CENTRAL JAPAN RAILWAY COMPANY ANNUAL REPORT 2016

CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 For the Year Ended March 31, 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016

Profile Operating Revenues Composition Contents

Central Japan Railway Company (JR Central, also known as JR Messages from Management Corporate Data *Environmental, Social, and Governance. Tokai) commenced operations in April 1987 upon the privatization Consolidated Companies appropriately considering/ Greetings 6 Profile/Organization Chart 45 responding to ESG issues and the and breakup of the Japanese National Railways (JNR). The core existence of shareholders who make of JR Central's operations is the Tokaido Shinkansen, the main Other Interview with the President 8 Operating Areas 46 investments in response to such efforts by the companies are thought to lead transportation artery linking Japan’s principal metropolitan areas 7.1% Key Measures and History 4 7 to the solution/improvement of global environmental issues and social issues of Tokyo, Nagoya, and Osaka, and a network of conventional lines Real Estate Management Strategy and even to the sound development/ in the Tokai Region centered on the Nagoya and Shizuoka areas. Summary of Performance 48 2.2% expansion of capital markets, thus JR Central and its consolidated subsidiaries also promote affiliated Transportation Key Measures and Capital Investment 10 contributing to the establishment of a Merchandise Financial Highlights sustainable society. businesses that are expected to generate synergic effects with the and Other Ensuring Safe and Reliable Transportation 14 (Consolidated/Non-consolidated) 50 Source:Japan Exchange Group, Inc. railway business. 13.3% JR Central is also steadily moving forward with efforts aimed at the Enhancing Transportation Service 18 Other Related Materials 51 % [Remarks regarding forecasts, etc.] early completion of the Chuo Shinkansen using the Superconducting 77.4 Future plans, forecast figures, etc. in Promoting the Chuo Shinkansen Project Financial Section 52 Maglev System in order to continually carry out its mission. Using Superconducting Maglev System 22 this report are an outlook based on the Appendices information that is currently available for JR Central and may contain risks and Refining the Superconducting Maglev Management Philosophy uncertainty. Examples of potential risks System Technology and Reducing Costs 24 Financial and Transportation Data 82 and uncertainty include economic trends, I. Contribute to society through sound management business environment developments, Enhancing Sales and Marketing 26 Operating Environment 84 consumption trends, competition situation II. Provide modern, valued, friendly, and reliable services Non-consolidated for JR Central and subsidiaries, and III. Establish a cheerful, fresh, and active corporate culture Technological Development International Comparison of  changes in relevant laws and legal Railway Operators 84 provisions. This report is compiled based and Enhancement of Technical Capability 28 on information available as of the end of Affiliated Businesses General Principles of Safety Miscellaneous Financial Data Comparison of May 2016 in principle. 0.6% Overseas Deployment of High-Speed 1. Safety is the most important mission in the transportation business 4.0% Railway System 29 Three JR Companies(consolidated) 86 •In this report, figures of financial 2. Safety is ensured based on compliance with rules and strict Conventional Developing Affiliated Businesses 30 Stock Information 87 information are truncated, while statistical execution of work and is built through continuous practice Lines data and all percentages are rounded. 3. Enforcement of confirmation and thorough communication are the % ESG* Information most important aspects in ensuring safety 7.6 Tokaido Shinkansen 4. To ensure safety, we must cooperate together beyond our official Engagement in Global Environment responsibility Preservation 32 5. When in doubt, we must thoroughly consider and take the measure that seems the safest 87.8% Human Resources Development 36 Cooperation with Local Communities 37

Corporate Governance 38

Note 1: Consolidated operating revenues composition is based on Board of Directors, Audit and Supervisory revenues from external customers Note 2: The total of items in the breakdown may not be 100% Board Members, and Corporate Officers 44 due to rounding.

CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 1 CENTRAL JAPAN RAILWAY COMPANY Market Area Characteristics and Transportation Capacity Annual Report 2016

Representing a powerful presence in the inter-city transportation market, one that is unrivaled all over the world Tokaido Shinkansen JR Central boasts an overwhelming market share within its operating areas

Market Share*1 (against Airlines) (Example) Railway Airlines

JR Central JR West Tokaido Shinkansen (Reference*3) Tokyo % Nagoya Osaka Okayama Hiroshima Hakata Operating Tokyo area*2 - 100 Kilometers Nagoya area (73 thousand passengers/day) New York ~ Tokyo ~ Nagoya Washington D.C. 85% 15% (LGA-IAD) Operating area Tokyo area - 366.0km 369km Osaka area (136 thousand passengers/day) Los Angeles ~ San Tokyo ~ Shin-Osaka Francisco (LAX-SFO) Tokyo area - Okayama 69% 31% (9 thousand passengers/day) 552.6km 542km Tokyo area - Hiroshima 67% 33% New York ~ Chicago Tokyo (15 thousand passengers/day) Tokyo ~ Hakata Nagoya (LGA-ORD) Hiroshima Okayama Osaka Tokyo area - Fukuoka 10% 90% Fukuoka (29 thousand passengers/day) 1,174.9km 1,180km

*1. Market share is calculated by JR Central based on the inter-prefectural data of the inter-Regional Passenger Mobility Survey, published by the Ministry of Land, infrastructure, Transport and Tourism for FY2014. *2. Tokyo area: Tokyo, Kanagawa, Chiba, Saitama, Ibaraki/Nagoya area: Aichi, Mie, Gifu/Osaka area: Osaka, Kyoto, Hyogo, Nara *3. Based on the U.S. Department of Transportation website

Japan’s population and economic activity are An inter-city transportation capacity that is An overwhelming capacity for transporting passengers along its main route, from concentrated in the area covering the Tokyo Metropolitan unrivaled all over the world Tokyo to Osaka area, the Nagoya region, and the Osaka region

Percentages of our market area in Japan as a whole Comparison with overseas transportation services Changes in daily transportation capacity (comparison between the Tokaido Shinkansen and airline JR Central’s Market Area transportation services operating between the Tokyo Metropolitan area and the Osaka region) Others (Thousand passengers/day)

(Thousand seats/day) Tokaido Shinkansen Airlines 23.7% 76.3% Tokaido 445 400 Area *1 Shinkansen Approximately seats [As of October 2015] [Tokyo ~ Shin-Osaka] 350,000

*1 300 60.1% 39.9% Eurostar 28 Population [London ~ Paris/Brussels] [As of January 1, 2015] 200 *2 Acela Express 9 About 12times 64.5% 35.5% that of airlines [Boston ~ Prefectural GDP Washington D.C.] (Nominal GDP) 100 [FY2013] (Reference) *3 Airlines 11 Approximately 0 50 100 *2 (%) [New York ~ Chicago] 30,000seats 0 [Source] [Source] ’07.3 ’08.3 ’09.3 ’10.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 JR Central’s market area is calculated taking the following prefectures into account *1. Calculated by JR Central based on figures provided on the Eurotunnel Tokyo, Kanagawa, Chiba, Saitama, Ibaraki, Shizuoka, Yamanashi, Nagano, Aichi, Mie, website (2015.1-2015.12) Gifu, Shiga, Osaka, Kyoto, Hyogo, Nara *2. Calculated by JR Central based on figures provided by the National *1. Tokaido Shinkansen: The number of passenger seating provided (including extra train services) on through-service “” and “” lines operating between Population: Ministry of Internal Affairs and Communications “Population, Demographics Fact Sheet: FY 2015 (Amtrak) and Shin-Osaka Station in each respective fiscal year and Number of Households Derived from Basic Resident Registration” *3. Calculated by JR Central based on figures provided on the U.S. *2. Airlines: Calculated by JR Central based on information pertaining to specified Japanese air carriers (Ministry of Land, Infrastructure, Transport and Tourism) for FY2006 to FY2015 Total production by prefecture: Cabinet Office “Report on Prefectural Accounts” Department of Transportation website (2014.12-2015.11)

2 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 3 CENTRAL JAPAN RAILWAY COMPANY Enhancing Our Competitive Strength Annual Report 2016

Transportation Service Thoroughgoing preparations against future aging degradation of the Tokaido Shinkansen and large-scale disasters We succeeded in lifting the maximum speed of our services from 220km/h, to 270km/h, and then to 285km/h. We successively increased the number of services Japan’s major transportation artery needs to be duplicated for our fastest speed train, the “Nozomi”, through increased investment in rolling FY2017 FY2019 stock and ground facilities. We established an operational system running up to •Completion of N700S •All rolling stock to be N700A type 10 up and down “Nozomi” services each hour. We continued to introduce new validation test vehicles (plan) rolling stock capable of traveling at The area covering the three major cities (Tokyo, Nagoya, and Osaka) will rolling stock incorporating the latest technology. a maximum speed of 285km/h (plan) effectively form one massive mega-city with the drastic reduction in travel times brought on by the introduction of the Superconducting Maglev System

Passenger Service With this expansion of the sphere of activity, our lifestyle will undergo a We expanded the lineup and sections covered by the “Express Reservation” online massive change in terms of the way business is performed and how we use our spare time, opening the door for a wide range of possibilities reservation service, establishing it as a core Tokaido Shinkansen service. And we improved convenience through our ticketless boarding service EX-IC. We aim to FY2014 •Operating speed •Time required (fastest) improve convenience for light users and overseas visitors to Japan with our new •Increase maximum speed to Tokyo ~ Nagoya City Tokyo ~ Osaka City online reservation and ticketless boarding service scheduled for summer 2017. 285km/h 500km/h 40minutes 67minutes

FY2013 •First stage ( ~ ) •Revise the timetable to have Tokaido Shinkansen 1hr 26min* a maximum of 10 “Nozomi” services running per hour for Chuo Shinkansen nearly all operating hours (Superconducting minutes Maglev System) 40

FY2012 *Accurate as of the March 2016 timetable revision (arrival time based on the fastest trains in service) •Put the N700A into 1. Register 2. Book 3. Board commercial service Chuo Shinkansen Project outline Credit •Extend platforms at card Tap! The project has been proceeding at JR Central’s own expense, using the Superconducting Shin-Osaka Station FY 2017 Maglev System developed by the Company. We will first establish a connection between FY2007 Tokyo and Nagoya City, before expanding this service to Osaka City under the premise of •New Tokaido Shinkansen ensuring sound management and providing stable dividends. Once launched, JR Central •Put the Series N700 into commercial online reservation and Commuting type will manage this service in an integrated manner together with the Tokaido Shinkansen. service ticketless boarding IC card service is rolled out (plan) FY2014 FY2003 •Release of The •Shinagawa Station on the Tokaido Shinkansen Tokaido Shinkansen is opened FY2012 50th Anniversary •Maximum speed of all commemoration travel Annual dividend Net income (non-consolidated) Tokaido Shinkansen trains •The “PLUS EX-IC” service Providing stable (Yen / Year) starts products. 140 increased to 270km/h dividends 125125 130 120 115 120 Our policy on dividends has 105 FY2007 100 95 always been to decide the 90 90 90 (Billion yen) •The “EX-IC” service starts 85 specific dividend amount 80 75 400 65 350 in accordance with the 60 300 5050 5050 5050 5050 5050 5050 55 management environment/ 250 FY2006 40 200 •“Express Reservation” performance in each FY based 150 on the principle of continuously 20 100 service expands to the 50 total length of Tokaido and providing stable dividends. 0 0 ’99.3 ’02.3 ’05.3 ’08.3 ’11.3 ’14.3 ’16.3 ’17.3 plan Sanyo Shinkansen lines

4 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 5 Messages from Management

Messages from Management PresidentGreetings Intervew

To all persons reading the Central Japan Railway Company Annual Report 2016

In the railway business, JR Central sets the highest priority on ensuring safety and reliability. JR Central’s fundamental policy is to stably and fully execute the long-term mission to integrally maintain/develop the Tokaido Shinkansen, which serves as Japan’s main transportation artery, and the conventional line network in the Tokai region through the continuous efforts of providing services that are preferred by customers as well as the streamlining of work, etc. The railway business, which is the core business of the JR Central Group, requires long-term massive capital investment and technological development with considerable lead times. Due to such a business structure, it is vital that we manage our railway business based on a long-term outlook rather than a short-term profitability-based view. Therefore, we are promoting mid-to-long- term projects in a well-planned manner while simultaneously providing high quality services in our daily railway operations and aiming to enhance our management base. Chairman and Representative President and Representative Director Director Yoshiomi Yamada Koei Tsuge

In terms of sales and marketing, we will improve efforts to consideration to safety and the environment. Furthermore, we consulting services for Taiwan High Speed Rail. We will also Railway Business market tourist products for “Express Reservation” and “PLUS will also promote efforts to establish sophisticated and efficient promote initiatives to establish the Japanese high-speed EX” along with “50+” in order to spur demands for tourism. operation/maintenance systems for the Chuo Shinkansen. rail system, which is based on the core principle of “Crash Additionally, we will steadily move ahead with preparations to On the other hand, with the Yamanashi Maglev Line, we will Avoidance”, as a global standard. Safety Measures begin the new Shinkansen online reservation and ticketless conduct evaluations to establish a maintenance system that 1 boarding service for customers other than Express members responds to commercial services by alternately operating 2 In the railway business, we will steadily proceed large- by Summer 2017. Further, we will look to enhance tourism trainsets and continuing to conduct long distance running Non-Railway Businesses scale renovation to maintain and improve the soundness of campaigns and products that convey the appeal of Kyoto, tests by using rolling stock and facilities in commercial civil engineering structures along the Tokaido Shinkansen Nara, Tokyo and , as well as Ise-Shima, which is in the line specifications. We will also strive to further refine the In terms of non-railway businesses, we will steadily move with continuous efforts of reducing cost. We will also spotlight as the venue of the Ise-Shima Summit, and other Superconducting Maglev technology and reduce the costs for forward with full-fledged interior finishing and equipment steadily promote earthquake countermeasures, such as locations, and will actively engage in sales and marketing the construction/operation/maintenance of commercial lines. installation works for the “JR Gate Tower” Project, with plans for countermeasures to derailment/deviation of the Tokaido activities that promote the sale of products to, and provide We will also continue promoting “Superconducting Maglev office tenants to move in from November 2016, while actively Shinkansen, enhancement of earthquake safety of the further information to overseas customers. Ride” in a well-planned manner. implementing preparations for sales and advertising activities elevated track columns, etc. along the conventional line, and In terms of passenger-related facilities, we will implement Since we decided to bear the cost of this project, we plan for the grand opening in April 2017 of the “Takashimaya Gate renovation and anti-quake reinforcement of the construction work for additional movable platform fences at to thoroughly reduce the cost throughout the construction, Tower Mall” commercial facility, the “Nagoya JR Gate Tower Workshop, the Nagoya Workshop, and station buildings, etc. Shinagawa and Shin-Yokohama Stations. We will also continue operation, and maintenance, etc., which will be inspected by Hotel” and other facilities. We will also make efforts to further In the same time, we will implement practical training and proceeding the installation of barrier-free facilities at stations, the internally-established “Chuo Shinkansen Construction Cost strengthen the earning capability of the JR Central Group coordinate with related organizations in an effort to bolster such as elevators, multifunction toilets, and braille blocks that Reduction Committee”, while ensuring safety. We also intend by revitalizing commercial facilities of station buildings and our ability to respond to natural disasters and other such indicate where platform edges are located. to flexibly respond to the project by optimizing the resources in merchandise businesses, etc. emergencies, and to ensure total safety within our stations accordance with the managerial environment. and trains. Promoting the Chuo Shinkansen Using the Global Environmental Issues 3 Superconducting Maglev System Enhancement of Technical Capability/Overseas 4 Deployment of High-Speed Rail System In regard to global environmental issues, JR Central will not Strengthening Transportation Service The Chuo Shinkansen that employs the Superconducting only make the public aware of the superiority of railways to 2 Maglev System will enable us to continue our mission of In terms of the enhancement of our technical capabilities, the global environment but also continue promoting various In terms of the Tokaido Shinkansen, we will continue operating a high-speed railway linking the Tokyo Metropolitan we will proceed with the development of upcoming rolling policies that contribute to engagement in global environment scheduling trains flexibly by utilizing the “10 Nozomi Timetable” areas, Chukyo regions and Kinki regions, which is also the stock for Shinkansen trains using the latest technology, while preservation, such as introduction of the N700A that enables to meet demands with a focus on time frames or seasons with lifeline of our business. It is being planned in order to ensure implementing efficient and advanced maintenance that utilizes significant energy conservation, as well as working toward increased customer use. Moreover, we will continue introducing the future foundation of the company. condition monitoring technologies, as well as move ahead with resource/ energy conservation in our daily operation. the N700A (2nd edition), and begin introducing the new We aim to gradually complete this project in a flexible manner technical development that can lead to cost reductions for upgraded N700A (3rd edition) with the results of our technical while ensuring sound management and stable dividends. large-scale renovation, earthquake countermeasure, upgrading As stated above, we will strive to steadily promote measures in developments. Additionally, we will start installing more security In terms of planned construction work for the Shinagawa - equipment and other uses. We will also move ahead with our railway business while ensuring the highest priority is given cameras in cabins, etc. to further enhance security. Nagoya section of the Chuo Shinkansen (part 1), we will look technological development for predicting landslides and other to safety and reliability, and implement initiatives to secure and In terms of conventional line, we will flexibly increase the to coordinating closely with regional partners while surveying disasters more accurately based on recent abnormal weather prop up a stable managerial foundation for the long-term while frequency or the number of cars of train to meet demands for locations, implementing designs and acquiring land in a conditions. also seeking to continually provide stable dividends. the popular “,” “Hida” and other express trains. We planned manner. In addition to this, we will steadily move In terms of overseas projects, we will promote technical will also continue to implement construction plans for over- ahead with construction of the Southern Alps tunnel, Shinagawa support and other guidance provided to the high speed rail Chairman and Representative Director track stations and free passageways, which will be opened at Station, and Nagoya Station, which will be hard and require Texas Project in the United States, while also promoting the Yoshiomi Yamada President and Representative Director Kusanagi Station, Shinjohara Station, Takayama Station and a long time to build, as well as sections where the necessary use of the Superconducting Maglev system for the Northeast Koei Tsuge Kasugai Station. preparation has been completed, while also giving serious Corridor Project in the U.S, and continuing to provide technical

6 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 7 Messages from Management

Messages from Management InterviewPresident with Intervewthe President

Management Management

What kind of company is JR Central? What is most important in management? Our Group’s business operations are focused on Improving our “safety”, “technology”, and “human resource” Continuing to Fulfill Our Mission Serving the railway business. In the railway business, JR capabilities to sustain and grow the Company. Central sets the highest priority on ensuring safety as Japan’s Main Transportation Artery and reliability. JR Central's mission is to integrally The most important is our “safety capabilities”. If we were to cause a maintain/develop the Tokaido Shinkansen, which major accident, all of the trust placed in our Company built up over the serves as Japan's main transportation artery, and the years would be lost in an instant, and not only the Chuo Shinkansen conventional line network in the Tokai region. Project, but the Company’s very existence would be put in danger. Continuing to fulfill this mission in both stable and sufficient manner over the long-term is our utmost The Tokaido Shinkansen boasts an incredible safety record, with no priority. fatal accidents involving riding passengers in the period of over 50 years since the launch of the service. How we can maintain this service record, President and Representative Director The railway business requires long-term massive and improve it further, lies at the very core of JR Central’s management Koei Tsuge capital investment and technological development philosophy. To achieve this, along with our other goals, we will look to with considerable lead times. Due to such a business operating our daily railway services in a disciplined manner, improving structure, it is vital that we manage our railway customer satisfaction by improving our “technological capabilities”, and by business based on a long-term outlook rather than a brushing up on our “human resource capabilities” that are so fundamental short-term profitability-based view. to the operation of our railway services.

Tokaido Shinkansen Tokaido Shinkansen Chuo Shinkansen Affiliated Businesses Q. The passenger volume for the Tokaido Shinkansen is improving Q. What will become the next series of rolling stock for the Q. With the large-scale construction of the Chuo Q. What kind of initiatives are in place with affiliated businesses? at a steady rate. How do you feel about these circumstances? Tokaido Shinkansen? Can you provide us with details Shinkansen underway, can you please reiterate the The “JR Gate Tower” is set to open soon, isn’t it? 1 3 on the schedule for adding this next set of rolling stock? 5 significance behind this project? 7 A. •While the Japanese economy has largely continued A. •The next series of rolling stock, which marks a full model A. •The Chuo Shinkansen Project is designed to continue to fulfill the A. •In terms of affiliated businesses, we will look to steadily 1 to show signs of growth, we also feel that many of the 3 change from the Series N700, will be referred to as the “N700S”. 5 Company’s founding mission into the future through the operation 7 proceed forward the “JR Gate Tower” Project while also measures we put in place to enhance our competitiveness •The “N700S” comes equipped with the latest technology designed of a high speed train service that links the Tokyo Metropolitan area expanding profits with existing businesses. over the mid to long-term have borne fruit. to improve safety and reliability, while better conserving energy. with the Chukyo and Kinki areas (Tokyo ~ Nagoya ~ Osaka). •Opened in 2000, JR Central Towers has already •Since the foundation of our company, we have continued •With the “N700S” we have developed a “standard rolling stock” •Over 50 years have passed since the inauguration of the Tokaido established itself as a Nagoya landmark, and has greatly to work towards strengthening our transportation capacity, that is adaptable to rolling stock of varying trainset lengths Shinkansen, which currently fulfills this role, and the time has contributed to the economic development of the Chubu yet even with these initiatives in mind, the “10 Nozomi through the optimal placement of underfloor equipment made come where we must think of drastic ways to respond to aging in region. Timetable”, which made the current transportation possible by painstaking efforts to reduce the size and weight of the future and large-scale disasters. In the wake of the Great East •Construction on “JR Gate Tower”, developed adjacent to capacity possible, still required a period of over five years the equipment used. Japan Earthquake, the need for a new line which enables us to JR Central Towers, is proceeding according to plan, with to install additional platforms, increase station loopback •The first trainsets are scheduled for around March 2018, which offer multiple routes in our main transportation artery has become the framework for JR Gate Tower completed in December equipment and implement other measures at Shin-Osaka are to be used as validation test vehicles to perform final even more important to prepare for the risk from natural disasters. 2015, offices set to open in November 2016, with the Station to bring it to fruition. The continual Introduction of confirmation tests of new technologies to be incorporated in This is the very reason why we decided to complete the Chuo opening of the “Takashimaya Gate Tower Mall” and the new rolling stock, and the enrichment of our “EX service*” the next series of commercial rolling stock (mass produced Shinkansen as quickly as possible, as it can alternate the role of “Nagoya JR Gate Tower Hotel” set to follow in April 2017. lineup and other such sales and marketing activities vehicles). Following this, they will be used as testing vehicles to the Tokaido Shinkansen by utilizing the Superconducting Maglev •The leasing out of office space is also proceeding also help prop up the current high level of service of our promote technological development in an aim to further brush System, which we have developed, under the condition that according to plan. Commercial facilities and hotels are Shinkansen trains. up Shinkansen technologies. We are currently reviewing plans we bear the cost of its construction. JR Central will operate the also in the midst of finalizing preparations for the roll out of

*Our “EX service” lineup refers to the “Express Reservation” service offered by JR to introduce the next series of commercial rolling stock (mass Chuo Shinkansen in an integrated manner along with the Tokaido full-fledged sales and promotional activities. Central and JR West, and the “PLUS EX” service offered by JR Central. produced vehicles) around FY2020. Shinkansen.

Tokaido Shinkansen Conventional Lines Chuo Shinkansen Dividends Q. Q. Can you tell us of what initiatives you have in place to Q. What risk factors do you foresee for the Chuo Shinkansen Q. What kind of service enhancement measures do you have in What is Company policy on dividends? 2 place for the Tokaido Shinkansen over the mid to long-term? 4 expand the use of conventional line? 6 Project, and how do you feel they can be overcome? 8 A. •We will continue to improve customer convenience by A. •In regards to conventional lines, we have steadily improved A. •With construction on the Chuo Shinkansen taking place A. •Our policy on dividends has always been to decide 2 boosting the advantages provided by the Tokaido 4 services such as introducing new rolling stock, and increasing 6 over the long-term, naturally this brings with it inherent 8 the specific dividend amount in accordance with the Shinkansen, in terms of “safety”, “accuracy”, “comfort”, the frequency of trains. In terms of the popular “Shinano,” risks in terms of fluctuations in the economic climate, management environment/performance in each FY based “speed”, and “service frequency/volume”, in order to “Hida” and other express trains, we will strive to increase the namely fluctuations in business conditions, interest on the principle of continuously providing stable dividends continue fulfilling its mission. use of our train services by flexibly increasing the frequency rates, prices, labor costs, and land value. However, we in a manner characteristic to the railway business, •From a transportation perspective, we will offer flexible and the number of cars of train to meet demand at busy times aim to deal with this by strengthening our management which emphasizes management based on a long-term train services to meet consumer demand, such as adding and for nearby events, while also strengthening ties with local base by improving profitability, streamlining business perspective. the latest Series N700A trains and expanding operating communities to achieve this. operations, and reducing costs, and by further curtailing •This stance will not change during the construction of, or speeds up to 285 km/h. •From the perspective of strengthening ties with local communities, construction costs for the Chuo Shinkansen specifically. after the launch of, the Chuo Shinkansen. And from a sales perspective, we will introduce new we are also rolling out “Shupo” campaigns intended at introducing We aim to gradually complete this project in a flexible online reservation and ticketless ride services targeting a the many tourist attractions situated around our railway lines in manner while ensuring sound management and stable broader customer base. an attempt to further promote the use of limited express trains on dividends, assuming that the Company is provided with •Additionally, in June 2016 we announced the production conventional line, and “Sawayaka Walking” events, which are free freedom in management while maintaining autonomy over of the next series of rolling stock. walking courses covering sightseeing spots near our railway lines investments afforded that as a private enterprise. that start from our stations.

8 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 9 Key Measures and Management Strategy

Key Measures and Capital Investment FY2016 Consolidated:423 billion yen Non-consolidated:362 billion yen (Safety-related investments: 191 billion yen)

Ensuring Safe and Reliable Transportation P.14 Capital investment Enhancing Transportation Services P.18 Capital investment 155 billion yen 40 billion yen We will give the top priority to ensuring safe and reliable We will continue striving to enhance transportation services 1 transportation, which is the foundation of the railway business. 2 on both the Tokaido Shinkansen and conventional lines. FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Large-scale renovation of the Tokaido Shinkansen “10 Nozomi Timetable” (March 2014) The maximum speed of 285km/h for the Tokaido Shinkansen is attained Countermeasures for Disasters, such as Earthquakes, etc. Introduction of N700A Shinkansen trains (A total of 51 trainsets) Complete quake-resistant reinforcement Begin general overhauls of rolling stock using new Complete renovation of the 6 trainsets 6 trainsets 7 trainsets 7 trainsets 7 trainsets 5 trainsets work for each Rolling Stock Depot of the inspection lines at the Hamamatsu Workshop (January 2017) Hamamatsu Workshop (March 2019) Begin introduction of the N700A (2nd edition) Begin introduction of the N700A (3rd edition) Tokaido Shinkansen (March 2016) Upgrading of Series N700 Complete the anti-quake reinforcement of elevated track columns Complete derailment and deviation countermeasures for Upgrading of existing Shinkansen trains (A total of 111 trainsets) in high density sections and areas where a long strong earthquake the Tokaido Shinkansen along sections that could result Shinkansen trains (A total of 80 trainsets) 37 trainsets 11 trainsets tremor is anticipated in conventional line (March 2018) in major damage if derailment occurred (March 2020) All diesel rail cars for conventional lines are standardized to new All rolling stocks change to “N700A type” rolling stock, with the Introduction of new diesel rail cars vehicles which are produced after the Company starts (March 2016) maximum speed 285km/h [Tokaido Shinkansen] [Tokaido Shinkansen] [Conventional Lines] •Large-scale renovation •Renewal construction for rebuilding and anti-quake reinforcement of Steadily promote large-scale renovation to maintain and improve the the Hamamatsu Workshop •Scheduling trains flexibly •The flexible increase in frequency and cars of train services for soundness of civil engineering structures in constant pursuit of cost Continue anti-quake reinforcement and renovation of the Hamamatsu Continue scheduling trains flexibly by utilizing the “10 Nozomi limited express trains reduction, including improvement of construction methods by implementing Workshop, and begin general overhauls of rolling stock using new Timetable” to meet demands with a focus on time frames or Flexibly increase the frequency or the number of cars of trains to the results of our technical development. inspection lines. seasons with increased customer use. meet demands for “Shinano,” “Hida” and other express trains. •Implementing countermeasures to derailment/deviation •The continual Introduction of new rolling stock •Construction of new free passageways and over-track stations Continue implementing countermeasures to derailment/deviation, which also Continue introducing the N700A (2nd edition), and begin Implement construction plans of new over-track stations and free covers non-ballast bridges and expansion joints, by utilizing newly introducing the new N700A (3rd edition) upgraded with the N700A passageways, which will be opened at Kusanagi Station, Shinjohara developed installation methods. results of our technical developments, such as those designed Station, Takayama Station and Kasugai to shorten the stopping distance of the “Earthquake Brake.” Station. •Expansion of security cameras in use •Installation of barrier-free facilities Start installing more security cameras in cabins, etc. to Continue installing barrier-free facilities enhance security. at stations, including elevators, •Installation of additional movable platform fences multifunction toilets, and braille blocks Implement construction work for additional movable platform Security cameras that have lines indicating the platform Completed image of fences at Shinagawa and Shin-Yokohama Stations. (image installed in deck) edges. Takayama Station

Promoting the Chuo Shinkansen Project Using Capital investment Large-scale renovation Derailment prevention guards Hamamatsu Workshop undergoing renovation P.22 (for non-ballast bridges) (photo taken in November 2015) the Superconducting Maglev System 113 billion yen

[Conventional Lines] With large-scale constructions of the Chuo Shinkansen Project using the Superconducting Maglev system already started, we will proceed with the project while giving serious consideration to •Countermeasures for disasters, such as earthquakes, etc. Continue making elevated track columns, etc. quake-resistant, and 3 safety, the environment, and coordination with towns and cities along the planned route. promoting reconstruction and quake-resistant reinforcement work for the Nagoya Workshop, station buildings and other facilities. •Replacement work of the operation management system, etc. FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Continue promoting replacements and upgrades of the operation management system in the Shizuoka area along the Tokaido Line, Promoting the Chuo Shinkansen project that Using the Superconducting Maglev System introducing measures against falling rocks, and improving safety devices on August 2014 Submission of the nal Environment Impact Statement grade crossing. October 2014 Approval for the Construction Implementation Plan (Part 1) •Curtailing scheduled service suspensions at an early stage, and December 2014 Start Shinagawa/Nagoya Station preparation construction promptly resuming services Make greater efforts to notify customers of scheduled suspensions or stopped •Ensuring sound management and providing stable dividends Route of the Chuo Shinkansen (Between Tokyo and the City of Nagoya) trains as early as possible if typhoons or other natural phenomenon are expected Making conventional line elevated track columns quake-resistant Promote the Chuo Shinkansen Project while ensuring sound management and stable to impact train operations, and resume operations as soon as possible. (steel plate jacketing method) dividends, and gradually completing the project in a flexible manner. •Well-planned execution of measurement, designing, and land acquisition, etc. Yamanashi Tokyo Systematically execute the measurement, designing and land acquisition while closely Nagano Prefecture Metropolis [Training, etc.] collaborating with the towns and cities for the Construction Implementation Plan (Part 1) of the Prefecture Chuo Shinkansen section between Shinagawa and Nagoya. •Response to emergencies •Response to Ise-Shima Summit •Thorough promotion of construction Conduct practical training in order Coordinate with relevant authorities Kanagawa While giving serious consideration to safety and the Prefecture to respond to various possible to ensure safety at stations, trains environment, we will steadily move ahead with construction scenarios caused by natural and other areas for the Ise-Shima of the Southern Alps tunnel, Shinagawa Station, and disasters or other emergency Summit being held in 2016. Nagoya Station, which will be hard and require a long time Shizuoka Legends Aichi Prefecture :Planning Route conditions. Prefecture to build, as well as sections where the necessary :Yamanashi Maglev Line preparation has been completed. :Station Location N New construction of Southern Alps •Establishment of the operation/maintenance systems 0 25 50km tunnel (Yamanashi section) Promote efforts to establish sophisticated and efficient Praying for safety at groundbreaking Note: This map is copied from a Japanese map (with a scale of 1 to 1,000,000) published by the Tsunami evacuation guidance training Emergency conditions response training operation/maintenance systems for the Chuo Shinkansen. ceremony Geographical Survey Institute with their authorization. (Authorization number: H25 Jo Fuku,310)

10 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 11 Key Measures and Management Strategy

Key Measures and Capital Investment FY2016

Enhancing of Technological Capability, Pursuing Overseas Capital investment Refining Superconducting Maglev Technology and Reducing Costs P.24 Capital investment P.28 Projects & Engagement in Global Environment Preservation 1 billion yen 3 billion yen We will continue to refine the Superconducting We will continuously strive to enhance our technological capabilities, as well as to pursue Maglev System technology and reduce costs. overseas projects using the high-speed rail and Superconducting Maglev systems. 4 6 We will also continue initiatives involving the engagement in global environment preservation. FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Refining Superconducting Maglev technology and reducing costs Improving the continuance of our technological capabilities

Marketing activities in regions and corridors that have been selected as viable targets for overseas projects, etc. November 2014 Continue offering the “Superconducting Maglev Ride” in a well-planned manner. April 2014 International High-Speed Rail Association (IHRA) is established May 2016 Establish a subsidiary in Texas, U.S. April 2014 Start to provide technical consulting services to Taiwan High Speed Rail Corporation Engagement in Global Environment Preservation

•Development that incorporates the latest technology provided to the Texas Project in the United States, while •Conducting long distance running tests Promote development of upcoming Shinkansen models also promoting the use of the Superconducting Maglev Continue operating two alternate trainsets and conducting while adopting the latest technology. system for the Northeast Corridor Project in the U.S. long-distance running by using rolling stock and facilities with New •Technological development that leads to the Furthermore, we will continue to provide technical Vibration commercial line specifications at the Yamanashi Maglev Line. New Vibration Control Device advancement of maintenance and labor saving consultations for the Taiwan High Speed Rail. Steel plate Control •Refining Superconducting Maglev technology and reducing costs jacketing Device Implement efficient and advanced maintenance that •Making efforts to promote Japan's high-speed rail Continue conducting evaluations to establish a maintenance system reinforcement utilizes condition monitoring technologies, as well as system as a global standard. suitable for commercial services while also further striving to refine Elevated bridge displacement suppression control with move ahead with technical development that can lead to Promote initiatives to establish the Japanese high-speed new vibration control device (earthquake countermeasures) the Superconducting Maglev system technology and reduce costs for cost reductions for large-scale renovation, earthquake rail system, which is based on the core principle of the construction/operation/maintenance of commercial lines. countermeasure, upgrading equipment and other uses. “Crash Avoidance”, as a global standard. •Implementing the “Superconducting Maglev Ride” for public •Technological development for predicting landslides •Promotion of various measures that contribute to We will continue promoting the “Superconducting Maglev Ride” in a and other disasters more accurately engagement in global environment preservation well-planned manner. Move ahead with technological development for Promote measures that contribute to engagement in Series L0 “Superconducting Maglev Ride” predicting landslides and other disasters more accurately global environment preservation, such as replacing old based on recent abnormal weather conditions. rolling stock with energy-saving rolling stock like the U.S. Department of Transportation Secretary Foxx and Minister •Overseas deployment of high-speed railway systems N700A. of Land, Infrastructure, Transport and Tourism Ishii observing Move ahead with technical support and other guidance the Yamanashi Maglev Line [November 2015]

Enhancing Sales and Marketing P.26 Capital investment Developing Affiliated Businesses P.30 Capital investment 6 billion yen 77 billion yen We will proactively promote our sales and marketing with We will steadily move ahead with “JR Gate Tower” Project at Nagoya Including 61 billion yen in capital investment the aim of increasing revenue, and make preparations for the new Shinkansen online Station, partially opening in Autumn 2016 and fully opening in by consolidated subsidiaries 5 reservation and ticketless boarding service that will begin in Summer of 2017. 7 Spring 2017, as we strive to increase competitiveness and revenues from our existing businesses.

