CENTRAL JAPAN RAILWAY COMPANY ANNUAL REPORT 2015 CENTRAL JAPAN RAILWAY COMPANY Contents

CENTRAL JAPAN RAILWAY COMPANY RAILWAY JAPAN CENTRAL Report 2015 Annual 31, 2015 Ended March For the Year

Annual Report 2015 A Message from Management 2 Key Measures and Management Strategy Key Measures and Capital Investment 4 Profile Safe and Reliable Transportation 8 ■Percentages of our market area in Japan as a whole Central Japan Railway Company (JR Central, also JR Central’s Market Area Transportation Service 12 known as JR Tokai) commenced operations in April Transportation result of the Area Tokaido Shinkansen (per day) The Chuo Shinkansen Using the 1987 upon the privatization and breakup of the other 76.3% ( As of October 2014) 23.7% Superconducting Maglev System 16 Japanese National Railways (JNR). The core of JR Population Central's operations is the Tokaido Shinkansen, the % Number of Sales and Marketing 18 ( As of January 1, 2014) 60.0% 40.0 Number of passengers main transportation hub linking Japan's principal trains in operation Technological Development and metropolitan areas of Tokyo, Nagoya, and Osaka, and Prefectural GDP Approximately Enhancement of Technical Capability / ( Nominal GDP) ( FY2013) 64.5% 35.5% a network of conventional lines in the Tokai Region Overseas Deployment of High-Speed Rail Systems 20 centered on the Nagoya and Shizuoka areas. JR 0 50 100 （%） 430,000 350 Affiliated Business 22 Central and its consolidated subsidiaries also promote ESG * Information affiliated businesses that are expected to generate synergic effects with the railway business. Engagement in Global Environment ■Population Density (As of the end of March 2014) Business structure/revenue situation Preservation, etc. 24 JR Central is also steadily moving forward with efforts aimed at the early completion of the Chuo Human Resources 28 Japan 100 (Base) Shinkansen using the Superconducting Maglev System (As a whole) JR Central mainly deploys the transportation business with the focus on Cooperation with Local Communities 29 in order to continually carry out its mission. JR Central’s Market Area 253 the railway business in addition to merchandise and other businesses, real Corporate Governance 30 estate businesses, and other affiliated businesses. The main focus is the Management Philosophy 0 100 200 Tokaido Shinkansen, which serves as Japan's main transportation hub Board of Directors, Audit and Supervisory Board Members, and ● Contribute to society through sound management connecting Tokyo, Nagoya, and Osaka. The Tokaido Shinkansen offers Corporate Officers 33 ● Provide modern, valued, friendly, and reliable safe and punctual transportation, which is unparalleled in the world. Its Corporate Data services revenue covers approximately 90% of the non-consolidated operating 34 ● Establish a cheerful, fresh, and active corporate revenue for JR Central. Profile / Organization Chart culture Unparalleled large 35 Consolidated Operating Operating Areas Revenues Composition Company History 36 volume/high-speed Other General Principles of Safety 6.8% Financial Highlights Real Estate (consolidated/non-consolidated) 37 ● Safety is the most important mission in the 2.4% Summary of Performance 38 transportation business transportation mode Merchandise and Other Financial Section 40 ● Safety is ensured based on compliance with rules 13.5% and strict execution of work and is built through Appendices continuous practice Financial and Transportation Data 68 ● Enforcement of confirmation and thorough communication are the most important aspects in Operating Environment 70 Transportation ensuring safety 77.4% International Comparison of Railway Operators 70 ● To ensure safety, we must cooperate together Operating Areas 72 beyond our official responsibility Financial Data Comparison of Three JR Companies Nagoya ● When in doubt, we must thoroughly consider and Tokyo Stock Information 73 take the measure that seems the safest Osaka Non-Consolidated Operating Revenues Composition Affiliated ＊Environmental, Social, and Governance. Companies appropriately Miscellaneous Businesses considering/responding to ESG issues and the existence of shareholders who 4.2% 0.7% make investments in response to such efforts by the companies are thought to lead to the solution/improvement of global environmental issues and social Conventional Lines issues and even to the sound development/expansion of capital markets, thus 7.6% contributing to the establishment of a sustainable society.

[Remarks regarding forecasts, etc.] Future plans, forecast figures, etc. in this report are an outlook based on the information that is currently available for JR Central and may contain risks and uncertainty. Examples of potential risks and uncertainty include economic trends, business Tokaido environment developments, consumption trends, competition situation for JR Shinkansen Central and subsidiaries, and changes in relevant laws and legal provisions. 87.5% This report is compiled based on information available as of the end of May 2015 in principle. ●In this report, figures of financial information are truncated, while statistical data and all percentages are rounded. ●FY 2014 refers to the one-year period ending March 31, 2015. Note 1: Consolidated operating revenues composition is based on revenues from external customers Note 2: The total of items in the breakdown may not be 100% due to rounding.

CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 1 A Message from Management A Message from Management transportation system through the efficient rolling stock operations, 4.Enhancement of Technical Capability which were made possible by the electrification of the Taketoyo Line In terms of enhancement of technical capability, we will further reduce in March 2015. Furthermore, we will continue newly manufacturing cost of maintaining and updating facilities, such as large-scale renovation, the Series Ki-Ha 25 railcars with the aim of further enhancing the through technological development. We will also promote the research transportation service by sequentially introducing it to the Kisei and and development of practical technologies that would lead to efficiency Sangu Lines, etc. In addition, we are scheduled to complete the in inspections/maintenance, etc., enhancement of transportation service, restoration construction of the Meisho Line (between Ieki Station and etc., accurate forecast and detection of major natural disasters, etc. Ise-Okitsu Station), which was affected in October 2009, along with We will utilize our technical capability in high-speed railway and promote the soil/water projects by the prefecture/cities. We are scheduled to marketing activities with the aim of establishing overseas projects targeting restart the operation of the entire line within FY2015. certain lines. We will also promote our initiatives to establish Japan's In terms of sales and marketing, we will reinforce tourist products high-speed rail system, which is based on the core principle of “Crash targeting "Express Reservation", "PLUS EX" services, and "50+" Avoidance”, as a global standard. In addition, we will continue offering members. Additionally, we will strive to proactively promote our sales technical consultation for Taiwan High Speed Rail Company. Furthermore, and marketing through the development of products utilizing permanent we will promote activities to use the Superconducting Maglev System in tourism resources, such as Kyoto and Nara, enhancement of various the north east corridor project of the United States. campaigns, and sales of products targeting foreign tourists. Furthermore, we will aim to increase the demand by deploying excursion packages using the Tokaido Shinkansen, Takayama Line, and Hokuriku Line by using Non-Railway Businesses the Kanagawa inauguration of the Hokuriku Shinkansen as an opportunity. In terms of passenger-related facilities, we will continue promoting the In terms of non-railway businesses, we will steadily promote the installation of new movable platform fences at Nagoya Station and Kyoto construction of the “JR Gate Tower” at Nagoya Station with the aim of Station and will gradually start their use. We will also continue promoting completing the framework in winter of FY2015. We will not only promote the installation of barrier-free facilities at stations, such as elevators, the formulation of the operation plan prior to the inauguration with the disabled-accessible toilets, and new braille blocks that indicate where aim of proactive striving to increase revenues but also promote PR/ platform edges are located. advertisement activities. We will also make efforts to further strengthen Chairman and Representative President and Representative Director: Director: the earning capability of the JR Central Group by revitalizing commercial Yoshiomi Yamada Koei Tsuge 3.Promoting the Chuo Shinkansen Using the Superconducting Maglev System facilities of station buildings and merchandise businesses, etc. The Chuo Shinkansen that employs the Superconducting Magnetic

In the railway business, JR Central sets the highest priority on ensuring safety and reliability. JR Levitation railway system (hereinafter referred to as “Superconducting Central's fundamental policy is to stably and fully execute the long-term social mission to integrally Maglev System”) will enable us to continue our mission of operating a Global Environmental Issues maintain/develop the Tokaido Shinkansen, which serves as Japan's main transportation hub, and the high-speed railway linking the Tokyo Metropolitan areas, Chukyo regions conventional line network in the Tokai region through the continuous efforts of providing services that are and Kinki regions, which is also the lifeline of our business. It is being In regard to global environmental issues, JR Central will not only make preferred by customers as well as the streamlining of work, etc. planned in order to ensure the future foundation of the company. the public aware of the superiority of railways to the global environment Since railway business, which is the core business of the JR Central Group, requires long-term massive As far as the said plan which was approved by the Minister of Land, but also continue promoting various policies that contribute to global capital investments and technological development with considerable lead times, the time base for Infrastructure, Transport and Tourism in October 2014 goes, we will environment preservation, such as introduction of the N700A that enables recovering investments becomes extremely long. Due to such a business structure, it is vital that we systematically execute the measurement, designing, land acquisition, significant energy conservation, as well as working toward resource/ manage our railway business with a continuous strategic perspective based on a long-term outlook rather etc. while closely collaborating with communities between Shinagawa energy conservation in our daily operation. than a short-term profitability-based view. Therefore, we are promoting mid-to-long-term projects in a and Nagoya along the Chuo Shinkansen (Part 1). In addition, we will well-planned manner while simultaneously providing high quality services in our daily railway operations steadily promote the construction with the focus on construction safety and aiming to enhance our financial strength. and environment preservation, starting with areas where necessary Reduction of Long-term Debt and Payables arrangements have been made, such as both Shinagawa Station and Nagoya Station terminals that will require a long-term construction period. We have steadily strengthened our financial ground by reducing our Furthermore, we will also promote efforts to establish sophisticated and long-term debt and payables, which was as much as 5.5 trillion yen at efficient operation/maintenance systems for the Chuo Shinkansen. its highest, by approximately 3.3 trillion yen. The company will continue On the other hand, with the Yamanashi Maglev Line, we will conduct striving to reduce long-term debt and payables while steadily promoting evaluations to establish a maintenance system that responds to various efforts. Railway Business to respond to various situations that we can expect due to natural commercial services by alternately operating 2 trainsets and conducting disasters, etc., such as earthquakes. long distance running tests by using rolling stock and facilities in Going forward, JR Central will continue making efforts to ensure safety 1.Safety Measures commercial line specifications. We will also strive to further refine the and reliability in the railway business, to improve customer service, and In the railway business, we will steadily promote large-scale 2.Strengthening Transportation Service Superconducting Maglev technology and reduce the costs for the to pursue efficiency and cost reduction throughout our entire operation renovation with the aim of maintaining/improving the soundness In terms of the Tokaido Shinkansen, we will utilize the “10 Nozomi construction/operation/maintenance of commercial lines. We will also including capital investments. At the same time, we will steadily promote of civil engineering structures along the Tokaido Shinkansen while Timetable” to flexibly schedule trains to meet demands with the focus continue promoting "Superconducting Maglev Test Rides" in a well- efforts to strengthen our managerial foundation for various businesses, such continuously making efforts to reduce cost. We will also steadily on time frames with increased customer use. In addition, we will not only planned manner. as the Tokaido Shinkansen, and to construct the Chuo Shinkansen using promote earthquake countermeasures, such as countermeasures improve convenience through the increased maximum speed of 285km/ Since we decided to bear the cost of this project, we plan to thoroughly the Superconducting Maglev System, and promote efforts to reduce long- to derailment/deviation of the Tokaido Shinkansen, enhancement h, which was implemented in March of 2015, but also aim to improve the reduce the cost throughout the construction, operation, and maintenance, term debt and payables in order to continue offering stable dividends. of earthquake safety of the elevated track columns, etc. along the reliability of the timetable in case of emergencies. Furthermore, we will etc., which will be inspected by the internally-established "Chuo conventional line tracks, and renovation and anti-quake reinforcement continue introducing the new model rolling stock N700A and complete the Shinkansen Construction Cost Reduction Committee", while ensuring Chairman and Representative Director: Yoshiomi Yamada of the Hamamatsu Workshop, the Nagoya Workshop, and station renovation construction for Series N700 within 2015. safety. We also intend to flexibly respond to the project by optimizing the President and Representative Director: Koei Tsuge buildings, etc. Furthermore, we will conduct practical training in order In terms of conventional lines, we will establish a highly convenient resources in accordance with the managerial environment.

2 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 3 Key Measures and Key Measures and Management Strategy Key Measures and Capital Investment Capital Investment FY2015 Consolidated：366 billion yen Non-Consolidated： billion yen （including 183 billion yen for safety-related investments） 335

Ensuring Safe and Reliable Transportation ▶P.8 Capital investment Enhancing the Conventional Line Transportation Service ▶P.15 Capital investment 144 billion yen 8 billion yen We will give priority to ensuring safety and reliability, We will continue striving to enhance the transportation service 1 which are the foundation of the railway business. 3 by newly manufacturing diesel railcars. FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Large-scale renovation for the Tokaido Shinkansen (FY2015, 35 billion yen) Electrification of the Taketoyo Line ★March 2015 Electrification of the Taketoyo Line Countermeasures for disasters, such as earthquakes, etc. Newly produced railcars, Series Ki-Ha 25 (52 cars) (Tokaido Shinkansen: Countermeasures to derailment/deviation, Hamamatsu Workshop renovation Conventional lines: Enhancement of earthquake safety of the elevated track columns, etc., renovation and anti-quake reinforcement of station buildings, etc.) Meisho Line restoration construction Installation of barrier-free facilities

[Updating facilities, etc.] [Countermeasures for disasters, such as earthquakes, etc.] ●Electrification of the Taketoyo Line ● ● Large-scale renovation for the Tokaido Shinkansen Tokaido Shinkansen We will establish a highly convenient transportation system through the We will steadily promote large-scale renovation to We will continue taking countermeasures to efficient rolling stock operations, which were made possible by the maintain and improve the soundness of civil engineering derailment/deviation for the Tokaido Shinkansen, electrification of the Taketoyo Line in March 2015. structures along the Tokaido Shinkansen in constant making renovation of the Hamamatsu Workshop, etc. ● pursuit of cost reduction. *Countermeasures to derailment/deviation: Scheduled to be completed at the end of FY2019 Introduction of new diesel railcars *Hamamatsu Workshop renovation: Scheduled to be completed in FY2018 We will continue newly manufacturing the Series Ki-Ha 25 and ●Updating the ATC device, overhead contact lines, Large-scale renovation introduce it to the Kisei and Sangu Lines one by one. ● etc. of the Tokaido Shinkansen Conventional lines (rock bolt installation within tunnels) ● Introduce the latest technologies and ensure further We will continue promoting the enhancement of earthquake Meisho Line restoration construction Meisho Line restoration construction We will complete the restoration construction of the Meisho Line safety while striving to reduce cost, including safety of the elevated track columns, etc. along the conventional (between Ieki Station and Ise-Okitsu Station), which was affected in maintenance. line tracks, anti-quake reinforcement of the Nagoya Workshop, October 2009, along with the soil/water conservation projects by the ● station buildings, etc., and measures against falling rocks. Updating the operation management system for prefecture/cities and restart the operation of the entire line. conventional lines, etc. *Nagoya Workshop renovation: Scheduled to be completed in March 2022 ●Installation of barrier-free facilities With conventional lines, we will continue the update of ● Conducting practical training We will continue promoting the installation of barrier-free facilities at Electrified Taketoyo Line the operation management system in the Shizuoka area We will conduct practical training in order to respond to stations, such as elevators, disabled-accessible toilets, and introducing along the Tokaido Line, improvement of safety devices various possible situations caused by natural disasters, new braille blocks that indicate where platform edges are located, etc. on grade crossings, etc. etc., such as earthquakes. Derailment prevention guards Series Ki-Ha 25

Promotion of the Chuo Shinkansen Project Enhancing the Tokaido Shinkansen Transportation Services ▶P.12 Capital investment ▶P.16 Capital investment 36 billion yen using the Superconducting Maglev System 93 billion yen We will continue striving to enhance the transportation service We will shift from the planning phase to the new construction phase, and will thoroughly 2 by utilizing the “10 Nozomi Timetable” and accelerating the speed, etc. 4 promote the phase with the focus on safety, environment, and cooperation with communities. FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Enhancement of transportation service Promotion of the Chuo Shinkansen Project using the Superconducting Maglev System ★March 2014 "10 Nozomi Timetable" started ★Increased maximum speed of 285km/h (Started in March 2015) ★August 2014 Submission of the ﬁnal Environment Impact Statement Introduction of N700A Shinkansen Trains (31 trainsets) ★October 2014 Approval for the Construction Implementation Plan (Part 1) ★December 2014 Started Shinagawa/Nagoya Station preparation construction Modification of Series N700 Shinkansen Trains (80 trainsets)

●Well-planned execution of measurement, designing, ■Route of the Chuo Shinkansen (Between Tokyo and the City of Nagoya) ● Utilization of the “10 Nozomi Timetable” and land acquisition, etc. We will flexibly schedule trains to meet demands with the focus on We will systematically execute the measurement, designing, the time frames with increased customer use. and land acquisition, etc. while closely collaborating with Yamanashi ● Tokyo Introduction of the new model rolling stock N700A and communities while executing the Construction Implementation Nagano Prefecture Prefecture completion of the modification of Series N700 Gifu Prefecture We will continue introducing the new model rolling stock N700A and Plan (Part 1) between Shinagawa and Nagoya along the Chuo Prefecture complete the renovation construction for Series N700. Shinkansen, which was approved by the Minister of Land, ● Infrastructure, Transport and Tourism in October 2014. Kanagawa Increase of the maximum speed of the Tokaido Shinkansen Prefecture We will not only improve convenience through the increased ●Thorough promotion of construction maximum speed of 285km/h, which was implemented in March We will steadily promote the construction with the focus on 2015, but also aim to improve the reliability of the timetable in case construction safety and environment preservation, starting of emergencies, etc. with areas where necessary preparations have been made, Shizuoka Legends ●Installation of new movable platform fences and replacement N700A such as both Shinagawa Station and Nagoya Station Aichi Prefecture ：Planning Route terminals that will require a long-term construction period. Prefecture ：Yamanashi Maglev Line of the new automatic ticketing gates ：Station Location N We will continue the installation of new movable platform fences, ●Establishment of the operation/maintenance systems start their use in Nagoya Station and Kyoto Station, and replace We will promote efforts to establish sophisticated and efficient 0 25 50km automatic ticketing gates with the latest model. operation/maintenance systems for the Chuo Shinkansen. Increased maximum speed of 285km/h 4 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 5 Key Measures and Key Measures and Management Strategy Key Measures and Capital Investment Capital Investment FY2015

Enhancement of Technical Capability, Pursuit of Overseas Projects, Refining Superconducting Maglev Technology and reducing costs ▶P.17 Capital investment ▶P.20 Capital investment 3 billion yen and Engagement in Global Environment Preservation 1 billion yen We will continue making efforts to refine the Superconducting Maglev technology We will continuously strive to enhance our technical capability, which supports the railway management/development, and to reduce costs. and simultaneously promote the efforts toward overseas projects that use the high-speed railway and 5 7 Superconducting Maglev System. We will also continue to engage in global environment preservation. FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Cost reduction through technological development, research and development of practical technologies Refinement of Superconducting Maglev technology and Cost Reduction Marketing activities, etc. with the aim of establishing projects targeting certain lines ★From November 2014 Hosting “Superconducting Maglev Test Rides” ★April 2014 International High-Speed Rail Association (IHRA) is established ★April 2014 Technical Consulting Agreement with Taiwan High Speed Rail ★October 2014 In Commemoration of the 50th Anniversary of the Tokaido Shinkansen, High-Speed Rail Conference

●Conducting long distance running tests ●Cost reduction through technological development certain lines. We will also promote our initiatives to With the Yamanashi Maglev Line, we will alternately We will further reduce costs to maintain/upgrade establish Japan's high-speed rail system, which is operate 2 trainsets and conduct long distance facilities, such as large-scale renovation, through based on the core principle of “Crash Avoidance”, as running tests by using rolling stock and facilities in technological development. a global standard. In addition, we will continue commercial line specifications. ●Research and development of practical offering technical consultation for Taiwan High Speed ● Rail Company. Refining Superconducting Maglev technology technologies Overhead contact line test simulator and Reducing Costs We will promote research and development that would ●Promotion activities for the Superconducting We will not only conduct evaluations to establish a lead to not only the enhancement of efficiency in Maglev System maintenance system that responds to commercial inspections, maintenance, etc., transportation We will promote activities to use the services but also further strive to refine the services, etc. but also accurate forecast, detection, Superconducting Maglev System in the north east Superconducting Maglev technology and reduce the etc. for major natural disasters, etc. corridor project of the United States. costs for the construction/operation/maintenance of ●Making efforts to promote Japan's high-speed ●Promotion of various measures that contribute commercial lines. rail system as a global standard. to global environment preservation ● We will utilize our technical capability in high-speed We will promote various measures that contribute to Hosting test rides Series L0 (L zero) “Superconducting Maglev Test Rides” We will continue promoting "Superconducting railways and promote marketing activities with the global environment preservation, such as replacing old Railway Structure Loading Test System Maglev Test Rides" in a well-planned manner. aim of establishing overseas projects targeting rolling stock with new energy-conserving rolling stock.

Enhancing Sales and Marketing ▶P.18 Capital investment Developing Affiliated Businesses ▶P.22 Capital investment 4 billion yen 43 billion yen ※Including 31 billion yen capital investments We will proactively promote our sales and marketing with the aim of increasing revenue. We will steadily promote the “JR Gate Tower” Project at Nagoya by consolidated subsidiaries 6 (Various campaigns utilizing permanent tourism resources, such as Kyoto and Nara, etc.) 8 Station as well as strive to increase competitiveness and revenue of our existing businesses. FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

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 at Nagoya Station ★Winter of FY2015 Completion of Framework ★Release of The Tokaido Shinkansen 50th Anniversary commemoration travel products ★November 2016 Start of occupancy of offices ★Enhancement of tourist products for EX and 50+ members April 2017 Inauguration of commercial facilities/hotel★

●Enhancement of tourist products ●Promotion of the “JR Gate Tower” Project We will aim to increase the demand by enhancing tourist products for We will steadily promote the construction of the members of "Express Reservation", "PLUS EX", or "50+". "JR Gate Tower" with the aim of completing the ●Enhancement of various campaigns utilizing permanent tourism resources framework in winter of FY2015. We will not only We will aim to expand use by enhancing products and various campaigns promote the formulation of the operation plan utilizing permanent tourism resources, such as Kyoto and Nara, and prior to the inauguration with the aim of proactive showcasing the attractions. We will also proactively promote sales and striving to increase revenues but also promote marketing by selling products targeting foreign tourists, etc. PR/advertisement activities. ●Deploying excursion packages ●Revitalization of commercial facilities of "Takashimaya Gate Tower Mall" completion image We will aim to increase the demand by deploying excursion packages Kyoto Campaign station buildings and merchandise using the Tokaido Shinkansen, Takayama Line, and Hokuriku Line by businesses using the Kanagawa inauguration of the Hokuriku Shinkansen as an We will aim to further increase revenues by opportunity. revitalizing commercial facilities of station ●Cooperation with communities buildings and merchandising businesses. We will aim to expand customer use and reinforce our cooperation with ●Enhancement of agriculture business communities through "Sawayaka Walking", "Shupo", "Japan Highlights We will continue aiming to enhance our Travel", which is a portal site that has a collection of tourism information agriculture business in order to provide safer and along the Tokaido Shinkansen, etc. more reliable food products. "Nagoya JR Gate Tower Hotel" completion image EX-IC Excursion packages Image of “JR Gate Tower”（right side） 6 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 7 Key Measures and Management Strategy Safe and Reliable Transportation Safe and Reliable Transportation Diagram1 Shifts in Safety-Related Investment Amounts (Non-consolidated) Diagram 3 Mechanism of ATC Diagram 5 Comparison Diagram for Next Generation Overhead Contact Line

Safety-Related Other than Chuo ③Based on the position information of both trains, Conventional model Next Generation (Billion yen) Investments Safety-Related Investments Shinkansen ATC signal (train speed checking pattern) is calculated (Heavy compound overhead contact line) (High-speed heavy simple overhead contact line) 350 Speed of FY 2013 FY 2014 FY 2016 FY 2017 335.0 the train Overhead FY 2015 contact line 93.0 ⑤When the speed exceeds the ATC signal, the brake system is activated Auxiliary 300 298.4 301.6 overhead Large-scale renovation for the Tokaido Shinkansen (FY2015, 35 billion yen) 288.8 164.7 contact line 155.5 ④Comparison between speed and ATC signal. Contact 124.1 wire Countermeasures for disasters, such as earthquakes, etc. 5.0 257.2 ②Position information of the train Overhead (Tokaido Shinkansen: Countermeasures to derailment/deviation Hamamatsu Workshop renovation) 250 Preceding train contact (Conventional lines: Enhancement of earthquake safety of the elevated track columns, etc., 79.0 line renovation and anti-quake reinforcement of station buildings, etc.) 229.0 59.0 Auxiliary 85.5 overhead Ground ①Position information of contact line Facilities Large-scale renovation (rock bolt installation within tunnels) 200 Receive the preceding train(Rail) Diagram2 (for position adjustment) Contact wire 183.0 173.1 Number of overhead contact lines 3 Number of overhead contact lines 2 150 164.7 Diagram 4 Overview of ATC Update 142.9 143.5 136.9 Derailment Prevention Guards Present Diagram 6 5km 5km 100 max max Equipment room Equipment room Equipment room ATC signal along the line in station along the line Station

50 60→24Equipment rooms After replacement 20km 20km max max 0 Equipment room ATC signal in station ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 Station (plan) ▲ATC ground equipment

Initiatives for Ensuring Safe and Reliable Transportation signal. If the train's speed exceeds the allowed speed, the brakes elevated track columns, embankments, and bridges, and reinforced JR Central firmly believes that ensuring safety and reliability is Maintaining/Updating Facilities are automatically activated to reduce the speed to under the allowed the "Tokaido Shinkansen Earthquake Rapid Alarm System the fundamental principle of the railway business and has worked It is essential that we maintain/update facilities in a well- speed, which is one of the functions that makes the principle of “Crash (TERRA-S)", which is an earthquake disaster prevention system, to improve its systems and to introduce the latest technologies for planned manner in order to ensure safety. At the same Avoidance” * possible. [ Diagram 3] Using this system, the Tokaido but also steadily promoted countermeasures to derailment/ its rolling stock and facilities ever since the establishment of the time, we thoroughly consider and promote streamlining Shinkansen has maintained excellent safety for half a century since deviation along the Tokaido Shinkansen. company. Accordingly, we not only promote education and training and cost reduction throughout our operations. We also its inauguration in 1964 by maintaining zero fatal train accidents. We will continue promoting these initiatives and proactively for staff in charge of train operations and facility maintenance but promote initiatives to reduce costs to maintain/update, work on reinforcing facilities against natural disasters, etc. by *The principle of “Crash Avoidance” is a safety system that is designed to prevent even the renovating/reinforcing Hamamatsu Workshop along the Tokaido also strive to enhance our crisis management ability by conducting etc. facilities while maintaining/improving the safety level. possibility of a collision. The key elements of “Crash Avoidance” are: the use of “exclusively hands-on training and other activities to respond to various dedicated tracks for high speed passenger rail service”, which completely exclude freight Shinkansen and by continuing to promote the earthquake safety accidents and disasters in case of emergency situations. and commuter rail being on the same tracks; no at-grade crossings of any sort; and an for elevated track columns, etc., anti-earthquake reinforcement Large-scale Renovation Diagram “Automatic Train Control” (ATC) system, which automatically detects train positions and 2 controls the operation of the system. constructions for Nagoya Workshop, and station buildings, etc., Measures for Ensuring Safety Soundness of civil engineering structures for the Tokaido and strengthen measures against falling rocks, etc. along the JR Central proactively promotes updating of signaling Shinkansen is sufficiently maintained through daily and thorough To update this ATC, the Komaki Research Center has promoted conventional line tracks. systems/rolling stock, etc., countermeasures for disasters, such inspections/repair. However, it will be necessary to replace many of technological development since 2011 and succeeded in further as earthquakes, etc., and improvement of safety devices on the facilities in the future due to aging. Therefore, we formulated the enhancing the performance of the current ATC. Specifically, we Tokaido Shinkansen grade crossings, etc. with the aim of ensuring safe and reliable allowance reserve plan for the large-scale renovation of Shinkansen aggregate the equipment room by improving the processing capability transportation. infrastructure based on the Nationwide Shinkansen Railway of ATC ground equipment and reducing the ATC ground equipment ①Countermeasures to Derailment/Deviation JR Central has implemented a wide range of capital investments Development Act and have reserved the allowance since 2002 in and by extending the ATC signal transmission distance; thus further In light of the derailment accident on the Joetsu Shinkansen in a well-planned manner, including the upgrading of ATC response to the approval by the Minister of Land, Infrastructure, improving reliability and streamlining maintenance. [ Diagram 4] This caused by the Niigata Chuetsu Earthquake and certain characteristics (Automatic Train Control)/CTC (Centralized Traffic Control) for the Transport and Tourism. enabled us to reduce costs significantly by approximately 14.5 billion of the Tokaido Shinkansen, we have been installing "Derailment Tokaido Shinkansen, installation of ATS-PT (new Automatic Train Along with this, we continued research and development for yen, including the maintenance cost, in approximately 20 years. Prevention Guards" inside of the rail along the Tokaido Shinkansen Stop) for conventional lines, introduction of CTC to conventional large-scale renovation methods, which was mainly promoted by Renovation is expected to be completed in FY2026. since 2009 with the aim of further reinforcing anti-earthquake safety. lines, earthquake countermeasures such as strengthening of the Komaki Research Center, and developed a new method. In this We are scheduled to complete the installation in 60% of the planned elevated track columns, embankments, and bridges, etc., the method, we respond in 2 phases. We first implement "measures to track extension length of 596km as of the end of FY2015, and we are replacement of rolling stock for Series N700 and N700A, and inhibit aging deterioration", which extends the life of structures by Introduction of the Next Generation Overhead Contact Line Diagram5 scheduled to complete the entire project at the end of FY2019. improvement of safety devices on grade crossings, etc. In inhibiting the very occurrence of aging damage, such as cracks; we The Komaki Research Center has promoted technological In addition, in order to prevent large rolling stock deviations from addition, we started implementing countermeasures to derailment/ then implement "overall renovation", such as material replacement, development on the next generation overhead contact line, which the track in case of a derailment as much as possible, “Deviation deviation on the Tokaido Shinkansen in 2009 as an earthquake as necessary while confirming the effect of the first phase. can respond to the Tokaido Shinkansen's characteristic of long Prevention Stoppers” have been installed on all of our Shinkansen countermeasure. We also started large-scale renovation of the The new method made it possible not only to significantly reduce trainset, high density, and high-speed travel, and which can also rolling stock. We completed the initiative in FY2012 [ Diagram 6] Tokaido Shinkansen in FY2013. the interference to train operations when doing the construction realize cost reduction at the same time. Furthermore, while we appropriately implement various work but also to significantly reduce construction costs. The next generation overhead contact line can reduce the ②Reinforcement of Structures inspections for civil engineering structures and various rolling In response to the development of this method, JR Central number of parts by reducing the number of lines from 3 to 2. It is In terms of reinforcement of structures for the Tokaido stock/facilities/electrical equipment, we also aim to develop more determined that an earlier start of the large-scale renovation would effective in ensuring safe and reliable transportation, as there is Shinkansen, we have completed anti-earthquake reinforcement efficient and effective inspection methods and have introduced a be appropriate and decided to start the construction in 2013, five lower risk of malfunction. It also realizes cost reduction, as it can of elevated track columns (with the exception of parts related number of inspection equipment and systems. years ahead of the original schedule. We promoted measures to reduce the replacement cost after the introduction by approximately to development projects, etc.), which were deemed to require Since the establishment of the company, we have spent a total inhibit aging deterioration for the three years between 2013 and 20% compared to the current overhead contact line. [Diagram 5] reinforcement as a result of an anti-earthquake diagnosis amount of approximately 3 trillion yen in safety-related investments 2015 [ Diagram 2] , and we are scheduled to steadily promote the Since November 2014, we have been introducing the next performed after the Great Hanshin-Awaji Earthquake, as well as over the 28 years up until FY2014. [ Diagram 1] We also plan to make overall construction over 10 years. generation overhead contact line one by one in the light sections elevated track columns, for which the expected wave patterns for 183 billion yen in safety-related investments in FY2015. This covers (excluding areas where contact wires cross) with more than a a future Tokai Earthquake published by the Japanese government 76% of the overall investments, excluding the capital investment 2500m curve radius, which cover approximately 70% of the entire in 2003 suggest that ground motion in this area could be related to the Chuo Shinkansen. The ratio remains high. We also Updating ATC (Automatic Train Control) Diagrams3/4 length of Tokaido Shinkansen, when replacing the lines due to particularly strong and long. In conjunction with this, to further recognize that enhancement of the existing railway business is With the Shinkansen, we divide routes by a certain distance and aging damage. strengthen structures along the same section, we have proceeded extremely important in our effort to promote the Chuo Shinkansen determine sections (enclosed sections). By allowing only one train in to implement earthquake-resistant reinforcement of bridges and Project. We will continue making necessary investments to ensure each section, we ensure mutual safety between trains. Furthermore, Countermeasures for Disasters, such as Earthquakes, etc.［ Diagram 6］ embankments as well since 2008. We completed the construction safe and reliable transportation. using ATC (Automatic Train Control), the system displays the allowed As part of earthquake countermeasures, we have not only of bridges in September 2014, and we completed the reinforcement speed, which takes the distance from the preceding train and the reinforced structures with anti-earthquake reinforcement for of embankments at the end of FY2012, excluding parts related to route conditions into account, on the driver's cabin of the train as a development projects, etc.

8 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 9 Key Measures and Management Strategy Safe and Reliable Transportation

Diagram 7 Train Control System in the Case of Earthquakes Diagram 10 General Training Session Simulating Actual Accidents Diagram 13 Tokaido/Sanyo Shinkansen Second General Control Center Diagram 14 Dr. Yellow Tokaido Shinkansen Earthquake Rapid Alarm Shinkansen General Tokai General Control Center Control Center System (TERRA-S)

Relay Station

Train Radio Transmit stop signal to train Stop Electricity Conventional-Lines Earthquake Seismometer Information Communications System Substation Diagram 11 Tsunami Evacuation Guide Training

Seismic wave Detector of the Japan Japan Meteorological Splicing equipment for Detector Epicenter Meteorological Agency Agency main office earthquake early warning (Japan Meteorological Diagram 15 ATS-PT Functions Diagram 16 Dr. Tokai Business Support Center)

Train’s running curve ATS-PT Overview Diagram 8 Renovation of the Hamamatsu Workshop (completion image) Diagram 9 Renovation of the Nagoya Workshop (completion image) Speed ・Based on information from the Speed is continuously ground, a braking pattern is Simulators for Station Staff and Conductors Braking Pattern checked. At any given speed, Diagram 12 if the speed exceeds the generated in a train in accordance pattern, the emergency brake with the distance to the signal is activated. ahead. ・When the train speed exceeds this pattern, emergency brakes are automatically engaged, Signal bringing the train to a stop before the signal. ・ATS-PT provides continuous Ground element (generates pattern) control through braking patterns.

