Financial Results for Fiscal 2000

Mazda Motor Corporation today announced a revision to its projection of financial results for Fiscal Year 2000 (the year ending March 31, 2001). The revision primarily reflects the full writeoff of Mazda's transition obligation of new accounting for retirement benefits instead of the previously announced amortization of the obligation over a 15-year period. The Company also announced a revaluation of land on an unconsolidated basis totaling 218 billion yen before taxes in accordance with the Land Revaluation Law. With these two actions, Mazda is eliminating a major adverse factor that would have reduced earnings over an extended period of time, and it is strengthening the Company's balance sheet.

Mazda's revised forecast includes consolidated revenue of 2,030 billion yen, down 70 billion yen from the previous projection released last November at the time of the announcement of financial results for the First Half of Fiscal Year 2000. The Company is projecting an operating loss of 16 billion yen, no change from November, and a net loss of 156.5 billion yen, an increase of 107 billion yen.

The lower revenue reflects lower volume and adverse product mix, primarily in Japan. The adverse profit impact of this, however, is offset fully by increased cost reductions, along with a relatively small gain from a weaker-than-expected yen.

Mazda's transition obligation for retirement benefits that is being expensed totals 158.4 billion yen. A partial offset is the elimination of the 10.1 billion yen amortization of the obligation over a 15-year period that had been included in the prior financial projection.

The revised full year projection also includes additional extraordinary costs associated with the "Early Retirement Special Program". One of the key pillars of Mazda's mid-term business plan (now called the "Mazda Millennium Plan"), the program resulted in 2,210 retirees, 410 more than the target of 1,800. While the increased special retirement charge of 12.4 billion yen will adversely affect this year's income, Mazda will benefit from a higher level of ongoing savings starting in Fiscal Year 2001. The successful implementation of the Early Retirement Special Program is a solid start to the execution of the Millennium Plan.

The revaluation of Mazda's unconsolidated land holdings at fair market value under the provisions of the Land Revaluation Law permits the Company to recognize unrealized gains on land on its balance sheet. By taking this action, Mazda is able to increase its net worth and strengthen its balance sheet despite the full writeoff of the pension transition obligation.

The environment in which Mazda operates is becoming more severe, including a slowdown of global economic growth, lower or stagnant industry demand in key markets, increasing societal pressures to reduce the impact of automotive products on the environment, and intensified competition.

Despite this, we continue to believe that the Millennium Plan announced in November last year provides a firm foundation on which Mazda can move forward with confidence. We are pleased with the progress achieved since November in implementing the Plan, and we believe that the actions announced today further strengthen Mazda's business foundation.

As far as the projection of financial results for Fiscal Year 2001 (the year ending March 31, 2002) is concerned, Mazda will announce details in May at the time of the announcement of actual financial results for Fiscal Year 2000.