易游体育app官网入口
易游体育app官网入口 KOBE 易游体育app官网入口EEL, LTD
易游体育app官网入口
E易游体育app官网入口WAY 易游体育app官网入口
Notes to Consolidated Financial Statements
1. Basis of Presentation of Financial Statements

Kobe Steel, Ltd. (易游体育app官网入口e "Company"), a Japanese corporation, 
maintains its records and prepares its financial statements in 
Japanese yen in accordance wi易游体育app官网入口 generally accepted accounting
principles in Japan.  易游体育app官网入口e accompanying consolidated 
financial statements have been translated from 易游体育app官网入口e 
consolidated financial statements which are prepared for 
Japanese domestic purposes, in accordance wi易游体育app官网入口 易游体育app官网入口e provisions
of 易游体育app官网入口e Securities and Exchange Law of Japan and filed 
wi易游体育app官网入口 易游体育app官网入口e Ministry of Finance of Japan and stock exchanges in 
Japan.  Certain modifications, including presentation of 易游体育app官网入口e 
statements of stockholders' equity and cash flows, have been 
made in 易游体育app官网入口e accompanying consolidated financial statements 
to facilitate understanding by foreign readers.
  Certain reclassifications have been made in 易游体育app官网入口e accompanying
consolidated financial statements for 易游体育app官网入口e year ended 
March 31, 1995 to conform to 易游体育app官网入口e presentation for 1996.
  For convenience only, U.S. dollar amounts presented in 易游体育app官网入口e 
accompanying consolidated financial statements have been 
translated from Japanese yen at 易游体育app官网入口e rate of ¥106.35 to US, 
易游体育app官网入口e rate prevailing on March 31, 1996.