③Improvement of Earthquake Disaster Prevention promoting the construction for stations with more than 5,000 professions, such as simultaneously hosting Shinkansen-related precision inspections at the speed of 270 km/h; and it therefore System passengers per day. We are scheduled to complete the anti- training and conventional line-related training, holding lectures supports the safety and reliability of the Tokaido Shinkansen. We continued enhancing the earthquake disaster prevention earthquake construction of Kiyosu Station and Matsuda Station in and discussions for both Shinkansen and conventional lines, and FY2015. enhancing lectures involving borders of systems, etc. As you can *COMTRAC (COMputer-aided TRAffic Control): COMTRAC is the system that controls train system even after introducing it to the Shinkansen prior to other routes, manages train operations, and operates/manages the allocation of staff (drivers and companies, and introduced the “Tokaido Shinkansen Earthquake see, JR Central strives to further develop employee education that conductors) and rolling stock. Based on input data prescribing the operational conditions for Rapid Alarm System (TERRA-S)” in 2005, accelerating the speed focuses on safety. each train (such as station departure and arrival time, platform, and order) in the computer, *1 General overhauls (conventional lines): General overhauls required for conventional line the system can monitor the status of all trains in operation at all times. of the alarm and improving accuracy, etc. [ Diagram 7] Furthermore, rolling stock within eight years. by the end of May 2013, we increased responsiveness to vertical *2 Important equipment inspections: Overhauls required for important equipment of Conventional lines Diagrams earthquakes and interlocking-type earthquakes, as well as conventional line rolling stock within four years or under the distance of 600,000km (electric Operation Management and Safety Measures 15/16 trains)/500,000km (diesel railcars). provided better backup systems. JR Central's 12 conventional lines are operated and managed by Tokaido Shinkansen Diagrams13/14 two control centers; the Tokai General Control Center in Nagoya Anti-Quake Reinforcement and Renovation of the The safe and punctual operation of the Tokaido Shinkansen ④ Education and Training Diagrams10/11/12 and the Shizuoka General Control Center. Each center monitors the ［］ is supported by a number of systems, mainly the Computer Hamamatsu Workshop To ensure safe and reliable transportation, we implement safety operational status of trains and the utilization status of facilities 24 aided Traffic Control (COMTRAC*). These systems accurately Since July 2010, we have been promoting anti-quake education and training for the staff engaging in train operations hours a day. comprehend a massive amount of information, such as the reinforcement and renovation of the Hamamatsu Workshop, and facility maintenance. We conduct education and training The operation management is done by the operation operational status of trains and utilization status of facilities, which is the only workshop that conducts General overhauls* especially for the staff engaging in train operations (such as management system, including CTC (Centralized Traffic Control)*, control, and thoroughly manage the safety of the overall on the Tokaido Shinkansen. With this construction, we will not drivers, conductors, directors, and those who handle signals or PRC (Programmed Route Control)*, and automatic broadcasting transportation services. only enhance earthquake resistance through renovation and operate switch stands) according to the contents/time stipulated devices, etc. These systems manage train schedules, signal At the Shinkansen General Control Center in Tokyo, various reinforcement of buildings but also reduce the risk of not being for each duty. control, train tracing, and operation performance data, etc. These directives, such as transportation, operations, facilities, electrical able to operate the Shinkansen due to rolling stock maintenance We promote employee education/training mainly to improve the systems enable us to manage train and station information in a power, and signals, utilize these systems and work in close by maintaining the inspection/repair work of rolling stock even in knowledge and technical capability of employees through the daily centralized manner at control centers. Such centralization not cooperation to support the safety and reliability of the Shinkansen. case of a major earthquake while promoting earthquake safety in duties in their workplace. Specifically, we introduce simulators, only enables normal train management but also allows orders and Also, the Shinkansen Second General Control Center with the each Rolling Stock Depot. Along with this, we will aim to improve which can perform simulation training of operations, etc. in case directives to be issued more rapidly even in emergency situations. same functions as the General Control Center in Tokyo has been the operation efficiency and enhance the work environment by of emergencies, to field offices, in which drivers/conductors We have implemented the operation management systems on established in Osaka with the cooperation of JR West. This improving lines and introducing the latest equipment. Renovation belong, as part of the skill improvement training for drivers and almost all of our lines, thus ensuring reliable train operation Center is to be used in the event that the Shinkansen General is expected to be completed at the end of FY2018. [ Diagram 8] conductors. We also conduct a number of major and minor training management. Control Center becomes inoperable due to a disaster, thereby *General overhauls (Shinkansen): Overhauls required for Shinkansen rolling stock within 36 sessions for transportation, rolling stock, facilities, and electric strengthening our crisis management ability in case of emergency *CTC: The CTC system not only remotely and integrally controls signaling equipment of months or under the distance of 120,000,000km. systems by using ground facilities, such as actual rolling stock/ situations. Equipment at the Second General Control Center is on stations, etc. in order to efficiently manage train operations but also has the function to overhead contact lines/signaling equipment, so that employees of conduct real-time monitoring of operational status of trains. stand-by at all times with the power on. They are usually utilized Conventional lines each system can swiftly and accurately respond to emergencies. *PRC: Equipment that automatically controls the route for each train via CTC, using daily for education/training of directors/maintenance staff. The Tokaido operation plan information and the position of each train. We also conduct large-scale training, in which they participate. We promote enhancement of earthquake safety of the elevated Shinkansen has been doubling as various facilities with the aim General Training Session Simulating Actual Accidents is the track columns, etc. and anti-quake reinforcement of the Nagoya of ensuring safe and reliable transportation. We also reinforce the biggest training session which is conducted every year as an In addition, ATS-PT (Automatic Train Stop) continuously checks Workshop/station buildings, etc. as part of our effort to reinforce crisis management ability by doubling control centers themselves, structures. We already completed the anti-quake reinforcement opportunity for us to enhance the fast-response restoration the speed for conventional lines according to the distance between which are in charge of operation management. [ Diagram 13] structure in case of accidents and to learn the work of other the train and the signal. It ensures safety by automatically applying of elevated track columns in high density sections (sections in We updated the ATC system (refer to Diagram 3 on P9 for systems. [ Diagram 10] We are scheduled to conduct practical emergency brakes in situations where the train risks overrunning. which there are more than 10 trains one way per hour at its peak details) in March 2006. The updated system realized a “one-step” training in FY2015, such as passenger evacuation guide training [ Diagram 15] We completed the introduction of ATS-PT to all of our of the day) at the end of May 2014. We are currently promoting the brake control system that ensures smoother braking from full sessions, information communication training sessions, training conventional lines in February 2012. reinforcement in the Shizuoka area of the Tokaido line and the Fuji speed to a complete stop. By digitalizing the signal used to send sessions simulating repair of derailed rolling stock, and line facility As for the maintenance of railway tracks and electrical facilities on area of the Minobu line, where a long strong earthquake tremor is and receive data with this ATC system, JR Central improved the restoration training, based on the assumption of natural disasters, conventional line tracks, using the "Shinkansen Multiple Inspection anticipated in a future Tokai Earthquake. reliability of the system, the comfort of the passenger cabin, and such as earthquakes. [ Diagram 11] Train" and "Track Inspection Train" (AKA Dr. Tokai), JR Central On the other hand, we started the anti-earthquake construction the flexibility of the timetable scheduling. In addition to this, the General Training Center not only offers monitors the facility status both efficiently and quickly. [ Diagram 16] of the Nagoya Workshop, which is the only workshop that can Furthermore, we have also introduced the "Shinkansen Multiple education on specialized knowledge/skills for each function conduct General overhauls and important equipment inspections* Inspection Train (AKA Dr. Yellow)" to test the ground facilities, for rolling stock of our conventional lines, in February 2014. This but also provides sessions for various qualifications and trains such as electrical facilities and tracks. [ Diagram 14] This rolling conductors/drivers. [ Diagram 12] is scheduled to be completed at the end of FY2021. [ Diagram 9] In stock, which is based on Series 700, is equipped with the latest It also hosts effective training beyond the borders of terms of anti-earthquake construction for stations, we have been inspection/measurement devices to efficiently conduct high-

10 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 11 Key Measures and Management Strategy Transportation Service

Transportation Service Shifts in GDP and the Tokaido Shinkansen Passenger-kilometers Diagram 1 Example of "10 Nozomi timetable" Tokaido/Sanyo Shinkansen timetable (Departures from Tokyo Station)

GDP Passenger-kilometers ■Example for Monday ■Example for Friday (Billion passenger-kilometers) (Trillion yen) Hour Departure time Hour Departure time 50 50.1 600 Late Friday afternoon, etc. FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 48.9 15 00 10 30 40 50 15 00 10 20 30 40 47 50 53 when many customers 16 00 10 20 30 40 50 16 00 10 20 30 40 47 50 53 take the Shinkansen 46.5 46.9 46.0 Introduction of N700A Shinkansen Trains (31 trainsets) 17 00 10 20 30 40 50 17 00 10 13 20 23 30 40 47 50 53 Modification of Series N700 Shinkansen Trains (80 trainsets) 45 44.5 44.3 550 Maximum of 43.8 43.7 18 00 10 20 30 40 50 18 00 10 13 20 23 30 40 47 50 53 “10 Nozomi Timetable” (from March 2014) 10 42.7 “Nozomi ” services Increased maximum speed of 285km/h (from March 2015) 19 00 10 20 30 50 19 00 10 13 20 23 30 40 47 50 53 41.6 531 operated 526 Electrification of the Taketoyo Line ★Electrified in March 2015 40.6 40.3 525 520 20 00 10 20 30 50 20 00 10 13 20 23 30 40 50 53 each hour 40 39.7 39.6 515 500 Introducing new diesel railcars 516 513 507 506 21 00 10 20 23 21 00 10 20 23 Completion of the Meisho Line restoration construction 498 496 491 *Excerpt only for "Nozomi" Installation of barrier-free facilities 477 475 480 35 450 Shifts in the number of daily departures for the Tokaido Shinkansen Shifts in the introduction of rolling stock for the Tokaido Shinkansen The Tokaido Shinkansen Service Diagram 2

(Trains / day) Nozomi Hikari Kodama (Trainsets) Series 300 Series 700 Series N700 N700A 150 ～～ Number of 400 Type of Service Tokyo Shin-Osaka, Tokyo Shin-Osaka, Non-reserved seats time required Fare and Surcharges *2 6 cars 30 400 350 342 350 120 32 48 64 13 311 194 201 16 80 80 19 2 hr 22 min *1 ¥14,450 3 300 60 80 Nozomi 273 166 60 80 Hikari Approx. 3 hr ¥14,140 5 250 231 34 90 60 200 158 *3 143 60 Kodama Approx. 4 hr ¥14,140 10 25 350 150 60 60 Note: Each Tokaido Shinkansen train has 16 cars 65 65 65 61 100 52 51 47 *1. Time required for the fastest train 30 41 40 *2. For a reserved seat during the normal season (¥13,620 for all non-reserved seats) 50 89 81 80 83 83 32 *3. May vary by train 25 20 300 0 0 9 ’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 ’88.3 ’94.3 ’06.3 ’14.3 ’15.3 ’07.3 ’08.3 ’09.3 ’10.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 Stops for Nozomi: Shinagawa, Shin-Yokohama, Nagoya, and Kyoto Note 1. Departures shown include extra trains Hikari: Same as "Nozomi", plus a few additional stations Kodama: Stops at each station Sources: GDP: Annual Report on National Accounts (Cabinet office, Government of Japan) Note 2. JR Central is established in 1987.4, "Nozomi" is introduced in 1992.3, Drastic timetable revision in 2003.10 (maximum 7 “Nozomi” hourly departures) Note: The trainset figures are as of the end of each fiscal year (excluding retrained trains, etc.)

Providing Services Customers Will Choose Tokaido Shinkansen Improvement of the Tokaido Shinkansen Timetable Introduction of the latest N700A (N700 Advanced) and JR Central has been working to improve its transportation ■ and Speed Upgrage Modification of Series N700 services not only by ensuring safety and reliability, which are Since its inauguration in 1964, approximately 5.7 the fundamental principles of the railway business, but also by We have developed the N700A, which employs the results of our billion people have used the Tokaido Shinkansen, "10 Nozomi Timetable" and Offering extra trains flexibly Diagrams1/2 establishing easy-to-use timetables, introducing new rolling stock the transportation hub linking Japan's three largest original technological developments achieved since the birth of to increase the speed and passengers' comfort, and improving metropolitan areas, Tokyo, Nagoya, and Osaka. The Since the introduction of "Nozomi" in 1992, JR Central has Series N700, including the “Wheel Mounted Brake Disks”, “Bolster- facilities/equipment, etc. These efforts are made in order to Tokaido Shinkansen has literally supported Japan's increased the number of services for "Nozomi", which is the less Bogie Vibration Detection System”, and “Cruise Control fulfill our long-term mission of maintaining and developing, economic growth. fastest train of Tokaido Shinkansen with the aim of improving our System”, in an effort to replace Series 700 rolling stock, which in an integrated manner, both the Tokaido Shinkansen which 2014 was a commemorative year as the 50th anniversary transportation service. In March 2014, we created the "10 Nozomi is facing the need to be replaced. With this N700A, we strive to serves as Japan's main transportation hub and the conventional of the Tokaido Shinkansen. We held a number of events, timetable", which enabled a maximum of 10 “Nozomi” services further improve the safety and reliability and conserve energy. We lines network in the Tokai region, as well as to continue to be a etc. to promote customers' understanding of the Tokaido operated each hour, for almost all time frames. This was made are scheduled to introduce a total of 31 N700A trains by FY2016. transportation mode chosen by the customers. Shinkansen, and many customers used the Shinkansen. possible due to the fact that the renovation construction to add We have also been modifying all of the existing eighty N700 We will continue operating Japan's transportation hub a new track, a new platform, and two more draw-out tracks from trains to improve further safety and reliability by equipping part while ensuring safety and reliability as the first priority. 2 to 4 in Shin-Osaka Station was completed and that we now of the latest functions introduced to the N700A, such as the have a certain number of trainsets for the N700A and Series N700 “Central fastening brake disks” and the “Cruise control system”. (renovated). We currently operate 10 "Nozomi" per hour, mainly Modification construction is expected to be completed in FY2015. during the time frames with increased customer use. We strive to This means that more than 80% of the Shinkansen rolling stock ■ Characteristics of the Tokaido Shinkansen offer more flexible services to meet the demands. [ Diagram 1] owned by JR Central will be composed of the latest N700A type at In addition, the number of services per day in FY2014 was the end of FY2016. ○No accidents resulting in fatalities or injuries of passengers on board since operations commenced. increased by 2% YoY, and use has also increased. [ Diagram 2] ○Improvement of safety awareness/skills through human resources education/training. Safety ○Continuous safety-related investments, such as further earthquake countermeasures for derailment/ deviation, etc., in addition to the train control system with the latest technologies, reinforcement of Increasing the Speed of the Tokaido Shinkansen structures including anti-earthquake reinforcement, etc. Thanks to the revised timetable in March 2015, we were able ○Annual average delay is 0.6 minutes per operational train in FY2014 (including delays due to natural to increase the speed for the first time in 23 years. The maximum Punctuality speed of the Tokaido Shinkansen became 285km/h. Due to this, disasters, etc.) the travel time required between Tokyo and Shin-Osaka was ○Rolling stock with enhanced riding comfort and comfortable interior space. shortened by 3 minutes, which is as short as 2 hours and 22 minutes. The new timetable has not only improved convenience ○Comfortable interior space that meets various needs of passengers such as a wireless Internet connection but also improved the timetable recovery capability in case of Comfort service in Series N700/N700 available between Tokyo and Shin-Osaka. emergency. ○Renovation of stations and modification of station facilities for better convenience, such as elevators, Currently, approximately 1 "Nozomi" per hour travels at 285km/h, escalators, and smoking rooms. rather than all trains. However, we plan to expand the operation of trains at 285km/h as we update rolling stock and promote ○Maximum speed of 285 km/h (300km/h in the Sanyo Shinkansen section). modification constructions. High Speeds ○"Nozomi" connects Tokyo and Shin-Osaka in as fast as 2 hours and 22 minutes. This is virtually the same time that this route takes by air if one includes the time necessary to travel between airports and city centers as well as check-in, etc.

○350 daily services (FY2014, including extra services), 1,323 seats per train. High Frequency and ○A maximum of 10 “Nozomi” services are available in each direction per hour in almost all time frames. Daily passenger capacity of the Shinkansen between Tokyo and Osaka is approximately 340 thousand, which far High Capacity exceeds that of airlines with approximately 30 thousand (FY2014). ○Number of passengers: 431 thousand/day, 157 million/year (FY2014).

N700A

12 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 13 Key Measures and Management Strategy Transportation Service

Diagram 4 New Movable Platform Fence Diagram 5 New Automatic Ticketing Gates Diagram 6 Express Train “Wide-View Shinano” Shifts in the Number of Passengers on Conventional Lines Commuter Passes Ordinary Tickets (Million Conventional Automatic ticketing gate New Automatic Ticketing Gates passengers) 400 386 384 387 395 391 132 130 133 135 134 300

254 254 253 260 257 200

100

0 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3

Diagram 7 Opening Ceremony of the Electrification of the Taketoyo Line Diagram 8 Series Ki-Ha 25 (Secondary Edition)

Modification of Station Facilities(new movable Diagrams4/5 ■Conventional lines platform fences and new automatic ticketing gates) ［］ We operate a network of 12 conventional lines, which On the Tokaido Shinkansen, we are installing movable platform fences form an integrated network with the Tokaido Shinkansen. in stations where "Nozomi" stops, which have many passengers, with These lines have contributed to the development of the aim of further improving safety on platforms. We will complete the communities and the regional economy in the Tokai region, installation of movable platform fences in all platforms in Nagoya Station mainly around Nagoya and Shizuoka. and Kyoto Station by March 2016. [ Diagram 4] We are also replacing automatic ticketing gates for the Tokaido Shinkansen with the new model one by one. [ Diagram 5] We strive Improvement of Service on Conventional Lines Diagram6 New Manufacturing of Rolling Stock Diagram8 to improve services by making the guidance screen for customers In regards to conventional lines, we have steadily improved In terms of conventional line rolling stock, we have easier to understand, etc. In addition, the standby electricity services such as speeding up, introducing new rolling stock, and newly manufactured/introduced the latest rolling stock with consumption of the new automatic ticketing gates has reduced by increasing the frequency of trains. With regard to the express considerations for energy efficiency, being barrier-free, riding approximately 30% compared to the existing ones. trains, we have introduced “Wide View” new rolling stock and comfort, etc. in a well-planned manner since the establishment of established the "Wide View" express network, which forms an the company. integrated network with the Shinkansen, by ensuring connections We have newly manufactured 28 Series 313 cars along with the with the Shinkansen. [ Diagram 6] In terms of local trains, we are electrification of the Taketoyo Line. We are also introducing 16 striving to increase the frequency/cars of train services during new Series Ki-Ha 25 (secondary edition) to the Takayama Line and peak-demand morning and evening periods, establish a rapid train the Taita Line since FY2014. In this new series, new functions/ system, and adjust services so that they are offered in certain facilities were added to the Series Ki-Ha 25, which were newly intervals. Through initiatives such as the above, we strive to offer manufactured and introduced in FY2010. Furthermore, we will timetables that are easier for customers to use. introduce 36 cars to the Kisei and Sangu Lines one by one in FY2015. [ Diagram 8] With this introduction, by March 2016, all diesel railcars for our October 2003 Improvement in the access time due to the inauguration of Shinagawa Station conventional lines will be those which were newly manufactured Drastic timetable revision and opening of the Shinagawa after the foundation of the company. Electrification of the Taketoyo Line Diagram7 Shinkansen Station on the Tokaido Shinkansen Area in which the access will be improved We promoted the construction for electrifying the Taketoyo Line Construction of a New Station With the inauguration of the Tokaido Shinkansen in 1964, the (between Obu and Taketoyo), which transports commuters in the time required traveling between Tokyo and Osaka was shortened Nagoya metropolitan area, and started the operation on March 1, Since 1994, JR Central has held a number of discussions to 3 hours and 10 minutes from 6 hours and 30 minutes (originally 2015. [ Diagram 7] As a result, timetable flexibility and rolling stock regarding the establishment of a new station between Fukuroi 4 hours). Furthermore, with the introduction of the “Nozomi” in operation efficiency have improved due to the fact that the same Station and Iwata Station on the Tokaido Line, which had been 1992, that time was shortened to 2 hours and 30 minutes. type of trains that are in operation in the Nagoya metropolitan area requested by the City of Iwata for some time. In April 2014, four Shinjuku In October 2003, the investment in rolling stock and ground are used. We have been able to not only expand direct service parties, including the City of Iwata, formed associations to carry facilities that we had continuously engaged in for approximately 15 Tokyo operation time frames and increase the number of local trains for years culminated with the upgrading of the maximum speed of all Shibuya 7km out a land readjustment project in Shingai and Kamata-Daiichi trains to 270km/h and the drastic timetable revision that resulted in the Taketoyo Line but also increase the number of services of the of Iwata, and JR Central, signed the agreement regarding the Tokaido Line and increase the number of trainsets for the Kansai a maximum of seven “Nozomi” services operated each hour. Shinagawa construction start for the new station. After this, we signed the We also simultaneously opened the Shinkansen Shinagawa Line. We have also been able to reduce the running cost and agreement regarding the construction work in December 2014. Tokaido Shinkansen Station with the drastic timetable revision, thereby shortening environmental burden after discontinuing the use of diesel railcars. We are currently taking necessary procedures and designing the the total travel time of passengers traveling from or to southwest details in preparation for the construction work. The new station is Tokyo by 20 to 30 minutes. Furthermore, having all train services, scheduled to open at the end of FY2019. including “Nozomi” services, stop at Shinagawa and Shin- 15km Yokohama stations with the timetable revision of March 2008 Shin-Yokohama resulted in further improving accessibility/convenience to the Tokaido Shinkansen in the Tokyo metropolitan area. Tokyo International Airport

14 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 15 The Chuo Shinkansen Using the The Chuo Shinkansen Key Measures and Management Strategy Superconducting Maglev System Using the Superconducting Diagram 4 Series L0 (L zero) Diagram 3 Receiving an approval from Minister Ota of Land, Infrastructure, Transport and Tourism The Principles of the Superconducting Maglev System Maglev System

N S N S N S N S N Propulsion System FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 By passing current through the Propulsion S N S N Coils on the ground, a magnetic field (north and south poles) is produced, thus the Promotion of the Chuo Shinkansen Project using the Superconducting Maglev System N S N S vehicle is propelled forward by the attractive ★October 2014 Approval for the Construction Implementation Plan (Part 1) force of opposite poles and the repulsive December 2014 Started Shinagawa/Nagoya Station preparation construction ★ S N S N S N S N S force of same poles acting between the Refinement of Superconducting Maglev technology and Cost Reduction ground coils and the Superconducting ★From November 2014 Hosting of Superconducting Maglev Test Rides Magnets built into the vehicles.

This map is copied from a Japanese map (with a scale of 1 to 1,000,000) and a Japanese local map (with a scale of Diagram 1 Route of the Chuo Shinkansen (Between Tokyo and the City of Nagoya) 1 to 500,000) published by the Geographical Survey Institute with their authorization. (Authorization number: H25 310) Levitation System Yamanashi The Levitation and Guidance Coils are Tokyo installed on both sides of the guideway (track). Prefecture Metropolis Nagano When the on-board Superconducting Magnets “Superconducting Maglev Test Rides” N S pass through at high speed, an electric current Gifu Prefecture Diagram 5 S S N N Prefecture is induced in the Levitation and Guidance Coils, causing them to become electromag- nets. This generates a force that both pushes and pulls up the vehicle. Kanagawa Prefecture Guidance System Legends The Levitation and Guidance Coils on both ：Planning Route sides of the guideway keep the vehicle in ：Yamanashi Maglev Line the center of the guideway at all times by N S N N exerting an attractive force on the far side N ：Station Location of the vehicle and a repulsive force on the near side when the vehicle moves off Shizuoka Aichi 0 25 50km center to either side. Prefecture Prefecture

Flow of work based on the Nationwide Shinkansen Railway Development Act In Order to Continually Carry Out Our Mission efforts to refine the Superconducting Maglev technology, which Diagram 2 Diagrams JR Central, whose mission is to operate high-speed Progress of the Project 1/2/3 has already been established for practical use, and to reduce costs railway linking the three major metropolitan areas of According to the Act, JR Central follows the procedures for in construction, operation, and maintenance of the commercial line. Article 4 Basic Plan Tokyo, Chukyo, and Kinki, promotes the Chuo Shinkansen the Chuo Shinkansen (between the Tokyo Metropolis and the [ Diagram 4] In April 2015, we recorded the travel distance of 4,064km ● Decided in November 1973 Project using the Superconducting Maglev System. City of Osaka) as shown in Diagram 2. Since receiving the order per day in the long distance running test and the maximum speed for construction in May 2011, we have taken the procedures of 603km/h in the high-speed area running test. of environmental assessment between Tokyo and the City of We have also been conducting "Superconducting Maglev Test Article 5 Researches and Reports The Chuo Shinkansen Project Using the Nagoya, which is promoted as the first stage. In August 2014, we Rides" since FY2014, and many people have experienced the high- ● Topographical and geological research: Ordered in February 1990 Superconducting Maglev System submitted the final Environment Impact Statement to the Minister speed travel at 500km/h. [ Diagram 5] → Reported in October 2008 of Land, Infrastructure, Transport and Tourism (the Minister) and Promoting the Project While Ensuring Sound Management and Providing Stable Dividends ● Research on “the residual 4 items” *Ordered in December 2008 made a public announcement. In addition, we simultaneously made necessary preparations to apply for the approval for the Reducing Costs thoroughly while Ensuring Safety → Reported in December 2009 We are promoting the Chuo Shinkansen Project using the Superconducting Maglev System based on the Nationwide construction implementation plan along with the environmental The burden of the cost for construction of the Chuo Shinkansen Shinkansen Railway Development Act (hereinafter referred to as assessment procedures. We submitted the application for the rests entirely on us, therefore all construction expenses and costs Article 14-2 The Transport Policy Council “the Act”) to continually carry out our mission of operating a high- approval for the Construction Implementation Plan (Part 1) will be examined by the internally established “Chuo Shinkansen ● Consulted on February 24, 2010 speed railway linking the Tokyo Metropolitan area, Chukyo, and between Shinagawa and Nagoya to the Minister on the same day Construction Cost Reduction Committee”, which will thoroughly as the submission of the final Environment Impact Statement and reduce costs while ensuring safety. At the same time, we will → Reported on May 12, 2011 Kinki regions, which is the lifeline of our business, and to ensure the future foundation of the company. received the approval in October. flexibly distribute resources in an optimal fashion in accordance 50 years have passed since the inauguration of the Tokaido After the approval, we held explanatory sessions for the project with the managerial environments. Article 6 Designation of Operator and Constructor Shinkansen, which serves as Japan's main transportation hub. in various locations along the line in order to further deepen ● Consented on May 18, 2011 Therefore, we must think of drastic ways to respond to aging in the understanding of the Chuo Shinkansen. We also held a Superconducting Maglev System and construction safety invocation ceremony at Shinagawa Station Engagement in Global Environment Preservation → Designated on May 20, 2011 the future and large-scale disasters based on the fact that it takes a long time to construct and build a new railway line. In the wake and Nagoya Station, which are the 2 ends of the construction, Tokyo and Osaka will be connected in as fast as 67 minutes of the Great East Japan Earthquake, the need for a new line which in December before the preparation construction with the hopes by the Chuo Shinkansen using the Superconducting Maglev Article 7 Development Plan enables us to offer multiple routes in our main transportation of safety in construction of all lines and to pledge to carry out System, and the actual travel time required to move between the safe construction. Furthermore, we have been promoting the centers of Tokyo and Osaka can be shortened to approximately ● Agreed on May 23, 2011 hubs has become even more important to prepare for the risk preparation for the full-scale construction, such as establishing the half of airplanes. In addition, the amount of CO2 emissions that → Decided on May 26, 2011 from natural disasters. This is the very reason why we decided to complete the Chuo Shinkansen as quickly as possible, as it system to acquire land with the cooperation of local municipalities Superconducting Maglev System produces when carrying one can be used instead of the Tokaido Shinkansen by utilizing the along the line and starting the procedures for measurement for the person between Tokyo and Osaka is approximately one-third of Article 8 Instruction to Construct Superconducting Maglev System, which we have developed, under center line and construction contracts, etc. airplanes. As this shows, Superconducting Maglev is a transport system suitable for the 21st century in which global environment ● Instructed on May 27, 2011 the condition that we bear the cost of its rail construction. JR Central will operate the Chuo Shinkansen in an integrated manner preservation is becoming more and more important. Environmental Impact Assessment along with the Tokaido Shinkansen. While promoting this project, we will make necessary Initiatives with the Yamanashi Maglev Line investments to ensure safe and reliable transportation and to Based on our long-term belief that the Superconducting Maglev Article 9 Construction Implementation Plan enhance competitiveness as well as ensure sound management System is the most suitable for use on the Chuo Shinkansen due and provide stable dividends. We will first realize the project to its speed and advanced technology, JR Central has not only ● Submission of Construction Implementation Plan (Part 1) on August 26, 2014 between Tokyo and the City of Nagoya and strive to further extend conducted technological developments but also constructed the Approved on October 17, 2014 → to the City of Osaka as soon as possible after the company regains Yamanashi Maglev Line and conducted test runs. its business strength. As a result, the Superconducting Magnetic Levitation Start of Construction In order to confirm that the principles of a privately owned Technological Practicality Evaluation Committee of the Ministry company, such as freedom of management and autonomy of acknowledged that the Superconducting Maglev technology had already achieved levels sufficient for commercial operation in July *Research on “the residual 4 items” capital investment, would not be hindered by application of the 2009. The Minister established the technological standards of the ● Items related to transportation capacity in response to the transportation demand Act, we referred fundamental clauses regarding application of the ● Items related to the development of facility and rolling stock technologies Act to the Ministry of Land, Infrastructure, Transport and Tourism Superconducting Maglev in December 2011. ● Items related to construction costs (the Ministry) and received a reply in January 2008 indicating that JR Central is currently conducting test runs using a new vehicle, ● Other necessary items those principles would not be hindered. the series L0 (L zero), in commercial line specifications and making

16 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 17 Key Measures and Management Strategy Sales and Marketing

Sales and Marketing Diagram 2 A poster introducing “Express Reservation” and “PLUS EX” Diagram 3 Kyoto Campaign Diagram 6 Image of Mutual Use of IC card for conventional lines in Japan

Any IC card for conventional lines can be used for railway and FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 bus services in all areas.