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Promotion of sales and marketing to increase revenues (Various campaigns utilizing permanent tourism resources, such as Kyoto and Nara, etc.) Promotion of the “JR Gate Tower” Project Release of The Tokaido Shinkansen Enhance tourism campaigns and products that convey the appeal of The new online seat reservation and ticketless boarding service is Framework completes December 2015 November 2016: Partially open (Of ce tenants start to move in) 50th Anniversary commemoration travel Ise-Shima, which is spotlighted as the venue of the Summit rolled out (Summer 2017) April 2017: Fully open products (“Takashimaya Gate Tower Mall,” “Nagoya JR Gate Tower Hotel” etc. open) Enhancement of tourist products for EX and 50+ members

•Improving sales of tourist products and spurring •Promote products for inbound tourists •Promotion of the “JR Gate Tower” Project •Revitalizing local communities with “IIMONOTANBOU” demands for tourism Promote products and enhance information for inbound tourists. Steadily move forward with the construction of the “JR Gate Help revitalize local communities through the “IIMONOTAN- Improve efforts to market tourist products for “Express •Cooperation with communities Tower” Project, with plans for office tenants to move in from BOU” website that introduces appealing products found along Reservation” and “PLUS EX” along with “50+” in order to Enhance coordination with communities by utilizing the “Sawayaka Walking” event, “Japan Highlights November 2016 and full preparations for sales and our train routes, with online sales operations starting in 2016. spur demands for tourism. Travel” websites and other efforts as we strive to expand customer use of rail, while also promoting the advertising activities for the grand opening in April 2017 of •Enhancement of agriculture business •Preparations for the roll out of the new online seat use of “Shinano,” “Hida” and other express services through “Shupo” and other publications. the “Takashimaya Gate Tower Mall,” “Nagoya JR Gate Make continuous efforts to develop our agriculture business to reservation and ticketless boarding service Tower Hotel” and other facilities. provide safer and more reliable food products. We will steadily move ahead with preparations to begin the •Revitalization of commercial facilities of station 1. Register 2. Book 3. Board new online reservation and ticketless boarding service for buildings and merchandise customers other than Express members by Summer 2017. Increase revenues by invigorating commercial facilities in Credit Tap! •Introducing attractive products and roll out tourism card the station buildings and stimulating merchandise campaigns businesses. Enhance tourism campaigns and products that convey the •Preparations for handover of the “Central Garden appeal of Kyoto, Nara, Tokyo and Hida, as well as Residence Okazaki” condominium Ise-Shima, which is in the spotlight as the venue of the Commuting type Move ahead with preparations for the handover of the IC card Ise-Shima Summit, and other locations. “Central Garden Residence Okazaki” in Spring 2017. External view of the “JR Gate Tower” Image of the new Shinkansen online reservation and ticketless Kyoto Campaign “Central Garden Residence Okazaki” Image of “JR Gate Tower” entrance (photo taken in March 2016) boarding service 12 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 13 Key Measures and Management Strategy

Large-scale renovation Ensuring Safe and Reliable Transportation Progress of large-scale renovation work For the initial three year period (FY2013 ~ FY2015), we focused on “measures to inhibit aging damage” and spent around 75 billion yen as a total cumulative renovation cost. We are planning for a total cost of 145 billion yen for the next four years (FY2016 ~ FY2019)

Ensuring safety and reliability marks the foundation No. of accidents resulting in fatalities or injuries to continue measures to inhibit aging damage. In this four year period, we will effectively of the railway business. If we were to cause a major of passengers on board since the Tokaido proceed with both certain renovation work and construction work for implementing accident, the trust placed in the Company would be Shinkansen started service in 1964. countermeasures to derailment/deviation (refer to the following section) to be carried out lost in an instant, and the Company’s very existence until FY2019 in the same time, and these efforts enable us to reduce total costs. would be put in danger. With this frame of mind, the Company has worked to ensure safety across all its operations since its founding. Total safety-related investments have now exceeded Countermeasures for disasters, such as earthquakes (the Tokaido Shinkansen) 3 trillion yen, trending up from accounting for around accidents 70% to close to 80% of all annual capital investment 0 Countermeasures to derailment/deviation when excluding investments made towards the Chuo Total cumulative safety-related investments Shinkansen. We will also continue with steadfast since the Company’s founding In light of the derailment accident on the Joetsu Shinkansen undergone separate reviews concerning the laying of derailment initiatives aimed at further improving the technical caused by the Niigata Chuetsu Earthquake in 2004, we have prevention guards due to their unique structure - with derailment skills and safety consciousness of employees, such been installing “Derailment prevention guards” since 2009. prevention guards from September 2015. as by implementing practical training and large- We are scheduled to complete the installation in around 70% In addition, in order to prevent large rolling stock deviations scale recovery training in preparation for emergency of the planned 596km track by the end of FY2016, and we are from the track in case situations, etc. Derailment prevention guards (for non-ballast bridges) scheduled to complete the entire project at the end of FY2019. of a derailment as 3.2 And since 2009, we have tried to work these derailment much as possible, Refer to P51 for further related information (Column 1 “Learning safety from accidents”) trillion yen Diagram 1 General Principles of Safety prevention guards to work effectively at essential civil “Deviation prevention engineering structures along the planned section of track, stoppers” were applying damper-brace measures designed to damper the installed on all of our amplification of sway on elevated tracks in the event of an Shinkansen rolling earthquake. stock by FY2012. General Principles of Safety Diagram 1 Furthermore, advancements in technological development allowed us to cover non-ballast bridges, etc. - which had “General Principles of Safety” have been established as the basic state of mind for employees involved in ensuring transportation safety. We have an important responsibility of ensuring the safety of the precious human lives and the valuable property of customers boarding our train services. The General Principles of Safety specifically outlines the mental readiness, Earthquake countermeasures for structures, etc. and moral awareness and attitude needed for all employees to do everything they can to ensure safety and to prioritize In terms of elevated track columns for the Tokaido Shinkansen, suggest that ground motion in this area could be particularly protecting the lives of other passengers above all else, without questioning their duties. we have completed anti-earthquake reinforcement of elevated strong and long. track columns (with the exception of some consultation works, We have proceeded to implement earthquake-resistant Features of Japanese-developed high-speed railway systems etc.), which were deemed to require reinforcement as a result reinforcement of bridges and embankments in conjunction of an anti-earthquake diagnosis performed after the Great with this to further strengthen structures. We completed The Tokaido Shinkansen is based on a principle of How ATC works Hanshin-Awaji Earthquake, as well as elevated track columns, the renovation of bridges in 2014, and we completed the

Crash Avoidance. This principle has been derived (3) Creates ATC signals (train speed comparing patterns) from for which the expected wave patterns for a future Tokai reinforcement of embankments at the end of FY2012, excluding (4) Compares positional information for the train ahead and one’s own train Earthquake published by the Japanese government in 2003 some consultation works, etc. to prevent the possibility of a collision by using the speed with the (1) “dedicated tracks for high speed passenger signal (5) When the train’s speed exceeds the signal the brakes are applied rail service”, which completely exclude freight and Improvement of earthquake disaster prevention system commuter rail from existing on the same tracks and (2) Own train positional information Speed of the own train have no grade crossings, and (2) an “Automatic Train Preceding train We continued enhancing the “Urgent TERRA-S Earthquake Detection and Alarm System Tokai General Control Center Tokaido Shinkansen Earthquake Rapid Alarm System (TERRA-S) Shinkansen General Control (ATC)” system, which automatically controls Control Center the speed of trains and definitely prevents any (1) Preceding train positional information (rail) (UrEDAS)” even after introducing it to the Ground facilities Relay Shinkansen prior to other companies in 1992, Station collision from happening. (for positional adjustments) Receive the information and introduced the “Tokaido Shinkansen Train Radio Transmit stop signal to train

Earthquake Rapid Alarm System (TERRA-S)” Conventional-Lines Substation Earthquake Information Rapid Seismometer Stop Electricity in 2005, accelerating the speed of the alarm Communications System Large-scale renovation (Tokaido Shinkansen) and improving accuracy, etc. Furthermore, in 2013 we increased responsiveness to vertical Seismic wave Summary of large-scale renovation work Detector of the Japan Japan Meteorological Splicing equipment Detector Meteorological Agency Agency Office (Japan for earthquake early Epicenter earthquakes and interlocking-type earthquakes. Meteorological Business warning Support Center) Our civil engineering structures is sufficiently maintained to inhibit aging damage”, which extends the life of structures through daily and thorough inspections/repair. However, in by inhibiting the very occurrence of aging damage, such as Earthquake countermeasures for rolling stock depots and the renewal of the Hamamatsu Workshop future, it will be inevitable to replace many of the facilities due cracks. Confirming the effect of the first phase, we secondly to aging. We formulated the allowance reserve plan for the implement “overall renovation” as necessary, including material Earthquake countermeasures were introduced to buildings improving inspection and repair lines and introducing the latest large-scale renovation of Shinkansen infrastructure based on replacement. This constructing method made it possible to of the rolling stock depots used daily for the inspection and equipment, and reduce the risk of not being able to operate the Nationwide Shinkansen Railway Development Act and have reduce the interference to train operations significantly during repair of rolling stock from FY2012, and construction work was the Shinkansen over an extended period of time by enhancing reserved the allowance since 2002 in response to the approval renovation work, and to reduce renovation costs as well. completed at the end of FY2015. earthquake resistance through renovation and reinforcement of by the Minister of Land, Infrastructure, Transport and Tourism. This method made JR Central start the renovation work in Since 2010, we have been carrying out renovation work for the buildings and maintaining the inspection/repair work of rolling stock, Along with this, we have developed a new constructing method 2013, five years ahead of the original schedule. We are planning Hamamatsu Workshop, which conducts general overhauls* of even in case of a major earthquake. We plan to begin general after our continuous R&D effort mainly conducted at Komaki to steadily proceed this renovation work over 10 years. Shinkansen rolling stock. With this construction, we will improve overhauls of rolling stock using new inspection lines from 2017. Research Center. In this method, we first conduct “measures the operation efficiency and enhance the work environment by *General overhauls (Shinkansen): Overhauls required for Shinkansen rolling stock within 36 months or under the distance of 1,200,000km. 14 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 15 Key Measures and Management Strategy

Countermeasures for disasters, such as earthquakes, etc. (conventional lines) Operation management and safety measures Operation management and safety (the Tokaido Shinkansen) measures (conventional lines) Reinforcement of structures Operational control systems Operation management systems We already completed the anti-quake reinforcement of elevated are currently promoting the reinforcement in the Shizuoka area of track columns at the end of 2014, in sections in which there are the Tokaido line and the Fuji area of the Minobu line, where a long The safe and punctual operation of the Tokaido Shinkansen Our Company currently incorporates operation management more than 10 trains one way per hour at its peak of the day. We strong earthquake tremor is anticipated in a future Tokai Earthquake. is supported by a number of systems, mainly the Computer systems into most lines run on conventional lines. The operation aided Traffic Control (COMTRAC*). These systems accurately management is done by the operation management system, comprehend a massive amount of information, such as the including CTC (Centralized Traffic Control)*1 and the PRC Earthquake countermeasures for the Nagoya Workshop and station buildings operational status of trains and utilization status of facilities, (Programmed Route Control)*2. These manage train schedules, control, and thoroughly manage the safety of the overall signal control, train tracing, and operation performance data, We started the anti-earthquake renovation of the Nagoya were able to complete anti-earthquake construction efforts at transportation services. etc. These systems enable us to manage train and station Workshop, which conducts general overhauls and important 68 stations by FY2015. We are scheduled to complete anti- *COMTRAC (COMputer-aided TRAffic Control): COMTRAC is the system that controls train routes, information in a centralized manner at control centers. Such equipment inspections* for rolling stock of our conventional earthquake construction at four stations, including Kusanagi manages train operations, and operates/manages the allocation of staff (drivers and conductors) and rolling stock. Based on input data prescribing the operational conditions for each train (such as station centralization not only enables normal train management but lines, in 2014. This is scheduled to be completed at the end of Station, in FY2016. departure and arrival time, platform, and order) in the computer, the system can monitor the status of all trains in operation at all times. also allows orders and directives to be issued more rapidly FY2021. *General overhauls (conventional lines): General overhauls required for conventional line rolling stock even in emergency situations. We have also been promoting anti-earthquake construction within eight years. *1 CTC: The CTC system not only remotely and integrally controls signaling equipment of stations, etc. for stations with more than 5,000 passengers per day. We Important equipment inspections: Overhauls required for important equipment of conventional line rolling in order to efficiently manage train operations but also has the function to conduct real-time stock within four years or under the distance of 600,000km (electric trains)/500,000km (diesel railcars). Shinkansen General Control Center monitoring of operational status of trains. *2 PRC: Equipment that automatically controls the route for each train via CTC, using daily operation plan information and the position of each train. At the Shinkansen General Control Center in Tokyo, various directives, such as transportation, operations, facilities, Tokai General Control Center (Nagoya)/ electrical power, and signals, utilize the above-mentioned Education and training Employee training in preparation for contingencies Shizuoka General Control Center systems and work in close cooperation to support the safety From FY2016 we started training all employees in going Technical skills training and reliability of the Shinkansen. JR Central’s 12 conventional lines are operated and managed beyond the call of duty in working together with staffs, etc. Also, the Shinkansen Second General Control Center To ensure safe and reliable transportation, we implement to respond appropriately in ensuring our customers’ safety by two control centers; the Tokai General Control Center in safety education and training for the staff engaging in train should employees happen to be present when unforeseen with the same functions as the General Control Center in Nagoya and the Shizuoka General Control Center. Each center Tokyo has been established in Osaka with the cooperation monitors the operational status of trains and the utilization operations and facility maintenance. We conduct education circumstances occur while Employee training in preparation for and training especially for the staff engaging in train traveling to and from work, contingencies of JR West. This Center is to be used in the event that the status of facilities 24 hours a day. operations (such as drivers, conductors, directors, and those or while on a business trip. Shinkansen General Control Center becomes inoperable due who handle signals or operate switch stands) according to We will continue to train to a disaster, thereby strengthening our crisis management ATS-PT (Automatic Train Stop) the contents/time stipulated for each duty. employees every year in the in case of emergency situations. Equipment at the Second ATS-PT continuously checks the speed for conventional lines We introduce simulators, which can perform simulation specific measures to take in General Control Center is on stand-by at all times with the training of operations, etc. in case of emergencies, to field according to the distance between the train and the signal, an emergency, including the power on. They are usually utilized for education/training of offices for drivers and conductors. We also conduct various mental readiness needed to the curve and the points. It ensures safety by automatically directors/maintenance training sessions using ground facilities, such as actual respond in such a manner as Tokaido/Sanyo Shinkansen Second General Control applying emergency brakes in situations where the train risks staff. The Tokaido Center rolling stock/overhead contact lines/signaling equipment, so employees. overrunning. We completed the introduction of ATS-PT to all of Shinkansen has been that employees of each system can swiftly and accurately our conventional lines* in 2012. respond to emergencies. doubling as various *Introduced on the Meisho Line (Ieki ~ Ise-Okitsu section), which had been put out of service from October 2009 due to natural calamities, in conjunction with the recommencement of services in March 2016. Other training facilities for ensuring safe and reliable ATS-PT function Emergency conditions response training In addition to this, the General Education Center offers Speed transportation. We Travel curve of train ATS-PT overview education on specialized knowledge/skills for each function, Brake patterns •A brake pattern is generated in the General Training Session Simulating Actual Accidents is also reinforce our Consecutively comparing train based on the distance to the and provides sessions for various qualifications and trains speeds. The emergency signal derived from information conducted every year as an opportunity for us to enhance crisis management brakes are applied when from the ground conductors/drivers. excessive speed is detected, •The emergency brakes are the fast-response restoration structure in case of accidents ability by doubling regardless of the speed automatically applied to stop trains It also hosts effective Simulators for station staff and conductors running at speeds in excess of this and to learn the work of other systems. We conducted pattern by the time they get to the training beyond the control centers. signal practical training in FY2015, such as passenger evacuation signal borders of professions, •Continuous control is performed guide training sessions, information communication training Ground unit (pattern occurrence) using brake patterns holds lectures for sessions, training sessions simulating repair of derailed both Shinkansen and rolling stock, and line facility restoration training, based on conventional lines, and “The Shinkansen Multiple Inspection Train” “Multiple Inspection Train” and the assumption of natural disasters, such as earthquakes, enhancing lectures (Dr. Yellow) “Track Inspection Train” (Dr. Tokai) and train fires. involving borders of We have also introduced the “Shinkansen Multiple Inspection JR Central efficiently monitors facility status with regard to General Training systems, etc. Session Simulating Train (Dr. Yellow)” to test the ground facilities, such as electrical the maintenance of railway tracks and electrical facilities on Actual Accidents facilities and tracks. This rolling stock, which is based on Series conventional lines, using the “Multiple Inspection Train” and Safety audits 700, aids safety and reliability by efficiently conducting high “Track Inspection Train” (Dr. Dr. Tokai precision inspections at speeds of 270km/h. Tokai). The latest sensors and Internal audits are performed on the Company’s business high performance cameras organizations and affiliated companies from three main Dr. Yellow will be installed from 2016 to standpoints. The confirmation of the level of compliance with laws and regulations, etc., the confirmation of systems 2017 in an effort to improve our in place to prevent train and labor accidents, and the inspection capabilities. confirmation of the state of implementation of accident prevention measures. We strive to prevent violations of laws Introduction of tablet devices for drivers and regulations, the fading out of past countermeasures, and We will look to further improving safety by introducing tablet rules from losing their substance before such instances occur by having a third party inspect our business operations and devices for drivers on conventional lines, which will be used for Tsunami evacuation operational support by notifying drivers of slowdown sections guidance training share these results. using screen text and voice narration. This is scheduled to be introduced at the end of FY2017.

16 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 17 Key Measures and Management Strategy

Enhancing Transportation Service “10 Nozomi Timetable” and offering extra trains flexibly Since the introduction of “Nozomi” in 1992, JR Central has by 2% over the previous year to 358 in FY2015 by scheduling increased the number of services for “Nozomi”, which is the trains in this manner. Diagram 2 We also recorded the highest fastest train of Tokaido Shinkansen, with the aim of improving number of services offered in one day, 431, on August 16 2015 JR Central has strived to improve its our transportation service. In 2014, we created the “10 Nozomi at the height of the Summer holiday season. transportation service to fulfill its mission of timetable”, which enabled a maximum of 10 “Nozomi” services integrally maintaining/developing the Tokaido operated each hour, for almost all time frames. This was made Diagram 2 Shifts in the number of daily departures for the Tokaido Shinkansen Shinkansen, which serves as Japan’s main Tokaido Shinkansen possible due to the fact that the renovation construction to add transportation artery, and the conventional (Trains / day) Nozomi Hikari Since its inauguration in 1964, approximately 5.9 billion people have used a new track, a new platform, and two more draw-out tracks from 400 line network in the Tokai region. With 350 342 350 358 the Tokaido Shinkansen, the transportation artery linking Japan’s three largest 2 to 4, for which back-to-back maintenance is possible, in Shin- continual long-term capital investments, 300 290 Osaka Station was completed and that we now have a certain 273 we have improved the Tokaido Shinkansen metropolitan areas, Tokyo, Nagoya, and Osaka. The Tokaido Shinkansen has 250 number of trainsets for the N700A type. This kind of capital 231 34 145 194 201 209 service not only by bolstering the safety literally supported Japan’s economic growth. 200 and accuracy, but also by the high speed, investment over a mid to long-term span is needed to increase We will continue operating Japan’s transportation artery while ensuring safety 150 143 158 frequency and capacity, such as boosting the number of services available. We currently operate 10 100 65 65 65 65 speeds to 285km/h, or introducing the “10 and reliability as the first priority. “Nozomi” per hour, mainly during the time frames with increased 50 Nozomi timetable”. We will look to further 89 81 80 83 83 83 customer use. We strive to offer more flexible services to meet 0 maintaining and enhancing the competitive the demands. Diagram 1 ’88.3 ’94.3 ’05.3 ’14.3 ’15.3 ’16.3 advantages offered by the Tokaido We were able to increase the number of daily services offered Note 1. Departures shown include extra trains Note 2. JR Central is established in 1987.4, “Nozomi” is introduced in 1992.3, Drastic timetable revision Shinkansen as the earnings received from this in 2003.10 (maximum 7 “Nozomi” hourly departures) service are vitally important in proceeding with the Chuo Shinkansen Project. Diagram 1 Example of “10 Nozomi timetable” Tokaido/Sanyo Shinkansen timetable (Departures from Tokyo Station (June 2016))

Refer to P51 for further related information (Column 2 “Improvement Example for Monday Example for Friday in the access time due to the inauguration of Shinagawa Station”) Hour Departure time Hour Departure time Friday evening, etc. when many customers 15 00 10 30 40 50 15 00 10 23 30 40 47 50 53 take the Shinkansen 16 00 10 20 30 40 50 16 00 10 20 23 30 40 47 50 53 17 00 10 20 30 40 50 17 00 10 13 20 23 30 40 47 50 53 Maximum of 18 00 10 20 30 40 50 18 00 10 13 20 23 30 40 47 50 53 10 “Nozomi” services 19 00 10 20 30 50 19 00 10 13 20 23 30 40 47 50 53 Characteristics of the Tokaido Shinkansen operated each 20 00 10 20 30 50 20 00 10 13 20 23 30 40 50 53 hour 21 00 10 23 21 00 10 20 23 Note:Excerpt only for “Nozomi” Safety Punctuality 0accidents 0.2 minutes •No accidents resulting in fatalities or injuries of passengers on •Average delay time: 0.2 minutes / 1 train in service Increasing the speed of the Tokaido Shinkansen board since operations commenced Note: Results for FY2015. Including delays caused by natural disasters, etc. •Improvement of safety awareness/skills through human resources Thanks to the revised timetable in 2015, we were able to capability in case of emergency. education/training increase the speed for the first time in 23 years. The maximum Currently there is generally one “Nozomi” train running every •Continual investment in safety-related facilities speed of the Tokaido Shinkansen became 285km/h. Due to hour at 285km/h. With revisions to the timetable in March 2016 this, the travel time required between Tokyo and Shin-Osaka we were able to increase the number of “Nozomi” and “Kodama” was shortened by 3 minutes, which is as short as 2 hours trains running at a maximum speed of 285km/h. We plan to and 22 minutes. The new timetable has not only improved continue upgrading our rolling stock to further increase the High Frequency services, convenience but also improved the timetable recovery number of trains running at 285km/h. High Speeds and 358 km/h High Capacity The Tokaido Shinkansen Service Shifts in GDP and the Tokaido Shinkansen Passenger-kilometers 285 445,000 passengers Tokyo ~ Shin- GDP Passenger-kilometers Tokyo ~ Shin- Osaka Number of •Maximum speed: 285km/h •Number of train services per day: 358 Osaka Non-reserved (Billion passenger-kilometers) (Trillion yen) •Tokyo ~ Shin-Osaka: 2 hours 22 minutes Note: Results for FY2015 (including extra trains) Fare and 52.1 Time required 2 seats cars 50 50.1 600 surcharges* 48.9 Note: Accurate as of the March 2016 timetable revision (arrival time based on the fastest trains in service) •Number of passengers per day: 445,000 46.5 46.9 Note: Results for FY2015 46.0 Nozomi 1 45 550 2hr 22min* ¥14,450 3 43.8 44.5 43.7 44.3 •Number of seating available: 1,323 seats/train 42.7 41.6 529 40.6 40.3 530 40 39.6 525 500 Hikari 516 525 515 520 Approx.3hr ¥14,140 5 507 506 513 498 496 491 480 Kodama 3 35 475 450 Approx.4hr ¥14,140 10 *

Note: Each Tokaido Shinkansen trainset has 16 cars 30 400 *1. Time required for the fastest train Environmental *2. For a reserved seat during the normal season (¥13,620 for all non-reserved seats) Comfort *3. May vary by train feasibility 25 350 Approx. Approx. Station stops 1/8 1/12 Nozomi: Shinagawa, Shin-Yokohama, Nagoya, and Kyoto Hikari: Same as “Nozomi”, plus a few additional stations Kodama: Stops at each station 20 300 •The energy consumption amount per seat when traveling from Tokyo •Wide open, quiet space ~ Osaka is around 1/8th that of airplanes

•The CO2 emission rate for the same is around 1/12th 0 0 ’02.3 ’03.3 ’04.3 ’05.3 ’06.3 ’07.3 ’08.3 ’09.3 ’10.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 Note: Comparison between the “Nozomi” Series N700 Tokaido Shinkansen and a B777-200 jet Sources: GDP: Annual Report on National Accounts (Cabinet office, Government of Japan)

18 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 19 Key Measures and Management Strategy

Introduction of the latest N700A and upgrading of Series N700 Conventional line Shifts in the number of passengers on conventional lines

(Million passengers) Commuter Passes Ordinary Tickets We have continued to introduce the N700A, which employs These measures are due to end in FY2019 with the We operate a network of 12 the results of our unique technological developments achieved replacement of Series 700 trains in service, resulting in all of our conventional lines, which form an 400 381 389 391 384 386 384 387 395 391 401 since the birth of Series N700, including the “Wheel Mounted Shinkansen rolling stock being N700A type capable of running integrated network with the Tokaido 300 136 139 139 132 132 130 133 135 134 138 Brake Disk”, “Bogie Vibration Detection System”, and “Cruise at a maximum speed of 285km/h. Shinkansen. These lines have Control System”, in an effort to replace Series 700 rolling stock, contributed to the development of 200 which is facing the need to be replaced. Additionally, we will communities and the regional economy 245 250 252 252 254 254 253 260 257 262 Shifts in the number of trainsets by type for the Tokaido Shinkansen 100 begin introducing the new N700A (3rd edition) upgraded with in the Tokai region, mainly around the results of our latest technological development in FY2016. Series 300 Series 700 Series N700 N700A 0 (Trainsets) Nagoya and Shizuoka. ’07.3 ’08.3 ’09.3 ’10.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 With the 3rd edition we were able to further improve safety 150 and reliability, and reduce inspection and repair costs by bolstering monitoring functions for traveling rolling stock data 6 in terms of pantographs, bogies, and ATC, in addition to further 13 Improvement of service on conventional line 120 16 19 25 reducing the stopping distance of Earthquake Brake due to 32 48 In regards to conventional line, we have steadily improved initiatives such as the above, we strive to offer timetables that the development of a new brake lining. We plan to introduce a 64 51 80 express services, introduced new rolling stock, and increased are easier for customers to use. total of 51 N700A trainsets, including 3rd edition trainsets, by 90 80 the frequency of trains. With regard to the express trains, we FY2019. 60 80 80 have introduced “Wide-View” rolling stock and established We have also been upgrading all of the existing eighty Series Express Train “Wide-View Shinano” 60 80 the “Wide-View” express network, which forms an integrated N700 trainsets to improve further safety and reliability by 60 network with the Shinkansen, by ensuring connections with the equipping part of the latest functions introduced to the N700A, 60 80 Shinkansen. In terms of the popular “Wide-View Shinano,” “Wide- such as the “Wheel Mounted Brake Disk” and the “Cruise 60 View Hida” and other express trains, we are flexibly increasing Control System”, which was completed in August 2015. 30 61 60 the frequency and the number of cars of train services to Additionally, from FY2017 to FY2019 we plan to make 52 51 meet demand at busy times and for nearby events. additional upgradings to the Series N700 and N700A (1st edition 41 47 40 32 28 25 In terms of local trains, we are striving to increase the and 2nd edition), introducing the above-mentioned features 0 9 ’07.3 ’08.3 ’09.3 ’10.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 ’20.3 frequency/cars of train services during peak-demand morning adopted by the N700A 3rd edition, such as further reducing the (plan) and evening periods, establish a rapid train system, and adjust stopping distance of the Earthquake Brake. Note: The trainset figures are as of the end of each fiscal year (excluding retrained trains, etc.) services so that they are offered in certain intervals. Through

Introduction plan of the N700A and additional specifications Additions to 2nd edition specifications: New rolling stock 1st edition 2nd edition 3rd edition •Shortening of Earthquake Brake distances by incorporating new brake lining(Brake distance shortened by around 5% (Trainsets) 51 In terms of conventional line rolling stock, we have newly Series Ki-Ha 25 (2nd edition) compared to 2nd edition) 50 3rd •Enhancement of ATC status monitoring functions manufactured/introduced the latest rolling stock with considerations 46 edition •Enhancement of failure detection functions by improving the for energy efficiency, being barrier-free, riding comfort, etc. in a 20 Bogie Vibration Detection System 40 39 •Implementation of a pantograph status monitoring system well-planned manner since the establishment of the company. 15 •Further miniaturization of power converter In regard to our new diesel railcar, the Ki-Ha 25 (2nd edition), we 32 8 introduced 16 rolling stock for the Takayama Line and Taita Line 1 Additions to 1st edition specifications: 30 2nd in FY2014, 36 rolling stock for the Kisei Line and the Sangu Line •Adoption of warm water bidet toilets 25 edition •Installation of baby keeping gear in FY2015 and, as of March 2016, all diesel railcar rolling stock 18 18 18 18 used on the Company’s conventional line are now newly produced 20 19 12 •Installation of Wheel Mounted Brake Disk (later rolled out rolling stock produced after the Company’s founding. 13 6 based on upgradings to the Series N700) •Addition of Earthquake Brake functionality (later rolled out 10 based on upgradings to the Series N700) 6 13 13 13 13 13 13 13 1st •Installation of a vibration detection machine Installation of free passageways, over-track stations, and new stations edition •Installation of a cruise control device (later rolled out based on 6 upgradings to the Series N700) 0 The Company is currently in the process of installing free Completed image of Takayama Station ’13.3 ’14.3 ’15.3 ’16.3 ’17.3 ’18.3 ’19.3 ’20.3 •Installation of an emergency call unit (plan) (plan) (plan) (plan) •Expansion of body inclining sections (later rolled out based on passageways and over-track stations with the cooperation of upgradings to the Series N700) local municipalities located along our train lines. These changes went into service at Abekawa Station in FY2015. These changes are due to go into service at Kusanagi Station, Shinjohara Addition of security cameras in all of our passenger cars Station, Takayama Station and Kasugai Station in FY2016. Further, an agreement was reached with Iwata City in 2014 While security cameras are currently installed in the deck Security cameras (image installed in passenger cars) with regard to the installation of a new station between Fukuroi section of our N700A and Series N700 rolling stock, we will Station and Iwata Station on the Tokaido Line based on advance add security cameras into the passenger cars and deck requests received from Iwata City. Construction on the new passageways to further bolster security. We will also improve station is currently underway, with the new station scheduled to security cameras by linking them with emergency alarms, open at the end of FY2019. immediately showing the passenger’s circumstances to the driver’s cabin and conductor’s compartment. Resumption of services along the entire Meisho Line

We completed the restoration construction of the Meisho damage in 2009 - along with progress made on soil/water Line (between Ieki Station and Ise-Okitsu Station) - for which projects by Mie Prefecture and Tsu City. We restarted operation a substitute bus shuttle service was provided due to typhoon of the entire line on March 26, 2016.

20 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 21 Key Measures and Management Strategy

Promoting the Chuo Shinkansen Project Using Progress of the Project

Superconducting Maglev System Route of the Chuo Shinkansen (between Tokyo and the City of Nagoya)

Yamanashi Prefecture Tokyo Metropolis Nagano Gifu Prefecture Prefecture Operating speed

Kanagawa Prefecture

km/h 500 Legends :Planning Route Time required (fastest) Shizuoka :Yamanashi Maglev Line Aichi Prefecture N Tokyo Metropolis ~ Tokyo Metropolis ~ Prefecture :Station Location Nagoya City Osaka City We are promoting the Chuo Shinkansen Project using the Superconducting 0 25 50km Maglev System based on the Nationwide Shinkansen Railway Development This map is copied from a Japanese map (with a scale of 1 to 1,000,000) published by the Geographical Survey Institute with their authorization. (Authorization number: H25 Jo Fuku, 310) Act (hereinafter referred to as “the Act”) to continually carry out our mission of operating a high-speed railway linking the Tokyo Metropolitan According to the Act, JR Central follows the procedures for region-oriented information etc. Further, we have proceeded with area, Chukyo, and Kinki regions, which is the lifeline of our business, and the Chuo Shinkansen (between the Tokyo Metropolis and the preparations for future construction work by continuing to work to ensure the future foundation of the company. 40 67 minutes minutes City of Osaka) as shown in Diagram 1 . Since receiving the order with center line surveys used to determine the central position for construction in May 2011, we have taken the procedures of the route in six prefectures, which the planned route is set of environmental assessment between Tokyo and the City of to pass through, and by holding site briefings used to explain Nagoya, which is promoted as the first stage. In August 2014, we compensation plans, etc. Additionally, constructions agreements submitted the final Environment Impact Statement to the Minister were concluded for the Southern Alps tunnel and Shinagawa Significance of the Chuo Shinkansen Project using the Superconducting Maglev System of Land, Infrastructure, Transport and Tourism (the Minister) and Station, among other construction works, and we held construction ~Promoting the Project while ensuring sound management and providing stable dividends made a public announcement. In addition, we simultaneously briefings for some construction works to provide local residents made necessary preparations to apply for the approval for the with an overview of the construction taking place and to explain 50 years have passed since the inauguration of the Tokaido would not be hindered by application of the Act, we referred fundamental construction implementation plan along with the environmental the safety measures used, etc. The praying for safety ceremony Shinkansen, which serves as Japanʼs main transportation artery. clauses regarding application of the Act to the Ministry of Land, assessment procedures. We submitted the application for the and commencement ceremony were held in December 2015 for Therefore, we must think of drastic ways to respond to aging in the future Infrastructure, Transport and Tourism (the Ministry) and received a reply approval for the Construction Implementation Plan (Part 1) the Southern Alps tunnel construction (Yamanashi section), and and large-scale disasters based on the fact that it takes a long time to in January 2008 indicating that those principles would not be hindered. between Shinagawa and Nagoya to the Minister on the same day in January 2016 for the Shinagawa Station construction (north construct and build a new railway line. In the wake of the Great East Diagram 1 Flow of work based on the Nationwide Shinkansen Railway Development Act as the submission of the final Environment Impact Statement and section/south section), and large-scale construction work is now Japan Earthquake, the need for a new line which enables us to offer received the approval in October. underway for both. multiple routes in our main transportation artery has become even more Article 4 Basic Plan Decided in November 1973 We are currently looking to coordinating closely with regional Praying for safety at groundbreaking ceremony ahead of the construction of Southern important to prepare for the risk from natural disasters. This is the very Article 5 Researches and Reports Topological and geological surveys Ordered in February 1990 partners while surveying locations, implementing designs and Alps tunnel (Yamanashi section) reason why we decided to complete the Chuo Shinkansen as quickly Reported in October 2008 Research on “the residual 4 items” * acquiring land in a planned manner. In addition, we will steadily as possible, as it can alternate the role of the Tokaido Shinkansen by Ordered in December 2008 Reported in December 2009 proceed with construction of the Southern Alps tunnel, Shinagawa utilizing the Superconducting Maglev System, which we have developed, Consulted on February 24, 2010 Article 14-2 The Transport Policy Council Station, and Nagoya Station, which will be hard and require a long under the condition that we bear the cost of its construction. JR Central Replied on May 12, 2011 time to build, as well as sections where the necessary preparation will operate the Chuo Shinkansen in an integrated manner along with the Consented on May 18, 2011 Article 6 Designation of Operator and Constructor has been completed, while also giving serious consideration to Tokaido Shinkansen. Designated on May 20, 2011 safety and the environment. While steadily working towards the successful completion of this Article 7 Development Plan Consented on May 23, 2011 Decided on May 26, 2011 We have continued to hold briefings introducing our project for project and maintaining our ability to react in a flexible manner, we will individual municipalities and self-government associations along make necessary investments to ensure safety and reliability, and to Article 8 Instruction to Construct Instructed on May 27, 2011 the planned route to explain the ways in which we work with local enhance competitiveness in the railway business, as well as ensure Environmental Impact Assessment communities in as detailed a manner as possible, and introduce sound management and provide stable dividends. We will first realize Article 9 Construction Implementation Plan Submission on August 26, 2014 the project between Tokyo and the City of Nagoya and strive to further Approved on October 17, 2014 extend to the City of Osaka as soon as possible after the company Reducing costs thoroughly while ensuring safety regains its business strength. Start of Construction In order to confirm that the principles of a privately owned company, *Research on “the residual 4 items” We are responsible for the entire construction cost of the Chuo reduce costs while ensuring safety. At the same time, we will •Items related to transportation capacity in response to the transportation demand such as freedom of management and autonomy of capital investment, •Items related to the development of facility and rolling stock technologies Shinkansen, therefore all construction expenses and costs will flexibly distribute resources in an optimal fashion in accordance •Items related to construction costs •Other necessary items be examined by the internally established “Chuo Shinkansen with the managerial environments. Outline of the Construction Implementation Plan (Part1) of the Chuo Note) The estimated expense amount required for Construction Cost Reduction Committee”, which will thoroughly Overview of the development plan construction does not include interest. Shinkansen section between Shinagawa and Nagoya Line to be constructed Chuo Shinkansen Section Between Shinagawa and Nagoya Section Tokyo Metropolis ~ Osaka City Shinagawa Station, Kanagawa Prefecture Station (provisional name), Yamanashi Superconducting Maglev System and engagement in global environment preservation Technology used for running Superconducting Magnetic Levitation system Stations Prefecture Station (provisional name), Nagano Prefecture Station (provisional name), Gifu Prefecture Station (provisional name), Nagoya Station Maximum design speed 505km/h Tokyo and Osaka will be connected in as fast as 67 minutes emissions that Superconducting Maglev System produces per Line extension 285.6km Estimated expense amount required for 9,030 billion yen by the Chuo Shinkansen using the Superconducting Maglev seat between Tokyo and Osaka is approximately one-third of construction (including rolling stock costs) 4,015.8 billion yen Construction [Total construction costs of 5,523.5 billion yen (Includes rolling stock costs. costs System, and the actual travel time required to move between airplanes. As this shows, Superconducting Maglev is a transport Main areas passed through Excludes the construction costs for the existing Yamanashi Maglev Line)] Other required matters Kofu City area, south-central Akaishi Mountains (Southern the centers of Tokyo and Osaka City can be shortened to system suitable for the 21st century in which global environment Expected Alps), Nagoya City area, Nara City area 2027 completion year approximately half of airplanes. In addition, the amount of CO2 preservation is becoming more and more important.

22 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 23 Key Measures and Management Strategy

Progress on the Superconducting Maglev System Technology What is superconductivity? Refining the Superconducting Maglev System Superconductivity is the phenomenon that the electrical resistance of certain materials JR Central applies to the Minister of Transport for the approval approaches zero at very low temperatures. When an electrical current is applied to a Technology and Reducing Costs June 1990 of the construction plan of the Yamanashi Maglev Line and gains approval. coil in a superconductive state (superconducting coil), this current continues to flow almost indefinitely, resulting in the creation of a very large magnetic field. April 1997 Running tests start on the Yamanashi Maglev Line. Niobium-titanium alloy has been used for the SCMAGLEV and superconductive state is achieved when cooling it with liquid helium to a temperature of minus 269°C. JR Central has promoted The Superconducting Magnetic Levitation Technological March Practicality Evaluation Committee of the Ministry of Transport technological development based (hereafter, the “Evaluation Committee”) acknowledges that “there Higher 2000 on our long-term belief that the is potential from a technological standpoint that the technology could have practical applications” Temperature of liquid helium Superconducting Maglev System is the most suitable for use on the December JR Central records the world speed record for a manned rail Chuo Shinkansen due to its speed 2003 vehicle at 581km/h Electrical resistance and advanced technology. Accumulated traveling distance November JR Central performs exercises of trains passing each other at The Superconducting Maglev (Yamanashi Maglev Line) 2004 1,026km/h relative to one another System Technology has already 0 Higher March The Evaluation Committee of the Ministry of Land, Infrastructure, Transport and Tourism acknowledges that “the core technologies -273 Temperature been established as a practical 2005 technology, and we are currently for practical application have been established” -269 continuing to conduct evaluations million Approx. September A facility investment plan is established to extend the Yamanashi to establish a maintenance 1.59 km 2006 Maglev Line and upgrade facilities system suitable for commercial January Application for changes of “Yamanashi Maglev Line Construction Accumulated investment amount (consumption Plan” is approved by the Minister of Land, Infrastructure and services while also further striving 2007 to refine the Superconducting tax included for some investments) Transport (hereafter, the “Minister”) The Principles of the Superconducting Maglev System Maglev System Technology and The Evaluation Committee of the Ministry of Land, Infrastructure, reduce costs for the construction/ Transport and Tourism acknowledges that “the technologies Propulsion System N S N S N S NNS required for commercial services have been established from a July 2009 operation/maintenance of billion comprehensive and systematic standpoint, and it is possible to By passing current through the commercial lines. move forward with detailing the specifications for commercial Propulsion Coils on the ground, a SSNN yen services and the technical standards” magnetic field (north and south poles) is 653.6 produced, thus the vehicle is propelled The Minister determines development plans for the Chuo forward by the attractive force of N S N S May 2011 Shinkansen (between Tokyo and the City of Osaka), which is opposite poles and the repulsive force of based on a Superconducting Magnetic Levitation System same poles acting between the ground coils and the Superconducting Magnets S N S N S N S N S built into the vehicles. December The Minister establishes the technical standards for Superconducting Maglev

Initiatives with the Yamanashi Maglev Line August Work extending the Yamanashi Maglev Line to 42.8km and renewing the facilities is completed, and running tests starts with Levitation System 2013 the Series L0 We started running tests on the initial 18.4km section of 2013, and running tests were started with the Series L0 (el The Levitation and Guidance Coils are the Yamanashi Maglev Line in April 1997. The level of the zero) rolling stock based on commercial line specifications. In JR Central records a travel distance of 4,064km in one day installed on both sides of the guideway April 2015 JR Central records the world speed record for a manned rail (track). When the on-board Superconducting Maglev Technology was evaluated in multiple April 2015 we recorded the maximum daily running distance of vehicle at 603km/h Superconducting Magnets pass through stages, resulting in the Superconducting Magnetic Levitation 4,064km, and beat our own world record for the fastest running at high speed, an electric current is induced in the Levitation and Guidance N S S N Technological Practicality Evaluation Committee of the Ministry train with a record of 603km/h. Diagram 1 “Superconducting Maglev Ride” Coils, causing them to become S N electromagnets. This generates a force acknowledging that the Superconducting Maglev Technology We will continue conducting evaluations to establish a that both pushes and pulls up the had already achieved levels sufficient for commercial service in maintenance system suitable for commercial services while also vehicle. July 2009. The Minister established the technological standards further striving to refine the Superconducting Maglev System of the Superconducting Maglev in December 2011. Technology and reduce costs for the construction/operation/

Work extending the Yamanashi Maglev Line to 42.8km and maintenance of commercial lines using rolling stock and Guidance System completing fully renewing the facilities was completed in August facilities built to commercial line specifications. The Levitation and Guidance Coils on both sides of the guideway keep the vehicle in the center of the guideway at all times by exerting an attractive force “Superconducting Maglev Ride” for public on the far side of the vehicle and a N S NN repulsive force on the near side when We have been conducting “Superconducting Maglev Ride” positive impressions, such us “traveled in extreme comfort”. the vehicle moves off center to either side. since FY2014, and over 30,000 people have experienced the Diagram 1 We will also continue promoting “Superconducting high-speed travel at 500km/h, and the high level of performance Maglev Ride” in a well-planned manner.

of Superconducting Maglev Technology, with many giving their Overview of the Yamanashi Maglev Line

Yamanashi Maglev Initial section start point Initial section end point Yamanashi Maglev Investment in the Yamanashi Maglev Line and Superconducting Maglev technological development Line starting point Line end point 0km000m00 16km610m00 35km010m00 42km800m00 We have invested heavily in developing the practical Investment in the Yamanashi Maglev Line and Superconducting Maglev technological development technologies required to establish Superconducting Accumulated investment amount Maglev commercial lines. We will proceed with 1 Elevation initiatives to realize Superconducting Maglev Project Special investments for the Yamanashi Maglev Line * billion yen 170.5 800m

in the north east corridor of the United States while 2 Extension of the Yamanashi Maglev Line and upgrading of facilities * billion yen constructing Superconducting Maglev-based Chuo 337.7 600m Investment in proprietary Superconducting Maglev technological Shinkansen ourselves. The construction, operation development *3 145.3billion yen 400m and maintenance for these projects all rely on Total 653.6billion yen 200m technologies we have developed. [Extended section] Initial section [facility upgraded] [Extended section] *1 Special investment of 196.5 billion yen (including consumption tax) planned for test infrastructure (aboveground facilities for general purpose use), etc., such as civil engineering structures along initial sections of Incline (‰) 18 40 17 40 6 40 28 3 40 39 40 track. The above amount is the amount paid from FY1990 to FY2015. *2 355 billion yen (including tax) in construction costs planned as a new investment framework for work extending the Yamanashi Maglev Line to 42.8km and renewing the facilities. The above amount is the amount paid from FY2006 to FY2015. Kilometers (km) *3 The above amount is the amount paid separate to the amounts listed for*1 and*2 from FY1987 when the company was founded to FY2015. 0 5 10 15 20 25 30 35 40

24 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 25 Key Measures and Management Strategy

Stimulating Tourist Demand Enhancing Sales and Marketing Deployment of various tourism campaigns

JR Central has continuously implemented travel campaigns for Kyoto and “Kyoto campaign” Nara, which are the largest and sustainable tourist resources in our market “Express Reservation” and “PLUS EX”, are area, and the Company is promoting the use of the Shinkansen mainly from the membership reservation services which make the most out of the continually departing Tokaido Tokyo Metropolitan area to the Kansai region. We will especially run promotional Shinkansen. These services enable members to advertisements for the Kyoto Campaign based on a concept of enabling customers reserve seats and change reservations easily to re-acknowledge Japanese beauty and profundity. online, while eliminating the need to pick up In FY2016, we will roll out tourism campaigns covering the Ise-Shima region, 1 2 tickets. And they are used in approximately 30% Number of “EX service* ” members* which is in the spotlight as the venue of the Ise-Shima Summit in May. In addition, of all seat bookings for the Tokaido Shinkansen. we will continue to promote mutual travel between the Tokyo Metropolitan region, In the summer of 2017, we are also planning to the Nagoya region, and the Kansai region by expanding travel products offered introduce a new online reservation and ticketless in coordination with events happening near the railway line, such as theme park boarding service for non-members and overseas million 2.89 anniversary events. visitors traveling to Japan.