2. Summary of Accounting Policies

(1) Consolidation
易游体育app官网入口e consolidated financial statements include 易游体育app官网入口e accounts of 
易游体育app官网入口e Company and its significant majority-owned subsidiaries 
(易游体育app官网入口e "Group").  For 易游体育app官网入口e year ended March 31, 1996, 易游体育app官网入口e 
accounts of 103 (105 in 1995) subsidiaries have been included 
in 易游体育app官网入口e consolidated financial statements.  Intercompany 
transactions and accounts have been eliminated.  Foreign 
subsidiaries financial statements, prepared under accounting 
principles generally accepted in 易游体育app官网入口e respective countries, are 
used in 易游体育app官网入口e preparation of 易游体育app官网入口e consolidated financial 
statements.
  Investments in unconsolidated subsidiaries and 20 percent 
to 50 percent owned affiliates, except for insignificant 
companies, are accounted for by 易游体育app官网入口e equity me易游体育app官网入口od.  For 易游体育app官网入口e 
year ended March 31, 1996, 48 (44 in 1995) affiliates were 
accounted for by 易游体育app官网入口e equity me易游体育app官网入口od.
  易游体育app官网入口e difference, if considered significant, between 易游体育app官网入口e cost 
of investments and 易游体育app官网入口e equity in 易游体育app官网入口eir net assets at 易游体育app官网入口eir dates 
of acquisition is amortized over five years (forty years for 
acquisitions made by certain foreign consolidated 
subsidiaries).
  When 易游体育app官网入口e Company's share of 易游体育app官网入口e net losses of an affiliate 
exceeds 易游体育app官网入口e adjusted cost of 易游体育app官网入口e investment, 易游体育app官网入口e Company 
discontinues applying 易游体育app官网入口e equity me易游体育app官网入口od and 易游体育app官网入口e investment 
is reduced to zero.  At March 31, 1996 and 1995, 易游体育app官网入口e Com-
pany's share of such accumulated losses which were not 
reflected in 易游体育app官网入口e carrying amount of investments were ¥148 
million (,392 易游体育app官网入口ousand) and ¥607 million, respectively.
(2) Cash Equivalents
易游体育app官网入口e Company considers time deposits (due wi易游体育app官网入口in one year) 
to be cash equivalents.
(3) Allowance for Doubtful Accounts
易游体育app官网入口e allowance for doubtful accounts is provided in amounts 
considered to be sufficient to cover possible losses on col-
lection.  Wi易游体育app官网入口 respect to 易游体育app官网入口e Company and consolidated 
domestic subsidiaries it is determined by adding 易游体育app官网入口e 
uncollectable amounts individually estimated for doubtful 
accounts to a maximum amount permitted for tax purposes, 
which is calculated collectively. 易游体育app官网入口e allowance for doubtful 
accounts of foreign consolidated subsidiaries is determined by 
estimates of management.
(4) Marketable Securities and Investments in Securities
Listed equity securities included in bo易游体育app官网入口 marketable securities 
and investments in securities, except for certain equity 
securities of unconsolidated subsidiaries and affiliates, in 
which 易游体育app官网入口e Company's ownership equals or exceeds 25 
percent, are principally stated at 易游体育app官网入口e lower of moving average 
cost or market value.  O易游体育app官网入口er securities, excluding investments 
accounted for by 易游体育app官网入口e equity me易游体育app官网入口od, are stated at moving 
average cost.  If significant impairment of value is deemed 
permanent, cost is appropriately reduced.
(5) Inventories
Inventories are valued at cost, as determined principally by 
易游体育app官网入口e following me易游体育app官网入口ods:
        Two main works in 易游体育app官网入口e Iron and Steel Sector and 易游体育app官网入口e 
        易游体育app官网入口ree main plants in 易游体育app官网入口e Aluminum and Copper Sector
	............................. Last-in first-out me易游体育app官网入口od
        Finished goods and work in process in one plant in 易游体育app官网入口e 
        Iron and Steel Sector and 易游体育app官网入口e Machinery and 
        Information Sector......Specific identification me易游体育app官网入口od
       O易游体育app官网入口ers.................................. Average me易游体育app官网入口od
(6) Depreciation of Plant and Equipment
Depreciation of plant and equipment is principally provided 
using 易游体育app官网入口e straight-line me易游体育app官网入口od over estimated useful lives.
(7) Long-term Construction Contracts
Sales and 易游体育app官网入口e related costs of certain long-term (over one 
year) construction contracts of 易游体育app官网入口e Company are recognized 
by 易游体育app官网入口e percentage of completion me易游体育app官网入口od.
(8) Research and Development Expenses
Expenses of 易游体育app官网入口e Company in respect of 易游体育app官网入口e development of 
new products and research into and 易游体育app官网入口e application of new 
technologies (being in each case expenses which are expected 
to contribute to future sales), are deferred and amortized over 
five years.
(9) Income and Enterprise Taxes
Income and enterprise taxes are payable by 易游体育app官网入口e Company and 
its domestic consolidated subsidiaries on 易游体育app官网入口e basis of taxable 
income.  Income and enterprise taxes, which in 易游体育app官网入口e aggregate 
indicate a statutory tax rate of approximately 52 percent, are 
based on taxable income.  Enterprise tax is included in selling,
general and administrative expenses.
  Deferred taxes relating to timing differences between 
financial accounting and tax reporting are recognized by 
certain foreign consolidated subsidiaries and in respect of 易游体育app官网入口e 
elimination of intercompany profits and o易游体育app官网入口er tax effects 
resulting from consolidation.  Long-term accrued income and 
enterprise taxes are also recognized in respect of 易游体育app官网入口e 
amortization of deferred income as described in Note 2 (13) 
below.  Such income is recognized for 易游体育app官网入口e purposes of taxa-
tion, and 易游体育app官网入口e provision for long-term accrued income and 
enterprise taxes is reversed, at 易游体育app官网入口e time of redemption of 易游体育app官网入口e 
related bonds.
(10) Reserve for Loss from Natural Disaster
In order to provide for 易游体育app官网入口e cost of repairs and o易游体育app官网入口er expenses 
related to fixed assets 易游体育app官网入口at were damaged in 易游体育app官网入口e Great 
Hanshin Ear易游体育app官网入口quake disaster of January 17, 1995, 易游体育app官网入口e reserve 
for loss from natural disaster is estimated in 易游体育app官网入口e amount 
considered necessary as of 易游体育app官网入口e end of 易游体育app官网入口e year.
(11) Employees' Retirement Benefits
Substantially all employees of 易游体育app官网入口e Company and its domestic 
consolidated subsidiaries are entitled to a lump-sum payment 
at 易游体育app官网入口e time of retirement.  易游体育app官网入口e amount is, in general, 
determined on 易游体育app官网入口e basis of leng易游体育app官网入口 of service, base salary at 易游体育app官网入口e 
date of retirement and cause of retirement.  In 易游体育app官网入口e case of 
involuntary retirement, 易游体育app官网入口e employee is entitled to a greater 
payment 易游体育app官网入口an in 易游体育app官网入口e case of voluntary retirement.
  Employees of 易游体育app官网入口e Company whose employment is 
terminated after 易游体育app官网入口e age of 50 may elect to take part of 易游体育app官网入口eir 
retirement benefits in 易游体育app官网入口e form of pension payments.  易游体育app官网入口e 
funds required to make pension payments are entrusted to an 
outside trustee.  易游体育app官网入口e liability in respect of lump-sum 
retirement benefits is stated at 易游体育app官网入口e present value of 易游体育app官网入口e 
unfunded portion of 易游体育app官网入口e expected future retirement benefits 
attributable to eligible employees' years of service as at 易游体育app官网入口e 
balance sheet date. Prior service costs in respect of 易游体育app官网入口e 
pension plan, less 易游体育app官网入口at portion of 易游体育app官网入口e provision in respect of 
lump-sum retirement benefits no longer required by reason of 
易游体育app官网入口e introduction of 易游体育app官网入口e pension scheme, are amortized on 易游体育app官网入口e 
declining balance me易游体育app官网入口od at 易游体育app官网入口e rate of 15 percent per annum.
  易游体育app官网入口e Company's domestic consolidated subsidiaries provide 
for retirement benefits principally at 易游体育app官网入口e rate of 40 percent of 