Promotion of sales and marketing to increase revenues Kitaca areas (Various campaigns, etc. utilizing tourism resources, such as Kyoto and Nara, etc.) ★Release of The Tokaido Shinkansen 50th Anniversary commemoration travel products ★Enhancement of tourist products for EX and 50+ members ICOCA areas

TOICA areas

Diagram 4 “Shupo Campaign” Diagram 5 "Japan Highlights Travel" website HAYAKAKEN areas nimoca areas Diagram 1 Shifts in “Express Reservation” usage and the membership numbers Suica areas Membership Numbers of use (Daily average on weekdays) Membership Usage (Thousand) 2,660 (Thousand) 2,500 2,360 250 2,170 2,000 1,980 200 SUGOCA areas 1,790 manaca areas PASMO areas 1,610 PiTaPa areas 1,500 134 138 150 110 119 1,000 96 96 100

500 50 *IC cards for conventional lines cannot be used for travel that extends beyond the areas of use of each card. However, this excludes travels between the Suica and Pasmo usage areas in the metropolitan area and between Sugoca usage areas in Kyushu and part of the 0 HAYAKAKEN area (sections of mutual direct service). Also, some transportation companies ’10.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 Note 1. The membership numbers are as of the end of each month and include the total of JR Central and JR West. do not allow mutual use of IC cards. 2. Include "PLUS EX" members starting in March 2013

Proactive Promotion of Sales and Marketing with the Aim of thousand (as of March 2015). [ Diagram 1/2] as the “Tokyo Bookmark” campaign that mainly targets trend- Enhancement of IC Service for Conventional Lines［ Diagram6］ Increasing Revenues In FY2015, we will continue working to expand membership conscious young women. While improving convenience for business passengers, we are numbers/usage with the focus on customers, who currently In FY2015, we will not only showcase the attractions of While we have been promoting “TOICA”, the IC card for also making efforts to stimulate tourism demands through various use our services for business, by improving convenience for these tourism resources again but also capture opportunities, conventional lines, by expanding valid areas, expanding mutual information media/sales channels by launching various campaigns customers and effectively promoting advertisement. We will such as events, etc. along the line, and will develop attractive use, and adding the electronic money function, etc., we have and products for each region and target to further increase also enhance our tourism product lineup for members, such as products in cooperation with local people and travel agencies started nationwide mutual use with the 10 main conventional line revenues. "EX Family Hayatoku", "IC Hayatoku Type 21", and "Kodama with the aim of encouraging more people to travel, using the IC cards in March 2013. [ Diagram 6] "Express Reservation" and "PLUS EX", which are mainly offered Rakutabi IC Hayatoku", so that our customers use our services Tokaido Shinkansen. The mutual use enables those with any IC card for conventional to business passengers, are internet seat reservation services, not only for business but also for tourism; thus further lines to use the railways and buses within the area of each which are the key features for the Tokaido Shinkansen. We will expanding the usage by utilizing the member base. company and also to use electronic money at member stores of continue thoroughly expanding their use. Cooperation with Communities ［ Diagrams4/5］ each operator (excluding member stores of PiTaPa). In terms of tourism, we will not only further deepen our By introduction of transportation system electronic money cooperation with local communities along the line as well as travel JR Central promotes initiatives, such as the “Shupo Campaign” to commercial facilities in city centers, stores in stations, and 50+ agencies but also strive to further expand the Shinkansen use by which introduces a number of tourism resources along our convenience stores etc., it has been expanding the usage as a offering attractive travel products that are unique to the Tokaido JR Central has been operating a travel club "50+", which anyone conventional lines, together with the local people for the promotion means of payment for customers. Due to this, we introduced Shinkansen through effective campaigns, such as the "Kyoto over 50 years old can join, since 2003. The number of members as of the limited express trains on conventional lines. [ Diagram 4] transportation system electronic money to pay for items sold Campaign". of March 2015 is approximately 760,000. We not only inform the We also promote “Sawayaka Walking”, etc, which is a walking in the Tokaido/Sanyo Shinkansen trains in March 2015 with the members of seasonal tourism information through the magazine event visiting the tourist spots along our lines which is free of aim of further improving convenience for customers. The total of Enhancement of Tourist Products Utilizing the and the Internet but also inform them of exclusive travel products, charge. In May 2015, the number of the cumulative participants transportation system electronic money uses exceeded 120 million Active Member Base such as tours that enable customers to enjoy special viewings of reached 4 million people. We are also planning a commemorative per month for the first time in May 2015.* We will aim to further increase the demand by enhancing tourist shrines and temples. event. products targeting members of "Express Reservation", "PLUS EX", In FY2015, we are promoting "Always the same price for 50+", In September 2014, we also established "Japan Highlights We will continue striving not only to promote the establishment and "50+". which is a special product for the web members that offers the Travel" (in Japanese and English, etc.), which is a portal site of nationwide mutual use services but also to promote the use of same special price during a certain period regardless of the season that has a collection of tourism information along the Tokaido railways and electronic money services. or day of the week. We also share tourism information from new Shinkansen, with the cooperation of local municipalities and “Express Reservation” and “PLUS EX” Diagrams1/2 perspectives through "Futatabi", which is a new brand of "50+". tourism associations along the line. We will enhance the contents, JR Central offers “Express Reservation” along with “PLUS Through these initiatives, we will promote the enhancement of etc. in FY2015 with the aim of further stimulating the travel *Total number of electronic money uses for various transportation systems in member stores of Kitaca, PASMO, Suica, manaca, TOICA, ICOCA, HAYAKAKEN, nimoca, and SUGOCA EX” services, which can be used with various kinds of credit tourism demand and expand customers for tours, which have demand. [ Diagram 5] cards frequent customers of the Shinkansen already own who higher added values. use it mainly while on business. These services can significantly shorten the total travel time for customers because they can reserve seats online even if their schedule, such as a meeting Products for Foreign Tourists time, suddenly changed, change the reserved seat as many Deployment of Various Campaigns ［ Diagram3］ times as they like without any fee, and board trains by touching With the Japanese Government striving to attract more foreign their special IC card for the Shinkansen on the reader at the First, JR Central has continuously implemented travel campaigns travelers to visit Japan, JR Central is doing its part by working automatic ticketing gates. Furthermore, when transferring to a for Kyoto and Nara, which are the largest tourist resources in with travel agencies and local municipalities along train lines to conventional line, customers can transit smoothly by touching our market area, and the company is promoting the use of the increase the number of tourists visiting Japan. We also sell travel two cards, the special IC card for the Shinkansen and another Shinkansen mainly from the Tokyo Metropolitan area to the products, etc. for foreign tourists through the Internet, etc., using IC card for conventional lines such as “TOICA”, together on the Kansai region. [ Diagram 3] We will especially promote large-scale the "FLEX JAPAN" brand, with the aim of stimulating the tourism reader at the automatic ticketing gates. advertisement for the Kyoto Campaign while incorporating shrines demand for the Tokaido Shinkansen. In FY2014, we significantly increased the memberships and temples that we have covered in the past, with the concept of In addition to this, we also collaborate with various local through the sales of commemorative products, such as "Super- enabling customers to re-acknowledge the Japanese beauty and transportation companies to promote the sales of excursion Super IC Hayatoku" and “Kodama Rakutabi IC Hayatoku”, to its depth possessed by Kyoto. packages for foreign tourists visiting Japan, targeting areas such commemorate the 50th anniversary of the Tokaido Shinkansen. In terms of measures to increase the tourism demand from the as "Takayama/Hokuriku" and "Ise/Kumano". As a result, the number of members of “Express Reservation” Kansai and Nagoya regions to the Tokyo Metropolitan area, we together with the “PLUS EX” service has become 2.66 million, are striving to develop and promote the sales of travel products in and daily usage per weekday has become approximately 140 collaboration with popular tourist spots through initiatives, such

18 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 19 Key Measures and Management Strategy Technological Development and Enhancement of Technical Technological Development and Capability / Overseas Deployment of High-Speed Rail System Enhancement of Technical Capability/ Overhead contact line test simulator Rolling Stock Field Test Simulator Image of Overseas High-Speed Railway Signing a technical consulting contract with Taiwan High Speed Rail Overseas Deployment of High-Speed Rail System Diagram 2 Diagram 3 Diagram 5 Diagram 6

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Cost reduction through technological development, research and development of practical technologies

Marketing activities, etc. with the aim of establishing projects targeting certain lines ★April 2014 International High-Speed Rail Association (IHRA) is established ★April 2014 Technical Consulting Agreement with Taiwan High Speed Rail Diagram 4 Outcome of technological development equipped on N700A ★October 2014 In Commemoration of the 50th Anniversary of the Tokaido Shinkansen, High-Speed Rail Conference ① Wheel Mounted Brake Disk

Diagram 1 Internal Research Facility (Komaki City, Aichi Prefecture) (Conventional) Internal Circumference- Brake Disk Bolt Wheel Mounted anchored Brake Disk Brake Disk Diagram 7 Prime Minister Abe and U.S Ambassador to Japan Kennedy, observing the Yamanashi Maglev Line Diagram 8 In Commemoration of the 50th Anniversary of the Tokaido Shinkansen, High-Speed Rail Conference

Brake Disk

②Bolsterless Bogie Vibration Detection Mechanical problems are displayed in the driver's cabin System

Vibration Vibration Sensor Detection Vibration Sensor Machine

Creating the Future through Research and Development of characteristics through field tests. We have been introducing it Technological Development that Supports Series N700/N700A Diagrams3/4 become concrete, the office not only coordinates with relevant Railway business is made possible by employees with various when replacing the lines due to aging damage since November 2014. Series N700 began commercial operation in July 2007. The Japanese companies but also provides support and consultation skills cooperating with one another to thoroughly execute their With fewer parts, the next generation overhead contact line can results of various research and development, such as the to ensure safe and reliable operation of the high-speed railway by tasks and by various types of equipment, such as rolling stock, reduce the risk of malfunction and reduce the replacement cost after "modification of the nose shape" and the "Body Inclining System", supplying various manuals regarding operations/maintenance, and civil engineering structures, tracks, and electric and signaling introduction by approximately 20%. are reflected in the series N700. N700A, which was introduced conducting education/training for staff, etc. equipment, functioning seamlessly. In order for a railway operator in February 2013, reflects the technological development results Improving the performance of ATC (Automatic Train Control) Track Circuit to further ensure safety and strengthen its future managerial from the test rolling stock of Series N700 and the “Rolling Stock (1) The N700-I Bullet and SCMAGLEV foundation, it is vital for us to continue developing technologies, We have been working to improve the performance of ATC since Field Test Simulator”, which reproduces running conditions by JR Central is proposing high-speed railway systems called the which are the base of the foundation. Based on this belief, JR 2011 in an effort to update ATC facilities. We have thoroughly simulating various vibrations and aerodynamic characteristics that “N700-I Bullet” and “SCMAGLEV” to overseas markets. The “N700-I Central is proactively tackling the issue of practical technological conducted evaluations through simulations and onsite evaluations are generated while running. By equipping N700A with “Wheel Bullet” is an integrated high-speed rail system that consists mainly development and enhancement of technical capability, and is at the Komaki Research Center as well as test introduction of Mounted Brake Disks”, which provide stronger and more reliable of the Series N700 rolling stock. achieving significant results. actual facilities in the field, etc. This has enabled us to extend the braking, the “Bolsterless Bogie Vibration Detection System”, which The “N700-I” is based on Series N700 operated in Japan and Furthermore, JR Central is promoting the deployment of ATC signal transmission distance. This introduction will reduce the continuously monitors the state of all bogies, and the “Cruise refers to an 8 car trainset (Series N700 is a 16 car trainset) that high-speed railway in overseas projects by leveraging the malfunction frequency due to there being fewer facilities, enhance Control System”, which enables even more reliable operation using meets the overseas market trends and can currently travel at a comprehensive high-speed railway technical capability that the the facility monitoring function, and aggregate equipment rooms, ATC signals, we have been able to further improve safety and maximum speed of 330km/h (205mph). The Superconducting company has cultivated through the operation of the Tokaido etc. We will be able to further improve reliability in the Tokaido reliability of the Tokaido Shinkansen rolling stock. Maglev (SCMAGLEV) is a high-speed transportation system Shinkansen. Shinkansen's ATC and enhance the efficiency of maintenance. developed by JR Central that can realize commercial services at a speed of 500km/h (311mph). JR Central currently proactively Overseas Deployment of High-Speed Railway System ［ Diagram5］ promotes marketing activities, targeting the State of Texas for the Promoting Technological Development at the Development of a New Method for Large-Scale Renovation “N700-I Bullet,” and the north east corridor of the United States Komaki Research Center In terms of large-scale renovation methods, the company has Today, global warming is a pressing issue. High-speed between Washington D.C. and New York City for “SCMAGLEV”. JR Central opened its own R&D center in Komaki, Aichi continuously promoted research and development for over 10 railway has many environmental advantages over other forms of Prefecture in July 2002, and is promoting R&D activities to further years and successfully developed a new construction method. transportation, and construction projects are underway all over (2) Technical Consulting Agreement with Taiwan High Speed Rail Diagram6 strengthen our efforts toward technological development that In this method, we first take measures to extend the life of the world. JR Central offers consultation to overseas high-speed ［］ will support our future with the aim of enhancing our technical structures by inhibiting the very occurrence of aging damage of railway projects and coordination services (C&C) for our group JR Central signed a technical consulting agreement with Taiwan capabilities and developing human resources. The Komaki civil engineering structures, then we conduct overall renovation, companies and various domestic manufacturers by utilizing our High Speed Rail Company, which operates high-speed railways in Research Center not only further promotes cost reduction in such as replacement of the parts, as necessary by observing the comprehensive technologies regarding the highest level high- Taiwan, in April 2014 and provides consulting services as the first facility maintenance/updates, such as large-scale renovation, etc., structure condition. The new method makes it possible not only to speed railway system in the world. C&C business entrusted by overseas railway operators. with the primary focus on safety and reliability, but also promotes reduce interference significantly when doing the construction work JR Central believes that the overseas deployment of its high- research and development for practical technologies, which lead but also to greatly reduce construction costs. speed railway system will be a meaningful project that not only Additional Efforts for Overseas Deployment Diagrams Diagrams7/8 to enhancement of efficiency in inspections and maintenance, etc., leads to diversification of our group's revenue sources but also and to improvement of transportation services, etc. JR Central, JR West, JR East, and JR Kyushu established the Introduction of the Bolsterless Bogie Temperature Detection System enables domestic manufacturers to maintain and strengthen their We also promote efforts related to more accurate forecast/ technology and skills through the expansion of the international "International High-Speed Rail Association (IHRA)" in April 2014 detection, etc. for extreme weather and major natural disasters. The Tokaido Shinkansen possesses the function to record high-speed railway market, and it also leads to technological to promote the Japanese high-speed rail system based on the [ Diagram 1] various data, which indicates the condition of each piece of innovation and cost reduction of railway-related equipment. principle of “Crash Avoidance”* as a global standard. Furthermore, equipment during operation, within the rolling stock and transmit we held the "In Commemoration of the 50th Anniversary of the it to the ground side. We have further developed the Bolsterless Tokaido Shinkansen, High-Speed Rail Conference" on October Recent Technological Developments Bogie Temperature Detection System, which monitors the C&C (Consulting and Coordination) Business Diagram6 22, 2014 with IHRA, JR West, and JR Kyushu to promote deeper soundness of rolling stock bogies from the ground side, and Internally established the “C&C (Consulting and Coordination) understanding of the Japanese high-speed rail system among Introduction of the Next Generation Overhead Contact Line (high-speed heavy simple overhead contact line) Diagram 2 put it into practical use. It measures the surface temperature of Office-Overseas High Speed Railway Project” which mainly people in more countries and regions. We have developed the next generation overhead contact line, key parts of bogies, such as wheels and axle boxes of trains in promotes overseas deployment of the high-speed railway system. which can respond to the Tokaido Shinkansen's characteristics of operation, from the ground (tracks) and confirms the soundness. C&C office proposes the deployment of high-speed railway *The principle of “Crash Avoidance” is a safety system that is designed to prevent even the long trainset, high density, and high-speed travel, and which can By continuously monitoring this data, we are able to improve possibility of a collision. The key elements of “Crash Avoidance” are: the use of “exclusively as a total system, which includes civil engineering structures, dedicated tracks for high speed passenger rail service”, which completely exclude freight also realize cost reduction at the same time. We have been putting it inspection accuracy and efficiency of rolling stock inspections, and tracks, electrical equipment, signaling equipment, rolling stock, and commuter rail being on the same tracks; no at-grade crossings of any sort; and an to practical use through steady technological development, such as ensure safe and reliable transportation. “Automatic Train Control” (ATC) system, which automatically detects train positions and operation management systems, maintenance and repairing, etc., controls the operation of the system. tests and simulations using an overhead contact line test simulator at to overseas markets. When overseas high-speed railway projects the Komaki Research Center as well as evaluations and understanding

20 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 21 Key Measures and Management Strategy Affiliated Business

Affiliated Business Diagram 1 Shifts in the Operating Revenues of Consolidated Subsidiaries (simply aggregated) Affiliated Business Diagram 2 JR Central Towers Diagram 3 Completion image of "JR Gate Tower" (right side)

Transportation Merchandise and Other Real Estate Other

556.1 557.7 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 （29） 528.6 （29） 12.1 518.1 525.9 （31） 511.2（29） (Billion yen) 507.3 （29）（31）（29） 500 Promotion of the "JR Gate Tower" Project at Nagoya Station 462.4 （30） 436.2 FY2015 winter Completion of framework★ （30） November 2016 Start of occupancy of offices ★ 410.5 236.3 （30） April 2017 Inauguration of commercial facilities/hotel★ 400 382.0 385.0 369.3（29）（30） 355.6（30） 335.0（30） JR Nagoya Takashimaya （30）

300 64.0

210.1 （19） 200 "Takashimaya Gate Tower Mall" completion image "Nagoya JR Gate Tower Hotel" completion image 245.1

100

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 Note: Each of the figures in parentheses indicates the number of consolidated subsidiaries at the end of FY

Aiming for the Collective Strength of the Whole In terms of the department store business, JR Tokai In addition, restaurants, a mass appliance retailer, fitness club, List of Consolidated Subsidiaries Takashimaya Co., Ltd., belonging to the “Merchandise and Other” childcare facility, and medical facilities, etc. are scheduled to JR Central Group Capital Shareholding Segment Company Name Main Business segment, operates JR Nagoya Takashimaya, attracting many occupy the building. We aim to create a highly convenient and (Million yen) (%) As seen in JR Central Towers, Shin-Yokohama Chuo Building, visitors by leveraging the store's location directly above the attractive building. and the “JR Gate Tower” Project, we are improving the revenue station. Thanks to renovation of sales space and proactive sales We will steadily move the project forward with the start of JR Tokai Bus Company 1,747 100.0 Bus services promotions, etc., the sales of FY2014 was 126 billion yen (104.7% occupancy of offices in November 2016 and the opening of the base by engaging in businesses that are expected to generate Transportation JR TOKAI LOGISTICS COMPANY 300 90.0 Logistics business synergic effects with the railway business, such as areas that make YoY), which is the highest ever and approximately twice as much "Takashimaya Gate Tower Mall" and "Nagoya JR Gate Tower Railway business, entrusted business full use of the good location of railway stations. We will continue as that in 2000 when the store commenced its operation. Hotel" in April 2017. Tokai Transport Service Company 295 100.0 striving to enhance the earning capability as a business group by With regard to the hotel business, Nagoya Marriott Associa Hotel JR Tokai Takashimaya Co., Ltd 10,000 59.2 Department store operations deploying businesses in cooperation with group companies. is run by JR Tokai Hotels Co., Ltd. (wholly-owned subsidiary of JR Wholesale and retail sales, JR-CENTRAL PASSENGERS Co., Ltd. 998 100.0 food and beverage service Central, belonging to the “Other” segment). The location directly Merchandise above the station allows for a spectacular view from the high-rise, Other Initiatives and Tokai Kiosk Company 700 100.0 Wholesale and retail sales and the high-grade facilities have gained wide acclaim, thereby Other Tokai Food Service Co., Ltd, 295 51.6 Food and beverage service Deployment of the JR Central Group ［ Diagram1］ enabling the hotel to maintain a high occupancy rate of more than In terms of the merchandising businesses, we will enhance 85% in FY2014 (annual average). customer-attracting capabilities and product capabilities by JR Tokai Corporation 100 70.0 Wholesale and retail sales The combined operating revenues of these three companies updating products and renovating stores, etc. In terms of The JR Central Group undertakes business in the areas of JR CENTRAL BUILDING CO., LTD. 45,000 100.0 Real estate leasing “Transportation”, “Merchandise and Other”, “Real Estate” and were 167.7 billion yen in FY2014 (simply aggregated). We will be real estate businesses, we have completed the renovation of Real estate leasing and sales “Other”. The “Transportation” segment involves railway business further strengthening and developing businesses at Towers, which commercial facilities in 4 stations, including "Cubic Plaza Shin- JR Tokai Real Estate Co., Ltd. 16,500 100.0 have already been well-established. Yokohama", in FY2014. We will aim to expand revenues in the Shin-Yokohama Station Real estate leasing and bus business. The “Merchandise and Other” segment manages Development Co., Ltd. 9,304 100.0 department stores and provides sales services for goods and existing commercial facilities by renovating "Termina", the Toyohashi Station Building Co., Ltd. 1,880 52.5 Real estate leasing food in stations and trains, utilizing the railway's ability to attract underground mall in front of Nagoya Station, to the "Gate Walk", customers. The “Real Estate” segment develops commercial which will be a suitable approach to “JR Gate Tower”, etc. Real Tokyo Station Development Co., Ltd. 1,750 100.0 Real estate leasing Diagram “JR Gate Tower” Project ［ 3］ Moreover, for IC card “TOICA”, the IC card for conventional Estate Shizuoka Terminal Development facilities in stations and areas under elevated track columns 624 67.0 Real estate leasing and also leases real estate such as station buildings. As far as lines, we have expanded member stores and improved convenience CO. Ltd. HAMAMATSU TERMINAL Real estate leasing the “Other” segment is concerned, we manage hotels at major The “JR Gate Tower” Project is a project to construct a tall for the use of electronic money. Also, we have promoted the shift DEVELOPMENT CO. Ltd. 600 76.8 stations, travel agencies, and advertising agencies, etc. We also complex comprised of offices, commercial facilities, a hotel, to digital signage for advertisement media in stations. We will Nagoya Station Area Real estate leasing Development Corporation 480 100.0 manufacture rolling stock and maintain, inspect, and repair our a bus terminal and parking lots, next to Towers. The height is continue promoting efforts to enhance the competitiveness and JR DEVELOPMENT AND MANAGEMENT Real estate leasing railway facilities. approximately 220 meters, and the total floor area is approximately expand revenues of the existing businesses. CORPORATION OF SHIZUOKA 363 100.0 260,000m2. It is approximately 60% of the scale of Towers. It JR Development and Management Real estate leasing Operating revenues of consolidated subsidiaries, excluding JR Corporation of Kansai 30 100.0 creates a highly convenient and attractive urban space with Central, totaled 557.7 billion yen (simply aggregated) in FY2014. Hotel business Towers, providing even more activities around Nagoya Station. JR Tokai Hotels Co., Ltd. 14,000 100.0 From the standpoint of efficient management by the JR Central JR Tokai Tours 490 70.0 Travel agency services Group, JR CENTRAL BUILDING CO., LTD. will be in charge of the JR TOKAI AGENCY CO., LTD. 61 90.0 Advertising JR Central Towers ［ Diagram2］ overall management/operation of the building. "Takashimaya Gate NIPPON SHARYO, LTD. Manufacturing of railway Tower Mall", which is operated by JR Tokai Takashimaya Co., Ltd., 11,810 51.2 rolling stock and "Nagoya JR Gate Tower Hotel", which is operated by JR Tokai JR Central Towers (or “Towers”), the skyscraper complex with Other JR TOKAI CONSTRUCTION Co., Ltd. 300 100.0 Construction a height of 245 meters and total floor area of approx. 417,000m2, Hotels Co., Ltd., are scheduled to occupy the building. CHUOH LINEN SUPPLY Co, Ltd. Linen supply services built on Nagoya Station, is the core of the JR Central Group’s "Takashimaya Gate Tower Mall" will have approximately 150 150 87.6 fashion/goods stores. We will aim to effectively deploy businesses JR TOKAI Information Systems Company Development, improvement and affiliated businesses and has a department store, a hotel and 100 100.0 maintenance of systems offices that three of our subsidiaries are operating. The grand through the 2 department stores in an integrated manner by The Japan Mechanised Works and 100 92.1 Track maintenance and inspection opening in 2000 significantly increased the revenues from our offering stores in categories/price range that are not covered by Maintenance of Way Co. LTD Tokai Rolling Stock & Machinery Co., Ltd. Rolling stock and machinery affiliated businesses. the current JR Nagoya Takashimaya. 80 88.4 inspections and repair "Nagoya JR Gate Tower Hotel" will have 350 rooms in total. It The office business is run by JR CENTRAL BUILDING CO., LTD. JR Central Consultants Company 50 100.0 Construction consulting business (wholly-owned subsidiary of JR Central, belonging to the “Real will be a hotel with the focus on lodging that provides a sense of high quality and great functions, while offering the convenience Note 1: Two affiliated companies, SHINSEI TECHNOS CO., LTD. and RAILWAY INFORMATION Estate” segment), which owns Towers. Since its opening, the SYSTEMS CO., LTD., are accounted for by the equity method. of being directly connected to the station as well as providing a Note 2: SHIZUOKA TERMINAL HOTEL CO., Ltd. merged with JR Tokai Hotels Co., Ltd. offices have continually recorded high levels of occupancy, which on April 1, 2015 and was dissolved. remained at almost 100% during FY2014. comfortable sleeping environment.

22 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 23 Engagement in Global ESG Information Environment Preservation Engagement in Global Environment Preservation Diagram 2 Comparison of the Tokaido Shinkansen and Airplane (between Tokyo and Osaka) Diagram 3 Comparison of Electricity Consumption by the Tokaido Shinkansen Rolling Stock Type Diagram 4 Shifts in the Ratio of the Tokaido Shinkansen Energy-Saving Type Rolling Stock and Energy Consumption Unit （%）（%） 270km/h -23％ Compared to FY1990 100 100 ■Energy Consumption per Seat 100 270km/h -16％％ 33% improvement Approximately 92％ Distribution of Passenger Transportation Share, in terms of Transportation Volume, 285km/h Diagram 1 80 80 Energy Consumption and CO2 Emissions Shinkansen *1 90MJ 1/8 77％ Railway Bus Airplane Car Others of airplane 60 Series 0, Series 100 60 Series N700 “Nozomi” Energy-saving type rolling stock 40 Series 300/Series 700 40 3% 7% 9% Airplane Rolling Stock Ratio 746MJ *2 20 Even more energy-saving type rolling stock 20 Series N700/N700A B777-200 0 0 52% Series 300 Series 700 N700A ’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 （1992）（1999）（2013） (FY) Energy Consumption Unit (Ratio using an FY1990 basis) *Simulated run from Tokyo to Shin-Osaka at the maximum speed above. 84% CO2 Emission per Seat 77 ■ % Approximately Diagram 5 Reduction in Running Resistance (Coverall Hoods) Diagram 6 Electric Power Regenerative Braking System 5% Shinkansen *1 6% 4.2kg-CO2 1/12 of airplane Series N700 29% “Nozomi” 5% 6% 2% 3% 6% 5% Airplane Transportation Energy CO2 emissions *2 volume consumption 50kg-CO2 (Passenger-kilometer) Brake (Generation) Propulsion (Electricity consumption) B777-200 The motor is used as a The electricity that is returned Source: For transportation volume/energy consumption, created based on data from Transportation Related generator during braking to to the overhead contact line Statistics (Ministry of Land, Infrastructure, Transport and Tourism), and for CO2 emissions, the National produce electricity and return it is recycled by other trains Institute for Environmental Studies, Greenhouse Gas Inventory Office of Japan. *1. Calculation based on running performance of Series N700 “Nozomi” (Tokyo-Shin-Osaka) conducted by JR Central Series 300 N700A to the overhead contact line. during acceleration. * The total of items in the breakdown may not be 100% due to rounding. *2. Calculated by JR Central using ANA's "Annual Report 2011" B777-200 (Haneda - Itami/Kansai Airport) for reference (Not Equipped with Coverall Hoods) (Equipped with Coverall Hoods)

Fundamental Policies for Engaging in Global Initiatives with Shinkansen Diagrams3/4/5/6 2 Great Environmental Performance of Series N700 and N700A Environment Preservation Series N700 and N700A trains have been highly improved in the environmental performance both in terms of speed and comfort JR Central believes that demonstrating the superior qualities 1 Introducing Energy-saving type Rolling Stock due to the introduction of technologies mentioned as follows. of railways, particularly with the Tokaido Shinkansen, results in We are proactively developing and introducing energy-saving a contribution to global environment preservation. Our proactive type rolling stock in our effort to further reduce Shinkansen energy We reduce the running resistance by introducing the nose shape with great aerodynamic attributes, using flush Reduction in running resistance approaches focus on the following two points. Firstly, we reduce direct consumption. 1 windowpanes, which have no unevenness between the outside panel and windowpane, and installing coverall [ Diagram 5] burden on the environment by further enhancing the energy efficiency In March 1992, we introduced Series 300, in which the energy hoods between all cars, etc. for railway operations through initiatives such as improving energy- consumption was improved by approximately 30% compared to the first Series 0. In October 2003, all rolling stock was replaced efficiency of rolling stock. Secondly, we strive to offer even more A light and simple-structured bolsterless bogie is used for rolling stock in Series 300 and after. Light aluminum alloy comfortable transportation services with the aim of having as many with Series 300/Series 700. We introduced 80 Series N700 2 Reducing rolling stock weight is used for the body frame. Furthermore, we employed a high performance and small alternating-current traction trainsets in the five years starting from 2007. We introduced 19 customers choose and use railways as possible, which has less burden motor. Through these changes, we have reduced the rolling stock weight. of the latest N700A trainsets by FY2014 and are scheduled to on the global environment. We believe that these initiatives would introduce 12 trainsets in FY2015 and FY2016. suppress the environmental burden in the entire transportation sector, Energy consumption volume for N700A to travel between Tokyo and The Body Inclining System is introduced to Series N700/N700A for the first time in the Shinkansen in order to and would lead to global environment preservation. Shin-Osaka at the maximum speed of 285km/h is 23% less than Series 3 Introducing the Body Inclining increase the speed at curves currently subject to speed restriction. This system makes it possible to increase 300 and 16% less than Series 700 which travel at the maximum speed System speed while maintaining comfort, shortening travel hours, and reducing the frequency of speed acceleration and deceleration. Environmental Superiority of Railway Diagrams1/2 of 270km/h. It means that N700A has significantly improved energy consumption while accelerating the speed. [ Diagram 3] Railways have the outstanding characteristic of being highly energy The result is that our Energy Consumption Unit* at the end of The Electric Power Regenerative Braking System, in which the motor is used as a generator during braking to efficient compared to other transportation modes and having minimal FY2014 improved by approximately 33% compared with that of Expansion of Electric Power produce electricity and return it to the overhead contact line, is used in the Shinkansen for the first time. This adverse impact on the global environment. In terms of transportation Regenerative Braking System is installed in rolling stock in Series 300 and after. While 12 of the 16 cars in one trainset of Series 700 were FY1990. [ Diagram 4] 4 regenerative, 14 of the 16 cars in one trainset of Series N700 and N700A are regenerative. The Electric Power volume and CO2 emissions in passenger transportation, even though We will aim to further achieve energy efficiency by promoting [ Diagram 6] Regenerative Braking System provides all of the braking power needed for one trainset during normal braking. railway accounts for 29% of the passenger transportation volume in the introduction of N700A. Japan, it is only responsible for 5% of CO2 emissions. [ Diagram 1] Compared with an airplane (B777-200), the Tokaido Shinkansen *JR Central defines Energy Consumption Unit as the "amount of energy consumed when The power converter (CI) converts electricity from the overhead contact line and sends it to the motor at the time (Series N700 “Nozomi”) consumes approximately 1/8 of the amount running 1 car for 1 kilometer", due to total rolling stock kilometers being the value which is of acceleration and returns the electricity generated by the motor back to the overhead contact line at the time of the most relevant to our business activities. Lighter, smaller blower-less CI in of energy per seat when traveling between Tokyo and Osaka, deceleration. JR Central was the first to put the blower-less power converter, which uses the wind from running 5 all motor cars and discharges about 1/12 of the CO2 emissions. The data show for air cooling, into practical use in Shinkansen and uses the system in part of the rolling stock of Series N700. For that the Tokaido Shinkansen has overwhelming environmental N700A, they were made 17% smaller and lighter and installed on all motor cars. superiority. [ Diagram 2] In the cabins of regular cars on N700A, lighting has been optimized in accordance with the bright seat colors. LED Optimization of cabin lighting and lights with dimmer switches have also been employed in the toilets and powder rooms. These measures have resulted 6 introduction of LED lighting Environmental Action Guidelines in achieving a reduction in energy consumption of lighting by approximately 20% compared to Series N700.

1 Provide comfortable transportation services to promote further use of Approximately 90% (weight ratio) of the waste generated by scrapped Shinkansen rolling stock is recyclable. With railways which offer superior global environment preservation N700A, 100% recyclable polyester has been used for seat cushions, and conventional FRP (fiber reinforced plastic) 7 Using eco-friendly materials 2 Promote technological development that contributes to global bogie skirts, which cover bogies to lower air resistance, have been replaced with stainless steel ones to utilize environment preservation highly recyclable materials.

3 Efficiently utilize fuel and energy

4 Promote waste controlling and recycling

5 Appropriately manage chemical substances 3 Enhancement of Electricity Supply Efficiency by Replacing Ground Facilities Also, by replacing part of the frequency converters from FY2014 6 Procure environmentally friendly goods and materials By replacing the electricity compensation devices from FY2011 to to FY2021, which convert 50Hz electricity to 60Hz electricity 7 Contribute to society and raise awareness for global environment FY2018, which inhibit voltage reduction as rolling stock travels away from required to operate the Shinkansen, with a stationary type with preservation a substation, with a facility with less electricity loss, we expect to be able less loss, we expect to be able to reduce Shinkansen electricity to reduce the electricity use on the Shinkansen by approximately 3%. consumption by approximately 2%.

24 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 25 Engagement in Global ESG Information Environment Preservation

Comparison of Electricity Consumption and Diesel Fuel Consumption Diagram 7 of Conventional Line Cars (Electric Cars and Diesel Railcars) Diagram 8 Shifts in the Number of Rolling Stock (Electric Cars and Diesel Railcars) in Conventional Lines Diagram 13 Environmental Accounting Diagram 14 INPUT/OUTPUT

■ Electric cars ■ Changes in the Number of Energy-Saving Type Electric Rolling Stock Introduced ■Changes in the Number of Energy-Saving Type Diesel Cars Introduced Cars with new model Cars with conventional (Cars) Energy-saving type Conventional type (Cars) Environment preservation cost INPUT energy-saving type engines type engines (100 million yen)*1 Conventional rolling 100 1,200 300 Classification Main Initiatives Principal Effects of Environmental stock Series 117 2.79 billion kWh (110km/h) (Base) 497 Investment Expenditures Electricity 1,000 351 664 250 (2.03 billion kWh) New energy-saving type Global •Introduction of energy-saving type rolling stock •Energy-saving type rolling stock ratios: 100% (Shinkansen rolling stock 868 1009 256 69 139 223 244 environment •Improved energy-efficiency at stations and electric cars), 100% (conventional line electric cars), 100% Fuel Series 313 (120km/h) 800 200 221 preservation office buildings 447.9 5.7 (conventional line diesel railcars) 33 thousand kL •Installation of non-CFC type equipment, etc. (Amount of cost •Non-CFC rectifiers: 45 in operation converted crude oil) (15 thousand kL) *Based on simulated test runs between Toyohashi and Ogaki (rapid operation) 774 600 150 •Energy efficiency of Series N700A 658 Research and 3 ■ Diesel railcars •Development of energy-saving type rolling stock 23% (more efficient than Series 300) Water 3,331 thousand m development 0.0 89.4 ▲ 400 100 •Development related to environment *Comparison between series 300 (running at the speed of 270km/h) and 419 cost preservation along railway lines, etc. N700A (running at the speed of 285km/h) *Figures in parentheses are for Rolling stock with 100 103 operations (reprinted) conventional engine (Base) 200 50 •Proper disposal and recycling of station and 20 Resource train refuse, etc. •Recycling rate for refuse and waste: 58% Rolling stock with 127 6 recycling cost •Proper disposal and recycling of items 0.5 28.6 •Recycling rate for construction waste: 57% OUTPUT new model engine 71 0 0 0 0 0 generated by workshops and construction work ’94 ’99 ’04 ’09 ’14 (FY) ’94 ’99 ’04 ’09 ’14 (FY) CO2 emissions 1,530,000t *Figures indicate the number of rolling stock as of the end of each FY (March). *Figures indicate the number of rolling stock as of the end of each FY (March). *Result from running Series Ki-Ha 40 with new/conventional engines Environment •Countermeasures for noise and vibration They include some event trains and retained trains. They include retained trains as well as inspection trains. •Protection of the surrounding environment by increasing the (Conventional engine: DMF15HS, new model engine: C-DMF14HZ) conservation cost •Proper management of environmental load 113.3 41.2 height of and modifying noise-blocking wall, shaving of rail Refuse and waste 224,000t along railway lines substances, etc. surface, etc. (Station, train, and office refuse 19,000t) “Eco Business SCMAGLEV and Railway Park General Education Center “JR Gate Tower” (Skystreet, 15th floor/image of courtyard) Diagram 9 Trips” poster Diagram 10 (solar power generation system) Diagram 11 (rooftop gardening) Diagram 12 Management •Environmental advertising •Acquisition of ISO14001 certification in Technology Research (Construction waste 196,000t) 0.0 0.0 and Development Department activity cost •Environmental management education etc. (Rolling stock waste 9,000t) Recycled amount reused •Support and cooperation for organizations Social activity and other groups undertaking environment 0.0 0.0 •Participation in environmental partnership organizing club cost preservation (EPOC) Recycled Total*2 561.8 165.2 129,000t *1. Fractions of 10 million yen are omitted (Including internal reuse) [Approach to environment preservation cost] *2. Totals do not add up due to rounding •Compilation is applicable only to JR Central. •The applicable period is April 1, 2014 to March 31, 2015. •“Environmental Accounting Guidelines 2005,” a publication of the Ministry of the Environment, was consulted with regard to aspects of style. •Depreciation is not included in the calculations for expenditures. * The electricity and fuel CO2 emission coefficients •In the event of multiple-purpose expenditures, the full amount with greater environment preservation effect is included in the calculation. are based on a report of the law (Energy Saving Act) concerning the streamlining of energy use.

