Annual Report 2016 - JR東海 · 2019-02-06 · Railway System information are truncated, ......

CENTRAL JAPAN RAILWAY COMPANYAnnual Report 2016

For the Year Ended March 31, 2016

CENTRAL JAPAN RAILWAY COM

PANY ANNUAL REPORT 2016

Central Japan Railway Company (JR Central, also known as JR Tokai) commenced operations in April 1987 upon the privatization and breakup of the Japanese National Railways (JNR). The core of JR Central's operations is the Tokaido Shinkansen, the main transportation artery linking Japan’s principal metropolitan areas of Tokyo, Nagoya, and Osaka, and a network of conventional lines in the Tokai Region centered on the Nagoya and Shizuoka areas. JR Central and its consolidated subsidiaries also promote affiliated businesses that are expected to generate synergic effects with the railway business. JR Central is also steadily moving forward with efforts aimed at the early completion of the Chuo Shinkansen using the Superconducting Maglev System in order to continually carry out its mission.

Messages from Management

Greetings

Interview with the President

Key Measures and Management Strategy

Key Measures and Capital Investment

Ensuring Safe and Reliable Transportation

Enhancing Transportation Service

Promoting the Chuo Shinkansen Project Using Superconducting Maglev System

Refining the Superconducting Maglev System Technology and Reducing Costs

Enhancing Sales and Marketing

Technological Development and Enhancement of Technical Capability

Overseas Deployment of High-Speed Railway System

Developing Affiliated Businesses

ESG* Information

Engagement in Global Environment Preservation

Human Resources Development

Cooperation with Local Communities

Corporate Governance

Board of Directors, Audit and Supervisory Board Members, and Corporate Officers

*Environmental, Social, and Governance. Companies appropriately considering/responding to ESG issues and the existence of shareholders who make investments in response to such efforts by the companies are thought to lead to the solution/improvement of global environmental issues and social issues and even to the sound development/expansion of capital markets, thus contributing to the establishment of a sustainable society.

Source:Japan Exchange Group, Inc.

[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 environment developments, consumption trends, competition situation for JR Central and subsidiaries, and changes in relevant laws and legal provisions. This report is compiled based on information available as of the end of May 2016 in principle.

•In this report, figures of financial information are truncated, while statistical data and all percentages are rounded.

Corporate Data

Profile/Organization Chart

Operating Areas

History

Summary of Performance

Financial Highlights (Consolidated/Non-consolidated)

Other Related Materials

Financial Section

Appendices

Financial and Transportation Data

Operating Environment

International Comparison of Railway Operators

Financial Data Comparison of Three JR Companies(consolidated)

Stock Information

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Profile

Management Philosophy

General Principles of Safety

I.II.III.

Contribute to society through sound managementProvide modern, valued, friendly, and reliable servicesEstablish a cheerful, fresh, and active corporate culture

Safety is the most important mission in the transportation businessSafety is ensured based on compliance with rules and strict execution of work and is built through continuous practiceEnforcement of confirmation and thorough communication are the most important aspects in ensuring safetyTo ensure safety, we must cooperate together beyond our official responsibilityWhen in doubt, we must thoroughly consider and take the measure that seems the safest

1.2.

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CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 Operating Revenues Composition

Tokaido Shinkansen

7.1%

2.2%

13.3%

Transportation

87.8%

77.4 %

Note 1: Consolidated operating revenues composition is based on revenues from external customersNote 2: The total of items in the breakdown may not be 100% due to rounding.

0.6%4.0%

7.6%

Consolidated

Non-consolidated

Affiliated BusinessesMiscellaneous

Conventional Lines

Other

Real Estate

Merchandise and Other

Contents

CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 1

Nagoya Tokyo

OsakaFukuoka

Hiroshima Okayama

Operating area

Market Area Characteristics and Transportation Capacity

69% 31%

67% 33%

100%

85% 15%

OsakaNagoyaTokyo Hiroshima Hakata

JR Central JR West

OkayamaTokyo area*2 - Nagoya area

(73 thousand passengers/day)

Tokyo area - Osaka area

(136 thousand passengers/day)

Tokyo area - Okayama(9 thousand passengers/day)

Tokyo area - Okayama(9 thousand passengers/day)

Tokyo area - Hiroshima(15 thousand passengers/day)

10% 90%Tokyo area - Fukuoka(29 thousand passengers/day)

Railway Airlines

(Thousand seats/day)

’07.3 ’08.3 ’09.3 ’10.3 ’11.3 ’12.3 ’13.3 ’16.3’15.3’14.3

400

300

0

100

200

Tokaido Shinkansen Airlines

30,000seatsApproximately

About 12times that of airlines

*2

*1Approximately 350,000seats

[Source]*1. Calculated by JR Central based on figures provided on the Eurotunnel

website (2015.1-2015.12)*2. Calculated by JR Central based on figures provided by the National

Fact Sheet: FY 2015 (Amtrak)*3. Calculated by JR Central based on figures provided on the U.S.

Department of Transportation website (2014.12-2015.11)

[Source]JR Central’s market area is calculated taking the following prefectures into accountTokyo, Kanagawa, Chiba, Saitama, Ibaraki, Shizuoka, Yamanashi, Nagano, Aichi, Mie, Gifu, Shiga, Osaka, Kyoto, Hyogo, NaraPopulation: Ministry of Internal Affairs and Communications “Population, Demographics and Number of Households Derived from Basic Resident Registration”Total production by prefecture: Cabinet Office “Report on Prefectural Accounts”

*1. Market share is calculated by JR Central based on the inter-prefectural data of the inter-Regional Passenger Mobility Survey, published by the Ministry of Land, infrastructure, Transport and Tourism for FY2014.

