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Announcement of Reassessment of Capital Relationship Between Yamaha Corporation and Yamaha Motor

May 21, 2007

The Boards of Directors of Yamaha Corporation (Head Office: 10-1, Nakazawa-cho, Naka-ku, Hamamatsu, Shizuoka, Japan; President: Shuji Ito; Hereinafter, Yamaha) and Yamaha Motor Co., Ltd. (Head Office: 2500 Shingai, Iwata, Shizuoka, Japan; President: Takashi Kajikawa; Hereinafter, Yamaha Motor) met today, respectively, and made the decisions described below regarding the reassessment of their capital relationship, with the objectives of "increasing the corporate value of both companies" and "enhancing the value of the brand they share in common."

1. Decisions Made at the Board Meetings

(1) Yamaha

Yamaha holds a total of 64,913,884 shares of Yamaha Motor (representing 22.7% of the outstanding shares of that company) and will sell 22,271,000 of these shares (representing 7.8% of that company's outstanding shares). Yamaha will then remove Yamaha Motor from the scope of consolidation through the equity method.

Following the sale of these shares, Yamaha will continue to hold 42,642,884 shares in Yamaha Motor (representing 14.9% of the presently outstanding shares of that company).

Of the total number of shares to be sold, 8,586,000 will be purchased by Mitsui & Co., Ltd. (representing 3.0% of the outstanding shares), and 13,685,000 will be sold in block trades through a securities company (representing 4.8% of the outstanding shares).

* The above figures for shares of Yamaha Motor owned by Yamaha and percentage ownership figures include 371,150 shares (representing 0.1% of the outstanding shares of Yamaha Motor) owned by consolidated subsidiaries of Yamaha.

(2) Yamaha Motor

Yamaha Motor will purchase up to a limit of 5.0% of the outstanding shares of Yamaha as of May 21, 2007 from the market and other sources by no later than March 31, 2008.

2. Background and Objectives

The principal background developments leading to these decisions is that, as the scale of the operations of Yamaha Motor has expanded, the market value of the Yamaha Motor shares held by Yamaha has grown, and the influence of the performance of Yamaha Motor, which Yamaha accounts for under the equity method in its financial statements, has come to exert a larger influence on the consolidated performance of Yamaha. By selling a portion of its shareholdings in Yamaha Motor, Yamaha will be able to use the proceeds for "growth investments" and "providing a higher return to its shareholders." In addition, by excluding Yamaha Motor from consolidation under the equity method, Yamaha will be able to eliminate the risk of fluctuations in performance of Yamaha Motor, which has different core businesses, on its own performance, thus leading to greater transparency of Yamaha's own performance.

Along with the exclusion of Yamaha Motor from the scope of consolidation under the equity method, Yamaha and Yamaha Motor will develop a new relationship and work together to further develop the "Yamaha" brand that they share in common. Accordingly, after selling the previously mentioned portion, Yamaha will continue to hold its remaining Yamaha Motor shares, and Yamaha Motor will purchase up to 5% of the outstanding shares of Yamaha, thereby creating a new capital relationship that will form the basis for stronger and closer teamwork between the two companies.

With the "Yamaha" brand in common, the two companies will endeavor to build a stable, long-term capital relationship. Going forward, both companies will work to substantially increase their corporate value in their respective businesses and fulfill their missions and responsibilities to society on a global basis.

3. Outline of the Two Companies

Yamaha Corporation

(1)

Representative: Shuji Ito, President and Representative Director

(2)

Date of establishment: October 12, 1897

(3)

Location: 10-1, Nakazawa-cho, Naka-ku, Hamamatsu, Shizuoka, Japan

(4)

Paid-in capital: ¥ 28,534 million (as of March 31, 2007)

(5)

Sales: ¥550,361 million (for the year ended March 31, 2007)

(6)

Recurring profit: ¥42,626 million (for the year ended March 31, 2007)

(7)

Net income: ¥27,866 million (for the year ended March 31, 2007)

(8)

Number of employees: 19,911 (as of March 31, 2007)

(9)

Lines of business: Manufacture and sale of musical instruments, AV/IT equipment,electronic equipment, and other products

(10)

Outstanding shares: 206,524,676 (including 222,884 treasury shares) (As of March 31,2007)

(11)

Principal shareholders (Percentage ownership of the total outstanding shares)
The Master Trust Bank of Japan, Ltd. (trust account) (8.08%)
State Street Bank and Trust Company (7.66%)
Mitsui Sumitomo Insurance Co., Ltd. (4.32%)
Mizuho Bank, Ltd. (4.25%)
The Shizuoka Bank, Ltd. (4.04%)
The Chase Manhattan Bank N.A. London (3.76%)
Sumitomo Life Insurance Company (3.53%)
Japan Trustee Services Bank, Ltd. (trust account) (3.31%)
Nippon Life Insurance Company (3.14%)
Mizuho Corporate Bank, Ltd. (2.80%)
(As of March 31, 2007)

Yamaha Motor Co., Ltd.

(1)

Representative: Takashi Kajikawa, President, Chief Executive Officer and Representative Director

(2)

Date of establishment: July 1, 1955

(3)

Location: 2500 Shingai, Iwata, Shizuoka, Japan

(4)

Paid-in capital: ¥48,168 million (as of December 31, 2006)

(5)

Sales: ¥1,582,046 million (for the year ended December 31, 2006)

(6)

Recurring profit: ¥125,371 million (for the year ended December 31, 2006)

(7)

Net income: ¥77,233 million (for the year ended December 31, 2006)

(8)

Number of employees: 41,958 (as of December 31, 2006)

(9)

Lines of business: Development, manufacture, and sale of motorcycles, marine products, power products and other products

(10)

Outstanding shares: 286,333,528 (including 97,591 treasury shares) (As of May 10,2007)

(11)

Principal shareholders (Percentage ownership of the total outstanding shares)
Yamaha Corporation (22.55%)
Toyota Motor Corporation (4.37%)
Japan Trustee Services Bank, Ltd. (trust account) (4.23%)
The Master Trust Bank of Japan, Ltd. (trust account) (4.19%)
Mizuho Trust & Banking Co., Ltd., Employee Retirement Benefit Trust (3.82%)
Nomura Securities Co., Ltd. (3.47%)
The Shizuoka Bank, Ltd. (2.03%)
State Street Bank and Trust Company 505103 (1.91%)
The Bank of New York, Treaty Jasdec Account (1.60%)
Investors Bank and Trust Company (1.55%)
(As of December 31, 2006)

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