Diagrams to reduce emissions of waste materials during construction, utilize we were able to obtain "Rank S", which is the highest assessment Initiatives with Conventional Lines 7/8 Environmental Load in Business Activities Diagram14 rain water, recycle tickets/uniforms, and recycle rolling stock, etc. level under the "Comprehensive Assessment System for Built ①Introducing Energy-conserving Rolling Stock In addition, we have established the “JR Central Green Environment Efficiency (CASBEE)" The main resources and energy utilized as well as waste JR Central has also been striving to conserve energy of rolling Procurement Guidelines”. In the procurement of materials, we generated during JR Central's business activities for FY2014 are stock on conventional lines. We aim to improve energy efficiency are promoting initiatives which give even greater consideration to as shown in the above. [ Diagram 14] by introducing the Electric Power Regenerative Braking System, global environment preservation. ③Hamamatsu Workshop higher efficiency power control conversion methods, lighter rolling Hamamatsu Workshop, which conducts overhauls of Shinkansen Environmental Goal stock, etc. to electric cars. We aim to improve energy efficiency for Proposal of Eco Business Trips Diagram9 rolling stock, began the renovation construction in July 2010. diesel railcars by introducing lighter rolling stock and high mileage Along with this, the rooftop of the workshop will be used for JR Central has formulated the “Implementation Plan of Low JR Central proposes the idea of “Eco Business Trips”. diesel engines, etc. [ Diagram 7] installing a solar power generation system with the capacity to Carbon Society Phase II”, in which our Energy Consumption Unit As a result of these initiatives, all of the conventional line rolling “Eco Business Trips” refer to “business trips that contribute generate approximately 300kW or about 300,000kwh annually. at the end of FY2030 will be improved by 25% compared with that to environment preservation”, or the mindset of “selecting stock is energy-saving type rolling stock. [ Diagram 8] High-efficiency transformer facilities, boilers and other equipment of FY1995, and is striving to make sure that the plan is executed. transportation and business trip methods that will emit a smaller will be introduced in an effort to increase energy savings by We will continue promoting proactive initiatives, such as the ②Environmental Load Reduction through amount of greenhouse gas when traveling mid to long distances (or approximately 10%. continuous introduction of energy-saving type rolling stock, Electrification of the Taketoyo Line making business trips)”. We will actively showcase the information while setting train services flexibly through the "10 Nozomi of “Eco Business Trips” through advertisement campaigns to In March 2015, the Taketoyo Line (19.3km between Obu and Timetable", etc. to meet the demand of passengers and enhancing Taketoyo) was electrified. This electrification is expected to reduce spread it in society, as we believe that this initiative will lead to ④Nagoya Workshop transportation services by increasing the Shinkansen's maximum further prevention of global warming. [ Diagram 9] CO2 emissions by approximately 2,900t per year (approximately JR Central started conducting anti-earthquake measures and speed from 270km/h to 285km/h. 57% reduction compared to before). upgrading facilities in February 2014 in the Nagoya Workshop where general overhauls, etc. of conventional line rolling stock are Introduction of Natural Energies and Energy-Saving Facilities Diagrams10/11/12 conducted. We aim to reduce approximately 20% of electricity

Legal Compliance consumption for the entire workshop by introducing high ceiling JR Central strives to leverage natural energies and LED lighting and transforming equipment as energy saving introduce energy-saving facilities when constructing new JR Central has established a system to comply with measures. relevant environmental laws. buildings and renovating existing buildings.

①Management of Chemical Substances ⑤“JR Gate Tower” Based on the “PRTR Law (Pollutant Release and Transfer ①SCMAGLEV and Railway Park With the “JR Gate Tower” Project, we plan to work on creating Register Law)”, we report the amount of emission and transfer At the SCMAGLEV and Railway Park, which opened in March energy-efficient buildings and reducing the environmental burden 2011, we introduced a solar energy generation system on the of relevant substances to local municipalities and manage those by introducing regional air-conditioning systems, adopting LED Evaluation for Our Activities substances appropriately. expansive roof. [ Diagram 10] The system has a generation capacity lighting, installing solar power generation panels, creating green of approximately 500kW, or roughly 630,000kWh annually, which areas in the 15th floor courtyard and on roofs of low-rise buildings, JR Central was awarded in November ②Measures against Soil Contamination can cover approximately 30% of the Railway Park's energy needs. etc. We will not only aim to achieve "Rank S" of environmental 2014 the "Minister's Prize, the Ministry In FY2014, specific hazardous substances were detected performance, which is the highest rank on the “CASBEE” scale of Land, Infrastructure, Transport and Tourism" at the "11th Eco-Products exceeding the standard value from part of the soil and underground but also to reduce approximately 25% of CO2 emissions from the ②General Education Center building compared to standard model buildings according to the Awards", which is held by the Eco- water when we conducted soil surveys in the Nagoya Workshop Products Awards Steering Committee At the General Education Center, which was newly built in CASBEE 2010 standard.[ Diagram 12] and in Takayama Station prior to construction. We reported the for our activities for environment September 2011, we aim to conserve energy by introducing a matter to relevant administrative agencies and took appropriate load reduction; the environmentally ventilation system which uses ice thermal storage achieved from measures. friendly system of N700A and proactive the utilization of nighttime electricity service as its heat source Environmental Accounting Diagram13 development/introduction of energy- and LED lighting, etc. Furthermore, we designed the building to saving type rolling stock. Efficient use of resources use natural energy effectively by improving external insulation The investments, costs, and their principal effect involved in We promote effective utilization of resources through the 3R efficiency by arranging a rooftop garden and taking advantage of environment preservation activities during FY2014 are estimated (Reduce, Reuse, and Recycle) initiative, etc. Specifically, we aim natural wind and light as much as possible. [ Diagram 11] As a result, as per the above. [ Diagram 13]

26 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 27 Human Resources ESG Information / Cooperation with Local Communities Cooperation with Local Communities Human Resources New employee training Female employee at work

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

Education and Training System Diagram

Workplace Education and Training

Group training Self-betterment

Developing Secure and Safe Transport Professionals Promoting Active Roles of Female Employees Contributing to Local Communities through Projects and high quality acute medical care. The hospital offers patient- It is ultimately the people who operate railways and protect the Railways, which are a mode of public transportation, are centered care by introducing cutting-edge medical equipment and safety of its operation. Therefore, we focus on human resources Due to the characteristics of the work, railway business requires closely connected to local communities. We promote efforts to so on. The institution also focuses on preventive medicine. The development and skill development in order to develop employees so-called late-night work (work between 10 p.m. and 5 a.m.). enhance the convenience of stations, which are the gateway to adjoining medical examination center offers medical examinations with the awareness to thoroughly execute their duties and great However, the Labor Standards Act at the time of the company's local communities, as well as initiatives to contribute to local in collaboration with other medical professions. skills. We aim to establish them and promote their activities establishment prohibited late-night work of women in principle, communities, such as operating medical facilities and museums, The hospital will continue contributing to the local community through various programs. excluding some job types. As a result, we had no choice but to etc. in the Nagoya region, where our head office is located. as the core hospital of the Nagoya area by offering high-quality, utilize the company's female labor force mainly in part of the advanced and safe medical services certified by the Japan Council clerical departments that did not require late-night work, and it for Quality Health Care. was difficult for us to assign them to field departments. Due to Basic Policy of Human Resources Development this, the ratio of female employees as of the end of FY1996 was Contribution to Local Communities only 1.3%. ③Participating in Programs to Vitalize Local In order to continue ensuring safe and reliable transportation, it In response to the revision of the Labor Standards Act in 1997, ①Improving Station Convenience Communities is important to thoroughly hand down our technologies to younger/ we began actively employing female employees. As of the end of (SCMAGLEV and Railway Park) mid level employees, who will lead the next generation, and to FY2014, the number of female employees was approximately 2,000 Railway stations serve as gateways to communities. With the smoothly promote generation changes. (approximately 10% of the overall employees). aim of enhancing this function, JR Central cooperates with the We opened the "SCMAGLEV and Railway Park" in March 2011 The basic education system mainly involves "on-the-job JR Central has also been fostering an environment to support requests of local municipalities to establish new stations, improve in Kinjo Futo, Minato-ku, Nagoya as part of our participation in training (OJT)", in which employees learn the knowledge and skills employees in achieving a balance of work and family, with things station buildings, develop plazas in front of stations, and promote the “Monozukuri (manufacturing) Culture Exchange Area Project”, required for work through daily operations in each workplace. such as childcare, by establishing work systems, enhancing various railway elevation projects, etc., thereby contributing to community hosted by the City of Nagoya. They also acquire additional knowledge/skills from "group allowance systems, etc. We proactively inform all employees of development. At the "SCMAGLEV and Railway Park", we introduce the training", which is held in the General Education Center, etc., and these systems through employee training and internal news, etc. Based on relevant laws, such as the so-called Barrier-Free Law, “progress of the high-speed railway technology” through displays various "self-betterment" opportunities, such as internal/external For example, the number of employees utilizing childcare leave JR Central cooperates with governments and municipalities to of rolling stock mainly of the Tokaido Shinkansen as well as correspondence training systems, etc. that help employees learn was approximately 430 in FY2014. Utilization of these systems jointly establish and improve facilities to enable all passengers, conventional lines and Superconducting Maglev. In May 2015, the knowledge/skills on their own. In FY2014, approximately 260 group has been disseminating among both men and women. These including disabled and elderly passengers, to use our service number of visitors reached the 3 million mark. We will continue training sessions were held, and approximately 10,000 employees initiatives in gender equality and work-life balance have been safely and with a sense of security. In particular, in accordance making efforts to improve the general public's understanding of in total participated in the training. In addition, approximately highly recognized by the government, as seen in the example of with the fundamental government policy, we have been renovating railways and will contribute to the promotion of industrial tourism 6,000 employees in total voluntarily participated in internal the company receiving the "Minister of Health, Labour and Welfare stations with governments and municipalities by installing elevators by planning events, advertising, and offering products linked with correspondence training. Prize" in the Family-Friendly Enterprise category in FY2006. and escalators at stations used by more than 5,000 passengers the Nagoya region tourism to attract even more visitors. We also offer original systems such as the "advisory system", a day, as well as stations used by more than 3,000 and less than in which young senior employees support employees with 5,000 passengers since March 1, 2011 when the new policy was less experience, and "proposal activities" / "challenge Tokai defined by the government. activities", in which employees voluntarily make proposals In addition, to make the platforms safer, measures were taken to International Exchanges regarding improvement of daily work, and encourage employees to prevent falling. From FY2011, the busiest stations that the Nozomi proactively participate in them. stops at have started adding new movable platform fences, with JR Central proactively undertakes a wide range of international As a result of these initiatives, we have an extremely high more to be added to existing stations. Along with the fences, by operations, such as gathering up-to-date railway information employee retention rate despite the fact that we employ many new FY2013, a new version of braille blocks indicating where the edges from around the world via the company's network of overseas employees every year (approximately 630 employees in FY2015), of the platforms are also have been finished introducing at all offices (Washington D.C., London, and Sydney), participating as the labor turnover rate of approximately 1% indicates. stations that are used by more than 10,000 passengers a day, and in international conferences to exchange technological and we will continue to improve stations in order of customer use level management information with railway operators in the world, and *The General Education Center conducts employee training with the focus on safety and . issuing press releases overseas as part of our PR activities, etc. services as the Group, including personnel from affiliated companies that are engaged in railway operations. We also offer technical cooperation in the field of railways in response to government requests and promote human resources ②Setting General Hospitals for Local Communities development by hosting interns from overseas universities and (Nagoya Central Hospital) international organizations, etc.

JR Central established the “Nagoya Central Hospital” in Nakamura-ku, Nagoya, whose mission is to provide advanced

28 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 29 ESG Information Corporate Governance

Corporate Governance ■Outside Directors and Outside Audit and Supervisory ■Principal Activities of Outside Directors and Outside Audit and Board Members Supervisory Board Members [FY2014] Based on our policy to make the most appropriate execution Name Principal Activity system for Outside Directors and Outside Audit and Supervisory Board Members to execute our business, JR Central appoints three Attended all 12 meetings of the Board of Directors held Outside Directors and three Outside Audit and Supervisory Board Fujio in FY2014. In the Board of Directors meetings, he has JR Central's Corporate Governance System Members. Appointing them, we refer to the standard regarding to Cho stated his opinions based on his experience in corporate management, etc. independence of outside directors and outside auditors provided by the Tokyo Stock Exchange, Inc. Attended 11 out of 12 meetings of the Board of Directors General Shareholders Meeting Kenji held in FY2014. In the Board of Directors meetings, he has JR Central receives beneficial opinions about the execution Directors Koroyasu stated his opinions based on his experience as a public Selection Selection Selection of our business from Outside Directors and Outside Audit and prosecutor and lawyer, etc. Supervisory Board Members, who provide advice based on Attended all 12 meetings of the Board of Directors held Audit Cooperate their various experience and great insight gained outside of the Board of Directors Audit and Supervisory Board Takashi in FY2014. In the Board of Directors meetings, he has company from their independent standpoints, both in and out of Saeki stated his opinions based on his experience of corporate Board of Directors and Audit and Supervisory Board. We utilize management, etc.

Accounting Auditors the advice given by Outside Directors and Outside Audit and Attended all 10 meetings of the Board of Directors held after June President and Representative Director Supervisory Board Members to execute audits by Outside Audit Hajime 24, 2014 after his appointment and attended all 11 meetings of the Cooperate Investigate and Supervisory Board Members, internal audits, safety audits, Audit and Supervisory Board. In the Board of Directors meetings accounting audits, as well as items stipulated in the Fundamental Ishizu and meetings of the Audit and Supervisory Board, he has stated his Management Meeting Corporate Governance Policies. opinions based on his experience in transportation administration, etc. Audit Each Outside Director and Outside Audit and Supervisory Board Audit and Attended all 10 meetings of the Board of Directors held after June Member is submitted to the Tokyo Stock Exchange and the Nagoya Supervisory Hiroyuki 24, 2014 after his appointment and attended all 11 meetings of the Audit Cooperate Internal Audit Department Cooperate Audit and Supervisory Board. In the Board of Directors meetings Head Office, Regional offices, Field offices Stock Exchange as an independent officer who does not have any Board Ota (Audit Department/Transportation Safety Department) possible conflict of interest with general shareholders. and meetings of the Audit and Supervisory Board, he has stated his Members opinions based on his experience in police administration, etc.

Management / Guidance Audit Attended all 12 meetings of the Board of Directors held in FY2014 Shigeo and attended all 14 meetings of the Audit and Supervisory Board. Audit In the Board of Directors meetings and meetings of the Audit Affiliated Companies Kifuji and Supervisory Board, he has stated his opinions based on his experience as a public prosecutor and lawyer, etc.

■Appointment of Outside Directors and Outside Audit and Supervisory ■Concurrent Appointment of Outside Directors and Outside Audit and Board Members [As of June 23, 2015] Supervisory Board Members [As of March 31, 2015]

JR Central strives to enhance our corporate governance to ensure soundness, efficiency, and transparency of management, to implement Name Reasons for election Name Name of Other Company, etc. Titles sustainable development of the company, and to enhance corporate value over the mid-to-long-term. Fujio Mr. Cho was appointed as an Outside Director Toyota Industries Corporation Outside Director because of his corporate management experience and Fujio Cho DENSO CORPORATION Outside Audit and his great insight. Cho Supervisory Board Member ■Overview of Corporate Governance System Meetings but also inspect the state of the execution carried out The Board of Directors of JR Central is comprised of 16 members at head offices, railway operations divisions, branch offices, Kenji Mr. Koroyasu was appointed as an Outside Director Outside Audit and Directors because of his experience as a public prosecutor and Kenji (three of whom are outside directors). JR Central also employs an field offices and affiliated companies based on plans enacted by Koroyasu Furukawa Electric Co., Ltd. Supervisory Board lawyer and his great insight. Koroyasu Member auditor system, and its Audit and Supervisory Board consists of the Audit and Supervisory Board to strictly promote their audit Directors five members (three of whom are outside auditors). (The figures are work. Ensuring effective audit made by members of the Audit and Chairman and Takashi Mr. Saeki was appointed as an Outside Director TOHO GAS Co., Ltd. as of June 23, 2015) because of his corporate management experience and Representative Director Supervisory Board, JR Central also provides an assistant system UNY Group Holdings Co., Ltd. Meeting at least once a month, the Board of Directors makes Saeki his great insight. Outside Director in which our employees are assigned as full-time staff to support Takashi The Ogaki Kyoritsu Bank, Ltd. Outside Audit and legal and appropriate decisions upon fully discussing issues auditors work. Saeki Mr. Ishizu was appointed as an Outside Audit and Supervisory Board Member stipulated by the law and issues of importance to management Internal audits are performed by the Audit Department on the Hajime Aichi Tokei Denki Co., Ltd. Supervisory Board Member because of his experience Outside Audit and and monitors the work of directors. To broaden deliberations, we work of JR Central, its affiliated companies, and related companies Ishizu in transportation administration and his great insight. Supervisory Board Member have also established a Management Meeting in which important to confirm that execution is legally and appropriately made based Audit and issues related to management are discussed in advance of the on laws, articles of incorporation, and internal regulations. The Mr. Ota was appointed as an Outside Audit and Supervisory Hiroyuki Audit and ISHII IRON WORKS CO., LTD. Outside Audit and Board of Directors meeting. We request Audit and Supervisory results of internal audits are reported to management. In addition, Supervisory Board Member because of his experience Board Ota Supervisory Shigeo Supervisory Board Member Board Members to attend meetings of the Board of Directors, in police administration and his great insight. to prevent operational and labor accidents, safety audits are Members Board Kifuji Mori Building CO., LTD. Outside Audit and the Management Meeting and other important meetings as we performed by the Transportation Safety Department, and the Member Supervisory Board Member endeavor to ensure the legality of management measures during Shigeo Mr. Kifuji was appointed as an Outside Audit and results are also reported to management. Supervisory Board Member because of his experience the deliberation process. Based on generally accepted accounting standards, JR Central Kifuji as a public prosecutor and lawyer and his great insight. Although we introduced the corporate officer system in May has appropriate accounting audits made by an audit corporation, 2003, we introduced an executive system in June 2012 with the aim Deloitte Touche Tohmatsu LLC, which has been selected to be our of further accelerating decision-making, enhancing discussions, accounting auditor. and further clarifying roles for directors and corporate officers, who Audit and Supervisory Board Members, internal audit are responsible for operation, in order to appropriately respond to departments, and accounting auditors cooperate with each other changes in the business environment influencing our management by exchanging information periodically or as necessary and receive decision in a timely manner. necessary information from each department involved in internal Audit and Supervisory Board Members not only attend important control to confirm the status of implementation of each item Contents of Compensation for Officers □Total amount of compensation, etc. by officer classification, total amount meetings such as the Board of Directors and the Management stipulated in the Fundamental Corporate Governance Policies. ■ Compensation for officers is comprised of certain basic of compensation, etc. by type, and number of target officers [FY2014] compensation and a bonus. Basic compensation is based on Compensation Bonus comprehensive consideration of the title, length of service, etc., Total amount Number of Number of for the and the bonus is based on the performance and commissioned Classification Total amount Total amount target officers target officers compensation/ (Million yen) (Million yen) bonus, etc. work, etc. of each FY. The appropriate amount for each is decided (People) (People) in Board of Directors meetings within the range of compensation, Directors etc., which was decided in the 25th General Shareholders Meeting (Excluding Outside held on June 22, 2012. Directors) 14 528 11 213 741 Compensation for Outside Audit and Supervisory Board Members Audit and Supervisory is comprised solely of certain basic compensation. The appropriate Board Member (Excluding Outside 3 94 - - 94 amount is decided through discussions of Outside Audit and Directors) Supervisory Board Members within the range of compensation, etc., which was decided in the 20th General Shareholders Meeting Outside Officers 8 114 3 6 121 held on June 22, 2007.

30 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 31 ESG Information Corporate Governance

Board of Directors, Audit and Supervisory Board Members, and Corporate Officers as of June 23, 2015 JR Central makes decisions regarding the Fundamental Corporate Governance Policies, which includes the following items, in Fundamental Corporate Governance Policies Board of Directors meetings.

The Board of Directors monitors the status of director management along with making legal and appropriate decisions upon fully discussing issues stipulated by the law and issues of importance to management. System to ensure that the execution of duties by The department in charge of internal audits performs internal audits of the work of directors, corporate officers and employees to determine whether 1 directors and employees is in accordance with their work is legal and appropriate based on laws, the articles of incorporation, and internal stipulations. We set a system to obtain advice as necessary from external experts, such as retained lawyers, and strive to ensure legal execution. laws and the articles of incorporation We take action as necessary, such as by not giving in to unlawful demands, establishing departments to handle such issues and forming close relationships with external expert agencies, in order to shield ourselves from anti-social groups.

System related to storing and managing information We properly store and manage documents for which storage has been determined as needed in accordance with internal regulations. 2 concerning the execution of duties of directors

We make proper decisions regarding items for which each department is responsible in accordance with their importance, such as Stipulations and systems related to managing by seeking approval by upper managers and/or through meetings. 3 risk of loss In regards to preventing train accidents, we actively promote effective countermeasures through discussion on Railway Safety Promotion Committees. System to ensure that the duties of the director are 4 We introduce an efficient work system by clearly stipulating the duties of each department and its authority in accordance with executed efficiently internal regulations, and by properly assigning personnel in accordance with the task and work load. Yoshiyuki Kasai Yoshiomi Yamada Koei Tsuge Shin Kaneko Naotoshi Yoshikawa Yutaka Osada The Board of Directors in each subsidiary, etc. monitors the work of directors along with making legal and appropriate decisions upon fully Chairman Emeritus and Chairman and President and Executive Vice President Executive Vice President Executive Vice President discussing issues stipulated by the law and issues of importance to management. Representative Director Representative Director Representative Director and Representative Director and Representative Director and Representative Director We make proper decisions regarding subsidiaries, etc. in accordance with their importance and established procedures, such as by seeking approval by upper managers and/or through meetings. System for ensuring the suitability of work We introduce an efficient work system by clearly stipulating the duties of each department and its authority in accordance with internal regulations in subsidiaries, etc. 5 performed by corporate groups comprised of JR In accordance with internal regulations, we manage and provide guidance for subsidiaries, etc. as needed based on agreements signed with Board of Directors and Central and subsidiaries, etc. the companies that stipulate that certain important issues should be discussed and reported. Our Internal Audit Department performs internal audits of the work of directors, corporate officers, and employees in major subsidiaries, etc. Audit and Supervisory Board Members Corporate Officers to determine whether their work is legal and appropriate based on laws, the articles of incorporation, and internal stipulations. Subsidiaries, etc. establish a necessary system, such as not giving in to unlawful demands, establishing departments to handle such issues, and forming close relationships with JR Central and external expert agencies, in order to shield themselves from anti-social groups. Chairman Emeritus and Representative Director Senior Corporate Executive Officers Yoshiyuki Kasai Katsumi Miyazawa Director General of the Corporate Planning Division and in charge of the System related to employees that have been assigned Finance Department to support Audit and Supervisory Board Members at Some of JR Central’s employees will be designated as auditor staff for the purpose of assisting such auditors with the execution of Noriyuki Shirakuni(Ph.D.) Director General of the Maglev Systems Development Division of the Chuo 6 their request and matters related to the independence their duties. Shinkansen Promotion Division of those employees from directors, and matters to The Personnel Department obtains the opinion of auditors in advance in regards to auditor staff personnel. Chairman and Representative Director Yoshito Tsubouchi In charge of the Secretarial Department, the Audit Department, the Public Relations ensure the effectiveness of orders given to employees Yoshiomi Yamada Department, the Administration Department, the Legal Affairs Department, the Personnel Department, and the Property Management Department Corporate Executive Officers If directors, corporate officers or employees discover facts that may cause great loss to the corporate groups comprised of JR Central and subsidiaries, etc. or important facts that infringe upon laws or the articles of incorporation of the JR Central or System to enable directors and employees subsidiaries, etc., they must immediately report to an Audit and Supervisory Board Member or the Audit and Supervisory Board in accordance with internal regulations. President and Representative Director Corporate Executive Officers 7 to report to an auditor, and other systems for Directors, corporate officers and employees report on the execution of their duties if requested by an Audit and Supervisory Board reporting to auditors Member or the Audit and Supervisory Board. Deputy Director General of the General Technology Division, General Manager of the Directors, corporate officers, and employees who made the above report are not subject to disadvantageous treatment for making Koei Tsuge Shunichi Kosuge the said report. Technology Planning Department of the General Technology Division, Head of Consulting and Coordination Office - Overseas High Speed Railway Project of the Technology Planning System to enable directors, Audit and Supervisory If directors, corporate officers, and employees of subsidiaries, etc. discover facts that may cause great loss to the subsidiary, etc. or important Department of the General Technology Division, in charge of the Overseas High Speed facts that infringe upon laws or the articles of incorporation, they must immediately report to an Audit and Supervisory Board Member of the Railway Project, and in charge of the controlling of the Tracks and Structures Section Board Members, and employees of subsidiaries, subsidiary, etc. in accordance with the internal regulations of the subsidiary, etc. An Audit and Supervisory Board Member of the subsidiary, etc. Executive Vice President and Representative Director 8 etc. to report to an Audit and Supervisory Board reports to an Audit and Supervisory Board Member of JR Central if he/she receives a report regarding the above fact or discovers the above fact. Directors, Audit and Supervisory Board Members, corporate officers, and employees of subsidiaries, etc. who made the above report are not Shin Kaneko In charge of the Administrative Departments Mamoru Uno Director General of the Chuo Shinkansen Promotion Division Member of JR Central subject to disadvantageous treatment for making the said report. and in charge of the Chuo Shinkansen Promotion Division Sumio Atsuchi Director General of the Marketing Division Audit and Supervisory Board Members attend important meetings, such as Management Meetings, in addition to Board of Directors meetings to ensure the legality of management measures, beginning with the deliberation process. Other systems to ensure that audits of auditors are The department in charge of internal audits strengthens its links with Audit and Supervisory Board members and accounting auditors Naotoshi Yoshikawa In charge of the Shinkansen and Conventional Lines Kimiaki Tanaka Director General of the Business Promotion Division 9 performed effectively in an effort to enhance audits. Operations Division and in charge of controlling the Expenses, etc. resulting from the execution of duties of Audit and Supervisory Board Members are appropriately processed Transportation and Transportation Safety Section Kiyoshi Watanabe General Manager of the Construction Department, General Manager of the Nagoya Construction according to the internal regulations. Subdivision of the Chuo Shinkansen Construction Department of the Chuo Shinkansen Promotion Division, and in charge of controlling the Construction Section Yutaka Osada In charge of the Technology Section and in charge of controlling the Electrical Director General of the Conventional Lines Operations Division Engineering Section Hideyuki Shoji Director General of the Shinkansen Operations Division Directors Yoshiki Suyama ■Compliance/Whistle-Blowing System ■Response to Internal Control related to Financial Reporting Katsumi Miyazawa Hiroyuki Kawarasaki Director General of the Shizuoka Branch Office JR Central not only stipulates internal regulations based on In terms of internal control related to financial reporting, we Kazuhiro Igarashi Director General of the General Technology Division and in charge of the law, etc. but also conducts employee education on various periodically investigate the system/execution situation, etc. within Mamoru Uno controlling the Rolling Stock Section occasions with the aim of thoroughly complying with the law, JR Central and JR Central Group companies in accordance with Kimiaki Tanaka etc. when executing work. In addition, we also have established a basic framework offered by the Business Accounting Council in Corpotrate Officers a whistle-blowing system. We have whistle-blowing windows not order to confirm that they are effectively functioning. JR Central Hideyuki Shoji only within the Company but also in an external law firm in order also engages in efforts to maintain the level of internal control Yoshiki Suyama Tokuji Matsuno Deputy Director General of the Corporate Planning Division, General Manager of the Project Development Department of the Corporate Planning Division, and General Manager of the to establish a system in which employees, etc. can report any related to financial reporting by providing feedback from these Kazuhiro Igarashi Tokyo Project Development Department of the Corporate Planning Division violation of the law, etc. at work. We also post flyers describing the investigations to duties. Yasukazu Endo Deputy Director General of the Maglev Systems Development Division of the Chuo whistle-blowing system and contact information for the window in Torkel Patterson Shinkansen Promotion Division and General Manager of Yamanashi Maglev Center of the Concept of Capital Policy and Shareholder Return Maglev Systems Development Division of the Chuo Shinkansen Promotion Division all workplaces with the aim of widely disseminating the system. ■ Fujio Cho Our policy on dividends has always been to decide the Yoshihiro Yamamoto Deputy General Manager of the Construction Department specific dividend amount in accordance with the management Kenji Koroyasu ■Risk-Management System environment/performance in each FY based on the principle of Deputy Director General of the Chuo Shinkansen Promotion Division JR Central has established the "Railway Safety Promotion Takanori Mizuno continuously providing stable dividends. JR Central considers Takashi Saeki Committees", etc. at the head office, railway operation divisions, Motoaki Terai Deputy Director General of the Maglev Systems Development Division of the that shareholder returns through dividends are appropriate in branch offices, and in each area from the perspective of preventing Chuo Shinkansen Promotion Division principle, and we do not plan to purchase additional treasury train and labor accidents and formulates and promotes safety Full-time Audit and Supervisory Board Members Takao Yamaguchi Deputy Director General of the Corporate Planning Division and General Manager of the stock at this point. In addition, although we will promote Information Systems Department of the Corporate Planning Division countermeasures through an integrated organization that stretches projects, such as construction of the Chuo Shinkansen, etc., Hidenori Fujii Toshio Otake Deputy Director General of the General Technology Division and General Manager of the from the head office to each field office. we plan to procure the fund through issuance of corporate Technology Research and Development Department of the General Technology Division Hiromu Emi JR Central also manages a control center, which plays a key bonds and borrowing at this point. We do not plan to utilize the Shin Iwata Deputy Director General of the Chuo Shinkansen Promotion Division and General Manager of role in information communication, on call 24 hours a day at each treasury stock or increase the capital. Hajime Ishizu the Chuo Shinkansen Construction Department of the Chuo Shinkansen Promotion Division railway operation division to respond to emergencies, such as Ryo Ejiri (Ph.D.) General Manager of the Public Relations Department accidents and disasters, and has also established a fast-response ■IR Activities/Dialogues with Investors Hiroyuki Ota General Manager of the Administration Department restoration structure in which employees can be gathered anytime JR Central assigns personnel in charge of IR in the Corporate Hideo Inaba according to the scale or impact of an accident or disaster. Planning Division and periodically holds dialogues with investors Akihiko Ito General Manager of the Property Management Department Audit and Supervisory Board Member Additionally, in preparation for emergencies such as large-scale regarding the company's corporate strategies and performance. We Atsuhito Mori General Manager of the Transportation Safety Department natural disasters, we have established the second Shinkansen not only hold investor meetings every 6 months for analysts and Shigeo Kifuji General Control Center that can substitute for the Shinkansen institutional investors but also hold telephone conferences, etc. Kimihiro Ichikawa General Manager of the General Education Center General Control Center for the Tokaido Shinkansen. as necessary with the aim of disclosing information. In addition, from the perspective of fair disclosure, we swiftly post disclosed Mamoru Tanaka Director General of the Kansai Branch Office information, important information, and materials, etc. from investor meetings on our website. We also disclose information in Note 1: Directors Fujio Cho, Kenji Koroyasu, and Takashi Saeki are Outside Directors. English as quickly as possible for overseas investors. 2: Full-time Audit and Supervisory Board Members Hajime Ishizu, Hiroyuki Ota, and Shigeo Kifuji are Outside Audit and Supervisory Board Members.

