Financial Results and Investor Meeting

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

Overview of Interim Results and Outlook

Results of Operations

1. Overview of Results in the Interim Period

[Summary]

The Japanese economy in the current interim period has reentered a recession with falling of corporate capital investment due to the effect of worldwide IT slowdown, etc. coupled with sluggishness of personal consumption under the severe employment situation. JR East, with its consolidated subsidiaries and equity method affiliated companies, made efforts to establish a sound and stable management base by improving the efficiency of business operations by carrying out a scrupulous review of the overall expenses, coupled with reinforced endeavor to expand revenues.

As a result, operating revenues increased 0.1% to 1,261.5 billion yen and operating income increased 2.3% to 178.5 yen billion. Ordinary income increased 25.6% to 95.7 yen billion due to a decline in interest paid as a result of a further reduction in interest bearing debt by introducing a cash management system which controls the combined total group funds. On the other hand, the interim net income decreased 21.9% to 29.4 billion yen, as a result of a revaluation loss in the part of holding securities.

[Cash flows]

Net cash provided by operating activities increased by 16.7 billion yen to 237.1 billion yen due to a decline of 9.0 billion yen in interest paid as well as a fall of 8.6 billion yen in the amounts paid of income taxes, etc.
Net cash used in investing activities decreased by 14.6 billion yen to 127.6 billion yen, including capital expenditures for security and stable transportation measures, improvement in transportation capacity and shopping centers at stations, etc.
Net cash used in financing activities increased by 61.7 billion yen to 163.8 billion yen due to dividend payment and a reduction of 128.0 billion yen in total long term debt.
As a result, the balance of cash and cash equivalents decreased by 53.9 billion yen to 229.8 billion yen.
The balance of total long tem debt at the end of the current interim period amounted to 4,573.5 billion yen.

[Segment information]

JR East used to classified businesses of JR East and its consolidated subsidiaries into four business segments, i.e. Transportation, Merchandise sales, Real estate leasing and Other services in order to disclose actual operational diversification concretely and appropriately in accordance with the Japanese standard industrial classification. However, from this interim period, the segmentation was changed to the new four segments, i.e. Transportation, Station space utilization, Shopping centers & office buildings and Other services, at the occasion of a review of the operational management units based on the medium-term business plan.

Accordingly, the division for the same period last year has been rearranged on the basis of the current interim period for comparison purposes.

In transportation, securing safety is the subject of top priority, and various measures have been taken for this purpose. In addition, services have been substantiated both in hardware and software such as enhancing the level of convenience and comfort in transportation as well as improving station facilities.

On the operating front, product plans which meet various customers' demands and caring operating measures have been developed by setting up a new campaign, i.e. "A holiday for adults" for senior generations in addition to "Meguri Hime" and "Nombiri Komachi" with the full use of the five-route Shinkansen network. Furthermore, promotion of use of trains and revenue have tried to be secured by setting up travel products for which recreational trains are used and by continuing to develop "Hiking campaign from the stations", etc.

However, both commuter and non-commuter revenues declined, accompanied by a fall in the number of passengers, reflecting the severe economic condition.

As a result, sales decreased 0.4% to 923.7 billion yen. On the other hand, operating income increased 1.8% to 140.8 billion yen due to declines in personnel expenses and depreciation costs.

In station space utilization, as a part of the round of "Sun Flower Plan" to make an effective use of space at and around station, development of new stores which meet customer demands was carried out in positive manner at stations such as Hachioji and Maihama. East Japan Restaurant Co.,Ltd. merged its subsidiary J.B.Co., Ltd. to create JR East Food Business Co.,Ltd., to execute effective store development in restaurant business. Furthermore, new type store development was progressed to strengthen the profitability in association with non-group companies.

As a result, sales increased 5.7% to 188.9 billion yen. Operating income increased 2.9% to 13.9 billion yen because efforts were made to improve profitability by carrying out scrap and build and enhancing business efficiency.

In shopping centers and office buildings, renovation was carried out to shopping centers closely connected to living mainly for foods and living groceries at "Box Hill Toride" (Ibaraki prefecture), etc. In addition, the first nursery for which certified nursery system of the Tokyo Metropolis was applied was opened within "Lumine Kitasenju" (Tokyo). Leading tenants who have power of attracting customers were introduced in existing stores.

As a result, sales decreased 0.0% to 85.2 billion yen. Operating income increased 12.9% to 18.8 billion yen due to thorough pursuit of low cost operation.

In other services, chain management has been further strengthened in hotel operations, and sales activities such as joint advertisement, etc. have been carried out in positive manner. In advertisement, revenue increase has been sought by expanding sales of advertisement within the stations and trains and by developing new media. In housing development and sales, sales of condominiums of "View Park Shimousa Nakayama" (Chiba prefecture) and "View Park Toda Koen" (Saitama prefecture), etc. have started. In card business, the number of members as of May 2001 exceeded 2 million on an application basis. Furthermore, improvement in customer services such as bringing about a shorter period for card issuance and earlier dispatch of statements for details of card use has been made by introducing a new card system.

In new business utilized IT, new service was started in the internet shopping mall, "Eki-net Shopping", where books are handed out at the stores within stations on the next day of order.

As a result, sales increased 1.7% to 223.4 billion yen. Operating income decreased 18.3% to 5.1 billion yen due to increases in outsourse costs and personnel expenses accompanied by an increase in workload in construction related business.

[Dividend policy]

JR East's basic policy regarding the appropriation of earnings is to maintain a stable dividend for shareholders while increasing retained earnings, as necessary, to ensure a sound operating base for the future development of business centered around railway services.
Based on this policy, the board of directors approved an interim dividend payment of 2,500 yen per share at their meeting today (November 19 2001).The dividend will be payable from December 11, 2001.
Retained earnings will be used to reduce total long-term debt and improve JR East's financial position.
JR East will continue to work to pay a stable dividend while working to improve operating results and strengthen its operating base, thereby meeting the expectations of shareholders.

2.Outlook

Triggered by the terrorist attacks that occurred in the US in September this year, uncertainties of the outlook on the economy have been growing even further. JR East intends to fulfill the entrustment of the shareholders by making all possible efforts to further enhance the soundness and stability of the management base and achieving the various targets raised in "New Frontier 21" amid such an economic environment.

To do so, JR East intends to maximize its consolidated cash flow by evolving the businesses which have growth potential and by highly utilizing the railway network and the station spaces, while maintaining the railway business which is highly trusted by customers and the JR East Group's strength as its main axle. Furthermore, JR East also intends to carry out "Station Renaissance", which is the new station creation for the 21st century, and businesses for which new technologies such as IT are introduced or utilized, as measures common to each business area. JR East attempts to enhance management efficiency and strengthen competitiveness by reviewing the business areas of the group companies and implementing bold restructuring programs.

Estimated results for the full term as of now are as follows:

Dividend for the current term is expected to be 5,000 yen per share, out of which the interim dividend is 2,500 yen per share.

(Note) Please note that the above estimated business results are based on certain assumptions which JR East considers to be reasonable as at the present time, and that the actual results may be different from the above estimation due to various elements.

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