Financial Results and Investor Meeting

CONSOLIDATED AND NON-CONSOLIDATED FINANCIAL HIGHLIGHTS FOR SIX MONTHS ENDED SEPTEMBER 30, 2001

Overview of Interim Results and Outlook

Management Policies

1. Basic Policy

The East Japan Railway Company (JR East) Group provides high-quality and advanced services based on its sound management, with railway operations as its core, to fulfill its obligations to shareholders. For this purpose, every individual employee of the Group will endeavor to support safe and punctual transportation and supply convenient and high-quality products. Every employee will take on the challenge of improving the standard of services and raising the level of technology in order to further gain the confidence and trust of customers. As a "Trusted Life-Style Service Creating Group," we will go forward with our customers to contribute to the achievement of better living standards, the cultural development of local communities and the protection of the global environment.

2) Improving 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 Group company. The objective is to ensure the soundness of the management of each Group company with recognition that a company is evaluated based on the performance of its entire group.
Regarding the disclosure of information, we are strengthening our public information activities to ensure the public is better informed about JR East Group. We are also actively implementing investor relations (IR) activities, including information meetings for analysts and investors.

(3) Strategies and Management Issues

Medium-Term Business Plan

JR East has formulated the Group's medium-term business plan, "New Frontier 21" for the period from 2001 to 2005, which was announced on November 29, 2000. In this plan, the JR East Group aims to be a corporate group that strives to create life-style services trusted by its customers via corporate activities open to the world, i.e. a "Trusted Life-Style Service Creating Group."

Management will be carried out with five visions: "creating customer value and pursuing customer satisfaction," "innovation of business through the creation of technologies," "harmony with society and coexistence with the environment," "creating motivation and vitality," and "raising shareholder values. "

We have set five numerical goals. The following adjustments have been made with regard to consolidated free cash flows and the reduction of nonconsolidated long-term debt.

Numerical Goals

  Reference Fiscal 2006 Target
Fiscal 2001 Actual Initial Plan Adjusted
Consolidated Free Cash Flows 189.1 billion yen 180 billion yen 200 billion yen
Consolidated ROE
(return on average equity)
7.8% 10.0% 10.0%
Consolidated ROA
(ratio of operating income to average assets)
4.4% 5.5% 5.5%
Total long-term debt
(nonconsolidated)
Balance at end of Fiscal 2001:
4,537.5 billion yen
500 billion yen reduction over 5 years 750 billion yen reduction over 5 years (500 billion yen reduction achieved in 3 years)
Number of employees
(parent company)
75,380 at start of Fiscal 2002 Reduction of 10,000 employees over 5 years Reduction of 10,000 employees over 5 years

Realization of Group Vision

JR East intends to earn even greater trust by increasing customer satisfaction through the security of safe and stable transportation and provision of higher- quality services under scrupulous customer-oriented management. JR East also intends to continue to reduce total long-term debt to improve its financial position not only by striving to increase revenues and reduce expenses but also by implementing measures to carry out efficient capital investment and the slimming of assets.

Furthermore, JR East will carry out substantiation and strengthening of the group management system to maximize the group value. JR East will make efforts to display the integrated power of the Group by placing massive management resources into the areas that are located in a superior position in competition and carrying out a wide range of measures needing closer cooperation within the Group companies. By so doing, JR East intends to realize "speedy and flexible management" and increase the profit level and the quality of management.

Early Achievement of Full Privatization

The most urgent management priority for JR East is the achievement of full privatization. In June 2001, the 151st Japan's ordinary Diet session passed the Law of Part Amendment to the Law concerning Passenger Railway Companies and the Japan Freight Railway Company (Law No. 61 in 2001). This was a major step forward for the privatization process. The new law will take effect from December 1, 2001. The only remaining task is the sale of 500,000 East Japan Railway shares held by Japan Railway Construction Public Corporation.
Full privatization will allow greater management flexibility and maneuverability. At the same time, it will also raise the expectations of shareholders, customers and communities. We are determined to implement the medium-term business plan, "New Frontier 21," fully and rapidly, and to establish a reputation as "Trusted Life-Style Service Creating Group" that is trusted by all with whom it interacts.

Establishment of a Sound Management Base

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