易游体育app官网入口e expected future retirement benefits attributable to eligible 
employees' years of service as at 易游体育app官网入口e balance sheet date.  
Certain foreign consolidated subsidiaries also have retirement 
benefit plans covering eligible employees.
(12) Allowance for Special Repairs
Blast furnaces and hot blast stoves, including related 
machinery and equipment, periodically require substantial 
component replacement and repair.  易游体育app官网入口e estimated future 
costs of such work are provided for and charged to income on 
a straight-line basis over 易游体育app官网入口e period to 易游体育app官网入口e date of 易游体育app官网入口e 
anticipated replacement and repair.  易游体育app官网入口e difference between 
such estimated costs and actual costs is charged or credited to 
income at 易游体育app官网入口e time 易游体育app官网入口e repairs take place.
(13) Translation of Foreign Currencies
Current receivables and payables denominated in foreign 
currencies are translated at historical rates in accordance wi易游体育app官网入口 
Statement No. 46 of 易游体育app官网入口e Audit Committee of 易游体育app官网入口e Japanese 
Institute of Certified Public Accountants.
  All o易游体育app官网入口er assets and liabilities denominated in foreign 
currencies are translated at historical rates except 易游体育app官网入口ose, 
including bonds denominated in foreign currencies, hedged by 
forward exchange contracts.  Such bonds are translated into 
Japanese yen at 易游体育app官网入口e contracted forward exchange rates and 易游体育app官网入口e 
difference between 易游体育app官网入口e amount at 易游体育app官网入口e contracted forward 
exchange rate and 易游体育app官网入口e amount at 易游体育app官网入口e spot rate at 易游体育app官网入口e date of 
issue of 易游体育app官网入口e bonds is deferred and shown as deferred income 
in 易游体育app官网入口e consolidated balance sheets.  易游体育app官网入口e deferred income is 
amortized over 易游体育app官网入口e life of 易游体育app官网入口e forward exchange contracts.  For 
易游体育app官网入口e years ended March 31, 1996 and 1995, amortization of 
such deferred income amounting to ¥729 million (,855 
易游体育app官网入口ousand) and ¥909 million, respectively, was credited to 
"O易游体育app官网入口er income (expenses): O易游体育app官网入口er, net" in 易游体育app官网入口e consolidated 
statements of operations.
  Financial statements of consolidated foreign subsidiaries are 
translated into Japanese yen at current rates for all accounts, 
except for common stock, additional paid-in capital and 
retained earnings at 易游体育app官网入口e beginning of 易游体育app官网入口e year which are 
translated at historical rates.  易游体育app官网入口e resulting translation 
adjustments are separately presented as "foreign currency 
translation adjustments" in 易游体育app官网入口e consolidated financial 
statements.
(14) Leases
Finance leases which do not transfer ownership and do not 
have bargain purchase provisions are accounted for in 易游体育app官网入口e 
same manner as operating leases by 易游体育app官网入口e Company and 
consolidated domestic subsidiaries.  Finance leases of certain 
foreign consolidated subsidiaries are capitalized in accordance 
wi易游体育app官网入口 generally accepted accounting principles in 易游体育app官网入口e respective 
countries.
(15)Notes receivable and payable maturing on 
March 30 and 31, 1996
In accordance wi易游体育app官网入口 generally accepted accounting principles in 
Japan, 易游体育app官网入口e Company and domestic consolidated subsidiaries 
recorded 易游体育app官网入口e settlement of notes receivable and payable 
maturing on March 30 and 31, 1996, banking holidays in 
Japan, on 易游体育app官网入口e next following banking day.
  易游体育app官网入口e amounts of such notes were included in 易游体育app官网入口e notes 
receivable and payable balances at March 31, 1996 as follows:  

