thousand) and
¥226,483 million, respectively.

5. SHORT-TERM LOANS AND LONG-TERM DEBT

Short-term loans consisted of unsecured loans payable to banks at weighted average interest rates of 1.5% and 1.8%
per annum at March 31, 2003 and 2002, respectively.
Long-term debt at March 31, 2003 and 2002 consisted of the following:
Thousands of
Millions of Yen U.S. Dollars
2003 2002 2003
Loans from banks, due through 2018 at average
rates of 2.5% and 1.4% for the current
and noncurrent portions, respectively ................................................................................. ¥39,041 ¥23,978 $324,800
1.9% unsecured convertible bonds, due 2004....................................................................... 24,317 24,317 202,304
Total long-term debt.............................................................................................................. 63,358 48,295 527,105
Less: Current portion and convertible bonds scheduled for redemption................................ 34,407 4,363 286,248
.............................................................................................................................................. ¥28,951 ¥43,932 $240,857
On September 30, 1988, the Company issued 1.9% unsecured convertible bonds, due 2004, which are convertible
into common stock of the Company at ¥2,200 per share during the period from November 1, 1988 to March 31, 2004.
The assets pledged as collateral for long-term debt and certain other current liabilities at March 31, 2003 were as
follows:
Thousands of
Millions of Yen U.S. Dollars
March 31, 2003 2002 2003
Bank deposits.......................................................................................................................... ¥ 30 ¥ 30 $ 250
Marketable securities .............................................................................................................. 1,112 60 9,251
Property, plant and equipment, net of accumulated depreciation............................................ 2,440 13,651 20,300
Investment securities............................................................................................................... 1,315 2,423 10,940
................................................................................................................................................ ¥4,898 ¥16,165 $40,749
The aggregate annual maturities of long-term debt subsequent to March 31, 2003 are summarized as follows:
Thousands of
Year ending March 31, Millions of Yen U.S. Dollars
2004 ..................................................................................................................................................... ¥34,407 $286,248
2005 ..................................................................................................................................................... 3,616 30,083
2006 ..................................................................................................................................................... 19,168 159,468
2007 ..................................................................................................................................................... 707 5,882
2008 and thereafter .............................................................................................................................. 5,460 45,424
............................................................................................................................................................. ¥63,358 $527,105

6. DEFERRED GAIN OR LOSS ON HEDGES

Deferred gain or loss on hedges at March 31, 2003 and 2002 were as follows:
Thousands of
Millions of Yen U.S. Dollars
2003 2002 2003
Deferred gain on hedges ................................................................................................................. ¥ 16 ¥ 1 $ 133
Deferred loss on hedges.................................................................................................................. (649) (100) (5,399)
Deferred loss on hedges, net........................................................................................................... ¥(632) ¥ (99) $(5,258)

7. R&D EXPENSES
R&D expenses, included in selling, general and administrative expenses and cost of sales for the years ended March
31, 2003 and 2002 amounted to ¥22,441 million ($186,697 thousand) and ¥22,539 million, respectively.

34 YAMAHA CORPORATION
8. STRUCTURAL REFORM EXPENSES
Structural reform expenses for the year ended March 31, 2003 consisted of losses on disposition of inventories of
¥734 million ($6,106 million) resulting from the discontinuation of the CD-R/RW drive business and of ¥1,537 mil-
lion ($12,787 million) from the termination of operations at the Sunza Villa and Kiroro golf course.

9. OTHER INCOME (EXPENSES)

The components of “Other, net” in “Other income (expenses)” for the years ended March 31, 2003 and 2002 were
as follows:
Thousands of
Millions of Yen U.S. Dollars
2003 2002 2003
Loss on sale of shares of common stock of affiliates ................................................................... ¥(222) ¥ — $(1,847)
Loss on revaluation of capital invested in subsidiaries ............................................................... (242) — (2,013)
Loss on foreign exchange............................................................................................................ — (352) —
Additional retirement benefits paid............................................................................................ — (1,061) —
Other, net ................................................................................................................................... 198 1,079 1,647
................................................................................................................................................... ¥(266) ¥ (334) $(2,213)