*2. Tokyo area: Tokyo, Kanagawa, Chiba, Saitama, Ibaraki/Nagoya area: Aichi, Mie, Gifu/Osaka area: Osaka, Kyoto, Hyogo, Nara*3. Based on the U.S. Department of Transportation website

*1. Tokaido Shinkansen: The number of passenger seating provided (including extra train services) on through-service “Nozomi” and “Hikari” lines operating between Tokyo Station and Shin-Osaka Station in each respective fiscal year

*2. Airlines: Calculated by JR Central based on information pertaining to specified Japanese air carriers (Ministry of Land, Infrastructure, Transport and Tourism) for FY2006 to FY2015

Percentages of our market area in Japan as a whole Comparison with overseas transportation servicesChanges in daily transportation capacity (comparison between the Tokaido Shinkansen and airline transportation services operating between the Tokyo Metropolitan area and the Osaka region)

Market Share*1 (against Airlines) (Example)

Representing a powerful presence in the inter-city transportation market, one that is unrivaled all over the world

Tokaido Shinkansen

76.3%

39.9%

35.5%

0 50 100

Others

JR Central’s Market Area

Population[As of January 1, 2015]

Area[As of October 2015]

Prefectural GDP(Nominal GDP)

[FY2013]

(%)

23.7%

60.1%

64.5%

11(Reference)

Airlines[New York ~ Chicago]

*3

Acela Express 9[Boston ~

Washington D.C.]

*2

28Eurostar [London ~

Paris/Brussels]

[Tokyo ~ Shin-Osaka]

(Thousand passengers/day)

Tokaido Shinkansen

445

*1

Japan’s population and economic activity are concentrated in the area covering the Tokyo Metropolitan area, the Nagoya region, and the Osaka region

JR Central boasts an overwhelming market share within its operating areas

An overwhelming capacity for transporting passengers along its main route, from Tokyo to Osaka

An inter-city transportation capacity that is unrivaled all over the world

Tokaido Shinkansen Operating Kilometers

(Reference*3)

Tokyo ~ NagoyaNew York ~

Washington D.C. (LGA-IAD)

366.0km 369km

Tokyo ~ Shin-Osaka Los Angeles ~ San Francisco (LAX-SFO)

552.6km 542km

Tokyo ~ Hakata New York ~ Chicago (LGA-ORD)

1,174.9km 1,180km

CENTRAL JAPAN RAILWAY COMPANY

2016Annual Report

32 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016

•Completion of N700S validation test vehicles (plan)

•All rolling stock to be N700A type rolling stock capable of traveling at a maximum speed of 285km/h (plan)

•Increase maximum speed to 285km/h

•Put the Series N700 into commercial service

•Shinagawa Station on the Tokaido Shinkansen is opened

•Maximum speed of all Tokaido Shinkansen trains increased to 270km/h

•“Express Reservation” service expands to the total length of Tokaido and Sanyo Shinkansen lines

•Release of The Tokaido Shinkansen 50th Anniversary commemoration travel products.

•New Tokaido Shinkansen online reservation and ticketless boarding service is rolled out (plan)

•The “EX-IC” service starts

(Yen / Year)

’99.3 ’17.3

130125125120115105

959090908575

6555505050505050505050505050

’16.3’14.3’11.3’08.3’05.3’02.3

(Billion yen)

140

100

120

80

60

40

20

0

400

300350

200250

100150

500

Annual dividend Net income (non-consolidated)

plan

Tokyo ~ Nagoya City Tokyo ~ Osaka City

40minutes 67minutes500km/h

•Operating speed •Time required (fastest)

The area covering the three major cities (Tokyo, Nagoya, and Osaka) will effectively form one massive mega-city with the drastic reduction in travel

times brought on by the introduction of the Superconducting Maglev System

Thoroughgoing preparations against future aging degradation of the Tokaido Shinkansen and large-scale disasters

With this expansion of the sphere of activity, our lifestyle will undergo a massive change in terms of the way business is performed and how we use our spare time, opening the door for a wide range of possibilities

Japan’s major transportation artery needs to be duplicated

We succeeded in lifting the maximum speed of our services from 220km/h, to

270km/h, and then to 285km/h. We successively increased the number of services

for our fastest speed train, the “Nozomi”, through increased investment in rolling

stock and ground facilities. We established an operational system running up to

10 up and down “Nozomi” services each hour. We continued to introduce new

rolling stock incorporating the latest technology.

We expanded the lineup and sections covered by the “Express Reservation” online

reservation service, establishing it as a core Tokaido Shinkansen service. And we

improved convenience through our ticketless boarding service EX-IC. We aim to

improve convenience for light users and overseas visitors to Japan with our new

online reservation and ticketless boarding service scheduled for summer 2017.

Our policy on dividends has always been to decide the specific dividend amount in accordance with the management environment/performance in each FY based on the principle of continuously providing stable dividends.

Transportation Service

Passenger Service

Providing stable dividends

The project has been proceeding at JR Central’s own expense, using the Superconducting Maglev System developed by the Company. We will first establish a connection between Tokyo and Nagoya City, before expanding this service to Osaka City under the premise of ensuring sound management and providing stable dividends. Once launched, JR Central will manage this service in an integrated manner together with the Tokaido Shinkansen.

Chuo Shinkansen Project outline

FY 2017

FY2006

FY2007

FY2014

FY2014

FY2017

•Revise the timetable to have a maximum of 10 “Nozomi” services running per hour for nearly all operating hours

FY2013

FY2007

FY2003

FY2019

•Put the N700A into commercial service

•Extend platforms at Shin-Osaka Station

FY2012

1. Register 2. Book 3. Board

Commuting type IC card

Credit card Tap!

