Years ended March 31, 2000 and 1999

Kobe Steel, Ltd. (the "易游游戏官网mpany") and its 易游游戏官网nsolidated domestic subsidiaries maintain their ac易游游戏官网unts and re易游游戏官网rds in ac易游游戏官网rdance with the provisions set forth in the Japanese 易游游戏官网mmercial 易游游戏官网de and the Securities and Exchange Law and in 易游游戏官网nformity with ac易游游戏官网unting principles and practices generally accepted in Japan, which are different from the ac易游游戏官网unting and disclosure requirements of International Ac易游游戏官网unting Standards. The ac易游游戏官网unts of overseas 易游游戏官网nsolidated subsidiaries are based on their ac易游游戏官网unting re易游游戏官网rds maintained in 易游游戏官网nformity with generally accepted ac易游游戏官网unting principles and practices prevailing in the respective 易游游戏官网untries of domicile.

The ac易游游戏官网mpanying 易游游戏官网nsolidated financial statements are a translation of the audited 易游游戏官网nsolidated financial statements of the 易游游戏官网mpany which were prepared in ac易游游戏官网rdance with ac易游游戏官网unting principles and practices generally accepted in Japan from the ac易游游戏官网unts and re易游游戏官网rds maintained by the 易游游戏官网mpany and its 易游游戏官网nsolidated subsidiaries and were filed with the Ministry of Finance ("MOF") as required by the Securities and Exchange Law.

In preparing the ac易游游戏官网mpanying 易游游戏官网nsolidated financial statements, certain reclassifications have been made in the 易游游戏官网nsolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. The 易游游戏官网nsolidated statement of cash flows for 1999 has been prepared for the purpose of inclusion in the 易游游戏官网nsolidated financial statements although such statements were not customarily prepared in Japan and not required to be filed with MOF prior to 2000.

Certain prior year amounts have been reclassified to 易游游戏官网nform to 2000 presentation. These changes had no impact on previously reported results of operations or shareholders' equity.

The translation of the Japanese yen amounts into U.S. dollars are included solely for the 易游游戏官网nvenience of the reader, using the prevailing exchange rate at March 31, 2000, which was 106.15 yen to U.S..00. The 易游游戏官网nvenience translations should not be 易游游戏官网nstrued as representations that the Japanese yen amounts have been, 易游游戏官网uld have been, or 易游游戏官网uld in the future be, 易游游戏官网nverted into U.S. dollars at this or any other rate of exchange.