10. INCOME TAXES

Income taxes applicable to the Company and its domestic consolidated subsidiaries comprised corporation tax, inhab-
itants’ taxes and enterprise tax which, in the aggregate, resulted in a statutory tax rate of approximately 39.5% and
40.9% for the years ended March 31, 2003 and 2002, respectively. The effect of this change in the tax rate was to
decrease deferred tax assets, net of deferred tax liabilities, by ¥792 million at March 31, 2003 and to increase income
taxes by ¥802 million over the amount which would have been recorded if the tax rate of the previous year had been
applied in the current year. The increase in income taxes referred to above was computed by multiplying the total
balance of temporary differences at March 31, 2003 by the difference between the new and the former tax rates.
Income taxes of the foreign consolidated subsidiaries are, in general, based on the tax rates applicable in their coun-
tries of incorporation.
The major components of deferred tax assets and liabilities as of March 31, 2003 and 2002 are summarized
as follows:
Thousands of
Millions of Yen U.S. Dollars
2003 2002 2003
Deferred tax assets:
Write-downs of inventories................................................................................................ ¥ 2,357 ¥ 1,880 $ 19,609
Allowance for doubtful receivables ................................................................................... 1,244 1,188 10,349
Depreciation...................................................................................................................... 9,215 9,336 76,664
Unrealized loss on investment securities........................................................................... 7,289 7,447 60,641
Accrued employees’ bonuses ............................................................................................ 3,609 2,629 30,025
Warranty reserve............................................................................................................... 827 971 6,880
Retirement benefits and long-term accounts payable—other............................................ 18,686 20,569 155,458
Tax loss carried forward .................................................................................................... 21,387 19,667 177,928
Other................................................................................................................................. 8,465 8,808 70,424
.............................................................................................................................................. 73,084 72,499 608,020
Valuation allowance.......................................................................................................... (35,499) (33,682) (295,333)
Total deferred tax assets........................................................................................................ 37,584 38,816 312,679

Deferred tax liabilities:

Reserve for deferred gain on properties............................................................................. (1,460) (1,693) (12,146)
Reserve for asset replacement........................................................................................... (283) — (2,354)
Reserve for special depreciation ....................................................................................... (85) — (707)
Unrealized gain on securities ............................................................................................ (299) (589) (2,488)
Other................................................................................................................................. (663) (1,199) (5,516)
Total deferred tax liabilities .................................................................................................. (2,790) (3,481) (23,211)
Net deferred tax assets .......................................................................................................... ¥34,793 ¥35,335 $289,459

ANNUAL REPORT 2003 35

 A reconciliation between the statutory tax rate and the effective tax rate for the year ended March 31, 2003 is
as follows:
Year ended
March 31, 2003
Statutory tax rate .................................................................................................................................................................. 40.9%
Equity in earnings and loss of unconsolidated subsidiaries and affiliates
and non-temporary differences not deductible for tax purposes ......................................................................................... (11.7)
Inhabitants’ per capita taxes and other................................................................................................................................. 0.9
Effect of change in statutory tax rate .................................................................................................................................... 3.5
Change in valuation allowance............................................................................................................................................. (13.3)
Tax-rate variances of overseas subsidiaries and other.......................................................................................................... (2.5)
Effective tax rate .................................................................................................................................................................. 17.8%

11. LEGAL RESERVE AND ADDITIONAL PAID-IN CAPITAL

The Code provides that an amount equal to at least 10% of the amount to be disbursed as distributions of earnings
be appropriated to the legal reserve until such reserve and the amount of additional paid-in capital equals 25% of the
common stock account. The Code also provides that, to the extent that the sum of additional paid-in capital account
and the legal reserve exceeds 25% of the common stock account, the amount of any such excess is available for
appropriations by resolution of the shareholders.

12. RETIREMENT BENEFITS

The Company and its domestic consolidated subsidiaries have defined benefit plans, i.e., welfare pension fund plans,
tax-qualified pension plans and lump-sum payment plans, covering substantially all employees who are entitled to
lump-sum or annuity payments, the amounts of which are determined by reference to their basic rates of pay, lengths
of service and the conditions under which the termination occurs.
The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the
consolidated balance sheets at March 31, 2003 and 2002 for the Company’s and consolidated subsidiaries’ defined
benefit plans:
Thousands of
Millions of Yen U.S. Dollars
2003 2002 2003
Retirement benefit obligation ......................................................................................... ¥(194,003) ¥(186,269) $(1,614,002)
Plan assets at fair value .................................................................................................. 91,778 89,012 763,544
Unfunded retirement benefit obligation.......................................................................... (102,225) (97,257) (850,458)
Unrecognized actuarial gain or loss ................................................................................ 47,055 39,717 391,473
Unrecognized past service cost (2) ................................................................................... 1,181 (1,534) 9,825
Net retirement obligation................................................................................................ ¥ (53,988) ¥ (59,074) $ (449,151)
Accrued retirement benefits ........................................................................................... ¥ (53,988) ¥ (59,074) $ (449,141)
Notes: (1) The government-sponsored portion of the benefits under the welfare pension fund plan has been included in the amounts shown in the
above table.
Notes: (2) Effective the year ended March 31, 2003, the Company and certain domestic subsidiaries amended the basis of calculation of their
employees’ retirement 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
 The components of retirement benefit expenses for the years ended March 31, 2003 and 2002 are outlined as follows:
Thousands of
Millions of Yen U.S. Dollars
2003 2002 2003
Service cost ........................................................................................................................... ¥ 7,900 ¥ 6,380 $ 65,724
Interest cost........................................................................................................................... 4,595 5,446 38,228
Expected return on plan assets.............................................................................................. (3,540) (3,299) (29,451)
Amortization of past service cost........................................................................................... (45) (175) (374)
Amortization of actuarial gain or loss .................................................................................... 4,110 1,086 34,193
Additional retirement benefit expenses................................................................................. 1,311 2,234 10,907
Total...................................................................................................................................... ¥14,332 ¥11,673 $119,235
The assumptions used in accounting for the above plans are as follows:
2003 2002
Discount rates....................................................................... 2.5% 2.5%
Expected return on plan assets............................................. 4.0% 4.0%
Amortization of past service cost .......................................... 10 years (straight-line method) 10 years (straight-line method)
Amortization of actuarial gain or loss ................................... 10 years (straight-line method) 10 years (straight-line method)