•The “PLUS EX-IC” service starts

FY2012

Tokaido Shinkansen

Chuo Shinkansen(Superconducting Maglev System)

•First stage (Shinagawa Station ~ Nagoya Station)

1hr 26min*

40minutes

*Accurate as of the March 2016 timetable revision (arrival time based on the fastest trains in service)

CENTRAL JAPAN RAILWAY COMPANY

2016Annual Report Enhancing Our Competitive Strength


President IntervewGreetings

In the railway business, JR Central sets the highest priority on ensuring safety and reliability.

JR Central’s fundamental policy is to stably and fully execute the long-term mission to integrally

maintain/develop the Tokaido Shinkansen, which serves as Japan’s main transportation artery,

and the conventional line network in the Tokai region through the continuous efforts of providing

services that are preferred by customers as well as the streamlining of work, etc.

The railway business, which is the core business of the JR Central Group, requires long-term

massive capital investment and technological development with considerable lead times. Due to

such a business structure, it is vital that we manage our railway business based on a long-term

outlook rather than a short-term profitability-based view. Therefore, we are promoting mid-to-long-

term projects in a well-planned manner while simultaneously providing high quality services in our

daily railway operations and aiming to enhance our management base.

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

Safety Measures

In the railway business, we will steadily proceed large-scale renovation to maintain and improve the soundness of civil engineering structures along the Tokaido Shinkansen with continuous efforts of reducing cost. We will also steadily promote earthquake countermeasures, such as countermeasures to derailment/deviation of the Tokaido Shinkansen, enhancement of earthquake safety of the elevated track columns, etc. along the conventional line, and renovation and anti-quake reinforcement of the Hamamatsu Workshop, the Nagoya Workshop, and station buildings, etc. In the same time, we will implement practical training and coordinate with related organizations in an effort to bolster our ability to respond to natural disasters and other such emergencies, and to ensure total safety within our stations and trains.

Strengthening Transportation Service

In terms of the Tokaido Shinkansen, we will continue scheduling trains flexibly by utilizing the “10 Nozomi Timetable” to meet demands with a focus on time frames or seasons with increased customer use. Moreover, we will continue introducing the N700A (2nd edition), and begin introducing the new upgraded N700A (3rd edition) with the results of our technical developments. Additionally, we will start installing more security cameras in cabins, etc. to further enhance security. In terms of conventional line, we will flexibly increase the frequency or the number of cars of train to meet demands for the popular “Shinano,” “Hida” and other express trains. We will also continue to implement construction plans for over-track stations and free passageways, which will be opened at Kusanagi Station, Shinjohara Station, Takayama Station and Kasugai Station.

In terms of sales and marketing, we will improve efforts to market tourist products for “Express Reservation” and “PLUS EX” along with “50+” in order to spur demands for tourism. Additionally, we will steadily move ahead with preparations to begin the new Shinkansen online reservation and ticketless boarding service for customers other than Express members by Summer 2017. Further, we will look to enhance tourism campaigns and products that convey the appeal of Kyoto, Nara, Tokyo and Hida, as well as Ise-Shima, which is in the spotlight as the venue of the Ise-Shima Summit, and other locations, and will actively engage in sales and marketing activities that promote the sale of products to, and provide further information to overseas customers. In terms of passenger-related facilities, we will implement construction work for additional movable platform fences at Shinagawa and Shin-Yokohama Stations. We will also continue proceeding the installation of barrier-free facilities at stations, such as elevators, multifunction toilets, and braille blocks that indicate where platform edges are located.

Promoting the Chuo Shinkansen Using the Superconducting Maglev System

The Chuo Shinkansen that employs the Superconducting Maglev System will enable us to continue our mission of operating a high-speed railway linking the Tokyo Metropolitan areas, Chukyo regions and Kinki regions, which is also the lifeline of our business. It is being planned in order to ensure the future foundation of the company. We aim to gradually complete this project in a flexible manner while ensuring sound management and stable dividends. In terms of planned construction work for the Shinagawa - Nagoya section of the Chuo Shinkansen (part 1), we will look to coordinating closely with regional partners while surveying locations, implementing designs and acquiring land in a planned manner. In addition to this, we will steadily move ahead with construction of the Southern Alps tunnel, Shinagawa Station, and Nagoya Station, which will be hard and require a long time to build, as well as sections where the necessary preparation has been completed, while also giving serious

consideration to safety and the environment. Furthermore, we will also promote efforts to establish sophisticated and efficient operation/maintenance systems for the Chuo Shinkansen. On the other hand, with the Yamanashi Maglev Line, we will conduct evaluations to establish a maintenance system that responds to commercial services by alternately operating 2 trainsets and continuing to conduct long distance running tests by using rolling stock and facilities in commercial line specifications. We will also strive to further refine the Superconducting Maglev technology and reduce the costs for the construction/operation/maintenance of commercial lines. We will also continue promoting “Superconducting Maglev Ride” in a well-planned manner. Since we decided to bear the cost of this project, we plan to thoroughly reduce the cost throughout the construction, operation, and maintenance, etc., which will be inspected by the internally-established “Chuo Shinkansen Construction Cost Reduction Committee”, while ensuring safety. We also intend to flexibly respond to the project by optimizing the resources in accordance with the managerial environment.

Enhancement of Technical Capability/Overseas Deployment of High-Speed Rail System

In terms of the enhancement of our technical capabilities, we will proceed with the development of upcoming rolling stock for Shinkansen trains using the latest technology, while implementing efficient and advanced maintenance that utilizes condition monitoring technologies, as well as move ahead with technical development that can lead to cost reductions for large-scale renovation, earthquake countermeasure, upgrading equipment and other uses. We will also move ahead with technological development for predicting landslides and other disasters more accurately based on recent abnormal weather conditions. In terms of overseas projects, we will promote technical support and other guidance provided to the high speed rail Texas Project in the United States, while also promoting the use of the Superconducting Maglev system for the Northeast Corridor Project in the U.S, and continuing to provide technical

consulting services for Taiwan High Speed Rail. We will also promote initiatives to establish the Japanese high-speed rail system, which is based on the core principle of “Crash Avoidance”, as a global standard.