In terms of tourism, we will roll out measures to Record of “EX service*1” use (Daily average on weekdays)*2 stimulate demand, such as the Kyoto campaign, and continue to strengthen our relationship with Enhancement of tourist products for “Express Reservation” and “PLUS EX” members local residents and travel agencies at tourist spots in our operating areas. We will also strive 155,000 We are expanding tourist products to increase Shinkansen “Nozomi” tickets for services departing during the middle of to increase Shinkansen ridership by providing uses use for travel on weekends and holidays for members of both the day period when use is comparatively light up to 21 days attractive travel products and bolstering *1 Our “EX service” lineup refers to the “Express services that typically only ride the Shinkansen for business. before the travel date. “Kodama Rakutabi IC Hayatoku” and initiatives aimed at member bases. Reservation” service offered by JR Central and JR West, and the “PLUS EX” service offered by JR For example, “EX Family Hayatoku”, is for groups reserving Central. “Isshoni Kodama Hayatoku” are products offering affordable *2 As of March 2016 multiple seats on weekends or holidays up to three days before “Kodama” fares when booked up to three days in advance of the travel date. “IC Hayatoku Type 21”, is for persons booking the travel date.

50+(Fifty Plus) Improving Convenience for the Tokaido Shinkansen JR Central has been operating a travel club “50+”, which the Internet but also inform them of exclusive travel products, “Express Reservation” Service and “PLUS EX” Service anyone over 50 years old can participate. The number of such as tours that enable customers to enjoy special viewing members as of the end of FY2015 is approximately 830,000, and experiences of shrines and temples. Members of either service can quickly and smoothly ride Shifts in “Express Reservation” usage and the membership numbers approximately 220,000 members enjoyed “50+” brand products In addition to these initiatives, in FY2016 we will be preparing the Shinkansen by simply touching their member IC card at Membership Number of uses (Daily average on weekdays) by over the same fiscal year. We not only inform the members plans in response to the diverse range of needs of a more active the automatic ticketing gates after reserving their seats with Membership (million people) (Thousand) of seasonal tourism information through the magazine and set of customers who have just reached their 50s. a smartphone or other device beforehand. Members do not 3.00 2.89 180 need to visit the ticket sales booth in the station in advance, 2.66 2.50 155 150 greatly reducing total travel time. Additionally, as members can 2.36 2.17 138 change their reservation as many times as they want without 2.00 1.98 134 120 Products for foreign tourists 119 any additional charges. Members can always select the most 110 1.50 90 convenient train from a vast selection of trains including the JR Central is working with travel agencies to increase the We also collaborate with municipalities located along train “Nozomi”, which has a maximum of 10 departures every hour. 1.00 60 number of tourists visiting Japan. We also offer travel products, lines and local transportation companies to promote the sales of etc. for foreign tourists through the Internet, etc., using the “FLEX excursion packages for foreign tourists visiting Japan, targeting Both services boast a combined total of 2.89 million members 0.50 30 as of March 2016, and these services are used approximately JAPAN” brand, to stimulate the tourism demand for the Tokaido areas such as “Takayama/Hokuriku”, “Ise/Kumano/Wakayama”, 0 0 Shinkansen. “Tateyama Kurobe Alpine Route” and “Mt.Fuji/Shizuoka”. 160,000 times every weekday. ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 *1. The membership numbers are as of the end of each month and include the total of JR Central and JR West. *2. Include “PLUS EX” members from March 2013

New Tokaido/Sanyo Shinkansen online reservation and ticketless boarding service Enhanced cooperation with communities

We have been offering these “Express Reservation” service reservation up to the last moment using this online reservation JR Central promotes initiatives, such as the “Shupo Campaign” “Shupo” “Japan Highlights Travel” and “PLUS EX” service only to members, largely target and ticketless boarding service, the convenience of our which introduces a number of tourism resources along our passengers who frequently ride the Shinkansen for business or Shinkansen lines will improve the convenience. conventional lines, for the promotion of the limited express trains other reasons. And these services require a designated credit on conventional lines with local community. card and a member’s IC card for use. “Sawayaka Walking”, a free walking event starting from JR New online seat reservation and ticketless boarding service Now we aim to start a new online reservation and ticketless [Service due to start summer 2017] Central train stations where participants can visit the local boarding service in an attempt to improve the convenience for tourist spots, enters its 25th year in October 2016 having 1. Register 2. Book 3. Board non-members to be on board Tokaido Shinkansen and Sanyo established itself as a cornerstone community-based event. We Shinkansen by summer 2017. This service is to be available Credit Tap! will coordinate with local communities in preparing even more to anyone with an ordinal credit card and a widely popular Card spectacular walking courses. commuting type IC card. We are also making preparations to We have been using “Japan Highlights Travel” (in Japanese have the service available in multiple languages for overseas and English, etc.), a portal site that has a collection of tourism visitors to Japan. information along the Tokaido Shinkansen, to stimulate travel By enabling a broader range of customers to book Shinkansen Commuting type demand with the cooperation of local municipalities and tourism IC card tickets whenever they feel like it, and to freely change their associations.

26 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 27 Key Measures and Management Strategy

Technological Development and Enhancement of Technical Capability Overseas Deployment of High-Speed Railway System

Railway business is supported by employees who Basic railway R&D cycle JR Central offers consultation to overseas high-speed railway projects by thoroughly execute their tasks using various skills and utilizing our comprehensive technologies regarding the highest level high speed Acquisition of large Field-based Target lines for overseas expansion cooperating with each other, and supported by various amounts of field data verification railway system in the world. JR Central believes that the overseas deployment of (From rolling stocks in commercial services, (From testing on main lines, etc.) types of equipment, such as rolling stock, civil engineering aboveground facilities, test rolling stock, etc.) its high speed railway system will be a meaningful project that enables Japanese structures, tracks, and electric and signal communications manufacturers to maintain and strengthen their technology and skills through Understanding Target lines for the SCMAGLEV: equipment, functioning seamlessly. In order for a railway the expansion of the international high-speed railway market, and it also leads Northeast Corridor. (Washington D.C. ~ New York) phenomena operator to ensure safety and strengthen its future occurring in the to the stable provision of equipment, and the technological innovation and cost New York managerial foundation, it is vital to continue developing its field reduction of railway-related equipment. core technologies which are the base of the foundation. We target countries and regions that can be expected to introduce total systems Baltimore Target lines for the N700-I Bullet: Looking ahead, we will continue to proceed with involving new high speed passenger railway lines in which JR Central’s superior Theoretical Examining Dallas ~ Houston (State of Texas) Washington D.C. development using the latest technology in relation analysis and using testing high speed railway systems can be used to their full potential. Furthermore, we to rolling stock and other equipment towards further simulation equipment realize the need for target countries and regions to have a complete legal system Dallas improving safety and enriching our transportation where intellectual property rights and the sanctity of agreements are established service, and have this lead back to the building of an as socially-accepted ideas, a stable political situation, and an economic power Houston Verification using full efficient management structure that emphasizes reducing Computer-based that is able to invest in large-scale infrastructure investments. Therefore, the U.S. scale large testing theoretical analysis unnecessary costs in its railway business. equipment is our current main target for marketing activities.

Promoting Technological Development at the Komaki Research Center Overseas expansion and consulting of total Tokaido Shinkansen systems JR Central opened its own R&D center in Komaki, Aichi Prefecture in July 2002, and is promoting R&D activities to strengthen technological JR Central promotes a consulting business as part of the overseas expansion of high-speed railway systems in which JR development that will support our future with the aim of enhancing our technical capabilities and developing human resources. The main distinctive Central itself does not lead implementing body of development projects. JR Central proposes the deployment of high-speed feature of the Komaki R&D Center is full-scale testing equipment. Through the 14 years since the Center’s founding we have worked to improve railway as a total system, which includes civil engineering structures, tracks, electrical equipment, signaling equipment, our testing equipment, and leaded to proprietary technological development results that include the development of the Series N700 and N700A rolling stock, operation management systems, maintenance and repairing, etc., to overseas markets. When overseas high- rolling stock, the development of countermeasures to derailment/deviation for the Tokaido Shinkansen, the development of large-scale renovation speed railway projects become concrete, we not only coordinate with relevant Japanese companies but also provide support methods for civil engineering structures in relation to our Shinkansen trains, and the development of the next generation overhead contact line for our and consultation to ensure safe and reliable operation of the high-speed railway by supplying various manuals regarding Shinkansen trains. While ensuring safety and reliability as our top priority, we will continue to adopt the latest technology on upcoming Tokaido Shinkansen rolling operations/maintenance, and conducting education/training for staff, etc. stocks, etc. Additionally, we will not only further promote cost reduction in facility maintenance/updates, such as large-scale renovation, etc., but also promote research and development for practical technologies, which lead to efficiency in inspections and maintenance, and that of transportation The N700-I Bullet and SCMAGLEV service, etc. We also proceed more accurate forecasting and detection, etc. with regard to abnormal weather and large-scale natural disasters. JR Central is proposing high-speed railway systems called as part of preparations for the implementation of technical the “N700-I Bullet” and “SCMAGLEV” to overseas markets. The support for TCP. Downsizing and lightening the drive system of Shinkansen rolling stock through the use of SiC elements N700-I Bullet is a Tokaido Shinkansen total system based on

We have succeeded in developing a Shinkansen rolling stock drive some 20% (around 10t per trainset), CI using SiC elements the principle of “Crash Avoidance” of which the Series N700 The Northeast Corridor Project system that uses silicon carbide (SiC), a next-gen semiconductor, as a and has allowed for further size rolling stock is the main component. The SCMAGLEV is a An SCMAGLEV line is supposed to connect Washington D.C. power semiconductor element used to reduce the size and weight of the reductions compared to the drive Superconducting Maglev System developed by JR Central that with New York, and JR Central is currently initiating promotional drive system and to improve energy efficiency. We now have a view to system for the Series N700, promoting can realize commercial services at a speed of 500km/h. activities to ensure that the initial section from Washington the practical application of this drive system and are currently reviewing greater energy efficiency and allowing SiC elements D.C. to Baltimore goes ahead with the cooperation of both the its introduction into the next generation of the Tokaido Shinkansen trains. for more freedom in design through The Texas Project Japanese and U.S. governments. The awareness toward this This is a world-first, radical new development in high-speed trains, the relaxing of rolling stock equipment Approx. in terms of greatly reducing the weight of the drive system and further layout restrictions. 1,000 mm The Texas Project, which is set to use the N700-I Bullet, project has continues to rise on the U.S. side. Secretary of Cooling fin reducing its size. This has reduced the weight of the drive system by is a business venture which aims at linking two major city Transportation of the U.S. Department of Transportation Secretary Foxx centers, Dallas and Houston, with high-speed rail. The main U.S. and the Governor of observing the Yamanashi Maglev Line Elevated bridge displacement suppression control with new vibration control device development body, Texas Central Partners (TCP), continues Maryland observed the to ramp up development activities through the procurement of Yamanashi Maglev Line In the event of an earthquake, in addition to quickly bringing Shinkansen that allows for construction in a manner that does not require offices or construction funds and the formulation of preliminary designs in 2015, and the U.S. rolling stock to a stop, we are (1) installing “Derailment prevention guards” to shops, etc. under the elevated bridge to relocate. Looking ahead, we will ahead of project commercialization. JR Central is responsible government approved prevent derailments, (2) “Deviation prevention stoppers” to prevent deviation continue to roll out for continuing with promotional activities about this project, and a federal grant of 27.8 of rolling stock in the unlikely event of a derailment, and (3) implementing measures using the New seismic control device countermeasures to suppress major displacements of structures as conventional damper- providing TCP with technical support. million USD for the State instances of implementing countermeasures to derailment/deviation. brace method in areas Furthermore, a local subsidiary, the High-Speed-Railway of Maryland. The Komaki R&D Center developed a new elevated bridge displacement where construction is New seismic Technology Consulting Corporation, was founded in May 2016 suppression control with a new vibration control device as part of the difficult, and strive to control device New seismic control device countermeasures initiated for (3). This structure absorbs the seismic energy reduce costs. Strengthening Technical consulting with Taiwan High Speed Rail from frictional heat using a displacement suppression construction method of steel plate lining We received a request for technical support from Taiwan High have been providing technical consulting since April 2014. We Improving maintenance and labor saving using status monitoring technologies, etc. Speed Rail Corporation, which operates Taiwan’s high speed will continue to provide technical support to the greatest degree rail system based on Japan’s high speed rail system, and we possible, based on the requests from them. Previously we have developed and put into practical use switchover robots saving on manpower through the new development of a maintenance for Derailment prevention guards using robotics technology, and a Bogie system that continually monitors rolling stock data. We will continue to Making efforts to promote Japan's high-speed rail system as a global standard temperature detection system using highly advanced sensor technologies, focus our technological development efforts on upgrading the function and etc. With the introduction of devices which led to this technological cutting down on labor costs associated with rolling stock and equipment We will continue to promote initiatives to establish the Japanese high-speed rail system, which is based on the core principle development, we have succeeded in improving inspection precision while inspections and maintenance using status monitoring technologies, etc. of “Crash Avoidance”, as a global standard, through the International High-Speed Rail Association (IHRA).

28 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 29 Key Measures and Management Strategy

store, a hotel and offices operated by three of our subsidiaries. promotions, etc., the sales of the year ending February 2016 Developing Affiliated Businesses After the grand opening in 2000, Towers significantly increased was 130.1 billion yen (103.2% YoY), which is the highest ever the revenues from our affiliated businesses. Diagram 1 and approximately twice as much as that in 2000 when the The office business is run by JR CENTRAL BUILDING CO., store commenced its operation. LTD. (wholly-owned subsidiary of JR Central, belonging to With regard to the hotel business, Nagoya Marriott Associa the “Real Estate” segment), which owns property of Towers. Hotel is run by JR Tokai Hotels Co., Ltd. (wholly-owned Since its opening, the offices have continually recorded high subsidiary of JR Central, belonging to the “Other” segment). Operating Revenues of Consolidated Subsidiaries (simply aggregated) occupancy level, which almost remained at full occupancy The location directly above the station allows for a spectacular FY1989 FY2015 (3 companies) (28 companies) during FY2015. high-rise view and the high-grade facilities have gained As for the department store business, JR Tokai Takashimaya wide acclaim. This has led to the hotel maintaining a high Co., Ltd., belonging to the “Merchandise and Other” segment, occupancy rate of more than 89% in FY2015 (annual average). operates JR Nagoya Takashimaya, which attracts many visitors The combined operating revenues of these three companies 52.6 by leveraging the store’s location directly above the station. were 175.0 billion yen in FY2015 (simply aggregated). billion yen 569.6 Thanks to renovation of sales space and proactive sales billion yen

“JR Gate Tower” Project

As seen in JR Central Towers and the “JR Gate Tower” The “JR Gate Tower” Project is a project to construct another we will ensure all preparations are completed as we steadily Project in Nagoya Station, we have improved the revenue skyscraper complex comprised of offices, commercial facilities, move forward with the interior finishing and building equipment base by engaging in businesses that are expected to generate a hotel, a bus terminal and parking lots, along with other installation as these aspects of the construction process reach synergic effects with the railway business, such as areas that facilities next to Towers. The height is approximately 220 their peak, and begin implementing full-fledged sales and make full use of the good location of railway stations. We will meters, and the total floor area is approximately 260,000m2. promotional activities ahead of the start of occupancy of offices continue to expand our revenues and profits in cooperation It is approximately 60% of the scale of Towers. It creates a in November 2016, and the opening of the “Takashimaya Gate with group companies. Refer to P51 for related information (Table 1 “List of Consolidated Subsidiaries”) highly convenient and attractive urban space with Towers, Tower Mall” and “Nagoya JR Gate Tower Hotel” in April 2017. providing even more activities around Nagoya Station. From the JR Gate Tower (left) and JR Central Towers (center/right) standpoint of efficient management by the JR Central Group, JR CENTRAL BUILDING CO., LTD. will be in charge of the overall management/operation of the building in the same manner as Towers. “Nagoya JR Gate Tower Hotel” is scheduled to occupy the building, along with commercial facilities such as the Line-ups of JR Central Group affiliated business “Takashimaya Gate Tower Mall”. “Takashimaya Gate Tower Mall” will have approximately The JR Central Group undertakes business Diagram 1 Shifts in the Operating Revenues of Consolidated Subsidiaries (simply aggregated) 150 fashion/goods stores. We will aim to effectively deploy in the areas of “Transportation”, “Merchandise businesses through the 2 department stores in an integrated and Other”, “Real Estate” and “Other”. The Transportation Merchandise and Other Real Estate Other manner by offering stores in categories/price range that are not “Transportation” segment involves railway 569.6 covered by the current JR Nagoya Takashimaya. 556.1 557.7 (28) business and bus business. The “Merchandise (29) 528.6 525.9 (29) 12.9 “Nagoya JR Gate Tower Hotel” will have 350 rooms in total. It 507.3 (31) 518.1 511.2 and Other” segment manages department (29) (29) (Billion yen) (31) (29) will be a hotel with the focus on lodging that provides a sense of 500 stores and provides sales services for goods 462.4 high quality and great functions, while offering the convenience 436.2 (30) and food in stations and trains, utilizing the 410.5 (30) of being directly connected to the station as well as providing a 382.0 385.0 (30) merit of having good railway station locations to 400 243.6 369.3 (29) (30) comfortable sleeping environment. “Nagoya JR Gate Tower Hotel” 355.6 (30) “Takashimaya Gate Tower Mall” attract customers. The “Real Estate” segment 335.0 (30) Furthermore, in addition to a restaurant floor that boasts completion image completion image (30) develops commercial facilities in stations and one of the largest number of restaurants on offer in Japan (in 300 areas under elevated track columns and also 63.9 conjunction with Towers), electronics retails stores, fitness leases real estate such as station buildings. 210.1 clubs, childcare facilities, medical care facilities and other (19) In the “Other” segment, we manage hotels at 200 facilities are also scheduled to occupy the building. major stations, travel agencies, and advertising The building construction is proceeding according to plan, with agencies, etc. We also manufacture rolling 249.0 100 the building framework being completed in December 2015. stock and maintain, inspect, and repair our The leasing out of offices is also proceeding smoothly, and railway facilities in this segment. Operating revenues of consolidated 0 ’00.3 ’01.3 ’02.3 ’03.3 ’04.3 ’05.3 ’06.3 ’07.3 ’08.3 ’09.3 ’10.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 subsidiaries, excluding JR Central, totaled 569.6 Note: Each figures in parentheses indicates the number of consolidated subsidiaries at the end of FY Other initiatives billion yen (simply aggregated) in FY2015. In terms of the merchandising businesses, we will enhance “Nagoya Umaimon-dori” “IIMONOTANBOU” website customer-attracting capabilities and product capabilities by JR Central Towers updating products and renovating stores, etc. Additionally, in regard to our Real Estate business, we renewed the “Nagoya The development of Nagoya Station, which boasts the highest we are securing a revenue base by engaging in businesses Umaimon-dori” restaurant zone within Nagoya Station, among number of passengers of any other JR Central’s stations, forms that are expected to generate synergic effects with the railway renewing other locations in the station. We will also continue a pillar of JR Central’s affiliated businesses. Further, as JR business, such as areas that make full use of the good location to carry out renewals for commercial facilities inside existing Central only holds Tokaido Shinkansen stations and related of railway stations. station buildings in FY2016. facilities in the Tokyo Metropolitan area and the Kansai region, JR Central Towers (or “Towers”), the skyscraper complex We are also working to help revitalize local communities through the Company has engaged in developing business which with a height of 245 meters and total floor area of approx. the “IIMONOTANBOU” website that introduces appealing effectively uses the limited space available, such as the area 417,000m2, built on Nagoya Station, is the core of the JR products found along our train routes, and will be making inside Shinkansen stations and under elevated tracks. As such, Central Group’s affiliated businesses. Towers has a department preparations to commence online sales operations in 2016.

30 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 31 ESG Information

Initiatives with Shinkansen Engagement in Global Environment Preservation Introducing Energy-Conserving Rolling Stock

We are proactively developing and introducing energy- and Shin-Osaka at the maximum speed of 285km/h is 23% less conserving rolling stock in our effort to further reduce than Series 300 and 16% less than Series 700 which travel Shinkansen energy consumption. We have introduced 80 at the maximum speed of 270km/h. It means that N700A has Railways have the outstanding mainline Series N700 trainsets in an intensive manner for five significantly improved energy consumption while accelerating characteristic of being highly years since FY2007. Twenty five trainsets of the latest N700A the speed. The result is that our Energy Consumption Unit at the energy efficient compared to other rolling stock have been introduced as of FY2015, with a further end of FY2015 improved by approximately 33% compared with transportation modes and having 7% 9% 3% Railway 26 trainsets scheduled to be introduced from FY2016 to FY2019. that of FY1990. We will aim to further achieve energy efficiency minimal adverse impact on the global Bus environment. In addition to directly 52% Airplane Energy consumption volume for N700A to travel between Tokyo by promoting the introduction of N700A. 83% 77% reducing the load on the environment Car 5% by improving energy efficiency in its Others Comparison of Electricity Consumption by the Tokaido Shinkansen Shifts in the Ratio of the Tokaido Shinkansen Energy-Conserving Rolling Stock and Energy 6% 5% 6% railway operations, such as by lowering Rolling Stock Type Consumption Unit 2% 3% power consumption in rolling stock, 29% (%) (%) 270km/h -23% Compared to FY1990 6% 5% 100 JR Central also thinks the suppression 270km/h -16% 100 of the load placed on the environment Transportation Energy CO2 around 33% improvement volume consumption emission rate 285km/h across its entire Transportation section, Energy Consumption Unit for the Tokaido (passenger-kilometer) 80 80 Shinkansen in FY2015* brought about by having as many Source: For transportation volume/energy consumption, created based on data from Series 0/ Series 100 passengers as possible opt to use Compared to FY1990 Transportation Related Statistics (Ministry of Land, Infrastructure, Transport and 60 60 Tourism), and for CO2 emissions, the National Institute for Environmental Studies, 100% 92% 77% railway services that reduce the burden Greenhouse Gas Inventory Office of Japan. * The total of items in the breakdown may not be 100% due to rounding. Energy-conserving on the global environment, as linked 40 rolling stock 40 Series 300/ Series 700 to efforts related to the engagement in Diagram 1 Distribution of Passenger Transportation Share, in terms global environment preservation. % of Transportation Volume, Energy Consumption and CO2 20 Even more energy-conserving 20 Emissions rolling stock improvement Energy-conserving rolling stock ratio Series N700/ N700A 33 Series 300 Series 700 N700A 1992 1999 2013 0 0 ( ) ( ) ( ) Energy Consumption Unit (Ratio using an FY1990 basis) ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 Note:Simulated run from Tokyo to Shin-Osaka at the maximum speed above (FY)

*JR Central defines Energy Consumption Unit as the “Amount of energy consumed when running 1 car for 1 kilometer”, due to total rolling stock kilometers being the value which is the most relevant to our business activities. Great environmental performance of Series N700 and N700A

Environmental Superiority of Railway Series N700 and N700A trains have been highly improved in the environmental performance both in terms of speed and comfort due to the introduction of technologies mentioned as follows. In terms of transportation volume and CO2 emissions in passenger transportation, even though railway accounts for 29% of

the passenger transportation volume Reduction in running Diagram 2 Comparison of the Tokaido Shinkansen and Airplane (between Tokyo and Osaka) resistance We reduce the running resistance by introducing the nose shape with great aerodynamic attributes, using flush windowpanes, which in Japan, it is only responsible for 5% 1 have no unevenness between the outside panel and windowpane, and installing coverall hoods between all cars, etc. Diagram 3 Energy Consumption per Seat CO2 Emission per Seat of CO2 emissions. Diagram 1 Compared Reducing rolling stock A light and simple-structured bolsterless bogie is used, with light aluminum alloy used for the body frame. Furthermore, we employed with an airplane (B777-200), the Approximately Approximately 2 weight a high performance and small alternating-current traction motor. Through these changes, we have reduced the rolling stock weight. Tokaido Shinkansen (Series N700 Shinkansen Shinkansen *1 1/8 *1 1/12 of airplane of airplane The Body Inclining System is introduced to Series N700/N700A for the first time in the Shinkansen in order to increase the speed at “Nozomi”) consumes approximately 1/8 90MJ 4.2kg-CO2 Introducing the Body curves currently subject to speed restriction. This system makes it possible to increase speed with comfort, shortening travel hours, Series N700 Series N700 3 Inclining System of the amount of energy per seat when “Nozomi” “Nozomi” and reducing the frequency of speed acceleration and deceleration. traveling between Tokyo and Osaka, Airplane Airplane The Electric Power Regenerative Braking System, in which the motor is used as a generator during braking to produce electricity and Expansion of Electric Power and discharges about 1/12 of the CO2 return it to the overhead contact line, is used in the Shinkansen for the first time. While 12 of the 16 cars in one trainset of Series 700 *2 *2 4 Regenerative Braking System 746MJ 50kg-CO2 were regenerative, 14 of the 16 cars in one trainset of Series N700 and N700A are regenerative. The Electric Power Regenerative emissions. The data show that the B777-200 B777-200 Diagram 4 Braking System provides all of the braking power needed for one trainset during normal braking. Tokaido Shinkansen has overwhelming *1. Calculation based on running performance of Series N700 “Nozomi” (Tokyo - Shin-Osaka) conducted by JR Central The power converter (CI) converts electricity from the overhead contact line and sends it to the motor at the time of acceleration and environmental superiority. Diagram 2 *2. Calculated by JR Central using ANA's "Annual Report 2011" B777-200 (Haneda - Itami/Kansai Airport) for reference Lighter, smaller blower-less returns the electricity generated by the motor back to the overhead contact line at the time of deceleration. JR Central was the first to 5 CI in all motor cars put the blower-less power converter, which uses the wind from running for air cooling, into practical use in the Shinkansen and uses the system in part of the rolling stock of Series N700. For N700A, these CI were made 17% smaller and lighter and installed on all motor cars. Guidelines and Objectives In the cabins of regular cars on N700A, lighting has been optimized in accordance with the bright seat colors. LED lights with dimmer Optimization of cabin lighting function have also been employed in the toilets and powder rooms. These measures have contributed in achieving a reduction in and introduction of LED Environmental Action Guidelines Environmental goal 6 energy consumption of lighting by approximately 20% compared to Series N700. We are now installing LED lights in passenger cabins lighting to reduce power consumed for lighting starting with rolling stock introduced in FY2016. JR Central has established a set of Environmental Action JR Central has formulated the “Implementation Plan of Low Approximately 90% (weight ratio) of the waste generated by scrapped the Shinkansen rolling stock is recyclable. With N700A, 100% Guidelines consisting of the following seven items as part of Carbon Society Phase II”, in which our Energy Consumption 7 Using eco-friendly materials recyclable polyester has been used for seat cushions, and conventional fiber-reinforced plastic(FRP) bogie skirts, which cover bogies its engagement in global environment preservation. Unit as of FY2030 will be improved by 25% compared with that to lower air resistance, have been replaced with stainless steel ones to utilize highly recyclable materials. of FY1995 (refer to the Japan Business Federation (Keidanren) 1 Provide comfortable transportation services to promote website for further details), and is striving to make sure that Diagram 3 Reduction in Running Resistance (Coverall Hoods) Diagram 4 Electric Power Regenerative Braking System further use of railways which offer superior global the plan is executed. Up to now we established a “Voluntary environment preservation Plan” in which we achieved our target of a 15% reduction in 2 Promote technological development that contributes to energy consumption as of the end of FY2010, and we have global environment preservation proactively developed and introduced energy-conserving 3 Use fuel and energy efficiently rolling stock. We will continue promoting proactive initiatives, 4 Promote waste controlling and recycling such as the continuous development and introduction of Brakes (Power generation) Power running (Power consumption) 5 Appropriately manage chemical substances energy-conserving rolling stock, while setting train services The motor is used as a generator during The regenerated power returned to the braking to produce electricity and return it overhead contact line is reused when 6 Procure environmentally friendly goods and materials flexibly through the “10 Nozomi Timetable”, etc. to meet the to the overhead contact line accelerating other trains 7 Contribute to society and raise awareness for global demand of passengers. environment preservation Series 300 N700A (Not Equipped with Coverall Hoods) (Equipped with Coverall Hoods)

32 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 33 ESG Information

Enhancement of electricity supply efficiency by replacing ground facilities Facility and workshop status Hamamatsu Workshop By replacing the electricity compensation devices from FY2011 Also, by replacing part of the frequency converters from Hamamatsu Workshop, which conducts general overhauls of SCMAGLEV and Railway Park (solar power to FY2018, which inhibit voltage reduction as rolling stock FY2014 to FY2021, which convert 50Hz electricity to 60Hz SCMAGLEV and Railway Park Shinkansen rolling stock, began the renovation construction generation system) in July 2010. Along with this, in FY2015 the rooftop of the At the SCMAGLEV and Railway Park, travels away from a substation, with a facility with less electricity electricity required to operate the Shinkansen, with a stationary workshop was used for installing a solar power generation which opened in March 2011, we introduced system with the capacity to generate approximately 300kW or loss, we expect to be able to reduce the electricity use on the type with less loss, we expect to be able to reduce Shinkansen a solar energy generation system on the about 300,000kWh annually. In addition to this, high-efficiency Shinkansen by approximately 3%. electricity consumption by approximately 2%. expansive roof. The system has a generation transformer facilities, boilers and other equipment will be capacity of approximately 500kW, or roughly introduced in an effort to increase energy savings across the 610,000kWh annually, which can cover entire Workshop by approximately 10%. approximately 30% of the SCMAGLEV and Railway Park’s energy needs. Nagoya Workshop Proposal of Eco Business Trips JR Central started conducting anti-earthquake measures and General Education Center upgrading facilities in February 2014 in the Nagoya Workshop JR Central proposes the idea of “Eco Business Trips”. information of “Eco Business Trips” At the General Education Center, which was where general overhauls, etc. of conventional line rolling stock are newly built in September 2011, we aim to conducted. We aim to reduce approximately 20% of electricity “Eco Business Trips” refer to “business trips that contribute through advertisement campaigns to conserve energy by introducing a ventilation General Education Center (rooftop gardening) consumption for the entire workshop by introducing high ceiling LED to environment preservation”, or the mindset of “selecting spread it in society, as we believe that system which uses ice thermal storage lighting and transforming equipment as energy saving measures. transportation and business trip methods that will emit a smaller this initiative will lead to further prevention achieved from the utilization of nighttime “JR Gate Tower” Project amount of greenhouse gas when traveling mid to long distances of global warming. electricity service as its heat source and LED lighting, etc. Furthermore, we designed With the “JR Gate Tower” Project, we plan to work on creating (or making business trips)”. We will actively showcase the energy-efficient buildings and reducing the environmental burden “Eco Business Trips” the building to use natural energy effectively by introducing regional air-conditioning systems, adopting LED poster by improving external insulation efficiency by arranging a rooftop garden and taking lighting, installing solar power generation panels, creating green Initiatives with Conventional Lines advantage of natural wind and light as areas in the 15th floor courtyard and on roofs of low-rise buildings, much as possible. As a result, we were able etc. We will not only aim to achieve “Rank S” of environmental to obtain “Rank S”, which is the highest performance, which is the highest rank on the “CASBEE” scale Introducing energy-conserving rolling stock assessment level under the “Comprehensive but also to reduce approximately 25% of CO2 emissions from the Assessment System for Built Environment building compared to standard model buildings according to the JR Central has also been striving to conserve energy of rolling introducing lighter rolling stock and high mileage diesel engines, Efficiency (CASBEE)”. CASBEE Nagoya 2010 standard. stock on conventional lines. We will promote the introduction etc. As a result of these initiatives, all of the conventional line of rolling stock with better energy efficiency by introducing the rolling stock is energy-conserving rolling stock. Electric Power Regenerative Braking System, higher efficiency Additionally, we will look to further reducing the load on the Legal Compliance power control conversion methods, lighter rolling stock, etc. environment by using LED lights in new rolling stock. Measures against soil contamination to electric cars, and will do the same for diesel railcars by JR Central has established a system to comply with In FY2015, specific hazardous substances were detected relevant environmental laws. Comparison of electricity consumption and diesel fuel Shift in the introduction of energy-conserving rolling stock on conventional lines (electric cars and diesel railcars) exceeding the standard value from part of the soil when we consumption of cars on conventional lines (electric conducted soil surveys in the Nagoya Workshop prior to cars and diesel railcars) (Cars) Energy-conserving rolling stock Conventional type rolling stock 1,600 construction. We reported the matter to relevant administrative 775 Management of chemical substances Electric cars 440 465 469 481 490 542 626 881 639 887 885 885 885 885 888 1,091 1,210 1,242 agencies and took appropriate measures. Looking ahead, we Conventional type 100(Base) 1,112 1,112 1,112 1,166 1,242 1,265 1,222 (Series 117, 110km/h) 1,200 Based on the “PRTR Law (Pollutant Release and Transfer plan to successively carry out further surveys as construction Energy-efficient type Register Law)”, we report the amount of emission and progresses. We will submit a report should any substances (Series 313, 120km/h) 69 800 988 936 918 Note:Based on simulated test runs between Toyohashi and Ogaki 919 877 850 transfer of relevant substances to local municipalities and exceeding the standard value set be detected in such (rapid operation) 748 733 698 manage those substances appropriately. surveys, and will take appropriate measures as instructed by 400 Diesel railcars 517 480 432 426 426 425 408 laws and regulations and the administrative authorities. Conventional type 100(Base) 153 127 127 107 107 (rolling stock with 272 50 conventional engine) 0 0 0 0 Energy-efficient type ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’14’13’15 (cars with new model 71 (FY) energy-efficient type engines) Note:Values denote the number of rolling stock as of the end of each fiscal year (they include some event trains, retained trains, and test trains) Note:Result from running Series Ki-Ha 40 with new/conventional engines Activity status for FY2015 (Conventional engine: DMF15HS, new model engine: C-DMF14HZ) Environmental accounting Environmental load in business Environmental load reduction through electrification of the Taketoyo Line The investments, costs, and their principal effect involved in environment activities preservation activities during FY2015 are estimated as listed below. The main resources and energy utilized as In March 2015 we electrified the Taketoyo Line (between Obu metropolitan area. This electrification process will result in an well as waste generated during JR Central’s and Taketoyo, 19.3km), which transports commuters in the Nagoya annual reduction of CO2 emissions of approximately 2,600 tons.* Environmental Accounting business activities for FY2015 are as shown *Estimated from operating results for FY2015 Environment preservation cost (100 million yen)*1 Principal Effects of below. Classification Main Initiatives Environment preservation Investment Expenditures INPUT/OUTPUT Effective Use of Resources/Use of Natural Energies and Introduction of Energy-Efficient Facilities Global •Introduction of energy-conserving rolling stock •Energy-conserving rolling stock ratios: 100% environment •Improved energy-efficiency at stations and (Shinkansen electric cars), 100% (conventional line preservation office buildings 418.7 4.6 (electric cars and diesel railcars)) INPUT We promote effective utilization of resources through the 3R (Reduce, Reuse, and Recycle) initiative, etc. Specifically, we cost •Installation of non-CFC type equipment, etc. Non-CFC rectifiers: 53 in operation •Energy efficiency of Series N700A 23% (more Research and •Development of energy-conserving rolling stock Electricity Fuel Water aim to reduce emissions of waste materials during construction, utilize rain water, recycle tickets/uniforms, and recycle rolling efficient than Series 300) (Amount of converted crude oil) •Development related to environment preservation development 0.2 92.8 *Comparison between the Series 300 (traveling at cost along railway lines, etc. stock, etc. 270km/h) and the N700A (traveling at 285km/h) 2.85 billion kWh 31,000 kL 3.287million m3 •Proper disposal and recycling of station and train refuse, etc. , Resource •Recycling rate for refuse and waste: 57% (2.08 billion kWh) (14 000 kL) •Proper disposal and recycling of items generated Furthermore, we strive to leverage natural energies and introduce energy-efficient facilities when constructing new buildings recycling cost 0.8 26.5 •Recycling rate for construction waste: 58% by workshops and construction work *Figures in parentheses are for operations (reprinted)

and renovating existing buildings. Environment •Countermeasures for noise and vibration •Protection of the surrounding environment by conservation cost •Proper management of environmental load 129.3 42.0 increasing the height of and modifying noise-blocking along railway lines substances, etc. wall, shaving of rail surface, etc. OUTPUT Refuse and waste Management •Environmental advertising •Acquisition of ISO14001 certification in Technology activity cost •Environmental management education etc. 0.0 0.1 Research and Development Department CO2 emissions 1.514 million t 234,000t Green Procurement Guidelines (Station, train, and office refuse 16,000t) Social activity •Support and cooperation for organizations and •Participation in environmental partnership organizing (Construction waste 210,000t) other groups undertaking environment preservation 0.0 cost 0.0 club (EPOC) (Rolling stock waste 7,000t) *Recycled amount reprinted JR Central implements a green procurement policy, prioritizing for the purpose of enhancing coordination with our business Total*2 549.1 166.2 *The electricity and fuel CO2 Recycled the procurement of eco-friendly materials. To this end, we partners and working with them to contribute to engagement in [Approach to environment preservation cost] *1. Fractions of 10 million yen are omitted emission coefficients are based •Compilation is applicable only to JR Central. *2. Totals do not add up due to rounding established the “JR Central Green Procurement Guidelines” global environment preservation. •The applicable period is April 1, 2015 to March 31, 2016. on a report of the law (Energy 136,000t •“Environmental Accounting Guidelines 2005”, a publication of the Ministry of the Environment, was consulted with regard to aspects of style. Saving Act) concerning the •Depreciation is not included in the calculations for expenditures. streamlining of energy use. (Including internal reuse) URL http://english.jr-central.co.jp/company/company/material_procurement/_pdf/green_guide_line.pdf •In the event of multiple-purpose expenditures, the full amount with greater environment preservation effect is included in the calculation.