13. CONTINGENT LIABILITIES

The Company had the following contingent liabilities at March 31, 2003:
Thousands of
Millions of Yen U.S. Dollars
Export bills discounted with banks......................................................................................................... ¥1,483 $12,338
As guarantors of indebtedness of others ................................................................................................. 131 1,090

14. AMOUNTS PER SHARE

Basic net income (loss) per share shown below is based on the weighted average number of shares of common stock
outstanding during each year. Diluted net income per share is based on the weighted average number of shares of
common stock outstanding each year after giving effect to the dilutive potential of common shares to be issued upon
the conversion of convertible bonds.
Net assets per share are based on the number of shares of common stock outstanding at each balance sheet date.
Yen U.S. Dollars
Years ended March 31 2003 2002 2003
Net income (loss):
Basic ..................................................................................................................................... ¥86.65 ¥(49.75) $0.72
Diluted .................................................................................................................................. 77.32 — 0.64
Yen U.S. Dollars
March 31 2003 2002 2003
Net assets.................................................................................................................................. ¥1,040.06 ¥978.15 $8.65
Diluted net loss per share for the year ended March 31, 2002 has not been presented because the effect of the
conversion of the convertible bonds would have resulted in an anti-dilutive effect on the computation of net loss
per share.

ANNUAL REPORT 2003 37

 Effective the year ended March 31, 2003, the Company and its consolidated subsidiaries have adopted a new
accounting standard for earnings per share (Accounting Standard No. 2 announced by the ASBJ) as well as an
accounting implementation guidance on a revised accounting standard for earnings per share (Accounting Standard
Implementation Guidance No. 4 issued by the ASBJ) which took effect on April 1, 2002. If the previous standards
had been applied for the year ended March 31, 2003, the amounts per share would have been presented as follows:
Yen Dollars
Net assets per share............................................................................................................................ ¥1,040.45 $8.66
Net income:
Basic .............................................................................................................................................. 87.04 0.72
Diluted ........................................................................................................................................... 77.68 0.65
Note: Basis for calculation of basic net income per share and diluted net income per share
Year ended March 31, 2003
Basic net income per share:
Net income .......................................................................................................... ¥17,947 million $149,309 thousand
Amounts not attributable to shareholders of common stock................................. 82 682,196
Directors’ bonuses by appropriation of retained earnings ................................ 82 682,196
Amounts attributable to shareholders of common stock....................................... 17,864 148,618
Weighted average number of shares outstanding................................................. 206,177 thousand shares
Diluted net income per share:
Adjustments arising from dilution ....................................................................... ¥(1,069) million $ (8,894) thousand
Interest on corporate bonds, net of tax............................................................. 273 2,271
Equity in earnings of unconsolidated subsidiaries and affiliates ..................... (1,342) (11,164)
Increase in number of shares outstanding ........................................................... 11,053 thousand shares
Dilution arising from conversion of convertible bonds..................................... 11,053
Diluted shares resulting in an anti-dilutive effect................................................ — —

15. LEASES
Lessees’ accounting
The following pro forma amounts represent the acquisition costs, accumulated depreciation and net book value of the
leased assets as of March 31, 2003 and 2002 which would have been reflected in the balance sheets if finance leases
currently accounted for as operating leases had been capitalized.
Millions of Yen Thousands of U.S. Dollars
Tools Tools
and and
Year ended March 31, 2003 equipment Other Total equipment Other Total
Acquisition costs ................................................................... ¥2,801 ¥1,261 ¥4,062 $23,303 $10,491 $33,794
Accumulated depreciation..................................................... 1,478 815 2,293 12,296 6,780 19,077
Net book value ...................................................................... ¥1,322 ¥ 446 ¥1,768 $10,998 $ 3,710 $14,709
Millions of Yen
Tools
and
Year ended March 31, 2002 equipment Other Total
Acquisition costs ................................................................... ¥4,195 ¥1,159 ¥5,355
Accumulated depreciation..................................................... 2,620 776 3,397
Net book value ...................................................................... ¥1,574 ¥ 382 ¥1,957
Lease expenses relating to finance leases accounted for as operating leases amounted to ¥959 million ($7,978 thou-
sand) and ¥1,124 million for the years ended March 31, 2003 and 2002, respectively.
Depreciation of the leased assets is computed by the straight-line method over the respective lease terms and the
interest portion is included in the lease payments.
Future minimum lease payments subsequent to March 31, 2003 for finance leases accounted for as operating
leases are summarized as follows:
Thousands of
Year ending March 31, Millions of Yen U.S. Dollars
2004 ............................................................................................................................................................ ¥455 $3,785
2005 and thereafter ..................................................................................................................................... 511 4,251
Total ............................................................................................................................................................ ¥966 $8,037

