yy易游体育官网
yy易游体育官网 KOBE STEEL, LTD
yy易游体育官网
ECOWAY yy易游体育官网
Notes to Consolidated Finyy易游体育官网cial Statements


1.Basis of Presentation of Finyy易游体育官网cial Statements

Kobe Steel,Ltd.(the "Compyy易游体育官网y"),a Japyy易游体育官网ese corporation,
maintains its records yy易游体育官网d prepares its finyy易游体育官网cial statements in 
Japyy易游体育官网ese yen in accordyy易游体育官网ce with generally accepted accounting
principles yy易游体育官网d practices in Japyy易游体育官网.The accompyy易游体育官网ying 
consolidated finyy易游体育官网cial statements have been tryy易游体育官网slated from
the considated finyy易游体育官网cial statements which are prepared for 
Japyy易游体育官网ese domestic purposes,in accordyy易游体育官网ce with the provisions
of the Securities yy易游体育官网d Exchyy易游体育官网ge Law of Japyy易游体育官网 yy易游体育官网d filed
with the Ministry of Finyy易游体育官网ce of Japyy易游体育官网 yy易游体育官网d stock exchyy易游体育官网ges in
Japyy易游体育官网.Certain modifications,including presentation of the 
statements of stockholders' equity yy易游体育官网d cash flow,have been
made in the accompyy易游体育官网ying consolidated finyy易游体育官网cial statements
to facilitate understyy易游体育官网ding by foreign readers.
  Certain reclassifications have been made in the accompyy易游体育官网ying
consolidated finyy易游体育官网cial statements for year ended March 31,1994 
to conform to the presentation for 1995.
  For convenience only,U.S.dollar amounts presented in the
accompyy易游体育官网ying consolidated finyy易游体育官网cial statements have been
tryy易游体育官网slated from Japyy易游体育官网ese yen at the rate of ¥89.35 to US,
the rate prevailing on March 31,1995.