In terms of non-railway businesses, we will steadily move forward with full-fledged interior finishing and equipment installation works for the “JR Gate Tower” Project, with plans for office tenants to move in from November 2016, while actively implementing preparations for sales and advertising activities for the grand opening in April 2017 of the “Takashimaya Gate Tower Mall” commercial facility, the “Nagoya JR Gate Tower Hotel” and other facilities. We will also make efforts to further strengthen the earning capability of the JR Central Group by revitalizing commercial facilities of station buildings and merchandise businesses, etc.

In regard to global environmental issues, JR Central will not only make the public aware of the superiority of railways to the global environment but also continue promoting various policies that contribute to engagement in global environment preservation, such as introduction of the N700A that enables significant energy conservation, as well as working toward resource/ energy conservation in our daily operation.

As stated above, we will strive to steadily promote measures in our railway business while ensuring the highest priority is given to safety and reliability, and implement initiatives to secure and prop up a stable managerial foundation for the long-term while also seeking to continually provide stable dividends.

1

23 4


Chairman and Representative DirectorYoshiomi Yamada

President and Representative DirectorKoei Tsuge

Railway Business

Non-Railway Businesses

Global Environmental Issues

Chairman and Representative Director Yoshiomi YamadaPresident and Representative Director Koei Tsuge



Q.

President IntervewMessages from Management Interview with the President

Continuing to Fulfill Our Mission Serving as Japan’s Main Transportation Artery

•While the Japanese economy has largely continued to show signs of growth, we also feel that many of the measures we put in place to enhance our competitiveness over the mid to long-term have borne fruit.

•Since the foundation of our company, we have continued to work towards strengthening our transportation capacity, yet even with these initiatives in mind, the “10 Nozomi Timetable”, which made the current transportation capacity possible, still required a period of over five years to install additional platforms, increase station loopback equipment and implement other measures at Shin-Osaka Station to bring it to fruition. The continual Introduction of new rolling stock, and the enrichment of our “EX service*” lineup and other such sales and marketing activities also help prop up the current high level of service of our Shinkansen trains.

*Our “EX service” lineup refers to the “Express Reservation” service offered by JR Central and JR West, and the “PLUS EX” service offered by JR Central.

•The Chuo Shinkansen Project is designed to continue to fulfill the Company’s founding mission into the future through the operation of a high speed train service that links the Tokyo Metropolitan area with the Chukyo and Kinki areas (Tokyo ~ Nagoya ~ Osaka).

•Over 50 years have passed since the inauguration of the Tokaido Shinkansen, which currently fulfills this role, and the time has come where we must think of drastic ways to respond to aging in the future and large-scale disasters. In the wake of the Great East Japan Earthquake, the need for a new line which enables us to offer multiple routes in our main transportation artery has become even more important to prepare for the risk from natural disasters. This is the very reason why we decided to complete the Chuo Shinkansen as quickly as possible, as it can alternate the role of the Tokaido Shinkansen by utilizing the Superconducting Maglev System, which we have developed, under the condition that we bear the cost of its construction. JR Central will operate the Chuo Shinkansen in an integrated manner along with the Tokaido Shinkansen.

•We will continue to improve customer convenience by boosting the advantages provided by the Tokaido Shinkansen, in terms of “safety”, “accuracy”, “comfort”, “speed”, and “service frequency/volume”, in order to continue fulfilling its mission.

•From a transportation perspective, we will offer flexible train services to meet consumer demand, such as adding the latest Series N700A trains and expanding operating speeds up to 285 km/h.

And from a sales perspective, we will introduce new online reservation and ticketless ride services targeting a broader customer base.

•Additionally, in June 2016 we announced the production of the next series of rolling stock.

•In terms of affiliated businesses, we will look to steadily proceed forward the “JR Gate Tower” Project while also expanding profits with existing businesses.

•Opened in 2000, JR Central Towers has already established itself as a Nagoya landmark, and has greatly contributed to the economic development of the Chubu region.

•Construction on “JR Gate Tower”, developed adjacent to JR Central Towers, is proceeding according to plan, with the framework for JR Gate Tower completed in December 2015, offices set to open in November 2016, with the opening of the “Takashimaya Gate Tower Mall” and the “Nagoya JR Gate Tower Hotel” set to follow in April 2017.

•The leasing out of office space is also proceeding according to plan. Commercial facilities and hotels are also in the midst of finalizing preparations for the roll out of full-fledged sales and promotional activities.

The passenger volume for the Tokaido Shinkansen is improving at a steady rate. How do you feel about these circumstances?

With the large-scale construction of the Chuo Shinkansen underway, can you please reiterate the significance behind this project?

What kind of service enhancement measures do you have in place for the Tokaido Shinkansen over the mid to long-term?

What kind of initiatives are in place with affiliated businesses? The “JR Gate Tower” is set to open soon, isn’t it?

Q.

A.

Q.

A.

Q.

A.

Q.

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1

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5

5

2

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7

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Tokaido Shinkansen

•The next series of rolling stock, which marks a full model change from the Series N700, will be referred to as the “N700S”.

•The “N700S” comes equipped with the latest technology designed to improve safety and reliability, while better conserving energy.

•With the “N700S” we have developed a “standard rolling stock” that is adaptable to rolling stock of varying trainset lengths through the optimal placement of underfloor equipment made possible by painstaking efforts to reduce the size and weight of the equipment used.

