IR

Financial Results
NON-CONSOLIDATED FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED MARCH 31,1998

EAST JAPAN RAILWAY COMPANY(9020)

Years ended March 31, 1997 and 1998  
Millions of Yen(except for Net Income per Share)
  1997.3 1998.3 change(%)
Operating Revenues 1,967,934 1,945,885 -1.1
Net Income 57,778 50,231 -13.1
Net Income per Share(yen) 14,444 12,557 -13.1
Total Assets 6,757,430 6,716,092 -0.6
Total Long-Term Debt 4,858,037 4,833,218 -0.5
Shareholders' Equity 692,526 722,553 4.3
Figures are rounded down to the nearest million.

Overview of Results

1. Operating Activities and Results

During the fiscal year ended March 31, 1998, the difficulties plaguing the Japanese economy became increasingly pronounced. Domestic demand, such as consumer spending and housing construction, fell sharply due to the April 1997 consumption tax rate hike and other factors. Additionally, there was a series of bankruptcies late in 1997, notably among financial institutions. Passenger volume at JR East fell below the prior-year level because of the adverse economic environment and a fall in sales of commuter passes and tickets following the temporary rise in these sales prior to the consumption tax rate hike. In an environment offering little likelihood of economic growth, JR East made a concerted effort to generate higher revenues. One focus was promoting the Shinkansen network, which is even more competitive now that trains travel on five routes. At the same time, JR East is also focused on improving operating efficiency, such as cutting costs and improving its financial position. Through these steps, the Company strove to establish a sound and stable management base.

In railway operations, optimizing safety is the top priority. During the year, JR East revised timetables twice, including one when Nagano Shinkansen began operations. The revisions increased capacity for business and student commuters in the Tokyo metropolitan area, made intercity travel more convenient and comfortable, and brought about other improvements in transportation services.

In related businesses, JR East continued to use existing assets to promote activities that mesh closely with railway activities and to bolster the capabilities of the entire JR East Group.

Against this backdrop, the decline in passenger volume, the transfer of certain directly operated stores and restaurants to JR East Group companies, and the closing of underperforming stores and restaurants resulted in a 1.1% decrease in operating revenues to 1,945.8 billion yen. Operating expenses increased mainly due to the termination of special reductions in property taxes and the amortization of a payment required upon the merger of Japan Railways Group Mutual Aid Association into the Welfare Pension (national pension). Non-operating expenses were down considerably as losses on early redemptions of certain bonds and interest expenses declined. As a result, ordinary income decreased 16.2% to 87.2 billion yen and net income was down 13.1% to 50.2 billion yen.

2. Major Objectives of the Company

Since its inception, JR East has relentlessly worked on its own toward fulfilling the spirit of the JNR (Japanese National Railways) restructuring, namely the establishment of an independent, self-reliant management base, being responsible for its own actions. This spirit has never been more important than it is today, with the Japanese economy having entered an age of mega-competition based on global standards. As we approach a new century, JR East will continue to concentrate on our development as a company providing comprehensive life-style services that embody stability and growth, pursuing a management system that is truly independent and responsible.

To this end, the Company will aggressively promote life-style service businesses that hold the potential of future growth while working to improve safety in railway operations and services. We will also continuously implement steps to make operations more efficient and to reduce total long-term debt to bolster the financial position.

Additionally, JR East intends to steadily enhance disclosure activities and, through the measures discussed above, plans to establish a sound operating base capable of maintaining a stable dividend and to fulfill our obligations to our shareholders.

We respectfully ask for your continued support and understanding.