38 YAMAHA CORPORATION
Lessors’ accounting
The following amounts represent the acquisition costs, accumulated depreciation 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:
Thousands of
Millions of Yen U.S. Dollars
Years ending March 31, 2003 2002 2003
Acquisition costs ..................................................................................................................... ¥5,328 ¥5,127 $44,326
Accumulated depreciation....................................................................................................... 3,643 3,469 30,308
Net book value ........................................................................................................................ ¥1,685 ¥1,657 $14,018
Lease income and depreciation expenses relating to finance leases accounted for as operating leases amounted to
¥1,136 million ($9,451 thousand) and ¥612 million ($5,092 thousand), respectively, and ¥1,173 million and ¥606 mil-
lion, respectively, for the years ended March 31, 2003 and 2002.
Depreciation of the leased assets is computed by the straight-line method over the respective lease terms and the
interest portion is included in the lease income.
Future minimum lease income subsequent to March 31, 2003 for finance leases accounted for as operating leases
is summarized as follows:
Thousands of
Year ending March 31, Millions of Yen U.S. Dollars
2004 ............................................................................................................................................................ ¥ 932 $ 7,754
2005 and thereafter ..................................................................................................................................... 1,779 14,800
Total ............................................................................................................................................................ ¥2,711 $22,554

16. SECURITIES
(a) Held-to-maturity debt securities with determinable market value
Millions of Yen Thousands of U.S. Dollars
Carrying Estimated Unrealized Carrying Estimated Unrealized
Year ended March 31, 2003 value fair value gain value fair value gain
Securities whose fair value exceeds their carrying value:
Government and municipal bonds ........................... ¥ 270 ¥ 274 ¥ 4 $ 2,246 $ 2,280 $ 33
Corporate bonds ...................................................... 1,540 1,549 8 12,812 12,887 67
Other ....................................................................... 1,750 1,778 28 14,559 14,792 233
.................................................................................... 3,561 3,602 41 29,626 29,967 341

Securities whose carrying value does not exceed

their fair value:
Government and municipal bonds ........................... — — — — — —
Corporate bonds ...................................................... 100 100 — 832 832 —
Other ....................................................................... — — — — — —
.................................................................................... 100 100 — 832 832 —
Total ............................................................................ ¥3,661 ¥3,702 ¥41 $30,458 $30,799 $341
Millions of Yen
Carrying Estimated Unrealized
Year ended March 31, 2002 value fair value gain (loss)
Securities whose fair value exceeds their carrying value:
Government and municipal bonds ............................ ¥ 270 ¥ 272 ¥ 2
Corporate bonds........................................................ 1,631 1,646 14
Other ........................................................................ 1,250 1,268 18
..................................................................................... 3,152 3,187 35
Securities whose carrying value does not exceed
their fair value:
Government and municipal bonds ............................ — — —
Corporate bonds........................................................ 300 299 (0)
Other ........................................................................ 199 199 (0)
..................................................................................... 499 498 (1)
Total ............................................................................. ¥3,652 ¥3,686 ¥33

