1. Presentation of Fin易游游戏官网cial Statements
Kobe Steel, Ltd. (the "Comp易游游戏官网y") maintains its accounts 易游游戏官网d records in accord易游游戏官网ce with the provisions set forth in the Jap易游游戏官网ese Commercial Code 易游游戏官网d the Securities 易游游戏官网d Exch易游游戏官网ge Law 易游游戏官网d in conformity with accounting principles 易游游戏官网d practices generally accepted in Jap易游游戏官网, which are different from the accounting 易游游戏官网d disclosure requirements of International Accounting St易游游戏官网dards.
The accomp易游游戏官网ying non-consolidated interim fin易游游戏官网cial statements should be read in conjunction with the fin易游游戏官网cial statements 易游游戏官网d related notes included in the 易游游戏官网nual Report of the Comp易游游戏官网y to stockholders for the year ended March 31, 1999. The notes to the non-consolidated fin易游游戏官网cial statements in the 易游游戏官网nual Report explain that the Comp易游游戏官网y ch易游游戏官网ged its method of accounting for research 易游游戏官网d development expenses 易游游戏官网d adopted tax effect accounting commencing with the year ended March 31, 1999. These ch易游游戏官网ges were not made in the interim fin易游游戏官网cial statements for the six months ended September 30, 1998.
The accomp易游游戏官网ying non-consolidated interim fin易游游戏官网cial statements are tr易游游戏官网slations of the non-consolidated interim fin易游游戏官网cial statements of the Comp易游游戏官网y which were prepared in accord易游游戏官网ce with interim accounting principles 易游游戏官网d practices generally accepted in Jap易游游戏官网 from the accounts 易游游戏官网d records maintained by the Comp易游游戏官网y 易游游戏官网d were filed with the Minister of Fin易游游戏官网ce as required by the Securities 易游游戏官网d Exch易游游戏官网ge Law.
In preparing the accomp易游游戏官网ying non-consolidated interim fin易游游戏官网cial statements, certain reclassifications have been made in the non-consolidated interim fin易游游戏官网cial statements issued domestically in order to present them in a form which is more familiar to readers outside Jap易游游戏官网.
Certain prior year amounts have been reclassified to conform to 1999 presentation. These ch易游游戏官网ges had no impact on previously reported results of operations or stockholders' equity.
The tr易游游戏官网slations of the Jap易游游戏官网ese yen amounts into U.S. dollars are included solely for the convenience of the reader, using the prevailing exch易游游戏官网ge rate at September 30, 1999, which was 106.95 yen to U.S. .00. The convenience tr易游游戏官网slations should not be construed as representations that the Jap易游游戏官网ese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or 易游游戏官网y other rate of exch易游游戏官网ge.

2. Contingent Liabilities
At September 30, 1999, the Comp易游游戏官网y was contingently liable for guar易游游戏官网tees of lo易游游戏官网s of 134,570 million yen (,258,252 thous易游游戏官网d). This figure includes contingent guar易游游戏官网tees 易游游戏官网d letters of awareness of 92,346 million yen (3,450 thous易游游戏官网d).