2008 Annual Report [PDF/7.44MB]

East Japan Railway Company 2-2, Yoyogi 2-chome, Shibuya-ku, Tokyo 151-8578, Japan http://www.jreast.co.jp/e/ ANNUAL REPORT 2008 ANNUAL REPORT 2008 This report is printed on recycled paper using Non-VOC (non-volatile organic compound) ink for waterless printing. For the year ended March 31, 2008 Printed in Japan PROFILE Profile OPERATING AREA Shin-Aomori Hachinohe Sapporo JR Hokkaido Akita Morioka JR East Shinjo Tokyo JR Central Osaka JR West Nagoya Yamagata Sendai JR Shikoku Niigata Fukuoka JR Kyushu Fukushima Nagano Joetsu Utsunomiya Nagano Takasaki Maebashi Shinkansen Omiya Mito Hybrid Shinkansen Tokyo Chiba Convenitional Lines Yokohama Additional Shinkansen Additional Shinkansen (Under Construction) 0 50 100km JR EAST RAILWAY Omiya Akabane NETWORK AROUND Tachikawa Ikebukuro Ueno Narita Kofu Nishi-Funabashi Airport TOKYO Shinjuku Tokyo Hachioji Shinagawa Chiba Kawasaki Yokohama Ofuna 0 25 50km Shizuoka Profile Railway Network Share of Passenger Line Network As of March 31, 2006 JR East has a passenger line Other Railways 27.6% JR East 27.2% network covering 7,526.8 kilo- 7,637.8 km 7,526.8 km Total meters, accounting for 27% JR Central 7.2% 27,636km of Japan’s railway network. 1,970.8 km Other JR Companies 19.8% JR West 18.2% 5,476.8 km 5,024.1 km Shinkansen Competition with Airlines Destination Time Required Frequency JR East operates 5 high- Aomori 3:59 15 speed Shinkansen routes by Aircraft 2:58 6 Akita 3:49 15 linking Tokyo and major cities in by Aircraft 2:53 7 the eastern portion of Japan’s Yamagata 2:30 16 by Aircraft 3:08 1 main island of Honshu. Tokyo Number of Busy Stations In the operating area of JR East 92 JR East, there are 92 stations JR Central 5 JR West 12 used by more than 100,000 Tokyu 18 passengers daily. More than 200,000 Passengers per Day More than 100,000 Passengers per Day Data: Year ended March 31, 2008 for JR East, JR Central, and Tokyu; year ended March 31, 2007 for JR West Synergies JR East’s Non-Transportation Operations JR East serves about 17 million passengers daily and is leverag- ing this passenger flow to realize synergies with non- 123 19 38 transportation businesses. Shopping Centers Office Buildings Hotels Suica Recent Suica Topics The number of subscribers January 2006 Mobile Suica service launched Automatic charging service for View Cards to Suica has surpassed October 2006 * with Suica functions implemented 25 million and is continuing Suica / PASMO mutual-use service started in March 2007 to grow. Tokyo metropolitan area Mobile Suica Limited Express Ticket service March 2008 started *As of June 30, 2008 1 FInanCIAL HIghLIghts East Japan Railway Company and Subsidiaries Years ended March 31, 2006, 2007 and 2008 Millions of Yen Percent Millions of U.S. Dollars*1 (except for per share data) Change (except for per share data) 2006 2007 2008 2008/2007 2008 For the Year Financial Highlights Operating revenues ....................................................... ¥2,592,393 ¥2,657,346 ¥2,703,564 +1.7% $27,036 Operating income ......................................................... 396,100 428,098 445,160 +4.0% 4,452 Net income ................................................................... 157,575 175,871 189,673 +7.8% 1,897 Depreciation ................................................................. 316,038 318,526 335,587 +5.4% 3,356 Capital expenditures*2 .................................................. 361,372 413,310 417,144 +0.9% 4,171 Cash flows from operating activities .............................. 447,722 541,850 475,601 –12.2% 4,756 Free cash flows*3 .......................................................... 138,233 193,050 74,812 –61.2% 748 Amount per share of common stock (yen and U.S. dollars): Earnings .................................................................... ¥ 39,370 ¥ 44,008 ¥ 47,464 +7.9% $ 475 Cash flows from operating activities .......................... 112,035 135,586 119,014 –12.2% 1,190 At Year-End Total assets ................................................................... ¥6,821,584 ¥6,968,032 ¥6,942,003 –0.4% $69,420 Long-term debt (including current portion) ................... 1,960,211 2,034,558 2,101,439 +3.3% 21,014 Long-term liabilities incurred for purchase of railway facilities*4 (including current portion) .............. 1,743,657 1,601,646 1,457,360 –9.0% 14,574 Total long-term debt (sum of two items above) ............. 3,703,868 3,636,204 3,558,799 –2.1% 35,588 Shareholders’ equity*5 .................................................. 1,357,359 1,488,554 1,596,398 +7.2% 15,964 Percent (except for debt-to-equity ratio) Financial Ratios Net income as a percentage of revenues ....................... 6.1% 6.6% 7.0% Return on average equity (ROE)..................................... 12.4 12.4 12.3 Ratio of operating income to average assets (ROA) ....... 5.9 6.2 6.4 Equity ratio ................................................................... 