32 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 33 Corporate Data

Corporate Data

Profile Operating Areas

JR Central operates the Tokaido Shinkansen, the main transportation hub linking Tokyo, Name Head Office and Other Main Offices (As of July 2015) Nagoya, and Osaka, and a network of 12 conventional lines centered on the Nagoya and Central Japan Railway Company (JR Central) Head Office JR Central Towers, Meieki 1-1-4, Nakamura-ku, Nagoya-shi, Aichi 450- Shizuoka City areas. Established 6101, Japan JR Central Towers 0 500km April 1, 1987 JR Central Shinagawa Building -A Wing 2-1-85, Konan, Minato-ku, Tokyo Head Office Area of Japan: Approx. 380,000 km2 Tokyo 108-8204, Japan Population: 128 million Business activities (As of January 1, 2014) Railways business, Affiliated businesses Conventional Lines JR Central Taiko Building, Meieki 1-3-4, Nakamura-ku, Nagoya-shi, Operations Division Aichi 453-8520, Japan Key data Kyoto Nagoya Tokyo JR Central Shinkansen Conventional Lines Shin-Osaka (as of the end of March 2015) Shizuoka Branch Office Shizuoka 4, Kurogane-cho, Aoi-ku, Shizuoka-shi, Shizuoka 420-0851, Japan Capital 112 billion yen JR Central Inotani Operating Revenues 1,306.6 billion yen Mie Regional Office Ust-Tsu 12F, 700, Hadokoro-cho, Tsu-shi, Mie 514-0009, Japan Number of Shares Outstanding 206,000,000

Share Listings Nagoya/Tokyo Stock Exchange Iida Regional Office 5356, Kami-Iida, Iida-shi, Nagano 395-0000, Japan Number of Shareholders 95,949 Shiojiri Number of Employees 18,231 Shinkansen Operations Marunouchi Chuo Building, 1-9-1, Marunouchi, Chiyoda-ku, Tokyo 100- Division Operating Route Length 0005, Japan 1,970.8 km Takayama Line Number of Stations 405 Kansai Branch Office Shin-Osaka Hankyu Building 10F, 1-1-1, Miyahara, Yodogawa-ku, Tatsuno Number of Rolling Stock Osaka-shi, Osaka 532-0003, Japan 4,890 Tokyo Double-and Multi-Tracked Section 55.1% (1,086.8km) Washington D.C. Office Kofu 900 17th Street, N.W., Suite 520, Washington, DC 20006, U.S.A. Electrified Section 76.7% (1,511.0km) Chuo Line Taita Line Shinagawa Centralized Traffic Control 97.5% (1,922.3km) London Office 6th Floor, 4 Eastcheap, EC3M 1AE, London, U.K. Mino-Akasaka Mino-Ota Shin-Yokohama Automatic Signaling System 97.8% (1,927.3km) Iida Line Minobu Line Gotemba Line Sydney Office Suite 5.01A, Level5, 20 Hunter Street, Sydney, NSW 2000, Australia Gifu Ogaki Tajimi Maibara Fuji Kozu Nagoya Atami Kansai Line Numazu Obu Kyoto Kameyama Shizuoka Organization Chart Tokaido Line Taketoyo Meisho Line Toyohashi Shin-Osaka Matsusaka Tokaido Shinkansen Taketoyo Line Board of Directors Secretarial Department Ise-Okitsu Toba Corporate Planning Division Chairman Taki General Technology Division Sangu Line Supervision Department Kisei Line President Chuo Shinkansen Promotion Division Conventional Lines Transportation and Marketing Department Audit Department Route Length by line Operations Division Rolling Stock Department Public Relations Department Engineering Department Tokaido Shinkansen 552.6km Administration Department Shizuoka Branch Office Conventional Lines Legal Affairs Department Mie Regional Office Tokaido Line 360.1km Personnel Department Iida Regional Office Gotemba Line 60.2km Finance Department Minobu Line 88.4km Audit and Supervisory Board Members Shingu Property Management Department Iida Line 195.7km Audit and Supervisory Board Planning Department Taketoyo Line Marketing Division 19.3km Supervision Department Takayama Line 189.2km Business Promotion Division Shinkansen Transportation and Marketing Department Chuo Line 174.8km Construction Department Operations Division Rolling Stock Department Taita Line 17.8km Transportation Safety Department Tracks and Structures Department Kansai Line 59.9km Overseas Offices: Washington D.C., London, Sydney Electrical Engineering Department Kisei Line 180.2km General Education Center Meisho Line 43.5km Kansai Branch Office Nagoya Central Hospital Sangu Line 29.1km Health Care Center Conventional Line Total 1,418.2km Administration Management Center Total 1,970.8km SCMAGLEV and Railway Park

34 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 35 Corporate Data

Corporate Data

Company History Financial Highlights

Central Japan Railway Company (JR Central) is established. 1987 April ● ▶ Consolidated 1988 March ●3 stations are established on the Tokaido Shinkansen (Shin-Fuji, Kakegawa, Mikawa-Anjo) ●JR Tokai Bus Company is established (now a consolidated subsidiary). FY2010 FY2011 FY2012 FY2013 FY2014 In April of the same year, automobile transport business is transferred to the company. Billion yen Billion yen Billion yen Billion yen Billion yen 1989 March ●A new model diesel railcar is introduced to the “Hida” Express on the Takayama Line. April 1, 1987 Establishment of JR Central Operating revenues ¥1,503.0 ¥1,508.3 ¥1,585.3 ¥1,652.5 ¥1,672.2 February ●JR Central starts topographical and geological surveys along the Chuo Shinkansen 1990 following orders of the Minister of Transport. Operating expenses 1,153.7 1,135.8 1,159.1 1,157.9 1,165.6 June ●JR Central applies to the Minister of Transport for the approval of plans to build the Operating income 349.3 372.5 426.1 494.6 506.5 Yamanashi Maglev Line and gains approval. Net income for this term before taxation, etc. 224.6 263.8 326.1 402.7 428.1 1991 October ●JR Central takes over the Tokaido Shinkansen facilities. Net income for this term 133.8 132.7 199.9 255.6 264.1 1992 March ●The first “Nozomi” begins commercial operation on the Tokaido Shinkansen using Series 300 rolling stock. Depreciation cost 258.5 257.0 240.1 276.2 271.5 July ●JR Tokai Hotels Co., Ltd. is established (now a consolidated subsidiary). Capital expenditure*1 284.1 290.6 281.1 200.1 214.5 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). Total asset 5,252.9 5,214.0 5,231.1 5,178.1 5,217.9 1994 June ●JR CENTRAL BUILDING CO., LTD. is established (now a consolidated subsidiary). October 8, 1997 Shares are listed Net asset 1,246.1 1,363.2 1,557.9 1,802.2 2,063.9 1997 April ●Running tests start on the Yamanashi Maglev Line. Equity 1,206.6 1,321.6 1,513.3 1,753.7 2,020.1 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 Equity Ratio 23.0% 25.3% 28.9% 33.9% 38.7% Exchange (merged with the Osaka Stock Exchange in March 2001). Operating income/Total assets 6.7% 7.1% 8.2% 9.5% 9.7% March ●Series 700 rolling stock is introduced to “Nozomi” on the Tokaido Shinkansen. 1999 Return on Equity 11.6% 10.5% 14.1% 15.7% 14.0% Construction of JR Central Towers is completed. December ● Yen Yen Yen Yen Yen 2000 March ●JR Nagoya Takashimaya opens (operated by JR Tokai Takashimaya Co., Ltd.). Net income for this term per share*2 ¥67,990.31 ¥67,470.45 ¥1,016.12 ¥1,299.23 ¥1,342.15 May ●Nagoya Marriott Associa Hotel opens (operated by JR Tokai Hotels Co., Ltd.). Annual dividend per share*2 9,000.00 9,500.00 105.00 115.00 120.00 ●JR Tokai Real Estate Co., Ltd. is established (now a consolidated subsidiary). 2001 March *1: Increase in tangible fixed assets and intangible fixed assets December ●JR Central is excluded from the jurisdiction of the JR Law through the enactment of *2: 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, the net income for this term and the annual amendment to the JR Law. dividend per share were calculated based on the assumption that the said stock split was made in the beginning of FY2012.

2002 July ●A new research center is constructed in Komaki City in Aichi Prefecture. Shinagawa Shinkansen Station on the Tokaido Shinkansen opens. The timetable is drastically 2003 October ● December 20, 1999 Construction of JR Central Towers is Non-consolidated revised by the increase of the maximum speed on all Tokaido Shinkansen trains to 270km/h. completed ▶ July ●The Japan National Railways (JNR) Settlement Headquarters, an independent division FY2010 FY2011 FY2012 FY2013 FY2014 2005 within the Japan Railway Construction, Transport and Technology Agency (JRTT), sells 600,000 shares of JR Central. Billion yen Billion yen Billion yen Billion yen Billion yen

2006 March ●New Automatic Train Control (ATC) system is introduced into the Tokaido Shinkansen. Operating revenues ¥1,171.9 ¥1,184.5 ¥1,245.0 ¥1,277.2 ¥1,306.6 April ●JR Central repurchases 268,686 shares of its treasury stock based on the decision made by the Board of Directors authorized by the articles of incorporation. Railways business 1,162.6 11,75.6 1,235.9 1,268.5 1,297.8 ●The JNR Settlement Headquarters within the JRTT completes the sale of all of its shares of JR Central by selling 286,071 shares of common stock of the company. Affiliated businesses 9.2 8.9 9.0 8.6 8.7

January ●Application for changes of “Yamanashi Maglev Line Construction Plan” is approved by Operating expenses 846.4 839.0 8,45.9 816.3 831.1 2007 the Minister of Land, Infrastructure and Transport. July ●JR Central introduces the new Series N700 rolling stock for the Tokaido Shinkansen Railways business 839.6 833.2 8,40.1 808.9 826.5 “Nozomi” services. October 1, 2003 Shinagawa Shinkansen Station on the Affiliated businesses 6.7 5.7 5.7 7.4 4.6 Tokaido Shinkansen is opened 2008 October ●JR Central makes NIPPON SHARYO, LTD. a consolidated subsidiary. ●JR Central submits a report to the Minister of Land, Infrastructure, Transport and Tourism Operating income 325.4 345.5 3,99.1 460.8 475.4 (the “Minister”) concerning topographical and geological surveys of the Chuo Shinkansen in response to the order received in 1990. Net income for this term before taxation 206.7 239.7 3,01.8 370.4 397.8 December ●JR Central starts conducting the remaining four surveys under Article 5 of the Nationwide Net income for this term 123.0 120.8 1,87.8 240.3 260.2 Shinkansen Railway Development Act (hereinafter referred to as "the Act") related to the Chuo Shinkansen in response to the order by the Minister. Depreciation cost 240.0 241.4 223.7 260.3 255.8 2009 May ●JR Central cancels 90,000 shares of treasury stock. Total capital investments 288.8 298.4 301.6 229.0 257.2 December ●JR Central submits a report regarding the remaining four surveys under Article 5 of the Act related to the Chuo Shinkansen in response to the order by the Minister received in 2008. Total asset 5,075.0 5,033.5 5,042.9 4,986.0 5,013.4 2011 May ●The Minister designates JR Central as the operator and constructor of the Chuo Net asset 1,156.1 1,258.2 1,436.3 1,661.3 1,931.0 Shinkansen between Tokyo and Osaka City. August 29, 2013 Opening ceremony of Yamanashi Maglev ●The Minister approves the development plan and instructs JR Central to construct the Line Equity 1,156.1 1,258.2 1,436.3 1,661.3 1,931.0 Chuo Shinkansen. Equity Ratio 22.8% 25.0% 28.5% 33.3% 38.5% May ●JR Central cancels 90,000 shares of treasury stock. 2012 Operating income/Total assets 6.5% 6.8% 7.9% 9.2% 9.5% February ●JR Central introduces the new Series N700A rolling stock for the Tokaido Shinkansen 2013 “Nozomi” services. Return on Equity 11.1% 10.0% 13.9% 15.5% 14.5% August ●Extension of the Yamanashi Maglev Line to 42.8km and upgrading of facilities are Yen Yen Yen Yen Yen completed, and the running test is restarted. Net income for this term per share* ¥62,455.63 ¥61,328.43 ¥953.32 ¥1,220.16 ¥1,321.21 2014 October ●The Minister approves the Construction Implementation Plan (Part 1) between Shinagawa and Nagoya along the Chuo Shinkansen. Annual dividend per share* 9,000.00 9,500.00 105.00 115.00 120.00 2015 March ●The Taketoyo Line (between Obu and Taketoyo stations) is electrified. *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, the net income for this term and the annual dividend Increase of the maximum speed of the Tokaido Shinkansen to 285km/h. per share were calculated based on the assumption that the said stock split was made in the beginning of FY2012. ● March 14, 2015 Increase of the maximum speed to 285km/h

36 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 37 Corporate Data

Corporate Data

Summary of Performance

■Shifts in Operating Revenues

Segment-by-Segment Performance for FY2014 Line restarted the operation on October 16. ❶ Transportation ❷ Merchandise and Other While the JR Central Group prioritizes safe and reliable In terms of sales and marketing, we have enhanced our transportation, which is the foundation of the core of our business initiatives to expand the number of members for Express 233.8 (Billion yen) 1,276.1 1,305.6 (Billion yen) 220.7 1,182.6 1,243.0 205.2 209.5 – the railway business, we aim to further enhance our services. Reservation and PLUS EX services along with the sales of "Super- 1,200 1,169.7 200 195.0 We have continually endeavored to improve the competency Super IC Hayatoku", etc. and planning of "Trips along the Tokaido of our employees, to enhance facilities, to increase efficiency Line", etc. as valuable commemorative products to show our 900 150 and to reduce costs throughout our business, including capital appreciation for the "50th Anniversary of the Tokaido Shinkansen". 600 100 investments, in an effort to enhance profitability. As a result, the We also promoted the "80th anniversary of the Takayama Line" and overall railway performance (passenger-kilometers) rose favorably the "80th anniversary of the Gotemba Line" plans in cooperation 300 50 in terms of both business and tourism use, increasing by 1.9% with local municipalities along the lines. Furthermore, we have YoY to 59.23 billion passenger-kilometers. The operating revenue aimed to expand the number of passengers by promoting various 0 0 ’11.3 ’12.3 ’13.3 ’143 ’15.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 also increased by 1.2% YoY to 1,672.2 billion yen, ordinary income campaigns making use of tourist resources in Kyoto, Nara, and increased by 5.9% YoY to 428.1 billion yen, and net income for Tokyo, etc., planning and expanding travel products in connection this term increased by 3.3% YoY to 264.1 billion yen. with these campaigns, and promoting efforts in collaboration of Long-term debt was reduced by 220.2 billion yen. The balance local areas, such as "Shupo". We have also promoted proactive ❸ Real Estate ❹ Other as of the end of the term is 2,150.5 billion yen. In addition, we set sales and marketing by deploying excursion packages using the 67.4 (Billion yen) (Billion yen) 66.4 62.7 64.9 66.5 250.6 the year-end dividend at 60 yen per share for an annual per share Tokaido Shinkansen, Takayama Line, and Hokuriku Line by using 250 239.6 238.9 60 225.8 233.1 dividend of 120 yen. the Kanagawa inauguration of the Hokuriku Shinkansen as an 200 Business performance in each segment was as follows. opportunity. We have also expanded the number of member stores 45 of electronic money "TOICA" and started a service for customers 150 to use electronic money to pay for items sold in the Tokaido/Sanyo 30 100 Shinkansen. ①Transportation Due to the successive use of the railway for business and 15 50 tourism, performance for the Tokaido Shinkansen increased by In the railway business, we have steadily promoted large-scale 0 0 renovation with the aim of maintaining/improving the soundness 2.6% YoY to 50.134 billion passenger-kilometers for the current ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 of civil engineering structures along the Tokaido Shinkansen while term. For conventional lines, it reduced by 1.7% YoY to 9.69 billion continuously making efforts to reduce cost. Also, in addition to passenger-kilometers. taking earthquake countermeasures, such as countermeasures to In our bus business, we have worked to create products tailored derailment/deviation, we have also moved ahead with renovation of to customers' needs and ensure profitability with safety as the first the Hamamatsu Workshop, which conducts the Shinkansen rolling priority. stock overhauls, in an effort to improve earthquake resistance. As a result of the aforementioned, operating revenues for the Furthermore, we utilized the “10 Nozomi Timetable” to flexibly term increased by 2.3% YoY to 1,305.6 billion yen, and operating schedule trains to meet demands by operating more services than income increased by 2.6% YoY to 472.0 billion yen. With our travel business, we have proactively marketed travel Efforts for FY2015 ever during busy seasons, such as summer and New Year seasons, products in collaboration with the "Tokaido Shinkansen 50th Over the next term, we will continue ensuring safe and reliable etc. On January 4, 2015, we had approximately 466,000 customers Anniversary" project as well as attractive travel products in transportation in our railway business as our top priority while (between Odawara and Shizuoka for “Nozomi” and “Hikari”, and ②Merchandise and Other collaboration with travel campaigns for locations, such as Kyoto/ steadily pushing forward with earthquake countermeasures, between Shin-Yokohama and Odawara for “Kodama”), which In our merchandise and other businesses, we have worked to Nara and Tokyo. We have also promoted sales through the implementing large-scale renovation of civil engineering structures, was the highest number ever. We have improved convenience by bolster earning power through JR Nagoya Takashimaya through Internet. introducing N700A rolling stock, modifying Series N700 rolling increasing the maximum speed to 285km/h in March and reducing renovation of sales spaces, an attractive product lineup, services In our rolling stock manufacturing business, we have stock, replacing diesel railcars for conventional lines, and so on. the shortest required time between Tokyo and Shin-Osaka to 2 suited to customer needs, and events for Valentine's Day, etc. endeavored to increase orders for the manufacture of rolling stock, With the Chuo Shinkansen Project using the Superconducting hr 22 min, etc. We also improved the reliability of the timetable We also held events and sold products, such as commemorative construction machinery, and other items. Maglev System, we will shift from the planning phase to the in case of emergencies, etc. We have also introduced the latest bento boxes, to commemorate the "Tokaido Shinkansen 50th As a result of the aforementioned, operating revenues for the new construction phase and thoroughly promote the phase with model rolling stock, N700A and are modifying Series N700 to Anniversary" with the aim of increasing revenues. term reduced by 4.6% YoY to 238.9 billion yen, and operating the focus on safety, the environment, and cooperation with mirror N700A's functions (by equipping trains with Wheel Mounted As a result of the aforementioned, operating revenues for the income reduced by 21.7% YoY to 8.2 billion yen. communities. In addition, we will steadily promote our efforts with Brake Disks and the Cruise Control System, etc.). In addition, we term increased by 5.9% YoY to 233.8 billion yen, and operating the “JR Gate Tower” Project at Nagoya Station, high-speed railway have worked to further enhance passenger service and ensure income increased by 8.7% YoY to 8.9 billion yen. systems and Superconducting Maglev projects overseas, etc. In safe and reliable transportation, including installing new movable order to steadily move forward with these various challenges, we platform fences at Nozomi stop-stations frequently used by large will continue working to enhance profitability and make sustained volumes of passengers and the latest automatic ticketing gates. ③Real Estate improvements in our engineering capabilities. At the same time, In terms of conventional lines, we have continued promoting In terms of Real Estate businesses, we have steadily promoted we will make every effort to reduce costs and increase efficiency earthquake countermeasures, such as anti-earthquake construction of JR Gate Tower at Nagoya Station along with across all operations including capital investment and will strive to constructions in the Nagoya Workshop, which conducts overhauls proactively promoting tenant leases and hashing out the details improve our business strength . for conventional line rolling stock, etc., in addition to anti- of other businesses to be opened. In terms of station commercial earthquake reinforcement for elevated track columns, etc. We facilities, we renovated "Cubic Plaza Shin-Yokohama", "ASTY have also systematically promoted measures against falling Shizuoka", and "ASTY Gifu", etc. We also held events, etc. to rocks, improvement of safety devices on grade crossings, and commemorate the "Tokaido Shinkansen 50th Anniversary" with the ■Performance forecast for FY2015 (consolidated) tsunami countermeasures, etc. Moreover, we have completed aim of increasing the number of customers. （Billion yen） YoY the replacement of the operation management system for the As a result of the aforementioned, operating revenues for the Tokaido Line in the Nagoya region. Furthermore, we have worked term reduced by 1.2% YoY to 66.5 billion yen, and operating Operating Revenues 1,674.0 100.1％ to further enhance passenger service and ensure safe and reliable income increased by 20.1% YoY to 16.6 billion yen. transportation, including the electrification of the Taketoyo Operating Income 515.0 101.7％ Line in March 2015 and introduction of new diesel railcars to Ordinary income 445.0 103.9 the Takayama Line and Taita Line. In addition, we planned to ④Other ％ reconstruct the Chuo Line (between Sakashita and Nojiri stations), With our hotel business, we have worked on creating attractive Net income attributable to owners of the parent 303.0 114.7 which was affected by the heavy rain on July 9, 2014, and the products, such as plans, etc. to commemorate the "Tokaido ％ Note: As of the release of the financial report for FY2014 Tokaido Line (between Yui and Okitsu stations), which was affected Shinkansen 50th Anniversary", and on enhancing our sales by typhoon No. 18 on October 6, as soon as was possible. The capabilities. We have also worked to offer higher quality services Chuo Line restarted the operation on August 6, and the Tokaido to respond to the increasing number of foreign customers.

38 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 39 Financial Section

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

1) Overview of FY2014 the electric rate, despite a decrease in the cost of sales at d) Non-Operating Income/Loss facilities in October 1991, we were burdened with total long- In the current term, amid the continuing satisfactory level NIPPON SHARYO, LTD. Moreover, non-operating income/ Non-operating income/loss improved 11.8 billion yen over term debt and payables of more than five times our annual of railway use, JR Central strived to further enhance services loss improved due to a decrease in interest expenses as well the previous term due to a decrease in interest expenses as transportation revenues, including the liabilities inherited while placing the highest priority on ensuring safe and as in losses from the early repayment of long-term debt and well as in losses from the early repayment of long-term debt from Japanese National Railways at the time of its break-up reliable transportation in the railway business, which is the payables. and payables. and privatization. Because we have regarded reducing long- core of our operations. term debt and payables as our most important financial task, In our railway business, in terms of the Tokaido Shinkansen, As a result, both revenue and income increased for the e) Net Income we have endeavored to trim debt and payables as rapidly we have steadily promoted a large-scale renovation, which current term with operating revenue ending at 1,672.2 billion As a result, net income increased by 8.4 billion yen (3.3%) as possible. Consequently, the 5,456.2 billion yen in total started in FY2013, and earthquake countermeasures, such yen, operating income at 506.5 billion yen, ordinary income YoY to 264.1 billion yen. long-term debt and payables at the end of March 1992, as countermeasures to derailment and deviation. Also, we at 428.1 billion yen, and net income at 264.1 billion yen. immediately after we acquired Tokaido Shinkansen assets, utilized the “10 Nozomi Timetable” to schedule trains flexibly. has been lowered by 3,319.9 billion yen. Furthermore, we have worked to enhance passenger service 3) Cash Flow In addition to continuing to strengthen our earning and ensure safe and reliable transportation by increasing the 2) Operating Performance Cash and cash equivalents (hereinafter, “capital”) as of the capabilities and thoroughly pursuing efficiency as maximum speed to 285km/h, introducing the latest model a) Operating Revenue end of March 2015 increased by 54.5 million yen YoY to 130 well as greater cost reductions across all operations rolling stock, N700A, and modifying rolling stock of the Operating revenue increased by 19.7 billion yen (1.2%) billion yen. including capital investment, we will strive to reduce series N700. In terms of the conventional lines, we have YoY to 1,672.2 billion yen. Long-term debt and payables decreased by 220.2 billion long-term debt as we steadily promote efforts directed systematically promoted earthquake countermeasures, such In terms of our transportation business, JR Central’s yen YoY for a balance of 2,150.5 billion yen at the end of at construction of the Chuo Shinkansen through more as anti-earthquake reinforcement for elevated columns, transportation revenues increased by 28.3 billion yen (2.3%) March 2015. effective use of on-hand cash. measures against falling rocks, improvement of safety YoY to 1,243.2 billion yen. Passenger volume on the Tokaido Capital gained from operating activities increased by devices on grade crossings, and tsunami countermeasures. Shinkansen rose 2.6% YoY, pushing up transportation 30.2 billion yen YoY to 570.8 billion yen due to continuing Also, we have made efforts to further improve convenience revenues 2.7% YoY to 1,143.4 billion yen. Passenger favorable railway transportation volume for both business 5) Net Asset Balance by completing the electrification of the Taketoyo Line in volume on conventional lines decreased by 1.7% YoY with and tourism and an increase in JR Central’s transportation Net asset balance at the end of March 2015 increased by March 2015, of which construction began in FY2009. In transportation revenues decreasing 1.2% YoY to 99.7 billion revenues. 261.7 billion yen over the end of the previous term to end at terms of sales and marketing, we have promoted proactive yen. Capital expended through investing activities increased by 2,063.9 billion yen, and our equity ratio rose from 33.9% at initiatives, such as measures to expand the number of In our non-transportation businesses, operating revenues 33.5 billion yen YoY to 263.9 billion yen due to increases in the end of the previous term to 38.7% at the end of this term. members and usage of Express Reservation, etc. for the merchandise and other segment increased by 5.9% expenses for fund management. In non-railway business, we have strived to strengthen YoY, and the real estate and the other segments decreased Capital expended through financing activities decreased by existing businesses, and steadily moved forward with the “JR respectively by 1.2% and 4.6% YoY. 57.4 billion yen YoY to 252.2 billion yen due to an increase 6) Capital Procurement Gate Tower” Project at Nagoya Station. in proceeds from long-term debt. In order to procure capital from various sources Our commitment to the aforementioned series of measures b) Operating Expenses and facilitate smooth fundraising, we have acquired led to continuing favorable railway transportation volume for Operating expenses increased by 7.7 billion yen (0.7%) issuer credit ratings from Moody’s Japan, Rating and both business and tourism. Therefore, transportation revenues YoY to end at 1,165.6 billion yen due to an increase in non- 4) Shrinking Long-Term Debt and Payables Investment Information, Inc. and Japan Credit Rating for JR Central increased. Overall consolidated operating personnel expenses, such as the cost related to the progress of During this term, we decreased long-term debt and Agency, Ltd. The rating is respectively Aa3, AA, and revenues also increased, in spite of revenue decrease at the large-scale renovations and rise in the electric rate, despite payables by 220.2 billion yen on a consolidated basis, and AAA. Our credit ratings for corporate bonds during this NIPPON SHARYO, LTD., according to completion of a decrease in the cost of sales at NIPPON SHARYO, LTD. 215.4 billion yen on a non-consolidated basis. Long-term term are issued from Moody’s Japan, and Rating and delivery of rolling stock to Taiwan. debt and payables at the end of this term were 2,150.5 billion Investment Information, Inc. On the other hand, operating expenses increased due to an c) Operating Income yen on a consolidated basis and 2,136.3 billion yen on a non- Furthermore, in order to secure short-term liquidity, we increase in non-personnel expenses, such as the cost related Operating income increased by 11.9 billion yen (2.4%) consolidated basis. have established a commitment of 100 billion yen as of the to the progress of the large-scale renovations and rise in YoY to 506.5 billion yen. When JR Central purchased the Tokaido Shinkansen end of this term.

40 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 41 Financial Section

Consolidated Balance Sheet

Central Japan Railway Company and Consolidated Subsidiaries March 31, 2015 March 31, 2015 Thousands of Thousands of Millions of Yen U.S. Dollars Millions of Yen U.S. Dollars ASSETS (Note 2) (Note 2) LIABILITIES AND EQUITY (Note 2) (Note 2)

2015 2014 2015 2015 2014 2015

CURRENT ASSETS: CURRENT LIABILITIES: Cash and cash equivalents (Note 10) ￥ 130,002 ￥ 75,445 $ 1,083,350 Short-term loans payable (Notes 5 and 10) ￥ 31,368 ￥ 24,754 $ 261,400 Current portion of long-term debt (Notes 5 and 10) 139,879 213,026 1,165,658 Time deposits (Note 10) 114,000 50,010 950,000 Current portion of long-term accounts payable—railway facilities (Notes 6 and 10) 86,073 96,505 717,275 Trade receivables (Note 10) 90,957 99,031 757,975 Trade payables (Note 10) 183,033 169,153 1,525,275 Allowance for doubtful accounts (22) (39) (183) Provision for bonuses 27,715 27,319 230,958 Inventories 38,636 36,650 321,966 Income taxes payable (Note 10) 71,528 84,472 596,066 Deferred tax assets (Note 9) 26,708 27,592 222,566 Advances received 41,137 52,890 342,808 Prepaid expenses and other 31,901 25,163 265,841 Other (Note 9) 78,130 43,403 651,083 Total current assets 432,183 313,853 3,601,525 Total current liabilities 658,868 711,526 5,490,566 NONCURRENT ASSETS: NONCURRENT LIABILITIES: Investments and other assets: Long-term debt (Notes 5 and 10) 1,280,954 1,301,895 10,674,616

Investment securities (Notes 4 and 10) 137,066 111,332 1,142,216 Long-term accounts payable—railway facilities (Notes 6 and 10) 643,611 759,382 5,363,425

Investments in and advances to unconsolidated subsidiaries and affiliates (Note 4) 13,450 18,541 112,083 Provision for large-scale renovation of the Shinkansen infrastructure (Note 3.i) 280,000 315,000 2,333,333 Liability for retirement benefits (Note 7) 205,501 212,969 1,712,508 Asset for retirement benefits (Note 7) 5,929 2,276 49,408 Other (Note 9) 85,079 75,139 708,991 Deferred tax assets (Note 9) 149,077 171,225 1,242,308 Total noncurrent liabilities 2,495,146 2,664,387 20,792,883 Prepaid expenses and other 45,535 46,317 379,458 CONTINGENCIES (Note 13): Total investments and other assets 351,058 349,693 2,925,483 EQUITY (Notes 8 and 16): Property, plant and equipment (Note 3.e): Common stock—authorized, 824,000,000 shares; Buildings and structures (Note 5) 4,643,280 4,603,138 38,694,000 issued, 206,000,000 shares in 2015 and 2014 112,000 112,000 933,333 Machinery, rolling stock and vehicles 1,344,884 1,331,561 11,207,366 Capital surplus 53,500 53,500 445,833 Land (Note 5) 2,356,186 2,358,060 19,634,883 Retained earnings 1,927,407 1,669,462 16,061,725 Construction in progress 169,240 132,900 1,410,333 Treasury stock—at cost, 9,200,743 shares in 2015 and 9,200,676 shares in 2014 (103,156) (103,155) (859,633)

Other 184,573 185,192 1,538,108 Accumulated other comprehensive income:

Total 8,698,165 8,610,852 72,484,708 Unrealized gain on available-for-sale securities 38,663 21,493 322,191 Deferred (loss) gain on hedges (24) 5 (200) Accumulated depreciation (4,263,426) (4,096,232) (35,528,550) Remeasurements of defined benefit plans (Note 7) (8,192) 465 (68,266) Net property, plant and equipment 4,434,739 4,514,619 36,956,158 Total 2,020,196 1,753,771 16,834,966

Total noncurrent assets 4,785,798 4,864,313 39,881,650 Minority interests 43,770 48,481 364,750

TOTAL ASSETS ￥ 5,217,982 ￥ 5,178,166 $ 43,483,183 Total equity 2,063,967 1,802,252 17,199,725 See notes to consolidated financial statements.

TOTAL LIABILITIES AND EQUITY ￥ 5,217,982 ￥ 5,178,166 $ 43,483,183 See notes to consolidated financial statements.

42 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 43 Financial Section

Consolidated Statement of Income Consolidated Statement of Changes in Equity

Central Japan Railway Company and Consolidated Subsidiaries Year Ended March 31, 2015 Central Japan Railway Company and Consolidated Subsidiaries Year Ended March 31, 2015 Thousands of Thousands Millions of Yen (Note 2) Millions of Yen U.S. Dollars (Note 2) (Note 2) Accumulated Other 2015 2014 2013 2015 Comprehensive Income OPERATING REVENUES ￥ 1,672,295 ￥ 1,652,547 ￥ 1,585,319 $ 13,935,791 Outstanding Unrealized Deferred Number of Gain on (Loss) Gain Remeasurements OPERATING EXPENSES (Note 3.k): Shares of Common Capital Retained Treasury Available-for- on of Defined Minority Total Transportation, other services and cost of sales (Note 3.i) 983,074 979,083 986,975 8,192,283 Common Stock* Stock Surplus Earnings Stock Sale Securities Hedges Benefit Plans Total Interests Equity Selling, general and administrative expenses 182,622 178,851 172,201 1,521,850 BALANCE, APRIL 1, 2012 196,799 ￥112,000 ￥53,500 ￥1,357,387 ￥(205,367) ￥ 4,117 ￥ 17 ￥1,321,654 ￥41,597 ￥1,363,251 Total operating expenses 1,165,696 1,157,935 1,159,176 9,714,133 Net income 199,971 199,971 199,971 Operating income 506,598 494,612 426,142 4,221,650 Dividends from surplus, ¥100 per share* (19,700) (19,700) (19,700) OTHER INCOME (EXPENSES): Retirement of treasury stock (102,212) 102,212 Interest and dividend income 2,287 1,987 1,857 19,058 Net change in the year 11,390 1 11,391 3,057 14,449 Interest expense (Note 6) (72,272) (80,325) (89,289) (602,266) Loss on redemption of bonds (13,676) (13,357) (11,721) (113,966) BALANCE, MARCH 31, 2013 196,799 112,000 53,500 1,435,445 (103,155) 15,508 18 1,513,317 44,654 1,557,972 Other—net (18,239) (177) (801) (151,991)

Other expenses—net (101,900) (91,873) (99,954) (849,166) Net income 255,686 255,686 255,686 INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS 404,698 402,738 326,187 3,372,483 Dividends from surplus, ¥110 per share (21,670) (21,670) (21,670) Purchase of treasury stock (0) (0) (0) (0) INCOME TAXES (Note 9): Net change in the year 5,985 (12) ￥ 465 6,437 3,827 10,264 Current 135,387 143,576 131,571 1,128,225 Deferred 12,547 (906) (8,906) 104,558 BALANCE, MARCH 31, 2014 Total income taxes 147,934 142,670 122,664 1,232,783 (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 NET INCOME BEFORE MINORITY INTERESTS 256,763 260,068 203,523 2,139,691 Cumulative effect of accounting change (Note 3.j) 17,450 17,450 (580) 16,869 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 MINORITY INTERESTS IN NET (LOSS) INCOME (7,370) 4,381 3,551 (61,416)

NET INCOME ￥ 264,134 ￥ 255,686 ￥ 199,971 $ 2,201,116 Net income 264,134 264,134 264,134 Yen U.S. Dollars Dividends from surplus, ¥120 per share (23,640) (23,640) (23,640) 2015 2014 2013 2015 Purchase of treasury stock (0) (1) (1) (1) PER SHARE OF COMMON STOCK* (Note 3.q): Net change in the year 17,169 (30) (8,657) 8,482 (4,130) 4,351 Basic net income ￥ 1,342.15 ￥ 1,299.23 ￥ 1,016.12 $ 11.18 Cash dividends applicable to the year 120.00 115.00 105.00 1.00 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 * Per share figures have been restated, as appropriate, to reflect a hundred-for-one stock split effective as of October 1, 2012. See notes to consolidated financial statements. Thousands of U.S.Dollars (Note 2) Accumulated Other Comprehensive Income Consolidated Statement of Comprehensive Income Unrealized Deferred Gain on (Loss) Gain Remeasurements Common Capital Retained Treasury Available-for- on of Defined Minority Total Central Japan Railway Company and Consolidated Subsidiaries Year Ended March 31, 2015 Stock Surplus Earnings Stock Sale Securities Hedges Benefit Plans Total Interests Equity Thousands of BALANCE, MARCH 31, 2014 Millions of Yen U.S. Dollars (APRIL 1, 2014, as previously reported) $ 933,333 $ 445,833 $ 13,912,183 $ (859,625) $ 179,108 $ 41 $ 3,875 $ 14,614,758 $ 404,008 $ 15,018,766 (Note 2) (Note 2) 2015 2014 2013 2015 Cumulative effect of accounting change (Note 3.j) 145,416 145,416 (4,833) 140,575 NET INCOME BEFORE MINORITY INTERESTS ￥ 256,763 ￥ 260,068 ￥ 203,523 $ 2,139,691 BALANCE APRIL 1, 2014 (as restated) 933,333 445,833 14,057,608 (859,625) 179,108 41 3,875 14,760,175 399,166 15,159,350 OTHER COMPREHENSIVE INCOME (Note 14): Unrealized gain on available-for-sale securities 18,741 5,581 12,496 156,175 Net income 2,201,116 2,201,116 2,201,116 Deferred (loss) gain on hedges (59) (25) 2 (491) Dividends from surplus, $1.00 per share (197,000) (197,000) (197,000) Remeasurements of defined benefit plans (6,725) (56,041) Purchase of treasury stock (8) (8) (8) Share of other comprehensive income in affiliates 201 25 81 1,675 Net change in the year 143,075 (250) (72,141) 70,683 (34,416) 36,258 Total other comprehensive income 12,157 5,582 12,581 101,308 BALANCE, MARCH 31, 2015 $ 933,333 $ 445,833 $ 16,061,725 $ (859,633) $ 322,191 $ (200) $ (68,266) $ 16,834,966 $ 364,750 $ 17,199,725 COMPREHENSIVE INCOME ￥ 268,921 ￥ 265,650 ￥ 216,104 $ 2,241,008 * Shares and per share figures have been restated, as appropriate, to reflect a hundred-for-one stock split effective as of October 1, 2012. TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: See notes to consolidated financial statements. Owners of the parent ￥ 272,616 ￥ 261,659 ￥ 211,363 ￥ 2,271,800 Minority interests (3,694) 3,991 4,741 (30,783) See notes to consolidated financial statements.