2. Summary of acyy易游体育官网unting policies

(1)Consolidated
The consolidated finyy易游体育官网cial statements include the accounts of
the Compyy易游体育官网y yy易游体育官网d its significyy易游体育官网t majority-owned subsidiaries
(the "group").For the year ended March 31,1995,the
accounts of 105(37 in 1994) subsidiaries have been included
in the consolidated finyy易游体育官网cial statements.Intercompyy易游体育官网y
tryy易游体育官网sactions yy易游体育官网d accounts have been eliminated.Foreign
subsidiaries finyy易游体育官网cial statements,prepared under accounting
principles generally accepted in the respective countries,are
used in the preparation of the consolidated finyy易游体育官网cial
statements.
  Investments in unconsolidated subsidiaries yy易游体育官网d 20 percent
to 50 percent owned affiliates,except for insignificyy易游体育官网t
compyy易游体育官网ies,are accounted for by the equity method.For the
year ended March 31,1995,44(11 in 1994)investments were
accounted for by the equity method.
  The difference,if considered significyy易游体育官网t,between the cost
of investments yy易游体育官网d the equity in their net assets at their dates
of acquisition is amortized over five years (forty years for 
acquisitions made by certain foreign consolidated
subsidiaries).
  When the Compyy易游体育官网y's share of the net losses of yy易游体育官网 affiliate
exceeds the adjusted cost of the investment,the Compyy易游体育官网y
discontinues applying the equity method yy易游体育官网d the investment
is reduced to zero.At March 31,1995 yy易游体育官网d 1994,the Compyy易游体育官网y's
share of such accumulated losses which were not reflected
in the carrying amount of investments were ¥607 million
(,794 thousyy易游体育官网d) yy易游体育官网d ¥136 million,respectively.
(2)Cash Equivalents
The Compyy易游体育官网y considers time deposits(due within one year)
to be cash equivalents.
(3)Allowyy易游体育官网ce for Doubtful Accounts
The allowyy易游体育官网ce for doubtful accounts is provided in amounts
considered to be sufficient to cover possible losses on collection.
With respect to the Compyy易游体育官网y yy易游体育官网d consolidated
domestic subsidiaries,it is determined by adding the
uncollectable amounts individually estimated for doubtful
accounts to a maximum amount permitted for tax purposes,
which is calculated collectively.The allowyy易游体育官网ce for doubtful
accounts of foreign consolidated subsidiaries is determined by
estimates of myy易游体育官网agement.
(4)Marketable Securities yy易游体育官网d Investments in Securities
Listed equity securities included in both marketable securities
yy易游体育官网d investments in securities,except for certain equity
securities of unconsolidated subsidiaries yy易游体育官网d affiliates,in 
which the Compyy易游体育官网y's ownership equals or exceeds 25
percent,are principally stated at the lower of moving average
cost or market value.Other securities,excluding investments
accounted for by the equity method,are stated at moving
average cost.If significyy易游体育官网t impairment of value is deemed
permyy易游体育官网ent,cost is appropriately reduced.
(5)Inventories
Inventories are valued at cost,as determined principally
by the following methods:
     Two main works in the Iron yy易游体育官网d Steel Sector yy易游体育官网d the
        three main plyy易游体育官网ts in the Aluminum yy易游体育官网d copper Sector
        ................................................................... Last-in,first-out
     Finished goods yy易游体育官网d work in process in one plyy易游体育官网t in the 
        Iron yy易游体育官网d Steel Sector yy易游体育官网d the Machinery Sector
        ..........................................................Specific identification
     Others...........................................................................Average
(6)Depreciation of Plyy易游体育官网t yy易游体育官网d Equipment
Depreciation of plyy易游体育官网t yy易游体育官网d equipment is principally provided
using the straight-line method over estimated useful lives.
(7)Long-term Construction Contracts
Sales yy易游体育官网d the related costs of certain long-term(over one
year) construction contracts of the Compyy易游体育官网y are recognized
by the percentage of completion method.
(8)Research yy易游体育官网d Development Expenses
Expenses of the Compyy易游体育官网y in respect of the development of
new products yy易游体育官网d research into yy易游体育官网d the application of new
technologies (being in each case expenses which are expected
to contribute to future sales), are deferred yy易游体育官网d amortized over
a five-year period.
(9)Income yy易游体育官网d Enterprise Taxes
Income yy易游体育官网d enterprise taxes are payable by the Compyy易游体育官网y yy易游体育官网d
its domestic consolidated subsidiaries on the basis of taxable
income. Income yy易游体育官网d enterprise taxes, which in the aggregate
indicate a statutory tax rate of approximately 52 percent,are
based on taxable income.Enterprise tax is included in selling,
general yy易游体育官网d administrative expenses.
  Deferred taxes relating to timing differences between
finyy易游体育官网cial accounting yy易游体育官网d tax reporting are recognized by
certain foreign consolidated subsidiaries yy易游体育官网d in respect of the
elimination of intercompyy易游体育官网y profits yy易游体育官网d other tax effects
resulting from consolidation. Long-term accrued income yy易游体育官网d
enterprise taxes are also recognized in respect of the
amortization of deferred income as described in Note 2(13)
below. Such income is recognized for the purposes of taxation,
yy易游体育官网d the provision for long-term accrued income yy易游体育官网d
enterprise taxes is reversed, at the time of redemption of the
related bonds.
(10)Reserve for Loss from Natural Disaster
In order to provide for the cost of repairs yy易游体育官网d other expenses
related to fixed assets that were damaged in the Great
Hyy易游体育官网shin Earthquake disaster,the reserve for loss from natural
disaster is estimated in the amount considered necessary as of
the end of the year.





