During the year under review, sales in the Electronics and Information Sector rose 17.1%, to 87.8 billion yen, as we raised production and sales volume substantially in our semiconductor-related businesses.

  In the semiconductor field, KMT Semiconductor, Ltd., registered impressive improvements in both sales and operating profits following improvements in productivity and major reductions in costs, attributable to the full-scale manufacturing of the products of its joint venture partner, Micron Technology Inc. We expect the synergy of Micron Technology's top-class DRAM manufacturing technology and KMT Semiconductor's own expertise in production will enable the joint venture to continue progressing as a world-class facility.

  At Genesis Technology Inc., a Kobe Steel subsidiary involved in semiconductor testing, sales grew robustly as semiconductor manufacturers increased production capacities and boosted demand for outsourced post-processing operations. In fiscal 2000, Genesis Technology's new plant under construction is expected to come on stream. This will augment its production capacity and enable it to further expand its business.

  Engaged in the design of semiconductors, Kobelco LSI Design, Inc., enjoyed a smooth start of operations in its first full year of business since its establishment in February 1999. We intend to make full use of its strengths and focus on the fields of audio and telecommunications, its areas of preeminence, to expand its operations.

  Sales in the information and telecommunications systems field have maintained their upward trend as demand continued to be healthy. Of particular note has been the performance of real-time operating systems---one of our mainstay products---where the rapid growth of the multimedia market has led to a sharp increase in orders. We will continue accelerating our alliances with CPU makers and software houses to accommodate a wider range of client demands. In urban information and environment-related systems, the Bay Electronic Data Interchange System strengthens our capabilities to respond to public-sector demand. We are now moving forward to enhance our sales capabilities, taking full advantage of the sales record of our systems business.

  Kobelco Systems Co., Ltd., a subsidiary in the information business, has played a vital role in assisting Kobe Steel and its Group companies in constructing network systems. As a solutions provider aiming to cultivate more business outside the Group, Kobelco Systems is currently expanding its range of e-business services. As the Kobe Steel Group continues to increase its involvement in the IT business, it will invest management resources in strengthening and expanding its solutions business.