44 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 45 Financial Section

Consolidated Statement of Cash Flows Notes to Consolidated Financial Statements

Central Japan Railway Company and Consolidated Subsidiaries Year Ended March 31, 2015 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 The consolidated financial statements are stated in Japanese yen, the currency of the country in which the Company is incorporated and 2015 2014 2013 2015 COMPANY Central Japan Railway Company (Tokai Ryokaku Tetsudo Kabushiki operates. The translations of Japanese yen amounts into U.S. dollar OPERATING ACTIVITIES: Gaisha, the "Company") was incorporated on April 1, 1987, as a private amounts are included solely for the convenience of readers outside Income before income taxes and minority interests ￥ 404,698 ￥ 402,738 ￥ 326,187 $ 3,372,483 business company, pursuant to the Law for Japanese National Railways Japan and have been made at the rate of ¥120 to $1, the approximate Adjustments for: Restructuring enacted upon the resolution of the Japanese Diet. rate of exchange as of March 31, 2015. Such translations should not Income taxes—paid (148,296) (139,513) (114,018) (1,235,800) The business of the Japanese National Railways (the "JNR") was be construed as representations that the Japanese yen amounts could be Depreciation and amortization 271,568 276,269 240,193 2,263,066 succeeded by the following newly established organizations: seven converted into U.S. dollars at that or any other rate. Japanese yen figures Equity in earnings of affiliates (339) (326) (2) (2,825) railway companies including the Company, the former Shinkansen of less than one million yen are rounded down to the nearest million of Proceeds from contribution for construction (2,221) (1,284) (7,378) (18,508) Holding Corporation (a predecessor entity to the Railway Development yen, except for per share information, and U.S. dollar figures of less than Reduction of noncurrent assets related to contribution for construction 3,545 1,854 7,440 29,541 Fund (1991–1997), which was subsequently succeeded by the Corporation one thousand U.S. dollars are also rounded down to the nearest thousand Loss on retirement of noncurrent assets 10,001 15,104 14,584 83,341 for Advanced Transport and Technology (the "CATT") (1997–2003) and of U.S. dollars, except for per share information. Gain on sales of noncurrent assets—net (1,395) (2,386) (561) (11,625) in turn by the Japan Railway Construction, Transport and Technology Changes in assets and liabilities: Agency (the "JRTT")), the former Railway Telecommunication Co., (Decrease) increase in provision for large-scale Ltd., Railway Information Systems Co., Ltd., and the Railway Technical 3.SUMMARY OF SIGNIFICANT ACCOUNTING renovation of the Shinkansen infrastructure (35,000) (35,000) 33,333 (291,666) Research Institute (the "RTRI") which reorganized as a public interest POLICIES Decrease (increase) in trade receivables 8,052 (24,259) 8,798 67,100 corporation as of April 1, 2011. The JNR itself became the JNR a.Principles of Consolidation (Increase) decrease in inventories (518) 14,763 (16,813) (4,316) Settlement Corporation (the "JNRSC"). All of the assets and liabilities of The accompanying consolidated financial statements as of March Increase (decrease) in trade payables 6,654 (1,603) 2,438 55,450 the JNR were transferred to such organizations, including the JNRSC. 31, 2015, include the accounts of the Company and its 29 significant (Decrease) increase in advances received (11,752) 8,503 (3,758) (97,933) Prior to December 1, 2001, the Law Concerning Passenger subsidiaries (together, the "Companies"). Increase in provision for retirement benefits 4,532 Railway Companies and Japan Freight Railway Company (the "Law") On April 1, 2015, Shizuoka Terminal Hotel, Ltd., a consolidated Increase in liability for retirement benefits 4,561 4,143 38,008 required that authorization be obtained from the Minister of Land, subsidiary, was merged into JR Tokai Hotels, Ltd., another consolidated Infrastructure, Transport and Tourism (the "Minister of Transport") subsidiary. Other—net 61,249 21,552 17,347 510,408 regarding fundamentals such as: (1) commencement of business other Under the control and influence concepts, those companies in which Net cash provided by operating activities 570,806 540,557 512,324 4,756,716 than railway and its related business, (2) the appointment or dismissal the Company, directly or indirectly, is able to exercise control over of representative directors and corporate auditors, (3) the issuance of operations are consolidated, and those companies over which the INVESTING ACTIVITIES: new shares and bonds, (4) long term loans payable, (5) amendments to Company has the ability to exercise significant influence are accounted Placement of time deposits (279,000) (95,000) (20,000) (2,325,000) the Articles of Incorporation, (6) operating plans, (7) sales of material for by the equity method. Withdrawal of time deposits 215,010 65,002 30,000 1,791,750 assets, (8) appropriations of earnings and (9) merger or dissolution. As of Investments in two affiliates are accounted for by the equity method. Purchases of marketable securities (50,000) (35,000) (25,000) (416,666) December 1, 2001, since the Law was revised and the Company was no Investments in the remaining unconsolidated subsidiaries and affiliates Proceeds from redemption of marketable securities 50,000 35,000 25,000 416,666 longer in scope of the Law, the Company was not required to obtain the are stated at cost. If the equity method of accounting had been applied Purchases of property, plant and equipment (197,469) (202,118) (268,440) (1,645,575) aforementioned authorizations. to the investments in these companies, the effect on the accompanying Proceeds from contribution for construction 4,929 3,825 2,433 41,075 On October 8, 1997, the Company's shares were listed on the Nagoya consolidated financial statements would not be material. Proceeds from sales of investment securities 434 902 519 3,616 and Tokyo stock exchanges in Japan. The JNRSC, which held all The difference between the cost of acquisition and the fair value of Purchases of investment securities (203) (108) (4) (1,691) 2,240,000 of the Company's outstanding shares prior to the listing, sold the equity of an acquired subsidiary at the date of acquisition is fully Other—net (7,670) (2,958) (6,623) (63,916) 1,353,929 shares in the initial public offerings. Pursuant to the Law for amortized when incurred. Disposal of Debts and Liabilities of the JNRSC enacted in October of All significant intercompany balances and transactions have been Net cash used in investing activities (263,970) (230,454) (262,114) (2,199,750) 1998, the Company's shares held by the JNRSC were transferred to Japan eliminated in consolidation. All material unrealized profit included Railway Construction Public Corporation (the "JRCPC"). On October in assets resulting from transactions within the Companies is also FINANCING ACTIVITIES: 1, 2003, the CATT and the JRCPC were fully integrated, pursuant to the eliminated. Net increase (decrease) in short-term loans payable 6,581 (1,889) 1,684 54,841 Law of Japan Railway Construction, Transport and Technology enacted A certain consolidated subsidiary has adopted a fiscal year ending on Proceeds from long-term debt 259,600 189,600 189,000 2,163,333 on October 1, 2003, and designated as the JRTT. In July 2005, the JRTT February 28, which is different from that of the Company. The necessary Repayments of long-term debt (353,699) (319,950) (266,782) (2,947,491) sold 600,000 shares of the Company. On April 5, 2006, the JRTT also adjustments for preparing consolidated financial statements as of the Payments for long-term accounts payable— railway facilities (126,202) (138,848) (148,989) (1,051,683) sold its remaining 286,071 shares of the Company. As a result of this Company's year-end were appropriately made, such as adjustments for Cash dividends paid (23,640) (21,670) (19,700) (197,000) sale, all of the Company's shares held by the JRTT were sold. significant intercompany accounts and transactions which occur between Cash dividends paid to minority shareholders (434) (434) (434) (3,616) The shares above do not reflect the effect of the hundred-for-one stock the fiscal year-end of the subsidiary and that of the Company. Other—net (14,483) (16,572) (14,615) (120,691) split effective as of October 1, 2012. b.Cash Equivalents Net cash used in financing activities (252,279) (309,764) (259,838) (2,102,325) Cash equivalents are short term investments that are readily NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 54,556 338 (9,629) 454,633 2.BASIS OF PRESENTATION OF CONSOLIDATED convertible into cash and that are exposed to insignificant risk of changes FINANCIAL STATEMENTS in value. Cash equivalents include time deposits, certificates of deposit, CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 75,445 75,106 84,692 628,708 The accompanying consolidated financial statements have been commercial paper and others, all of which mature or become due within prepared in accordance with the provisions set forth in the Japanese three months of the date of acquisition. CASH AND CASH EQUIVALENTS INCREASED Financial Instruments and Exchange Act and its related accounting BY MERGER WITH AN UNCONSOLIDATED SUBSIDIARY 43 regulations, and in accordance with accounting principles generally c.Inventories CASH AND CASH EQUIVALENTS, END OF YEAR ￥ 130,002 ￥ 75,445 ￥ 75,106 $ 1,083,350 accepted in Japan, which are different in certain respects as to the Inventories are stated at the lower of cost, principally determined by application and disclosure requirements of International Financial the retail method for merchandise, by the specific identification method Reporting Standards. for land and buildings held for sale in lots, by the specific identification ADDITIONAL CASH FLOW INFORMATION: In preparing these consolidated financial statements, certain method for work in process and by the moving average cost method for Interest paid ￥ 72,683 ￥ 81,070 ￥ 89,227 $ 605,691 reclassifications and rearrangements have been made to the consolidated materials and supplies, or net selling value. See notes to consolidated financial statements. financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain d.Investment Securities reclassifications have been made in the 2014 and 2013 consolidated All investment securities are classified and accounted for, depending financial statements to conform to the classifications used in 2015. on management's intent, as available-for-sale securities, which are

46 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 47 Financial Section

principally comprised of investment securities, and are reported at fair line basis mainly over five years, which is within the average remaining n.Appropriations of Retained Earnings securities. value, with unrealized gain and loss, net of applicable taxes, reported in a service period. Prior service costs are amortized on a straight-line basis Appropriations of retained earnings are reflected in the consolidated Cash dividends per share presented in the accompanying consolidated separate component of equity. mainly over five years, which is within the average remaining service financial statements for the following year upon shareholders' approval. statement of income are dividends applicable to the respective years, Nonmarketable available-for-sale securities are stated at cost period. including dividends to be paid after the end of the year. determined by the moving average cost method. For other-than- The Accounting Standards Board of Japan (the “ASBJ”) issued ASBJ o.Consumption Tax On October 1, 2012, the Company effected a hundred-for-one stock temporary declines in fair value, investment securities are reduced to net Statement No. 26, "Accounting Standard for Retirement Benefits" in May Unless otherwise stated, all figures are presented net of tax. split and implemented a share unit system, by which shares became share realizable value by a charge to income. 2012 and ASBJ Guidance No. 25, "Guidance on Accounting Standard units. All prior year shares and per share figures have been restated and the for Retirement Benefits” in March 2015, which replaced the accounting p.Derivatives and Hedging Activities Company presents the weighted-average number of common shares, basic e.Property, Plant and Equipment standard for retirement benefits that had been issued by the Business The Companies use derivative financial instruments mainly to manage net income per share and cash dividends per share to reflect the impact of Property, plant and equipment are stated at cost. Certain contributions Accounting Council in 1998 with an effective date of April 1, 2000, their exposures to fluctuations in interest rates. Interest rate swaps are the stock split. in aid for construction of railways and other property are deducted and the other related practical guidance, and were followed by partial utilized by the Companies to reduce interest rate risks. The Companies do directly from the cost of the related assets. The accumulated amendments from time to time through 2009. not enter into derivatives for trading or speculative purposes. r.Accounting Changes and Error Corrections contributions deducted from the cost of property, plant and equipment as (a)Under the revised accounting standard, actuarial gains and losses Interest rate swaps, which qualify for hedge accounting and meet specific In December 2009, the ASBJ issued ASBJ Statement No. 24, "Accounting of March 31, 2015 and 2014 amounted to ¥275,321 million ($2,294,341 and past service costs that are yet to be recognized in profit or loss are matching criteria, are not remeasured at market value, but the differential Standard for Accounting Changes and Error Corrections" and ASBJ thousand), and ¥273,188 million, respectively. recognized within equity (accumulated other comprehensive income), paid or received under the swap agreements is recognized and included in Guidance No. 24, "Guidance on Accounting Standard for Accounting Depreciation is computed substantially by the declining-balance after adjusting for tax effects, and any resulting deficit or surplus is interest expense. Changes and Error Corrections." Accounting treatments under this standard method over the estimated useful lives of the assets. Additional recognized as a liability (liability for retirement benefits) or asset (asset and guidance are as follows: (1) Changes in Accounting Policies—When depreciation is provided for the Shinkansen rolling stock based on for retirement benefits). q.Per Share Information a new accounting policy is applied following revision of an accounting kilometers traveled. (b)The revised accounting standard does not change how to recognize Basic net income per share is computed by dividing net income available standard, the new policy is applied retrospectively unless the revised The range of useful lives is principally from 2 to 60 years for buildings actuarial gains and losses and past service costs in profit or loss. Those to common shareholders by the weighted-average number of common shares accounting standard includes specific transitional provisions, in which and structures, and from 2 to 20 years for machinery, rolling stock and amounts are recognized in profit or loss over a certain period no longer outstanding for the period. case the entity shall comply with the specific transitional provisions. (2) vehicles. than the expected average remaining service period of the employees. The net income available to common shareholders used in the Changes in Presentation—When the presentation of financial statements Depreciation of certain railway ground structures, except for the However, actuarial gains and losses and past service costs that arose in computation for 2015, 2014 and 2013 was ¥264,134 million ($2,201,116 is changed, prior-period financial statements are reclassified in accordance Shinkansen railway ground facilities, is computed by the replacement the current period and have not yet been recognized in profit or loss are thousand), ¥255,686 million and ¥199,971 million, respectively. The with the new presentation. (3) Changes in Accounting Estimates—A change accounting-method. included in other comprehensive income, and actuarial gains and losses average number of common shares used in the computation for 2015, 2014 in an accounting estimate is accounted for in the period of the change if and past service costs that were recognized in other comprehensive and 2013 was 196,799,298 shares, 196,799,336 shares and 196,799,380 the change affects that period only, and is accounted for prospectively if f.Long-Lived Assets income in prior periods and then recognized in profit or loss in the current shares, respectively. the change affects both the period of the change and future periods. (4) The Companies review their long-lived assets for impairment whenever period, are treated as reclassification adjustments (see Note 14). Diluted net income per share is not presented in the accompanying Corrections of Prior-Period Errors—When an error in prior-period financial events or changes in circumstances indicate the carrying amount of an (c)The revised accounting standard also made certain amendments consolidated financial statements as the Companies do not have any dilutive statements is discovered, those statements are restated. asset or asset group may not be recoverable. An impairment loss is relating to the method of attributing expected benefit to periods, the recognized if the carrying amount of an asset or asset group exceeds discount rate, and expected future salary increases. the sum of the undiscounted future cash flows expected to result from This accounting standard and the guidance for (a) and (b) above are the continued use and eventual disposition of the asset or asset group. effective for the end of annual periods beginning on or after April 1, The impairment loss would be measured as the amount by which the 2013, and for (c) above are effective for the beginning of annual periods carrying amount of the asset exceeds its recoverable amount, which is the beginning on or after April 1, 2014, or for the beginning of annual periods 4.INVESTMENT SECURITIES higher of the discounted cash flows from the continued use and eventual beginning on or after April 1, 2015, subject to certain disclosure in March Information regarding investment securities with readily determinable fair values classified as available-for-sale as of March 31, 2015 and 2014, was as follows: disposition of the asset or the net selling price at disposition. 2015, all with earlier application being permitted from the beginning Millions of Yen of annual periods beginning on or after April 1, 2013. However, no 2015 g.Software Costs retrospective application of this accounting standard to consolidated Software costs are amortized by the straight-line method over five financial statements in prior periods is required. Unrealized Unrealized Fair Cost Gain Loss Value years. The Companies applied the revised accounting standard and guidance for retirement benefits for (a) and (b) above, effective March 31, 2014, Equity securities ￥ 60,185 ￥ 56,863 ￥ 5 5 ￥ 116,992 h.Deferred Charges and for (c) above, effective April 1, 2014. Trust fund investment and other 276 67 343 Bond issuance costs are fully charged to income as incurred. With respect to (c) above, the Companies changed the method of Total ￥ 60,461 ￥ 56,931 ￥ 55 ￥ 117,336 attributing the expected benefit to periods from a straight-line basis to i.Provision for Large-Scale Renovation of the Shinkansen Infrastructure a benefit formula basis, and the method of determining the discount Millions of Yen Provision for large-scale renovation of the Shinkansen infrastructure rate, and recorded the effect above as of April 1, 2014, in retained is provided based on the Nationwide Shinkansen Railway Development earnings. As a result, retained earnings as of April 1, 2014, increased by 2014 Law. ¥17,450 million ($145,416 thousand). The effect of this change on the Unrealized Unrealized Fair The Company amended the provision reserve plan in the year ended consolidated statement of income for the year ended March 31, 2015, was Cost Gain Loss Value March 31, 2013, and started to appropriate the reverse evenly over 10 immaterial. Equity securities ￥ 60,452 ￥ 31,752 ￥ 653 ￥ 91,552 years from the year ended March 31, 2014. Accordingly, the Company Trust fund investment and other 276 4 271 reversed the provision in an amount of ¥35,000 million in the year ended k.Research and Development Costs Total ￥ 60,728 ￥ 31,752 ￥ 657 ￥ 91,823 March 31, 2014, whereas ¥33,333 million was reserved in the year ended Research and development costs are charged to income as incurred. March 31, 2013. As a result, operating expenses decreased by ¥68,333 Research and development costs charged to income were ¥107,370 million, and both operating income and income before income taxes in million ($894,750 thousand), ¥93,533 million and ¥33,851 million for the Thousands of U.S. Dollars the year ended March 31, 2014, increased by the same amount from the years ended March 31, 2015, 2014 and 2013, respectively. 2015 year ended March 31, 2013. Unrealized Unrealized Fair l.Leases Cost Gain Loss Value j.Retirement and Pension Plans Lease assets of finance leases that were not deemed to transfer Equity securities $ 501,541 $ 473,858 $ 458 $ 974,933 The Company and 28 consolidated subsidiaries have unfunded ownership of the leased property are depreciated and amortized by the Trust fund investment and other 2,300 558 2,858 retirement plans covering substantially all of their employees. Six straight-line method over the lease period. consolidated subsidiaries have noncontributory defined benefit pension Total $ 503,841 $ 474,425 $ 458 $ 977,800 plans and one consolidated subsidiary has a defined contribution pension m.Income Taxes The information for available-for-sale securities whose fair value is not readily determinable as of March 31, 2015 and 2014, is disclosed in Note 10. plan, some of those subsidiaries also have unfunded retirement plans. The provision for income taxes is computed based on the pretax The impairment loss on investments in an unconsolidated subsidiary for the year ended March 31, 2015, was ¥5,648 million ($47,066 thousand). The impairment loss on available-for-sale equity securities for the years ended March 31, 2014 and 2013, was not presented as the effect was immaterial. Some of the subsidiaries adopt the simplified accounting method for income included in the consolidated statement of income. The asset and calculation of liability of retirement benefits and retirement benefit liability approach is used to recognize deferred tax assets and liabilities expenses. for the expected future tax consequences of temporary differences Liability for retirement benefits is mainly calculated based on the between the carrying amounts and the tax bases of assets and liabilities. projected benefit obligations and plan assets at the balance sheet date. Deferred taxes are measured by applying currently enacted tax laws to The projected benefit obligations are attributed to periods on a benefit the temporary differences. formula basis. Actuarial gains and losses are amortized on a straight-

48 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 49 Financial Section

5.SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBT Annual maturities of long-term debt outstanding at the principal amounts as of March 31, 2015, were as follows: The interest rates applicable to short‑term loans payable were 0.36% as of March 31, 2015, 0.32% as of March 31, 2014, and 0.35% as of March 31, 2013. Millions of Yen Thousands of Long-term debt as of March 31, 2015 and 2014, consisted of the following: Year Ending March 31 U.S. Dollars Millions of Yen Thousands of 2016 ¥ 139,879 $ 1,165,658 U.S. Dollars 2017 132,236 1,101,966 2015 2014 2015 2018 170,574 1,421,450 The Company 2019 130,647 1,088,725 Unsecured 2.39% bonds due 2022 ￥ 9,497 Unsecured 2.2% bonds due 2022 9,100 2020 134,593 1,121,608 Unsecured 1.74% bonds due 2022 10,000 Thereafter 712,976 5,941,466 Unsecured 1.42% bonds due 2017 5,000 Total ¥ 1,420,907 $ 11,840,891 Unsecured 1.15% bonds due 2022 12,500 Unsecured 1.31% bonds due 2033 5,000 The Company has entrusted cash for the repayment of a portion of its outstanding bonds based on debt assumption agreements with financial institutions; Unsecured 2.015% bonds due 2023 4,500 however, the Company is not released from the primary responsibility for the liability by these agreements. The outstanding bonds covered by these Unsecured 2.2% bonds due 2024 4,950 agreements as of March 31, 2015 and 2014, were as follows: Unsecured 2.19% bonds due 2019 4,950 Thousands of Unsecured 1.875% bonds due 2019 10,000 Millions of Yen U.S. Dollars Unsecured 2.21% bonds due 2024 4,825 2015 2014 2015 Unsecured 1.775% bonds due 2020 10,000 Secured 3.95% bonds due 2016 ¥ 29,000 ¥ 29,000 $ 241,666 Unsecured 1.77% bonds due 2017 10,000 Secured 2.825% bonds due 2017 49,800 49,800 415,000 Unsecured 1.695% bonds due 2016 10,000 Secured 2.18% bonds due 2018 29,900 29,900 249,166 Unsecured 2.14% bonds due 2018 9,200 Secured 2.6% bonds due 2020 49,800 49,800 415,000 Unsecured 2.405% bonds due 2026 4,950 Unsecured 2.39% bonds due 2022 18,995 9,497 158,291 Unsecured 2% bonds due 2016 15,000 Unsecured 2.2% bonds due 2022 18,200 9,100 151,666 Unsecured 2.04% bonds due 2018 ¥ 18,795 18,794 $ 156,625 Unsecured 1.74% bonds due 2022 20,000 10,000 166,666 Unsecured 2.39% bonds due 2026 29,787 29,786 248,225 Unsecured 1.42% bonds due 2017 10,000 5,000 83,333 Unsecured 1.88% bonds due 2016 19,997 19,996 166,641 Unsecured 1.15% bonds due 2022 25,000 12,500 208,333 Unsecured 1.78% bonds due 2017 19,998 19,998 166,650 Unsecured 1.31% bonds due 2033 10,000 5,000 83,333 Unsecured 1.78% bonds due 2017 19,998 19,998 166,650 Unsecured 2.015% bonds due 2023 9,000 4,500 75,000 Unsecured 1.75% bonds due 2017 19,998 19,998 166,650 Unsecured 2.2% bonds due 2024 9,900 4,950 82,500 Unsecured 2.31% bonds due 2027 19,981 19,979 166,508 Unsecured 2.19% bonds due 2019 9,900 4,950 82,500 Unsecured 1.69% bonds due 2018 9,999 9,999 83,325 Unsecured 1.875% bonds due 2019 20,000 10,000 166,666 Unsecured 2.3% bonds due 2027 14,993 14,992 124,941 Unsecured 2.21% bonds due 2024 9,650 4,825 80,416 Unsecured 1.79% bonds due 2020 19,894 19,992 165,783 Unsecured 1.775% bonds due 2020 20,000 10,000 166,666 Unsecured 1.83% bonds due 2018 9,997 9,996 83,308 Unsecured 1.77% bonds due 2017 20,000 10,000 166,666 Unsecured 2.39% bonds due 2028 19,984 19,983 166,533 Unsecured 1.695% bonds due 2016 20,000 10,000 166,666 Unsecured 2.391% bonds due 2028 30,000 30,000 250,000 Unsecured 2.14% bonds due 2018 18,400 9,200 153,333 Unsecured 2.646% bonds due 2038 10,000 10,000 83,333 Unsecured 2.405% bonds due 2026 9,900 4,950 82,500 Unsecured 1.557% bonds due 2019 19,800 20,000 165,000 Unsecured 2% bonds due 2016 30,000 15,000 250,000 Unsecured 2.166% bonds due 2029 30,000 30,000 250,000 Total ¥ 437,445 ¥ 297,972 $ 3,645,375 Unsecured 2.312% bonds due 2029 30,000 30,000 250,000 The aforementioned bonds for which the Company entered into debt assumption agreements have been derecognized in the consolidated balance sheet and Unsecured 2.556% bonds due 2039 10,000 10,000 83,333 disclosed as contingent liabilities (see Note 13). Unsecured 1.667% bonds due 2019 10,000 10,000 83,333 The Company has credit commitments from banks. Total unused credit available to the Company as of March 31, 2015, was ¥100,000 million ($833,333 Unsecured 2.321% bonds due 2029 30,000 30,000 250,000 thousand). Unsecured 2.157% bonds due 2029 40,000 40,000 333,333 All assets of the Company were pledged for the above secured bonds of ¥158,500 million ($1,320,833 thousand), as an enterprise mortgage, which gives Unsecured 2.375% bonds due 2039 10,000 10,000 83,333 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. Unsecured 1.472% bonds due 2020 14,100 15,000 117,500 The carrying amounts of assets pledged as collateral for the secured current portion of long-term debt of a consolidated subsidiary of ¥175 million ($1,458 Unsecured 2.212% bonds due 2030 30,000 30,000 250,000 thousand), as of March 31, 2015, were as follows: Unsecured 2.111% bonds due 2030 20,000 20,000 166,666 Millions of Yen Thousands of Unsecured 1.797% bonds due 2030 10,000 10,000 83,333 U.S. Dollars Unsecured 0.586% bonds due 2015 30,000 Buildings and structures—net of accumulated depreciation ¥ 184 $ 1,533 Unsecured 2.083% bonds due 2031 20,000 20,000 166,666 Land 669 5,575 Unsecured 0.297% bonds due 2014 30,000 Total ¥ 854 $ 7,116 Unsecured 1.895% bonds due 2031 10,000 10,000 83,333 Unsecured 0.262% bonds due 2015 20,000 20,000 166,666 Unsecured 1.824% bonds due 2032 10,000 10,000 83,333 6.LONG-TERM ACCOUNTS PAYABLE—RAILWAY FACILITIES Unsecured 0.156% bonds due 2014 25,000 Based on legal defeasance agreements with special purpose entities, the Company has transferred the debt repayment obligations for certain long-term Unsecured 0.13% bonds due 2016 15,000 15,000 125,000 accounts payable—railway facilities to the special purpose entities, and has provided the special purpose entities with Japanese national government bonds or Unsecured 1.725% bonds due 2033 10,000 10,000 83,333 cash for the payments of principal and interest on the long-term accounts payable—railway facilities. As a result of these transactions, the balance of long- Unsecured 1.807% bonds due 2033 15,000 15,000 125,000 term accounts payable—railway facilities was reduced by ¥154,438 million ($1,286,983 thousand) and ¥224,711 million as of March 31, 2015 and 2014, Unsecured 1.786% bonds due 2033 15,000 15,000 125,000 respectively (see Note 13). Annual maturities of long-term accounts payable—railway facilities as of March 31, 2015, were as follows: Unsecured 1.629% bonds due 2033 10,000 10,000 83,333 Unsecured 1.623% bonds due 2034 15,000 15,000 125,000 Millions of Yen Thousands of Unsecured 1.584% bonds due 2034 15,000 125,000 Year Ending March 31 U.S. Dollars Unsecured 1.502% bonds due 2034 20,000 166,666 2016 ¥ 86,073 $ 717,275 Unsecured 1.309% bonds due 2032 15,000 125,000 2017 89,749 747,908 Unsecured 1.917% bonds due 2044 10,000 83,333 2018 4,820 40,166 Unsecured 1.362% bonds due 2034 20,000 166,666 2019 5,118 42,650 Unsecured 1.014% bonds due 2035 20,000 166,666 2020 5,437 45,308 Unsecured 1.685% bonds due 2045 10,000 83,333 Thereafter 538,486 4,487,383 Unsecured loans from Japanese banks and others, with interest rates ranging from Total ¥ 729,685 $ 6,080,708 0.76% to 6.6% (2015), from 0.84% to 6.6% (2014), due 2014 to 2045 639,293 612,883 5,327,441 Interest expense on the aforementioned long-term accounts payable—railway facilities amounted to ¥46,784 million ($389,866 thousand), ¥52,375 million Subsidiaries and ¥59,004 million for the years ended March 31, 2015, 2014 and 2013, respectively. Unsecured and secured loans from Japanese banks and others, with interest rates ranging from 0.53% to 4.65% (2015), from 0.53% to 4.65% (2014), due 2014 to 2018 14,214 19,051 118,450 Total 1,420,834 1,514,922 11,840,283 Less current portion (139,879) (213,026) (1,165,658) Long-term debt, less current portion ¥ 1,280,954 ¥ 1,301,895 $ 10,674,616

50 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 51 Financial Section

7.RETIREMENT AND PENSION PLANS 7.Plan assets Employees whose service with the Company or consolidated subsidiaries is terminated are entitled to retirement and pension benefits determined by a.Components of plan assets reference to accumulated points during their employment calculated by their position or basic rates of pay at the time of termination, length of service Plan assets as of March 31, 2015 and 2014, consisted of the following: and other conditions under which the termination occurs. Some of the subsidiaries adopt the simplified accounting method for calculation of liability of 2015 2014 retirement benefits and retirement benefit expenses. Equities 62% 55% Years Ended March 31, 2015 and 2014 General security account 23 28 1.The changes in defined benefit obligation for the years ended March 31, 2015 and 2014, were as follows: Bonds 11 13 Others 4 4 Millions of Yen Thousands of Total 100% 100% U.S. Dollars The employee retirement benefit trust for the Companies’ contributory pension plans accounted for 51% and 42% of total plan assets for the years ended 2015 2014 2015 March 31, 2015 and 2014, respectively. Balance at beginning of year (as previously reported) ¥ 230,925 ¥ 227,177 $ 1,924,375 Cumulative effect of accounting change (25,696) (214,133) b.Method of determining the expected rate of return on plan assets Balance at beginning of year (as restated) 205,228 227,177 1,710,233 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 Current service cost 13,227 12,770 110,225 various components of the plan assets. Interest cost 2,900 3,407 24,166 Actuarial losses (gains) 19,841 (920) 165,341 8.Assumptions used for the years ended March 31, 2015 and 2014, were set forth as follows: Benefits paid (15,068) (11,512) (125,566) Prior service cost 2 2015 2014 Others 90 750 Discount rate Mainly 0.4% Mainly 1.5% Balance at end of year ¥ 226,219 ¥ 230,925 $ 1,885,158 Expected rate of return on plan assets 1.2% to 2.0% 1.1% to 2.0% The retirement benefit expenses recognized by the consolidated subsidiaries, which adopt the simplified accounting method, are included in the current service cost. 9.Defined Contribution Plan Total contribution by the Companies for the defined contribution plan was ¥113 million ($941 thousand) for the year ended March 31, 2015 and ¥106 2.The changes in plan assets for the years ended March 31, 2015 and 2014, were as follows: million for the year ended March 31, 2014. Thousands of Millions of Yen Year Ended March 31, 2013 U.S. Dollars The components of net periodic benefit costs for the year ended March 31, 2013, were as follows: 2015 2014 2015 Balance at beginning of year ¥ 20,231 ¥ 17,893 $ 168,591 Millions of Yen Expected return on plan assets 290 269 2,416 2013 Actuarial gains 5,763 1,682 48,025 Contributions from the employer 1,124 1,135 9,366 Service cost ¥ 12,575 Benefits paid (854) (748) (7,116) Interest cost 3,344 Others 90 750 Expected return on plan assets (235) Balance at end of year ¥ 26,647 ¥ 20,231 $ 222,058 Amortization of transitional obligation 199 Amortization of prior service cost 49 Recognized actuarial loss 255 3.Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets: Net periodic benefit costs 16,188 Thousands of Contribution to the defined contribution plan 111 Millions of Yen U.S. Dollars Total ¥ 16,300 2015 2014 2015 The retirement benefit expenses recognized by the consolidated subsidiaries, which adopt the simplified accounting method, are ncludedi in service cost.