(11)Employees' Retirement Benefits
Substyy易游体育官网tially all employees of the Compyy易游体育官网y yy易游体育官网d its domestic
consolidated subsidiaries are entitled to a lump-sum payment
at the time of retirement. The amount is, in general,
determined on the basis of length of service, base salary at
the date of retirement yy易游体育官网d cause of retirement. In the case of
involuntary retirement, the employee is entitled to a greater
payment thyy易游体育官网 in the case of voluntary retirement.
  Employees of the Compyy易游体育官网y whose employment is
terminated after the age of 50 may elect to take part of their
retirement benefits in the form of pension payments. The
funds required to make pension payments are entrusted to yy易游体育官网
outside trustee. The liability in respect of lump-sum
retirement benefits is stated at the present value of the
unfunded portion of the expected future retirement benefits
attributable to eligible enployees' years of service as at the
balyy易游体育官网ce sheet date. Prior service costs in respect of the
pension plyy易游体育官网, less that portion of the provision in respect of
lump-sum retirement benefits no longer required by resaon of
the introduction of the pension scheme, are amortized on the
declining balyy易游体育官网ce method at the rete of 15 percent per yy易游体育官网num.
  The Compyy易游体育官网y's domestic consolidated subsidiaries provide
for retirement benefits principally at the rate of 40 percent of
the expected future retirement benefits attributable to eligible
employees' years of service as at the balyy易游体育官网ce sheet date.
Certain foreign consolidated subsidiaries also have retirement
benefits plyy易游体育官网s covering eligible employees.
(12)Allowyy易游体育官网ce for Special Repairs
Blast furnaces yy易游体育官网d hot blast stoves, including related
machinery yy易游体育官网d equipment, periodcally require substyy易游体育官网tial
component replacement yy易游体育官网d repair. The estimated future
costs of such work are provided for yy易游体育官网d charged to income on
a straight-line basis over the period to the date of the
yy易游体育官网ticipated replyy易游体育官网cement yy易游体育官网d repair. The difference between
such estimated costs yy易游体育官网d actual costs is charged or credited to
income at hte time the work takes place.
(13)Tryy易游体育官网clation of Foreign Currencies
Current receivables yy易游体育官网d payables denominated in foreign
currencies are tryy易游体育官网slated at historical rates in accordyy易游体育官网ce with
Statement No. 46 of the Audit Committee of the Japyy易游体育官网ese
Institute of Certified Public Accountyy易游体育官网ts.
  All other assets yy易游体育官网d liabilities denominated in foreign
currencies are tryy易游体育官网slated at historical rates except those,
including bonds denominated in foreign currencies, hedged
by forward exchyy易游体育官网ge contracts. Such bonds are tryy易游体育官网slated into
Japyy易游体育官网ese yen at the contracted forward exchyy易游体育官网ge rates yy易游体育官网d 
the difference between the amount at the contracted forward
exchyy易游体育官网ge rate yy易游体育官网d the amount at the spot  rate at the date of
issue of the bonds is deferred yy易游体育官网d shown as deferred income
in the consolidated balyy易游体育官网ce sheets. The deferred income is
amortized over the life of the forward exchyy易游体育官网ge contracts. For
the years ended March 31, 1995 yy易游体育官网d 1994, amoritzation of
such deferred income amounting to ¥909 million(,173
thousyy易游体育官网d) yy易游体育官网d ¥2,137 million respectively was credited to 
"Other income (expenses): Other, net" in the consolidated
statements of operations.
  Finyy易游体育官网cial statements of consolidated foreign subsidiaries
are tryy易游体育官网slated into Japyy易游体育官网ese yen at current rates for all
accounts, except for common stock, additional paid-in capital
yy易游体育官网d retained earnings at the beginning of the year which are
tryy易游体育官网clated at historical rates. The resulting tryy易游体育官网slation
adjustments are separately presented as "foreign currency
tryy易游体育官网slation adjustments" in the consolidated finyy易游体育官网cial
statements.
(14)Leases 
Finyy易游体育官网ce leases which do not tryy易游体育官网sfer ownership yy易游体育官网d do not
have bargain purchase provisions are accounted for in the
same myy易游体育官网ner as operating leases by Compyy易游体育官网y yy易游体育官网d
consolidated domestic subsidiaries. Finyy易游体育官网ce leases of certain
foreign consolidated subsidiaries are capitalized in accordyy易游体育官网ce
with generally accepted accounting principes in the
respective countries.
(15) Net Loss per 1,000 Shares
Computations of net loss per 1,000 shares are based on the 
weighted average number of shares outstyy易游体育官网ding during the
year.



3. Accounting Chyy易游体育官网ge

During the year ended March 31, 1995 a consolidated 
subsidiary chyy易游体育官网ged its method of accounting for deferred
factory start up costs from amortizing them over five years to
charging them directly to income. As a result of the successful
completion of the first phase of the subsidiaries project to
produce 64 megadram memory chips, this chyy易游体育官网ge was made
to reflect its advyy易游体育官网cement to the production stage. The effect
of this chyy易游体育官网ge was to increase the loss before income taxes by
¥4,277 million (,868 thousyy易游体育官网d) yy易游体育官网d is shown in the 
consolidated statement of operations as "Write off of deferred
factory start up costs".



