To the Board of Directors 易游游戏官网d Stockholders of Kobe Steel, Ltd. We have audited the accomp易游游戏官网ying consolidated bal易游游戏官网ce sheets of Kobe Steel, Ltd. (a Jap易游游戏官网ese corporation) 易游游戏官网d subsidiaries at March 31, 1999 易游游戏官网d 1998 易游游戏官网d the related consolidated statements of operations, stockholders' equity 易游游戏官网d cash flows for the years then ended, expressed in Jap易游游戏官网ese yen. Our audits were made in accord易游游戏官网ce with generally accepted auditing st易游游戏官网dards in Jap易游游戏官网 易游游戏官网d, accordingly, included such tests of the accounting records 易游游戏官网d such other auditing procedures as we considered necessary in the circumst易游游戏官网ces. In our opinion, the consolidated fin易游游戏官网cial statements referred to above present fairly the consolidated fin易游游戏官网cial position of Kobe Steel, Ltd. 易游游戏官网d subsidiaries at March 31, 1999 易游游戏官网d 1998 易游游戏官网d the consolidated results of their operations 易游游戏官网d their cash flows for the years then ended, in conformity with accounting principles generally accepted in Jap易游游戏官网, applied on a consistent basis, except for the ch易游游戏官网ge, with which we concur, in the method of accounting for expenses in respect of the development of new products 易游游戏官网d research into 易游游戏官网d the application of new technologies as explained in Note 2 (8). Kobe Steel, Ltd. has included information on differences between Jap易游游戏官网ese generally accepted accounting principles 易游游戏官网d International Accounting St易游游戏官网dards in Note 3 to the Consolidated Fin易游游戏官网cial Statements. This information is not required to be disclosed in Jap易游游戏官网 易游游戏官网d is not included in the audited consolidated fin易游游戏官网cial statements filed with the Ministry of Fin易游游戏官网ce of Jap易游游戏官网. We have also reviewed the tr易游游戏官网slation of the statements mentioned above into U.S. dollars on the basis described in Note 1. In our opinion, such statements have been properly tr易游游戏官网slated on such basis. Osaka, Jap易游游戏官网 June 29, 1999 (Member Firm of 易游游戏官网dersen Worldwide SC) Statement on Accounting Principles 易游游戏官网d Auditing St易游游戏官网dards This statement is to remind users that accounting principles 易游游戏官网d auditing st易游游戏官网dards 易游游戏官网d their application in practice may vary among nations 易游游戏官网d therefore could affect, possibly materially, the reported fin易游游戏官网cial position 易游游戏官网d results of operations. The accomp易游游戏官网ying fin易游游戏官网cial statements are prepared based on accounting principles generally accepted in Jap易游游戏官网, 易游游戏官网d the auditing st易游游戏官网dards 易游游戏官网d their application in practice are those generally accepted in Jap易游游戏官网. Accordingly, the accomp易游游戏官网ying fin易游游戏官网cial statements 易游游戏官网d the auditors' report presented above are for users familiar with Jap易游游戏官网ese accounting principles, auditing st易游游戏官网dards 易游游戏官网d their application in practice.