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Monetary Damages Relating to the Earthquake in Chuetsu, Niigata Prefecture

East Japan Railway Company
Mutsutake Otsuka, President and CEO

December 16, 2004

The East Japan Railway Company (JR East) has estimated the monetary damages incurred throughout the entire JR East Group as a result of the earthquake that struck the Chuetsu region of Niigaober 23, 2004.

  1. Categories of Damage
    [1]  Shinkansen and Conventional Lines
     

    On the Joetsu Shinkansen, damage occurred between Echigo Yuzawa and Tsubame-Sanjo, with particularly heavy damage occurring to tunnels, elevated track bridges, and other structures between Urasa and Nagaoka, a section close to the quake’s epicenter. Rail service has been suspended between Echigo Yuzawa and Nagaoka, but repair work is underway there to meet the scheduled resumption of service by Tuesday, December 28, when the New Year’s increase in service demand will begin.

    Five conventional lines were damaged: the Joetsu line, Shinetsu main line, Iiyama line, Echigo line, and Tadami line. Damage occurred over a particularly large area on the Joetsu, Shinetsu, and Iiyama lines. Gradually, the service is resuming due to the recovery efforts. Repair work on the currently closed sections of the Joetsu line (Koide – Miyauchi) and Iiyama line (Tokamachi – Echigo Kawaguchi) is underway to resume service by Monday, December 27.

    The impact of this damage is expected to reduce rail-service revenue in the quarter by approximately ¥13 billion. Repair of railway infrastructure is expected to cost approximately ¥20 billion. However, both of these amounts contain losses that will be reflected in the profit-and-loss statement, as well as losses that will be counted as capital outlays; the exact amount of each type of loss has yet to been determined. We also expect to incur expenses relating to provisional bus service in the closed railway sections.

    [2]  Shinano River Power Plant
     

    The Shinano River Power Plant, owned by JR East and located on the Shinano River system, experienced extensive damage to both its electrical equipment and structures. Currently, investigations are underway to determine the extent of the damage and draft repair plans, but because no overall plan for repairs yet exists, we cannot estimate the cost of repairs.

    However, because the power plant is currently inoperable, we do estimate an increase in power costs of approximately ¥5 billion in the quarter for the purchase electrical power, for instance.

    [3]  Tenants in Station Buildings
     

    Tenant stores and other facilities housed in station buildings managed by the JR East Group were also damaged, primarily in Nagaoka. However, the stores have gradually reopened and today are doing business normally for the most part.

    In addition to revenue lost due to tenant stores closing after the earthquake, we also expect sales by station-building tenants and on-board sales throughout the metropolitan area to show a decline because of service interruptions. We estimate the resultant decrease in revenues for the quarter to total approximately ¥1 billion.

  2. Impact on Financial Results

    Because the costs of repairing the Shinano River Power Plant cannot be estimated presently, and for other reasons, we have not yet adjusted our forecasts of financial results for the fiscal year, which were released with the half-year results on November 12, 2004. The forecast for the fiscal year will be revised once the majority of fiscal impact has been determined.

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