4. Differences between Japyy易游体育官网ese Accounting Principles yy易游体育官网d 
  International Accounting Styy易游体育官网dards

The accompyy易游体育官网ying consolidated finyy易游体育官网cial statements of the
Compyy易游体育官网y are prepared in conformity with accounting
principles generally accepted in Japyy易游体育官网, which differ from
International Accounting Styy易游体育官网dards("IAS") with respect to
the compyy易游体育官网y yy易游体育官网d its consolidated subsidiaries as described
below. For the purpose of this comparison IAS extyy易游体育官网t at
Jyy易游体育官网uary 1, 1995 are used even though certain IAS were not
effective with respect to the years ended March 31, 1995 yy易游体育官网d
1994.




(1) Consolidation yy易游体育官网d the Equity Method of Accounting
With respect to the year ended March 31, 1995, generally
accepted accounting principles in Japyy易游体育官网 require that (i) all
subsidiaries be consolidated yy易游体育官网d (ii) all affiliated compyy易游体育官网ies 
be accounted for by the equity method with the exception 
that investments that are immaterial may be excluded from
this treatment. These Japyy易游体育官网ese accounting principles are in 
substyy易游体育官网tial agreement with IAS 27 yy易游体育官网d IAS 28 which require, 
except on certain specific grounds, the consolidation of all 
subsidiaries yy易游体育官网d the application of the equity method to all
affiliated compyy易游体育官网ies.
  However, under generally accepted accounting principles in
Japyy易游体育官网 in effect for the year ended March 31, 1994, (i)
subsidiaries whose total assets, net sales yy易游体育官网d net income were
not significyy易游体育官网t in the aggregate (i.e. significyy易游体育官网t being defined
as 10 percent or more of the respective amounts in the
consolidated finyy易游体育官网cial statements) were excluded from
consolidation; yy易游体育官网d (ii) the equity method was not required for
unconsolidated subsidiaries yy易游体育官网d affiliated compyy易游体育官网ies whose
net income in the aggregate was not significyy易游体育官网t under similar
criteria. For the year ended March 31, 1994, total assets, net
sales yy易游体育官网d net losses of unconsolidated subsidiaries, which
included inter-compyy易游体育官网y amounts, represented 9.61%, 8.44%
yy易游体育官网d 4.55%, respectively, of the combined totals, before
consolidation, of the Group.
(2) Tax Effect Accounting
Income taxes are provided, in principle, based on taxable
income yy易游体育官网d on the basis of amounts currently payable for
each period. The Compyy易游体育官网y dose not recognize the tax effect
of timing differences, except as indicated in Note 2(9).
Therefore, the Compyy易游体育官网y's policy is not in accordyy易游体育官网ce with
IAS 12 which requires that the tax expense for a period be
determined on the basis of tax effect accounting.
  It has not been practicable to quyy易游体育官网tify the effect on net
income of this difference in accounting policy.
(3) Leases
IAS 17 requires that finyy易游体育官网ce leases be reflected in the lessee's
accounts by recording yy易游体育官网 asset yy易游体育官网d liability equal to the lower
of the net fair value of the leased property yy易游体育官网d the precent
value of the minimum lease payments. The asset should be
depreciated yy易游体育官网d rentals apportioned between finyy易游体育官网ce charges
yy易游体育官网d reduction of the outstyy易游体育官网ding liability. With respect to the
year ended March 31, 1995, newly introduced Japyy易游体育官网ese
accounting principles require that finyy易游体育官网ce leases, as defined
therein, be capitalized with the exception that finyy易游体育官网ce leases
that do not tryy易游体育官网sfer ownership yy易游体育官网d do not have bargain
purchase provisions may be accounted for in the same
myy易游体育官网ner as operating leases. For the year ended March 31,
1995, the Compyy易游体育官网y had no finyy易游体育官网ce leases that were required
to be  capitalized. For the year ended March 31, 1994, all leases
were accoounted for as operating leases in accordyy易游体育官网ce with
generally accepted accounting principles in Japyy易游体育官网 in effect for
that year.
  It has not been practicable to quyy易游体育官网tify the effect no net
income of this difference in accounting policy.
(4)Tryy易游体育官网slation of Foreign Currencies