•The first trainsets are scheduled for around March 2018, which are to be used as validation test vehicles to perform final confirmation tests of new technologies to be incorporated in the next series of commercial rolling stock (mass produced vehicles). Following this, they will be used as testing vehicles to promote technological development in an aim to further brush up Shinkansen technologies. We are currently reviewing plans to introduce the next series of commercial rolling stock (mass produced vehicles) around FY2020.

•With construction on the Chuo Shinkansen taking place over the long-term, naturally this brings with it inherent risks in terms of fluctuations in the economic climate, namely fluctuations in business conditions, interest rates, prices, labor costs, and land value. However, we aim to deal with this by strengthening our management base by improving profitability, streamlining business operations, and reducing costs, and by further curtailing construction costs for the Chuo Shinkansen specifically. We aim to gradually complete this project in a flexible manner while ensuring sound management and stable dividends, assuming that the Company is provided with freedom in management while maintaining autonomy over investments afforded that as a private enterprise.

•In regards to conventional lines, we have steadily improved services such as introducing new rolling stock, and increasing the frequency of trains. In terms of the popular “Shinano,” “Hida” and other express trains, we will strive to increase the use of our train services by flexibly increasing the frequency and the number of cars of train to meet demand at busy times and for nearby events, while also strengthening ties with local communities to achieve this.

•From the perspective of strengthening ties with local communities, we are also rolling out “Shupo” campaigns intended at introducing the many tourist attractions situated around our railway lines in an attempt to further promote the use of limited express trains on conventional line, and “Sawayaka Walking” events, which are free walking courses covering sightseeing spots near our railway lines that start from our stations.

•Our policy on dividends has always been to decide the specific dividend amount in accordance with the management environment/performance in each FY based on the principle of continuously providing stable dividends in a manner characteristic to the railway business, which emphasizes management based on a long-term perspective.

•This stance will not change during the construction of, or after the launch of, the Chuo Shinkansen.

What will become the next series of rolling stock for the Tokaido Shinkansen? Can you provide us with details on the schedule for adding this next set of rolling stock?

What risk factors do you foresee for the Chuo Shinkansen Project, and how do you feel they can be overcome?

Can you tell us of what initiatives you have in place to expand the use of conventional line? What is Company policy on dividends?

A.

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3

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6

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Tokaido Shinkansen Chuo Shinkansen Affiliated BusinessesTokaido Shinkansen

Chuo ShinkansenConventional Lines Dividends

Our Group’s business operations are focused on the railway business. In the railway business, JR Central sets the highest priority on ensuring safety and reliability. JR Central's mission is to integrally maintain/develop the Tokaido Shinkansen, which serves as Japan's main transportation artery, and the conventional line network in the Tokai region. Continuing to fulfill this mission in both stable and sufficient manner over the long-term is our utmost priority.

The railway business requires long-term massive capital investment and technological development with considerable lead times. Due to such a business structure, it is vital that we manage our railway business based on a long-term outlook rather than a short-term profitability-based view.

Improving our “safety”, “technology”, and “human resource” capabilities to sustain and grow the Company.

The most important is our “safety capabilities”. If we were to cause a major accident, all of the trust placed in our Company built up over the years would be lost in an instant, and not only the Chuo Shinkansen Project, but the Company’s very existence would be put in danger.

The Tokaido Shinkansen boasts an incredible safety record, with no fatal accidents involving riding passengers in the period of over 50 years since the launch of the service. How we can maintain this service record, and improve it further, lies at the very core of JR Central’s management philosophy. To achieve this, along with our other goals, we will look to operating our daily railway services in a disciplined manner, improving customer satisfaction by improving our “technological capabilities”, and by brushing up on our “human resource capabilities” that are so fundamental to the operation of our railway services.

What kind of company is JR Central? What is most important in management?

Management Management

President and Representative DirectorKoei Tsuge



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

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

We will give the top priority to ensuring safe and reliable transportation, which is the foundation of the railway business.1 Ensuring Safe and Reliable Transportation

We will continue striving to enhance transportation services on both the Tokaido Shinkansen and conventional lines.2 Enhancing Transportation Services

3•Ensuring sound management and providing stable dividendsPromote the Chuo Shinkansen Project while ensuring sound management and stable dividends, and gradually completing the project in a flexible manner.•Well-planned execution of measurement, designing, and land acquisition, etc.Systematically execute the measurement, designing and land acquisition while closely collaborating with the towns and cities for the Construction Implementation Plan (Part 1) of the Chuo Shinkansen section between Shinagawa and Nagoya.•Thorough promotion of constructionWhile giving serious consideration to safety and the environment, we will steadily move ahead with construction of the Southern Alps tunnel, Shinagawa Station, and Nagoya Station, which will be hard and require a long time to build, as well as sections where the necessary preparation has been completed.•Establishment of the operation/maintenance systemsPromote efforts to establish sophisticated and efficient operation/maintenance systems for the Chuo Shinkansen.

Promoting the Chuo Shinkansen Project Using the Superconducting Maglev System

Making conventional line elevated track columns quake-resistant (steel plate jacketing method)

•Countermeasures for disasters, such as earthquakes, etc.Continue making elevated track columns, etc. quake-resistant, and promoting reconstruction and quake-resistant reinforcement work for the Nagoya Workshop, station buildings and other facilities.•Replacement work of the operation management system, etc.Continue promoting replacements and upgrades of the operation management system in the Shizuoka area along the Tokaido Line, introducing measures against falling rocks, and improving safety devices on grade crossing.•Curtailing scheduled service suspensions at an early stage, and promptly resuming services

Make greater efforts to notify customers of scheduled suspensions or stopped trains as early as possible if typhoons or other natural phenomenon are expected to impact train operations, and resume operations as soon as possible.

[Conventional Lines]

[Conventional Lines]

Tsunami evacuation guidance training Emergency conditions response training

•Response to emergenciesConduct practical training in order to respond to various possible scenarios caused by natural disasters or other emergency conditions.