ANNUAL REPORT 2003 39

 (b) Other securities with determinable market value
Millions of Yen Thousands of U.S. Dollars
Acquisition Carrying Unrealized Acquisition Carrying Unrealized
Year ended March 31, 2003 costs value gain (loss) costs value gain (loss)
Securities whose carrying value exceeds their
acquisition costs:
Stock ...................................................................... ¥ 3,195 ¥ 4,491 ¥1,296 $26,581 $ 37,363 $10,782
Bonds
Government and municipal bonds ...................... — — — — — —
Corporate bonds ................................................. — — — — — —
Others................................................................. — — — — — —
Other ...................................................................... — — — — — —
................................................................................... 3,195 4,491 1,296 26,581 37,363 10,782
Securities whose carrying value does not exceed
their acquisition cost:
Stock ...................................................................... 8,741 8,277 (463) 72,720 68,860 (3,852)
Bonds
Government and municipal bonds ...................... — — — — — —
Corporate bonds ................................................. — — — — — —
Others................................................................. — — — — — —
Other ...................................................................... 51 37 (13) 424 308 (108)
................................................................................... 8,792 8,315 (477) 73,145 69,176 (3,968)
Total ........................................................................... ¥11,988 ¥12,806 ¥ 818 $99,734 $106,539 $ 6,805
(c) Other securities sold during the year ended March 31, 2002
Millions of Yen
Sales of other securities......................................................................................................................................................... ¥4,028
Profit on sales........................................................................................................................................................................ 3,648
Loss on sales ......................................................................................................................................................................... (27)
(d) Securities without determinable value
Thousands of
Millions of Yen U.S. Dollars
2003 2002 2003
Other securities:
Unlisted securities (other than securities traded over-the-counter)......................................... ¥6,929 ¥808 $57,646
(e) Schedule for redemption of other securities with maturities and held-to-maturity debt securities
at March 31, 2003 and 2002
Millions of Yen Thousands of U.S. Dollars
Due in one year Due after one year Due in one year Due after one year
Year ended March 31, 2003 or less through five years or less through five years
Bonds
Government and municipal bonds ........................... ¥ — ¥ 270 $ — $ 2,246
Corporate bonds ...................................................... 1,170 470 9,734 3,910
Other ....................................................................... 200 1,550 1,664 12,895
Total ................................................................................ ¥1,370 ¥2,290 $11,398 $19,052
Millions of Yen
Due in one year Due after one year
Year ended March 31, 2002 or less through five years
Bonds
Government and municipal bonds ........................... ¥ — ¥ 270
Corporate bonds ...................................................... 310 1,670
Others...................................................................... — 1,450
Others.............................................................................. 45 —
Total ................................................................................ ¥356 ¥3,390
Losses on revaluation of marketable securities classified as other securities as a result of their permanent decline in
value totaled ¥7,672 million ($63,827 thousand) for the year ended March 31, 2003.

40 YAMAHA CORPORATION
17. SUPPLEMENTARY CASH FLOW INFORMATION
The following table represents a reconciliation of cash and cash equivalents at March 31, 2003 and 2002:
Thousands of
Millions of Yen U.S. Dollars
2003 2002 2003
Cash and bank deposits......................................................................................................... ¥44,485 ¥41,074 $370,092
Time deposits with a maturity of more than three months ..................................................... (1,509) (502) (12,554)
Cash and cash equivalents .................................................................................................... ¥42,976 ¥40,571 $357,537

18. DERIVATIVES AND HEDGING ACTIVITIES

The Group utilizes derivative financial instruments such as forward exchange contracts and currency options for the
purpose of hedging its exposure to adverse fluctuations in foreign currency exchange rates but does not enter into
such transactions for speculative or trading purposes.
The Group may from time to time enter into foreign forward exchange agreements in order to manage certain risks
arising from adverse fluctuations in the foreign exchange transactions. The Group has implemented internal regula-
tions under which they will hedge any significant foreign exchange risks.
No specific disclosure for derivatives has been made as the Group principally holds only derivatives positions
which meet the criteria for deferral hedge accounting.

19. SEGMENT INFORMATION

The business and geographical 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
Electronic
Lifestyle- equipment Eliminations
Musical related and metal or unallocated
Year ended March 31, 2003 instruments AV/IT products products Recreation Others Total amounts Consolidated
I. Sales and operating income (loss)
Sales to external customers .............. ¥292,647 ¥83,670 ¥46,031 ¥60,554 ¥20,903 ¥20,956 ¥524,763 ¥ — ¥524,763
Intersegment sales or transfers ......... — — — 2,599 — — 2,599 (2,599) —
Total sales ........................................ 292,647 83,670 46,031 63,153 20,903 20,956 527,363 (2,599) 524,763
Operating expenses .......................... 282,854 80,419 45,569 43,870 22,013 20,591 495,320 (2,599) 492,720
Operating income (loss).................... ¥ 9,792 ¥ 3,250 ¥ 461 ¥19,282 ¥ (1,110) ¥ 365 ¥ 32,043 ¥ — ¥ 32,043
II. Total assets, depreciation
and capital expenditures
Total assets....................................... ¥255,247 ¥42,922 ¥18,909 ¥53,011 ¥58,849 ¥83,775 ¥512,716 ¥ — ¥512,716
Depreciation..................................... 8,001 1,807 1,002 2,845 2,932 996 17,586 — 17,586
Capital expenditures ........................ 9,067 1,503 911 3,320 728 1,352 16,883 — 16,883
Thousands of U.S. Dollars
Electronic
Lifestyle- equipment Eliminations
Musical related and metal or unallocated
Year ended March 31, 2003 instruments AV/IT products products Recreation Others Total amounts Consolidated
I. Sales and operating income (loss)
Sales to external customers .............. $2,434,667 $696,090 $382,953 $503,777 $173,902 $174,343 $4,365,749 $ — $4,365,749
Intersegment sales or transfers ......... — — — 21,622 — — 21,622 (21,622) —
Total sales ........................................ 2,434,661 696,090 382,953 525,399 173,902 174,343 4,387,379 (21,622) 4,365,749
Operating expenses .......................... 2,353,195 669,043 379,110 364,975 183,136 171,306 4,120,799 (21,622) 4,099,168
Operating income (loss).................... $ 81,464 $ 27,038 $ 3,835 $160,416 $ (9,235) $ 3,037 $ 266,581 $ — $ 266,581
II. Total assets, depreciation
and capital expenditures
Total assets....................................... $2,123,519 $357,088 $157,313 $441,023 $489,592 $696,963 $4,265,524 $ — $4,265,524
Depreciation..................................... 66,564 15,033 8,336 23,669 24,393 8,286 146,306 — 146,306
Capital expenditures ........................ 75,433 12,504 7,579 27,621 6,057 11,248 140,458 — 140,458

