SOQI Inc. Becomes a Wholly-Owned Subsidiary of Yamaha Motor Co., Ltd. Through Share Exchange

February. 08 2005

Yamaha Motor Co., Ltd. (“Yamaha Motor”) and SOQI Inc. (“SOQI”) resolved at their respective Board of Directors meetings, held on February 8, 2005, that Yamaha Motor will make SOQI a wholly-owned subsidiary through share exchange, in accordance with the Commercial Code. The companies have entered into the share exchange agreement.

Purpose of making SOQI a wholly-owned subsidiary

Yamaha Motor has initiated a new medium-term management plan, NEXT 50 - Phase II. With this plan, Yamaha Motor aims to build on the profitable structure it has established, and to implement a new business strategy designed to balance value, profitability and growth. SOQI is a core manufacturing subsidiary of the Yamaha Motor Group, mainly producing power products such as all-terrain vehicles and generators for the Group. Yamaha Motor has decided to make SOQI a wholly-owned subsidiary pursuant to the simplified share exchange provisions (Article 358, Paragraph 1) of the Commercial Code of Japan, in order to promote quick decision-making, enhance management agility, and streamline and strengthen the production system.

Terms and conditions of the share exchange

Timetable

	February 8, 2005:		Meetings of the Board of Directors to approve the share exchange agreement
	February 8, 2005:		Conclusion of the share exchange agreement
	March 18, 2005:		SOQI Ordinary General Meeting of Shareholders to approve the share exchange agreement
	May 31, 2005:		Delivery of SOQI stock certificates
	June 1, 2005:		Exchange of shares
	July 20, 2005:		Issue of new shares

Note:

Yamaha Motor does not plan to seek approval for the share exchange at its Ordinary General Meeting of Shareholders, pursuant to the provisions of Article 358 of the Commercial Code of Japan (simplified share exchange).

Share exchange ratio

Yamaha Motor and SOQI requested a third party, Deloitte Tohmatsu Corporation Finance Co., Ltd. (Deloitte Tohmatsu), to evaluate the exchange ratio. Using the Deloitte Tohmatsu evaluation as a reference for negotiations, the parties to the deal agreed on the following terms for the exchange. It should be noted that the exchange ratio is subject to adjustment, pursuant to discussions between Yamaha Motor and SOQI, should a major change occur in the assets and/or management conditions of one or both of the parties.

Company name	Yamaha Motor Co., Ltd.	SOQI Inc.
Share exchange ratio	1	0.6

Notes:	1.	Deloitte Tohmatsu evaluated the Yamaha Motor exchange ratio using the average share market price and discounted cash flow (DCF) methods, and the exchange ratio for SOQI using similar company comparison and DCF methods. Deloitte Tohmatsu calculated the exchange ratios of both companies in careful consideration of their respective evaluation results.

	2.	No Yamaha Motor shares will be allocated for the SOQI shares held by Yamaha Motor.

	3.	Number of new shares to be issued and treasury stock to be used under the share exchange agreement: Yamaha Motor will issue 386,589 new shares of common stock, which will be added together with the 300,000 shares of common stock currently held by Yamaha Motor as treasury stock. Yamaha Motor will allocate the total of 686,589 shares of common stock to the shareholders of SOQI under the share exchange agreement.

Share exchange grant

There will be no share exchange grant.

Capital and capital surplus

	(1)Capital		The capital of Yamaha Motor will not increase as a result of the share exchange.
	(2)Capital surplus		The capital surplus of Yamaha Motor may increase, by the amount computed by subtracting the total book value of the treasury stock to be delivered by Yamaha Motor to the shareholders of SOQI from the amount computed by multiplying the amount of net assets of SOQI as of the effective date of share exchange by the ratio of the number of SOQI shares transferred to Yamaha Motor on the occasion of the share exchange to the total number of SOQI shares issued. However, if the result of the computation is not positive, the capital surplus of Yamaha Motor will not increase.

Overview of the companies party to the share exchange
(as of December 31, 2004 except for ”Representative”)

Company name

Yamaha Motor Co., Ltd.