•Response to Ise-Shima SummitCoordinate with relevant authorities to ensure safety at stations, trains and other areas for the Ise-Shima Summit being held in 2016.

[Training, etc.]

•Scheduling trains flexiblyContinue scheduling trains flexibly by utilizing the “10 Nozomi Timetable” to meet demands with a focus on time frames or seasons with increased customer use.•The continual Introduction of new rolling stockContinue introducing the N700A (2nd edition), and begin introducing the new N700A (3rd edition) upgraded with the results of our technical developments, such as those designed to shorten the stopping distance of the “Earthquake Brake.”•Expansion of security cameras in useStart installing more security cameras in cabins, etc. to enhance security.•Installation of additional movable platform fencesImplement construction work for additional movable platform fences at Shinagawa and Shin-Yokohama Stations.

•The flexible increase in frequency and cars of train services for limited express trains

Flexibly increase the frequency or the number of cars of trains to meet demands for “Shinano,” “Hida” and other express trains.•Construction of new free passageways and over-track stationsImplement construction plans of new over-track stations and free passageways, which will be opened at Kusanagi Station, Shinjohara Station, Takayama Station and Kasugai Station.•Installation of barrier-free facilitiesContinue installing barrier-free facilities at stations, including elevators, multifunction toilets, and braille blocks that have lines indicating the platform edges.

N700A

Completed image of Takayama Station

Security cameras (image installed in deck)

Derailment prevention guards (for non-ballast bridges)

Hamamatsu Workshop undergoing renovation(photo taken in November 2015)

Large-scale renovation

•Large-scale renovationSteadily promote large-scale renovation to maintain and improve the soundness of civil engineering structures in constant pursuit of cost reduction, including improvement of construction methods by implementing the results of our technical development.•Implementing countermeasures to derailment/deviationContinue implementing countermeasures to derailment/deviation, which also covers non-ballast bridges and expansion joints, by utilizing newly developed installation methods.

•Renewal construction for rebuilding and anti-quake reinforcement of the Hamamatsu Workshop

Continue anti-quake reinforcement and renovation of the Hamamatsu Workshop, and begin general overhauls of rolling stock using new inspection lines.

[Tokaido Shinkansen][Tokaido Shinkansen]

Large-scale renovation of the Tokaido Shinkansen

Introduction of new diesel rail cars

Upgrading of existing Shinkansen trains (A total of 111 trainsets)Upgrading of Series N700 Shinkansen trains (A total of 80 trainsets)

Promoting the Chuo Shinkansen project that Using the Superconducting Maglev System

“10 Nozomi Timetable” (March 2014)

Countermeasures for Disasters, such as Earthquakes, etc. Introduction of N700A Shinkansen trains (A total of 51 trainsets)6 trainsets6 trainsets 7 trainsets 7 trainsets 7 trainsets 5 trainsets

11 trainsets 37 trainsets

The maximum speed of 285km/h for the Tokaido Shinkansen is attained

Begin introduction of the N700A (2nd edition)

October 2014 Approval for the Construction Implementation Plan (Part 1)

December 2014 Start Shinagawa/Nagoya Station preparation construction

August 2014 Submission of the �nal Environment Impact Statement

Begin introduction of the N700A (3rd edition)

Legends

:Yamanashi Maglev Line

:Station Location

:Planning Route

N

0 25 50km

GifuPrefecture

NaganoPrefecture

AichiPrefecture

ShizuokaPrefecture

KanagawaPrefecture

YamanashiPrefecture

TokyoMetropolis

Complete quake-resistant reinforcement work for each Rolling Stock Depot of the

Tokaido Shinkansen (March 2016)Complete the anti-quake reinforcement of elevated track columns

in high density sections and areas where a long strong earthquake tremor is anticipated in conventional line (March 2018)

Complete derailment and deviation countermeasures for the Tokaido Shinkansen along sections that could result

in major damage if derailment occurred (March 2020)

Begin general overhauls of rolling stock using new inspection lines at the Hamamatsu Workshop (January 2017)

Complete renovation of the Hamamatsu Workshop (March 2019)

All rolling stocks change to “N700A type” rolling stock, with the maximum speed 285km/h

All diesel rail cars for conventional lines are standardized to new vehicles which are produced after the Company starts (March 2016)

With large-scale constructions of the Chuo Shinkansen Project using the Superconducting Maglev system already started, we will proceed with the project while giving serious consideration to safety, the environment, and coordination with towns and cities along the planned route.

New construction of Southern Alps tunnel (Yamanashi section)Praying for safety at groundbreaking ceremony

Key Measures and Capital Investment FY2016

Note: This map is copied from a Japanese map (with a scale of 1 to 1,000,000) published by the Geographical Survey Institute with their authorization. (Authorization number: H25 Jo Fuku,310)

P.14 P.18

P.22

Consolidated:423 billion yen Non-consolidated:362 billion yen (Safety-related investments: 191 billion yen)

155 billion yen

Capital investment

40 billion yen

Capital investment

113 billion yen

Capital investment

Route of the Chuo Shinkansen (Between Tokyo and the City of Nagoya)





We will continue to refine the Superconducting Maglev System technology and reduce costs.

Refining Superconducting Maglev Technology and Reducing Costs4

•Conducting long distance running testsContinue operating two alternate trainsets and conducting long-distance running by using rolling stock and facilities with commercial line specifications at the Yamanashi Maglev Line.•Refining Superconducting Maglev technology and reducing costsContinue conducting evaluations to establish a maintenance system suitable for commercial services while also further striving to refine the Superconducting Maglev system technology and reduce costs for the construction/operation/maintenance of commercial lines.•Implementing the “Superconducting Maglev Ride” for publicWe will continue promoting the “Superconducting Maglev Ride” in a well-planned manner.