34 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 35 ESG Information

Human Resources Development Cooperation with Local Communities

Turnover rate

Around1 %

Female employees at work General Education Center (Mishima City, Shizuoka Prefecture) SCMAGLEV and Railway Park Nagoya Central Hospital

JR Central views its employees as its greatest management resource. It Railways, which are a mode of public transportation, are extremely closely is ultimately the people who operate railways and protect the safety of its connected to local communities. We are enhancing the convenience of stations, operation. The railway business is also referred to as experience engineering, which are the gateway to local communities, as well as contributing to local and employee skills development does not happen in short term. Therefore, we communities, such as operating medical facilities and museums, etc. in the focus on human resources development and skill development from a long-term Nagoya region, where our head office is located, in addition to rolling out sales perspective based on long-term employment in order to develop employees with and marketing efforts and launching websites introducing local delicacies and the awareness to thoroughly execute their duties and great skills. We aim to Refer to P51 for related information (Column 3 fine products in conjunction with communities located along our railway lines. establish them and promote their activities through various programs. “Overcoming the “1st year elementary school wall””)

Basic Policy of Human Resources development Contribution to Local Communities

The basic education system mainly involves “on-the-job training (OJT)”, basic knowledge on leadership and other skills that are required of them in which employees learn the knowledge and skills required for work as employees that play a central role in each workplace. Looking ahead, Improving the level of passengers in a wheelchair. Park” in March 2011 in Kinjo Futo, Minato- through daily operations in each workplace. They also acquire additional we will continue to brush up our training program to expand the learning convenience of stations, etc. Directions and train boarding support is ku, Nagoya as part of our participation in knowledge/skills from “group training”, which is held in the General opportunities for our employees. Furthermore, we will coordinate with our provided, where necessary, for passengers the “Monozukuri (manufacturing) Culture JR Central cooperates with the requests of in a wheelchair and other passengers with a Exchange Area Project”, hosted by the City Education Center*1, etc., and various “self-betterment” opportunities, internal Health Care Center*2 to enrich trainings regarding mental health- local municipalities to establish new stations, physical disability. of Nagoya. such as internal/external correspondence training systems, etc. related “self-care” methods and training methods to ensure that each and improve station buildings, develop plazas At the “SCMAGLEV and Railway Park”, that help employees learn knowledge/skills on their own. In FY2015, every employee can go about their work with a sound body and mind. in front of stations, and promote railway we introduce the “progress of the high- Setting general hospitals for local elevation projects, etc., thereby contributing speed railway technology” through displays approximately 260 group training sessions were held, and approximately As a result of these initiatives, we have an extremely high employee communities 9,500 employees in total participated in the training. In addition, retention rate despite the fact that we employ many new employees every to community development. (Nagoya Central Hospital) of rolling stock mainly of the Tokaido Based on relevant laws, such as the Shinkansen as well as conventional lines and approximately 6,000 employees in total voluntarily participated in internal year (approximately 670 employees in FY2016 first recruitment), as the so-called Barrier-Free Law, JR Central As an acute care hospital, Nagoya Central Superconducting Maglev. In May 2016, the correspondence training. labor turnover rate of approximately 1% indicates. cooperates with governments and Hospital, located in Nakamura-ku, Nagoya, number of visitors reached the 3.58 million. In FY2016, we have established new “Fore-runner Training” aimed at municipalities to jointly establish and improve performs over 1,500 surgeries year round, * 1. The General Education Center conducts employee training including personnel from affiliated broadening the horizons and improving the level of insight of employees companies that are engaged in railway operations. facilities to enable all passengers, including providing some of the most advanced * 2. Health Care Centers are set up in each area of Tokyo, Shizuoka, Nagoya, and Osaka, and consist disabled and elderly passengers, to use our medical care services available using the in professional positions, and enhancing employee capabilities in Roll out of initiatives in coordination of industrial physicians, public health nurses, nurses, and clinical psychologists. These Centers are service safely and with a sense of security. latest medical equipment. The hospital is with communities located along general. In this program, we will provide the opportunity to learn the responsible for employee health maintenance and touring workplaces, and providing health care education and consultation services, etc. General improvements to stations used by also a committed emergency health care our lines over 5,000 passengers per day have been provider, coordinating with local ambulance As part of sales and marketing, we are completed, with the exception of stations services to take in over 4,000 ambulance deepening ties with communities located for which over-track station plans, etc. are calls per year. Looking ahead, the Nagoya along our lines while rolling out initiatives Promoting female employees in active roles in place. We are currently proceeding with Central Hospital will look to leveraging its such as the “Shupo” campaign, “Sawayaka initiatives to sequentially add and improve distinctive features and expertise to further Walking”, and “Japan Highlights Travel”. Due to the characteristics of the work, railway business requires so- in achieving a balance of work and private, with things such as childcare, elevator and multi-purpose toilet facilities at contribute to the local community. Furthermore, as a new initiative aimed at called late-night work (work between 10 p.m. and 5 a.m.). However, by establishing work systems, enhancing various allowance systems, etc. stations used by over 3,000 passengers per revitalizing local communities, we launched the Labor Standards Act at the time of the company's establishment Specifically, in terms of childcare support, we have implemented systems day according to the new Basic Policy put Participating in programs to the “IIMONOTANBOU” website in December forth by the government, with improvements prohibited late-night work of women in principle, excluding some job that go above and beyond that called for by law in relation to childcare vitalize local communities 2015 as a means of attracting visitors to either complete, or plans underway, at some these regions by introducing famous local types. Due to this situation, the ratio of female employees as of the leave periods, exemption periods for overtime work, and maternity leave 90% of the stations targeted for improvement “SCMAGLEV and Railway Park” delicacies and other fine products around end of FY1996 was only 1.3%. periods, etc. With the enactment of the Act to Advance Women’s Success at the current time. Further, nearly all of JR ~A museum of memories and dreams~ our railway lines. In response to the revision of the Labor Standards Act in 1997, we in their Working Life in April 2016, and with these initiatives in mind, we Central’s trains include support facilities for We opened the “SCMAGLEV and Railway have actively employed female employees. As of the end of FY2015, the have established an action plan for maintaining and improving the ratio number of female employees was approximately 2,000 (approximately of employees taking childcare leave with a view to proactively promoting 10% of the overall employees). the involvement of both men and women in the act of childcare [No. of International Exchanges JR Central has also been fostering an environment to support employees employees taking childcare leave in FY2015: Approx. 490]. JR Central proactively undertakes a wide range of international operations, such as gathering up-to-date railway information from around the world via the company's network of overseas offices (Washington D.C., London, and Sydney), participating Healthy labor-management relations in international conferences to exchange technological and management information with railway operators in the world, and issuing press releases overseas as part of our PR activities, etc. JR Central currently has four labor unions, and has signed labor meetings and engage in collective bargaining based on these labor agreements with all of them [Total union membership of 19,334 agreements, and will continue to strive to build healthy and stable labor- We also offer technical cooperation in the field of railways in response to government requests and promote human employees as of March 31, 2016]. We hold joint management council management relations. resources development by hosting interns from overseas universities and international organizations, etc.

36 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 37 ESG Information

Outside Directors and Outside Audit and Supervisory Board Members Corporate Governance Based on our policy to make the most appropriate execution Supervisory Board Members, who provide advice based on system for Outside Directors and Outside Audit and Supervisory their various experience and great insight gained outside of JR Central strives to enhance our corporate governance to ensure soundness, efficiency, Board Members, JR Central appoints three Outside Directors the company from their independent standpoints, both in and and transparency of management, to implement long-term development of the company, and three Outside Audit and Supervisory Board Members. out of Board of Directors and Audit and Supervisory Board. We and to enhance sustainable corporate value. The Company determines the level of independence of utilize the advice given by Outside Directors and Outside Audit Outside Directors and Outside Audit and Supervisory Board and Supervisory Board Members to execute audits by Outside JR Central's Corporate Governance System Members based on the criteria for independence established Audit and Supervisory Board Members, internal audits, safety by the Japan Exchange Group, Inc. in order to ensure that audits, accounting audits, as well as items stipulated in the the opinions provided by Outside Directors and Outside Audit Fundamental Corporate Governance Policies. General Shareholders Meeting and Supervisory Board Members on matters raised are formed Each Outside Director and Outside Audit and Supervisory Selection Selection Selection from on an independent standpoint, and are based on the high Board Member is submitted to the Tokyo Stock Exchange and

Audit Cooperate degree of experience and insight accumulated outside the the Nagoya Stock Exchange as an independent officer who Board of Directors Audit and Supervisory Board Company. does not have any possible conflict of interest with general JR Central receives beneficial opinions about the execution shareholders.

President and Representative Director Accounting Auditors of our business from Outside Directors and Outside Audit and Cooperate Investigate Management Meeting Activity status of Outside Directors and Outside Audit Election of Outside Directors and State of main posts held concurrently for Audit and Supervisory Board Members Outside Audit and Supervisory Outside Directors and Outside Audit and Board Members Supervisory Board Members Audit Internal Audit Department Cooperate [FY2015] [As of June 23, 2016] [As of March 31, 2016] Head Office, Regional offices, Field offices (Audit Department/Transportation Safety Department) Name of other Name Principal activity Name Reasons for election Name Titles company, etc. Management / Guidance Audit Report Attended 11 out of 13 meetings of the Board Mr. Cho was appointed of Directors held in FY2015. In the Board as an Outside Director Outside Fujio Fujio Kenji Furukawa Electric Audit of Directors meetings, he has stated his because of his corporate Audit and Affiliated Companies Cho opinions based on his experience of corporate Cho management experience Koroyasu Co., Ltd. Supervisory management, etc. and his great insight. Board Member

Attended all 13 meetings of the Board of Mr. Koroyasu was appointed Chairman and TOHO GAS Co., Ltd. Representative Kenji Directors held in FY2015. In the Board Kenji as an Outside Director of Directors meetings, he has stated his because of his experience Director Koroyasu opinions based on his experience as a public Koroyasu as a public prosecutor and

Directors prosecutor and lawyer, etc. Directors lawyer and his great insight. UNY Group Holdings Outside Attended all 13 meetings of the Board of Mr. Saeki was appointed Co., Ltd. Director Directors held in FY2015. In the Board of as an Outside Director Takashi Takashi Directors Takashi Directors meetings, he has stated his opinions because of his corporate Saeki Outside Saeki based on his experience of corporate Saeki management experience The Ogaki Kyoritsu Audit and management, etc. and his great insight. Overview of Corporate Governance System Bank, Ltd. Supervisory Board Member Attended all 13 meetings of the Board of Directors, Mr. Ishizu was appointed The Board of Directors of JR Central is comprised of 16 important meetings such as the Board of Directors and the and attended all 14 meetings of the Audit and as an Outside Audit and Outside Supervisory Board held in FY2015. In the Board Hajime Hajime Supervisory Board Member Aichi Tokei Denki Audit and members (three of whom are outside directors). JR Central also Management Meetings but also inspect the state of the of Directors meetings and meetings of the because of his experience in Co., Ltd. Supervisory Ishizu Audit and Supervisory Board, he has stated his Ishizu employs an auditor system, and its Audit and Supervisory Board execution carried out at head offices, railway operations transportation administration Board Member opinions based on his experience in transportation and his great insight. consists of five members (three of whom are outside auditors). divisions, branch offices, field offices and affiliated companies administration, etc. Outside (The figures are as of June 23, 2016) based on plans enacted by the Audit and Supervisory Board to Attended all 13 meetings of the Board of ISHII IRON WORKS Audit and Mr. Ota was appointed Directors, and attended all 14 meetings of the Supervisory as an Outside Audit and CO., LTD. The Board of Directors meets at least once a month, and strictly promote their audit work. Ensuring effective audit made Audit and Supervisory Board held in FY2015. In Board Member Hiroyuki Hiroyuki Supervisory Board Member the Board of Directors meetings and meetings of makes legal and appropriate decisions upon fully discussing by members of the Audit and Supervisory Board, JR Central because of his experience in Shigeo Ota the Audit and Supervisory Board, he has stated Ota police administration and his issues stipulated by the law - following conscientious briefings also provides an assistant system in which our employees are his opinions based on his experience in police Kifuji great insight. Outside administration, etc. that are given to bring all concerned up to speed on the assigned as full-time staff to support auditors work. Mori Building CO., Audit and Board Members Attended all 13 meetings of the Board of Directors, LTD. Supervisory

Mr. Kifuji was appointed Audit and Supervisory background to issues discussed, and the progress status for Internal audits are performed by the Audit Department on and attended all 14 meetings of the Audit and Board Member as an Outside Audit and Supervisory Board held in FY2015. In the Board such - and issues of importance to management and monitors the work of JR Central, its affiliated companies, and related Shigeo Shigeo Supervisory Board Member of Directors meetings and meetings of the Audit because of his experience the work of directors. To broaden deliberations, we have also companies to confirm that execution is legally and appropriately Kifuji and Supervisory Board, he has stated his opinions Kifuji (Note) Director Fujio Cho resigned from his post as Outside Director

Audit and Supervisory Board Members Audit and Supervisory Board Members as a public prosecutor and based on his experience as a public prosecutor and at TOYOTA INDUSTRIES CORPORATION on June 11, 2015, lawyer and his great insight. established a Management Meeting in which important issues made based on laws, articles of incorporation, and internal lawyer, etc. and as Outside Auditor at DENSO Corporation on June 19 of the same year. related to management are discussed in advance of the Board regulations. The results of internal audits are reported to of Directors meeting. We request Audit and Supervisory Board management. In addition, to prevent operational and labor Members to attend meetings of the Board of Directors, the accidents, safety audits are performed by the Transportation Contents of Compensation for Officers Management Meeting and other important meetings as we Safety Department, and the results are also reported to Compensation for officers is comprised of certain basic Total amount of compensation, etc. by officer classification, endeavor to ensure the legality of management measures management. compensation and a bonus. Basic compensation is based on total amount of compensation, etc. by type, and number of target officers during the deliberation process. Further, JR Central strives to Based on generally accepted accounting standards, JR comprehensive consideration of the title, length of service, etc., [FY2015] ensure the appropriate execution of business by managing, and Central has appropriate accounting audits made by an audit and the bonus is based on the performance and commissioned Basic Compensation Bonus Total amount providing guidance to, affiliated companies where necessary. corporation, and by Deloitte Touche Tohmatsu LLC, which has work, etc. of each FY. Each amount is appropriately decided in for the Number Number Classification Total Total compensation/ Although we introduced the corporate officer system in May been selected to be our accounting auditor. Board of Directors meetings within the range of compensation, of target of target amount amount bonus, etc. officers (Million yen) officers (Million yen) 2003, we introduced an executive system in June 2012 with Audit and Supervisory Board Members, internal audit etc., which was decided in the 25th General Shareholders (People) (People) (Million yen) the aim of further accelerating decision-making, enhancing departments, and accounting auditors cooperate with Meeting held on June 22, 2012. Furthermore, compensation for No. of officers discussions, and further clarifying roles for directors and each other by exchanging information periodically or as Outside Directors shall be set to the fixed basic compensation (Excluding corporate officers, who are responsible for operation, in order to necessary and receive necessary information from each set from July 2016. Outside Directors) 13 564 13 232 797

appropriately respond to changes in the business environment department involved in internal control to confirm the status Compensation for Outside Audit and Supervisory Board Audit and Supervisory influencing our management decision in a timely manner. of implementation of each item stipulated in the Fundamental Members is comprised solely of certain basic compensation. Board Members (Excluding Outside 2 94 -- 94 Audit and Supervisory Board Members not only attend Corporate Governance Policies. The appropriate amount is decided through discussions of Auditors) Outside Audit and Supervisory Board Members within the range of compensation, etc., which was decided in the 20th General Outside Officers 6 114 3 6 121 Shareholders Meeting held on June 22, 2007.

38 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 39 ESG Information

Respond to the Corporate Governance Code The Board of Directors is involved in decision making processes concerning matters stipulated in relevant laws JR Central has announced its stance on, and the initiatives it plans and establish numerical targets in this manner, the and regulations and the articles of incorporation, matters put in their charge at a General Shareholders Meeting, and Supplementary important matters related to the execution of business. A specific outline of such matters is established in the rules has put in place, in relation to the Corporate Governance Code Company does promote its railway business from a long-term Principle 4-1 principle governing the Board of Directors. (hereafter, “the Code”) found within “Corporate Governance perspective. Specifically, in addition to the construction of the Roles and responsibilities of the Board 4-1-1 Further, the Board of Directors clearly defines the division of duties and job functions for each department based Report”*. Chuo Shinkansen, which is now underway, other measures that on internal regulations, clarifies the scope of authority for Directors and corporate officers, while also defining the Of the principles set forth in the Code, those that are not require a long-term capital investment, such as large-scale division of roles of Directors and areas in which corporate officers are put in charge. implemented are principles that assume the formulation of mid- renovation for the Tokaido Shinkansen, the implementation of term management plans and the presentation of numerical earthquake countermeasures, and plans to upgrade rolling stock The Company determines the level of independence of Outside Directors and Outside Audit and Supervisory Board Principle 4-9 targets (supplementary principle 4-1-2 and principle 5-2). The in service, are established with a long-term perspective in mind, Members based on the criteria for independence established by the Japan Exchange Group, Inc. in order to ensure Independence standards and that the opinions provided by Outside Directors and Outside Audit and Supervisory Board Members on matters reason for this as provided in the report is as follows. and we are steadily proceeding forward these projects. Plans qualification for Independent raised are formed from on an independent standpoint, and are based on the high degree of experience and insight “In the railway business, the core pillar of JR Central’s and results of other major measures are announced publicly Directors accumulated outside the Company. business, ensuring safety and reliability is an issue of utmost as appropriate, and steady progress continues to be made in importance, and all aspects of our business, from our daily these areas. We will continue to announce annual income and The election of Directors is conferred to General Shareholders Meetings following a resolution of the Board of business operations, to employee training and capital expenditure plans, key measures, and capital investment plans Supplementary Directors concerning the appropriate election of candidates deemed to be the most fitting for the role as selected based upon a general consideration of their abilities, knowledge, and work history, etc. The number of Directors investment, are implemented with the highest priority given each year in light of our immediate management environment, principle elected, and the division of Director roles, etc. is determined based on a general consideration of the level of to increasing the level of reliability of the services we provide and will continue to steadily enhance our management 4-11-1 progress of each project at the time based on a policy of establishing the most appropriate management structure for and, as such, we do not implement a system of management foundation in order to firmly maintain a sound management the execution of the Company’s business activities. whereby company-wide mid-term business plans are formulated outlook based on efficient operational management stemming

and managerial targets are pursued in a manner that can neatly from the securing of safety and reliability.” Supplementary The status of Directors and Audit and Supervisory Board Members holding important concurrent positions is serve as a cross-sectional look at the state of the business at Further, matters disclosed based on each principle of the code principle as described in business reports and General Shareholders Meeting Reference Materials. All concurrently held set moments. are as follows. positions bear no hindrance on the Director or Audit and Supervisory Board Member’s ability to fulfill the roles and Principle 4-11 4-11-2 responsibilities of such a position for the Company. While JR Central does not formulate mid-term management Preconditions for Board and *“Corporate Governance Report” can be found on the Japan Exchange Group, Inc. website. Audit and Supervisory Board effectiveness The Board of Directors meets once or more a month to make legal and appropriate decisions upon fully discussing issues stipulated by the law - following conscientious briefings that are given to bring all concerned up to speed on Disclosure based on Corporate Governance Code principles the background to issues discussed, and the progress status for such. Further, the status of the execution of duties Supplementary General principle Disclosed contents by Directors is monitored by having Directors report back on business functions under their charge when needed. principle Supplementary JR Central receives valuable broad-view advice on management from Outside Directors, which is brought into principle [1] Policy concerning cross-shareholdings consideration in regulating the management of the Company. JR Central holds cross-shareholdings based on a general consideration of the necessity of such from the 4-11-3 Additionally, round-table conferences for opinion exchanges between Outside Directors, Outside Audit and perspective that maintaining and strengthening long-term, stable business relations through the holding of Supervisory Board Members and members of management are set up ahead of meetings of the Board of Directors in shares will lead to the smoother execution of business operations and increases in corporate value over the mid- order to further improve the effectiveness of the Board of Directors. Principle 1-4 to long-term. Through the above-mentioned initiatives, we find at meetings of the Board of the Directors that the effectiveness of Cross-shareholdings [2] Criteria for the exercising of voting rights the entire Board of Directors to be ensured to a satisfactory degree. In terms of the exercising of cross-shareholding voting rights, JR Central closely examines the contents of each resolution and decides how to vote in consideration of improving the corporate value of the Company over the mid- to long-term and the sustainable growth of business partners, etc. All Directors and Audit and Supervisory Board Members of the Company have the sufficient ability and insight to fulfill their roles and responsibilities, and perform their duties with an appropriate sense of responsibility as entrusted All transactions involving Directors which may pose a conflict of interest, and transactions between Directors and by all shareholders while continuing to refine their skills and knowledge by actively participating in external training Principle 1-7 the Company, require the approval of, and reporting to, the Board of Directors as stipulated in relevant laws and Principle 4-14 Supplementary programs, etc. regulations and rules governing the Board of Directors. Every year confirmations are made on a regular basis with principle JR Central takes the appropriate measures to ensure that all Directors and Audit and Supervisory Board Members Related party transactions Director and Audit and officers as to whether related party transactions have been made between officers or relatives and the Company. Supervisory training 4-14-2 perform the duties required of them, such as in instances where relevant laws and regulations are revised, for example, by making the content of such revisions commonly known through meetings, etc., and by holding training [1] •JR Central was founded in 1987 as part of the reform of the national railway system with a mission of events to share management issues faced by the Company so that the Company can make decisions concerning integrally maintaining, developing and future-proofing the Tokaido Shinkansen, which serves as Japan's main such issues in an appropriate manner. transportation artery linking Tokyo, Nagoya and Osaka, and the conventional line network in the Tokai region with a central focus around Nagoya and Shizuoka. In light of this mission, JR Central established a Management Philosophy to act as a guideline for the corporate JR Central has established a “Policy for Promoting Constructive Dialog with Shareholders” as follows. activities and human resource development of the Company, with an emphasis placed on its core involvement •JR Central positions the General Shareholders Meeting as the most important opportunity for dialog with in the railway business. This Management Philosophy can be found on the Company’s website at the URL shareholders and strives to improve the quality of questions and answers session in the meeting as a means below. of contributing to sustainable growth and enhancing corporate value over the mid- to long-term. All dialog with URL http://english.jr-central.co.jp/company/company/about/outline.html shareholders is overseen by the General Manager of the Administration Department, and questions, opinions and •In the railway business, JR Central sets the highest priority on ensuring safety and reliability. JR Central's requests are fielded from shareholders and responded to in the form of an individual meeting or over the telephone, fundamental policy is to stably and fully execute the long-term social mission described in detail above through etc. where reasonable to do so. the continuous efforts of providing services that are preferred by customers as well as the streamlining of work, •Of this, dialog with institutional investors is overseen by the Director General of the Corporate Planning Division, and etc. the IR team is placed in the Business Administration Department, Corporate Planning Division in order to further This Management Philosophy is included in the “A Message from the Management” improve shareholder dialog by organically coordinating with the Administration, Finance, and Legal Departments, section of the “Annual Report”, and can be found at the following URL. Principle 3-1 etc. Dialog response is the purview of IR team, and a response is made together with members of management URL http://english.jr-central.co.jp/company/ir/annualreport/index.html and Director, where reasonable, based on a general consideration of the requests and interests, etc. put forth by Principle Full disclosure •Specific measures to be implemented in the current business year based on this Management Philosophy are 5-1 the institutional investor. Specifically, we strive to improve upon dialog measures by not only holding individual described in “Key Measures and Capital Investment”, and can be found at the URL below. Policy for constructive dialogue meetings, but also holding conference calls and facility tours, etc., where necessary, in addition to holding financial Key Measures and Capital Investment with shareholders results briefings biannually. URL http:// english.jr-central.co.jp/company/company/achievement/capital-investment/key-measures.html •We also strive to enrich the broader provision of information to shareholders by sending reports on information [2] The basic outlook on corporate governance is described in “1.1. Basic Outlook” in the “Corporate Governance presented at financial results briefings biannually, in addition to posting this information on our website. Moreover, Report”. we work to ensure that a sufficient degree of information concerning decisions made on important measures and [3] Details on the policy and procedures concerning the setting of Director compensation are described in “2.1. important capital investments reaches as large a number of stakeholders as possible using the mass media services [Director Compensation-related] Disclosure of Policy for Determining the Amount of Compensation and the to deliver detailed information at press conferences held by the President, and by presenting such information to the Calculation Method for Such” in the “Corporate Governance Report”. press. [4] The election of Directors and Audit and Supervisory Board Members is conferred to General Shareholders •The content of discussions with shareholders is reported to members of management and, if necessary, feedback is Meetings following a resolution of the Board of Directors concerning the appropriate election of candidates given to the Board of Directors. deemed to be the most fitting for the role as selected based upon a general consideration of their abilities, •Under no circumstances is insider information communicated during discussions with shareholders. Furthermore, knowledge, and work history, etc. the 14 day period in the lead up to the day in which financial results are announced each quarter is designated as a [5] Directors and Audit and Supervisory Board Members are elected in an appropriate manner in consideration of the work history, etc. written in the General Shareholders Meeting Reference Materials. “silent period” in which the Company refrains from discussing financial results.

40 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 41 ESG Information

Fundamental Corporate Governance Policies Summary of the 29th Ordinary General Meeting of Shareholders [Held June 23, 2016]

JR Central resolved the Fundamental Corporate Governance *The Fundamental Corporate Governance Policies can be found at the URL below. The following resolutions were passed at the 29th Ordinary General Meeting of Shareholders held June 23, 2016. Policies* in Board of Directors meetings. URL http://english.jr-central.co.jp/company/company/about/governance.html (1)Contents of the resolved matters: Proposal 1: Appropriation of retained earnings (i) Matters concerning year-end dividends Sixty five (65) yen per common share of the Company (ii) Other matters concerning the appropriation of retained earnings: Compliance/Whistle-blowing system •Line item relating to retained earnings showing an increase and the JR Central not only stipulates internal regulations based also in an external law firm in order to establish a system in amount thereof on the law, etc. but also conducts employee education on which employees, etc. can report any violation of the law, General reserve: 300,000,000,000 yen various occasions with the aim of thoroughly complying etc. at work. We also post flyers describing the whistle- •Line item relating to retained earnings showing a decrease and the with the law, etc. when executing work. In addition, we blowing system and contact information for the window amount thereof also have established a whistle-blowing system. We have in all workplaces with the aim of widely disseminating the Retained earnings carried forward: 300,000,000,000 yen whistle-blowing windows not only within the Company but system. Proposal 2:Election of sixteen (16) Directors Yoshiyuki Kasai, Yoshiomi Yamada, Koei Tsuge, Shin Kaneko, Yutaka Osada, Katsumi Miyazawa, Yoshiki Suyama, Shun-ichi Kosuge, Mamoru Uno, Kimiaki Tanaka, Hideyuki Shoji, Atsuhito Mori, Torkel Patterson, Fujio Cho, Kenji Koroyasu and Takashi Saeki were elected as Directors. Risk-management system

JR Central has established the “Railway Safety Promotion each railway operation division to respond to emergencies, (2)Number of votes, indicating approval, disapproval, and abstention regarding the resolved Committees”, etc. at the head office, railway operation such as accidents and disasters, and has also established matters, requirements for the resolved matters to be adopted, and results of voting: divisions, branch offices, and in each area from the a fast-response restoration structure in which employees Approval Disapproval Abstention (number Approval Rate perspective of preventing train and labor accidents and can be gathered anytime according to the scale or impact Resolved Matter Result of Voting (number of votes) (number of votes) of votes) (%) formulates and promotes safety countermeasures through an of an accident or disaster. Additionally, in preparation for integrated organization that stretches from the head office to emergencies such as large-scale natural disasters, we have Proposal 1 1,684,066 19,428 79 98.01 Adopted each field office. established the second Shinkansen General Control Center that Proposal 2 JR Central also manages a control center, which plays a key can substitute for the Shinkansen General Control Center for the role in information communication, on call 24 hours a day at Tokaido Shinkansen. Yoshiyuki Kasai 1,674,324 27,844 1,959 97.41 Adopted Yoshiomi Yamada 1,656,091 46,076 1,959 96.35 Adopted

Koei Tsuge 1,682,059 20,113 1,959 97.86 Adopted

Response to internal control related to financial reporting Shin Kaneko 1,674,548 27,620 1,959 97.42 Adopted

In terms of internal control related to financial reporting, Accounting Council in order to confirm that they are effectively Yutaka Osada 1,674,564 27,604 1,959 97.43 Adopted we periodically investigate the system/execution situation, functioning. JR Central also engages in efforts to maintain Katsumi Miyazawa 1,675,380 26,788 1,959 97.47 Adopted etc. within JR Central and JR Central Group companies in the level of internal control related to financial reporting by accordance with a basic framework offered by the Business providing feedback from these investigations to duties. Yoshiki Suyama 1,676,536 25,631 1,959 97.54 Adopted

Shun-ichi Kosuge 1,672,357 29,810 1,959 97.30 Adopted

Mamoru Uno 1,676,549 25,618 1,959 97.54 Adopted

Concept of capital policy and shareholder return Kimiaki Tanaka 1,676,519 25,648 1,959 97.54 Adopted

Our policy on dividends has always been to decide additional treasury stock at this point. In addition, although Hideyuki Shoji 1,676,515 25,652 1,959 97.54 Adopted the specific dividend amount in accordance with the we will promote projects, such as construction of the Chuo management environment/performance in each FY based on Shinkansen, etc., we plan to procure the fund through Atsuhito Mori 1,673,542 28,625 1,959 97.37 Adopted the principle of continuously providing stable dividends. JR issuance of corporate bonds and borrowing at this point. Torkel Patterson 1,676,383 25,784 1,959 97.53 Adopted Central considers that shareholder returns through dividends We do not plan to utilize the treasury stock or increase the are appropriate in principle, and we do not plan to purchase capital. Fujio Cho 1,645,687 57,581 862 95.75 Adopted

Kenji Koroyasu 1,683,361 20,690 79 97.94 Adopted

Takashi Saeki 1,688,565 15,487 79 98.24 Adopted

(Note) The requirements for the proposals to be resolved were as follows: 1. For proposal 1, a majority of votes indicating the approval of the shareholders who attended the meeting was required. 2. For proposals 2, a majority of votes indicating the approval of the shareholders who attended the meeting with the attendance of shareholders representing 1/3 or more of all voting rights that can be exercised were required.

(3)Reason for not adding some of the votes of shareholders who attended the ordinary general meeting of shareholders to the final number of votes: The votes of shareholders who attended the general meeting of shareholders on the meeting date, but have not been confirmed as to whether they indicated approval, disapproval or abstention, were not added to the final count because the requirements for the proposals to be resolved were already met by adding the votes from the exercise of voting rights as of the day before the general meeting of shareholders was held to the votes of shareholders who attended the general meeting of shareholders, which were confirmed as approvals or disapprovals, and the proposals were duly adopted in accordance with the Companies Act.

42 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 43 ESG Information & Corporate Data

Board of Directors, Audit and Supervisory Board Members, and Corporate Officers [as of June 23, 2016] Corporate Data

Profile

Name Head Office and Other Main Offices (As of July 2016)

Central Japan Railway Company (JR Central) Head Office Meieki 1-1-4, Nakamura-ku, Nagoya-shi, Aichi 450-6101, Japan JR Central Towers Established

April 1, 1987 Head Office (Tokyo) Chairman Emeritus and Chairman and President and Executive Vice President Executive Vice President Executive Vice President JR Central Shinagawa Building -A Wing 2-1-85, Konan, Minato- ku, Tokyo 108-8204, Japan Representative Director Representative Director Representative Director and Representative Director and Representative Director and Representative Director Business activities

Yoshiyuki Kasai Yoshiomi Yamada Koei Tsuge Shin Kaneko Yutaka Osada Katsumi Miyazawa Railways business, Affiliated businesses Conventional Lines JR Central Taiko Building, Meieki 1-3-4, Nakamura-ku, Nagoya- Operations Division shi, Aichi 453-8520, Japan Key data Board of Directors and Audit and Supervisory Board Members Corporate Officers (As of the end of March 2016) Shizuoka Branch Office 4, Kurogane-cho, Aoi-ku, Shizuoka-shi, Shizuoka 420-0851, Capital 112 billion yen Japan Chairman Emeritus and Representative Director Senior Corporate Executive Officers Director General of the Maglev Systems Development Division of the Operating Revenues 1,357.9 billion yen Mie Regional Office Yoshiyuki Kasai Noriyuki Shirakuni Chuo Shinkansen Promotion Division and in charge of controlling the Ust-Tsu 12F, 700, Hadokoro-cho, Tsu-shi, Mie 514-0009, Japan (Ph.D.) Rolling Stock Section Number of Shares Outstanding 206,000,000 In charge of the Secretarial Department, the Audit Department, the Public Relations Yoshito Tsubouchi Share Listings Nagoya/Tokyo Stock Exchange Iida Regional Office Chairman and Representative Director Department, the Administration Department, the Legal Affairs Department, the 5356, Kami-Iida, Iida-shi, Nagano 395-0000, Japan Personnel Department, and the Property Management Department Number of Shareholders 95,042 Yoshiomi Yamada Yoshiki Suyama Director General of the Corporate Planning Division and in charge of the Finance Department Number of Employees 18,164 Shinkansen Operations Marunouchi Chuo Building, 1-9-1, Marunouchi, Chiyoda-ku, Division Tokyo 100-0005, Japan Director General of the General Technology Division and in charge of the Operating Kilometers 1,970.8 km President and Representative Director Shun-ichi Kosuge Overseas High Speed Railway Project and in charge of controlling the Tracks and Structures Section Number of Stations 405 Kansai Branch Office Shin-Osaka Hankyu Building 10F, 1-1-1, Miyahara, Yodogawa- Koei Tsuge Director General of the Chuo Shinkansen Promotion Division and in Mamoru Uno (Ph.D.) Number of Rolling Stock ku, Osaka-shi, Osaka 532-0003, Japan charge of controlling the Construction Section 4,836 Executive Vice President and Representative Director Sumio Atsuchi Director General of the Marketing Division Double-and Multi-Tracked Section 55.1% (1,086.8km) Washington D.C. Office 900 17th Street, N.W., Suite 520, Washington, DC 20006, U.S.A. In charge of the Administrative Kimiaki Tanaka Director General of the Business Promotion Division Electrified Section 76.7% (1,511.0km) Shin Kaneko Departments and in charge of the Chuo Hideyuki Shoji Director General of the Shinkansen Operations Division CTC System Adoption Rate 97.5% (1,922.3km) London Office Shinkansen Promotion Division 6th Floor, 4 Eastcheap, EC3M 1AE, London, U.K. Automatic Signaling System 97.8% (1,927.3km) Yutaka Osada In charge of the Shinkansen and Corporate Executive Officers Conventional Lines Operations Division Sydney Office Suite 5.01A, Level5, 20 Hunter Street, Sydney, General Manager of the Construction Department and General Manager and in charge of Transportation Safety Tokuji Matsuno NSW 2000, Australia Section and in charge of controlling the of the Nagoya Construction Subdivision of the Chuo Shinkansen Construction Department of the Chuo Shinkansen Promotion Division Electrical Engineering Section Takanori Mizuno Deputy Director General of the Chuo Shinkansen Promotion Division Katsumi Miyazawa In charge of the Technology Section Deputy Director General of the Maglev Systems Development Division of and in charge of controlling the Motoaki Terai the Chuo Shinkansen Promotion Division Transportation Section Corpotrate Officers