SOQI Inc.

Principle business lines

Manufacture and sales of motorcycles, all-terrain vehicles, pleasure boats, fishing boats, outboard motors, generators, golf cars, automotive engines, industrial robots and other products

Manufacture and sales of power products (including all-terrain vehicles, generators, multi-purpose engines, and golf cars); shock absorbers for motorcycles and four-wheel vehicles, and other products

Date of incorporation

July 1, 1955

November 16, 1944

Location of head office

2500 Shingai, Iwata City, Shizuoka Prefecture, Japan

200-1 Sakagawa, Kakegawa City, Shizuoka Prefecture, Japan

Representative

Takashi Kajikawa, President and Representative Director (as of January 1, 2005)

Katsuhiko Sakuramoto, President and Representative Director

Capital

46,362 million yen

275 million yen

Number of shares issued

281,783,475 shares

5,507,200 shares

Shareholders’ equity

198,693 million yen

7,633 million yen

Total assets

450,812 million yen

14,885 million yen

Fiscal year end

December 31

Number of employees

8,099

694

Major customers

Yamaha Motor Corporation, USA
Yamaha Motor Europe N.V.
Yamaha Motor Marketing Japan Co., Ltd.

Yamaha Motor Co., Ltd.

Principal shareholders and their shareholding ratios

Yamaha Corporation	22.9%
The Master Trust Bank of Japan, Ltd. (trust account)	6.1%
Japan Trustee Services Bank, Ltd. (trust account)	5.4%
Toyota Motor Corporation	4.4%
Mizuho Trust & Banking Co., Ltd., Employee Retirement Benefit Trust	3.9%

Yamaha Motor Co., Ltd.	78.9%
Yamaha Corporation	3.2%
Kawakami Foundation	2.0%

Major banks

Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Shizuoka Bank, Limited
The Bank of Tokyo-Mitsubishi, Ltd.

Mizuho Corporate Bank, Ltd.
The Shizuoka Bank, Limited

Business performance over the past three fiscal years

(Millions of yen, except for per share amount)

	Yamaha Motor Co., Ltd.				SOQI Inc.
Fiscal year ending	Mar. 31, 2002	Mar. 31, 2003	Mar. 31, 2004	Dec. 31, 2004	Mar. 31, 2002	Mar. 31, 2003	Mar. 31, 2004	Dec. 31, 2004
Net sales	557,726	607,909	585,044	501,555	76,837	75,468	72,882	57,567
Operating income	12,390	24,494	12,230	8,713	794	1,390	1,095	780
Recurring profit	15,046	24,618	16,319	9,567	819	1,437	1,199	865
Net income	5,128	8,020	4,270	6,715	67	659	928	464
Net income per share (yen)	22.2	34.33	16.49	23.81	12.29	118.65	167.47	83.19
Annual dividends per share (yen)	8	10	12	14	5	8	8	8
Shareholders' equity per share (yen)	594.08	624.36	684.91	705.67	1,038.72	1,150.83	1,310.77	1,386.13

Notes:	1.	Both Yamaha Motor and SOQI adopted an irregular nine-month accounting period for the fiscal year ended December 31, 2004, due to a change of the annual closing date from March 31 to December 31.

	2.	The annual dividends per share indicated for the fiscal year ended December 31, 2004 are planned figures.

Outlook after the share exchange

	(1)	Company name, major business lines, location of head office, capital The company name, major business lines and location of the head offices of the two companies, and the representative of Yamaha Motor, will remain the same as those indicated in item 3 above, “Overview of the companies party to the share exchange.” Yoshio Mabuchi (currently a corporate officer of Yamaha Motor) is scheduled to assume the presidency of SOQI after the Ordinary General Meeting of Shareholders to be held on March 18, 2005.

	(2)	Impact on Yamaha Motor’s consolidated business performance Since SOQI is already a consolidated subsidiary of Yamaha Motor, the impact on Yamaha Motor’s consolidated business performance from the share exchange making SOQI a wholly-owned subsidiary is expected to be insignificant.