Series L0 “Superconducting Maglev Ride”

Elevated bridge displacement suppression control with new vibration control device (earthquake countermeasures)

U.S. Department of Transportation Secretary Foxx and Minister of Land, Infrastructure, Transport and Tourism Ishii observing the Yamanashi Maglev Line [November 2015]

Kyoto Campaign

5•Improving sales of tourist products and spurring demands for tourism

Improve efforts to market tourist products for “Express Reservation” and “PLUS EX” along with “50+” in order to spur demands for tourism.•Preparations for the roll out of the new online seat reservation and ticketless boarding service

We will steadily move ahead with preparations to begin the new online reservation and ticketless boarding service for customers other than Express members by Summer 2017.•Introducing attractive products and roll out tourism campaigns

Enhance tourism campaigns and products that convey the appeal of Kyoto, Nara, Tokyo and Hida, as well as Ise-Shima, which is in the spotlight as the venue of the Ise-Shima Summit, and other locations.

•Promote products for inbound touristsPromote products and enhance information for inbound tourists.•Cooperation with communitiesEnhance coordination with communities by utilizing the “Sawayaka Walking” event, “Japan Highlights Travel” websites and other efforts as we strive to expand customer use of rail, while also promoting the use of “Shinano,” “Hida” and other express services through “Shupo” and other publications.

Image of the new Shinkansen online reservation and ticketless boarding service

Commuting type IC card

Tap!


Creditcard


6Enhancing of Technological Capability, Pursuing Overseas

Projects & Engagement in Global Environment Preservation

7•Promotion of the “JR Gate Tower” ProjectSteadily move forward with the construction of the “JR Gate Tower” Project, with plans for office tenants to move in from November 2016 and full preparations for sales and advertising activities for the grand opening in April 2017 of the “Takashimaya Gate Tower Mall,” “Nagoya JR Gate Tower Hotel” and other facilities.•Revitalization of commercial facilities of station buildings and merchandise

Increase revenues by invigorating commercial facilities in the station buildings and stimulating merchandise businesses.•Preparations for handover of the “Central Garden Residence Okazaki” condominium

Move ahead with preparations for the handover of the “Central Garden Residence Okazaki” in Spring 2017.

•Revitalizing local communities with “IIMONOTANBOU”Help revitalize local communities through the “IIMONOTAN-BOU” website that introduces appealing products found along our train routes, with online sales operations starting in 2016.•Enhancement of agriculture businessMake continuous efforts to develop our agriculture business to provide safer and more reliable food products.


Image of “JR Gate Tower” entranceExternal view of the “JR Gate Tower”(photo taken in March 2016)“Central Garden Residence Okazaki”

•Development that incorporates the latest technologyPromote development of upcoming Shinkansen models while adopting the latest technology.•Technological development that leads to the advancement of maintenance and labor saving

Implement efficient and advanced maintenance that utilizes condition monitoring technologies, as well as move ahead with technical development that can lead to cost reductions for large-scale renovation, earthquake countermeasure, upgrading equipment and other uses.•Technological development for predicting landslides and other disasters more accurately

Move ahead with technological development for predicting landslides and other disasters more accurately based on recent abnormal weather conditions.•Overseas deployment of high-speed railway systemsMove ahead with technical support and other guidance

provided to the Texas Project in the United States, while also promoting the use of the Superconducting Maglev system for the Northeast Corridor Project in the U.S. Furthermore, we will continue to provide technical consultations for the Taiwan High Speed Rail.•Making efforts to promote Japan's high-speed rail system as a global standard.

Promote initiatives to establish the Japanese high-speed rail system, which is based on the core principle of “Crash Avoidance”, as a global standard.•Promotion of various measures that contribute to engagement in global environment preservation

Promote measures that contribute to engagement in global environment preservation, such as replacing old rolling stock with energy-saving rolling stock like the N700A.

New Vibration Control Device

Steel plate jacketing reinforcement

New Vibration Control Device

Refining Superconducting Maglev technology and reducing costs

Promotion of sales and marketing to increase revenues (Various campaigns utilizing permanent tourism resources, such as Kyoto and Nara, etc.)

Improving the continuance of our technological capabilities

Marketing activities in regions and corridors that have been selected as viable targets for overseas projects, etc.


Promotion of the “JR Gate Tower” Project

November 2014 Continue offering the “Superconducting Maglev Ride” in a well-planned manner. April 2014 International High-Speed Rail Association (IHRA) is establishedApril 2014 Start to provide technical consulting services to Taiwan High Speed Rail Corporation

November 2016: Partially open (Of�ce tenants start to move in)

April 2017: Fully open (“Takashimaya Gate Tower Mall,” “Nagoya JR Gate Tower Hotel” etc. open)

Framework completes December 2015

May 2016 Establish a subsidiary in Texas, U.S.

Enhancement of tourist products for EX and 50+ members

Including 61 billion yen in capital investment by consolidated subsidiaries

Release of The Tokaido Shinkansen 50th Anniversary commemoration travel products

Enhance tourism campaigns and products that convey the appeal of Ise-Shima, which is spotlighted as the venue of the Summit

The new online seat reservation and ticketless boarding service is rolled out (Summer 2017)

Key Measures and Capital Investment FY2016

P.24 P.28

P.26 P.30

3 billion yen

Capital investment 1 billion yen

Capital investment

6 billion yen

Capital investment

77 billion yen

Capital investment

We will continuously strive to enhance our technological capabilities, as well as to pursue overseas projects using the high-speed rail and Superconducting Maglev systems.We will also continue initiatives involving the engagement in global environment preservation.

We will steadily move ahead with “JR Gate Tower” Project at Nagoya Station, partially opening in Autumn 2016 and fully opening in Spring 2017, as we strive to increase competitiveness and revenues from our existing businesses.