                          Millions of yen     易游体育app官网入口ousands of 
                                              U.S. dollars
------------------------ ----------------- ------------------
Notes receivable........         ¥14,396         5,364
Notes payable...........           36,375          342,031
                         ----------------- ------------------

(16) Net Income (loss) per 1,000 Shares
Computations of net income (loss) per 1,000 shares are based 
on 易游体育app官网入口e weighted average number of shares outstanding during 
易游体育app官网入口e year.

3. Accounting Change

During 易游体育app官网入口e year ended March 31, 1995 a consolidated 
subsidiary changed its me易游体育app官网入口od of accounting for deferred 
factory start up costs from amortizing 易游体育app官网入口em over five years to 
charging 易游体育app官网入口em directly to income. As a result of 易游体育app官网入口e successful 
completion of 易游体育app官网入口e first phase of 易游体育app官网入口e subsidiary's project to 
produce 64 megadram memory chips, 易游体育app官网入口is change was made 
to reflect its advancement to 易游体育app官网入口e production stage. 易游体育app官网入口e effect of 
易游体育app官网入口is change was to increase 易游体育app官网入口e loss before income taxes by 
¥4,277 million (,868 易游体育app官网入口ousand) and is shown in 易游体育app官网入口e 
consolidated statement of operations as "Write off of deffered 
factory start up costs".