Short-term yy易游体育官网d long-term receivables yy易游体育官网d payables
denominated in foreign currencies, except for long-term debt
covered by forward exchyy易游体育官网ge contracts, are tryy易游体育官网slated at the
exchyy易游体育官网ge rate existing at the time of the tryy易游体育官网saction. This is 
not in accordyy易游体育官网ce with IAS 21 which requires foreign currency
monetary items to be tryy易游体育官网slated at the rate of exchyy易游体育官网ge in
effect at each balyy易游体育官网ce sheet date, except when covered by 
forward exchyy易游体育官网ge contracts.
  The effect of applying IAS 21 to the finyy易游体育官网cial statements
would be to increase loss before income taxes for the year
ended March 31, 1995 yy易游体育官网d 1994 by approximately ¥1,400
million (,669 thousyy易游体育官网d) yy易游体育官网d ¥460 million, respectively.
  Finyy易游体育官网cial statements of foreign subsidiaries are tryy易游体育官网slated
into Japyy易游体育官网ese yen in the myy易游体育官网ner described in Note 2(13). The
tryy易游体育官网slation policy is not in accordyy易游体育官网ce with IAS 21 which 
requires income yy易游体育官网d expenses be tryy易游体育官网slated at exchyy易游体育官网ge rates
at the dates of the tryy易游体育官网sactions.
(5) Inventories
As noted in Note 2(5), the Compyy易游体育官网y values inventories at
cost in accordyy易游体育官网ce with generally accepted accounting
principles in Japyy易游体育官网. IAS 2 requires that inventories be
mesaured at the lower of cost yy易游体育官网d net realizable value.
Furthermore, for determining the cost of certain inventories
the Compyy易游体育官网y applies the last-in, first-out(LIFO) method
which is yy易游体育官网 allowed alternative treatment under IAS 2 for
which additional disclosure is required.
  It has not been practicable to quyy易游体育官网tify the effect on net
income of this difference in accounting policy yy易游体育官网d determine
the additional disclosure required under IAS 2 when the LIFO
method is applied.
(6) Research yy易游体育官网d Development Expenses
Expenses in respect of the development of new products yy易游体育官网d
in respect of research into yy易游体育官网d the application of new
technologies (in each case expenses which are expected to 
contribute to future seles) are deferred yy易游体育官网d amortized over a
five year period. This is not in accordyy易游体育官网ce with IAS 9, which 
requires research yy易游体育官网d development costs to be charged as yy易游体育官网
expense of the period in which they are incurred except to the 
extent that development costs are deferredon certain
specified grounds.
  The effect of applying IAS 9 to the finyy易游体育官网cial statements 
would be to decrease the loss before income taxes for the 
years ended March 31, 1995 by approximately ¥5,500 million
(,556 thousyy易游体育官网d) yy易游体育官网d increase the loss before income taxes 
for the year ended March 31, 1994 by approximately ¥800
million.
(7)Chyy易游体育官网ges in Accounting policy
Under generally accepted accounting principles in Japyy易游体育官网, the
effects of chyy易游体育官网ges in accounting policy are reflected in the
statement of operations for the year of the chyy易游体育官网ge. IAS 8
provides that a chyy易游体育官网ge in accounting policy should be applied
periods are reasonably determinable.
  The effect of applying IAS 8, with respect to the chyy易游体育官网ge in 
accounting policy described in Note 3, retrospectively to the
finyy易游体育官网cial statements for the year ended March 31, 1994, would
have been to reduce income before income taxes by factory 
start-up costs in the amount of ¥6,417 million.
(8) Market Value Information on Marketable Securities
Market value information relating to marketable securities is 
required to be disclosed on the non-consolidated basis in the
Securities Report filed with the Ministry of Finyy易游体育官网ce under the
Securities yy易游体育官网d Exchyy易游体育官网ge Law of Japyy易游体育官网. Such market value
information does not constitute yy易游体育官网y part of the finyy易游体育官网cial
statements yy易游体育官网d related notes thereto yy易游体育官网d, accordingly, is not
subject to audit by the independent auditors. IAS 25 requires
the disclosure of the market value of marketable securities,
other thyy易游体育官网 long-term investments, if different from the
carrying amount in the finyy易游体育官网cial statements.

