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Revision of Business Forecasts and Cash Dividends for Fiscal 2011 and Reversal of Accrual for Product Liability

August 3, 2011

Yamaha Motor Co., Ltd. (the "Company") has made the revisions detailed below to the consolidated financial results for the first half-year and full year for fiscal 2011 (January 1, 2011 through December 31, 2011) and cash dividends forecast for fiscal 2011. Initial forecasts were originally released on February 15, 2011. The Company has also reversed the accrual for product liability.

1. Revised business forecasts for the fiscal year ending December 31, 2011

1) Revised consolidated financial forecasts for first half-year (January 1, 2011 through June 30, 2011)

Millions of yen

 

Net sales

Operating
income

Ordinary
income

Net income for quarter

Net income per share for quarter

Original forecast (A)

670,000

25,000

26,000

8,500

(Yen)
24.35*

Revised forecast (B)

663,132

41,543

48,784

28,960

82.96

Amount of change (B-A)

-6,868

16,543

22,784

20,460

Percentage change
[(B-A)/A]

-1.0%

66.2%

87.6%

240.7%

Reference: Results for first
half of fiscal 2010

676,166

35,030

43,808

23,776

76.68

*Revised on April 28, 2011.
2) Revised consolidated financial forecasts for full year (January 1, 2011 through December 31, 2011)

Millions of yen

 

Net sales

Operating
income

Ordinary
income

Net income for
quarter

Net income per
share for quarter

Previous forecasts (A)

1,350,000

53,000

55,000

20,000

(Yen)
57.29*

Revised forecast (B)

1,350,000

68,000

78,000

35,000

100.26

Amount of change (B-A)

15,000

23,000

15,000

Percentage change
[(B-A)/A]

28.3

41.8

75.0

Reference: Results for fiscal
2010

1,294,131

51,308

66,142

18,300

55.50

*Revised on April 28, 2011.
3) Main reasons for the revision
(i)

Revision of consolidated financial forecasts for the first half-year

Although net sales for the first half-year were roughly in line with of the initial forecast, improvements in profits for the motorcycle business in Central and South America and the marine business overall as well as factors like cost reductions including the reversal of accrual for product liabilities, profits for the first half-year exceeded the initial forecast.

(ii)

Revision of consolidated financial forecasts for the full year

The consistently high exchange rate of the yen, further increases in the price of raw materials, the effects of the Great Eastern Japan Earthquake, as well as accelerated research and development aimed at shifting to a growth-oriented footing, the business conditions facing the Company continue to be very challenging.
Nonetheless, the Company predicts that consolidated financial results for the full year will exceed the initial forecast, due to the improvement in profits for the first half-year and the fact that continued growth in sales for the motorcycle business in Central and South America and the marine business overall are expected as well as further cost reductions achieved through structural reform.
Forecasts are based on the following assumed exchange rates:
Second half of the fiscal year: U.S. dollar = 80 yen (two yen higher than initial forecast, four yen higher year on year); euro = 110 yen (as per initial forecast, one yen higher than previous period).
Full year: U.S. dollar = 81 yen (one yen higher than initial forecast, seven yen higher year on year); euro = 113 yen (three yen lower than initial forecast, three yen higher year on year).

2. Revised forecast for cash dividends

1) Details

Yen

 

Annual dividends

 

End of the 1st quarter

End of 1st half

End of 1st nine months

Fiscal year end

Total

Previous forecasts
(released February 15, 2011)

0.00

Undecided

Undecided

Revised forecasts

20.00

20.00

Results for the fiscal
year ending December 31, 2011

0.00

Results for the fiscal
year ended
December 31, 2010

0.00

0.00

0.00

2) Reason for revision of forecast for cash dividends
The Company regards improved benefits for shareholders as management's top priority, and as such, we are assuming a global perspective and pursuing business worldwide to increase corporate value
In deciding its dividend, the Company's basic approach is to adopt a long-term perspective that takes overall account of consolidated business results and other factors, using payout ratio as the index, in such a way as to consistently meet shareholder expectations.
A decision regarding the forecast of year-end cash dividends for fiscal 2011 was originally left pending. However, with the steady implementation of structural reform yielding improved business results and with improvement expected in the financial resilience, the Company is now in a position to resume dividend payment. Based on consolidated financial forecasts for the full year, a year-end dividend of 20 yen per share is planned.
3) Reversal of accrual for product liability
The Company's accrual for product liability includes an accrual for product liability relating to the side-by-side vehicle manufactured by the U.S. manufacturing subsidiary Yamaha Motor Manufacturing Corporation of America. However, in light of progress with the settlement of liability claims, an optimistic estimate was made in the consolidated financial statement for the second quarter of fiscal 2011. As a result, it was decided to make a reversal of the accrual for product liability for the second quarter amounting to 6,762 million yen, which was recorded under selling, general and administrative expenses.

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