Summary of Financial Results for the Fiscal Year Ended March 31, 2001

Although the strong yen and other factors caused profits to fall, the Company registered record sales

Yamaha Motor's consolidated net sales for fiscal 2001, ended March 31, 2001, increased 0.8 percent from the previous year, to ¥884.1 billion, setting a sales record for the second consecutive year. However, operating income decreased 14.7 percent, to ¥31.8 billion, and ordinary income also fell 17.3 percent, to ¥25.1 billion. The declines in income were principally attributable to the negative effect of a significant appreciation of the yen against major currencies.

The major factors behind the record high sales achievement include increased sales in the motorcycles, marine products, and power products businesses, as well as the IM (industrial robots) business. These gains more than offset the decrease resulting from the withdrawal from the GHP (gas engine heat-pump) air conditioner business. Products which registered particularly high sales included large sports and cruiser motorcycles, outboard motors -- including a wide variety of environmentally-friendly models -- all-terrain vehicles (ATVs), for which demand grew in North America, and surface mounters, which mount electronic components on printed circuit boards.

A review of sales by geographic segment reveals that sales in Japan were low, due to the sluggish domestic economy, and that sales also dropped in Europe, reflecting the negative effects of a significant depreciation of the euro against the yen. Sales fell in Asia as well, due to the change of closing date for account settlement in the Company's Taiwan subsidiaries. However, sales in North America, where the Company's mainstay products -- including motorcycles, outboard motors and ATVs are marketed -- climbed substantially. Accordingly, overseas consolidated sales represented 79.1 percent of net sales, with the highest results recorded by North American subsidiaries, while European subsidiaries' sales increased 12 percent (motorcycles: 15 percent) on a local currency basis.

In terms of profit, the Company strove to reduce selling, general and administrative expenses, and the cost of sales. However, there was a loss from currency translation into yen totaling ¥26.8 billion, due to the yen's appreciation during the term -- by ¥4 against the U.S. dollar, and by ¥19 against the euro -- compared to the previous year. As a result, operating income declined by ¥5.5 billion from the previous year, and ordinary income fell ¥5.2 billion.

Net income for the term decreased 31.4 percent from the previous year, to ¥7.6 billion -- the first such decrease in two years -- due to the negative effects of exchange rate fluctuations, and the appropriation of an extraordinary loss of ¥8.2 billion -- which was half amount of the shortage in the provision for employees' retirement benefits scheduled to be written off in fiscal 2001 and 2002.

The number of consolidated subsidiaries at the fiscal year-end stood at 84, an increase of five from the previous fiscal year-end. The number of affiliates accounted for by the equity method was 44, a gain of eight.

A slight decline in sales; profits fall

Non-consolidated net sales declined 0.3 percent from the previous year, to ¥590.3 billion. This was mainly attributable to the sales decrease resulting from the withdrawal from the GHP air conditioner business, and the negative effect of currency translation, which together surpassed the sales increases generated by motorcycles, marine products, power products and industrial robots.

Major positive factors impacting sales include: a 7.9 percent gain in motorcycle sales in Japan, due to increased sales of small motorcycles such as the TW200 and Majesty 250 -- the first time in seven years that sales exceeded the level for the previous year. In addition, record sales of ¥32.7 billion were registered for industrial robots -- a 35.3 percent increase from the previous year.

Ordinary income, however, decreased 7.8 percent, to ¥11.4 billion, due mainly to a loss of ¥17.9 billion arising from currency translation. Consequently, non-consolidated business results showed a sales decrease for the first time in seven years, and a decline in income (on ordinary income basis) after an interval of two years. 

Based on the medium-term 3-year management plan initiated in April 1999, Yamaha Motor has been promoting many structural reform activities. Through the implementation of the plan, the Company aims to "achieve consolidated net sales of 1 trillion yen and 5 percent of the ratio of ordinary income to net sales, by establishing a solid management foundation that generates stable profits, even at an exchange rate of 100 yen to the U.S. dollar (euro)." Amid a challenging management environment, characterized by changes such as a slowing U.S. economy dragging the world economy, and the emergence of competitive Chinese motorcycle manufacturers in the international marketplace, the Company initiated a corporate reform and business restructuring drive in fiscal 2002, based on "a new, result-oriented value system." With the reform and restructuring program, the Company can survive and win the increasingly intense global competition.

Yamaha Motor is determined to promote corporate reform, focusing on a "profit-oriented operating approach" at the core of the management. The action guidelines and evaluation criteria designed to achieve the objective are based on the "Yamaha Value 21" concept, which aims to raise the employees' awareness of the reform. The Company plans to implement "consolidated business evaluation," emphasizing group-wide achievements, while establishing a new personnel system featuring results-based pay, designed to foster capable personnel.

From the viewpoint of corporate governance, the Company is taking measures to review its management system. As part of this drive, the Company is reorganizing the board of directors, by introducing a corporate executive officer system, which enables speedier decision-making on the business front. It has also adopted a new management style, emphasizing consolidated management. Moreover, the Company is looking into a "brand equity strategy" to further enhance corporate value. Pushing these internal renovations, the Company can also realize steady achievements by expediting all the other reform activities in progress.

Since its foundation, the motorcycle business has been at the core of the Company's operations. Sales in this mainstay business segment accounted for 50.1 percent of consolidated net sales for the fiscal year ended March 31, 2001. To hone its competitive edge in the global motorcycle market, the Company has initiated reform of the motorcycle business, and initiated a new organizational system in May 2001. The reforms enable swift response to 21st century business issues.

The new organization abolished the conventional, vertically organized system for manufacture, purchase, engineering and sales, and transformed it into a more agile management system. It enables cost structure reform and efficient consolidated operations, the Company's key business priorities for the 21st century. The new management aims to achieve "manufacturing innovation" -- leading to the development and manufacture of excellent, lower-cost products on a global scale -- and "SCM (supply chain management) innovation from a consolidated perspective," designed to increase responsibility and profitability for consolidated business management.

The Company forecasts its consolidated business results for fiscal 2002, ending March 31, 2002 as follows: net sales of ¥940 billion; operating income of ¥42 billion; ordinary income of ¥35 billion; and net income of ¥12 billion. The non-consolidated business results forecast for fiscal 2002 are: net sales of ¥580 billion; operating income of ¥9 billion; ordinary income of ¥13.5 billion; and net income of ¥4 billion.

These business performance forecasts are based on the assumption that one U.S. dollar equals ¥116 (a ¥9 depreciation from the previous fiscal year), and one euro equals ¥105 (an ¥8 depreciation).