ANNUAL REPORT 2003 41

 Millions of Yen
Electronic
Lifestyle- equipment Eliminations
Musical related and metal or unallocated
Year ended March 31, 2002 instruments AV/IT products products Recreation Others Total amounts Consolidated
I. Sales and operating income (loss)
Sales to external customers .............. ¥286,920 ¥95,214 ¥45,714 ¥36,628 ¥21,590 ¥18,339 ¥504,406 ¥ — ¥504,406
Intersegment sales or transfers ......... — — — 2,471 — — 2,471 (2,471) —
Total sales ........................................ 286,920 95,214 45,714 39,099 21,590 18,339 506,878 (2,471) 504,406
Operating expenses .......................... 282,182 92,176 44,667 34,748 23,331 18,728 495,834 (2,471) 493,362
Operating income (loss).................... ¥ 4,738 ¥ 3,037 ¥ 1,046 ¥ 4,351 ¥ (1,741) ¥ (389) ¥ 11,043 ¥ — ¥ 11,043
II. Total assets, depreciation
and capital expenditures
Total assets....................................... ¥264,227 ¥45,887 ¥20,124 ¥38,413 ¥62,666 ¥78,343 ¥509,663 ¥ — ¥509,663
Depreciation..................................... 8,373 1,877 1,505 3,068 2,893 1,050 18,767 — 18,767
Capital expenditures ........................ 8,837 2,133 851 1,921 1,867 1,015 16,627 — 16,627
Notes: (1) The business segments have been determined based on the application or nature of each product in the market.
(2) Major products in each business segment:
Business segment Major products & services
Musical instruments Pianos, digital musical instruments, wind instruments, guitars, percussion instruments, educational
musical instruments, professional audio equipment, music schools, language schools, content provision,
tuning, sound equipment for residential 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 automation, machinery, molds
The major products are described in the accompanying “Review of Operations.”
Geographical Segments
Millions of Yen
Asia, Eliminations
North Oceania and or unallocated
Year ended March 31, 2003 Japan America Europe other areas Total amounts Consolidated
I. Sales and operating income
Sales to external customers........................... ¥326,769 ¥88,512 ¥76,620 ¥ 32,861 ¥524,763 ¥ — ¥524,763
Intersegment sales or transfers ..................... 137,734 1,675 610 69,090 209,110 (209,110) —
Total sales .................................................... 464,503 90,188 77,230 101,951 733,874 (209,110) 524,763
Operating expenses ...................................... 441,129 86,892 74,801 98,542 701,365 (208,645) 492,720
Operating income ......................................... ¥ 23,374 ¥ 3,295 ¥ 2,429 ¥ 3,409 ¥ 32,508 ¥ (465) ¥ 32,043
II. Total assets........................................... ¥412,904 ¥35,620 ¥32,100 ¥ 50,354 ¥530,979 ¥ (18,263) ¥512,716
Thousands of U.S. Dollars
Asia, Eliminations
North Oceania and or unallocated
Year ended March 31, 2003 Japan America Europe other areas Total amounts Consolidated
I. Sales and operating income
Sales to external customers ............ $2,718,544 $736,373 $637,438 $273,386 $4,365,749 $ — $4,365,749
Intersegment sales or transfers ....... 1,145,874 13,935 5,075 574,792 1,739,684 (1,739,684) —
Total sales ...................................... 3,864,418 750,316 642,512 848,178 6,105,441 (1,739,684) 4,365,749
Operating expenses ........................ 3,669,958 722,895 622,304 819,817 5,834,983 (1,735,815) 4,099,168
Operating income ........................... $ 194,459 $ 27,413 $ 20,208 $ 28,361 $ 270,449 $ (3,869) $ 266,581
II. Total assets............................. $3,435,141 $296,339 $267,055 $418,918 $4,417,463 $ (151,938) $4,265,524

