Fiscal 2011 was an historic year for JR East because the Tohoku Shinkansen Line was completed with the December 2010 start of operations on the segment between Hachinohe and Shin-Aomori. In March 2011, we started Shinkansen service using the series E5 railcars, the Hayabusa, with the introduction of GranClass, a first class Shinkansen service?the first of its kind in Japan. Our revenues in fiscal 2011 were higher than one year earlier up until the earthquake. We were poised to break free of the downturn precipitated by the Lehman crisis and report higher revenues and earnings for the first time in three years. Then the earthquake hit and changed everything.

Overall, we estimate the financial effect of the disaster to have depressed operating revenues by about ¥59.0 billion; in addition, we posted extraordinary losses of ¥58.7 billion for restoration and other expenses (see the table below). The disaster brought down our revenues in many ways. We had to suspend railway operations in the areas the disaster hit. We suspended or reduced the frequency of services on some lines because of the enforcement of rolling power outages. The reluctance of people to travel due to the accidents at the Fukushima Daiichi Nuclear Power Station further impacted our revenues. Numerous factors associated with the earthquake cut revenues at our Group companies, too. Operations of shopping centers suspended by damage, including to buildings, shortened operating hours as a result of rolling power outages and the reluctance of people to spend their money all exerted pressure on revenues. Moreover, in terms of extraordinary losses, we have had to record ¥1.7 billion in expenses paid for the restoration and removal of damaged or lost railway facilities and other property, plant and equipment, and made provision for an allowance for an estimated ¥56.9 billion in restoration and other expenses for fiscal 2012 and beyond. Establishing a reasonable estimate for these expenses, however, is impossible for some railway segments along the Pacific coast damaged in the tsunami that are still inoperable. Consequently, the allowance did not include the cost of restoration activities in these locations.