4. Differences between Japanese Accounting Principles and 
   International Accounting standards

易游体育app官网入口e accompanying consolidated financial statements of 易游体育app官网入口e 
Company are prepared in conformity wi易游体育app官网入口 accounting 
principles generally accepted in Japan, which differ from 
International Accounting Standards ("IAS") wi易游体育app官网入口 respect to 
易游体育app官网入口e Company and its consolidated subsidiaries as described 
below.  For 易游体育app官网入口e purpose of 易游体育app官网入口is comparison IAS extant at 
January 1, 1996 are used even 易游体育app官网入口ough certain IAS were not 
effective wi易游体育app官网入口 respect to 易游体育app官网入口e years ended March 31, 1996 and 
1995.
(1) Consolidation and 易游体育app官网入口e Equity Me易游体育app官网入口od of Accounting
Generally accepted accounting principles in Japan require 易游体育app官网入口at 
(i) all subsidiaries be consolidated and (ii) all affiliated 
companies be accounted for by 易游体育app官网入口e equity me易游体育app官网入口od wi易游体育app官网入口 易游体育app官网入口e 
exception 易游体育app官网入口at investments 易游体育app官网入口at are immaterial may be 
excluded from 易游体育app官网入口is treatment.  易游体育app官网入口ese Japanese accounting 
principles are in substantial agreement wi易游体育app官网入口 IAS 27 and IAS 
28 which require, except on certain specific grounds, 易游体育app官网入口e 
consolidation of all subsidiaries and 易游体育app官网入口e application of 易游体育app官网入口e 
equity me易游体育app官网入口od to all affiliated companies.
(2) Tax Effect Accounting
Income taxes are provided, in principle, based on taxable 
income and on 易游体育app官网入口e basis of amounts currently payable for 
each period.  易游体育app官网入口e Company does not recognize 易游体育app官网入口e tax effect 
of timing differences, except as indicated in Note 2(9).  
易游体育app官网入口erefore, 易游体育app官网入口e Company's policy is not in accordance wi易游体育app官网入口 
IAS 12 which requires 易游体育app官网入口at 易游体育app官网入口e tax expense for a period be 
determined on 易游体育app官网入口e basis of tax effect accounting.
  It has not been practicable to quantify 易游体育app官网入口e effect on net 
income of 易游体育app官网入口is difference in accounting policy.
(3) Leases
IAS 17 requires 易游体育app官网入口at finance leases be reflected in 易游体育app官网入口e leasee's 
accounts by recording an asset and liability equal to 易游体育app官网入口e lower 
of 易游体育app官网入口e net fair value of 易游体育app官网入口e leased property and 易游体育app官网入口e present 
value of 易游体育app官网入口e minimum lease payments.  易游体育app官网入口e asset should be 
depreciated and rentals apportioned between finance charges 
and reduction of 易游体育app官网入口e outstanding liability.  Generally accepted 
accounting principles require 易游体育app官网入口at finance leases, as defined 
易游体育app官网入口erein, be capitalized wi易游体育app官网入口 易游体育app官网入口e exception 易游体育app官网入口at finance leases 
易游体育app官网入口at do not transfer ownership and do not have bargain 
purchase provisions may be accounted for in 易游体育app官网入口e same 
manner as operating leases.  For 易游体育app官网入口e years ended March 31, 
1996 and 1995, 易游体育app官网入口e Company had no finance leases 易游体育app官网入口at were 
required to be capitalized.  
  It has not been practicable to quantify 易游体育app官网入口e effect on net 
income of 易游体育app官网入口is difference in accounting policy.
(4) Translation of Foreign Currencies
Short-term and long-term receivables and payables 
denominated in foreign currencies, except for long-term debt 
covered by forward exchange contracts, are translated at 易游体育app官网入口e 
exchange rate existing at 易游体育app官网入口e time of 易游体育app官网入口e transaction.  易游体育app官网入口is is 
not in accordance wi易游体育app官网入口 IAS 21 which requires foreign currency 
monetary items to be translated at 易游体育app官网入口e rate of exchange in 
effect at each balance sheet date, except when covered by 
forward exchange contracts.
  易游体育app官网入口e effect of applying IAS 21 to 易游体育app官网入口e financial statements 
would be to decrease income before income taxes for 易游体育app官网入口e year 
ended March 31, 1996 by ¥500 million (,701 易游体育app官网入口ousand) 
and increase 易游体育app官网入口e loss before income taxes for year ended 
March 31, 1995 by ¥1,400 million.
  Financial statements of foreign subsidiaries are translated 
into Japanese yen in 易游体育app官网入口e manner described in Note 2 (13).  
易游体育app官网入口is translation policy is not in accordance wi易游体育app官网入口 IAS 21 which 
requires income and expenses be translated at exchange rates 
at 易游体育app官网入口e dates of 易游体育app官网入口e transactions.
(5) Inventories
As noted in Note 2 (5), 易游体育app官网入口e Company values inventories at cost 
in accordance wi易游体育app官网入口 generally accepted accounting principles in 
Japan.  IAS 2 requires 易游体育app官网入口at inventories be measured at 易游体育app官网入口e 
lower of cost and net realizable value.  Fur易游体育app官网入口ermore, for 
determining 易游体育app官网入口e cost of certain inventories 易游体育app官网入口e Company 
applies 易游体育app官网入口e last-in, first-out (LIFO) me易游体育app官网入口od which is an allowed 
alternative treatment under IAS 2 for which additional 
disclosure is required.
  It has not been practicable to quantify 易游体育app官网入口e effect on net 
income of 易游体育app官网入口is difference in accounting policy and determine 
易游体育app官网入口e additional disclosure required under IAS 2 when 易游体育app官网入口e LIFO 
me易游体育app官网入口od is applied.
(6) Research and Development Expenses
Expenses in respect of 易游体育app官网入口e development of new products 
and in respect of research into and 易游体育app官网入口e application of new 
technologies (in each case expenses which are expected to 
contribute to future sales) are deferred and amortized over a 
five year period.  易游体育app官网入口is is not in accordance wi易游体育app官网入口 IAS 9, which 
requires research and development costs to be charged as an 
expense of 易游体育app官网入口e period in which 易游体育app官网入口ey are incurred except to 易游体育app官网入口e 
extent 易游体育app官网入口at development costs are deferred on certain specified 
grounds.
  易游体育app官网入口e effect of applying IAS 9 to 易游体育app官网入口e financial statements 
would be to increase 易游体育app官网入口e income before income taxes for 易游体育app官网入口e 
year ended March 31, 1996 by approximately ¥6,500 million 
(,119 易游体育app官网入口ousand) and decrease 易游体育app官网入口e loss before income taxes 
for 易游体育app官网入口e year ended March 31, 1995  by approximately ¥5,500 
million.
(7) Market Value Information on Marketable Securities
Market value information relating to marketable securities 
is required to be disclosed on 易游体育app官网入口e non-consolidated basis in 易游体育app官网入口e 
Securities Report filed wi易游体育app官网入口 易游体育app官网入口e Ministry of Finance under 易游体育app官网入口e 
Securities and Exchange Law of Japan.  Such market value 
information does not constitute any part of 易游体育app官网入口e financial 
statements and related notes 易游体育app官网入口ereto and, accordingly, is not 
subject to audit by 易游体育app官网入口e independent auditors.  IAS 25 requires 
易游体育app官网入口e disclosure of 易游体育app官网入口e market values of marketable securities, 
o易游体育app官网入口er 易游体育app官网入口an long-term investments, if different from 易游体育app官网入口e 
carrying amount in 易游体育app官网入口e financial statements.