42 YAMAHA CORPORATION
 Millions of Yen
Asia, Eliminations
North Oceania and or unallocated
Year ended March 31, 2002 Japan America Europe other areas Total amounts Consolidated
I. Sales and operating income
Sales to external customers........................... ¥304,945 ¥92,246 ¥73,260 ¥ 33,954 ¥504,406 ¥ — ¥504,406
Intersegment sales or transfers ..................... 136,211 2,135 493 68,063 206,902 (206,902) —
Total sales .................................................... 441,156 94,381 73,753 102,017 711,309 (206,902) 504,406
Operating expenses ...................................... 437,937 90,897 73,103 98,283 700,222 (206,859) 493,362
Operating income ......................................... ¥ 3,219 ¥ 3,484 ¥ 649 ¥ 3,733 ¥ 11,087 ¥ (43) ¥ 11,043
II. Total assets........................................... ¥410,969 ¥40,077 ¥28,515 ¥ 47,260 ¥526,821 ¥ (17,158) ¥509,663
Notes: (1) Geographical segments are divided into categories based on their geographical proximity.
(2) Major nations or regions included in each geographical segment are as follows:
(a) North America—U.S.A., Canada
(b) Europe—Germany, England
(c) Asia, Oceania and other areas—Singapore, Australia
Overseas Sales
Millions of Yen
Asia, Oceania
Year ended March 31, 2003 North America Europe and other areas Total
Overseas sales:
Overseas sales............................................................................................. ¥89,728 ¥77,185 ¥45,721 ¥212,634
Consolidated net sales ................................................................................ — — — 524,763
% of consolidated net sales......................................................................... 17.1% 14.7% 8.7% 40.5%
Thousands of U.S. Dollars
Asia, Oceania
Year ended March 31, 2003 North America Europe and other areas Total
Overseas sales:
Overseas sales........................................................................................ $746,489 $642,138 $380,374 $1,769,002
Consolidated net sales............................................................................ — — — 4,365,749
% of consolidated net sales .................................................................... 17.1% 14.7% 8.7% 40.5%
Millions of Yen
Asia, Oceania
Year ended March 31, 2002 North America Europe and other areas Total
Overseas sales:
Overseas sales............................................................................................. ¥93,524 ¥73,458 ¥47,472 ¥214,455
Consolidated net sales ................................................................................ — — — 504,406
% of consolidated net sales......................................................................... 18.5% 14.6% 9.4% 42.5%

20. SUBSEQUENT EVENT

Appropriations of retained earnings
The following appropriations of retained earnings, which have not 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:
Thousands of
Millions of Yen U.S. Dollars
Cash dividends ........................................................................................................................................ ¥1,031 $8,577

ANNUAL REPORT 2003 43

 REPORT OF INDEPENDENT AUDITORS

44 YAMAHA CORPORATION
BOARD OF DIRECTORS AND CORPORATE AUDITORS

President and Representative Senior Managing Director Managing Director

Director Katsuhiko Kishida Kunihiro Maejima
Shuji Ito

Managing Director Director Director

Hirokazu Kato Toru Hasegawa Yoshihiro Umeda

Director Director Director

Shinya Hanamoto Tsuneo Kuroe Tokihisa Makino

Corporate Auditors
Naomoto Ota
Michio Horikoshi
Kunio Miura
Haruhiko Wakuda

(As of June 26, 2003)

ANNUAL REPORT 2003 45

 WORLDWIDE NETWORK

Consolidated Subsidiaries
Non-consolidated Subsidiaries
Companies accounted for by the equity method
Japan Overseas

Yamaha Music Tokyo Co., Ltd. American Region Asia, Oceania, and Other Regions

Yamaha Music Nishi-Tokyo Co., Ltd.
Yamaha Corporation of America
Yamaha KHS Music Co., Ltd.

Yamaha Music Yokohama Co., Ltd.
Yamaha Electronics Corporation,
Taiwan Yamaha Musical Inst. Mfg.

Yamaha Music Kanto Co., Ltd. U.S.A. Co., Ltd.

Yamaha Music Osaka Co., Ltd.
Yamaha Exporting, Inc.
Kaohsiung Yamaha Co., Ltd.

Yamaha Music Kobe Co., Ltd.
Yamaha Music Manufacturing, Inc.
Yamaha Music & Electronics (China)

Yamaha Music Setouchi Co., Ltd.
Yamaha Musical Products, Inc. Co., Ltd.

Yamaha Music Nagoya Co., Ltd. Yamaha Music InterActive Inc.
Tianjin Yamaha Electronic Musical

Yamaha Music Hamamatsu Co., Ltd. YMH Digital Music Publishing LLC Instruments, Inc.

Yamaha Music Kyushu Co., Ltd.
Yamaha Canada Music Ltd. Yamaha Trading (Shanghai) Co., Ltd.

Yamaha Music Hokkaido Co., Ltd.
Yamaha de México, S.A. de C.V. Yamaha Electronics Trading

Yamaha Music Tohoku Co., Ltd.
Yamaha Music Latin America, S.A. (Shanghai) Co., Ltd.

Yamaha Music Trading Corporation Yamaha Musical do Brasil Ltda.
Guangzhou Yamaha-Pearl River

Yamaha Music Media Corporation Piano Inc.

Yamaha Sound Technologies Inc. European Region
Xiaoshan Yamaha Musical

Yamaha Music Craft Corporation
Yamaha Music Holding Europe Instruments Co., Ltd.

