Good afternoon. I thank you for coming to this briefing at such a short notice. My name is Takeshi Tanaka. I am President and CEO of Fuji Heavy Industries Limited.

Today I am very happy to be able to make a joint announcement with President Wagoner of General Motors about the new alliance between our two companies.

As you all know, Fuji Heavy Industries was established in 1953 as a successor to an aircraft company, and started as a manufacturer of aircraft, buses, railroad cars and general-purpose engines.
In 1958, Fuji entered the automobile business with the mini car named �gSubaru 360�h. Since then we have successfully developed our business as a general transportation equipment manufacturer. With the rapid development of motorization we have gradually increased our focus on the car business.

In 1990, however, due to the sales slump in our automotive division, it became necessary to restructure the business. During the first half of the 90s, we experienced extreme difficulties, but our people worked hard to overcome the challenges one by one. We achieved this by developing a product strategy focusing on our core technology, such as All Wheel Drive (AWD) and horizontally opposed engine, by applying thorough cost reduction programs, and by expanding sales focusing on the compact car "Legacy" both in the domestic and overseas markets. These were the years that emphasized "choice and concentration".

It was during these years that we entered the World Rally Championship to develop Subaru's distinctive core technologies. As a result, Subaru achieved three-year consecutive win for manufacturer's title from 1995 to 1997, the first among Japanese automakers to achieve this. This year, we won five-time first places out of 14 races, the best result among all. We have proved the superiority of the driving performance delivered by the combination of a symmetrical AWD layout and longitudinally mounted horizontally opposed engine on the world stage. We were successful in establishing and promoting the Subaru brand worldwide and, most important, in winning the support of our customers.

As a result,in the latter half of the 1990's, we were not only able to successfully restructure our company but achieved a record financial performance in fiscal year ended March 1999.

As for myself, I joined Fuji Heavy Industries as a member of the new management team which was formed under former president Mr. Kawai in 1990 with the assignment to revitalize the company. After six years of hard work by all members of the company from executives to employees, we were able to restart paying our shareholders dividends in 1996. In the same year, I was appointed as the president of the company. Since then, I have established the TQF21 program, which is our mid-term corporate strategy, committed to the success of the company in the 21^st century. In the meantime, the Japanese accounting system was changed to filing consolidated accounts, and we are working to improve the financial constitution of the whole group, not just our own company.

On an immediate practical note, we undertook the restructuring of the board of directors and the introduction of the executive officers system. We also integrated our distribution channels in Japan and increased allowances to some of our subsidiaries with a view to liquidating accumulated losses. Also we are studying ways of streamlining and integrating business areas within our group of companies, with the objective of completing the process by the end of the present fiscal year.

As you can see from what you have just heard, I believe the company has more or less successfully completed the restructuring. On the long term, however, I thought it was extremely important to have some options for our company for further growth for the future against ever intensifying competition. I am confident that the company has successfully reengineered itself, with a record performance and good business situation, and I realized that it was my responsibility to chart the course for the company to become an "attractive and distinctive company for the 21^st century". For these reasons, I had been studying the potential of this strategy since this spring.

We decided to seek a strategic alliance with other auto makers to enable us to avoid risks including exchange rate fluctuations and those associated with the development of next- generation technology, while realizing stable management and a growth strategy critical in capital markets and for rating considerations. Furthermore, it was hoped that the global development of Subaru's original technology would provide a broad platform for our young employees to test their talents as they go forward.

In seeking an alliance partner, we wanted to be able to share a common vision, an expanded application of our own technologies and realization of growth through expansion of our production and sales bases. Our talks emphasized the importance of ensuring the company's management independence.

As a consequence, we decided to walk together with General Motors, the world's number one carmaker. Today, we are ready to sign a contract for a comprehensive alliance, with the objective of seeking mutual prosperity through mutual cooperation.

As you can see the nature of the cooperation between our companies in the press release provided today, we possess advantageous technologies such as AWD that enables advanced driving control and CVT, the highly fuel-efficient next generation automatic transmission, at a time when worldwide competition emphasizes safety and concern for the environment. In these fields we will be giving our best efforts as the center of expertise within the General Motors Group. On the other hand, where General Motors has an advantage, such as the environment and ITS-related technologies, we will be seeking their cooperation. For example, while we conduct research and development in direct injection engines and hybrid cars, the cooperation will give us an opportunity to review our programs and channel our investment in an efficient manner. We are also able to find out other fields for cooperation such as mutual supply of multi-passenger wagon and high performance cars, cooperation in overseas marketing, and improvement of efficiency and production capacity by making our plants available to each other. We hope to build a cooperative relationship in which 1 plus 1 will produce not 2 but 3 and 4.

Through these cooperative relations, we will try to expand our production and sales and to strive for worldwide growth while maintaining the independence of our management. At the same time I am convinced that this will contribute to the global strategy of the world's number one carmaker, General Motors.

We were pleased, in the course of our negotiations, to learn of the high esteem in which our own All-Wheel Drive and CVT technologies were held, with their history of 27 years and 5 million-plus units, and 15 years and 1.4 million-plus units respectively. We were able to renew our confidence and pride in our "Subaru" brand and technological strength dedicated to making safe and reliable cars through All-Wheel Drive.

With our proud heritage, we will continue to improve our core technologies, increase the esteem of the Subaru brand and achieve steady growth. At the same time, by increasing the independence of our non-automotive business areas, such as aerospace, buses, railroad cars, ecology system and general-purpose engines, we will continue to strive to be a company in which together we will shine brightly as the six stars of the Subaru constellation.

I wish to conclude by making a pledge, as the door opens on the 21^st century, that our company will continue to provide unique and high-quality products to satisfy our customers, and strive to become an "attractive and distinctive company" as stated in our Management Vision.

Thank you very much.

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