Directors Takao Yamaguchi Deputy Director General of the Corporate Planning Division and General Manager Organization Chart of the Information Systems Department of the Corporate Planning Division Yoshiki Suyama Toshio Otake (Ph.D.) Deputy Director General of the General Technology Division and General Manager of the Technology Research and Development Department of Shun-ichi Kosuge the General Technology Division Mamoru Uno (Ph.D.) Mamoru Tanaka Deputy Director General of the General Technology Division and General Manager of the Technology Planning Department of the General Technology Division Board of Directors Secretarial Department Kimiaki Tanaka Corporate Planning Division Deputy Director General of the Chuo Shinkansen Promotion Division and Supervision Department Shin Iwata General Manager of the Chuo Shinkansen Construction Department of Chairman General Technology Division Hideyuki Shoji the Chuo Shinkansen Promotion Division Transportation and Marketing Department Conventional Lines President Chuo Shinkansen Promotion Division Atsuhito Mori Akihiko Ito General Manager of the Administration Department Operations Division Rolling Stock Department Audit Department Torkel Patterson Ryo Ejiri (Ph.D.) General Manager of the Property Management Department Engineering Department ( ) Public Relations Department Fujio Cho Outside Atsuhito Mori Director General of the Conventional Lines Operations Division Shizuoka Branch Office Administration Department Kenji Koroyasu (Outside) Eiji Sugizaki Deputy Director General of the Corporate Planning Division, General Manager of the Mie Regional Office Project Development Department of the Corporate Planning Division, and General Legal Affairs Department Takashi Saeki (Outside) Manager of the Tokyo Project Development Department of the Corporate Planning Division Iida Regional Office Deputy Director General of the Corporate Planning Division and General Personnel Department Hajime Ikuta Manager of the Investment Planning Department of the Corporate Planning Division Audit and Supervisory Finance Department Full-time Audit and Supervisory Board Members Board Members Deputy Director General of the Chuo Shinkansen Promotion Division and Planning Department Atsushi Honda (Ph.D.) Property Management Department Hidenori Fujii General Manager of the Planning and Promotion Department of the Chuo Supervision Department Shinkansen Promotion Division Audit and Marketing Division Hiromu Emi Yutaka Hatano Deputy Director General of the Maglev Systems Development Division of the Chuo Supervisory Board Shinkansen Transportation and Marketing Department Shinkansen Promotion Division and General Manager of Yamanashi Maglev Center of the Business Promotion Division Operations Division (Outside) Rolling Stock Department Hajime Ishizu Maglev Systems Development Division of the Chuo Shinkansen Promotion Division Construction Department ( ) General Manager of the Public Relations Department Tracks and Structures Department Hiroyuki Ota Outside Shunsuke Niwa Transportation Safety Department Tatsuhiko Yamada General Manager of the Finance Department Electrical Engineering Department Overseas Offices: Washington D.C., London, Sydney Audit and Supervisory Board Member Hiroto Takeuchi (Ph.D.) Deputy General Manager of the Construction Department Kansai Branch Office General Education Center (Outside) Tomohisa Furuhashi General Manager of the Transportation Safety Department Shigeo Kifuji Nagoya Central Hospital Nobuhiro Hayakawa General Manager of the General Education Center Health Care Center Masayuki Ueno Deputy Director General of the Shinkansen Operations Division and General Manager of the Rolling Stock Department of the Shinkansen Operations Division Administration Management Center SCMAGLEV and Railway Park Hiroshi Suzuki Director General of the Shizuoka Branch Office Takayuki Oyama Director General of the Kansai Branch Office

44 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 45 Corporate Data

Corporate Data

Operating Areas History

JR Central operates the Tokaido Shinkansen, the main transportation artery linking Tokyo, 1987 April • Central Japan Railway Company (JR Central) is established. Nagoya, and Osaka, and a network of 12 conventional lines centered on the Nagoya and March • 3 stations are established on the Tokaido Shinkansen (Shin-Fuji, Kakegawa, Mikawa-Anjo) 1988 • JR Tokai Bus Company is established (now a consolidated subsidiary). Shizuoka City areas. In April of the same year, automobile transport business is transferred to the company. 0 500km

2 March • A new model diesel railcar is introduced to the “Hida” Express on the Takayama Line. Area of Japan: Approx. 380,000 km 1989 Population: 128 million April 1, 1987 Establishment of JR Central (As of January 1, 2015) February • JR Central starts topographical and geological surveys along the Chuo Shinkansen following 1990 orders of the Minister of Transport. June • JR Central applies to the Minister of Transport for the approval of plans to build the Yamanashi Kyoto Nagoya Tok yo Maglev Line and gains approval. JR Central Shinkansen Conventional Lines Shin-Osaka Shizuoka 1991 October • JR Central takes over the Tokaido Shinkansen facilities. JR Central March • The first “Nozomi” begins commercial service on the Tokaido Shinkansen using Series 300 Inotani 1992 rolling stock. July • JR Tokai Hotels Co., Ltd. is established (now a consolidated subsidiary). December • JR Central Department Store Co., Ltd. is established. Company name changed to JR Tokai Takashimaya Co., Ltd. in September 1997 (now a consolidated subsidiary). October 8, 1997 Shares are listed Shiojiri 1994 June • JR CENTRAL BUILDING CO., LTD. is established (now a consolidated subsidiary). 1997 April • Running operation starts on the Yamanashi Maglev Line. Takayama Line October • JR Central lists on the first section of the Nagoya, Tokyo and Osaka stock exchanges (integrated with the Tokyo Stock Exchange in July 2013) and also on the Kyoto Stock Tatsuno Exchange (merged with the Osaka Stock Exchange in March 2001). Tokyo 1999 March • Series 700 rolling stock is introduced to “Nozomi” on the Tokaido Shinkansen. Kofu December • Construction of JR Central Towers is completed. Chuo Line Taita Line Shinagawa 2000 March • JR Nagoya Takashimaya opens (operated by JR Tokai Takashimaya Co., Ltd.). May • Nagoya Marriott Associa Hotel opens (operated by JR Tokai Hotels Co., Ltd.). Mino-Akasaka Mino-Ota Shin-Yokohama 2001 March • JR Tokai Real Estate Co., Ltd. is established (now a consolidated subsidiary). Iida Line Minobu Line Gotemba Line December • JR Central is excluded from the jurisdiction of the JR Law through the enactment of Gifu amendment to the JR Law. Ogaki Maibara Fuji Kozu 2002 July • A new research center is constructed in Komaki City in Aichi Prefecture. December 20, 1999 Construction of JR Central Nagoya October • Shinagawa Station on the Tokaido Shinkansen opens. The timetable is drastically revised by Towers is completed Atami 2003 the increase of the maximum speed on all Tokaido Shinkansen trains to 270km/h. Kansai Line Numazu July • The Japan National Railways (JNR) Settlement Headquarters, an independent division within Obu 2005 the Japan Railway Construction, Transport and Technology Agency (JRTT), sells 600,000 Kyoto Kameyama Shizuoka shares of JR Central. Tokaido Line Taketoyo 2006 March • New Automatic Train Control (ATC) system is introduced into the Tokaido Shinkansen. April • JR Central repurchases 268,686 shares of its treasury stock based on the decision made by Meisho Line Toyohashi the Board of Directors authorized by the articles of incorporation. Shin-Osaka Matsusaka Tokaido Shinkansen • The JNR Settlement Headquarters within the JRTT completes the sale of all of its shares of Taketoyo Line JR Central by selling 286,071 shares of common stock of the company. Ise-Okitsu Toba January • Application for changes of “Yamanashi Maglev Line Construction Plan” is approved by the Taki 2007 Minister of Land, Infrastructure and Transport. Sangu Line July • JR Central introduces the new Series N700 rolling stock for the Tokaido Shinkansen “Nozomi” October 1, 2003 Shinagawa Station on the Kisei Line services. Tokaido Shinkansen is opened Operating Kilometers by line October • JR Central makes NIPPON SHARYO, LTD. a consolidated subsidiary. 2008 • JR Central submits a report to the Minister of Land, Infrastructure, Transport and Tourism Tokaido Shinkansen 552.6km (the “Minister”) concerning topographical and geological surveys of the Chuo Shinkansen in response to the order received in 1990. Conventional Lines December • JR Central starts conducting the remaining four surveys under Article 5 of the Nationwide Tokaido Line 360.1km Shinkansen Railway Development Act (hereinafter referred to as "the Act") related to the Chuo Shinkansen in response to the order by the Minister. Gotemba Line 60.2km Minobu Line 88.4km 2009 May • JR Central cancels 90,000 shares of treasury stock. Shingu December • JR Central submits a report regarding the remaining four surveys under Article 5 of the Act Iida Line 195.7km related to the Chuo Shinkansen in response to the order by the Minister received in 2008. Taketoyo Line 19.3km 2011 May • The Minister designates JR Central as the operator and constructor of the Chuo Shinkansen August 29, 2013 Opening ceremony of Takayama Line 189.2km between Tokyo and Osaka City. Yamanashi Maglev Line Chuo Line 174.8km • The Minister approves the development plan and instructs JR Central to construct the Chuo Shinkansen. Taita Line 17.8km Kansai Line 59.9km 2012 May • JR Central cancels 90,000 shares of treasury stock. Kisei Line 180.2km 2013 February • JR Central introduces the new Series N700A rolling stock for the Tokaido Shinkansen “Nozomi” Meisho Line 43.5km services. Sangu Line August • Extension of the Yamanashi Maglev Line to 42.8km and upgrading of facilities are completed, 29.1km and the running operation is restarted. Conventional Line Total 1,418.2km October • The Minister approves the Construction Implementation Plan (Part 1) between Shinagawa 2014 and Nagoya along the Chuo Shinkansen. Total 1,970.8km March • The Taketoyo Line (between Obu and Taketoyo stations) is electrified. 2015 • Increase of the maximum speed of the Tokaido Shinkansen to 285km/h. March, 2015 Increase of the maximum speed to 285km/h

46 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 47 Corporate Data

Corporate Data

Summary of Performance

Segment-by-Segment Performance for FY2015 Line in March 2015, we completed the introduction of the newly Tower Mall,” “Nagoya JR Gate Tower Hotel”. Further, in terms of JR Central Group have prioritized safe and reliable transportation developed Series Ki-Ha 25 diesel railcars to the Kisei Line and station commercial facilities, we implemented initiatives aimed in our core railway business, and enhanced our services in the the Sangu Line. We completed the restoration construction of the at enhancing our competitive strength and earning power by Shifts in Operating Revenues same time. And we have continually endeavored to improve the Meisho Line (between Ieki Station and Ise-Okitsu Station) - for renovating “ASTY Shizuoka”, “ASTY Kyoto” and “MAY ONE” in competency of our employees, to enhance facilities, to increase which a substitute bus shuttle service was provided due to typhoon Hamamatsu Station, alongside expanding the “Nagoya Umaimon- efficiency and to reduce costs throughout our business, including damage in October 2009 - in line with progress made on soil/water dori” restaurant zone in Nagoya Station. Additionally, we started 1) Transportation capital investments, in an effort to enhance profitability. As a result, projects by Mie Prefecture and Tsu City. We restarted operation of the sale of apartments in “Central Garden Residence Okazaki”, 1,358.1 the overall railway performance for the term (passenger-kilometers) the entire line on March 26, 2016. Additionally, we further ensured a condominium apartment building developed on a site used for (Billion yen) 1,276.1 1,305.6 1,182.6 1,243.0 rose favorably in terms of both business and tourism use, safety and reliability and improved our transportation service by company housing in Okazaki City, Aichi. 1,200

increasing by 3.8% YoY to 61.467 billion passenger-kilometers. implementing practical training in anticipation of earthquakes and As a result of the aforementioned, operating revenues for the term 900 The operating revenue also increased by 4.0% YoY to 1,738.4 other natural disasters, etc. reduced by 0.7% YoY to 66.0 billion yen, and operating income billion yen, ordinary income increased by 19.5% YoY to 511.4 In terms of sales and marketing, we worked to stimulate demand reduced by 5.9% YoY to 15.6 billion yen. 600 billion yen, and net income attributable to owners of the parent by expanding our travel product range, introducing the “IC 300 increased by 27.8% YoY to 337.4 billion yen. Hayatoku Type 21” and “Isshoni Kodama Hayatoku” products in 4) Other 0 Long-term debt was reduced by 205.4 billion yen. The balance FY2015, in addition to the “EX Family Hayatoku”, targeting Express With our hotel business, we have worked on creating attractive ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 as of the end of the term is 1,945.0 billion yen. Reservation and PLUS EX members. We also strove to increase products and on enhancing our sales capabilities. We have also The year-end dividend was set at 65 yen, an increase of 5 yen to the use of our products among passengers in their 50s or above worked to offer higher quality services to respond to the increasing the expected dividend per share announced in January 2016 due in the “50+” travel club by introducing affordable packages only number of foreign customers. Further, we have actively pursued to increases in passenger volume for business and travel. As a available to online members, in addition to our regular product sales activities in the lead up to the opening of the “Nagoya JR 2) Merchandise and Other result, the annual per share dividend was set at 125 yen. lineup. Furthermore, we have aimed to expand the number of Gate Tower Hotel” in April 2017. Business performance in each segment was as follows. With our travel business, we have proactively marketed attractive 233.8 239.6 passengers by promoting various campaigns making use of 220.7 (Billion yen) 205.2 209.5 tourist resources in Kyoto, Nara, and Tokyo, etc., enhancing travel travel products in collaboration with travel campaigns for locations 200 1) Transportation products in connection with these campaigns, and implementing such as Kyoto/Nara and Tokyo, and have promoted sales of We steadily proceeded large-scale renovation to maintain and events and sales promotions based around “Shupo” and the “400th products only available to “50+” online members. 150

improve the soundness of civil engineering structures along the Anniversary of the Death of Tokugawa Ieyasu”. We have also In our rolling stock manufacturing business, we have endeavored 100 Tokaido Shinkansen in constant pursuit of cost reduction. In terms promoted proactive sales and marketing by deploying excursion to increase orders for the manufacture of rolling stock, construction 50 of earthquake countermeasures, in addition to implementing packages using the Tokaido Shinkansen, Takayama Line, and machinery, and other items. countermeasures to derailment/deviation, we completed anti- Hokuriku Line by using the Kanazawa inauguration of the Hokuriku As a result of the aforementioned, operating revenues for the term 0 quake reinforcement to the Oi Repair and Inspection Depot in Shinkansen as an opportunity. We also worked to expand the increased by 1.7% YoY to 243.0 billion yen, and operating loss ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 March 2016 as part of anti-quake measures implemented for train network of store accepting electronic money with TOICA. was 1.7 billion yen. depot structures, and have also moved ahead with the renovation Due to the successive use of the railway for business and tourism, of the Hamamatsu Workshop, which conducts the Shinkansen performance for the Tokaido Shinkansen increased by 4.1% YoY to Efforts for FY2016 rolling stock general overhauls, in an effort to improve earthquake 52.166 billion passenger-kilometers for FY2015. For conventional We will continue to ensure that our railway business provides safe 3) Real Estate resistance. Furthermore, in addition to established a maximum line, it increased by 2.6% YoY to 9.302 billion passenger- and reliable transportation as the top priority for FY2016. Moreover, 67.4 travel speed of 285km/h beginning in March 2015, we utilized the kilometers. we will steadily promote earthquake countermeasures, implement (Billion yen) 62.7 64.9 66.5 66.0 “10 Nozomi Timetable” to flexibly schedule trains to meet demands In our bus business, we have worked to create products tailored large-scale renovation of the civil engineering structures, and 60

by operating as many transport services as possible during busy to customers' needs and ensure profitability with safety as the first also begin introducing the new type of N700A rolling stock (3rd 45 seasons, such as summer and New Year seasons, etc. On January priority. edition) that has been upgraded with the latest technology. Our 3, 2016, we had approximately 468,000 customers (between As a result of the aforementioned, operating revenues for the Chuo Shinkansen Project, which uses the Superconducting 30

Odawara and Shizuoka for “Nozomi” and “Hikari”, and between term increased by 4.0% YoY to 1,358.1 billion yen, and operating Maglev Technology, will steadily move ahead with large-scale 15 Shin-Yokohama and Odawara for “Kodama”), which was the income increased by 18.0% YoY to 556.8 billion yen. construction, while giving serious consideration to safety, the highest number ever. We have also continuing to introduce N700A, environment, and coordination with towns and cities along the 0 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 the latest model rolling stock, and finished upgrading Series 2) Merchandise and Other planned route. Meanwhile, we will make preparations ahead of N700 to mirror N700A's functions (by equipping trains with Wheel In our merchandise and other businesses, we have worked to the planned summer 2017 roll out of the new Shinkansen online Mounted Brake Disk and the Cruise Control System, etc.) in August bolster earning power through JR Nagoya Takashimaya through reservation and ticketless boarding service, and steadily move 2015. In addition, we are continuing the replacement to new renovation of sales spaces, an attractive product lineup, and forward overseas projects that utilize the high-speed rail and automatic ticketing gates, and have worked to enhance passenger services suited to customer needs. We also worked to increase Superconducting Maglev system. We will also make thorough 4) Other service and ensure safe and reliable transportation, including revenue by reviewing our lunch box lineup on sale inside Tokaido preparations ahead of the opening of the “JR Gate Tower”. At the (Billion yen) same time, we will make every effort to reduce costs and increase 250.6 238.9 243.0 installing new movable platform fences at Nozomi stop-stations Shinkansen trains and at major stations. 250 225.8 233.1 frequently used by large volumes of passengers, with installations As a result of the aforementioned, operating revenues for the term efficiency across all operations including capital investment and 200 complete on all platforms at Nagoya Station and . increased by 2.5% YoY to 239.6 billion yen, and operating income will strive to improve our business strength. In terms of conventional lines, we have continued proceeding reduced by 2.1% YoY to 8.7 billion yen. 150 100 earthquake countermeasures, such as anti-earthquake Performance forecast for FY2016 (consolidated) constructions in the Nagoya Workshop, which conducts general 3) Real Estate (Billion yen) YoY 50 overhauls for conventional line rolling stock, etc., in addition to In terms of real estate, we steadily moved forward with the Operating Revenues 17,360 99.9% 0 anti-quake reinforcement for elevated track columns, etc. We have construction of the “JR Gate Tower” Project in Nagoya Station, ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 also systematically promoted measures against rainfall, falling with plans for office tenants to move in from November 2016, Operating Income 5,770 99.7% rocks, and the improvement of safety devices on grade crossings. and proceeded with the formulation of management plans and Ordinary income 5,200 101.7% Note:Operating revenues by segment include sales to other segments in addition to Furthermore, in addition to establishing a highly convenient PR and promotional activities for the grand opening in April sales to external customers Net income attributable to owners of the parent 3,630 107.6% transportation system with the electrification of the Taketoyo 2017 of commercial facilities such as the “Takashimaya Gate Note: As of the release of the financial report for FY2015

48 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 49 Corporate Data

Corporate Data

Financial Highlights Other Related Materials

Consolidated • List of consolidated subsidiaries (Table 1) • Improvement in the access time due to the inauguration of Shinagawa Station (Column 2) Capital Capital Ratio Segment Company Name Main Business FY2011 FY2012 FY2013 FY2014 FY2015 (Million yen) (%) With the inauguration of the Tokaido Shinkansen in 1964, JR Tokai Bus Company 1,747 100.0 Bus services (Billion yen) (Billion yen) (Billion yen) (Billion yen) (Billion yen) the time required traveling between Tokyo and Osaka Transportation JR TOKAI LOGISTICS COMPANY 300 90.0 Logistics business was shortened to 3 hours and 10 minutes from 6 hours Operating Revenues ¥1,508.3 ¥1,585.3 ¥1,652.5 ¥1,672.2 ¥1,738.4 Tokai Transport Service Company 295 100.0 Railway business, entrusted business and 30 minutes (originally 4 hours). Furthermore, with the Operating expenses 1,135.8 1,159.1 1,157.9 1,165.6 1,159.7 JR Tokai Takashimaya Co., Ltd 10,000 59.2 Department store operations introduction of the “Nozomi” in 1992, that time was shortened JR-CENTRAL PASSENGERS Co., Ltd. Wholesale and retail sales, food and Operating income 372.5 426.1 494.6 506.5 578.6 998 100.0 beverage service Merchandise to 2 hours and 30 minutes. Income before income taxes 263.8 326.1 402.7 428.1 508.1 and Tokai Kiosk Company 700 100.0 Wholesale and retail sales In October 2003, the investment in rolling stock and Other Tokai Food Service co., Ltd, 295 51.6 Food and beverage service Net income attributable to owners of the parent*1 132.7 199.9 255.6 264.1 337.4 ground facilities that we had continuously engaged in for JR Tokai Corporation 100 70.0 Wholesale and retail sales approximately 15 years culminated with the upgrading of Depreciation and amortization 257.0 240.1 276.2 271.5 242.3 JR CENTRAL BUILDING CO., LTD. 45,000 100.0 Real estate leasing the maximum speed of all trains to 270km/h and the drastic 2 Capital expenditure* 238.3 JR Tokai Real Estate Co., Ltd. Real estate leasing and sales 290.6 281.1 200.1 214.5 16,500 100.0 timetable revision that resulted in a maximum of seven Total assets 5,214.0 5,231.1 5,178.1 5,217.9 5,268.5 Shin-Yokohama Station Development Co., Ltd. 9,304 100.0 Real estate leasing “Nozomi” services operated each hour. Building Co., Ltd. 1,880 52.5 Real estate leasing Total equity 1,363.2 1,557.9 1,802.2 2,063.9 2,352.5 We also simultaneously opened the Shinagawa Station Tokyo Station Development Co., Ltd. Real estate leasing Real 1,750 100.0 Equity 1,321.6 1,513.3 1,753.7 2,020.1 2,316.3 with the drastic timetable revision, thereby shortening the Estate Shizuoka Terminal Development Company Limited Real estate leasing 624 67.0 total travel time of passengers traveling from or to southwest Equity Ratio 25.3% 28.9% 33.9% 38.7% 44.0% HAMAMATSU TERMINAL DEVELOPMENT CO., Ltd. Real estate leasing 600 76.8 Tokyo by 20 to 30 minutes. Operating income/Total assets 7.1% 8.2% 9.5% 9.7% 11.0% Nagoya Station Area Development Corporation 480 100.0 Real estate leasing JR DEVELOPMENT AND MANAGEMENT CORPORATION OF SHIZUOKA 363 100.0 Real estate leasing Area in which the access will be improved Return on Equity 10.5% 14.1% 15.7% 14.0% 15.6% JR Development and Management Corporation of Kansai Real estate leasing (Yen) (Yen) (Yen) (Yen) (Yen) 30 100.0 JR Tokai Hotels Co., Ltd. Hotel business Net income per share*3 ¥67,470.45 ¥1,016.12 ¥1,299.23 ¥1,342.15 ¥1,714.64 14.000 100.0 JR Tokai Tours 490 70.0 Travel agency services Annual dividends per share*3 9,500.00 105.00 115.00 120.00 125.00 JR TOKAI AGENCY CO., LTD. 61 90.0 Advertising Shinjuku *1: Net income attributable to owners of the parent in or before FY2014 indicates net income in each FY. NIPPON SHARYO, LTD. Manufacturing of railway rolling stock *2: Increase in tangible fixed assets and intangible fixed assets 11,810 51.2 Shibuya 7km Tokyo *3: On October 1, 2012, the Company implemented a 100-for-1 stock split and employed a share unit system by which one share unit equals 100 shares. Along with this, net income per share and annual dividends per JR TOKAI CONSTRUCTION Co., Ltd. Construction share were calculated based on the assumption that the said stock split was made in the beginning of FY2012. 300 100.0 Other CHUOH LINEN SUPPLY Co., Ltd. 150 87.6 Linen supply services Shinagawa JR TOKAI Information Systems Company Development, improvement and Tokaido Shinkansen Non-consolidated 100 100.0 maintenance of systems The Japan Mechanised Works and Maintenance of Way Co., LTD 100 92.1 Track maintenance and inspection JR Tokai Financial Management Co., Ltd. Contracted accounting operations 15km 80 100.0 and financial business FY2011 FY2012 FY2013 FY2014 FY2015 Shin-Yokohama Tokai Rolling Stock & Machinery Co., Ltd. Rolling stock and machinery Tokyo 80 88.4 inspections and repair (Billion yen) (Billion yen) (Billion yen) (Billion yen) (Billion yen) International JR Central Consultants Company 50 100.0 Construction consulting business Airport Operating Revenues ¥1,184.5 ¥1,245.0 ¥1,277.2 ¥1,306.6 ¥1,357.9 Note 1: Two affiliated companies, SHINSEI TECHNOS CO., LTD. and RAILWAY INFORMATION SYSTEMS CO., LTD., are accounted for by the equity method. Railways Business 1,175.6 1,235.9 1,268.5 1,297.8 1,349.7 Affiliated Businesses 8.9 9.0 8.6 8.7 8.2 • Learning safety from accidents (Column 1) • Overcoming the “1st year Elementary School Wall” - Support for employees intending to balance child “Learning Safety from Accidents” is a booklet that has Operating expenses 839.0 845.9 816.3 831.1 800.3 rearing and work (Column 3) been published seven times since FY2007 that introduces, Railways Business 833.2 840.1 808.9 826.5 794.1 Difficulties balancing child rearing and work that arise in illustrations, past accidents and disasters in an easy to Affiliated Businesses 5.7 5.7 7.4 4.6 6.1 temporarily when a child enters elementary school are referred understand format. The booklet is distributed to the General to generally as the “1st year elementary school wall”. Even at Operating income 345.5 399.1 460.8 475.4 557.6 Education Center and field offices for use in training and JR Central there are a number of employees who resign due Income before income taxes 239.7 301.8 370.4 397.8 491.7 workplace OJT. to environmental changes brought on by their child entering Net income 120.8 187.8 240.3 260.2 328.6 This booklet is prepared based on a theme of how past elementary school, such as a shortening of the time the child events have been used as lessons, and serves as an Depreciation and amortization 241.4 223.7 260.3 255.8 227.0 can be kept at child care facilities, and the end of company- educational tool used to aid readers in gaining an accurate based child care support systems. Total capital investments 298.4 301.6 229.0 257.2 259.1 understanding why the current rules and equipment are In response JR Central now makes child care leave available Total assets 5,033.5 5,042.9 4,986.0 5,013.4 5,059.4 established in the manner they are. until the employee’s child reaches three years of age, and has Total equity 1,258.2 1,436.3 1,661.3 1,931.0 2,219.9 established a new “Child Care Leave (Elementary School)” Equity 1,258.2 1,436.3 1,661.3 1,931.0 2,219.9 system whereby parents can take a leave of Equity Ratio 25.0% 28.5% 33.3% 38.5% 43.9% absence of up to six months from April 1 of Operating income/Total assets 6.8% 7.9% 9.2% 9.5% 11.1% the year their child enters elementary school as a means of adapting to this change. With Return on Equity 10.0% 13.9% 15.5% 14.5% 15.8% (Yen) (Yen) (Yen) (Yen) (Yen) these systems in place, JR Central supports Net income per share* ¥61,328.43 ¥953.32 ¥1,220.16 ¥1,321.21 ¥1,668.31 employees intending to balance child rearing and work in overcoming this temporary Annual dividends per share* 9,500.00 105.00 115.00 120.00 125.00 hardship, and to continue working with the * On October 1, 2012, the Company implemented a 100-for-1 stock split and employed a share unit system by which one share unit equals 100 shares. Along with this, net income per share and annual dividends per share were calculated based on the assumption that the said stock split was made in the beginning of FY2012. Company on a full-time basis.

50 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 51 Financial Section

Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations (MD&A)

1) Overview of FY2015 with the Yamanashi Maglev Line. Moreover, non-operating d) Non-Operating Income/Loss annual transportation revenues, including the liabilities In FY2015, amid the continuing satisfactory level of income/loss improved due to a decrease in interest expenses Non-operating income/loss improved 11.2 billion yen over inherited from Japanese National Railways at the time railway use, JR Central strived to enhance services placing as well as a decrease in losses from early redemption of the FY2014 due to a decrease in interest expenses as well as of its break-up and privatization. We regarded reducing the top priority on ensuring safe and reliable transportation bonds. in losses from the early redemption of bonds. long-term debt and payables as our most important in the railway business, which is the core of our operations. financial task, and we have endeavored to trim debt and In our railway business, in terms of the Tokaido As a result, both revenue and income increased for e) Net Income Attributable to Owners of the Parent payables as rapidly as possible. Consequently, the 5,456.2 Shinkansen, we have steadily proceeded with a large- FY2015 with operating revenue ending at 1,738.4 billion As a result, net income attributable to owners of the billion yen in total long-term debt and payables at the scale renovation and earthquake countermeasures, such yen, operating income at 578.6 billion yen, and net income parent increased by 73.3 billion yen (27.8%) YoY to end of March 1992, immediately after we acquired the as countermeasures to derailment and deviation. Also, attributable to owners of the parent at 337.4 billion yen. 337.4 billion yen. Tokaido Shinkansen assets, has been lowered by 3,540.6 we utilized the “10 Nozomi Timetable” to schedule trains billion yen. flexibly. Furthermore, we have worked to enhance passenger JR Central will continue working to enhance the service and ensure safe and reliable transportation by 2) Operating Performance 3) Cash Flow earning capability and make every effort to pursue introducing the N700A, and by upgrading rolling stock of a) Operating Revenue Cash and cash equivalents (hereinafter, “capital”) as of efficiency and cost reduction across all operations the series N700 in October 2015. Operating revenue increased by 66.1billion yen (4.0%) the end of FY2015 increased by 188.3 billion yen YoY to including capital investment while steadily promoting In terms of the conventional lines, we have YoY to 1,738.4 billion yen. 318.3 billion yen. efforts to strengthen our managerial foundation for systematically promoted earthquake countermeasures, such In terms of our transportation business, JR Central’s Capital gained from operating activities increased various businesses, such as the Tokaido Shinkansen, and as anti-earthquake reinforcement for elevated columns, transportation revenues increased by 51.4billion yen by 30.6 billion yen YoY to 601.4 billion yen due to to construct the Chuo Shinkansen. At the same time, we etc., measures against rainfall and falling rocks, and (4.1%) YoY to 1,294.7 billion yen. Passenger volume continuing favorable railway transportation volume for will strive to improve our financial strength as the entire improvement of safety devices on grade crossings. Also, on the Tokaido Shinkansen rose 4.1% YoY, pushing up both business and tourism and an increase in JR Central’s group by, among others, procuring capital effectively as we completed the introduction of the newly developed transportation revenues 4.2% YoY to 1,192.0 billion yen. transportation revenues. well as efficiently. Series Ki-Ha 25 diesel railcars to the Kisei Line and the Passenger volume on conventional lines increased by 2.6% Capital expended through investing activities decreased Sangu Line. YoY with transportation revenues increasing 2.9% YoY to by 93.6 billion yen YoY to 170.3 billion yen due to a In terms of sales and marketing, we have promoted 102.6 billion yen. decrease in expenses for fund management. 5) Net Asset Balance proactive initiatives, such as measures to expand the number In our non-transportation businesses, operating revenues Capital expended through financing activities Net asset balance at the end of FY2015 increased by of members and usage of “Express Reservation”, etc. for the merchandise and other segment and other segment decreased by 9.4 billion yen YoY to 242.8 billion yen 288.5 billion yen over the end of FY2014 to end at 2,352.5 In non-railway business, we have strived to strengthen increased respectively by 2.5% YoY, and real estate segment due to a decrease in payments for long-term debt and billion yen, and our equity ratio rose from 38.7% at the existing businesses, and steadily moved forward with the decreased by 0.7%. payables. end of FY2014 to 44.0% at the end of FY2015. “JR Gate Tower” Project at Nagoya Station. Our commitment to the aforementioned series of measures b) Operating Expenses led to continuing favorable railway transportation volume Operating expenses slightly decreased by 5.9 billion 4) Long-Term Debt and Payables 6) Capital Procurement for both business and tourism. Therefore, transportation yen (0.5%) YoY to end at 1,159.7 billion yen despite an During FY2015, we decreased long-term debt and In order to procure capital from various sources revenues for JR Central increased. Overall consolidated increase in expenses of the group companies, including payables by 205.4 billion yen on a consolidated basis, and facilitate smooth fundraising, we have acquired operating revenues also increased due to an increase in NIPPON SHARYO, LTD due to, among others, a decrease in and 220.6 billion yen on a non-consolidated basis. Long- issuer credit ratings from Moody’s Japan, Rating and sales in the merchandise and other segment centering on JR depreciation and amortization associated with the Yamanashi term debt and payables at the end of FY2015 were 1,945.0 Investment Information, Inc., Standard and Poor’s Tokai Takashimaya Co., Ltd., and NIPPON SHARYO, LTD. Maglev Line. billion yen on a consolidated basis and 1,915.6 billion Ratings Japan K.K. and Japan Credit Rating Agency, Ltd. On the other hand, operating expenses slightly decreased yen on a nonconsolidated basis. The rating is respectively Aa3, AA, AA-, and AAA. despite an increase in expenses of the group companies, c) Operating Income When JR Central purchased the Tokaido Shinkansen Furthermore, in order to secure short-term liquidity, we including NIPPON SHARYO, LTD., due to, among others, Operating income increased by 72.0 billion yen (14.2%) facilities in October 1991, we were burdened with total have established a commitment of 100 billion yen as of a decrease in depreciation and amortization associated YoY to 578.6billion yen. long-term debt and payables of more than five times our the end of FY2015.

52 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 53 Financial Section

Consolidated Balance Sheet

Central Japan Railway Company and Consolidated Subsidiaries March 31, 2016 March 31, 2016 Thousands of Millions of Yen Thousands of Millions of Yen U.S. Dollars (Note 2) U.S. Dollars ASSETS (Note 2) (Note 2) LIABILITIES AND EQUITY (Note 2)

2016 2015 2016 2016 2015 2016

CURRENT ASSETS: CURRENT LIABILITIES: Cash and cash equivalents (Note 10) ¥ 318,352 ¥ 130,002 $ 2,842,428 Short-term loans payable (Notes 5 and 10) ¥ 24,800 ¥ 31,368 $ 221,428 Current portion of long-term debt (Notes 5 and 10) 112,236 139,879 1,002,107 Time deposits (Note 10) 32,000 114,000 285,714 Current portion of long-term accounts payable—railway facilities (Notes 6 and 10) 77,665 86,073 693,437 Trade receivables (Note 10) 85,524 90,957 763,607 Trade payables (Note 10) 179,047 183,033 1,598,633 Allowance for doubtful accounts (37) (22) (330) Provision for bonuses 27,991 27,715 249,919 Inventories 38,214 38,636 341,196 Income taxes payable (Note 10) 105,953 71,528 946,008 Deferred tax assets (Note 9) 24,222 26,708 216,267 Advances received 42,781 41,137 381,973 Prepaid expenses and other 32,440 31,901 289,642 Other (Note 9) 68,792 78,130 614,214 Total current assets 530,716 432,183 4,738,535 Total current liabilities 639,269 658,868 5,707,758 NONCURRENT ASSETS: NONCURRENT LIABILITIES: Investments and other assets: Long-term debt (Notes 5 and 10) 1,201,290 1,280,954 10,725,803

Investment securities (Notes 4 and 10) 109,730 137,066 979,732 Long-term accounts payable—railway facilities (Notes 6 and 10) 553,856 643,611 4,945,142

Investments in and advances to unconsolidated subsidiaries and affiliates (Note 4) 16,593 13,450 148,151 Provision for large-scale renovation of the Shinkansen infrastructure (Note 3.j) 245,000 280,000 2,187,500 Liability for retirement benefits (Note 7) 207,625 205,501 1,853,794 Asset for retirement benefits (Note 7) 4,015 5,929 35,848 Other (Note 9) 68,936 85,079 615,500 Deferred tax assets (Note 9) 148,760 149,077 1,328,214 Total noncurrent liabilities 2,276,709 2,495,146 20,327,758 Prepaid expenses and other 43,995 45,535 392,812 CONTINGENCIES (Note 13): Total investments and other assets 323,096 351,058 2,884,785 EQUITY (Notes 8 and 16): Property, plant and equipment (Note 3.f): Common stock—authorized, 824,000,000 shares; Buildings and structures 4,677,518 4,643,280 41,763,553 issued, 206,000,000 shares in 2016 and 2015 112,000 112,000 1,000,000 Machinery, rolling stock and vehicles 1,380,116 1,344,884 12,322,464 Capital surplus 53,499 53,500 477,669 Land 2,356,273 2,356,186 21,038,151 Retained earnings 2,241,207 1,927,407 20,010,776 Construction in progress 225,268 169,240 2,011,321 Treasury stock—at cost, 9,200,776 shares in 2016 and 9,200,743 shares in 2015 (103,157) (103,156) (921,044)

Other 176,848 184,573 1,579,000 Accumulated other comprehensive income:

Total 8,816,025 8,698,165 78,714,508 Unrealized gain on available-for-sale securities 22,227 38,663 198,455 Deferred loss on hedges (2) (24) (17) Accumulated depreciation (4,401,293) (4,263,426) (39,297,258) Remeasurements of defined benefit plans (Note 7) (9,375) (8,192) (83,705) Net property, plant and equipment 4,414,731 4,434,739 39,417,241 Total 2,316,397 2,020,196 20,682,116

Total noncurrent assets 4,737,827 4,785,798 42,302,026 Noncontrolling interests 36,168 43,770 322,928

TOTAL ASSETS ¥ 5,268,544 ¥ 5,217,982 $ 47,040,571 Total equity 2,352,566 2,063,967 21,005,053 See notes to consolidated financial statements.

TOTAL LIABILITIES AND EQUITY ¥ 5,268,544 ¥ 5,217,982 $ 47,040,571 See notes to consolidated financial statements.

54 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 55 Financial Section

Consolidated Statement of Income Consolidated Statement of Changes in Equity

Central Japan Railway Company and Consolidated Subsidiaries Year Ended March 31, 2016 Central Japan Railway Company and Consolidated Subsidiaries Year Ended March 31, 2016 Thousands of Thousands Millions of Yen (Note 2) Millions of Yen U.S. Dollars (Note 2) (Note 2) Accumulated Other 2016 2015 2014 2016 Comprehensive Income OPERATING REVENUES ¥ 1,738,409 ¥ 1,672,295 ¥ 1,652,547 $ 15,521,508 Outstanding Unrealized Deferred Number of Gain on (Loss) Gain Remeasurements OPERATING EXPENSES (Note 3.l): Shares of Common Capital Retained Treasury Available-for- on of Defined Noncontrolling Total Transportation, other services and cost of sales (Note 3.j) 982,295 983,074 979,083 8,770,491 Common Stock Stock Surplus Earnings Stock Sale Securities Hedges Benefit Plans Total Interests Equity Selling, general and administrative expenses 177,436 182,622 178,851 1,584,250 BALANCE, APRIL 1, 2013 196,799 ¥ 112,000 ¥ 53,500 ¥ 1,435,445 ¥ (103,155) ¥15,508 ¥ 18 ¥ 1,513,317 ¥ 44,654 ¥ 1,557,972 Total operating expenses 1,159,732 1,165,696 1,157,935 10,354,750 Net income attributable to owners of the parent 255,686 255,686 255,686 Operating income 578,677 506,598 494,612 5,166,758 Dividends from surplus, ¥110 per share (21,670) (21,670) (21,670) OTHER INCOME (EXPENSES): Purchase of treasury stock (0) (0) (0) (0) Interest and dividend income 2,790 2,287 1,987 24,910 Net change in the year 5,985 (12) ¥ 465 6,437 3,827 10,264 Interest expense (Note 6) (65,533) (72,272) (80,325) (585,116) Other—net (Note 3.s) (7,832) (31,915) (13,535) (69,928) BALANCE, MARCH 31, 2014 Other expenses—net (70,575) (101,900) (91,873) (630,133) (APRIL 1, 2014, as previously reported) 196,799 112,000 53,500 1,669,462 (103,155) 21,493 5 465 1,753,771 48,481 1,802,252 Cumulative effect of accounting change (Note 3.k) 17,450 17,450 (580) 16,869 INCOME BEFORE INCOME TAXES 508,101 404,698 402,738 4,536,616 BALANCE APRIL 1, 2014 (as restated) 112,000 53,500 1,686,913 (103,155) 21,493 5 465 1,771,221 47,900 1,819,122 INCOME TAXES (Note 9): Current 165,344 135,387 143,576 1,476,285 Net income attributable to owners of the parent 264,134 264,134 264,134 Deferred 11,754 12,547 (906) 104,946 Dividends from surplus, ¥120 per share (23,640) (23,640) (23,640) Total income taxes 177,098 147,934 142,670 1,581,232 Purchase of treasury stock (0) (1) (1) (1) NET INCOME 331,003 256,763 260,068 2,955,383 Net change in the year 17,169 (30) (8,657) 8,482 (4,130) 4,351

NET (LOSS) INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (6,437) (7,370) 4,381 (57,473) BALANCE, MARCH 31, 2015 196,799 112,000 53,500 1,927,407 (103,156) 38,663 (24) (8,192) 2,020,196 43,770 2,063,967 NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT ¥ 337,440 ¥ 264,134 ¥ 255,686 $ 3,012,857 Net income attributable to owners of the parent 337,440 337,440 337,440 Yen U.S. Dollars 2016 2015 2014 2016 Dividends from surplus, ¥120 per share (23,640) (23,640) (23,640) PER SHARE OF COMMON STOCK (Note 3.r): Purchase of treasury stock (0) (0) (0) (0) Basic net income ¥ 1,714.64 ¥ 1,342.15 ¥ 1,299.23 $ 15.31 Change in the parent's ownership interest due to Cash dividends applicable to the year 125.00 120.00 115.00 1.12 transactions with noncontrolling interests (1) (1) (1) See notes to consolidated financial statements. Net change in the year (16,436) 21 (1,183) (17,597) (7,601) (25,199)

BALANCE, MARCH 31, 2016 196,799 ¥ 112,000 ¥ 53,499 ¥ 2,241,207 ¥ (103,157) ¥ 22,227 ¥ (2) ¥ (9,375) ¥ 2,316,397 ¥ 36,168 ¥ 2,352,566

Thousands of U.S.Dollars (Note 2) Consolidated Statement of Comprehensive Income Accumulated Other Comprehensive Income Unrealized Central Japan Railway Company and Consolidated Subsidiaries Year Ended March 31, 2016 Gain on Deferred Remeasurements Millions of Yen Thousands of Common Capital Retained Treasury Available-for- Loss of Defined Noncontrolling Total U.S. Dollars Stock Surplus Earnings Stock Sale Securities on Hedges Benefit Plans Total Interests Equity (Note 2) (Note 2) 2016 2015 2014 2016 BALANCE, MARCH 31, 2015 $1,000,000 $ 477,678 $17,208,991 $ (921,035) $ 345,205 $ (214) $ (73,142) $18,037,464 $ 390,803 $18,428,276 NET INCOME ¥ 331,003 ¥ 256,763 ¥ 260,068 $ 2,955,383 Net income attributable to owners of the parent 3,012,857 3,012,857 3,012,857 OTHER COMPREHENSIVE (LOSS) INCOME (Note 14): Dividends from surplus, $1.07 per share (211,071) (211,071) (211,071) Unrealized (loss) gain on available-for-sale securities (16,719) 18,741 5,581 (149,276) Deferred gain (loss) on hedges 42 (59) (25) 375 Purchase of treasury stock (0) (0) (0) Remeasurements of defined benefit plans (1,898) (6,725) (16,946) Change in the parent's ownership interest due to Share of other comprehensive income in affiliates (105) 201 25 (937) transactions with noncontrolling interests (8) (8) (8) Net change in the year (146,750) 187 (10,562) (157,116) (67,866) (224,991) Total other comprehensive (loss) income (18,681) 12,157 5,582 (166,794)

COMPREHENSIVE INCOME ¥ 312,322 ¥ 268,921 ¥ 265,650 $ 2,788,589 BALANCE, MARCH 31, 2016 $1,000,000 $477,669 $20,010,776 $ (921,044) $ 198,455 $ (17) $(83,705) $20,682,116 $322,928 $21,005,053 TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: See notes to consolidated financial statements. Owners of the parent ¥ 319,842 ¥ 272,616 ¥ 261,659 $ 2,855,732 Noncontrolling interests (7,520) (3,694) 3,991 (67,142) See notes to consolidated financial statements.

