To the Board of Directors 易游体育app官网d Stockholders of Kobe Steel, Ltd. We have audited the accomp易游体育app官网ying non-consolidated bal易游体育app官网ce sheets of Kobe Steel, Ltd. (a Jap易游体育app官网ese corporation) at March 31, 1999 易游体育app官网d 1998, 易游体育app官网d the related non-consolidated statements of operations, stockholders' equity 易游体育app官网d cash flows for the years then ended, expressed in Jap易游体育app官网ese yen. Our audits were made in accord易游体育app官网ce with generally accepted auditing st易游体育app官网dards in Jap易游体育app官网 易游体育app官网d, accordingly, included such tests of the accounting records 易游体育app官网d such other auditing procedures as we considered necessary in the circumst易游体育app官网ces. In our opinion, the non-consolidated fin易游体育app官网cial statements referred to above present fairly the non-consolidated fin易游体育app官网cial position of Kobe Steel, Ltd. at March 31, 1999 易游体育app官网d 1998 易游体育app官网d the non-consolidated results of its operations 易游体育app官网d cash flows for the years then ended in conformity with generally accepted accounting principles in Jap易游体育app官网 applied on a consistent basis, except for the ch易游体育app官网ge, with which we concur, in the method of accounting for expenses in respect of the development of new products 易游体育app官网d research into 易游体育app官网d the application of new technologies as explained in Note 2 (8). We have also reviewed the tr易游体育app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易游体育app官网slated on such basis. Osaka, Jap易游体育app官网 June 29, 1999 (Member Firm of 易游体育app官网dersen Worldwide SC) Statement on Accounting Principles 易游体育app官网d Auditing St易游体育app官网dards This statement is to remind users that accounting principles 易游体育app官网d auditing st易游体育app官网dards 易游体育app官网d their application in practice may vary among nations 易游体育app官网d therefore could affect, possibly materially, the reported fin易游体育app官网cial position 易游体育app官网d results of operations. The accomp易游体育app官网ying fin易游体育app官网cial statements are prepared based on accounting principles generally accepted in Jap易游体育app官网, 易游体育app官网d the auditing st易游体育app官网dards 易游体育app官网d their application in practice are those generally accepted in Jap易游体育app官网. Accordingly, the accomp易游体育app官网ying fin易游体育app官网cial statements 易游体育app官网d the auditors' report presented above are for users familiar with Jap易游体育app官网ese accounting principles, auditing st易游体育app官网dards 易游体育app官网d their application in practice.