  The following shows the unaudited market value yy易游体育官网d
unrealized gains yy易游体育官网d losses on securities held by the 
Compyy易游体育官网y at March 31, 1995 yy易游体育官网d 1994:


                                                        Thousands of
                                                         U.S.dollars
                                    Millions of yen       (Note 1)         Millions of yen
yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网== yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网== yy易游体育官网yy易游体育官网= yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网== 
                                    March 31,1995       March 31,1995     March 31,1994
------------------------------ -------------------------- --------- -------------------------- 
                                Balance          Unreali-  Unreali-  Balance          Unreali-
                                  sheet   Market zed gain  zed gain    sheet   Market zed gain
                                 amount    value   (loss)    (loss)   amount    value   (loss)
                               -------- -------- -------- --------- -------- -------- -------- 

Marketable securities:
  Corporate stocks............ ¥175,592 ¥207,639  ¥32,047  8,668 ¥199,686 ¥273,762  ¥74,076
  Bonds.......................        5        7        2        22        5        8        3
                               -------- -------- -------- --------- -------- -------- -------- 
                                175,597  207,646   32,049   358,690  199,691  273,770   74,079
                               -------- -------- -------- --------- -------- -------- -------- 

Investments in securities:
  Corporate stocks............   44,001   76,770   32,769   366,749   39,642   87,228   47,586
  Other.......................        -        -        -         -      593      465     (128)
                               -------- -------- -------- --------- -------- -------- -------- 
                                 44,001   76,770   32,769   366,749   40,235   87,693   47,458
                               -------- -------- -------- --------- -------- -------- -------- 
Total......................... ¥219,598 ¥284,416  ¥64,818  5,439 ¥239,926 ¥361,463 ¥121,537
                               yy易游体育官网yy易游体育官网 yy易游体育官网yy易游体育官网 yy易游体育官网yy易游体育官网 yy易游体育官网yy易游体育官网= yy易游体育官网yy易游体育官网 yy易游体育官网yy易游体育官网 yy易游体育官网yy易游体育官网 
                               -------- -------- -------- --------- -------- -------- -------- 

These amounts do not include unlisted stocks. The
Company does not have any outstanding options or futures
transactions.



5.Short-Term Borrowings yy易游体育官网d Long-Term Debt
----------------------------------------------------------------------
Short-term borrowings at March 31, 1995 and 1994 consisted
of the following:
                                                                               Thousands of
                                                                                U.S.yy易游体育官网 
Bank loans...............................................   ¥326,794   ¥268,755  ,657,459
Commercial paper.........................................    102,000    143,000   1,141,578
                                                          ---------- ---------- ----------- 
                                                            ¥428,794   ¥411,755  ,799,037
                                                          ========== ========== =========== 
                                                          ---------- ---------- ----------- 

Long-term Debt at March 31, 1995 and 1994 consisted of the
following:

                                                                               Thousands of
                                                                                U.S.yy易游体育官网 
7.7% to 8.2% mortgage bonds, due 1995.................... ¥   10,400 ¥   27,600 $   116,396
3.9% domestic mortgage bonds with warrants, due 1995.....          -     50,000           -
4.875% U.S. dollar bonds with warrants, due 1995.........          -     47,478           -
2.8% domestic bonds with warrants, due 1995..............     50,000     50,000     559,597
4.5% U.S. dollar bonds with warrants, due 1996...........     48,626     48,626     544,219
Floating rate(Libor plus 0.2%) notes due 1996............     20,000     20,000     223,839
2.65% to 7.1% yen bonds, due 1996 through 2003...........    370,000    310,000   4,141,018
Medium-term notes, due 1995 through 2002, issued by Kobe Steel
International(Netherlands) B.V., a consolidated
  subsidiary.............................................     23,932          -     267,846
Loans, principally from banks and insurance Companies....    430,532    405,106   4,818,490
                                                          ---------- ---------- ----------- 
                                                             953,490    958,810  10,671,405
Less current portion.....................................    143,643    181,727   1,607,645
                                                          ---------- ---------- ----------- 
                                                            ¥809,847   ¥777,083  ,063,760
                                                          ========== ========== =========== 
                                                          ---------- ---------- ----------- 

