IR

Financial Results
NON-CONSOLIDATED FINANCIAL HIGHLIGHTS FOR SIX MONTHS ENDED SEPTEMBER 30, 1998

EAST JAPAN RAILWAY COMPANY(9020)

Millions of Yen
  Six Months ended September 30, 1997 Six Months ended September 30, 1998 change(%)
Operating Revenues 974,370 962,976 -1.2
Net Income 32,257 24,324 -24.6
 
  March 31, 1998 September 30, 1998 Change(%)
Total Assets 6,716,092 6,608,436 -1.6
Total Shareholders' Equity 722,553 736,693 2.0
Figures are rounded down to the nearest million.

Overview of Interim Results and Outlook

During the first half of the fiscal year, the Japanese economy showed few signs of a way out of its present predicament. Set against a backdrop of wavering trust in the financial system, domestic demand such as private-sector capital investment and personal consumption languished. In this environment, passenger volume at JR East declined compared with the same period a year earlier.

Due to the decline in passenger volume and the transfer of certain directly operated stores and restaurants to JR East's subsidiaries and the closing of underperforming stores and restaurants, operating revenues decreased 1.2% to 962.9 billion yen. Operating expenses increased mainly due to the change in accounting for depreciation of Shinkansen railway fixtures from the straight-line method to the declining balance method, and usage fees for the Nagano Shinkansen. Non-operating expenses were down sharply as interest expenses and other items fell. As a result, ordinary income decreased 4.0% to 59.0 billion yen. Net income was down 24.6% to 24.3 billion yen due to the tax system amendment for allowances for retirement and bonuses payable.

For the second half of the fiscal year, the outlook is for no signs of an economic recovery in Japan. JR East will take aggressive revenue-expansion actions that make effective use of Shinkansen and other services, carry out a thorough review of all expenditures, and take other measures to make operations more efficient. In this manner, JR East will make efforts to establish a sound, stable management base.

The "Law Related to Disposition of Liabilities of the Japanese National Railways Settlement Corporation," Law No. 136, 1998, was enforced on October 22, 1998. This law includes an article that places on the JR Companies an additional burden of pension transfer liabilities in the amount of about 180 billion yen, of which JR East is forced to pay approximately 70 billion yen. JR East has strenuously opposed the imposition of this additional burden. At present, JR East is closely examining relevant Cabinet and ministerial orders, the contents of Diet deliberations and others, and at the same time consulting with legal experts and others to arrive at the most appropriate response.