56 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 57 Financial Section

Consolidated Statement of Cash Flows Notes to Consolidated Financial Statements

Central Japan Railway Company and Consolidated Subsidiaries Year Ended March 31, 2016 Central Japan Railway Company and Consolidated Subsidiaries Thousands of Millions of Yen U.S. Dollars (Note 2) (Note 2) 1.INCORPORATION OF CENTRAL JAPAN RAILWAY accepted in Japan, which are different in certain respects as to the 2016 2015 2014 2016 COMPANY application and disclosure requirements of International Financial OPERATING ACTIVITIES: Central Japan Railway Company (Tokai Ryokaku Tetsudo Reporting Standards. Income before income taxes ¥ 508,101 ¥ 404,698 ¥ 402,738 $ 4,536,616 Kabushiki Gaisha, the "Company") was incorporated on April In preparing these consolidated financial statements, certain Adjustments for: 1, 1987, as a private business company, pursuant to the Law reclassifications and rearrangements have been made to the Income taxes—paid (133,119) (148,296) (139,513) (1,188,562) for Japanese National Railways Restructuring enacted upon the consolidated financial statements issued domestically in order to Depreciation and amortization 242,369 271,568 276,269 2,164,008 resolution of the Japanese Diet. present them in a form which is more familiar to readers outside Equity in earnings of affiliates (560) (339) (326) (5,000) The business of the Japanese National Railways (the "JNR") Japan. In addition, certain reclassifications have been made in the Proceeds from contribution for construction (3,944) (2,221) (1,284) (35,214) was succeeded by the following newly established organizations: 2015 and 2014 consolidated financial statements to conform to the Reduction of noncurrent assets related to contribution seven railway companies including the Company, the former classifications used in 2016. for construction 4,244 3,545 1,854 37,892 Shinkansen Holding Corporation (a predecessor entity to the Railway Loss on retirement of noncurrent assets 8,769 10,001 15,104 78,294 Development Fund (1991–1997), which was subsequently succeeded The consolidated financial statements are stated in Japanese yen, Gain on sales of noncurrent assets—net (1,322) (1,395) (2,386) (11,803) by the Corporation for Advanced Transport and Technology the currency of the country in which the Company is incorporated Changes in assets and liabilities: (the "CATT") (1997–2003) and in turn by the Japan Railway and operates. The translations of Japanese yen amounts into Decrease in provision for large-scale U.S. dollar amounts are included solely for the convenience of renovation of the Shinkansen infrastructure (35,000) (35,000) (35,000) (312,500) Construction, Transport and Technology Agency (the "JRTT")), the readers outside Japan and have been made at the rate of ¥112 to Decrease (increase) in trade receivables 5,743 8,052 (24,259) 51,276 former Railway Telecommunication Co., Ltd., Railway Information Decrease (increase) in inventories 1,421 (518) 14,763 12,687 Systems Co., Ltd., and the Railway Technical Research Institute $1, the approximate rate of exchange as of March 31, 2016. Such Increase (decrease) in trade payables 1,324 6,654 (1,603) 11,821 (the "RTRI") which reorganized as a public interest corporation translations should not be construed as representations that the Increase (decrease) in advances received 1,644 (11,752) 8,503 14,678 as of April 1, 2011. The JNR itself became the JNR Settlement Japanese yen amounts could be converted into U.S. dollars at that Increase in liability for retirement benefits 1,657 4,561 4,143 14,794 Corporation (the "JNRSC"). All of the assets and liabilities of the or any other rate. Japanese yen figures of less than one million Other—net 165 61,249 21,552 1,473 JNR were transferred to such organizations, including the JNRSC. yen are rounded down to the nearest million of yen, except for per Prior to December 1, 2001, the Law Concerning Passenger share information, and U.S. dollar figures of less than one thousand Net cash provided by operating activities 601,495 570,806 540,557 5,370,491 Railway Companies and Japan Freight Railway Company (the U.S. dollars are also rounded down to the nearest thousand of U.S. INVESTING ACTIVITIES: "Law") required that authorization be obtained from the Minister dollars, except for per share information. Placement of time deposits (162,900) (279,000) (95,000) (1,454,464) of Land, Infrastructure, Transport and Tourism (the "Minister of Withdrawal of time deposits 244,900 215,010 65,002 2,186,607 Transport") regarding fundamentals such as: (1) commencement 3.SUMMARY OF SIGNIFICANT ACCOUNTING Purchases of marketable securities (120,000) (50,000) (35,000) (1,071,428) of business other than railway and its related business, (2) the POLICIES Proceeds from redemption of marketable securities 120,000 50,000 35,000 1,071,428 appointment or dismissal of representative directors and corporate a.Principles of Consolidation Purchases of property, plant and equipment (236,164) (197,469) (202,118) (2,108,607) auditors, (3) the issuance of new shares and bonds, (4) long‍term —The accompanying consolidated financial statements as of Proceeds from contribution for construction 4,909 4,929 3,825 43,830 loans payable, (5) amendments to the Articles of Incorporation, March 31, 2016, include the accounts of the Company and its Purchases of investment securities (2,013) (203) (108) (17,973) (6) operating plans, (7) sales of material assets, (8) appropriations 28 (29 in 2015 and 2014) significant subsidiaries (together, the Proceeds from sales of investment securities 5,262 434 902 46,982 of earnings and (9) merger or dissolution. As of December 1, "Companies"). Other—net (24,300) (7,670) (2,958) (216,964) 2001, since the Law was revised and the Company was no longer Shizuoka Terminal Hotel, Ltd., a consolidated subsidiary, was Net cash used in investing activities (170,305) (263,970) (230,454) (1,520,580) in scope of the Law, the Company was not required to obtain the excluded from the scope of consolidation due to a merger with JR aforementioned authorizations. Tokai Hotels, Ltd., another consolidated subsidiary, on April 1, 2015. FINANCING ACTIVITIES: On October 8, 1997, the Company's shares were listed on the Under the control and influence concepts, those companies in Net (decrease) increase in short-term loans payable (5,712) 6,581 (1,889) (51,000) Nagoya and Tokyo stock exchanges in Japan. The JNRSC, which which the Company, directly or indirectly, is able to exercise control Proceeds from long-term debt 215,141 259,600 189,600 1,920,901 held all 2,240,000 of the Company's outstanding shares prior to over operations are consolidated, and those companies over which Repayments of long-term debt (322,464) (353,699) (319,950) (2,879,142) the listing, sold 1,353,929 shares in the initial public offerings. the Company has the ability to exercise significant influence are Payments for long-term accounts payable—railway facilities (98,163) (126,202) (138,848) (876,455) Pursuant to the Law for Disposal of Debts and Liabilities of the accounted for by the equity method. Cash dividends paid (23,640) (23,640) (21,670) (211,071) JNRSC enacted in October of 1998, the Company's shares held by Investments in two affiliates are accounted for by the equity Cash dividends paid to noncontrolling interests (79) (434) (434) (705) Other—net (7,928) (14,483) (16,572) (70,785) the JNRSC were transferred to Japan Railway Construction Public method. Investments in the remaining unconsolidated subsidiaries Corporation (the "JRCPC"). On October 1, 2003, the CATT and the and affiliates are stated at cost. If the equity method of accounting Net cash used in financing activities (242,847) (252,279) (309,764) (2,168,276) JRCPC were fully integrated, pursuant to the Law of Japan Railway had been applied to the investments in these companies, the effect NET INCREASE IN CASH AND CASH EQUIVALENTS 188,343 54,556 338 1,681,633 Construction, Transport and Technology enacted on October 1, 2003, on the accompanying consolidated financial statements would not be and designated as the JRTT. In July 2005, the JRTT sold 600,000 material. CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 130,002 75,445 75,106 1,160,732 shares of the Company. On April 5, 2006, the JRTT also sold its The difference between the cost of acquisition and the fair value CASH AND CASH EQUIVALENTS INCREASED remaining 286,071 shares of the Company. As a result of this sale, of the equity of an acquired subsidiary at the date of acquisition is BY MERGER WITH AN UNCONSOLIDATED SUBSIDIARY 7 62 all of the Company's shares held by the JRTT were sold. fully amortized when incurred. The shares above do not reflect the effect of the hundred-for-one All significant intercompany balances and transactions have been CASH AND CASH EQUIVALENTS, END OF YEAR ¥ 318,352 ¥ 130,002 ¥ 75,445 $ 2,842,428 stock split effective as of October 1, 2012. eliminated in consolidation. All material unrealized profit included in assets resulting from transactions within the Companies is also ADDITIONAL CASH FLOW INFORMATION: 2.BASIS OF PRESENTATION OF CONSOLIDATED eliminated. Interest paid ¥ 65,636 ¥ 72,683 ¥ 81,070 $ 586,035 FINANCIAL STATEMENTS A certain consolidated subsidiary has adopted a fiscal year ending See notes to consolidated financial statements. The accompanying consolidated financial statements have been on February 28, which is different from that of the Company. The prepared in accordance with the provisions set forth in the Japanese necessary adjustments for preparing consolidated financial statements Financial Instruments and Exchange Act and its related accounting as of the Company's year-end were appropriately made, such as regulations, and in accordance with accounting principles generally adjustments for significant intercompany accounts and transactions

58 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 59 Financial Section

which occur between the fiscal year-end of the subsidiary and that of transactions with noncontrolling interest, (b) presentation of the recognize actuarial gains and losses and past service costs in the Company. consolidated balance sheet, (c) presentation of the consolidated g.Long‍Lived Assets profit or loss. Those amounts are recognized in profit or loss over statement of income, and (e) acquisition-related costs above, —The Companies review their long‍lived assets for impairment a certain period no longer than the expected average remaining b.Business Combinations effective April 1, 2015, and (d) provisional accounting treatments whenever events or changes in circumstances indicate the carrying service period of the employees. However, actuarial gains and — On September 13, 2013, the Accounting Standards Board for a business combination above for a business combination which amount of an asset or asset group may not be recoverable. An losses and past service costs that arose in the current period and of Japan (the "ASBJ") issued revised ASBJ Statement No. 21, occurred on or after April 1, 2015. The revised accounting standards impairment loss is recognized if the carrying amount of an asset or have not yet been recognized in profit or loss are included in "Accounting Standard for Business Combinations," revised ASBJ for (a) transactions with noncontrolling interest and (e) acquisition- asset group exceeds the sum of the undiscounted future cash flows other comprehensive income, and actuarial gains and losses and Statement No. 22, "Accounting Standard for Consolidated Financial related costs were applied prospectively as permitted in the expected to result from the continued use and eventual disposition past service costs that were recognized in other comprehensive Statements," and revised ASBJ Statement No. 7, "Accounting transitional treatment of the revised standards. of the asset or asset group. The impairment loss would be measured income in prior periods and then recognized in profit or loss in Standard for Business Divestitures." Major accounting changes from With respect to (b) presentation of the consolidated balance sheet as the amount by which the carrying amount of the asset exceeds its the current period, are treated as reclassification adjustments (see the previous standards are as follows: and (c) presentation of the consolidated statement of income, the recoverable amount, which is the higher of the discounted cash flows Note 14). applicable line items in the 2015 and 2014 consolidated financial from the continued use and eventual disposition of the asset or the net (c) The revised accounting standard also made certain amendments (a) Transactions with noncontrolling interest—A parent's statements have been accordingly reclassified and presented in line selling price at disposition. relating to the method of attributing expected benefit to periods, ownership interest in a subsidiary might change if the parent with those in 2016. the discount rate, and expected future salary increases. purchases or sells ownership interests in its subsidiary. The Cash flows arising from purchases of or proceeds from sales of h.Software Costs carrying amount of noncontrolling interest is adjusted to reflect investments in subsidiaries that do not result in the change in the —Software costs are amortized by the straight‍line method over five This accounting standard and the guidance for (a) and (b) above the change in the parent's ownership interest in its subsidiary scope of consolidation are classified as financing activities in the years. are effective for the end of annual periods beginning on or after April while the parent retains its controlling interest in its subsidiary. consolidated statement of cash flows for the year ended March 31, 1, 2013, and for (c) above are effective for the beginning of annual Under the previous accounting standard, any difference 2016. i.Deferred Charges periods beginning on or after April 1, 2014, or for the beginning of between the fair value of the consideration received or paid The effects of the application of the revised accounting standards —Bond issuance costs are fully charged to income as incurred. annual periods beginning on or after April 1, 2015, subject to certain and the amount by which the noncontrolling interest is adjusted on the consolidated financial statements were immaterial. disclosure in March 2015, all with earlier application being permitted is accounted for as an adjustment of goodwill or as profit or j.Provision for Large-Scale Renovation of the Shinkansen from the beginning of annual periods beginning on or after April 1, loss in the consolidated statement of income. Under the revised c.Cash Equivalents Infrastructure 2013. However, no retrospective application of this accounting standard accounting standard, such difference is accounted for as capital —Cash equivalents are short‍term investments that are readily —Provision for large-scale renovation of the Shinkansen to consolidated financial statements in prior periods is required. surplus as long as the parent retains control over its subsidiary. convertible into cash and that are exposed to insignificant risk of infrastructure is provided based on the Nationwide Shinkansen Railway The Companies applied the revised accounting standard and guidance (b) Presentation of the consolidated balance sheet—In the changes in value. Cash equivalents include time deposits, certificates Development Law. In accordance with the Nationwide Shinkansen for retirement benefits for (a) and (b) above, effective March 31, 2014, consolidated balance sheet, "minority interest" under the of deposit, commercial paper and others, all of which mature or Railway Development Law and Regulations, the Company reversed the and for (c) above, effective April 1, 2014. previous accounting standard is changed to "noncontrolling become due within three months of the date of acquisition. provision in the amount of ¥35,000 million ($312,500 thousand) for the With respect to (c) above, the Companies changed the method of interest" under the revised accounting standard. year ended March 31, 2016 and ¥35,000 million for the years ended attributing the expected benefit to periods from a straight-line basis to a (c) Presentation of the consolidated statement of income—In the d.Inventories March 31, 2015 and 2014. benefit formula basis, and the method of determining the discount rate, consolidated statement of income, "income before minority — Inventories are stated at the lower of cost, principally and recorded the effect above as of April 1, 2014, in retained earnings. interest" under the previous accounting standard is changed to determined by the retail method for merchandise, by the specific k.Retirement and Pension Plans As a result, retained earnings as of April 1, 2014, increased by ¥17,450 "net income" under the revised accounting standard, and "net identification method for land and buildings held for sale in lots, —The Company and 27 consolidated subsidiaries have unfunded million. The effect of this change on the consolidated statement of income" under the previous accounting standard is changed by the specific identification method for work in process and by retirement plans covering substantially all of their employees. Six income for the year ended March 31, 2015, was immaterial. to "net income attributable to owners of the parent" under the the moving‍average cost method for materials and supplies, or net consolidated subsidiaries have noncontributory defined benefit pension revised accounting standard. selling value. plans and one consolidated subsidiary has a defined contribution l.Research and Development Costs (d) Provisional accounting treatments for a business pension plan, some of those subsidiaries also have unfunded retirement —Research and development costs are charged to income as incurred. combination—If the initial accounting for a business e.Investment Securities plans. Some of the subsidiaries adopt the simplified accounting method Research and development costs charged to income were ¥75,199 combination is incomplete by the end of the reporting period —All investment securities are classified and accounted for, for calculation of liability of retirement benefits and retirement benefit million ($671,419 thousand), ¥107,370 million and ¥93,533 million for in which the business combination occurs, an acquirer shall depending on management's intent, as available‍for‍sale securities, expenses. the years ended March 31, 2016, 2015 and 2014, respectively. report in its financial statements provisional amounts for which are principally comprised of investment securities, and are the items for which the accounting is incomplete. Under the reported at fair value, with unrealized gain and loss, net of applicable Liability for retirement benefits is mainly calculated based on the m.Leases previous accounting standard, the impact of adjustments taxes, reported in a separate component of equity. projected benefit obligations and plan assets at the balance sheet date. —Lease assets of finance leases that were not deemed to transfer to provisional amounts recorded in a business combination Nonmarketable available‍for‍sale securities are stated at cost The projected benefit obligations are attributed to periods on a benefit ownership of the leased property are depreciated and amortized by the on profit or loss is recognized as profit or loss in the year determined by the moving‍average cost method. For other-than- formula basis. Actuarial gains and losses are amortized on a straight- straight‍line method over the lease period. in which the measurement is completed. Under the revised temporary declines in fair value, investment securities are reduced to line basis mainly over five years, which is within the average remaining accounting standard, during the measurement period, which net realizable value by a charge to income. service period. Prior service costs are amortized on a straight-line basis n.Income Taxes shall not exceed one year from the acquisition, the acquirer mainly over five years, which is within the average remaining service —The provision for income taxes is computed based on the pretax shall retrospectively adjust the provisional amounts recognized f.Property, Plant and Equipment period. income included in the consolidated statement of income. The asset at the acquisition date to reflect new information obtained —Property, plant and equipment are stated at cost. Certain The ASBJ issued ASBJ Statement No. 26, "Accounting Standard and liability approach is used to recognize deferred tax assets and about facts and circumstances that existed as of the acquisition contributions in aid for construction of railways and other property for Retirement Benefits" in May 2012 and ASBJ Guidance No. 25, liabilities for the expected future tax consequences of temporary date and that would have affected the measurement of the are deducted directly from the cost of the related assets. The "Guidance on Accounting Standard for Retirement Benefits” in March differences between the carrying amounts and the tax bases of assets amounts recognized as of that date. Such adjustments shall be accumulated contributions deducted from the cost of property, plant 2015, which replaced the accounting standard for retirement benefits and liabilities. Deferred taxes are measured by applying currently recognized as if the accounting for the business combination and equipment as of March 31, 2016 and 2015 amounted to ¥277,750 that had been issued by the Business Accounting Council in 1998 enacted tax laws to the temporary differences. had been completed at the acquisition date. million ($2,479,910 thousand), and ¥275,321 million, respectively. with an effective date of April 1, 2000, and the other related practical (e) Acquisition-related costs—Acquisition-related costs are costs, Depreciation is computed substantially by the declining‍balance guidance, and were followed by partial amendments from time to time o.Appropriations of Retained Earnings such as advisory fees or professional fees, which an acquirer method over the estimated useful lives of the assets. Additional through 2009. —Appropriations of retained earnings are reflected in the incurs to effect a business combination. Under the previous depreciation is provided for the Shinkansen rolling stock based on consolidated financial statements for the following year upon accounting standard, the acquirer accounts for acquisition- kilometers traveled. (a) Under the revised accounting standard, actuarial gains and shareholders' approval. related costs by including them in the acquisition costs of the The range of useful lives is principally from 2 to 60 years for losses and past service costs that are yet to be recognized in investment. Under the revised accounting standard, acquisition- buildings and structures, and from 2 to 20 years for machinery, profit or loss are recognized within equity (accumulated other p.Consumption Tax related costs shall be accounted for as expenses in the periods rolling stock and vehicles. comprehensive income), after adjusting for tax effects, and any —Unless otherwise stated, all figures are presented net of tax. in which the costs are incurred. Depreciation of certain railway structures, except for resulting deficit or surplus is recognized as a liability (liability for the Shinkansen railway facilities, is computed by the retirement benefits) or asset (asset for retirement benefits). q.Derivatives and Hedging Activities The Company applied the revised accounting standards for (a) replacement‍accounting method. (b) The revised accounting standard does not change how to —The Companies use derivative financial instruments mainly to

60 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 61 Financial Section

manage their exposures to fluctuations in foreign exchange and in 5.SHOR‍ T TERM LOANS PAYABLE AND LONG‍TERM DEBT interest rates. Foreign currency swaps are utilized by the Companies to s.Change in Presentation (Consolidated Statement of Income) The interest rates applicable to short‍term loans payable were 0.16% as of March 31, 2016, 0.36% as of March 31, 2015, and 0.32% as of March 31, 2014. Long‍term debt as of March 31, 2016 and 2015, consisted of the following: reduce foreign exchange risks. Interest rate swaps are utilized by the —Prior to April 1, 2015, the loss on redemption of bonds was Companies to reduce interest rate risks. The Companies do not enter disclosed separately in the other income (expenses) section of the Thousands of Millions of Yen U.S. Dollars into derivatives for trading or speculative purposes. consolidated statement of income. Since during this fiscal year ended 2016 2015 2016 Foreign currency swaps, which qualify for hedge accounting and March 31, 2016, the materiality of the amount decreased, such amount The Company specific matching criteria, are not remeasured at market value, but the is included in the other-net in the other income (expense) section. Unsecured 2.04% bonds due 2018 ¥ 18,795 hedged debt is translated at the contracted rates of the foreign currency The amounts of loss on redemption of bonds separately disclosed for Unsecured 2.39% bonds due 2026 ¥ 29,788 29,787 $ 265,964 swaps. Interest rate swaps, which qualify for hedge accounting and the years ended March 31, 2015 and 2014 were ¥13,676 million and Unsecured 1.88% bonds due 2016 19,997 Unsecured 1.78% bonds due 2017 19,998 ¥13,357 million, respectively. meet specific matching criteria, are not remeasured at market value, Unsecured 1.78% bonds due 2017 19,998 but the differential paid or received under the swap agreements is Unsecured 1.75% bonds due 2017 19,998 recognized and included in interest expense. t.Accounting Changes and Error Corrections Unsecured 2.31% bonds due 2027 19,982 19,981 178,410 —In December 2009, the ASBJ issued ASBJ Statement No. 24, Unsecured 1.69% bonds due 2018 9,999 r.Per Share Information "Accounting Standard for Accounting Changes and Error Corrections" Unsecured 2.3% bonds due 2027 14,993 14,993 133,866 Unsecured 1.79% bonds due 2020 19,894 —Basic net income per share is computed by dividing net income and ASBJ Guidance No. 24, "Guidance on Accounting Standard for Unsecured 1.83% bonds due 2018 9,997 attributable to owners of the parent available to common shareholders Accounting Changes and Error Corrections." Accounting treatments Unsecured 2.39% bonds due 2028 19,985 19,984 178,437 by the weighted‍average number of common shares outstanding for the under this standard and guidance are as follows: (1) Changes in Unsecured 2.391% bonds due 2028 30,000 30,000 267,857 period. Accounting Policies—When a new accounting policy is applied Unsecured 2.646% bonds due 2038 10,000 10,000 89,285 Unsecured 1.557% bonds due 2019 19,800 The net income attributable to owners of the parent available to following revision of an accounting standard, the new policy is applied Unsecured 2.166% bonds due 2029 30,000 30,000 267,857 common shareholders used in the computation for 2016, 2015 and 2014 retrospectively unless the revised accounting standard includes specific Unsecured 2.312% bonds due 2029 30,000 30,000 267,857 was ¥337,440 million ($3,012,857 thousand), ¥264,134 million and transitional provisions, in which case the entity shall comply with the Unsecured 2.556% bonds due 2039 10,000 10,000 89,285 ¥255,686 million, respectively. The average number of common shares specific transitional provisions. (2) Changes in Presentation—When the Unsecured 1.667% bonds due 2019 10,000 Unsecured 2.321% bonds due 2029 30,000 30,000 267,857 used in the computation for 2016, 2015 and 2014 was 196,799,236 presentation of financial statements is changed, prior-period financial Unsecured 2.157% bonds due 2029 40,000 40,000 357,142 shares, 196,799,298 shares and 196,799,336 shares, respectively. statements are reclassified in accordance with the new presentation. (3) Unsecured 2.375% bonds due 2039 10,000 10,000 89,285 Diluted net income per share is not presented in the accompanying Changes in Accounting Estimates—A change in an accounting estimate Unsecured 1.472% bonds due 2020 14,100 consolidated financial statements as the Companies do not have any is accounted for in the period of the change if the change affects that Unsecured 2.212% bonds due 2030 30,000 30,000 267,857 Unsecured 2.111% bonds due 2030 20,000 20,000 178,571 dilutive securities. period only, and is accounted for prospectively if the change affects Unsecured 1.797% bonds due 2030 10,000 10,000 89,285 Cash dividends per share presented in the accompanying consolidated both the period of the change and future periods. (4) Corrections of Unsecured 2.083% bonds due 2031 20,000 20,000 178,571 statement of income are dividends applicable to the respective years, Prior-Period Errors—When an error in prior-period financial statements Unsecured 1.895% bonds due 2031 10,000 10,000 89,285 including dividends to be paid after the end of the year. is discovered, those statements are restated. Unsecured 0.262% bonds due 2015 20,000 Unsecured 1.824% bonds due 2032 10,000 10,000 89,285 Unsecured 0.13% bonds due 2016 15,000 Unsecured 1.725% bonds due 2033 10,000 10,000 89,285 4.INVESTMENT SECURITIES Unsecured 1.807% bonds due 2033 15,000 15,000 133,928 Information regarding investment securities with readily determinable fair values classified as available‍for‍sale as of March 31, 2016 and 2015, was as follows: Unsecured 1.786% bonds due 2033 15,000 15,000 133,928 Unsecured 1.629% bonds due 2033 10,000 10,000 89,285 Millions of Yen Unsecured 1.623% bonds due 2034 15,000 15,000 133,928 2016 Unsecured 1.584% bonds due 2034 15,000 15,000 133,928 Unrealized Unrealized Fair Unsecured 1.502% bonds due 2034 20,000 20,000 178,571 Cost Gain Loss Value Unsecured 1.309% bonds due 2032 15,000 15,000 133,928 Unsecured 1.917% bonds due 2044 10,000 10,000 89,285 Equity securities ¥ 62,188 ¥ 35,842 ¥ 3,151 ¥ 94,879 Unsecured 1.362% bonds due 2034 20,000 20,000 178,571 Trust fund investment and other 276 45 321 Unsecured 1.014% bonds due 2035 20,000 20,000 178,571 Total ¥ 62,464 ¥ 35,887 ¥ 3,151 ¥ 95,200 Unsecured 1.685% bonds due 2045 10,000 10,000 89,285 Unsecured 1.196% bonds due 2035 15,000 133,928 Unsecured 1.297% bonds due 2035 15,000 133,928 Millions of Yen Unsecured 1.21% bonds due 2035 15,000 133,928 2015 Unsecured 1.018% bonds due 2036 15,000 133,928 U.S. dollar 4.25% bonds due 2045 issued abroad 36,375 324,776 Unrealized Unrealized Fair Unsecured loans from Japanese banks and others, with interest rates ranging from Cost Gain Loss Value 0.71% to 5.6% (2016), from 0.76% to 6.6% (2015), due 2015 to 2045 637,962 639,293 5,696,089 Equity securities ¥ 60,185 ¥ 56,863 ¥ 55 ¥ 116,992 Subsidiaries Unsecured and secured loans from Japanese banks and others, with interest rates ranging Trust fund investment and other 276 67 343 from 0.53% to 3.15% (2016), from 0.53% to 4.65% (2015), due 2015 to 2022 29,438 14,214 262,839 Total ¥ 60,461 ¥ 56,931 ¥ 55 ¥ 117,336 Total 1,313,527 1,420,834 11,727,919 Less current portion (112,236) (139,879) (1,002,107) Long-term debt, less current portion ¥ 1,201,290 ¥ 1,280,954 $ 10,725,803 Thousands of U.S. Dollars 2016 Annual maturities of long‍term debt outstanding at the principal amounts as of March 31, 2016, were as follows: Unrealized Unrealized Fair Millions of Yen Thousands of Cost Gain Loss Value Year Ending March 31 U.S. Dollars Equity securities $ 555,250 $ 320,017 $ 28,133 $ 847,133 2017 ¥ 112,236 $ 1,002,107 Trust fund investment and other 2,464 401 2,866 2018 100,574 897,982 2019 82,047 732,562 Total $ 557,714 $ 320,419 $ 28,133 $ 850,000 2020 110,493 986,544 The information for available-for-sale securities whose fair value is not readily determinable as of March 31, 2016 and 2015, is disclosed in Note 10. 2021 58,369 521,151 The impairment losses on investments in an unconsolidated subsidiary for the years ended March 31, 2016 and 2015, were ¥19,061 million ($170,187 thousand) and ¥5,648 million, respectively. The impairment loss on available-for-sale equity securities for the year ended March 31, 2014 was not Thereafter 850,496 7,593,714 presented as the effect was immaterial. Total ¥ 1,314,216 $ 11,734,071

62 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 63 Financial Section

The Company has entrusted cash for the repayment of a portion of its outstanding bonds based on debt assumption agreements with financial institutions; 7.RETIREMENT AND PENSION PLANS however, the Company is not released from the primary responsibility for the liability by these agreements. The outstanding bonds covered by these Employees whose service with the Company and consolidated subsidiaries is terminated are entitled to retirement and pension benefits determined by agreements as of March 31, 2016 and 2015, were as follows: reference to accumulated points during their employment calculated by their position or basic rates of pay at the time of termination, length of service and other conditions under which the termination occurs. Some of the subsidiaries adopt the simplified accounting method for calculation of liability of Thousands of retirement benefits and retirement benefit expenses. Millions of Yen U.S. Dollars 2016 2015 2016 Years Ended March 31, 2016, 2015 and 2014 1.The changes in defined benefit obligation for the years ended March 31, 2016, 2015 and 2014, were as follows: Secured 3.95% bonds due 2016 ¥ 29,000 ¥ 29,000 $ 258,928 Thousands of Secured 2.825% bonds due 2017 49,800 49,800 444,642 Millions of Yen U.S. Dollars Secured 2.18% bonds due 2018 29,900 29,900 266,964 2016 2015 2014 2016 Secured 2.6% bonds due 2020 49,800 49,800 444,642 Balance at beginning of year (as previously reported) ¥ 226,219 ¥ 230,925 ¥ 227,177 $ 2,019,812 Cumulative effect of accounting change (25,696) Unsecured 2.39% bonds due 2022 18,995 18,995 169,598 Balance at beginning of year (as restated) 226,219 205,228 227,177 2,019,812 Unsecured 2.2% bonds due 2022 18,200 18,200 162,500 Current service cost 15,065 13,227 12,770 134,508 Interest cost 1,099 2,900 3,407 9,812 Unsecured 1.74% bonds due 2022 20,000 20,000 178,571 Actuarial losses (gains) 4,323 19,841 (920) 38,598 Unsecured 1.42% bonds due 2017 10,000 10,000 89,285 Benefits paid (18,232) (15,068) (11,512) (162,785) Prior service cost (66) 2 (589) Unsecured 1.15% bonds due 2022 25,000 25,000 223,214 Others 121 90 1,080 Unsecured 1.31% bonds due 2033 10,000 10,000 89,285 Balance at end of year ¥ 228,531 ¥ 226,219 ¥ 230,925 $ 2,040,455 Unsecured 2.015% bonds due 2023 9,000 9,000 80,357 The retirement benefit expenses recognized by the consolidated subsidiaries, which adopt the simplified accounting method, are included in the current Unsecured 2.2% bonds due 2024 9,900 9,900 88,392 service cost. Unsecured 2.19% bonds due 2019 9,900 9,900 88,392 2.The changes in plan assets for the years ended March 31, 2016, 2015 and 2014, were as follows: Unsecured 1.875% bonds due 2019 20,000 20,000 178,571 Millions of Yen Thousands of Unsecured 2.21% bonds due 2024 9,650 9,650 86,160 U.S. Dollars Unsecured 1.775% bonds due 2020 20,000 20,000 178,571 2016 2015 2014 2016 Balance at beginning of year ¥ 26,647 ¥ 20,231 ¥ 17,893 $ 237,919 Unsecured 1.77% bonds due 2017 20,000 20,000 178,571 Expected return on plan assets 321 290 269 2,866 Unsecured 1.695% bonds due 2016 20,000 Actuarial (losses) gains (2,124) 5,763 1,682 (18,964) Contributions from the employer 997 1,124 1,135 8,901 Unsecured 2.14% bonds due 2018 18,400 18,400 164,285 Benefits paid (921) (854) (748) (8,223) Unsecured 2.405% bonds due 2026 9,900 9,900 88,392 Others 90 Balance at end of year ¥ 24,920 ¥ 26,647 ¥ 20,231 $ 222,500 Unsecured 2% bonds due 2016 30,000 30,000 267,857 Unsecured 2.04% bonds due 2018 18,800 167,857 3.Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets as of March Unsecured 1.88% bonds due 2016 20,000 178,571 31, 2016 and 2015, was as follows: Unsecured 1.78% bonds due 2017 20,000 178,571 Millions of Yen Thousands of Unsecured 1.78% bonds due 2017 20,000 178,571 U.S. Dollars 2016 2015 2016 Unsecured 1.75% bonds due 2017 20,000 178,571 Funded defined benefit obligation ¥ 23,067 ¥ 21,606 $ 205,955 Unsecured 1.69% bonds due 2018 10,000 89,285 Plan assets (24,920) (26,647) (222,500) Unsecured 1.79% bonds due 2020 19,900 177,678 Total (1,853) (5,041) (16,544) Unfunded defined benefit obligation 205,463 204,613 1,834,491 Unsecured 1.83% bonds due 2018 10,000 89,285 Net liability arising from defined benefit obligation 203,610 199,572 1,817,946 Unsecured 1.557% bonds due 2019 19,800 176,785 Liability for retirement benefits 207,625 205,501 1,853,794 Asset for retirement benefits (4,015) (5,929) (35,848) Unsecured 1.667% bonds due 2019 10,000 89,285 Net liability arising from defined benefit obligation ¥ 203,610 ¥ 199,572 $ 1,817,946 Unsecured 1.472% bonds due 2020 14,100 125,892 Total ¥ 600,045 ¥ 437,445 $ 5,357,544 4.The components of net periodic benefit costs for the years ended March 31, 2016, 2015 and 2014, were as follows: The aforementioned bonds for which the Company entered into debt assumption agreements have been derecognized in the consolidated balance sheet and Millions of Yen Thousands of disclosed as contingent liabilities (see Note 13). U.S. Dollars The Company has credit commitments from banks. Total unused credit available to the Company as of March 31, 2016, was ¥100,000 million 2016 2015 2014 2016 ($892,857 thousand). Service cost ¥ 15,065 ¥ 13,227 ¥ 12,770 $ 134,508 All assets of the Company were pledged for the above secured bonds of ¥158,500 million ($1,415,178 thousand), as an enterprise mortgage, which gives Interest cost 1,099 2,900 3,407 9,812 the holder thereof a security interest in all assets junior to that of other present or future secured creditors, but senior to that of general creditors. Expected return on plan assets (321) (290) (269) (2,866) Recognized actuarial losses (gains) 3,840 3,742 (91) 34,285 Amortization of prior service cost 36 79 86 321 Amortization of transitional obligation 199 199 6.LONG‍TERM ACCOUNTS PAYABLE—RAILWAY FACILITIES Net periodic benefit costs ¥ 19,721 ¥ 19,859 ¥ 16,103 $ 176,080 Based on legal defeasance agreements with special purpose entities, the Company has transferred the debt repayment obligations for certain long‍term The retirement benefit expenses recognized by the consolidated subsidiaries, which adopt the simplified accounting method, are ncludedi in service cost. accounts payable—railway facilities to the special purpose entities, and has provided the special purpose entities with Japanese national government bonds or cash for the payments of principal and interest on the long‍term accounts payable—railway facilities. As a result of these transactions, the balance of 5.Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit plans for the years ended March 31, long-term accounts payable—railway facilities was reduced by ¥79,632 million ($711,000 thousand) and ¥154,438 million as of March 31, 2016 and 2015, 2016, 2015 and 2014, were as follows: respectively (see Note 13). Thousands of Annual maturities of long‍term accounts payable—railway facilities as of March 31, 2016, were as follows: Millions of Yen U.S. Dollars 2016 2015 2014 2016 Millions of Yen Thousands of Year Ending March 31 U.S. Dollars Actuarial gains ¥ (2,607) ¥ (10,334) $ (23,276) Prior service cost 102 79 910 2017 ¥ 77,665 $ 693,437 Transitional obligation 199 2018 4,822 43,053 Total ¥ (2,504) ¥ (10,055) $ (22,357) 2019 5,120 45,714 6.Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement benefit plans as of March 31, 2020 5,438 48,553 2016 and 2015, were as follows: 2021 5,777 51,580 Thousands of Thereafter 532,697 4,756,223 Millions of Yen U.S. Dollars Total ¥ 631,521 $ 5,638,580 2016 2015 2016 Interest expense on the aforementioned long‍term accounts payable—railway facilities amounted to ¥41,718 million ($372,482 thousand), ¥46,784 million Unrecognized actuarial losses ¥ (10,839) ¥ (8,232) $ (96,776) and ¥52,375 million for the years ended March 31, 2016, 2015 and 2014, respectively. Unrecognized prior service cost (13) (116) (116) Total ¥ (10,853) ¥ (8,349) $ (96,901)

64 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 65 Financial Section

7.Plan assets Net deferred tax assets as of March 31, 2016 and 2015, were reflected in the accompanying consolidated balance sheets under the following captions: a.Components of plan assets Plan assets as of March 31, 2016 and 2015, consisted of the following: Thousands of Millions of Yen U.S. Dollars 2016 2015 2016 2015 2016 Equities 59% 62% General security account 26 23 Current assets ¥ 24,222 ¥ 26,708 $ 216,267 Bonds 11 11 Investments and other assets 148,760 149,077 1,328,214 Others 4 4 Current liabilities—other (11) (1) (98) Total 100% 100% Noncurrent liabilities—other (7,024) (6,152) (62,714) The employee retirement benefit trust for the Companies’ contributory pension plans accounted for 47% and 51% of total plan assets for the years ended March 31, 2016 and 2015, respectively. Net deferred tax assets ¥ 165,946 ¥ 169,630 $ 1,481,660 Reconciliations between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated statements of b.Method of determining the expected rate of return on plan assets income for the years ended March 31, 2016 and 2014, were as follows: The expected rate of return on plan assets is determined considering the long-term rates of return which are expected currently and in the future from the various components of the plan assets. 2016 8.Assumptions used for the years ended March 31, 2016, 2015 and 2014, were set forth as follows: Normal effective statutory tax rate 32.7% 2016 2015 2014 Increase in valuation allowance 1.6 Discount rate Mainly 0.4% Mainly 0.4% Mainly 1.5% Effect of tax rate reduction 1.6 Expected rate of return on plan assets 1.2% to 2.0% 1.2% to 2.0% 1.1% to 2.0% Deduction of R&D promotion tax system (1.4) 9.Defined Contribution Plan Other—net 0.3 Total contribution by the Companies for the defined contribution plan was ¥117 million ($1,044 thousand) for the year ended March 31, 2016, ¥113 Actual effective tax rate 34.9% million for the year ended March 31, 2015, and ¥106 million for the year ended March 31, 2014.