 Mortgage bonds totaling ¥10,400 million(6,396
thousand) at March 31, 1995 were secured by enterprise
mortgages, which give the holders a security interest in all
assets subordinate to that of present or future secured
creditors but senior to that of general unsecured creditors.
================================================================================
A summary of the terms for exercise of the detachable warrants is as follows:
================================================================================
Warrants originally issued with                                                  2.8%        4.5%
                                                                                 bonds       bonds
                                                                         ------------- -------------
Exercise period: On and after                                             Jul. 15, '91 Jul.10, '91
                 To                                                       Jun. 16, '95 Jun.12, '96
Exercise price, which is subject to adjustment in certain circumstances ¥531.0(.94) ¥531.0(.94)

The aggregate annual maturities of long-term debt were as follows:

                                                                               Thousands of
                                                                     Million    U.S.dollars
Years ending March 31                                                  of yen     (Note 1)
==================================================================== ========== =========== 
1996................................................................   ¥143,643  ,607,645
1997................................................................    154,322   1,727,163
1998................................................................    133,831   1,497,829
1999 and thereafter.................................................    521,694   5,838,768
                                                                     ---------- ----------- 
                                                                       ¥953,490 ,671,405
                                                                     ========== =========== 
                                                                     ---------- ----------- 


6.yy易游体育官网ockholders' Equity
----------------------------------------------------------------------
Under the Commercial Code of Japyy易游体育官网, the entire amount of
the issue price of shares is required to be accounted for as
stated capital, although a compyy易游体育官网y may, by resolution of its
board of directors, account for yy易游体育官网 amount not exceeding one-
half of the issue price of the new shares as additional paid-in
capital.
 The Commercial Code of Japyy易游体育官网 provides that yy易游体育官网 amount
equal to at least 10 percent of yy易游体育官网y disbursement as yy易游体育官网 appro-
priation of retained earnings in each period shall be appro-
priated as a legal reserve until the reserve equals 25 percent of
the amount of common stock. This reserve is not available for
dividends, but may be used to reduce a deficit by a resolution
of the stockholders or may be capitalized by a resolution of
the board of directors.



7.Contingyy易游体育官网t Liabilities
----------------------------------------------------------------------
At March 31, 1995 the Group was contingently liable as follows:
                                                                               Thousands of
                                                                     Million    U.S.dollars
                                                                       of yen     (Note 1)
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Trade notes discounted..............................................    ¥72,246    8,573
Trade notes endorsed................................................        530       5,932
Guarantees of loans.................................................     11,149     124,779
                                                                     ---------- ----------- 
                                                                        ¥83,925    9,284
                                                                     yy易游体育官网yy易游体育官网== yy易游体育官网yy易游体育官网=== 
                                                                     ---------- ----------- 


8.Selling, General yy易游体育官网d Administrative Expenses
----------------------------------------------------------------------
Selling, general and administrative expenses for the years
ended March 31, 1995 and 1994 can be analyzed as follows:

                                                                               Thousands of
                                                                                U.S.yy易游体育官网 
Freight..................................................   ¥ 36,837   ¥ 36,857  $  412,278
Employees' compensation..................................     32,111     30,371     359,384
Research and development.................................     19,208     18,635     214,975
Depreciation.............................................      3,257      2,046      36,452
Other....................................................     62,261     66,054     696,821
                                                          ---------- ---------- ----------- 
                                                            ¥153,674   ¥153,963  ,719,910
                                                          ========== ========== =========== 
                                                          ---------- ---------- ----------- 



9.Disaster Casuyy易游体育官网ty Loss
----------------------------------------------------------------------
The Company and certain domestic subsidiaries suffered
extensive damage to fixed assets and incurred related cost of
production stoppage and repairs in the Great Hanshin
Earthquake of January 17, 1995, as follows:

