IR

Financial Results
CONSOLIDATED FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED MARCH 31,1999

EAST JAPAN RAILWAY COMPANY(9020)

Years ended March 31, 1998 and 1999  
Millions of Yen(except for Net Income per Share)
  1998.3 1999.3 change(%)
Operating Revenues 2,514,807 2,483,593 -1.2
Net Income 66,234 21,928 -66.9
Net Income per Share(yen) 16,558 5,482 -66.9
Total Assets 7,381,794 7,287,033 -1.3
Shareholders' Equity 765,423 766,879 0.2
Figures are rounded down to the nearest million.

Overview of Results

Despite a limited uplift from enormous public works investments late in the fiscal year, clear prospects for economic recovery in Japan during the fiscal year ended March 31, 1999 were clouded by a substantial drop in domestic demand such as lower private sector capital investment and consumer spending.

To overcome this extremely difficult environment in which Japan's economy is suffering negative growth, JR East and its consolidated subsidiaries redoubled their efforts to increase revenues and focused on improving operating efficiency, such as by cutting costs and improving the consolidated financial position. Through these steps, they strove to establish a sound and stable management base. As a result, recurring income rose 18.8% to 124.8 billion yen, despite a 1.2% drop in consolidated operating revenues to 2,483.5 billion yen. However, net income fell 66.9% to 21.9 billion yen due to an increase in extraordinary losses resulting from the additional burden of pension liabilities to be transferred to Welfare Pension (National Pension) and to the tax system amendment for allowance for retirement and bonuses payable.

Performance by business segment is as follows:

In transportation, operating revenues were down 1.5% to 1,857.4 billion yen because of the continuing adverse economic environment, which caused passenger volume at JR East to continue to fall below the prior-year level. Operating income declined by 9.0% to 294.0 billion yen because of an increase in depreciation due to the change in accounting for depreciation of Shinkansen railway fixtures from the straight-line to the declining-balance method, and an increase in usage fees for the Nagano Shinkansen.
In merchandise sales, aggressive marketing activities at subsidiaries failed to offset the effects of reduced consumer spending and the closing of underperforming stores and restaurants. As a result, sales fell 2.6% to 356.8 billion yen. However, increased profitability at stores and restaurants allowed this segment to post operating income of 3.5 billion yen, its first profitable year, after a loss of 0.8 billion yen last year.

In real estate leasing, operating revenues rose 2.6% to 165.0 billion yen as a result of promoting activities through collaboration with transportation companies by utilizing JR East's existing assets, such as openings of new station buildings. Operating income rose 12.3% to 30.4 billion yen.

In other services, aggressive marketing activities yielded a 0.2% rise in operating revenues to 169.7 billion yen, but operating income fell 18.7% to 6.0 billion yen on rising costs.

The establishment of JR East Management Services Co., Ltd. raised the total of consolidated subsidiaries to 81.