19.9 21.4 23.0 Debt-to-equity ratio*6 ................................................... 2.7 2.4 2.2 *1 Yen figures have been translated into U.S. dollars at the rate of ¥100 to US$1 as of March 31, 2008, solely as a convenience to readers. *2 These figures exclude expenditures funded by third parties, mainly governments and their agencies, that will benefit from the resulting facilities. *3 Net of cash flows from operating activities and cash flows from investing activities *4 Long-term liabilities incurred for the purchase of the Tohoku and Joetsu Shinkansen facilities, the Akita hybrid Shinkansen facilities, and the Tokyo Monorail facilities *5 Shareholders’ equity equals total net assets less minority interests beginning with the year ended March 31, 2007. *6 Ratio of total long-term debt to shareholders’ equity 2 Financial Highlights Operating Revenues and Net Income and Net Income Total Long-Term Debt and Operating Income as a Percentage of Revenues Debt-to-Equity Ratio (Billions of Yen) (Billions of Yen) (Billions of Yen) (%) (Billions of Yen) (%) 3,000 500 200 8 5,000 5 2,400 400 4,000 4 150 6 1,800 300 3,000 3 100 4 1,200 200 2,000 2 50 2 600 100 1,000 1 0 0 0 0 0 0 FY 04 05 06 07 08 FY 04 05 06 07 08 FY 04 05 06 07 08 Operating revenues (left) Net income (left) Long-term debt (left) Operating income (right) Net income as a percentage of revenues (right) Long-term liabilities incurred for purchase of railway facilities (left) Debt-to-equity ratio (right) Total Assets, Shareholders’ Cash Flows from Operating Capital Expenditures and Equity and Equity Ratio Activities and Free Cash Flows Depreciation (Billions of Yen) (%) (Billions of Yen) (Billions of Yen) 8,000 40 600 500 500 400 6,000 30 400 300 4,000 20 300 200 200 2,000 10 100 100 0 0 0 0 FY 04 05 06 07 08 FY 04 05 06 07 08 FY 04 05 06 07 08 Total assets (left) Cash flows from operating activities Capital expenditures Shareholders’ equity (left) Free cash flows Depreciation Equity ratio (right) Earnings per Share and Cash Flows Return on Average Equity Ratio of Operating Income to From Operating Activities per Share (ROE) Average Assets (ROA) (Thousands of Yen) (%) (%) 150 20 8 15 6 100 10 4 50 5 2 0 0 0 FY 04 05 06 07 08 FY 04 05 06 07 08 FY 04 05 06 07 08 Earnings per share Cash flows from operating activities per share 3 TABLE OF CONTENTS 5 JR East 2020 Vision East Japan Railway 6 JR East 2020 Vision—Outline Company 8 JR East 2020 Vision—Numerical Targets Annual Report 2008 For the year ended 10 A Message from the Management March 31, 2008 12 An Interview with the President 24 Review of Operations 24 At a Glance 26 Transportation 32 Non-Transportation 38 Suica 40 Management Systems 40 Safety 42 Corporate Social Responsibility 44 Corporate Governance 48 Board of Directors and Corporate Auditors 50 Organization 51 Financial Section 52 Eleven-Year Summary 54 Management’s Discussion and Analysis of Financial Condition and Results of Operations 59 Operational and Other Risk Information 66 Consolidated Financial Statements 71 Notes to Consolidated Financial Statements 84 Independent Auditors’ Report 85 Corporate Information 86 JR East: Domestic and International Perspectives 99 Glossary 100 Consolidated Subsidiaries and Equity Method Affiliated Companies 102 Corporate Data 103 Stock Information Forward-Looking Statements Statements contained in this report with respect to JR East’s plans, strategies, and beliefs that are not historical facts are forward-looking statements about the future performance of JR East, which are based on management’s assumptions and beliefs in light of the information currently available to it. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause JR East’s actual results, performance, or achievements to differ materially from the expectations expressed herein. These factors include, without limitation, (i) JR East’s ability to successfully maintain or increase current passenger levels on railway services, (ii) JR East’s ability to improve the profitability of railway and other operations, (iii) JR East’s ability to expand non-transportation operations, and (iv) general changes in economic conditions and laws, regulations, and government policies in Japan. 4 JR EAST 2020 VISION 5 JR EAST 2020 VISION—OUTLINE BACKGROUND TO PREPARATION OF THE VISION LONG-TERM VISION For fiscal 2009, the year ending March 31, 2009, the achievement of most of the numerical JR East 2020 Vision targets set out in the New Frontier 2008 medium-term management plan (from fiscal 2006) had come within sight. With more than 20 years having passed since the restructuring of the Japanese National Railways and having accomplished the initial goal of full privatization, it was necessary to depict a new long-term vision. Due to the railway-centered nature of JR East’s business and the resulting length of time required for projects, JR East prepared a management plan based on a long-term perspective that looks 10 or 15 years ahead.

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