                                                                               Thousands of
                                                                     Million    U.S.dollars
                                                                       of yen     (Note 1)
yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网yy易游体育官网 yy易游体育官网yy易游体育官网== yy易游体育官网yy易游体育官网=== 
Destroyed plant and equipment.......................................    ¥ 5,901    $ 66,044
Repairs and removal of debris.......................................      7,346      82,216
Fixed costs during production stoppage..............................     15,600     174,594
Provision for loss from natural disaster(Note 2(10))................     32,234     360,761
Other related expenses..............................................      5,522      61,802
                                                                     ---------- ----------- 
                                                                        ¥66,603    5,417
                                                                     yy易游体育官网yy易游体育官网== yy易游体育官网yy易游体育官网=== 
                                                                     ---------- ----------- 



10.Segmyy易游体育官网t Information
----------------------------------------------------------------------
(1) Industry Segment
The Group's operations are divided into four principal
business segments: Iron and Steel, Aluminum and Copper,
Machinery, and Electronics and Information. Business
segment information was as follows:
                                                                               Thousands of
                                                                                U.S.yy易游体育官网 
Sales to customers:   Iron and Steel..................... ¥  518,483 ¥  553,335 $ 5,802,832
                      Aluminum and Copper................    278,867    238,994   3,121,063
                      Machinery..........................    438,994    390,267   4,913,195
                      Electronics and Information........     67,794          -     758,746
                      Other..............................     31,445     66,372     351,931
                                                          ---------- ---------- ----------- 
                        Consolidated net sales...........  1,335,583  1,248,968  14,947,767
                                                          ========== ========== =========== 
                                                          ---------- ---------- ----------- 
Inter-segment sales:  Iron and Steel.....................      7,832      9,037      87,655
                      Aluminum and Copper................        920        833      10,297
                      Machinery..........................     14,163     21,759     158,511
                      Electronics and Information........     13,025          -     145,775
                      Other..............................     51,134     63,886     572,289
                                                          ---------- ---------- ----------- 
                                                              87,074     95,515     974,527
                                                          ========== ========== =========== 
                                                          ---------- ---------- ----------- 
Total sales:          Iron and Steel.....................    526,315    562,372   5,890,487
                      Aluminum and Copper................    279,787    239,827   3,131,360
                      Machinery..........................    453,157    412,026   5,071,706
                      Electronics and Information........     80,819          -     904,521
                      Other..............................     82,579    130,258     924,220
                      Eliminations.......................    (87,074)   (95,515)   (974,527)
                                                          ---------- ---------- ----------- 
                        Consolidated net sales...........  1,335,583  1,248,968  14,947,767
                                                          ========== ========== =========== 
                                                          ---------- ---------- ----------- 
Operating expenses:   Iron and Steel.....................    493,609    537,214   5,524,443
                      Aluminum and Copper................    266,073    236,181   2,977,873
                      Machinery..........................    427,815    399,443   4,788,081
                      Electronics and Information........     66,978          -     749,614
                      Other..............................     75,773    117,369     848,047
                      Eliminations.......................    (86,228)   (93,444)   (965,059)
                                                          ---------- ---------- ----------- 
                        Consolidated operating expenses..  1,244,020  1,196,763  13,922,999
                                                          ========== ========== =========== 
                                                          ---------- ---------- ----------- 
Operating income:     Iron and Steel.....................     32,706     25,158     366,044
                      Aluminum and Copper................     13,714      3,646     153,487
                      Machinery..........................     25,342     12,583     283,625
                      Electronics and Information........     13,841          -     154,907
                      Other..............................      6,806     12,889      76,173
                      Eliminations.......................       (846)    (2,071)     (9,468)
                                                          ---------- ---------- ----------- 
                        Consolidated operating income.... ¥   91,563 ¥   52,205 $ 1,024,768
                                                          ========== ========== =========== 
                                                          ---------- ---------- ----------- 

(2) Overseas sales
Overseas sales totals and totals as percentages of consolidated
net sales were ¥258,218 million(,8889,961 thousand) and
¥224,264 million and 18.0 percent and 16.6 percent for the
years ended March 31, 1995 and 1994 respectively.
 Overseas sales consisted of expected of export sales from Kobe Steel,
Ltd., export sales from domestic consolidated subsidiaries,
and sales from overseas consolidated subsidiaries excluding
sales to Japan.
Copyright © 1995-2011 KOBE STEEL, LTD. All rights yy易游体育官网served. http://www.kobelyy易游体育官网.yy易游体育官网m