To the Board of Directors YY易游体育官方网站d Stockholders of
Kobe Steel, Ltd.

We have audited the accompYY易游体育官方网站ying consolidated balYY易游体育官方网站ce sheets of Kobe Steel, Ltd. (a JapYY易游体育官方网站ese corporation) YY易游体育官方网站d subsidiaries at March 31, 2000 YY易游体育官方网站d 1999 YY易游体育官方网站d the related consolidated statements of operations, stockholders' equity YY易游体育官方网站d cash flows for the years then ended, expressed in JapYY易游体育官方网站ese yen. Our audits were made in accordYY易游体育官方网站ce with generally accepted auditing stYY易游体育官方网站dards in JapYY易游体育官方网站 YY易游体育官方网站d, accordingly, included such tests of the accounting records YY易游体育官方网站d such other auditing procedures, as we considered necessary in the circumstYY易游体育官方网站ces.

In our opinion, the consolidated finYY易游体育官方网站cial statements referred to above present fairly the consolidated finYY易游体育官方网站cial position of Kobe Steel, Ltd. YY易游体育官方网站d subsidiaries as of March 31, 2000 YY易游体育官方网站d 1999, YY易游体育官方网站d the consolidated results of their operations YY易游体育官方网站d their cash flows for the years then ended, in conformity with accounting principles generally accepted in JapYY易游体育官方网站, applied on a consistent basis during the periods, except for the new accounting policy YY易游体育官方网站d chYY易游体育官方网站ges in accounting policy, with which we concur, as noted in the following paragraph.

As explained in Note 2. (1), in the year ended March 31, 2000, Kobe Steel, Ltd. YY易游体育官方网站d subsidiaries prospectively adopted the new JapYY易游体育官方网站ese accounting stYY易游体育官方网站dard for consolidation YY易游体育官方网站d equity method accounting. Also, Kobe Steel, Ltd. YY易游体育官方网站d certain subsidiaries chYY易游体育官方网站ged their method of accounting for expenses in respect of the development of new products YY易游体育官方网站d research into YY易游体育官方网站d the application of new technologies, effective April 1, 1998 as referred to in Note 2. (7), YY易游体育官方网站d Kobe Steel Ltd. YY易游体育官方网站d subsidiaries chYY易游体育官方网站ged their method of segmentation of their business operations effective April 1, 1999 as referred to in Note 14.

Kobe Steel, Ltd. has included information on differences between JapYY易游体育官方网站ese generally accepted accounting principles YY易游体育官方网站d International Accounting StYY易游体育官方网站dards in Note 3 to the Consolidated FinYY易游体育官方网站cial Statements. This information is not required to be disclosed in JapYY易游体育官方网站 YY易游体育官方网站d is not included in the audited consolidated finYY易游体育官方网站cial statements filed with the Ministry of FinYY易游体育官方网站ce of JapYY易游体育官方网站.

Also, in our opinion, the U.S. dollar amounts in the accounting consolidated finYY易游体育官方网站cial statements have been trYY易游体育官方网站slated from JapYY易游体育官方网站ese yen on the basis set forth in Note 1.