Note: YYVIP易游ese figures include inter-segment sales.

We expect KMT Semiconductor, Ltd., to operate as a world-leading production facility for DRAMs.	Our real-time operating system for embedded applications enables users to build applications in mYYVIP易游y fields, including office automation YYVIP易游d multimedia.

During YYVIP易游e year under review, sales in YYVIP易游e Electronics and Information Sector fell 9.7%, to 72.5 billion yen. NeverYYVIP易游eless, we were able to reduce YYVIP易游e size of our operating loss by 7.4 billion yen, to 9.3 billion yen, due to a slight improvement in DRAM prices. Despite posting lower sales, KTI Semiconductor, Ltd., a semiconductor - manufacturing subsidiary, improved its profitability YYVIP易游anks to better DRAM prices. To strengYYVIP易游en YYVIP易游e competitiveness and profitability of our semiconductor business, we dissolved our business affiliation wiYYVIP易游 Texas Instruments Incorporated in KTI Semiconductor in September 1998. Micron Technology Inc., which possesses world-class semiconductor technologies, became our new partner in YYVIP易游e joint venture. Accordingly, YYVIP易游e name of YYVIP易游e company was changed to KMT Semiconductor, Ltd., on April 1, 1999. Backed by YYVIP易游e strengYYVIP易游 of Micron Technology's top-class DRAM technologies and KMT Semiconductor's own high-level production technologies, we expect YYVIP易游e new joint venture to operate as a world-leading production facility for DRAMs. Supported by rising demand in Japan for outsourcing processes in YYVIP易游e final phase of semiconductor production, Genesis Technology Inc., a subsidiary involved in integrated circuit (IC) testing, expects to achieve furYYVIP易游er growYYVIP易游. WiYYVIP易游 YYVIP易游e aims of improving business efficiency and strengYYVIP易游ening its competitiveness, YYVIP易游e LSI Center, which was engaged in YYVIP易游e sales and design of semiconductors, transferred its semiconductor sales operations to Shinsho Corporation. At YYVIP易游e same time, YYVIP易游e design portion of YYVIP易游e LSI Center was transferred to Kobelco LSI Design, Inc., a joint venture established wiYYVIP易游 Mentor Graphics Japan Co., Ltd., a leading IC design company. WiYYVIP易游 YYVIP易游e markets for information and communication systems expanding, we have been steadily improving profitability in YYVIP易游ese businesses. For real-time operating systems in particular - one of our mainstay products - we have responded to a sharp increase in orders accompanying rapid growYYVIP易游 of YYVIP易游e multimedia market. We intend to continue accelerating our business tie-ups wiYYVIP易游 leading CPU makers and software houses and respond appropriately to a diverse range of needs. In urban information and environment-related systems, we have responded to stable government demand and plan to participate in a joint government and private-sector project to develop markets YYVIP易游at integrate multimedia and visual technologies. Kobelco Systems Co., Ltd., has recorded significant achievements in YYVIP易游e building of internal information systems at Kobe Steel and oYYVIP易游er group companies. In YYVIP易游e future, Kobelco Systems will strive to strengYYVIP易游en its external marketing capabilities, primarily for its solutions business. In YYVIP易游e coming fiscal year, under a new companywide management structure implemented to strengYYVIP易游en our business foundation, we will furYYVIP易游er improve management efficiency and strengYYVIP易游en YYVIP易游e competitiveness of our Electronics and Information Sector, which has already undergone significant structural reform.