Funded defined benefit obligation ¥ 21,606 ¥ 18,904 $ 180,050 Assumptions used for the year ended March 31, 2013 were set forth as follows: Plan assets (26,647) (20,231) (222,058) (5,041) (1,327) (42,008) 2013 Unfunded defined benefit obligation 204,613 212,020 1,705,108 Discount rate Mainly 1.5% Net liability arising from defined benefit obligation 199,572 210,693 1,663,100 Expected rate of return on plan assets 1.1% to 2.0% Liability for retirement benefits 205,501 212,969 1,712,508 Amortization period of prior service cost Mainly five years Asset for retirement benefits (5,929) (2,276) (49,408) Recognition period of actuarial gains/losses Mainly five years Net liability arising from defined benefit obligation ¥ 199,572 ¥ 210,693 $ 1,663,100 Amortization period of transitional obligation 15years (a certain consolidated subsidiary only) 4.The components of net periodic benefit costs for the years ended March 31, 2015 and 2014, were as follows: Thousands of Millions of Yen U.S. Dollars 2015 2014 2015 8.EQUITY limitation. The Companies Act also provides that common stock, legal Service cost ¥ 13,227 ¥ 12,770 $ 110,225 Japanese companies are subject to the Companies Act of Japan (the reserve, additional paid-in capital, other capital surplus and retained Interest cost 2,900 3,407 24,166 "Companies Act"). The significant provisions in the Companies Act that earnings-unappropriated can be transferred among the accounts within Expected return on plan assets (290) (269) (2,416) affect financial and accounting matters are summarized below: equity under certain conditions upon resolution of the shareholders. Recognized actuarial losses (gains) 3,742 (91) 31,183 a.Dividends c.Treasury Stock and Treasury Stock Acquisition Rights Amortization of prior service cost 79 86 658 Under the Companies Act, companies can pay dividends at any time The Companies Act also provides for companies to purchase treasury Amortization of transitional obligation 199 199 1,658 during the fiscal year in addition to the year-end dividend upon resolution stock and dispose of such treasury stock by resolution of the Board of Net periodic benefit costs ¥ 19,859 ¥ 16,103 $ 165,491 at the shareholders’ meeting. For companies that meet certain criteria Directors. The amount of treasury stock purchased cannot exceed the The retirement benefit expenses recognized by the consolidated subsidiaries, which adopt the simplified accounting method, are included in service cost. including (1) having a Board of Directors, (2) having independent auditors, amount available for distribution to the shareholders which is determined by (3) having an Audit & Supervisory Board, and (4) the term of service of a specific formula. 5.Other comprehensive income (pretax) on defined retirement benefit plans for the years ended March 31, 2015 and 2014 the directors being prescribed as one year rather than the normal two-year Under the Companies Act, stock acquisition rights are presented as a separate component of equity. Thousands of term by its articles of incorporation, the Board of Directors may declare Millions of Yen dividends (except for dividends-in-kind) at any time during the fiscal year if The Companies Act also provides that companies can purchase both U.S. Dollars the Company has prescribed so in its articles of incorporation. treasury stock acquisition rights and treasury stock. Such treasury stock 2015 2014 2015 The Companies Act permits companies to distribute dividends-in-kind acquisition rights are presented as a separate component of equity or Actuarial gains ¥ (10,334) $ (86,116) (noncash assets) to shareholders subject to a certain limitation and additional deducted directly from stock acquisition rights. Prior service cost 79 658 requirements. d.Stock Splits Transitional obligation 199 1,658 Semiannual interim dividends may also be paid once a year upon On October 1, 2012, the Company effected a hundred-for-one stock split Total ¥ (10,055) $ (83,791) resolution by the Board of Directors if the articles of incorporation of the and implemented a share unit system, by which shares became share units. company so stipulate. The Companies Act provides certain limitations 6.Accumulated other comprehensive income (pretax) on defined retirement benefit plans as of March 31, 2015 and 2014 on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the Millions of Yen Thousands of shareholders, but the amount of equity after dividends must be maintained at U.S. Dollars no less than ¥3 million. 2015 2014 2015 b.Increases/Decreases and Transfer of Common Stock, Reserve and Surplus Unrecognized actuarial (losses) gains ¥ (8,232) ¥ 2,102 $ (68,600) Unrecognized prior service cost (116) (196) (966) The Companies Act requires that an amount equal to 10% of dividends Unrecognized transitional obligation (199) must be appropriated as a legal reserve (a component of retained earnings) Total ¥ (8,349) ¥ 1,706 $ (69,575) or as additional paid-in capital (a component of capital surplus), depending on the equity account charged upon the payment of such dividends, until the aggregate amount of legal reserve and additional paid-in capital equals to 25% of the common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without

52 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 53 Financial Section

9.INCOME TAXES (1) Fair Value of Financial Instruments The Companies are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 35.2% for the year ended March 31, 2015, and 37.6% for the years ended March 31, 2014 and 2013. Millions of Yen The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities as of March 31, 2015 March 31, 2015 Carrying Amount Fair Value Unrealized Gain/Loss and 2014, were as follows: Cash and cash equivalents ¥ 130,002 ¥ 130,002 Thousands of Millions of Yen U.S. Dollars Time deposits 114,000 114,000 2015 2014 2015 Trade receivables 90,957 90,957 Deferred tax assets: Investment securities 117,336 117,336 Depreciation and amortization ¥ 69,401 ¥ 73,380 $ 578,341 Total ¥ 452,296 ¥ 452,296 Liability for retirement benefits 67,421 75,957 561,841 Software 10,674 11,990 88,950 Provision for bonuses 9,066 9,622 75,550 Short-term loans payable ¥ (31,368) ¥ (31,368) Unrealized profit on property, plant and equipment 7,438 7,701 61,983 Trade payables (183,033) (183,033) Accrued railway usage charges 3,920 4,614 32,666 Tax loss carryforwards 466 1,011 3,883 Income taxes payable (71,528) (71,528) Other 52,688 50,325 439,066 Long-term debt (1,420,834) (1,520,818) ¥ (99,984) Total 221,077 234,603 1,842,308 Long-term accounts payable—railway facilities (729,685) (1,300,766) (571,080) Less valuation allowance (22,685) (18,648) (189,041) Deferred tax assets 198,391 215,954 1,653,258 Total ¥ (2,436,450) ¥ (3,107,515) ¥ (671,065) Millions of Yen Deferred tax liabilities: Unrealized gain on available-for-sale securities 17,656 10,748 147,133 March 31, 2014 Carrying Amount Fair Value Unrealized Gain/Loss Deferred gain on transfer of certain fixed assets 4,664 5,318 38,866 Cash and cash equivalents ¥ 75,445 ¥ 75,445 Other 6,439 4,984 53,658 Deferred tax liabilities 28,760 21,051 239,666 Time deposits 50,010 50,010 Trade receivables 99,031 99,031 Net deferred tax assets ¥ 169,630 ¥ 194,903 $ 1,413,583 Investment securities 91,823 91,823 Net deferred tax assets as of March 31, 2015 and 2014, were reflected in the accompanying consolidated balance sheets under the following captions: Total ¥ 316,310 ¥ 316,310 Thousands of Millions of Yen U.S. Dollars 2015 2014 2015 Short-term loans payable ¥ (24,754) ¥ (24,754) Current assets ¥ 26,708 ¥ 27,592 $ 222,566 Trade payables (169,153) (169,153) Investments and other assets 149,077 171,225 1,242,308 Income taxes payable (84,472) (84,472) Current liabilities—other (1) (0) (8) Long-term debt (1,514,922) (1,600,517) ¥ (85,595) Noncurrent liabilities—other (6,152) (3,913) (51,266) Net deferred tax assets ¥ 169,630 ¥ 194,903 $ 1,413,583 Long-term accounts payable—railway facilities (855,888) (1,387,186) (531,298) A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated statement of Total ¥ (2,649,191) ¥ (3,266,085) ¥ (616,894) income for the year ended March 31, 2014, was as follows: Thousands of U.S. Dollars 2014 Carrying Amount Fair Value Unrealized Gain/Loss Normal effective statutory tax rate 37.6% March 31, 2015 Deduction of R&D promotion tax system (2.8) Cash and cash equivalents $ 1,083,350 $ 1,083,350 Other—net 0.6 Time deposits 950,000 950,000 Actual effective tax rate 35.4% Trade receivables 757,975 757,975 Since the difference between the normal effective statutory tax rate and the actual effective tax rate was not significant, reconciliations were not presented for the years ended March 31, 2015 and 2013. Investment securities 977,800 977,800 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 Total $ 3,769,133 $ 3,769,133 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. 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 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 Short-term loans payable $ (261,400) $ (261,400) 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 million ($131,133 thousand) and to increase income taxes - deferred in the consolidated statement of income for the year then ended by ¥17,296 million Trade payables (1,525,275) (1,525,275) ($144,133 thousand). Income taxes payable (596,066) (596,066) Long-term debt (11,840,283) (12,673,483) $ (833,200) Long-term accounts payable—railway facilities (6,080,708) (10,839,716) (4,759,000) Total $ (20,303,750) $ (25,895,958) $ (5,592,208) 10.FINANCIAL INSTRUMENTS AND RELATED The interest rate of a part of such payable is variable and determined by the DISCLOSURES JRTT. Cash and Cash Equivalents and Time Deposits related to the debt at the Companies' assumed bond issuing rate or corporate a.Policy for Financial Instruments Derivatives include interest rate swaps, which are used to manage The carrying values of cash and cash equivalents and time deposits borrowing rate. The Companies use financial instruments, mainly debt including bank exposure to market risks of changes in interest rates of long-term debt. approximate fair value because of their short maturities. Long-term debt with floating interest rates is accounted for by special loans and bonds, based on their capital financing plan. Cash surpluses, if Please see Note 11 for the detail of derivatives. Investment Securities treatment. Please refer to Note 11. The fair value is measured by the total any, are invested in low risk financial assets, such as bank deposits. c.Risk Management for Financial Instruments The fair values of investment securities are measured at the quoted amount of principal and interest discounted by the Companies’ assumed Derivatives are used, not for speculative purposes, but to manage Credit Risk Management market price of the stock exchange. Fair value information for investment corporate borrowing rate. exposure to financial risks as described in Note 11. Credit risk is the risk of economic loss arising from a counterparty's securities by classification is included in Note 4. Long-Term Accounts Payable—Railway Facilities Including Current b.Nature and Extent of Risks Arising from Financial Instruments failure to repay or service debt according to the contractual terms. The Trade Receivables and Payables, Short-Term Loans Payable and Income Portion Trade receivables are exposed to customer credit risk. Investment Companies manage their credit risk from trade receivables by monitoring Taxes Payable Considering the legal characteristics, all terms and conditions of the securities, mainly equity instruments of customers and suppliers of the of payment terms and balances of major customers by each business The carrying values of trade receivables and payables, short-term loans accounts payable-railway facilities are stipulated in the special law, and as Companies, are exposed to the risk of market price fluctuations. administration department to identify the default risk of customers in the payable and income taxes payable approximate fair value because of their no active market exists for this type of obligation, the fair values of these Payment terms of trade payables and income taxes payable are within one early stage. short maturities. payables are determined by discounting the cash flow estimated for each due year. Market Risk Management Long-Term Debt Including Current Portion date at the Company’s assumed bond issuing rate. The estimated cash flows Short-term bank loans are used to fund the Companies’ ongoing Investment securities are managed by monitoring market values and Bonds payable with market values are measured at the quoted market of the floating rate portion of these payables are calculated using the latest operations. Bonds and long-term loans are used for renewal of long-term financial position of issuers on a regular basis. prices. The fair values of debt are determined by discounting the cash flows rate provided by the JRTT. debt and capital spending. Please see Note 5 for a maturity analysis for Interest rate swaps are used to manage exposure to market risks of bank loans and bonds payable. changes in interest rates of long-term debt. Long-term accounts payable—railway facilities were incurred in the d.Fair Values of Financial Instruments amount of ¥5,095,661 million in 1991 for the purchase of the Shinkansen Fair values of financial instruments are based on quoted prices in railway ground facilities and serially repaid to the JRTT. Payment terms active markets. If a quoted price is not available, other rational valuation are 25.5 years for ¥4,494,466 million and 60 years for ¥601,195 million. techniques are used instead. Also, please see Note 11 for the details of fair Payment term and interest rate of the payable were determined based on value for derivatives. the agreements on the purchase of the Shinkansen railway ground facilities.

54 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 55 Financial Section

(2)Financial Instruments Whose Fair Value Cannot Reliably be Determined 13.CONTINGENCIES As of March 31, 2015, the Company has joint and several obligations with the RTRI to make payments on long-term debt of ¥14,593 million ($121,608 Carrying Amount thousand) by the RTRI. The proceeds are being used for the enhancement of technology development for the Maglev system. March 31, 2015 Millions of Yen Thousands of U.S. Dollars As discussed in Notes 5 and 6, based on debt assumption agreements with financial institutions or legal defeasance agreements with the special purpose entities, the Company has transferred the debt repayment obligations for certain bonds and long-term accounts payable—railway facilities to such financial Investments in equity instruments that do not have a quoted market price in an active market ¥ 31,822 $ 265,183 institutions and the special purpose entities. As of March 31, 2015, the Company had contingent obligations of ¥437,445 million ($3,645,375 thousand) for the bonds and ¥154,438 million ($1,286,983 thousand) for long-term accounts payable—railway facilities. Carrying Amount March 31, 2014 Millions of Yen 14.COMPREHENSIVE INCOME The components of other comprehensive income for the years ended March 31, 2015, 2014 and 2013, were as follows: Investments in equity instruments that do not have a quoted market price in an active market ¥ 36,719 Thousands of e.Maturity Analysis for Financial Assets and Securities with Contractual Maturities Millions of Yen U.S. Dollars Millions of Yen 2015 2014 2013 2015 Due after One Year Due after Five Unrealized gain on available-for-sale securities: March 31, 2015 Due within One Year through Five Years Years Gain arising during the year ¥ 25,964 ¥ 8,847 ¥ 16,907 $ 216,366 Reclassification adjustments to profit (158) (361) 477 (1,316) Cash and cash equivalents ¥ 130,002 Amount before income tax effect 25,806 8,486 17,384 215,050 Time deposits 114,000 Income tax effect (7,065) (2,905) (4,887) (58,875) Trade receivables 90,957 Total ¥ 18,741 ¥ 5,581 ¥ 12,496 $ 156,175 Deferred (loss) gain on hedges: Total ¥ 334,959 (Loss) gain arising during the year ¥ (88) ¥ (40) ¥ 4 $ (733) Thousands of U.S. Dollars Amount before income tax effect (88) (40) 4 (733) Income tax effect 29 15 (1) 241 Due after One Year Due after Five Total ¥ (59) ¥ (25) ¥ 2 $ (491) March 31, 2015 Due within One Year through Five Years Years Remeasurements of defined benefit plans: Cash and cash equivalents $ 1,083,350 Adjustments arising during the year ¥ (14,077) $ (117,308) Reclassification adjustments to profit 4,021 33,508 Time deposits 950,000 Amount before income tax effect (10,055) (83,791) Trade receivables 757,975 Income tax effect 3,329 27,741 Total $ 2,791,325 Total ¥ (6,725) $ (56,041) f.Annual Maturities of long-term debt and long-term accounts payable—railway facilities Share of other comprehensive income in affiliates Please see Note 5 for annual maturities of long-term debt and Note 6 for long-term accounts payable—railway facilities. Gain arising during the year ¥ 167 ¥ 25 ¥ 81 $ 1,391 Reclassification adjustments to profit 33 275 Total ¥ 201 ¥ 25 ¥ 81 $ 1,675 11.DERIVATIVES The Companies enter into interest rate swap agreements to manage exposure to market risks of changes in interest rates of certain liabilities. Total other comprehensive income ¥ 12,157 ¥ 5,582 ¥ 12,581 $ 101,308 Derivative transactions are mainly entered into to hedge interest rate exposures incorporated within their business. Accordingly, market risk in these derivatives is basically offset by opposite movements in the value of hedged liabilities. Because the counterparties to these derivatives are limited to major international financial institutions, the Companies do not anticipate any loss arising from credit risk. 15.SEGMENT INFORMATION such as the Tokaido Shinkansen and conventional railway operations in the Derivative transactions entered into by the Companies have been made in accordance with internal policies and have been subject to due internal Tokai area, bus operations and others. The Merchandise and Other segment formalities. Under ASBJ Statement No. 17, “Accounting Standard for Segment Information Disclosures” and ASBJ Guidance No. 20, “Guidance on includes a department store in JR Central Towers, retail sales in trains and Derivative Transactions to Which Hedge Accounting Is Applied Accounting Standard for Segment Information Disclosures,” an entity is stations and others. The Real Estate segment includes real estate leasing required to report financial and descriptive information about its reportable business, such as station building leasing, and real estate sales in lots. Millions of Yen segments. Reportable segments are operating segments or aggregations of 2.Methods of Measurement for the Amounts of Operating Revenues, Contract Amount operating segments that meet specified criteria. Operating segments are components of an entity for which separate financial information is available Profit (Loss), Assets, Liabilities and Other Items for Each Reportable March 31, 2015 Hedged Item Contract Amount Due after One Year Fair Value and such information is evaluated regularly by the chief operating decision Segment The accounting policies of each reportable segment are consistent Interest rate swaps:(fixed rate payment, floating rate receipt) Long-term debt ¥ 162,900 ¥ 142,800 * maker in deciding how to allocate resources and in assessing performance. Generally, segment information is required to be reported on the same basis with those disclosed in Note 3, “Summary of Significant Accounting Policies.” Reportable segment profit represents operating income. Prices Millions of Yen as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. of intersegment transactions or transfers are determined based upon arm’s Contract Amount length transactions. March 31, 2014 Hedged Item Contract Amount Due after One Year Fair Value 1.Description of Reportable Segments As described in Note 3.i, the Company amended the provision reserve The Companies’ reportable segments are those for which separate plan in the year ended March 31, 2013, and started to appropriate the reverse Interest rate swaps:(fixed rate payment, floating rate receipt) Long-term debt ¥ 152,900 ¥ 118,900 * financial information is available and regular evaluation by the Companies’ evenly over 10 years from the year ended March 31, 2014. management is being performed in order to decide how resources are Accordingly, the Company reversed the provision in an amount of Thousands of U.S. Dollars allocated among the Companies. ¥35,000 million in the year ended March 31, 2014, whereas the Company Contract Amount The Companies are composed of segments by nature of products and reserved the provision in an amount of ¥33,333 million in the year ended services, and three reportable segments: Transportation, Merchandise and March 31, 2013. As a result, operating expenses of Transportation segment March 31, 2015 Hedged Item Contract Amount Due after One Year Fair Value Other and Real Estate are disclosed. in the year ended March 31, 2014 decreased by ¥68,333 million, and Interest rate swaps:(fixed rate payment, floating rate receipt) Long-term debt $1,357,500 $1,190,000 * The Transportation segment manages the Companies’ railway operations, Segment profit increased in the same amount from the year ended March 31, 2013. *The above interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but the differential paid or received under the swap agreements is recognized and included in interest expense. In addition, the fair value of such interest rate swaps is included 3.Information about Operating Revenues, Profit (Loss), Assets, Liabilities and Other Items in that of hedged items in Note 10 (i.e., long-term debt). Millions of Yen 2015 12.LEASES Reportable Segment As a lessee, the minimum rental commitments under noncancelable operating leases as of March 31, 2015 and 2014, were not presented as the effects were Transportation Merchandise and Other Real Estate Total Other Total Reconciliations Consolidated immaterial. As a lessor, the minimum rental commitments under noncancelable operating leases as of March 31, 2015 and 2014, were due as follows: Operating revenues: External customers ¥ 1,294,050 ¥ 225,038 ¥ 39,349 ¥ 1,558,437 ¥ 113,857 ¥ 1,672,295 ¥ 1,672,295 Thousands of Intersegment transactions or transfers 11,641 8,818 27,237 47,697 125,114 172,812 ¥ (172,812) Millions of Yen U.S. Dollars Total ¥ 1,305,691 ¥ 233,856 ¥ 66,587 ¥ 1,606,135 ¥ 238,971 ¥ 1,845,107 ¥ (172,812) ¥ 1,672,295 2015 2014 2015 Due within one year ¥ 1,476 ¥ 1,514 $ 12,300 Segment profit ¥ 472,017 ¥ 8,935 ¥ 16,616 ¥ 497,570 ¥ 8,281 ¥ 505,851 ¥ 746 ¥ 506,598 Due after one year 5,837 5,812 48,641 Segment assets 4,631,213 99,620 332,606 5,063,440 219,910 5,283,351 (65,369) 5,217,982 Total ¥ 7,313 ¥ 7,326 $ 60,941 Other: Depreciation and amortization 251,092 3,383 13,148 267,624 3,944 271,568 271,568 Amounts of investments in equity in affiliates 8,332 8,332 8,332 8,332 Increase in property,plant and equipment and intangible assets 191,252 6,143 14,051 211,446 3,084 214,531 214,531

56 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 57 Financial Section

Millions of Yen 2014 Nonconsolidated Balance Sheet Reportable Segment Transportation Merchandise and Other Real Estate Total Other Total Reconciliations Consolidated Operating revenues: External customers ¥ 1,264,827 ¥ 212,907 ¥ 39,182 ¥ 1,516,917 ¥ 135,630 ¥ 1,652,547 ¥ 1,652,547 Central Japan Railway Company March 31, 2015 Intersegment transactions or transfers 11,291 7,891 28,239 47,422 114,982 162,405 ¥ (162,405) Millions of Yen Thousands of Total ¥ 1,276,119 ¥ 220,798 ¥ 67,422 ¥ 1,564,340 ¥ 250,613 ¥ 1,814,953 ¥ (162,405) ¥ 1,652,547 U.S. Dollars ASSETS (Note 2) (Note 2) 2015 2014 2015 Segment profit ¥ 460,130 ¥ 8,221 ¥ 13,832 ¥ 482,183 ¥ 10,581 ¥ 492,765 ¥ 1,847 ¥ 494,612 Segment assets 4,749,578 92,155 323,578 5,165,312 217,708 5,383,020 (204,853) 5,178,166 CURRENT ASSETS: ¥ 127,277 ¥ 72,108 $ 1,060,641 Other: Cash and cash equivalents 114,000 50,000 950,000 Depreciation and amortization 255,180 3,286 13,504 271,971 4,298 276,269 276,269 Time deposits 35,710 43,139 297,583 Amounts of investments in equity in affiliates 7,700 7,700 7,700 7,700 Trade receivables 10,677 10,233 88,975 Increase in property,plant and equipment Supplies 22,464 23,019 187,200 and intangible assets 179,856 4,621 11,665 196,144 4,050 200,194 200,194 Deferred tax assets (Note 8) Prepaid expenses and other 38,116 42,818 317,633 Millions of Yen Total current assets 348,245 241,318 2,902,041 2013 NONCURRENT ASSETS: Reportable Segment Investments and other assets: Transportation Merchandise and Other Real Estate Total Other Total Reconciliations Consolidated Investment securities 118,734 96,541 989,450 Operating revenues: Investments in and advances to subsidiaries and affiliates (Note 5) 184,325 187,001 1,536,041 External customers ¥ 1,231,961 ¥ 201,547 ¥ 38,403 ¥ 1,471,911 ¥ 113,407 ¥ 1,585,319 ¥ 1,585,319 Deferred tax assets (Note 8) 134,898 161,504 1,124,150 Intersegment transactions or transfers 11,138 8,009 26,584 45,731 119,775 165,507 ¥ (165,507) Prepaid expenses and other 33,054 33,728 275,450 Total ¥ 1,243,099 ¥ 209,556 ¥ 64,987 ¥ 1,517,643 ¥ 233,183 ¥ 1,750,826 ¥ (165,507) ¥ 1,585,319 Total investments and other assets 471,012 478,775 3,925,100 Property, plant and equipment (Notes 3.e and 4): Segment profit ¥ 396,151 ¥ 7,262 ¥ 12,728 ¥ 416,142 ¥ 9,477 ¥ 425,620 ¥ 522 ¥ 426,142 Railway business property 7,912,012 7,865,908 65,933,433 Segment assets 4,850,076 84,160 329,031 5,263,269 214,972 5,478,241 (247,137) 5,231,104 Construction in progress 165,753 126,614 1,381,275 Other: Other 163,702 164,180 1,364,183 Depreciation and amortization 218,099 3,371 14,063 235,534 4,659 240,193 240,193 Total 8,241,468 8,156,703 68,678,900 Amounts of investments in equity in affiliates 7,531 7,531 7,531 7,531 Accumulated depreciation (4,047,266) (3,890,741) (33,727,216) Increase in property,plant and equipment Net property, plant and equipment 4,194,202 4,265,962 34,951,683 and intangible assets 253,852 4,152 19,695 277,701 3,406 281,107 281,107 4,665,215 4,744,738 38,876,791 Thousands of U.S. Dollars Total noncurrent assets 2015 TOTAL ASSETS ¥ 5,013,460 ¥ 4,986,057 $ 41,778,833 Reportable Segment Thousands of Transportation Merchandise and Other Real Estate Total Other Total Reconciliations Consolidated Millions of Yen U.S. Dollars Operating revenues: LIABILITIES AND EQUITY (Note 2) (Note 2) External customers $ 10,783,750 $ 1,875,316 $ 327,908 $ 12,986,975 $ 948,808 $ 13,935,791 $ 13,935,791 2015 2014 2015 Intersegment transactions or transfers 97,008 73,483 226,975 397,475 1,042,616 1,440,100 $(1,440,100) CURRENT LIABILITIES: Total $ 10,880,758 $ 1,948,800 $ 554,891 $ 13,384,458 $ 1,991,425 $ 15,375,891 $(1,440,100) $ 13,935,791 Short-term loans payable (Note 6) ¥ 126,210 ¥ 122,133 $ 1,051,750 Current portion of long-term debt (Note 6) 135,930 208,189 1,132,750 Segment profit $ 3,933,475 $ 74,458 $ 138,466 $ 4,146,416 $ 69,008 $ 4,215,425 $ 6,216 $ 4,221,650 Current portion of long-term accounts payable—railway facilities 86,073 96,505 717,275 Segment assets 38,593,441 830,166 2,771,716 42,195,333 1,832,583 44,027,925 (544,741) 43,483,183 Trade payables 140,984 124,358 1,174,866 Other: Provision for bonuses 21,164 20,839 176,366 Depreciation and amortization 2,092,433 28,191 109,566 2,230,200 32,866 2,263,066 2,263,066 Income taxes payable 65,361 74,005 544,675 Amounts of investments in equity in affiliates 69,433 69,433 69,433 69,433 Prepaid fares received 27,643 38,790 230,358 Increase in property,plant and equipment Inter-line fares received 7,293 163 60,775 and intangible assets 1,593,766 51,191 117,091 1,762,050 25,700 1,787,758 1,787,758 Other 57,111 32,665 475,925 Notes:1. Other includes business in hotel, travel, advertising, rolling stock production and construction which are not included in a reportable segment. 667,773 717,651 5,564,775 2. Reconciliations are as follows: Total current liabilities (1) The amount of the elimination of intersegment transactions included in the reconciliations was ¥746 million ($6,216 thousand), ¥1,847 million and ¥522 million for the years ended March 31, 2015, 2014 and 2013, respectively. (2) The reconciliations for segment assets include corporate assets, which are not allocated to a reportable segment, and the elimination of intersegment transactions. NONCURRENT LIABILITIES: Corporate assets principally consist of investment securities and short-term loans receivable. The amounts of corporate assets were ¥303,610 million ($2,530,083 thousand), ¥158,436 million and ¥119,959 million for the years ended March 31, 2015, 2014 and 2013, respectively. The elimination of intersegment transactions consists of intersegment receivables and others. The amounts of the elimination were ¥368,979 million ($3,074,825 thousand), ¥363,290 million and ¥367,096 million for the years ended Long-term debt (Note 6) 1,270,689 1,287,681 10,589,075 March 31, 2015, 2014 and 2013, respectively. 643,611 759,382 5,363,425 3. Segment profit is reconciled to operating income in the consolidated statement of income. Long-term accounts payable—railway facilities 4. Information about products and services was omitted since equivalent information was disclosed above. Provision for large scale renovation of the Shinkansen infrastructure (Note3.i) 280,000 315,000 2,333,333 Information about geographical areas was not presented since the Companies have no significant overseas operations. Provision for retirement benefits 178,432 201,049 1,486,933 Other 41,855 43,965 348,791 16.SUBSEQUENT EVENTS Total noncurrent liabilities 2,414,589 2,607,079 20,121,575 Appropriations of Retained Earnings The following appropriation of retained earnings as of March 31, 2015, was approved at the Company's shareholders’ meeting held on June 23, 2015: CONTINGENCIES (Note 9) Millions of Yen Thousands of U.S. Dollars EQUITY (Notes 7 and 10): Year-end cash dividends, ¥60 ($0.50) per share ¥ 11,820 $ 98,500 Common stock—authorized, 824,000,000 shares; issued, 206,000,000 shares in 2015 and 2014 112,000 112,000 933,333 Capital surplus 53,500 53,500 445,833 Retained earnings: Legal reserve 12,504 12,504 104,200 Unappropriated 1,819,258 1,565,533 15,160,483 Treasury stock—at cost, 8,999,123 shares in 2015 and 8,999,056 shares in 2014 (102,203) (102,201) (851,691) Unrealized gain on available-for-sale securities 36,037 19,989 300,308 Total equity 1,931,097 1,661,326 16,092,475

TOTAL LIABILITIES AND EQUITY ¥ 5,013,460 ¥ 4,986,057 $ 41,778,833 See notes to nonconsolidated financial statements

58 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 59 Financial Section

Nonconsolidated Statement of Income Nonconsolidated Statement of Changes in Equity

Central Japan Railway Company Year Ended March 31, 2015 Central Japan Railway Company Year Ended March 31, 2015 Thousands of Thousands Millions of Yen (Note 2) Millions of Yen U.S. Dollars (Note 2) (Note 2) Outstanding Unrealized Number of Retained Earnings Gain on 2015 2014 2013 2015 Shares of Common Capital Legal Treasury Available-for-Sale Total OPERATING REVENUES: Common Stock* Stock Surplus Reserve Unappropriated Stock Securities Equity Railway business ¥ 1,297,852 ¥ 1,268,528 ¥ 1,235,988 $ 10,815,433 BALANCE, APRIL 1, 2012 197,001 ¥ 112,000 ¥ 53,500 ¥ 12,504 ¥ 1,280,940 ¥ (204,414) ¥ 3,748 ¥ 1,258,280 Other 8,749 8,693 9,094 72,908 Total operating revenues 1,306,602 1,277,222 1,245,082 10,888,350 Net income 187,804 187,804 Dividends from surplus, ¥100 per share* (19,700) (19,700) OPERATING EXPENSES: Retirement of treasury stock (102,212) 102,212 Railway business (Note 3.i) 826,585 808,918 840,174 6,888,208 Net change in the year 10,000 10,000 Other 4,614 7,448 5,771 38,450 Total operating expenses 831,199 816,366 845,946 6,926,658 BALANCE, MARCH 31, 2013 197,001 112,000 53,500 12,504 1,346,832 (102,201) 13,749 1,436,384

Operating income 475,403 460,855 399,136 3,961,691 Net income 240,371 240,371 OTHER INCOME (EXPENSES): Dividends from surplus, ¥110 per share (21,670) (21,670) Purchase of treasury stock (0) (0) (0) Interest and dividend income 3,151 3,145 3,095 26,258 Net change in the year Interest expense (72,148) (80,069) (88,772) (601,233) 6,240 6,240 Loss on redemption of bonds (13,676) (13,357) (11,721) (113,966) Other—net 5,092 167 104 42,433 BALANCE, MARCH 31, 2014 Other expenses—net (77,581) (90,113) (97,293) (646,508) (APRIL 1, 2014, as previously reported) 197,000 112,000 53,500 12,504 1,565,533 (102,201) 19,989 1,661,326 Cumulative effect of accounting change (Note 3.j) 17,086 17,086 INCOME BEFORE INCOME TAXES 397,821 370,741 301,842 3,315,175 BALANCE, APRIL 1, 2014 (as restated) 197,000 112,000 53,500 12,504 1,582,619 (102,201) 19,989 1,678,412 INCOME TAXES (Note 8): Current 125,607 130,225 123,494 1,046,725 Net income 260,278 260,278 Deferred 11,935 144 (9,456) 99,458 Dividends from surplus, ¥120 per share (23,640) (23,640) Total income taxes 137,542 130,369 114,038 1,146,183 Purchase of treasury stock (0) (1) (1) Net change in the year 16,047 16,047 NET INCOME ¥ 260,278 ¥ 240,371 ¥ 187,804 $ 2,168,983 BALANCE, MARCH 31, 2015 197,000 ¥ 112,000 ¥ 53,500 ¥ 12,504 ¥ 1,819,258 ¥ (102,203) ¥ 36,037 ¥ 1,931,097 Yen U.S. Dollars 2015 2014 2013 2015 PER SHARE OF COMMON STOCK* (Note 3.p): Thousands of U.S. Dollars (Note 2) Basic net income ¥ 1,321.21 ¥ 1,220.16 ¥ 953.32 $ 11.01 Unrealized Cash dividends applicable to the year 120.00 115.00 105.00 1.00 Retained Earnings Gain on * Per share figures have been restated, as appropriate, to reflect a hundred-for-one stock split effective as of October 1, 2012. Common Capital Legal Treasury Available-for-Sale Total Stock Surplus Reserve Unappropriated Stock Securities Equity See notes to nonconsolidated financial statements. BALANCE, MARCH 31, 2014 $ 933,333 $ 445,833 $ 104,200 $ 13,046,108 $ (851,675) $ 166,575 $ 13,844,383 (APRIL 1, 2014, as previously reported) Cumulative effect of accounting change (Note 3.j) 142,383 142,383

BALANCE, APRIL 1, 2014 (as restated) 933,333 445,833 104,200 13,188,491 (851,675) 166,575 13,986,766 Net income 2,168,983 2,168,983 Dividends from surplus, $1.00 per share (197,000) (197,000) Purchase of treasury stock (8) (8) Net change in the year 133,725 133,725

BALANCE, MARCH 31, 2015 $ 933,333 $ 445,833 $ 104,200 $ 15,160,483 $ (851,691) $ 300,308 $ 16,092,475 * Shares and per share figures have been restated, as appropriate, to reflect a hundred-for-one stock split effective as of October 1, 2012. See notes to nonconsolidated financial statements.