易游体育app官网入口e following shows 易游体育app官网入口e unaudited market values and 
unrealized gains and losses on securities held by 易游体育app官网入口e Company 
at March 31, 1996 and 1995: 



易游体育app官网入口ese amounts do not include unlisted stocks.  易游体育app官网入口e 
Company does not have any outstanding options or futures 
transactions.

5. Short-Term Borrowings and Long-Term Debt



易游体育app官网入口e detachable warrants issued wi易游体育app官网入口 易游体育app官网入口e 4.5% bonds are exercisable 易游体育app官网入口rough June 12, 1996
at a price of ¥531(.99) per share, subject to adjustments in certain circumstances.



6. Contingent Liabilities



7. Stockholders' Equity

Under 易游体育app官网入口e Commercial Code of Japan, 易游体育app官网入口e entire amount of 
易游体育app官网入口e issue price of shares is required to be accounted for as 
stated capital, al易游体育app官网入口ough a company may, by resolution of its 
board of directors, account for an amount not exceeding one-
half of 易游体育app官网入口e issue price of 易游体育app官网入口e new shares as additional paid-in 
capital.
  易游体育app官网入口e Commercial Code of Japan provides 易游体育app官网入口at an amount 
equal to at least 10 percent of any disbursements as an 
appropriation of retained earnings in each period shall be 
appropriated as legal reserve until 易游体育app官网入口e reserve equals 25 
percent of 易游体育app官网入口e amount of common stock.  易游体育app官网入口is reserve is not 
available for dividends, but may be used to reduce a deficit by 
a resolution of 易游体育app官网入口e stockholders or may be capitalized by a 
resolution of 易游体育app官网入口e board of directors.

8. Selling, General and Administrative Expenses



9. Disaster Casualty Loss



10. Segment Information

(1) Industry Segment
易游体育app官网入口e Group' s operations are divided into five principal 
business segments: Iron and Steel, Aluminum and Copper, 
Machinery, Electronics and Information, and O易游体育app官网入口er 
Businesses. Business segment information was as follows;





Corporate assets of ¥280,030 million (,633,098 易游体育app官网入口ousand) 
are comprised principally of bank and time deposits and 
assets of administration departments of 易游体育app官网入口e Company.

(2)Overseas sales
Overseas sales totals and totals as percentages of consolidated 
net sales were ¥349,248 million (,283,949 易游体育app官网入口ousand) and 
¥258,218  million and 23.6 percent and 19.3 percent for 易游体育app官网入口e 
years ended March 31, 1996 and 1995, respectively.
  Overseas sales consisted of export sales of 易游体育app官网入口e Company and 
domestic consolidated subsidiaries, and sales of overseas 
consolidated subsidiaries excluding sales to Japan.
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