Note: These figures include inter-segment sales.

We expect KMT Semiconductor, Ltd., to operate as a world-leading production facility for DRAMs.	Our real-time operating system for embedded applications enables users to build applications in many fields, including office automation and multimedia.

During the year under review, sales in the Electronics and Information Sector fell 9.7%, to 72.5 billion yen. Nevertheless, we were able to reduce the size of our operating loss by 7.4 billion yen, to 9.3 billion yen, due to a slight improvement in DRAM prices. Despite posting lower sales, KTI Semiconductor, Ltd., a semiconductor - manufacturing subsidiary, improved its profitability thanks to better DRAM prices. To strengthen the competitiveness and profitability of our semiconductor business, we dissolved our business affiliation with Texas Instruments Incorporated in KTI Semiconductor in September 1998. Micron Technology Inc., which possesses world-class semiconductor technologies, became our new partner in the joint venture. Accordingly, the name of the company was changed to KMT Semiconductor, Ltd., on April 1, 1999. Backed by the strength of Micron Technology's top-class DRAM technologies and KMT Semiconductor's own high-level production technologies, we expect the new joint venture to operate as a world-leading production facility for DRAMs. Supported by rising demand in Japan for outsourcing processes in the final phase of semiconductor production, Genesis Technology Inc., a subsidiary involved in integrated circuit (IC) testing, expects to achieve further growth. With the aims of improving business efficiency and strengthening its competitiveness, the LSI Center, which was engaged in the sales and design of semiconductors, transferred its semiconductor sales operations to Shinsho Corporation. At the same time, the design portion of the LSI Center was transferred to Kobelco LSI Design, Inc., a joint venture established with Mentor Graphics Japan Co., Ltd., a leading IC design company. With the markets for information and communication systems expanding, we have been steadily improving profitability in these businesses. For real-time operating systems in particular - one of our mainstay products - we have responded to a sharp increase in orders accompanying rapid growth of the multimedia market. We intend to continue accelerating our business tie-ups with leading CPU makers and software houses and respond appropriately to a diverse range of needs. In urban information and environment-related systems, we have responded to stable government demand and plan to participate in a joint government and private-sector project to develop markets that integrate multimedia and visual technologies. Kobelco Systems Co., Ltd., has recorded significant achievements in the building of internal information systems at Kobe Steel and other group companies. In the future, Kobelco Systems will strive to strengthen its external marketing capabilities, primarily for its solutions business. In the coming fiscal year, under a new companywide management structure implemented to strengthen our business foundation, we will further improve management efficiency and strengthen the competitiveness of our Electronics and Information Sector, which has already undergone significant structural reform.