2014 b.Increases/Decreases and Transfer of Common Stock, Reserve and 8.EQUITY Normal effective statutory tax rate 37.6% Japanese companies are subject to the Companies Act of Japan (the Surplus "Companies Act"). The significant provisions in the Companies Act that The Companies Act requires that an amount equal to 10% of dividends Deduction of R&D promotion tax system (2.8) affect financial and accounting matters are summarized below: must be appropriated as a legal reserve (a component of retained earnings) Other—net 0.6 or as additional paid-in capital (a component of capital surplus), depending Actual effective tax rate 35.4% a.Dividends on the equity account charged upon the payment of such dividends, until Under the Companies Act, companies can pay dividends at any time the aggregate amount of legal reserve and additional paid-in capital equals Since the difference between the normal effective statutory tax rate and the actual effective tax rate was not significant, reconciliations were not presented during the fiscal year in addition to the year‍end dividend upon resolution to 25% of the common stock. Under the Companies Act, the total amount for the year ended March 31, 2015. at the shareholders’ meeting. For companies that meet certain criteria of additional paid-in capital and legal reserve may be reversed without New tax reform laws enacted in 2016 in Japan changed the normal effective statutory tax rate for the fiscal year beginning on or after April 1, 2016 and limitation. The Companies Act also provides that common stock, legal including (1) having a Board of Directors, (2) having independent auditors, 2017, from approximately 31.9% to 30.6% and the normal effective statutory tax rate for the fiscal year beginning on or after April 1, 2018, to approximately (3) having an Audit & Supervisory Board, and (4) the term of service of reserve, additional paid-in capital, other capital surplus and retained the directors being prescribed as one year rather than the normal two-year earnings-unappropriated can be transferred among the accounts within 30.3%. The effect of these changes was to decrease deferred tax assets, net of deferred tax liabilities, in the consolidated balance sheet as of March 31, 2016, term by its articles of incorporation, the Board of Directors may declare equity under certain conditions upon resolution of the shareholders. by ¥7,794 million ($69,589 thousand) and to increase income taxes - deferred in the consolidated statement of income for the year then ended by ¥8,162 dividends (except for dividends-in-kind) at any time during the fiscal year if c.Treasury Stock and Treasury Stock Acquisition Righvts million ($72,875 thousand). the Company has prescribed so in its articles of incorporation. The Companies Act also provides for companies to purchase treasury New tax reform laws enacted in 2015 in Japan changed the normal effective statutory tax rate for the fiscal year beginning on or after April 1, 2015, from stock and dispose of such treasury stock by resolution of the Board of The Companies Act permits companies to distribute dividends‍in‍kind approximately 35.2% to 32.7% and the normal effective statutory tax rate for the fiscal year beginning on or after April 1, 2016, to approximately 31.9%. The (noncash assets) to shareholders subject to a certain limitation and additional Directors. The amount of treasury stock purchased cannot exceed the requirements. amount available for distribution to the shareholders which is determined by effect of these changes was to decrease deferred tax assets, net of deferred tax liabilities, in the consolidated balance sheet as of March 31, 2015, by ¥15,736 Semiannual interim dividends may also be paid once a year upon a specific formula. million and to increase income taxes - deferred in the consolidated statement of income for the year then ended by ¥17,296 million. resolution by the Board of Directors if the articles of incorporation of the Under the Companies Act, stock acquisition rights are presented as a New tax reform laws enacted in 2014 in Japan changed the normal effective statutory tax rate for the fiscal year beginning on or after April 1, 2014, from company so stipulate. The Companies Act provides certain limitations separate component of equity. approximately 37.6% to 35.2%. The effect of this change on the consolidated statement of income for the year ended March 31, 2014 was immaterial. on the amounts available for dividends or the purchase of treasury stock. The Companies Act also provides that companies can purchase both The limitation is defined as the amount available for distribution to the treasury stock acquisition rights and treasury stock. Such treasury stock shareholders, but the amount of equity after dividends must be maintained at acquisition rights are presented as a separate component of equity or no less than ¥3 million. deducted directly from stock acquisition rights. 10.FINANCIAL INSTRUMENTS AND RELATED Derivatives include foreign currency swaps, which are used to manage DISCLOSURES exposure to market risks of changes in foreign exchange of foreign currency a.Policy for Financial Instruments bonds, and interest rate swaps, which are used to manage exposure to market 9.INCOME TAXES The Companies use financial instruments, mainly debt including bank risks of changes in interest rates of long-term debt. Please see Note 11 for The Companies are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of loans and bonds, based on their capital financing plan. Cash surpluses, if the detail of derivatives. approximately 32.7% for the year ended March 31, 2016, 35.2% for the year ended March 31, 2015, and 37.6% for the year ended March 31, 2014. any, are invested in low risk financial assets, such as bank deposits. The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities as of March 31, 2016 c.Risk Management for Financial Instruments and 2015, were as follows: Derivatives are used, not for speculative purposes, but to manage exposure to financial risks as described in Note 11. Credit Risk Management Thousands of Credit risk is the risk of economic loss arising from a counterparty's Millions of Yen U.S. Dollars b.Nature and Extent of Risks Arising from Financial Instruments failure to repay or service debt according to the contractual terms. The 2016 2015 2016 Trade receivables are exposed to customer credit risk. Investment Companies manage their credit risk from trade receivables by monitoring Deferred tax assets: securities, mainly equity instruments of customers and suppliers of the of payment terms and balances of major customers by each business

Depreciation and amortization ¥ 68,936 ¥ 69,401 $ 615,500 Companies, are exposed to the risk of market price fluctuations. administration department to identify the default risk of customers in the Liability for retirement benefits 64,403 67,421 575,026 Payment terms of trade payables and income taxes payable are within one early stage. Loss on write down of investment securities 9,782 3,868 87,339 Market Risk Management Software 9,688 10,674 86,500 year. Short-term bank loans are used to fund the Companies’ ongoing Investment securities are managed by monitoring market values and Provision for bonuses 8,604 9,066 76,821 financial position of issuers on a regular basis. Unrealized profit on property, plant and equipment 7,420 7,438 66,250 operations. Bonds and long-term loans are used for renewal of long-term Foreign currency swaps are used to manage exposure to market risks of Accrued railway usage charges 3,491 3,920 31,169 debt and capital spending. Please see Note 5 for a maturity analysis for Other 43,264 49,285 386,285 bank loans and bonds payable. changes in foreign exchange of foreign currency bonds. Interest rate swaps Total 215,590 221,077 1,924,910 Long-term accounts payable—railway facilities were incurred in the are used to manage exposure to market risks of changes in interest rates of Less valuation allowance (29,337) (22,685) (261,937) amount of ¥5,095,661 million in 1991 for the purchase of the Shinkansen long-term debt. Deferred tax assets 186,252 198,391 1,662,964 railway ground facilities and serially repaid to the JRTT. Payment terms are 25.5 years for ¥4,494,466 million and 60 years for ¥601,195 million. d.Fair Values of Financial Instruments Deferred tax liabilities: Payment term and interest rate of the payable were determined based on Fair values of financial instruments are based on quoted prices in Unrealized gain on available-for-sale securities 10,144 17,656 90,571 the agreements on the purchase of the Shinkansen railway ground facilities. active markets. If a quoted price is not available, other rational valuation Deferred gain on transfer of certain fixed assets 4,923 4,664 43,955 The interest rate of a part of such payable is variable and determined by the techniques are used instead. Also, please see Note 11 for the details of fair Other 5,237 6,439 46,758 JRTT. value for derivatives. Deferred tax liabilities 20,306 28,760 181,303

Net deferred tax assets ¥ 165,946 ¥ 169,630 $ 1,481,660

66 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 67 Financial Section

(1) Fair Value of Financial Instruments (2) Financial Instruments Whose Fair Value Cannot Reliably be Determined Millions of Yen Carrying Amount March 31, 2016 Carrying Amount Fair Value Unrealized Gain/(Loss) March 31, 2016 Millions of Yen Thousands of U.S. Dollars Cash and cash equivalents ¥ 318,352 ¥ 318,352 Investments in equity instruments that do not have a quoted market price in an active market: Time deposits 32,000 32,000 Investment securities ¥ 14,529 $ 129,723 Trade receivables 85,524 85,524 Investments in unconsolidated subsidiaries and affiliates 12,275 109,598 Investment securities 95,200 95,200 Total ¥ 26,805 $ 239,330 Total ¥ 531,077 ¥ 531,077 Carrying Amount Millions of Yen Short-term loans payable ¥ (24,800) ¥ (24,800) March 31, 2015 Trade payables (179,047) (179,047) Investments in equity instruments that do not have a quoted market price in an active market: Income taxes payable (105,953) (105,953) Investment securities ¥ 19,730 Long-term debt (1,313,527) (1,482,643) ¥ (169,115) Investments in unconsolidated subsidiaries and affiliates 12,091 Long-term accounts payable—railway facilities (631,521) (1,327,184) (695,662) Total ¥ 31,822 Total ¥ (2,254,851) ¥ (3,119,629) ¥ (864,778) e.Maturity Analysis for Financial Assets and Securities with Contractual Maturities Millions of Yen Millions of Yen March 31, 2015 Carrying Amount Fair Value Unrealized Gain/(Loss) Due after One Year Due after Five Cash and cash equivalents ¥ 130,002 ¥ 130,002 March 31, 2016 Due within One Year through Five Years Years Time deposits 114,000 114,000 Cash and cash equivalents ¥ 318,352 Trade receivables 90,957 90,957 Time deposits 32,000 Investment securities 117,336 117,336 Trade receivables 85,361 ¥ 162 Total ¥ 452,296 ¥ 452,296 Total ¥ 435,713 ¥ 162

Thousands of U.S. Dollars Short-term loans payable ¥ (31,368) ¥ (31,368) Due after One Year Due after Five Trade payables (183,033) (183,033) March 31, 2016 Due within One Year through Five Years Years Income taxes payable (71,528) (71,528) Cash and cash equivalents $ 2,842,428 Long-term debt (1,420,834) (1,520,818) ¥ (99,984) Time deposits 285,714 Long-term accounts payable—railway facilities (729,685) (1,300,766) (571,080) Trade receivables 762,151 $ 1,446 Total ¥ (2,436,450) ¥ (3,107,515) ¥ (671,065) Total $ 3,890,294 $ 1,446 Thousands of U.S. Dollars f. Annual Maturities of long-term debt and long-term accounts payable—railway facilities Please see Note 5 for annual maturities of long-term debt and Note 6 for long-term accounts payable—railway facilities. March 31, 2016 Carrying Amount Fair Value Unrealized Gain/(Loss) Cash and cash equivalents $ 2,842,428 $ 2,842,428 11.DERIVATIVES Time deposits 285,714 285,714 The Companies enter into foreign currency swap agreements to manage exposure to market risks of changes in foreign exchange of foreign currency Trade receivables 763,607 763,607 bonds, and interest rate swap agreements to manage exposure to market risks of changes in interest rates of certain liabilities. Derivative transactions are mainly entered into to hedge foreign exchange exposures and interest rate exposures incorporated within their business. Investment securities 850,000 850,000 Accordingly, market risk in these derivatives is basically offset by opposite movements in the value of hedged liabilities. Total $ 4,741,758 $ 4,741,758 Because the counterparties to these derivatives are limited to major international financial institutions, the Companies do not anticipate any loss arising from credit risk. Derivative transactions entered into by the Companies have been made in accordance with internal policies and have been subject to due internal Short-term loans payable $ (221,428) $ (221,428) formalities. Trade payables (1,598,633) (1,598,633) Derivative Transactions to Which Hedge Accounting Is Applied Income taxes payable (946,008) (946,008) Millions of Yen Long-term debt (11,727,919) (13,237,883) $ (1,509,955) Contract Amount Long-term accounts payable—railway facilities (5,638,580) (11,849,857) (6,211,267) March 31, 2016 Hedged Item Contract Amount Due after One Year Fair Value Total $ (20,132,598) $ (27,853,830) $ (7,721,232) Foreign currency swaps:(fixed amount payment in yen, fixed amount receipt in U.S. dollars) Foreign currency bonds ¥ 37,015 ¥ 37,015 * Interest rate swaps:(fixed rate payment, floating rate receipt) Long-term debt ¥ 193,473 ¥ 156,473 * Cash and Cash Equivalents and Time Deposits currency swaps at the Companies' assumed bond issuing rate. The carrying values of cash and cash equivalents and time deposits Fair values of long-term debt with floating interest rates are measured in Millions of Yen approximate fair value because of their short maturities. combination with interest rate swaps, which qualify for hedge accounting Investment Securities and are accounted for by the method stated in the Note 3.q, by discounting Contract Amount The fair values of investment securities are measured at the quoted the aggregated values of the principals and interests at the Companies' March 31, 2015 Hedged Item Contract Amount Due after One Year Fair Value market price of the stock exchange. Fair value information for investment assumed borrowing rate. * securities by classification is included in Note 4. The fair values of other debt are determined by discounting the cash flows Interest rate swaps:(fixed rate payment, floating rate receipt) Long-term debt ¥ 162,900 ¥ 142,800 Trade Receivables and Payables, Short-Term Loans Payable and related to the debt at the Companies assumed bond issuing rate or corporate Income Taxes Payable borrowing rate. Thousands of U.S. Dollars The carrying values of trade receivables and payables, short-term loans Long-Term Accounts Payable—Railway Facilities Including Current Contract Amount payable and income taxes payable approximate fair value because of their Portion short maturities. Considering the legal characteristics, all terms and conditions of accounts March 31, 2016 Hedged Item Contract Amount Due after One Year Fair Value Long-Term Debt Including Current Portion payable-railway facilities are stipulated in the special law, and as no active Foreign currency swaps:(fixed amount payment in yen, fixed amount receipt in U.S. dollars) Foreign currency bonds $ 330,491 $ 330,491 * Domestic bonds are measured at the quoted market prices. Fair values of market exists for this type of obligation, the fair values of these payables foreign currency bonds are measured in combination with foreign currency are determined by discounting the cash flow estimated for each due date at Interest rate swaps:(fixed rate payment, floating rate receipt) Long-term debt $ 1,727,437 $ 1,397,080 * swaps, which qualify for hedge accounting and meet specific matching the Company’s assumed bond issuing rate. The estimated cash flows of the *These foreign currency swaps or interest rate swaps which qualify for hedge accounting are accounted for in combination with hedged items such as the criteria and are accounted for by the method stated in the Note 3.q, by floating rate portion of these payables are calculated using the latest rate foreign currency bonds or long-term debt, and the fair values of these swaps are included in those of hedged items in Note 10. discounting the aggregated values of the bonds in combination with foreign provided by the JRTT.

68 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 69 Financial Section

12.LEASES 3.Information about Operating Revenues, Profit (Loss), Assets, Liabilities and Other Items As a lessee, the minimum rental commitments under noncancelable operating lease as of March 31, 2016 were due as follows. The minimum rental Millions of Yen commitments under noncancelable operating lease as of March 31, 2015, were not presented as the effect was immaterial. 2016 Thousands of Reportable Segment Millions of Yen U.S. Dollars Transportation Merchandise and Other Real Estate Total Other Total Reconciliations Consolidated 2016 2016 Operating revenues: Due within one year ¥ 468 $ 4,178 External customers ¥ 1,346,347 ¥ 230,670 ¥ 38,618 ¥ 1,615,635 ¥ 122,774 ¥ 1,738,409 ¥ 1,738,409 Due after one year 3,293 29,401 Intersegment transactions or transfers 11,815 9,025 27,471 48,312 120,252 168,564 ¥ (168,564) Total ¥ 3,762 $ 33,589 Total ¥ 1,358,162 ¥ 239,695 ¥ 66,089 ¥ 1,663,947 ¥ 243,026 ¥ 1,906,974 ¥ (168,564) ¥ 1,738,409 As a lessor, the minimum rental commitments under noncancelable operating leases as of March 31, 2016 and 2015, were due as follows: Segment profit (loss) ¥ 556,892 ¥ 8,747 ¥ 15,637 ¥ 581,276 ¥ (1,722) ¥ 579,554 ¥ (876) ¥ 578,677 Thousands of Segment assets 4,648,963 105,259 342,344 5,096,567 212,356 5,308,923 (40,378) 5,268,544 Millions of Yen U.S. Dollars Other: 2016 2015 2016 Depreciation and amortization 222,474 3,481 12,477 238,433 3,936 242,369 242,369 Due within one year ¥ 2,008 ¥ 1,476 $ 17,928 Amounts of investments in equity in affiliates 8,705 8,705 8,705 8,705 Due after one year 7,035 5,837 62,812 Increase in property, plant and equipment Total ¥ 9,043 ¥ 7,313 $ 80,741 and intangible assets 202,549 7,855 24,338 234,743 3,635 238,379 238,379 Millions of Yen 2015 13.CONTINGENCIES Reportable Segment As of March 31, 2016, the Company has joint and several obligations with the RTRI to make payments on long‍term debt of ¥11,152 million Transportation Merchandise and Other Real Estate Total Other Total Reconciliations Consolidated ($99,571 thousand) issued by the RTRI. The proceeds are being used for the enhancement of technology development for the Maglev system. As discussed in Notes 5 and 6, based on debt assumption agreements with financial institutions and legal defeasance agreements with special purpose Operating revenues: entities, the Company has transferred the debt repayment obligations for certain bonds and long-term accounts payable—railway facilities to such financial External customers ¥ 1,294,050 ¥ 225,038 ¥ 39,349 ¥ 1,558,437 ¥ 113,857 ¥ 1,672,295 ¥ 1,672,295 institutions and special purpose entities. As of March 31, 2016, the Company had contingent obligations of ¥600,045 million ($5,357,544 thousand) for the Intersegment transactions or transfers 11,641 8,818 27,237 47,697 125,114 172,812 ¥ (172,812) bonds and ¥79,632 million ($711,000 thousand) for long-term accounts payable—railway facilities. Total ¥ 1,305,691 ¥ 233,856 ¥ 66,587 ¥ 1,606,135 ¥ 238,971 ¥ 1,845,107 ¥ (172,812) ¥ 1,672,295

Segment profit ¥ 472,017 ¥ 8,935 ¥ 16,616 ¥ 497,570 ¥ 8,281 ¥ 505,851 ¥ 746 ¥ 506,598 14.OTHER COMPREHENSIVE (LOSS) INCOME Segment assets 4,631,213 99,620 332,606 5,063,440 219,910 5,283,351 (65,369) 5,217,982 The components of other comprehensive (loss) income for the years ended March 31, 2016, 2015 and 2014, were as follows: Other: Thousands of Depreciation and amortization 251,092 3,383 13,148 267,624 3,944 271,568 271,568 Millions of Yen U.S. Dollars Amounts of investments in equity in affiliates 8,332 8,332 8,332 8,332 2016 2015 2014 2016 Increase in property,plant and equipment and intangible assets 191,252 6,143 14,051 211,446 3,084 214,531 214,531 Unrealized (loss) gain on available-for-sale securities: (Loss) gain arising during the year ¥ (24,160) ¥ 25,964 ¥ 8,847 $ (215,714) Millions of Yen Reclassification adjustments to profit 0 (158) (361) 0 2014 Amount before income tax effect (24,160) 25,806 8,486 (215,714) Reportable Segment Income tax effect 7,440 (7,065) (2,905) 66,428 Transportation Merchandise and Other Real Estate Total Other Total Reconciliations Consolidated Total ¥ (16,719) ¥ 18,741 ¥ 5,581 $ (149,276) Operating revenues: Deferred gain (loss) on hedges: External customers ¥ 1,264,827 ¥ 212,907 ¥ 39,182 ¥ 1,516,917 ¥ 135,630 ¥ 1,652,547 ¥ 1,652,547 Gain (loss) arising during the year ¥ 65 ¥ (88) ¥ (40) $ 580 Intersegment transactions or transfers 11,291 7,891 28,239 47,422 114,982 162,405 ¥ (162,405) Amount before income tax effect 65 (88) (40) 580 Total ¥ 1,276,119 ¥ 220,798 ¥ 67,422 ¥ 1,564,340 ¥ 250,613 ¥ 1,814,953 ¥ (162,405) ¥ 1,652,547 Income tax effect (22) 29 15 (196) Total ¥ 42 ¥ (59) ¥ (25) $ 375 Segment profit ¥ 460,130 ¥ 8,221 ¥ 13,832 ¥ 482,183 ¥ 10,581 ¥ 492,765 ¥ 1,847 ¥ 494,612 Remeasurements of defined benefit plans: Segment assets 4,749,578 92,155 323,578 5,165,312 217,708 5,383,020 (204,853) 5,178,166 Adjustments arising during the year ¥ (6,381) ¥ (14,077) $ (56,973) Other: Reclassification adjustments to profit 3,876 4,021 34,607 Depreciation and amortization 255,180 3,286 13,504 271,971 4,298 276,269 276,269 Amount before income tax effect (2,504) (10,055) (22,357) Amounts of investments in equity in affiliates 7,700 7,700 7,700 7,700 Income tax effect 605 3,329 5,401 Increase in property,plant and equipment Total ¥ (1,898) ¥ (6,725) $ (16,946) and intangible assets 179,856 4,621 11,665 196,144 4,050 200,194 200,194 Share of other comprehensive income in affiliates (Loss) gain arising during the year ¥ (122) ¥ 167 ¥ 25 $ (1,089) Thousands of U.S. Dollars Reclassification adjustments to profit 17 33 151 2016 Total ¥ (105) ¥ 201 ¥ 25 $ (937) Reportable Segment Transportation Merchandise and Other Real Estate Total Other Total Reconciliations Consolidated Total other comprehensive (loss) income ¥ (18,681) ¥ 12,157 ¥ 5,582 $(166,794) Operating revenues: External customers $ 12,020,955 $ 2,059,553 $ 344,803 $ 14,425,312 $ 1,096,196 $ 15,521,508 $ 15,521,508 Intersegment transactions or transfers 105,491 80,580 245,276 431,357 1,073,678 1,505,035 $(1,505,035) 15.SEGMENT INFORMATION The Companies are composed of three reportable segments by nature Total $ 12,126,446 $ 2,140,133 $ 590,080 $ 14,856,669 $ 2,169,875 $ 17,026,553 $(1,505,035) $ 15,521,508 Under ASBJ Statement No. 17, "Accounting Standard for Segment of products and services: Transportation, Merchandise and Other and Real Information Disclosures" and ASBJ Guidance No. 20, "Guidance on Estate are disclosed. Segment profit (loss) $ 4,972,250 $ 78,098 $ 139,616 $ 5,189,964 $ (15,375) $ 5,174,589 $ (7,821) $ 5,166,758 Accounting Standard for Segment Information Disclosures," an entity is The Transportation segment manages the Companies' railway operations, Segment assets 41,508,598 939,812 3,056,642 45,505,062 1,896,035 47,401,098 (360,517) 47,040,571 such as the Tokaido Shinkansen and conventional railway operations in the required to report financial and descriptive information about its reportable Other: segments. Reportable segments are operating segments or aggregations of Tokai area, bus operations and others. The Merchandise and Other segment operating segments that meet specified criteria. Operating segments are includes a department store in JR Central Towers, retail sales in trains and Depreciation and amortization 1,986,375 31,080 111,401 2,128,866 35,142 2,164,008 2,164,008 components of an entity for which separate financial information is available stations and others. The Real Estate segment includes real estate leasing Amounts of investments in equity in affiliates 77,723 77,723 77,723 77,723 and such information is evaluated regularly by the chief operating decision business, such as station building leasing, and real estate sales in lots. Increase in property,plant and equipment maker in deciding how to allocate resources and in assessing performance. and intangible assets 1,808,473 70,133 217,303 2,095,919 32,455 2,128,383 2,128,383 Generally, segment information is required to be reported on the same basis 2.Methods of Measurement for the Amounts of Operating Revenues, Notes:1. Other includes business in hotel, travel, advertising, rolling stock production and construction which are not included in a reportable segment. 2. Reconciliations are as follows: as is used internally for evaluating operating segment performance and Profit (Loss), Assets, Liabilities and Other Items for Each Reportable (1) The amount of the elimination of intersegment transactions included in the reconciliations was ¥(876) million ($(7,821) thousand), ¥746 million and ¥1,847 million for the years ended March 31, 2016, 2015 and 2014, respectively. deciding how to allocate resources to operating segments. Segment (2) The reconciliations for segment assets include corporate assets, which are not allocated to a reportable segment, and the elimination of intersegment transactions. Corporate assets principally consist of investment securities and certificates of deposits. The amounts of corporate assets were ¥320,737 million ($2,863,723 thousand), ¥303,610 million and ¥158,436 million for the years ended March 31, 2016, 2015 and 2014, respectively. The accounting policies of each reportable segment are consistent The elimination of intersegment transactions consists of intersegment receivables and others. The amounts of the elimination were ¥361,116 million ($3,224,250 thousand), ¥368,979 million and ¥363,290 million for the years ended March 31, 2016, 1.Description of Reportable Segments with those disclosed in Note 3, “Summary of Significant Accounting 2015 and 2014, respectively. 3. Segment profit (loss) is reconciled to operating income in the consolidated statement of income. The Companies' reportable segments are those for which separate Policies.” Reportable segment profit represents operating income. Prices 4. Information about products and services was omitted since equivalent information was disclosed above. financial information is available and regular evaluation by the Companies' of intersegment transactions or transfers are determined based upon arm’s Information about geographical areas was not presented since the Companies have no significant overseas operations. management is being performed in order to decide how resources are length transactions. allocated among the Companies. 16.SUBSEQUENT EVENTS Appropriations of Retained Earnings The following appropriation of retained earnings as of March 31, 2016, was approved at the Company's shareholders’ meeting held on June 23, 2016: Millions of Yen Thousands of U.S. Dollars Year-end cash dividends, ¥65 ($0.58) per share ¥ 12,805 $ 114,330

70 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 71 Financial Section

Nonconsolidated Balance Sheet Nonconsolidated Statement of Income

Central Japan Railway Company March 31, 2016 Central Japan Railway Company Year Ended March 31, 2016 Thousands of Millions of Yen Millions of Yen Thousands of (Note 2) U.S. Dollars U.S. Dollars ASSETS (Note 2) (Note 2) (Note 2) 2016 2015 2016 2016 2015 2014 2016 CURRENT ASSETS: OPERATING REVENUES: Cash and cash equivalents ¥ 308,951 ¥ 127,277 $ 2,758,491 Time deposits 32,000 114,000 285,714 Railway business ¥ 1,349,713 ¥ 1,297,852 ¥ 1,268,528 $ 12,051,008 Trade receivables 39,604 35,710 353,607 Other 8,278 8,749 8,693 73,910 Supplies 11,176 10,677 99,785 Total operating revenues 1,357,991 1,306,602 1,277,222 12,124,919 Deferred tax assets (Note 8) 22,716 22,464 202,821 Prepaid expenses and other 34,149 38,116 304,901 Total current assets 448,598 348,245 4,005,339 OPERATING EXPENSES: Railway business (Note 3.i) 794,126 826,585 808,918 7,090,410 NONCURRENT ASSETS: 6,175 4,614 7,448 55,133 Investments and other assets: Other Investment securities 92,417 118,734 825,151 Total operating expenses 800,301 831,199 816,366 7,145,544 Investments in and advances to subsidiaries and affiliates (Note 5) 182,075 184,325 1,625,669 Deferred tax assets (Note 8) 134,382 134,898 1,199,839 Operating income 557,689 475,403 460,855 4,979,366 36,378 33,054 324,803 Prepaid expenses and other 445,253 471,012 3,975,473 Total investments and other assets OTHER INCOME (EXPENSES): Property, plant and equipment (Notes 3.e and 4): Railway business property 7,968,043 7,912,012 71,143,241 Interest and dividend income 2,899 3,151 3,145 25,883 Construction in progress 207,814 165,753 1,855,482 Interest expense (65,379) (72,148) (80,069) (583,741) Other 164,899 163,702 1,472,312 Other―net (Note 3.q) (3,426) (8,584) (13,190) (30,589) 8,340,757 8,241,468 74,471,044 Total Other expenses—net (65,907) (77,581) (90,113) (588,455) Accumulated depreciation (4,175,182) (4,047,266) (37,278,410) Net property, plant and equipment 4,165,574 4,194,202 37,192,625 INCOME BEFORE INCOME TAXES 491,782 397,821 370,741 4,390,910 Total noncurrent assets 4,610,827 4,665,215 41,168,098

TOTAL ASSETS ¥ 5,059,426 ¥ 5,013,460 $ 45,173,446 INCOME TAXES (Note 8): Current 155,787 125,607 130,225 1,390,955 Millions of Yen Thousands of U.S. Dollars Deferred 7,335 11,935 144 65,491 LIABILITIES AND EQUITY (Note 2) (Note 2) Total income taxes 163,123 137,542 130,369 1,456,455 2016 2015 2016 CURRENT LIABILITIES: Short-term loans payable (Note 6) ¥ 129,677 ¥ 126,210 $ 1,157,830 NET INCOME ¥ 328,658 ¥ 260,278 ¥ 240,371 $ 2,934,446 Current portion of long-term debt (Note 6) 109,171 135,930 974,741 Current portion of long-term accounts payable—railway facilities 77,665 86,073 693,437 Yen U.S. Dollars Trade payables 133,584 140,984 1,192,714 2016 2015 2014 2016 Provision for bonuses 21,431 21,164 191,348 PER SHARE OF COMMON STOCK (Note 3.p): Income taxes payable 100,071 65,361 893,491 Basic net income ¥ 1,668.31 ¥ 1,321.21 ¥ 1,220.16 $ 14.89 Prepaid fares received 30,138 27,643 269,089 Cash dividends applicable to the year 125.00 120.00 115.00 1.12 Inter-line fares received 260 7,293 2,321 Other 48,080 57,111 429,285 See notes to nonconsolidated financial statements. Total current liabilities 650,081 667,773 5,804,294 NONCURRENT LIABILITIES: Long-term debt (Note 6) 1,174,917 1,270,689 10,490,330 Long-term accounts payable—railway facilities 553,856 643,611 4,945,142 Provision for large scale renovation of the Shinkansen infrastructure (Note3.i) 245,000 280,000 2,187,500 Provision for retirement benefits 179,399 178,432 1,601,776 Other 36,262 41,855 323,767 Total noncurrent liabilities 2,189,435 2,414,589 19,548,526 CONTINGENCIES (Note 9) EQUITY (Notes 7 and 10): Common stock—authorized, 824,000,000 shares; issued, 206,000,000 shares in 2016 and 2015 112,000 112,000 1,000,000 Capital surplus 53,500 53,500 477,678 Retained earnings: Legal reserve 12,504 12,504 111,642 Unappropriated 2,124,277 1,819,258 18,966,758 Treasury stock—at cost, 8,999,156 shares in 2016 and 8,999,123 shares in 2015 (102,203) (102,203) (912,526) Unrealized gain on available-for-sale securities 19,831 36,037 177,062 Total equity 2,219,910 1,931,097 19,820,625

TOTAL LIABILITIES AND EQUITY ¥ 5,059,426 ¥ 5,013,460 $ 45,173,446 See notes to nonconsolidated financial statements

72 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 73 Financial Section

Nonconsolidated Statement of Changes in Equity Notes to Nonconsolidated Financial Statements

Central Japan Railway Company Year Ended March 31, 2016 Central Japan Railway Company Thousands Millions of Yen (Note 2) Outstanding Unrealized 1.INCORPORATION OF CENTRAL JAPAN RAILWAY Transport and Technology enacted on October 1, 2003, and Number of Retained Earnings Gain on COMPANY designated as the JRTT. In July 2005, the JRTT sold 600,000 shares Shares of Common Capital Legal Treasury Available-for-Sale Total Central Japan Railway Company (Tokai Ryokaku Tetsudo of the Company. On April 5, 2006, the JRTT also sold its remaining Common Stock Stock Surplus Reserve Unappropriated Stock Securities Equity Kabushiki Gaisha, the "Company") was incorporated on April 286,071 shares of the Company. As a result of this sale, all of the BALANCE, APRIL 1, 2013 197,001 ¥ 112,000 ¥ 53,500 ¥ 12,504 ¥ 1,346,832 ¥ (102,201) ¥ 13,749 ¥ 1,436,384 1, 1987, as a private business company, pursuant to the Law Company's shares held by the JRTT were sold. for Japanese National Railways Restructuring enacted upon the The shares above do not reflect the effect of the hundred-for-one Net income 240,371 240,371 resolution of the Japanese Diet. stock split effective as of October 1, 2012. Dividends from surplus, ¥110 per share (21,670) (21,670) The business of the Japanese National Railways (the "JNR") Purchase of treasury stock (0) (0) (0) was succeeded by the following newly established organizations: Net change in the year 6,240 6,240 seven railway companies including the Company, the former 2.BASIS OF PRESENTATION OF NONCONSOLIDATED Shinkansen Holding Corporation (a predecessor entity to the Railway BALANCE, MARCH 31, 2014 FINANCIAL STATEMENTS Development Fund (1991–1997), which was subsequently succeeded The accompanying nonconsolidated financial statements have (APRIL 1, 2014, as previously reported) 197,000 112,000 53,500 12,504 1,565,533 (102,201) 19,989 1,661,326 by the Corporation for Advanced Transport and Technology been prepared from the accounts maintained by the Company in Cumulative effect of accounting change (Note 3.j) 17,086 17,086 (the "CATT") (1997–2003) and in turn by the Japan Railway accordance with the provisions set forth in the Companies Act of Construction, Transport and Technology Agency (the "JRTT")), the Japan (the "Companies Act"), the Japanese Financial Instruments and BALANCE, APRIL 1, 2014 (as restated) 197,000 112,000 53,500 12,504 1,582,619 (102,201) 19,989 1,678,412 former Railway Telecommunication Co., Ltd., Railway Information Exchange Act, the Law for Railway Business Enterprise and their Systems Co., Ltd. and the Railway Technical Research Institute related accounting regulations, and in accordance with accounting Net income 260,278 260,278 (the "RTRI") which reorganized as a public interest corporation principles generally accepted in Japan, which are different in Dividends from surplus, ¥120 per share (23,640) (23,640) as of April 1, 2011. The JNR itself became the JNR Settlement certain respects as to the application and disclosure requirements of Purchase of treasury stock (0) (1) (1) Corporation (the "JNRSC"). All of the assets and liabilities of the International Financial Reporting Standards. Net change in the year 16,047 16,047 JNR were transferred to such organizations, including the JNRSC. As consolidated statements of cash flows and certain disclosures BALANCE, MARCH 31, 2015 197,000 112,000 53,500 12,504 1,819,258 (102,203) 36,037 1,931,097 Prior to December 1, 2001, the Law Concerning Passenger are presented in the consolidated financial statements of the Railway Companies and Japan Freight Railway Company (the Company, nonconsolidated statements of cash flows and certain Net income 328,658 328,658 "Law") required that authorization be obtained from the Minister disclosures are not presented herein in accordance with accounting Dividends from surplus, ¥120 per share (23,640) (23,640) of Land, Infrastructure, Transport and Tourism (the "Minister of principles generally accepted in Japan. Purchase of treasury stock (0) (0) (0) Transport") regarding fundamentals such as: (1) commencement Effective for the year ended March 31, 2014, the Japanese Net change in the year (16,205) (16,205) of business other than railway and its related business, (2) the Financial Instruments and Exchange Act and its related accounting appointment or dismissal of representative directors and corporate regulations were amended to allow an entity to not disclose certain BALANCE, MARCH 31, 2016 197,000 ¥ 112,000 ¥ 53,500 ¥ 12,504 ¥ 2,124,277 ¥ (102,203) ¥ 19,831 ¥ 2,219,910 auditors, (3) the issuance of new shares and bonds, (4) long‍term designated footnote information in its nonconsolidated financial loans payable, (5) amendments to the Articles of Incorporation, statements if the entity prepares and discloses consolidated financial (6) operating plans, (7) sales of material assets, (8) appropriations statements. Accordingly, the Company has omitted disclosure of Thousands of U.S. Dollars (Note 2) of earnings and (9) merger or dissolution. As of December 1, certain footnote information in the accompanying nonconsolidated Unrealized 2001, since the Law was revised and the Company was no longer financial statements. Retained Earnings Gain on Common Capital Legal Treasury Available-for-Sale Total in scope of the Law, the Company was not required to obtain the In preparing these nonconsolidated financial statements, certain Stock Surplus Reserve Unappropriated Stock Securities Equity aforementioned authorizations. reclassifications and rearrangements have been made to the BALANCE, MARCH 31, 2015 $ 1,000,000 $ 477,678 $ 111,642 $ 16,243,375 $ (912,526) $ 321,758 $ 17,241,937 On October 8, 1997, the Company's shares were listed on the nonconsolidated financial statements issued domestically in order Net income 2,934,446 2,934,446 Nagoya and Tokyo stock exchanges in Japan. The JNRSC, which to present them in a form which is more familiar to readers outside Dividends from surplus, $1.07 per share (211,071) (211,071) held all 2,240,000 of the Company's outstanding shares prior to the Japan. In addition, certain reclassifications have been made in the Purchase of treasury stock (0) (0) listing, sold 1,353,929 shares in the initial public offerings. Pursuant 2015 and 2014 nonconsolidated financial statements to conform to Net change in the year (144,687) (144,687) to the Law for Disposal of Debts and Liabilities of the JNRSC the classifications used in 2016. enacted in October 1998, the Company's shares held by the JNRSC The nonconsolidated financial statements are stated in Japanese BALANCE, MARCH 31, 2016 $ 1,000,000 $ 477,678 $ 111,642 $ 18,966,758 $ (912,526) $ 177,062 $ 19,820,625 were transferred to Japan Railway Construction Public Corporation yen, the currency of the country in which the Company is See notes to nonconsolidated financial statements. (the "JRCPC").On October 1, 2003, the CATT and the JRCPC were incorporated and operates. The translations of Japanese yen amounts fully integrated, pursuant to the Law of Japan Railway Construction, into U.S. dollar amounts are included solely for the convenience of

