Financial Results and Investor Meeting

CONSOLIDATED AND NON-CONSOLIDATED FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED MARCH 31, 2000

EAST JAPAN RAILWAY COMPANY(9020)

Years ended March 31, 1999 and 2000

CONSOLIDATED FIGURES

NON-CONSOLIDATED FIGURES

MANAGEMENT POLICIES AND RESULTS OF OPERATIONS

Management Policies

(1) Basic Policy

The JR East Group provides an array of quality, innovative and diverse services centered on railway operations, and based on sound management practices, to fulfill its obligations to shareholders. To this end, all employees are devoted to earning the trust of passengers by providing safe and reliable transportation and quality services. Employees continue to perform their jobs with innovative, fresh thinking and the enthusiasm to take on challenges. By developing along with its customers, the JR East Group will contribute to the cultural advancement of localities and enhance customers' lives as a comprehensive life-style services company.

(2) Establishing the Structure of Management Administration

To facilitate adequate and fast decision-making by the board of directors based on sufficient discussions, JR East is working on upgrading its corporate governance functions. This includes incorporating the opinions of directors from outside JR East and corporate auditors. Furthermore, JR East is strengthening ties between the parent company corporate auditors and the auditors at each JR East Group company. The objective is to ensure the soundness of the management of each group company because the importance now placed on consolidated results means that a company is evaluated based on the performance of its entire group.

Regarding the disclosure of information, JR East conducts a comprehensive range of IR activities including information meetings held in Japan and overseas.

(3) Strategies and Management Issues

Since its inception, JR East has relentlessly worked to establish an independent, self-reliant management base on its own in accordance with the spirit of the JNR (Japanese National Railways) restructuring. As JR East stands on the threshold of a new century, it faces dramatic changes in the operating environment, including the advent of intense competition accompanying the onward march of globalization as well as rapid advances in technological innovation. JR East will respond swiftly and appropriately to these changes. Meanwhile, JR East will continue to concentrate on its development as a company providing comprehensive life-style services that embody stability and growth.

In railway operations, JR East will continue to strive for increased revenues as well as improvements in safety and service. In life-style services, JR East will cooperate with group companies in the active development of businesses that can successfully compete with others. On the other hand, JR East will also continuously implement steps to make operations more efficient and reduce total long-term debt to bolster the financial position.

Early Attainment of Full Private-Sector Ownership

In August 1999, the second sale of one million shares of JR East held by Japan Railway Construction Public Corporation (JRCC) was conducted. Following this sale, JRCC holds 500 thousand shares of JR East stock. JR East will continue to concentrate all of its resources on attaining full private-sector ownership, the final objective of the JNR restructuring, as soon as possible.

Bolstering Management of the JR East Group

Now that consolidated results are the primary means of evaluating companies, JR East needs to take steps to improve its consolidated performance. In response, JR East will make the most effective use possible of the group's resources to enhance the group's overall strength and cohesiveness. To achieve this goal, JR East must address a number of important and pressing issues including the formulation of a common vision and goals for the group, a review of the group's organization, the establishment of means to evaluate performance, and the improvement of internal management administration systems.

Establishment of a Sound Management Base

JR East intends to enhance transparency by strengthening its disclosure activities and, through the measures discussed above, plans to establish a sound management base capable of maintaining a stable dividend and fulfilling its obligations to shareholders.

Results of Operations

(1) Summary

Overview

During the fiscal year ended March 31, 2000 (fiscal 2000), various actions by the government and other factors finally led to indications of an upturn in Japan's economy during the year's second half. However, private-sector demand such as consumer spending and capital investment doesn't show signs of a rebound, and the year ended with few clear trends that would point to a self-sustaining economic recovery. To overcome this difficult environment, the JR East Group worked to establish a sound and stable management base by improving management efficiency, such as through cost cuts and steps to bolster its financial position, while making a concerted effort to generate higher revenues.

As a result, operating revenues increased 0.8% to 2,502.9 billion yen, operating income increased 2.2% to 341.9 billion yen and ordinary income increased 5.5% to 131.7 billion yen. Net income increased 205.4% to 66.9 billion yen due to the absence in fiscal 2000 of an additional obligation related to transfer to Welfare Pension of 70.4 billion yen and the adoption of tax effect accounting in fiscal 2000.

Cash Flows

Net cash provided by operating activities in fiscal 2000 amounted to 474.7 billion yen due to increases in net income, depreciation and other items.