60 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 61 Financial Section

Notes to Nonconsolidated Financial Statements

Central Japan Railway Company

1.INCORPORATION OF CENTRAL JAPAN RAILWAY certain respects as to the application and disclosure requirements of Nonmarketable available-for-sale securities are stated at cost formula basis. Actuarial gains and losses are amortized on a straight- COMPANY International Financial Reporting Standards. determined by the moving-average cost method. For other-than- line basis over five years, which is within the average remaining service Central Japan Railway Company (Tokai Ryokaku Tetsudo As consolidated statements of cash flows and certain disclosures temporary declines in fair value, investment securities are reduced to period. Accounting treatments for unrecognized actuarial gains and Kabushiki Gaisha, the "Company") was incorporated on April are presented in the consolidated financial statements of the net realizable value by a charge to income. losses in the nonconsolidated financial statements are different from 1, 1987, as a private business company, pursuant to the Law Company, nonconsolidated statements of cash flows and certain those in the consolidated financial statements. for Japanese National Railways Restructuring enacted upon the disclosures are not presented herein in accordance with accounting e.Property, Plant and Equipment The Accounting Standards Board of Japan (the “ASBJ”) issued ASBJ resolution of the Japanese Diet. principles generally accepted in Japan. Property, plant and equipment are stated at cost. Certain Statement No. 26, "Accounting Standard for Retirement Benefits" The business of the Japanese National Railways (the "JNR") Effective for the year ended March 31, 2014, the Japanese contributions in aid for construction of railways and other property are in May 2012 and ASBJ Guidance No. 25, "Guidance on Accounting was succeeded by the following newly established organizations: Financial Instruments and Exchange Act and its related accounting deducted directly from the cost of the related assets. Standard for Retirement Benefits” in March 2015, which replaced the seven railway companies including the Company, the former regulations were amended to allow an entity to not disclose certain The accumulated contributions deducted from the cost of property, accounting standard for retirement benefits that had been issued by the Shinkansen Holding Corporation (a predecessor entity to the Railway designated footnote information in its nonconsolidated financial plant and equipment as of March 31, 2015 and 2014 amounted to Business Accounting Council in 1998 with an effective date of April 1, Development Fund (1991–1997), which was subsequently succeeded statements if the entity prepares and discloses consolidated financial ¥269,450 million ($2,245,416 thousand), and ¥267,318 million, 2000, and the other related practical guidance, and were followed by by the Corporation for Advanced Transport and Technology statements. Accordingly, the Company has omitted disclosure of respectively. partial amendments from time to time through 2009. (the "CATT") (1997–2003) and in turn by the Japan Railway certain footnote information in the accompanying nonconsolidated Depreciation is computed by the declining-balance method over the The revised accounting standard made certain amendments relating Construction, Transport and Technology Agency (the "JRTT")), the financial statements. estimated useful lives of the assets. Additional depreciation is provided to the method of attributing expected benefit to periods, the discount former Railway Telecommunication Co., Ltd., Railway Information In preparing these nonconsolidated financial statements, certain for the Shinkansen rolling stock based on kilometers traveled. rate, and expected future salary increases. Systems Co., Ltd. and the Railway Technical Research Institute reclassifications and rearrangements have been made to the The range of useful lives is principally from 3 to 50 years for This accounting standard and the guidance above are effective for (the "RTRI") which reorganized as a public interest corporation nonconsolidated financial statements issued domestically in order buildings, from 3 to 60 years for structures, from 10 to 20 years for the beginning of annual periods beginning on or after April 1, 2014, or as of April 1, 2011. The JNR itself became the JNR Settlement to present them in a form which is more familiar to readers outside rolling stock and from 4 to 17 years for machinery and equipment. for the beginning of annual periods beginning on or after April 1, 2015, Corporation (the "JNRSC"). All of the assets and liabilities of the Japan. In addition, certain reclassifications have been made in the Depreciation of certain railway ground structures, except for the subject to certain disclosure in March 2015, with earlier application JNR were transferred to such organizations, including the JNRSC. 2014 and 2013 nonconsolidated financial statements to conform to Shinkansen railway ground facilities, is computed by the replacement- being permitted from the beginning of annual periods beginning on Prior to December 1, 2001, the Law Concerning Passenger the classifications used in 2015. accounting method. or after April 1, 2013. However, no retrospective application of this Railway Companies and Japan Freight Railway Company (the "Law") The nonconsolidated financial statements are stated in Japanese accounting standard to nonconsolidated financial statements in prior required that authorization be obtained from the Minister of Land, yen, the currency of the country in which the Company is f.Long-Lived Assets periods is required. Infrastructure, Transport and Tourism (the "Minister of Transport") incorporated and operates. The translations of Japanese yen amounts The Company reviews its long-lived assets for impairment whenever The Company applied the revised accounting standard and guidance regarding fundamentals such as: (1) commencement of business into U.S. dollar amounts are included solely for the convenience events or changes in circumstances indicate the carrying amount of an above, effective April 1, 2014. other than railway and its related business, (2) the appointment or of readers outside Japan and have been made at the rate of ¥120 to asset or asset group may not be recoverable. An impairment loss is The Company changed the method of attributing the expected benefit dismissal of representative directors and corporate auditors, (3) the $1, the approximate rate of exchange as of March 31, 2015. Such recognized if the carrying amount of an asset or asset group exceeds to periods from a straight-line basis to a benefit formula basis, and issuance of new shares and bonds, (4) long-term loans payable, (5) translations should not be construed as representations that the the sum of the undiscounted future cash flows expected to result from the method of determining the discount rate and recorded the effect of amendments to the Articles of Incorporation, (6) operating plans, (7) Japanese yen amounts could be converted into U.S. dollars at that the continued use and eventual disposition of the asset or asset group. above as of April 1, 2014, in retained earnings. As a result, retained sales of material assets, (8) appropriations of earnings and (9) merger or any other rate. Japanese yen figures of less than one million The impairment loss would be measured as the amount by which the earnings as of April 1, 2014, increased by ¥17,086 million ($142,383 or dissolution. As of December 1, 2001, since the Law was revised yen are rounded down to the nearest million of yen, except for per carrying amount of the asset exceeds its recoverable amount, which thousand). The effect of this change on the nonconsolidated statement and the Company was no longer in scope of the Law, the Company share information, and U.S. dollar figures of less than one thousand is the higher of the discounted cash flows from the continued use and of income for the year ended March 31, 2015, was immaterial. was not required to obtain the aforementioned authorizations. U.S. dollars are also rounded down to the nearest thousand of U.S. eventual disposition of the asset or the net selling price at disposition. On October 8, 1997, the Company's shares were listed on the dollars, except for per share information. k.Leases Nagoya and Tokyo stock exchanges in Japan. The JNRSC, which g.Software Costs Lease assets of finance leases that were not deemed to transfer held all 2,240,000 of the Company's outstanding shares prior to the Software costs are amortized by the straight-line method over five ownership of the leased property are depreciated and amortized by the listing, sold 1,353,929 shares in the initial public offerings. Pursuant 3.SUMMARY OF SIGNIFICANT ACCOUNTING years. straight-line method over the lease period. to the Law for Disposal of Debts and Liabilities of the JNRSC POLICIES enacted in October 1998, the Company's shares held by the JNRSC a.Nonconsolidation h.Deferred Charges l.Income Taxes were transferred to Japan Railway Construction Public Corporation The nonconsolidated financial statements do not include the Bond issuance costs are fully charged to income as incurred. The provision for income taxes is computed based on the pretax (the "JRCPC").On October 1, 2003, the CATT and the JRCPC were accounts of subsidiaries. Investments in subsidiaries and affiliates income included in the nonconsolidated statement of income. The fully integrated, pursuant to the Law of Japan Railway Construction, are stated at cost. i.Provision for Large-Scale Renovation of the Shinkansen Infrastructure asset and liability approach is used to recognize deferred tax assets Transport and Technology enacted on October 1, 2003, and Provision for large scale renovation of the Shinkansen infrastructure and liabilities for the expected future tax consequences of temporary designated as the JRTT. In July 2005, the JRTT sold 600,000 shares b.Cash Equivalents is provided based on the Nationwide Shinkansen Railway Development differences between the carrying amounts and the tax bases of assets of the Company. On April 5, 2006, the JRTT also sold its remaining Cash equivalents are short-term investments that are readily Law. and liabilities. Deferred taxes are measured by applying currently 286,071 shares of the Company. As a result of this sale, all of the convertible into cash and that are exposed to insignificant risk of The Company amended the provision reserve plan in the year ended enacted tax laws to the temporary differences. Company's shares held by the JRTT were sold. changes in value. Cash equivalents include time deposits, certificates March 31, 2013, and started to appropriate the reverse evenly over 10 The shares above do not reflect the effect of the hundred-for-one of deposit, commercial paper and others, all of which mature or years from the year ended March 31, 2014. Accordingly, the Company m.Appropriations of Retained Earnings stock split effective as of October 1, 2012. become due within three months of the date of acquisition. reversed the provision in an amount of ¥35,000 million in the year Appropriations of retained earnings are reflected in the ended March 31, 2014, whereas ¥33,333 million was reserved in the nonconsolidated financial statements for the following year upon c.Supplies year ended March 31, 2013. As a result, operating expenses of Railway shareholders' approval. 2.BASIS OF PRESENTATION OF NONCONSOLIDATED Supplies are stated at the lower of cost, determined by the moving- business decreased by ¥68,333 million, and both operating income FINANCIAL STATEMENTS average cost method, or net selling value. and income before income taxes in the year ended March 31, 2014, n.Consumption Tax The accompanying nonconsolidated financial statements have increased in the same amount from the year ended March 31, 2013. Unless otherwise stated, all figures are presented net of tax. been prepared from the accounts maintained by the Company in d.Investment Securities accordance with the provisions set forth in the Companies Act of All investment securities are classified and accounted for, j.Retirement and Pension Plans o.Derivatives and Hedging Activities Japan (the "Companies Act"), the Japanese Financial Instruments and depending on management's intent, as available-for-sale securities, The Company has an unfunded retirement plan covering substantially The Company uses derivative financial instruments mainly to manage Exchange Act, the Law for Railway Business Enterprise and their which are principally comprised of investment securities, and are all of its employees. The provision for retirement benefits is calculated its exposures to fluctuations in interest rates. Interest rate swaps are related accounting regulations, and in accordance with accounting reported at fair value, with unrealized gain and loss, net of applicable based on the projected benefit obligations at the balance sheet date. utilized by the Company to reduce interest rate risks. The Company principles generally accepted in Japan, which are different in taxes, reported in a separate component of equity. The projected benefit obligations are attributed to periods on a benefit does not enter into derivatives for trading or speculative purposes.

62 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 63 Financial Section

Interest rate swaps, which qualify for hedge accounting and meet q.Accounting Changes and Error Corrections 6.SHORT-TERM LOANS PAYABLE AND LONG-TERM b.Increases/Decreases and Transfer of Common Stock, Reserve specific matching criteria, are not remeasured at market value, but the In December 2009, the ASBJ issued ASBJ Statement No.24, DEBT and Surplus The Companies Act requires that an amount equal to 10% of differential paid or received under the swap agreements are recognized "Accounting Standard for Accounting Changes and Error Corrections" The Company has credit commitments from banks. Total unused credit available to the Company as of March 31, 2015, was ¥100,000 dividends must be appropriated as a legal reserve (a component and included in interest expense. and ASBJ Guidance No.24, "Guidance on Accounting Standard for million ($833,333 thousand). of retained earnings) or as additional paid-in capital (a component Accounting Changes and Error Corrections." Accounting treatments All assets of the Company were pledged for the secured bonds of of capital surplus), depending on the equity account charged p.Per Share Information under this standard and guidance are as follows: ¥158,500 million ($1,320,833 thousand), which the Company entered upon the payment of such dividends, until the aggregate amount of legal reserve and additional paid-in capital equals 25% of the Basic net income per share is computed by dividing net income (1) Changes in Accounting Policies—When a new accounting policy into as debt assumption agreements and have been derecognized in the nonconsolidated balance sheet (see Note 9), as an enterprise common stock. Under the Companies Act, the total amount of available to common shareholders by the weighted-average number of is applied following revision of an accounting standard, the new policy mortgage, which gives the holder thereof a security interest in all additional paid-in capital and legal reserve may be reversed without common shares outstanding for the period. is applied retrospectively unless the revised accounting standard assets junior to that of other present or future secured creditors, but limitation. The Companies Act also provides that common stock, Cash dividends per share presented in the accompanying includes specific transitional provisions, in which case the entity shall senior to that of general creditors. legal reserve, additional paid-in capital, other capital surplus and retained earnings—unappropriated can be transferred among the nonconsolidated statement of income are dividends applicable to the comply with the specific transitional provisions. accounts within equity under certain conditions upon resolution of respective years, including dividends to be paid after the end of the (2) Changes in Presentation—When the presentation of financial the shareholders. year. statements is changed, prior-period financial statements are reclassified 7.EQUITY Japanese companies are subject to the Companies Act. The On October 1, 2012, the Company effected a hundred-for-one stock in accordance with the new presentation. c.Treasury Stock and Treasury Stock Acquisition Rights significant provisions in the Companies Act that affect financial and The Companies Act also provides for companies to purchase split and implemented a share unit system, by which shares became (3) Changes in Accounting Estimates—A change in an accounting accounting matters are summarized below: treasury stock and dispose of such treasury stock by resolution of the share units. All prior year shares and per share figures have been estimate is accounted for in the period of the change if the change a.Dividends Board of Directors. The amount of treasury stock purchased cannot restated and the Company represents weighted-average number of affects that period only, and is accounted for prospectively if the change Under the Companies Act, companies can pay dividends at any exceed the amount available for distribution to the shareholders time during the fiscal year in addition to the year-end dividend upon common shares, basic net income per share and cash dividends per affects both the period of the change and future periods. which is determined by a specific formula. resolution at the shareholders’ meeting. For companies that meet Under the Companies Act, stock acquisition rights are presented share to reflect the impact of the stock split. (4) Corrections of Prior-Period Errors—When an error in prior- certain criteria including (1) having a Board of Directors, (2) having as a separate component of equity. period financial statements is discovered, those statements are restated. independent auditors, (3) having an Audit & Supervisory Board, and The Companies Act also provides that companies can purchase (4) the term of service of the directors being prescribed as one year both treasury stock acquisition rights and treasury stock. Such rather than the normal two-year term by its articles of incorporation, treasury stock acquisition rights are presented as a separate the Board of Directors may declare dividends (except for dividends- component of equity or deducted directly from stock acquisition in-kind) at any time during the fiscal year if the company has rights. prescribed so in its articles of incorporation. 4.PROPERTY, PLANT AND EQUIPMENT The Companies Act permits companies to distribute dividends-in- d.Stock Splits Property, plant and equipment as of March 31, 2015 and 2014, consisted of the following: kind (noncash assets) to shareholders subject to a certain limitation On October 1, 2012, the Company effected a hundred-for-one Thousands of and additional requirements. stock split and implemented a share unit system, by which shares Semiannual interim dividends may also be paid once a year upon became share units. Millions of Yen U.S. Dollars resolution by the Board of Directors if the articles of incorporation 2015 2014 2015 of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase Land ¥ 2,326,793 ¥ 2,328,636 $ 19,389,941 of treasury stock. The limitation is defined as the amount available Buildings for distribution to the shareholders, but the amount of equity after 536,616 531,711 4,471,800 dividends must be maintained at no less than ¥3 million. Structures 3,722,682 3,692,880 31,022,350 Rolling stock 874,398 866,172 7,286,650 Machinery and equipment 613,900 609,533 5,115,833 Lease assets 1,323 1,155 11,025 8.INCOME TAXES Construction in progress 165,753 126,614 1,381,275 The Company is subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of Total 8,241,468 8,156,703 68,678,900 approximately 35.2% for the year ended March 31, 2015, and 37.6% for the years ended March 31, 2014 and 2013. The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities as of March 31, 2015 and 2014, were as Accumulated depreciation (4,047,266) (3,890,741) (33,727,216) follows: Net property, plant and equipment ¥ 4,194,202 ¥ 4,265,962 $ 34,951,683 Thousands of Millions of Yen U.S. Dollars

5.INVESTMENTS IN SUBSIDIARIES AND AFFILIATES 2015 2014 2015 The carrying amounts and aggregate fair values of investment securities in subsidiaries whose fair values are available as of March 31, 2015 and Deferred tax assets: 2014, were as follows: Depreciation and amortization ¥ 69,311 ¥ 73,354 $ 577,591 Millions of Yen Provision for retirement benefits 57,038 70,769 475,316 2015 2014 Software 10,592 11,880 88,266 Carrying Fair Unrealized Carrying Fair Unrealized Provision for bonuses 6,920 7,335 57,666 Amount Value Loss Amount Value Gain Railway usage charges 3,920 4,614 32,666 Subsidiaries ¥ 27,079 ¥ 25,291 ¥ 1,787 ¥ 27,079 ¥ 31,467 ¥ 4,388 Other 41,980 45,380 349,833 Total 189,763 213,335 1,581,358 Thousands of U.S. Dollars Less valuation allowance (14,775) (16,537) (123,125) 2015 Deferred tax assets 174,988 196,798 1,458,233 Carrying Fair Unrealized Amount Value Loss Deferred tax liabilities: Subsidiaries $ 225,658 $ 210,758 $ 14,891 Unrealized gain on available-for-sale securities 14,118 8,173 117,650 The carrying amounts of investments in subsidiaries and affiliated companies whose fair value cannot be readily determined as of March 31, 2015 and 2014, were as follows: Deferred gain on transfer of certain fixed assets 3,248 3,743 27,066 Thousands of Reserve for special depreciation 249 336 2,075 Millions of Yen U.S. Dollars Other 9 21 75 2015 2014 2015 Deferred tax liabilities 17,626 12,273 146,883 Subsidiaries ¥ 119,972 ¥ 120,075 $ 999,766 Affiliates 2,133 2,133 17,775 Net deferred tax assets ¥ 157,362 ¥ 184,524 $ 1,311,350

64 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 65 Financial Section

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: Deloitte Touche Tohmatsu LLC Nagoya Daiya Building 3-goukan 2014 13-5, Meieki, 3-chome, Nakamura-ku Nagoya, Aichi 450-8530 Normal effective statutory tax rate 37.6% Japan Deduction of R&D promotion tax system (3.0) Tel: +81(52)565 5511 Fax:+81(52)569 1394 www.deloitte.com/jp Other—net 0.6 Actual effective tax rate 35.2% INDEPENDENT AUDITOR’S REPORT Since the difference between the normal effective statutory tax rate and the actual effective tax rate was not significant, reconciliations were not presented for the years ended March 31, 2015 and 2013. 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 approximately 37.6% to 35.2%. The effect of this change on the nonconsolidated statement of income for the year ended March 31, 2014 was immaterial. To the Board of Directors of Central Japan Railway misstatement of the consolidated and nonconsolidated 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, Company: financial statements, whether due to fraud or error. In 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 approximately 31.9%. The effect of these changes was to decrease deferred tax assets, net of deferred tax liabilities, in the nonconsolidated balance We have audited the accompanying consolidated balance making those risk assessments, the auditor considers sheet as of March 31, 2015, by ¥15,375 million ($128,125 thousand) and to increase income taxes - deferred in the nonconsolidated statement of sheet of Central Japan Railway Company (the "Company") internal control relevant to the Company’s preparation and income for the year then ended by ¥16,836 million ($140,300 thousand). and its consolidated subsidiaries as of March 31, 2015, and fair presentation of the consolidated and nonconsolidated the related consolidated statements of income, comprehensive financial statements in order to design audit procedures 9.CONTINGENCIES income, changes in equity, and cash flows for the year then that are appropriate in the circumstances, but not for the As of March 31, 2015, the Company has joint and several obligations with the RTRI to make payments on long-term debt of ¥14,593 million ($121,608 thousand) by the RTRI. The proceeds are being used for the enhancement of technology development for the Maglev system. ended, and a summary of significant accounting policies purpose of expressing an opinion on the effectiveness of The Company also had contingent liabilities for guarantees of the loans of a certain subsidiary amounting to ¥9,039 million ($75,325 thousand) and other explanatory information, and the accompanying the Company’s internal control. An audit also includes as of March 31, 2015. The Company has entrusted cash for the repayment of a portion of the bonds based on debt assumption agreements with financial institutions; nonconsolidated balance sheet of the Company as of March evaluating the appropriateness of accounting policies used however, the Company is not released from the primary responsibility for the liability by these agreements. The outstanding bonds covered by 31, 2015, and the related nonconsolidated statements of and the reasonableness of accounting estimates made by these agreements as of March 31, 2015, were as follows: income, and changes in equity for the year then ended, and management, as well as evaluating the overall presentation of Thousands of Millions of Yen U.S. Dollars a summary of significant accounting policies and other the consolidated and nonconsolidated financial statements. 2015 2015 explanatory information, all expressed in Japanese yen. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit Secured 3.95% bonds due 2016 ¥ 29,000 $ 241,666 Management’s Responsibility for the Consolidated and opinion. Secured 2.825% bonds due 2017 49,800 415,000 Nonconsolidated Financial Statements Secured 2.18% bonds due 2018 29,900 249,166 Management is responsible for the preparation and fair Opinion Secured 2.6% bonds due 2020 49,800 415,000 presentation of these consolidated and nonconsolidated In our opinion: Unsecured 2.39% bonds due 2022 18,995 158,291 financial statements in accordance with accounting principles (1)The consolidated financial statements referred to above Unsecured 2.2% bonds due 2022 18,200 151,666 generally accepted in Japan, and for such internal control present fairly, in all material respects, the consolidated Unsecured 1.74% bonds due 2022 20,000 166,666 as management determines is necessary to enable the financial position of Central Japan Railway Company Unsecured 1.42% bonds due 2017 10,000 83,333 preparation of consolidated and nonconsolidated financial and its consolidated subsidiaries as of March 31, 2015, Unsecured 1.15% bonds due 2022 25,000 208,333 statements that are free from material misstatement, whether and the consolidated results of their operations and their Unsecured 1.31% bonds due 2033 10,000 83,333 due to fraud or error. cash flows for the year then ended in accordance with Unsecured 2.015% bonds due 2023 9,000 75,000 accounting principles generally accepted in Japan. Unsecured 2.2% bonds due 2024 9,900 82,500 Auditor’s Responsibility (2)The nonconsolidated financial statements referred to Unsecured 2.19% bonds due 2019 9,900 82,500 Our responsibility is to express an opinion on these above present fairly, in all material respects, the financial Unsecured 1.875% bonds due 2019 20,000 166,666 consolidated and nonconsolidated financial statements position of Central Japan Railway Company as of March Unsecured 2.21% bonds due 2024 9,650 80,416 based on our audit. We conducted our audit in accordance 31, 2015, and the results of its operations for the year then Unsecured 1.775% bonds due 2020 20,000 166,666 with auditing standards generally accepted in Japan. Those ended in accordance with accounting principles generally Unsecured 1.77% bonds due 2017 20,000 166,666 standards require that we plan and perform the audit to obtain accepted in Japan. Unsecured 1.695% bonds due 2016 20,000 166,666 reasonable assurance about whether the consolidated and Unsecured 2.14% bonds due 2018 18,400 153,333 nonconsolidated financial statements are free from material Convenience Translation Unsecured 2.405% bonds due 2026 9,900 82,500 misstatement. Our audit also comprehended the translation of Japanese Unsecured 2% bonds due 2016 30,000 250,000 An audit involves performing procedures to obtain yen amounts into U.S. dollar amounts and, in our opinion, Total ¥ 437,445 $ 3,645,375 audit evidence about the amounts and disclosures in the such translation has been made in accordance with the basis Based on legal defeasance agreements with special purpose entities, the Company has transferred the debt repayment obligations for certain consolidated and nonconsolidated financial statements. stated in Note 2 to the consolidated and nonconsolidated long-term accounts payable—railway facilities to the special purpose entities, and has provided the special purpose entities with Japanese national The procedures selected depend on the auditor’s financial statements. Such U.S. dollar amounts are presented government bonds or cash for the payment of principal and interest on the long-term accounts payable—railway facilities. As a result of these transactions, the balance of long-term accounts payable—railway facilities was reduced by ¥154,438 million ($1,286,983 thousand) as of March judgment, including the assessment of the risks of material solely for the convenience of readers outside Japan. 31, 2015.

10. SUBSEQUENT EVENTS Appropriations of Retained Earnings The following appropriation of retained earnings as of March 31, 2015,was approved at the Company's shareholders’ meeting held on June 23, 2015: Thousands of June 23, 2015 Millions of Yen U.S. Dollars Member of Year-end cash dividends, ¥60 ($0.5) per share ¥ 11,820 $ 98,500 Deloitte Touche Tohmatsu Limited

66 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 67 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 Passengers

Operating Revenues Total Ordinary tickets Commuter passes Total Shinkansen Conventional lines (thousand passengers/day, FY2014) Shinkansen (Million kilometers) 200 1,168 (Billion yen) 1,200 1,128 1,123 1,129 1,146 (Billion yen) 1,100 1,069.6 1,113.8 1,143.4 199 999.5 1,011.0 1,700 1,000 1,096.7 1,126.5 1,053.0 1,000 150 1,600 1,672.2 1,674.0 900 983.0 994.4 1,652.5 954 1,500 1,585.3 800 800 912 906 913 930 1,400 1,508.3 700 100 1,503.0 600 20 16.5 16.6 16.6 17.1 16.9 1,300 93 10 1,200 400 0 50 74 1,100 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 216 217 217 216 214 63 58 200 1,000 Conventional lines 35 35 33 32 31 900 0 0 (Billion yen) ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 Nagoya Tokyo Shin-Osaka Kanayama Shizuoka Hamamatsu Kyoto Shinagawa Kariya Gifu 800 120 98.7 97.0 99.4 100.9 99.7 0 100 Note: The figures for Tokyo, Shinagawa, Kyoto, and Shin-Osaka Stations indicate ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 80 Shinkansen passengers only (Forecast) 64.5 62.9 65.3 66.6 65.7 60 34.1 34.0 34.0 34.3 34.0 40 Shifts in Equity (Non-Consolidated) Operating income Ordinary income Net income for this term 20

(Billion yen) 0 426.1 494.6 (Billion yen) 500 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 506.5 515.0 2,100 404.2 400 372.5 1,931.0 349.3 428.1 445.0 328.0 1,800 Passenger Ridership 300 263.8 1,661.3 228.5 303.0 264.1 Shinkansen Total Ordinary tickets Commuter passes 200 255.6 1,500 1,436.3 (Million passengers) 157 199.9 160 149 155 141 143 1,258.2 100 133.8 132.7 140 120 140 143 1,200 1,156.1 129 135 100 127 1,056.7 0 975.0 80 953.2 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 881.9 (Forecast) 20 14 14 14 15 14 900 836.5 Note: Net income for the term attributable to the parent company shareholder before March 2015 describes 10 757.3 762.3 the net income for this term in the year-end financial results 690.8 0 662.3 The figures forecasted are as of the publication of the financial report for FY2014 629.1 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 600 589.3 Conventional lines 455.6 477.7 479.0 413.6 419.3 433.1 (Million passengers) 376.7 398.8 Shifts in Revenues/Income (Non-Consolidated) 386 384 387 395 391 337.2 400 300 284.0 217.2 Operating income 300 254 254 253 260 257 (Billion yen) 200 0 1,300 132 130 133 135 134 ’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 1,306.6 1,307.0 1,277.2 100 1,200 1,245.0 0 1,100 1,171.9 1,184.5 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 Total Long-Term Debt and Payables (Non-Consolidated) 1,000

(Billion yen) Long-Term Accounts Payable - Railway Facilities Latent Liabilities Born by the Shinkansen Leasing System 900 6,000 Passenger kilometers Long-Term Debt Corporate Bonds Inherited Liabilities Average Interest Rate 800 5,456.2 5,422.3 5,392.0 Shinkansen Total Ordinary tickets Commuter passes 5,346.3 5,278.5 5,223.0 5,232.7 5,195.6 5,164.3 （％） (Million passenger-kilometers) 50,134 5,045.2 0 48,873 5,000 4,922.2 8.0 50,000 46,930 4,801.0 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 44,303 (Forecast) 43,741 4,560.8 4,5000 47,429 48,744 4,0000 45,540 4,289.3 42,366 42,915 4,125.5 3,5000 4,000 3,943.4 7.0 3,0000 3,665.8 Operating income Ordinary income Net income for this term 6.53 2,000 1,375 1,389 1,391 1,444 1,390 6.35 6.39 3,455.7 3,415.6 (Billion yen) 6.08 6.19 3,260.1 500 475.4 487.0 1,000 6.01 3,177.6 3,117.0 460.8 3,000 5.90 3,001.5 6.0 0 5.84 2,829.1 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 399.1 5.43 2,614.9 400 371.8 Conventional lines 345.5 418.0 5.21 5.16 2,351.7 325.4 397.7 (Million passenger-kilometers) 5.08 5.01 2,136.3 302.4 2,000 4.91 1,986.3 5.0 300 10,000 9,001 8,952 9,038 9,229 9,069 4.75 4.62 239.8 4.51 207.5 288.0 8,000 260.2 4.30 200 240.3 5,476 5,490 5,463 5,588 5,481 4.08 6,000 3.91 187.8 1,000 3.71 4.0 4,000 100 3.54 3.36 123.0 120.8 2,000 3,525 3,462 3,575 3,641 3,587 3.24 3.14 3.13 3.10 0 0 0 3.0 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’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 (Forecast) (Forecast) Note: The figures forecasted are as of the publication of the financial report for FY2014 Note: The figures estimated are as of the publication of the financial report for FY2014

68 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 69 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) ■Services (As of April 2015) 40,000 150,000 33,707 34,082 125,065 Between Tokyo and … Osaka Okayama Hiroshima Fukuoka 29,841*2 120,000 30,000 (Operating kilometers) （552.6km）（732.9km）（894.2km）（1,174.9km） 84,860 Shinkansen 2 hr 22 min*3 3 hr 09 min 3 hr 44 min 4 hr 47 min*4 90,000 1 77,221 Travel Time* 20,000 2 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 ） 15,775*3 60,000 52,742 52,614 53,316 Number of services Shinkansen*5 250 128 99 67 and departures/ 10,000 7,513 30,000 arrivals per day Airplane 106 24 34 112 5,013 1,971 10,131 *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 JR East JR West SNCF DB AG ATOC Amtrak JR Central JR East JR West SNCF DB AG ATOC Amtrak *3. Travel time between Tokyo and Shin-Osaka stations (Japan) (Japan) (Japan) (France) (Germany) (UK) (USA) (Japan) (Japan) (Japan) (France) (Germany) (UK) (USA) *4. Travel time between Tokyo and Hakata stations *5. Number of services excludes extra services Number of Employees*4 Average Traffic Density Market Share (against Airlines) ■ (Persons) (Passenger-kilometers/day/operating kilometers) JR Central JR West 250,000 239,635 80,000 73,320 Tokyo Nagoya Osaka Okayama Hiroshima Fukuoka 200,000 60,000 *5 Tokyo Area–Nagoya Area Shinkansen Airplane 153,640 74 thousand passengers/day 100％ 150,000 45,489 40,000 100,000 28,678

Tokyo Area–Osaka Area 52,076 20,000 133 thousand passengers/day 85％ 15％ 50,000 35,606*3 26,778 9,260 17,468 20,047 7,791 6,277 814 Tokyo Area–Okayama 0 0 9 thousand passengers/day JR Central JR East JR West SNCF DB AG ATOC Amtrak JR Central JR East JR West SNCF DB AG ATOC Amtrak 70％ 30％ (Japan) (Japan) (Japan) (France) (Germany) (UK) (USA) (Japan) (Japan) (Japan) (France) (Germany) (UK) (USA) Tokyo Area–Hiroshima 15 thousand passengers/day 67％ 33％ Tokyo Area–Fukuoka Transportation Revenues*6 Passenger Revenues per Operating Kilometer*6 28 thousand passengers/day 10％ 90％ (Million US$) 19,346 (Thousand US$/km) 20,000 18,931 8000 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, 17,734 Transport and Tourism for 2014.3. 6700 Tokyo Area: Tokyo, Kanagawa, Chiba, Saitama, Ibaraki/Nagoya Area: Aichi, Gifu, Mie/Osaka Area: Osaka, Kyoto, Hyogo, Nara 15,000 13,204 6000 10,810 10,000 8,752 4000

2580 5,000 2000 1750 1,800 590 560 690 50 0 0 JR Central JR East JR West SNCF DB AG ATOC Amtrak JR Central JR East JR West SNCF DB AG ATOC Amtrak International Comparison of Railway Operators (Japan) (Japan) (Japan) (France) (Germany) (UK) (USA) (Japan) (Japan) (Japan) (France) (Germany) (UK) (USA)

International Comparison in Fundamentals Number of passengers Passenger Revenues per Employee*6 (Thousand US$/km)) 6,055,562 (Thousand US$/person) GDP per Capita (2014) Population Density (As of 2013) 6,000,000 800 760 (US$) 46,352 (per square kilometer) 45,000 400 4,500,000 600 341 35,418 36,163 300 32,046 3,000,000 400 370 31,062 263 30,000 330 300 226 1,778,416 1,896,580 200 1,331,180 1,500,000 1,077,430 200 120 515,065 80 90 15,000 116 28,700 100 0 0 JR Central JR East JR West SNCF DB AG ATOC Amtrak JR Central JR East JR West SNCF DB AG ATOC Amtrak (Japan) (Japan) (Japan) (France) (Germany) (UK) (USA) (Japan) (Japan) (Japan) (France) (Germany) (UK) (USA) 33

0 0 Source: Statistique Internationale des Chemins de fer (Union Internationale *3. Data for Network Rail Ltd. Japan U.K. Germany France U.S. Japan U.K. Germany France U.S. de Chemins de fer), Financial Report of the JRs, etc. *4. Total number of employees including staff for freight transport, affiliated businesses, etc. *1. Period is as below Japan/UK: April 2010 - March 2011 Data of the JRs are as of March 31, 2011. *Figures for Japan and the U.S. are forecast figures Source: OECD *2014 only for the U.S. Source: Statistics Bureau, the Ministry of Internal Affairs and Communications Other: January 2010 - December 2010 The others are the average of the period indicated under *1 However, data of passenger revenue, number of passengers, and *5. Sum of the data of SNCF and RFF passenger-kilometers for the U.S. Amtrak are for October 2009 - September 2010 *6. Data of the JRs are converted to US$ at the exchange rate as of March 31, 2012 Figures for European countries *2. Data for Réseau Ferré de France (RFF) are first converted to Japanese Yen at the rate of the above time, then converted to US$.

70 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 71 Appendices

Appendices

Financial Data Comparison of Three JR Companies Stock Information

▶Shifts in JR Central’s Stock Price (yen) (yen) Return on Equity Equity Ratio Operating income/Total assets 2,600,000 26,000

（%）（%）（%） 20 40.0 38.7 10 9.7 2,400,000 24,000

30.1 2,200,000 22,000 14.0 28.8

5.7 2,000,000 20,000 5.1 10 20.0 5 8.1 8.4 1,800,000 18,000

1,600,000 16,000

0 0.0 0 1,400,000 14,000 JR Central JR East JR West JR Central JR East JR West JR Central JR East JR West 1,200,000 12,000

*2 Net income / Total Assets Debt to Equity Ratio Earnings per Share (EPS) 1,000,000 10,000 （%） 5.1 （%）（yen） 5.0 300 1400 1,342 800,000 8,000 247.4 231.9 600,000 6,000

156.1 400,000 4,000 2.5 2.4 2.4 150 700 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 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 458 344 Note: On October 1, 2012, the Company implemented a 100-for-1 stock split 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

Percentage of Operating Income / Operating Revenues Current Ratio Net Asset per Share*2 Name Number of shares held total issued shares Mizuho Bank, Ltd. （%）（%）（yen） 10,265 9,783,300 4.75% 69.0 35.0 70 10,000 Japan Trustee Services Bank, Ltd. (Trust Account) 65.6 63.9 8,538,200 4.14% 30.3 The Master Trust Bank of Japan, Ltd. (Trust Account) 7,764,800 3.77%

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% 5,818 The Bank of Tokyo-Mitsubishi UFJ, Ltd. 6,678,100 3.24%

17.5 35 5,000 Nippon Life Insurance Company 5,000,000 2.43% 15.5 4,138 Toyota Motor Corporation 4,000,000 1.94% 10.4 The Dai-ichi Life Insurance Company, Ltd 3,423,900 1.66%

Sumitomo Mitsui Banking Corporation 3,230,000 1.57%

JR Central Employee Shareholding Association 3,059,700 1.49% 0.0 0 0 Total JR Central JR East JR West JR Central JR East JR West JR Central JR East JR West 58,603,000 28.45% Note:In addition to the above, JR Central holds 8,999,123 treasury stocks. (As of March 31, 2015)

Total Long-Term Debt and Long-Term Payables / Interest Coverage Ratio*1 Dividend Payout Ratio Operating Revenues （times）（times）（%） 2.0 7.0 7.0 40 36.3

5.3 5.4 1.3 JR Central has been included in the "FTSE4Good Index 26.1 1.2 Series" and "Ethical Index Global", which are leading indexes for socially responsible investment (SRI) and are 1.0 3.5 20 used for investment decisions by investors. 0.7 URL: http://jr-central.co.jp 8.9 [FTSE4Good Index Series] [Ethical Index Global] Investor Relations, Corporate Planning Division "FTSE4Good Index Series" is a socially "Ethical Index Global" is a socially responsible investment index responsible investment index provided by provided by ECPI, which investigates ESG (Environmental, Tel: +81-52-564-2413, Fax: +81-52-587-1300 0 0.0 0 the FTSE Group, a subsidiary of London Social and Governance) in a company and provides its rating E-mail: [email protected] JR Central JR East JR West JR Central JR East JR West JR Central JR East JR West Stock Exchange, and selects exceptional information. ECPI's main offices are located in Luxembourg and companies throughout the world. Italy. International Department, Corporate Planning Division

*1.(Operating income + Interest and dividend income) / Interest expense Tel: +81-3-6711-9533, Fax: +81-3-6711-9702 *2.JR East implemented a 100-for-1 stock split effective January 4, 2009, JR West did as well at the same rate effective July 1, 2011, and JR Central also did at the same rate effective October 1, 2012.

72 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2015 73