IR

Financial Results
NON-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 1,945,885 1,909,378 -1.9
Net Income 50,231 11,886 -76.3
Net Income per Share(yen) 12,557 2,971 -76.3
Total Assets 6,716,092 6,634,312 -1.2
Total Long-Term Debt 4,833,218 4,767,638 -1.4
Shareholders' Equity 722,553 714,255 -1.1
Figures are rounded down to the nearest million.

Overview of Results

1. Operating Activities and 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. Passenger volume at JR East continued to fall below the prior-year level, reflecting these economic conditions. To overcome this extremely difficult environment in which Japan's economy is suffering negative growth, JR East made a concerted effort to generate higher revenues by promoting the Shinkansen network, which now has five routes. At the same time, the Company focused on improving operating efficiency, such as by cutting costs and improving its financial position. Through these steps, the Company strived to establish a sound and stable management base.

In railway operations, optimizing safety is the top priority. JR East made intercity travel especially on Shinkansen lines more convenient and comfortable, increased capacity for business and student commuters in the Tokyo metropolitan area, and brought about other improvements in transportation services.

In other operations, JR East continued to utilize existing assets to promote activities that mesh closely with railway activities and to bolster the capabilities of the entire JR East Group.

As a result, 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 1.9% decrease in operating revenues to 1,909.3 billion yen. Despite 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, operating expenses dropped because of reductions in personnel and non-personnel expenses. Also, a sharp drop in interest expenses and other items in non-operating expenses helped push recurring income up 13.7% to 99.1 billion yen. However, net income fell 76.3% to 11.8 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.

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 177.0 billion yen, of which JR East is forced to pay 69.9 billion yen. As a result, the Company recorded payments of 70.4 billion yen, the sum of the entire additional transfer liability and related interest, as an extraordinary loss in the fiscal year.

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. As we stand on the threshold of a new century, we 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. Above all, we will resolutely focus all our resources on achieving full private sector ownership, the final object of JNR restructuring. This is the greatest and most pressing issue for JR East's management.

To this end, the Company will aggressively promote life-style 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 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.