Net cash used in investing activities was 292.4 billion yen. This was the result of capital expenditures which included measures to improve safety and stability, increase capacity, and construct station buildings, hotels and other structures.

Net cash used in financing activities was 168.1 billion yen. This was principally attributable to dividend payments and a net reduction of 112.8 billion yen in total long-term debt. As a result of these factors, cash and cash equivalents at the end of fiscal 2000 were 255.7 billion yen. Total long-term debt at the end of fiscal 2000 was 4,818.6 billion yen.

Overview by Segment

In transportation, 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. With regard to sales, JR East worked to increase railway utilization and generate revenues by developing products that meet a diverse range of customer needs and conducting a detailed marketing program, chiefly by using its Shinkansen network, which is made up of five routes. At the center of these activities was the TRAING campaign, which promotes the benefits and attractiveness of rail travel. However, the number of passengers again fell below the prior-year level as Japan's economy remained weak. As a result, operating revenues decreased 0.5% to 1,863.9 billion yen. Operating income increased 0.2% to 294.7 billion yen due to efforts to reduce non-personnel expenses.

In merchandise sales, JR East developed new stores to meet customers' needs, created new store formats through alliances with companies outside the JR East Group and renovated Kiosks to raise profitability. All these actions are part of JR East's Sunflower Plan that aims to make effective use of space at or around stations. Operations began at Gran Duo in Tachikawa during the year, a new type of shopping center that combines the advantages of department stores and station buildings. As a result, operating revenues increased 6.1% to 448.2 billion yen. Operating income increased 61.1% to 5.7 billion yen because of efforts to improve profitability by scrapping and rebuilding existing stores and raise efficiency.

In real estate leasing (shopping centers), the opening of such new station buildings as Lumine Machida and Mitaka LonLon contributed to growth in operating revenues. However, operating revenues decreased 7.8% to 155.1 billion yen as intense competition prevented meaningful growth at existing stores and because of the adoption of unified standards for recognizing revenues. Efforts to raise efficiency resulted in a 7.0% increase in operating income to 32.5 billion yen.

In other services, steps were taken to increase revenues. In hotels, aggressive marketing activities were conducted, such as joint advertising campaigns. In advertising, new formats were developed, such as placements on station floors and automatic fare collection gates. Additionally, East Japan Eco Access Co., Ltd. and other companies were consolidated beginning with fiscal 2000. As a result, operating revenues increased 24.1% to 339.4 billion yen and operating income increased 58.1% to 9.5 billion yen.

Note: Certain transactions that had been eliminated due to their recognition as transactions within the transportation segment are, beginning with fiscal 2000, presented as intersegment transactions separate from the transportation segment. Sales in fiscal 1999 have been restated to allow direct comparisons between results of the two years.

Y2K Issue

The Company regarded the Year 2000 Issue as a priority issue and took actions throughout the entire group. All remedial measures and tests had been completed and a contingency plan had been formulated. For a smooth new year and leap year transition, Year 2000 taskforces were ready to deal with unforeseen problems. As a result, there were no major problems and JR East was able to maintain normal railway operations and services.

(2) Outlook

The operating environment for the JR East Group is expected to become still more difficult. Japan's economy shows few signs of a full-scale recovery and the nation's productive population is falling as the numbers of older people grow and children decline. In fiscal 2001, the company foresees an increase in expenses because a shortfall of obligations for severance and retirement benefits is expected to be charged to income due to a change in accounting standards. In addition, competition from other forms of transportation will increase because of such events as expansion of the Tokyo area's subway networks, the deregulation of airline routes and fares, and an increase in capacity at Tokyo's Haneda Airport.

Viewing these challenges instead as a source of attractive opportunities to grow, the JR East Group will apply speedy management to implement new measures and prevail in this age when the difference between winners and losers grows. This requires increasing the group's earnings by rapidly developing businesses with growth potential and by making the most effective use of the railway network and space at stations while taking advantage of JR East's core railway operations, which have a solid reputation for reliability among passengers. Success also requires maximizing consolidated cash flows and otherwise improving consolidated performance. This will be achieved by drawing on the group's overall strengths through the sharing of such group resources as human resources, information, capital, customers and sales channels. Accompanying these moves will be a review and realignment of the businesses of JR East Group members to enhance efficiency and become more competitive.

In Japan, a new accounting method for the recognition of obligations for severance and retirement benefits will be applied beginning with fiscal 2001. Based on the present retirement system, JR East estimates that the shortfall under this new method could be 507.0 billion yen, based on a discount rate of 3.0%. This shortfall will be charged to income over a period of ten years.