74 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 75 Financial Section

readers outside Japan and have been made at the rate of ¥112 to $1, the The range of useful lives is principally from 3 to 50 years for 2000, and the other related practical guidance, and were followed by derivatives for trading or speculative purposes. approximate rate of exchange as of March 31, 2016. Such translations buildings, from 3 to 60 years for structures, from 10 to 20 years for partial amendments from time to time through 2009. Foreign currency swaps, which qualify for hedge accounting and should not be construed as representations that the Japanese yen rolling stock and from 4 to 17 years for machinery and equipment. The revised accounting standard made certain amendments relating meet specific matching criteria, are not remeasured at market value, amounts could be converted into U.S. dollars at that or any other rate. Depreciation of certain railway structures, except for the Shinkansen to the method of attributing expected benefit to periods, the discount but the hedged debt is translated at the contracted rates of the foreign Japanese yen figures of less than one million yen are rounded down to railway facilities, is computed by the replacement‍accounting method. rate, and expected future salary increases. currency swaps. Interest rate swaps, which qualify for hedge accounting the nearest million of yen, except for per share information, and U.S. This accounting standard and the guidance above are effective for and meet specific matching criteria, are not remeasured at market value, dollar figures of less than one thousand U.S. dollars are also rounded f.Long-Lived Assets the beginning of annual periods beginning on or after April 1, 2014, or but the differential paid or received under the swap agreements is down to the nearest thousand of U.S. dollars, except for per share —The Company reviews its long‍lived assets for impairment for the beginning of annual periods beginning on or after April 1, 2015, recognized and included in interest expense. information. whenever events or changes in circumstances indicate the carrying subject to certain disclosure in March 2015, with earlier application amount of an asset or asset group may not be recoverable. An being permitted from the beginning of annual periods beginning on p.Per Share Information impairment loss is recognized if the carrying amount of an asset or or after April 1, 2013. However, no retrospective application of this —Basic net income per share is computed by dividing net income 3.SUMMARY OF SIGNIFICANT ACCOUNTING asset group exceeds the sum of the undiscounted future cash flows accounting standard to nonconsolidated financial statements in prior available to common shareholders by the weighted‍average number of POLICIES expected to result from the continued use and eventual disposition periods is required. common shares outstanding for the period. a.Nonconsolidation of the asset or asset group. The impairment loss would be measured The Company applied the revised accounting standard and guidance Cash dividends per share presented in the accompanying —The nonconsolidated financial statements do not include the as the amount by which the carrying amount of the asset exceeds its above, effective April 1, 2014. nonconsolidated statement of income are dividends applicable to the accounts of subsidiaries. Investments in subsidiaries and affiliates are recoverable amount, which is the higher of the discounted cash flows The Company changed the method of attributing the expected benefit respective years, including dividends to be paid after the end of the stated at cost. from the continued use and eventual disposition of the asset or the net to periods from a straight-line basis to a benefit formula basis, and year. selling price at disposition. the method of determining the discount rate and recorded the effect of b.Cash Equivalents above as of April 1, 2014, in retained earnings. As a result, retained q.Changes in Presentation (Nonconsolidated Statement of Income) —Cash equivalents are short‍term investments that are readily g.Software Costs earnings as of April 1, 2014, increased by ¥17,086 million. The effect —Prior to April 1, 2015, the loss on redemption of bonds was convertible into cash and that are exposed to insignificant risk of —Software costs are amortized by the straight‍line method over five of this change on the nonconsolidated statement of income for the year disclosed separately in the other income (expenses) section of the changes in value. Cash equivalents include time deposits, certificates years. ended March 31, 2015, was immaterial. nonconsolidated statement of income. Since during this fiscal year of deposits, commercial paper and others, all of which mature or ended March 31, 2016, the materiality of the amount decreased, such become due within three months of the date of acquisition. h.Deferred Charges k.Leases amount is included in the other-net in the other income (expense) —Bond issuance costs are fully charged to income as incurred. —Lease assets of finance leases that were not deemed to transfer section. The amounts of loss on redemption of bonds separately c.Supplies ownership of the leased property are depreciated and amortized by the disclosed for the years ended March 31, 2015 and 2014 were ¥13,676 —Supplies are stated at the lower of cost, determined by the i.Provision for Large-Scale Renovation of the Shinkansen Infrastructure straight‍line method over the lease period. million and ¥13,357 million, respectively. moving‍average cost method, or net selling value. —Provision for large scale renovation of the Shinkansen infrastructure is provided based on the Nationwide Shinkansen Railway l.Income Taxes r.Accounting Changes and Error Corrections d.Investment Securities Development Law. In accordance with the Nationwide Shinkansen —The provision for income taxes is computed based on the pretax —In December 2009, the ASBJ issued ASBJ Statement No. 24, —All investment securities are classified and accounted for, Railway Development Law and Regulations, the Company reversed the income included in the nonconsolidated statement of income. The "Accounting Standard for Accounting Changes and Error Corrections" depending on management's intent, as available‍for‍sale securities, provision in the amount of ¥35,000 million ($312,500 thousand) for asset and liability approach is used to recognize deferred tax assets and ASBJ Guidance No. 24, "Guidance on Accounting Standard for which are principally comprised of investment securities, and are the year ended March 31, 2016 and ¥35,000 million for the years ended and liabilities for the expected future tax consequences of temporary Accounting Changes and Error Corrections." Accounting treatments reported at fair value, with unrealized gain and loss, net of applicable March 31, 2015 and 2014. differences between the carrying amounts and the tax bases of assets under this standard and guidance are as follows: (1) Changes in taxes, reported in a separate component of equity. and liabilities. Deferred taxes are measured by applying currently Accounting Policies—When a new accounting policy is applied Nonmarketable available‍for‍sale securities are stated at cost j.Retirement and Pension Plans enacted tax laws to the temporary differences. following revision of an accounting standard, the new policy is applied determined by the moving‍average cost method. For other-than- —The Company has an unfunded retirement plan covering retrospectively unless the revised accounting standard includes specific temporary declines in fair value, investment securities are reduced to substantially all of its employees. The provision for retirement benefits m.Appropriations of Retained Earnings transitional provisions, in which case the entity shall comply with the net realizable value by a charge to income. is calculated based on the projected benefit obligations at the balance —Appropriations of retained earnings are reflected in the specific transitional provisions. (2) Changes in Presentation—When the sheet date. The projected benefit obligations are attributed to periods nonconsolidated financial statements for the following year upon presentation of financial statements is changed, prior-period financial e.Property, Plant and Equipment on a benefit formula basis. Actuarial gains and losses are amortized shareholders' approval. statements are reclassified in accordance with the new presentation. (3) —Property, plant and equipment are stated at cost. Certain on a straight-line basis over five years, which is within the average Changes in Accounting Estimates—A change in an accounting estimate contributions in aid for construction of railways and other property are remaining service period. Accounting treatments for unrecognized n.Consumption Tax is accounted for in the period of the change if the change affects that deducted directly from the cost of the related assets. actuarial gains and losses in the nonconsolidated financial statements —Unless otherwise stated, all figures are presented net of tax. period only, and is accounted for prospectively if the change affects The accumulated contributions deducted from the cost of property, are different from those in the consolidated financial statements. both the period of the change and future periods. (4) Corrections of plant and equipment as of March 31, 2016 and 2015 amounted to The Accounting Standards Board of Japan (the “ASBJ”) issued ASBJ o.Derivatives and Hedging Activities Prior-Period Errors—When an error in prior-period financial statements ¥271,895 million ($2,427,633 thousand), and ¥269,450 million, Statement No. 26, "Accounting Standard for Retirement Benefits" — The Company uses derivative financial instruments mainly to is discovered, those statements are restated. respectively. in May 2012 and ASBJ Guidance No. 25, "Guidance on Accounting manage its exposure to fluctuations in foreign exchange and in interest Depreciation is computed by the declining‍balance method over the Standard for Retirement Benefits” in March 2015, which replaced the rates. Foreign currency swaps are utilized by the Company to reduce estimated useful lives of the assets. Additional depreciation is provided accounting standard for retirement benefits that had been issued by the foreign exchange risks. Interest rate swaps are utilized by the Company for the Shinkansen rolling stock based on kilometers traveled. Business Accounting Council in 1998 with an effective date of April 1, to reduce interest rate risks. The Company does not enter into

76 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 77 Financial Section

4.PROPERTY, PLANT AND EQUIPMENT additional paid-in capital and legal reserve may be reversed without exceed the amount available for distribution to the shareholders Property, plant and equipment as of March 31, 2016 and 2015, consisted of the following: limitation. The Companies Act also provides that common stock, which is determined by a specific formula. legal reserve, additional paid-in capital, other capital surplus and Under the Companies Act, stock acquisition rights are presented Thousands of retained earnings—unappropriated can be transferred among the as a separate component of equity. Millions of Yen U.S. Dollars accounts within equity under certain conditions upon resolution of The Companies Act also provides that companies can purchase the shareholders. both treasury stock acquisition rights and treasury stock. Such 2016 2015 2016 c.Treasury Stock and Treasury Stock Acquisition Rights treasury stock acquisition rights are presented as a separate Land ¥ 2,327,505 ¥ 2,326,793 $ 20,781,294 The Companies Act also provides for companies to purchase component of equity or deducted directly from stock acquisition treasury stock and dispose of such treasury stock by resolution of the rights. Buildings 542,517 536,616 4,843,901 Board of Directors. The amount of treasury stock purchased cannot Structures 3,746,906 3,722,682 33,454,517 Rolling stock 885,509 874,398 7,906,330 Machinery and equipment 628,886 613,900 5,615,053 8.INCOME TAXES Lease assets 1,617 1,323 14,437 The Company is subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of Construction in progress 207,814 165,753 1,855,482 approximately 32.7% for the year ended March 31, 2016, 35.2% for the year ended March 31, 2015, and 37.6% for the year ended March 31, 2014. The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities as of March 31, 2016 and 2015, were as Total 8,340,757 8,241,468 74,471,044 follows: Accumulated depreciation (4,175,182) (4,047,266) (37,278,410) Thousands of Millions of Yen U.S. Dollars Net property, plant and equipment ¥ 4,165,574 ¥ 4,194,202 $ 37,192,625 2016 2015 2016 Deferred tax assets: 5.INVESTMENTS IN SUBSIDIARIES AND AFFILIATES Depreciation and amortization ¥ 68,891 ¥ 69,311 $ 615,098 The carrying amounts and aggregate fair values of investment securities in subsidiaries whose fair values are available as of March 31, 2016 and 2015, were as follows: Provision for retirement benefits 54,457 57,038 486,223 Software 9,586 10,592 85,589 Millions of Yen Provision for bonuses 6,557 6,920 58,544 2016 2015 Accrued railway usage charges 3,491 3,920 31,169 Carrying Fair Unrealized Carrying Fair Unrealized Other 39,008 41,980 348,285 Amount Value Loss Amount Value Loss Total Subsidiaries ¥ 27,079 ¥ 20,365 ¥ (6,713) ¥ 27,079 ¥ 25,291 ¥ (1,787) 181,992 189,763 1,624,928 Less valuation allowance (14,028) (14,775) (125,250) Deferred tax assets Thousands of U.S. Dollars 167,963 174,988 1,499,669 2016 Deferred tax liabilities: Carrying Fair Unrealized Amount Value Loss Unrealized gain on available-for-sale securities 7,046 14,118 62,910 Subsidiaries $ 241,776 $ 181,830 $ (59,937) Deferred gain on transfer of certain fixed assets 3,590 3,248 32,053 The carrying amounts of investments in subsidiaries and affiliated companies whose fair value cannot be readily determined as of March 31, 2016 and Reserve for special depreciation 186 249 1,660 2015, were as follows: Other 41 9 366 Thousands of Deferred tax liabilities 10,865 17,626 97,008 Millions of Yen U.S. Dollars 2016 2015 2016 Net deferred tax assets ¥ 157,098 ¥ 157,362 $ 1,402,660 Subsidiaries ¥ 119,962 ¥ 119,972 $ 1,071,089 Affiliates 2,133 2,133 19,044 A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying nonconsolidated statement of income for the year ended March 31, 2014, was as follows: 2014 Normal effective statutory tax rate 37.6% 6.SHORT‑TERM LOANS PAYABLE AND LONG‍TERM (4) the term of service of the directors being prescribed as one year Deduction of R&D promotion tax system (3.0) DEBT rather than the normal two-year term by its articles of incorporation, The Company has credit commitments from banks. Total the Board of Directors may declare dividends (except for dividends- Other—net 0.6 in-kind) at any time during the fiscal year if the company has unused credit available to the Company as of March 31, 2016, was Actual effective tax rate 35.2% ¥100,000 million ($892,857 thousand). prescribed so in its articles of incorporation. All assets of the Company were pledged for the secured bonds of The Companies Act permits companies to distribute dividends‍in‍kind ¥158,500 million ($1,415,178 thousand), which the Company entered (noncash assets) to shareholders subject to a certain limitation and Since the difference between the normal effective statutory tax rate and the actual effective tax rate was not significant, reconciliations were not into as debt assumption agreements and have been derecognized additional requirements. presented for the years ended March 31, 2016 and 2015. in the nonconsolidated balance sheet (see Note 9), as an enterprise Semiannual interim dividends may also be paid once a year upon New tax reform laws enacted in 2016 in Japan changed the normal effective statutory tax rate for the fiscal year beginning on or after April 1, mortgage, which gives the holder thereof a security interest in all resolution by the Board of Directors if the articles of incorporation 2016 and 2017, from approximately 31.9% to 30.6% and the normal effective statutory tax rate for the fiscal year beginning on or after April 1, assets junior to that of other present or future secured creditors, but of the company so stipulate. The Companies Act provides certain 2018, to approximately 30.3%. The effect of these changes was to decrease deferred tax assets, net of deferred tax liabilities, in the nonconsolidated senior to that of general creditors. limitations on the amounts available for dividends or the purchase balance sheet as of March 31, 2016, by ¥7,772 million ($69,392 thousand) and to increase income taxes - deferred in the nonconsolidated statement of treasury stock. The limitation is defined as the amount available of income for the year then ended by ¥8,144 million ($72,714 thousand). 7.EQUITY for distribution to the shareholders, but the amount of equity after New tax reform laws enacted in 2015 in Japan changed the normal effective statutory tax rate for the fiscal year beginning on or after April 1, Japanese companies are subject to the Companies Act. The dividends must be maintained at no less than ¥3 million. 2015, from approximately 35.2% to 32.7% and the normal effective statutory tax rate for the fiscal year beginning on or after April 1, 2016, to significant provisions in the Companies Act that affect financial and b.Increases/Decreases and Transfer of Common Stock, Reserve approximately 31.9%. The effect of these changes was to decrease deferred tax assets, net of deferred tax liabilities, in the nonconsolidated balance accounting matters are summarized below: and Surplus sheet as of March 31, 2015, by ¥15,375 million and to increase income taxes - deferred in the nonconsolidated statement of income for the year a.Dividends The Companies Act requires that an amount equal to 10% of then ended by ¥16,836 million. Under the Companies Act, companies can pay dividends at any dividends must be appropriated as a legal reserve (a component New tax reform laws enacted in 2014 in Japan changed the normal effective statutory tax rate for the fiscal year beginning on or after April 1, time during the fiscal year in addition to the year‍end dividend upon of retained earnings) or as additional paid-in capital (a component 2014, from approximately 37.6% to 35.2%. The effect of this change on the nonconsolidated statement of income for the year ended March 31, resolution at the shareholders’ meeting. For companies that meet of capital surplus), depending on the equity account charged 2014 was immaterial. certain criteria including (1) having a Board of Directors, (2) having upon the payment of such dividends, until the aggregate amount independent auditors, (3) having an Audit & Supervisory Board, and of legal reserve and additional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount of

78 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 79 Financial Section

9.CONTINGENCIES Deloitte Touche Tohmatsu LLC As of March 31, 2016, the Company has joint and several obligations with the RTRI to make payments on long‍term debt of ¥11,152 million JP TOWER NAGOYA ($99,571 thousand) by the RTRI. The proceeds are being used for the enhancement of technology development for the Maglev system. 1-1-1 Meieki, Nakamura-ku The Company also had contingent liabilities for guarantees of the loans of a certain subsidiary amounting to ¥5,265 million ($47,008 thousand) Nagoya, Aichi 450-8530 as of March 31, 2016. Japan The Company has entrusted cash for the repayment of a portion of the bonds based on debt assumption agreements with financial institutions; however, the Company is not released from the primary responsibility for the liability by these agreements. The outstanding bonds covered by Tel: +81(52)565 5511 Fax:+81(52)569 1394 these agreements as of March 31, 2016, were as follows: www.deloitte.com/jp

Thousands of INDEPENDENT AUDITOR’S REPORT Millions of Yen U.S. Dollars 2016 2016 Secured 3.95% bonds due 2016 ¥ 29,000 $ 258,928 To the Board of Directors of of the consolidated and nonconsolidated financial Secured 2.825% bonds due 2017 49,800 444,642 Central Japan Railway Company: statements, whether due to fraud or error. In making those Secured 2.18% bonds due 2018 29,900 266,964 We have audited the accompanying consolidated risk assessments, the auditor considers internal control Secured 2.6% bonds due 2020 49,800 444,642 balance sheet of Central Japan Railway Company and its relevant to the entity’s preparation and fair presentation of Unsecured 2.39% bonds due 2022 18,995 169,598 consolidated subsidiaries as of March 31, 2016, and the the consolidated and nonconsolidated financial statements Unsecured 2.2% bonds due 2022 18,200 162,500 related consolidated statements of income, comprehensive in order to design audit procedures that are appropriate in Unsecured 1.74% bonds due 2022 20,000 178,571 income, changes in equity, and cash flows for the year the circumstances, but not for the purpose of expressing an Unsecured 1.42% bonds due 2017 10,000 89,285 then ended, and a summary of significant accounting opinion on the effectiveness of the entity’s internal control. Unsecured 1.15% bonds due 2022 25,000 223,214 policies and other explanatory information, and the An audit also includes evaluating the appropriateness Unsecured 1.31% bonds due 2033 10,000 89,285 accompanying nonconsolidated balance sheet of Central of accounting policies used and the reasonableness of Unsecured 2.015% bonds due 2023 9,000 80,357 Japan Railway Company as of March 31, 2016, and the accounting estimates made by management, as well as Unsecured 2.2% bonds due 2024 9,900 88,392 related nonconsolidated statements of income, and changes in evaluating the overall presentation of the consolidated and Unsecured 2.19% bonds due 2019 9,900 88,392 equity for the year then ended, and a summary of significant nonconsolidated financial statements. Unsecured 1.875% bonds due 2019 20,000 178,571 accounting policies and other explanatory information, all We believe that the audit evidence we have obtained is Unsecured 2.21% bonds due 2024 9,650 86,160 expressed in Japanese yen. sufficient and appropriate to provide a basis for our audit Unsecured 1.775% bonds due 2020 20,000 178,571 opinion. Unsecured 1.77% bonds due 2017 20,000 178,571 Management’s Responsibility for the Consolidated and Unsecured 2.14% bonds due 2018 18,400 164,285 Nonconsolidated Financial Statements Opinion Unsecured 2.405% bonds due 2026 9,900 88,392 Management is responsible for the preparation and fair In our opinion: presentation of these consolidated and nonconsolidated (1)The consolidated financial statements referred to above Unsecured 2% bonds due 2016 30,000 267,857 financial statements in accordance with accounting principles present fairly, in all material respects, the consolidated Unsecured 2.04% bonds due 2018 18,800 167,857 generally accepted in Japan, and for such internal control financial position of Central Japan Railway Company Unsecured 1.88% bonds due 2016 20,000 178,571 as management determines is necessary to enable the and its consolidated subsidiaries as of March 31, 2016, Unsecured 1.78% bonds due 2017 20,000 178,571 preparation of consolidated and nonconsolidated financial and the consolidated results of their operations and their Unsecured 1.78% bonds due 2017 20,000 178,571 statements that are free from material misstatement, whether cash flows for the year then ended in accordance with Unsecured 1.75% bonds due 2017 20,000 178,571 due to fraud or error. accounting principles generally accepted in Japan. Unsecured 1.69% bonds due 2018 10,000 89,285 (2)The nonconsolidated financial statements referred to Unsecured 1.79% bonds due 2020 19,900 177,678 Auditor’s Responsibility above present fairly, in all material respects, the financial Unsecured 1.83% bonds due 2018 10,000 89,285 Our responsibility is to express an opinion on these position of Central Japan Railway Company as of March Unsecured 1.557% bonds due 2019 19,800 176,785 consolidated and nonconsolidated financial statements 31, 2016, and the results of its operations for the year then Unsecured 1.667% bonds due 2019 10,000 89,285 based on our audit. We conducted our audit in accordance ended in accordance with accounting principles generally Unsecured 1.472% bonds due 2020 14,100 125,892 with auditing standards generally accepted in Japan. Those accepted in Japan. Total ¥ 600,045 $ 5,357,544 standards require that we plan and perform the audit to obtain Based on legal defeasance agreements with special purpose entities, the Company has transferred the debt repayment obligations for certain reasonable assurance about whether the consolidated and Convenience Translation long‍term accounts payable—railway facilities to the special purpose entities, and has provided the special purpose entities with Japanese national government bonds or cash for the payment of principal and interest on the long‍term accounts payable—railway facilities. As a result of these nonconsolidated financial statements are free from material Our audit also comprehended the translation of Japanese transactions, the balance of long‍term accounts payable—railway facilities was reduced by ¥79,632 million ($711,000 thousand) as of March 31, misstatement. yen amounts into U.S. dollar amounts and, in our opinion, 2016. An audit involves performing procedures to obtain such translation has been made in accordance with the basis audit evidence about the amounts and disclosures in the stated in Note 2 to the consolidated and nonconsolidated 10. SUBSEQUENT EVENTS Appropriations of Retained Earnings consolidated and nonconsolidated financial statements. financial statements. Such U.S. dollar amounts are presented The following appropriation of retained earnings as of March 31, 2016, was approved at the Company's shareholders' meeting held on June 23, The procedures selected depend on the auditor’s judgment, solely for the convenience of readers outside Japan. 2016: including the assessment of the risks of material misstatement Thousands of Millions of Yen U.S. Dollars Year-end cash dividends, ¥65 ($0.58) per share ¥ 12,805 $ 114,330

June 23, 2016 Member of Deloitte Touche Tohmatsu Limited

80 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 81 Appendices

Appendices

Financial and Transportation Data

Shifts in Revenues/Income (Consolidated) Transportation revenues Rolling Stock kilometers Top 10 Stations in terms of Number of Average Daily Shifts in EBITDA (consolidated) Passengers (FY2015) Net income attributable to (Thousand passengers/day) (Billion yen) Operating Revenues Operating Income Ordinary income owners of the parent Shinkansen Total Ordinary Tickets Commuter Passes Conventional Lines Total Shinkansen Conventional Lines 200 900 (Million kilometers) , 205 821.0 (Billion yen) 1,738.4 1,736.0 (Billion yen) 1,192.0 1,168 1 201 778.1 1,200 1,143.4 1,200 1,123 1,129 1,146 800 1,700 1,113.8 770.8 1,652.5 1,672.2 1,100 1,069.6 1,011.0 1,175.2 700 1,126.5 1,000 954 981 150 662.9 666.3 1,600 1,000 1,096.7 906 913 930 640.6 629.5 1,585.3 1,053.0 617.7 607.9 900 994.4 600 1,508.3 561.6 1,500 800 800 500 20 16.6 16.6 17.1 16.9 16.8 100 97 1,400 10 600 400 0 78 1,300 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 66 300 400 59 50 Conventional Lines 200 1,200 217 217 216 214 220 37 36 34 33 32 (Billion yen) 200 120 100 1,100 97.0 99.4 100.9 99.7 102.6 100 0 0 0 1,000 80 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 Nagoya Tok yo Shin-Osaka Kanayama Shizuoka Kyoto Hamamatsu Shinagawa Kariya Shin-Yokohama ’07.3 ’08.3 ’09.3 ’10.3 ’11.3 ’12.3’13.3 ’14.3 ’15.3 ’16.3 62.9 65.3 66.6 65.7 68.7 60 Note: The figures for Tokyo, Shin-Osaka, Kyoto, Shinagawa, and Note: EBITDA figures are calculated as the sum of operating 900 Shin-Yokohama Stations indicate Shinkansen passengers only income and depreciation and amortization 40 34.0 34.0 34.3 34.0 33.9

800 20 Shifts in Capital Investment Amounts (Non-consolidated) 0 700 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 (Billion yen) Capital Investment Amounts (Excluding the Chuo Shinkansen) Capital Investment Amounts (Chuo Shinkansen) 400 600 578.6 577.0 Passenger Ridership 506.5 362.0 494.6 511.4 500 520.0 350 426.1 428.1 Shinkansen Total Ordinary Tickets Commuter Passes 404.2 400 372.5 (Million passengers) 328.0 337.4 155 157 163 298.4 301.6 363.0 160 143 149 300 288.8 300 263.8 264.1 140 277.4 255.6 265.2 120 140 143 148 257.2259.1 199.9 135 250 200 129 244.8 132.7 100 229.0 80 211.1 100 209.8 20 14 14 15 14 15 200 197.8 10 174.3 0 166.9 164.8 171.3 172.6 169.8 0 159.5 159.2 156.8 157.6 161.5 155.5 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 ’17.3 151.5 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 150 (plan) 128.5 128.3 Note: Net income attributable to the parent before March 2015 describes the net income in the year-end financial Conventional Lines 120.3 results. The planned figures are as of the publication of the financial report for FY2015 (Million passengers) 100 395 401 400 384 387 391 50.1 300 257 50 Shifts in Revenues/Income (Non-Consolidated) 254 253 260 262

200 Operating Revenues Operating Income Ordinary income Net income 130 133 135 134 138 0 ’88.3 ’89.3’90.3 ’91.3 ’92.3 ’93.3 ’94.3 ’95.3 ’96.3 ’97.3 ’98.3 ’99.3 ’00.3 ’01.3 ’02.3 ’03.3 ’04.3’05.3 ’06.3 ’07.3 ’08.3 ’09.3 ’10.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 ’17.3 100 (plan) (Billion yen) Note: The planned figures are as of the publication of March 2016 1,400 1,357.9 1,358.0 0 1,306.6 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 1,300 1,277.2 1,245.0 Shifts in Total Long-Term Debt and Payables (Non-Consolidated) Long-Term Accounts Payable - Railway Facilities Latent Liabilities Born by the Shinkansen Leasing System 1,200 Passenger kilometers 1,184.5 (Billion yen) Long-Term Debt Corporate Bonds Inherited Liabilities Average Interest Rate 6,000 1,100 Shinkansen Total Ordinary Tickets Commuter Passes 5,456.2 5,422.3 5,392.0 (Million passenger-kilometers) 5,269.3 5,346.3 5,278.5 1,000 5,223.0 5,232.7 5,195.6 5,164.3 (%) 55,000 52,166 5,045.2 48,873 50,134 5,000 4,922.2 8.0 50,000 46,930 4,801.0 900 44,303 45,000 50,734 4,560.8 47,429 48,744 40,000 45,540 4,289.3 800 42,915 4,125.5 35,000 4,000 6.81 3,943.4 7.0 700 2,000 1,389 1,391 1,444 1,390 1,431 6.53 3,665.8 1,000 6.35 6.39 3,455.7 3,415.6 6.08 6.19 3,260.1 600 0 6.01 3,177.6 3,117.0 557.6 3,000 5.90 3,001.5 6.0 553.0 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 5.84 2,829.1 500 475.4 2,614.9 460.8 490.5 496.0 Conventional Lines 5.43 399.1 397.7 (Million passenger-kilometers) 5.21 5.16 2,351.7 400 371.8 5.08 5.01 2,136.3 345.5 10,000 9,038 9,229 9,069 9,302 2,000 4.91 5.0 328.6 8,952 4.75 1,915.6 1,908.6 302.4 349.0 4.62 300 260.2 8,000 4.51 239.8 240.3 4.30 6,000 5,490 5,463 5,588 5,481 5,568 200 187.8 4.08 1,000 3.91 4.0 120.8 4,000 3.71 100 3.54 2,000 3,462 3,575 3,641 3,587 3,734 3.36 3.24 3.14 3.13 3.10 3.12 0 0 0 3.0 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 ’17.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 ’88.3 ’89.3 ’90.3 ’91.3 ’92.3 ’93.3 ’94.3 ’95.3 ’96.3 ’97.3 ’98.3 ’99.3 ’00.3 ’01.3 ’02.3 ’03.3 ’04.3 ’05.3 ’06.3 ’07.3 ’08.3 ’09.3 ’10.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 ’17.3 (plan) (plan) Note: The planned figures are as of the publication of the financial report for FY2015 Note: The planned figures are as of the publication of the financial report for FY2015

82 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 83 Appendices

Appendices

Operating Environment International Comparison of Railway Operators*1

Comparison between the Shinkansen and Airline Transportation Operating Kilometers Passenger-kilometers (Kilometers) (Million passenger-kilometers) 40,000 100,000 Services (As of April 2016) 33,449 34,082 86,094 *2 79,906 Tokyo ~ Osaka Okayama Hiroshima Fukuoka 30,013 80,000 30,000 (Operating Kilometers) (552.6km) (732.9km) (894.2km) (1,174.9km) 61,467 59,171 *3 *4 60,000 1 Shinkansen 2 hr 22 min 3 hr 09 min 3 hr 44 min 4 hr 47 min Travel Time* 20,000 *3 2 15,748 Airplane* 1 hr 05 min (approx. 2 hr 40 min ) 1 hr 10 min (approx. 3 hr ) 1 hr 20 min (approx. 3 hr 10 min ) 1 hr 35 min (approx. 2 hr 50 min ) 40,000

Number of services 5 Shinkansen* 250 128 99 67 and departures/ 10,000 20,000 10,331 arrivals per day Airplane 108 20 34 110 1,971 *1. Travel times are in the case of the fastest service 0 0 *2. Travel times in parentheses include transfer and access times between city centers and airports JR Central SNCF DB AG ATOC Amtrak JR Central SNCF DB AG ATOC Amtrak *3. Travel time between Tokyo and Shin-Osaka stations *4. Travel time between Tokyo and Hakata stations (Japan) (France) (Germany) (U.K.) (U.S.) (Japan) (France) (Germany) (U.K.) (U.S.) *5. Number of services excludes extra services

Number of Employees*4 Average Traffic Density (Passenger-kilometers/day/ Market Share (against Airlines) (People) Operating Kilometers) 300,000 293,765 80,000 JR Central JR West 85,215 250,000 Tokyo Nagoya Osaka Okayama Hiroshima Fukuoka 60,000 200,000 *5 Tokyo area–Nagoya area Railway Airlines 151,808 73 thousand passengers/day 100% 150,000 40,000

100,000 20,000 50,000 35,261*3 10,294 Tokyo area–Osaka area 7,859 6,545 85% 15% 18,164 20,047 136 thousand passengers/day 830 0 0 JR Central SNCF DB AG ATOC Amtrak JR Central SNCF DB AG ATOC Amtrak Tokyo area–Okayama (Japan) (France) (Germany) (U.K.) (U.S.) (Japan) (France) (Germany) (U.K.) (U.S.) 9 thousand passengers/day 69% 31% Tokyo area–Hiroshima 15 thousand passengers/day 6 6 67% 33% Transportation Revenues* Transportation Revenues per Operating Kilometer* Tokyo area–Fukuoka (Million USD) (Thousand USD/km) 29 thousand passengers/day 10% 90% 25,000 23,258 6,000 5,870

Note: Market share is calculated by JR Central based on the inter-prefectural data of the inter-Regional Passenger Mobility Survey, published by the Ministry of Land, infrastructure, Transport and Tourism for FY2014. 20,000 Tokyo area: Tokyo, Kanagawa, Chiba, Saitama, Ibaraki/Nagoya area: Aichi, Gifu, Mie/Osaka area: Osaka, Kyoto, Hyogo, Nara 17,027 4,000 15,000 13,255 11,560

10,000 2,000

5,000 840 570 700 1,507 40 0 0 JR Central SNCF DB AG ATOC Amtrak JR Central SNCF DB AG ATOC Amtrak International Comparison of Railway Operators (Japan) (France) (Germany) (U.K.) (U.S.) (Japan) (France) (Germany) (U.K.) (U.S.)

International Comparison in Fundamentals Number of Passengers Transportation Revenues per Employee*6 (Thousand passengers) 2,008,020 (Thousand USD/employee) GDP per Capita (As of 2015) Population Density (As of 2014) 2,000,000 800 (USD) (Person/km2) 640 45,000 400 1,562,060 42,850 1,500,000 600 38,378 36,789 38,378 341 35,162 1,090,462 300 1,000,000 400 380 30,000 265 226 550,930 200 500,000 200 110 80 80 15,000 29,141 116 0 0 100 JR Central SNCF DB AG ATOC Amtrak JR Central SNCF DB AG ATOC Amtrak (Japan) (France) (Germany) (U.K.) (U.S.) (Japan) (France) (Germany) (U.K.) (U.S.) 33 0 0 Japan U.K. Germany France U.S. Japan U.K. Germany France U.S. Source: Statistique Internationale des Chemins de fer (Union Internationale de Chemins de fer) data is as of March 31, 2016. The others are the average of the period indicated under *1 *1. Period is as below *5.Sum of the data of SNCF and RFF Note:Figures for Japan and the U.S. are forecast figures Source: OECD Note:2012 only for the U.S. Source: Statistics Bureau, the Ministry of Internal Affairs and Communications JR Central: April 2015 - March 2016 SNCF: January 2011 - December 2011 DB AG: January 2013 - *6.JR Central figures converted to USD using the exchange rate set on March 31, 2016. Figures for December 2013 ATOC: April 2013 - March 2014 Amtrak: October 2009 - September 2010 other European companies are converted to JPY using the exchange rate set on the following dates, *2.Data for Réseau Ferré de France (RFF) and then converted to USD. *3.Data for Network Rail Ltd. SNCF: December 30, 2011 DB AG: December 30, 2013 ATOC: March 31, 2014 *4.Total number of employees including staff for freight transport, affiliated businesses, etc. JR Central

84 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 85 Appendices

Appendices

Financial Data Comparison of Three JR Companies (Consolidated)*1 Stock Information

Shifts in JR Central’s Stock Price

(yen) (yen) Return on Equity Operating Income/Total Assets Current Ratio 2,600,000 26,000

(%) (%) (%) 20 12 100 2,400,000 24,000 11.0 83.0 15.6 2,200,000 22,000 66.5 65.1 2,000,000 20,000 10.4 10.2 10 6 50 6.3 6.4 1,800,000 18,000

1,600,000 16,000

1,400,000 14,000 0 0 0 JR Central JR East JR West JR Central JR East JR West JR Central JR East JR West 1,200,000 12,000

Net Income/Operating Revenues Operating Income/Operating Revenues Earnings per Share 1,000,000 10,000

(%) (%) (Yen) 20 19.4 40 1,800 1,714 800,000 8,000 33.3 600,000 6,000

400,000 4,000 10 20 900 8.6 17.0 Jan. Mar. May Jul. Sep. Nov. Jan. Mar. May Jul. Sep. Nov. Jan. Mar. May Jul. Sep. Nov. Jan. Mar. May Jul. Sep. Nov. Jan. Mar. May Jul. Sep. Nov. Jan. Mar. May Jul. Sep. Nov. Jan. Mar. May Jul. Sep. Nov. Jan. Mar. May. Jul. Sep. Nov. Jan. Mar. May. 625 2008 2008 2008 2008 2008 2008 2009 2009 2009 2009 2009 2009 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 2011 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 2014 2015 2015 2015 2015 2015 2015 2016 2016 2016 5.9 12.5 443 Note: On October 1, 2012, the Company implemented a 100-for-1 stock split and employed a share unit system by which one share unit equals 100 shares. Please refer to the left axis for stock prices before September 2012 and the right axis for stock prices after October 2012.

0.0 0 0 JR Central JR East JR West JR Central JR East JR West JR Central JR East JR West Major Shareholders

Asset Turnover Interest Coverage Ratio*2 Shareholders’ Equity per Share Name Number of shares held Percentage of total issued shares

Mizuho Bank, Ltd. 9,783,300 4.75% (times) (times) (Yen) 11,770 1.0 10 12,000 Japan Trustee Services Bank, Ltd. (Trust Account) 8.9 8,898,900 4.32% The Master Trust Bank of Japan, Ltd. (Trust Account) 8,164,700 3.96% 7.5 The Nomura Trust and Banking Co., Ltd. (Holder in Retirement Benefit Trust for The Bank of Tokyo-Mitsubishi UFJ, Ltd.) 7,125,000 3.46% 6.4 The Bank of Tokyo-Mitsubishi UFJ, Ltd. 6,678,100 3.24% 6,232 0.5 0.5 5 6,000 Nippon Life Insurance Company 5,000,000 2.43%

0.4 4,534 Toyota Motor Corporation 4,000,000 1.94% 0.3 The Dai-ichi Life Insurance Company, Ltd 3,423,900 1.66%

Sumitomo Mitsui Banking Corporation 3,230,000 1.57%

The Master Trust Bank of Japan, Ltd. (Trust Account for Retirement Benefits, Mitsubishi Corporation Account) 3,000,000 1.46% 0.0 0 0 The Norinchukin Bank 3,000,000 1.46% JR Central JR East JR West JR Central JR East JR West JR Central JR East JR West Total 62,303,900 30.24% Note:In addition to the above, JR Central holds 8,999,156 treasury stocks. (As of March 31, 2016) Financial Leverage Total Long-Term Debt and Long-Term Payables / Operating Revenues Dividend Payout Ratio

(times) (times) (%) 30.4 4 1.2 30 1.1 1.1

3.2 3.2 JR Central has been included in the “FTSE4 Good Index Series” and “ECPI Indices”, 20.8 which are leading indexes for socially responsible investment (SRI) and are used for investment decisions by investors. 2.3 0.7 2 0.6 15

7.3 URL: http://english.jr-central.co.jp Tel: +81-52-564-2413, Fax: +81-52-587-1300 [FTSE4Good Index Series] [ECPI Indices] “FTSE4 Good Index Series” is a socially “ECPI Indices” is a socially responsible investment index E-mail: [email protected] 0 0.0 0 responsible investment index provided by provided by ECPI, which investigates ESG (Environmental, the FTSE Group, a subsidiary of London Social and Governance) in a company and provides its JR Central JR East JR West JR Central JR East JR West JR Central JR East JR West Stock Exchange, and selects exceptional rating information. ECPI's main offices are located in companies throughout the world. Luxembourg and Italy.

*1. Figures are calculated by JR Central based on Financial Report of the JRs for FY2015. *2. (Operating income + Interest and dividend income) / Interest expense

86 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 87