Yamaha Hall Co., Ltd. G.m.b.H. Yamaha Electronics (Suzhou) Co., Ltd.
Yamaha Piano Service Co., Ltd.
Yamaha Music Central Europe Yamaha Music Korea Ltd.

Yamaha Music Communications Co., Ltd. G.m.b.H.
Yamaha Music (Asia) Pte., Ltd.

Music Lease Corporation
Yamaha Elektronik Europa G.m.b.H.
Yamaha Electronics Asia Pte., Ltd.

MUSIC E-NET Inc.
Yamaha-Kemble Music (U.K.) Ltd.
Yamaha Music (Malaysia) Sdn. Bhd.

YIS Corporation
Yamaha Electronics (U.K.) Ltd.
Yamaha Electronics Manufacturing

D.S. Corporation
Kemble & Company Ltd. (M) Sdn. Bhd.

Yamaha Livingtec Corporation Kemble Music Ltd.
PT. Yamaha Music Indonesia

Yamaha Living Products Corporation
Yamaha Musique France S.A.S. (Distributor)
Joywell Home Corporation
Yamaha Electronique France S.A.S.
PT. Yamaha Indonesia

Yamaha Kagoshima Semiconductor Inc.
Yamaha Electronique Alsace S.A.
PT. Yamaha Music Manufacturing

Yamaha Metanix Corporation
Yamaha Scandinavia AB Indonesia

Kiroro Development Corporation
Yamaha Musica Italia S.p.A.
PT. Yamaha Music Manufacturing

Haimurubushi Corporation
Yamaha -Hazen Música S.A. Asia

Katsuragi Corporation
PT. Yamaha Musical Products

Toba International Hotel Corporation Indonesia

Tsumagoi Corporation
PT. Yamaha Electronics

Nemunosato Corporation Manufacturing Indonesia

Kiroro Associates Corporation Siam Music Yamaha Co., Ltd.

Yamaha Fine Technologies Co., Ltd.
Yamaha Music Australia Pty., Ltd.

Yamaha Credit Corporation
Yamaha Music Gulf FZE

Yamaha Insurance Service Co., Ltd.
Yamaha Business Support Corporation Yamaha Motor Co., Ltd.
KORG Inc.
(As of March 31, 2003)
South Korea
United States of America Taiwan
China
Canada
Mexico Sweden
United Kingdom
Germany Thailand
Singapore
France Italy Malaysia
Spain
Indonesia
Panama United Arab Emirates Australia

Brazil

46 YAMAHA CORPORATION
I N V E S T O R I N F O R M AT I O N

Head Office Transfer Agent and Registrar

10-1, Nakazawa-cho, Hamamatsu, The Chuo Mitsui Trust and Banking Co., Ltd.
Shizuoka 430-8650, Japan Nagoya Branch
Accounting & Finance Division Stock Transfer Agency Department
Tel: +81 53 460-2141 Address: 3-15-33, Sakae, Naka-ku, Nagoya 460-8685, Japan
Fax: +81 53 464-8554 Tel: +81 52 262-1520
General Administration Division
Newspaper for Official Notice
Tel: +81 53 460-2211
Nihon Keizai Shimbun
Fax: +81 53 460-2525
Annual General Meeting of Shareholders
Fiscal Year-end Date
The annual general meeting of shareholders of the Company
March 31
is normally held in June each year in Hamamatsu, Japan.
In addition, the Company may hold an extraordinary general
Dividends
meeting of shareholders as necessary, giving at least two weeks’
Year-end: To the shareholders of record on March 31
prior notice to shareholders. Notice to nonresident
Interim: To the shareholders of record on September 30
shareholders of any shareholders’ meeting will be mailed to
their standing proxies or to their mailing addresses in Japan.
Date of Establishment
October 1897
Auditor
Shin Nihon & Co.
Stated Capital
¥28,533 million
Main Shareholders
Percentage of Total Shares (%)
Number of Common Stock
Authorized: 700,000,000 shares
The Master Trust Bank of Japan, Ltd.
Issued: 206,523,263 shares
(Trust Account) 6.83
Japan Trustee Service Bank, Ltd.
Number of Shareholders
(Trust Account) 6.45
12,965
Sumitomo Mitsui Banking Corporation 4.83
Mizuho Corporate Bank, Ltd. 4.52
Number of Employees
Mitsui Sumitomo Insurance Co., Ltd. 4.52
23,563
The Shizuoka Bank, Limited 4.07
Number of Consolidated Subsidiaries
(As of March 31, 2003)
84

Number of Companies Accounted for

by the Equity Method
2 Stock Price Movement
(Yen)
Stock Exchange Listings
2,000
Tokyo
First Section, Code No. 7951
1,500

1,000

500

0
’01 ’02 ’03
Apr. July Oct. Jan. Apr. July Oct. Jan.
l l l l l l l l
June Sep. Dec. Mar. June Sep. Dec. Mar.

ANNUAL REPORT 2003 47

CM032