We will proactively promote our sales and marketing with the aim of increasing revenue, and make preparations for the new Shinkansen online reservation and ticketless boarding service that will begin in Summer of 2017.



General Principles of Safety

For the initial three year period (FY2013 ~ FY2015), we focused on “measures to inhibit aging damage” and spent around 75 billion yen as a total cumulative renovation cost. We are planning for a total cost of 145 billion yen for the next four years (FY2016 ~ FY2019) to continue measures to inhibit aging damage. In this four year period, we will effectively proceed with both certain renovation work and construction work for implementing countermeasures to derailment/deviation (refer to the following section) to be carried out until FY2019 in the same time, and these efforts enable us to reduce total costs.

In light of the derailment accident on the Joetsu Shinkansen caused by the Niigata Chuetsu Earthquake in 2004, we have been installing “Derailment prevention guards” since 2009. We are scheduled to complete the installation in around 70% of the planned 596km track by the end of FY2016, and we are scheduled to complete the entire project at the end of FY2019. And since 2009, we have tried to work these derailment prevention guards to work effectively at essential civil engineering structures along the planned section of track, applying damper-brace measures designed to damper the amplification of sway on elevated tracks in the event of an earthquake. Furthermore, advancements in technological development allowed us to cover non-ballast bridges, etc. - which had

undergone separate reviews concerning the laying of derailment prevention guards due to their unique structure - with derailment prevention guards from September 2015. In addition, in order to prevent large rolling stock deviations from the track in case of a derailment as much as possible, “Deviation prevention stoppers” were installed on all of our Shinkansen rolling stock by FY2012.

In terms of elevated track columns for the Tokaido Shinkansen, we have completed anti-earthquake reinforcement of elevated track columns (with the exception of some consultation works, etc.), which were deemed to require reinforcement as a result of an anti-earthquake diagnosis performed after the Great Hanshin-Awaji Earthquake, as well as elevated track columns, for which the expected wave patterns for a future Tokai Earthquake published by the Japanese government in 2003

suggest that ground motion in this area could be particularly strong and long. We have proceeded to implement earthquake-resistant reinforcement of bridges and embankments in conjunction with this to further strengthen structures. We completed the renovation of bridges in 2014, and we completed the reinforcement of embankments at the end of FY2012, excluding some consultation works, etc.

Earthquake countermeasures were introduced to buildings of the rolling stock depots used daily for the inspection and repair of rolling stock from FY2012, and construction work was completed at the end of FY2015. Since 2010, we have been carrying out renovation work for the Hamamatsu Workshop, which conducts general overhauls* of Shinkansen rolling stock. With this construction, we will improve the operation efficiency and enhance the work environment by

improving inspection and repair lines and introducing the latest equipment, and reduce the risk of not being able to operate the Shinkansen over an extended period of time by enhancing earthquake resistance through renovation and reinforcement of buildings and maintaining the inspection/repair work of rolling stock, even in case of a major earthquake. We plan to begin general overhauls of rolling stock using new inspection lines from 2017.

Summary of large-scale renovation work

Progress of large-scale renovation work

Countermeasures to derailment/deviation

Earthquake countermeasures for structures, etc.

We continued enhancing the “Urgent Earthquake Detection and Alarm System (UrEDAS)” even after introducing it to the Shinkansen prior to other companies in 1992, and introduced the “Tokaido Shinkansen Earthquake Rapid Alarm System (TERRA-S)” in 2005, accelerating the speed of the alarm and improving accuracy, etc. Furthermore, in 2013 we increased responsiveness to vertical earthquakes and interlocking-type earthquakes.

Improvement of earthquake disaster prevention system

Earthquake countermeasures for rolling stock depots and the renewal of the Hamamatsu Workshop

*General overhauls (Shinkansen): Overhauls required for Shinkansen rolling stock within 36 months or under the distance of 1,200,000km.

Our civil engineering structures is sufficiently maintained through daily and thorough inspections/repair. However, in future, it will be inevitable to replace many of the facilities due to aging. We formulated the allowance reserve plan for the large-scale renovation of Shinkansen infrastructure based on the Nationwide Shinkansen Railway Development Act and have reserved the allowance since 2002 in response to the approval by the Minister of Land, Infrastructure, Transport and Tourism. Along with this, we have developed a new constructing method after our continuous R&D effort mainly conducted at Komaki Research Center. In this method, we first conduct “measures

to inhibit aging damage”, which extends the life of structures by inhibiting the very occurrence of aging damage, such as cracks. Confirming the effect of the first phase, we secondly implement “overall renovation” as necessary, including material replacement. This constructing method made it possible to reduce the interference to train operations significantly during renovation work, and to reduce renovation costs as well. This method made JR Central start the renovation work in 2013, five years ahead of the original schedule. We are planning to steadily proceed this renovation work over 10 years.

TERRA-S

“General Principles of Safety” have been established as the basic state of mind for employees involved in ensuring transportation safety. We have an important responsibility of ensuring the safety of the precious human lives and the valuable property of customers boarding our train services. The General Principles of Safety specifically outlines the mental readiness, and moral awareness and attitude needed for all employees to do everything they can to ensure safety and to prioritize protecting the lives of other passengers above all else, without questioning their duties.

The Tokaido Shinkansen is based on a principle of Crash Avoidance. This principle has been derived to prevent the possibility of a collision by using (1) “dedicated tracks for high speed passenger rail service”, which completely exclude freight and commuter rail from existing on the same tracks and have no grade crossings, and (2) an “Automatic Train Control (ATC)” system, which automatically controls the speed of trains and definitely prevents any collision from happening.

Countermeasures for disasters, such as earthquakes (the Tokaido Shinkansen)

Features of Japanese-developed high-speed railway systems

Large-scale renovation (Tokaido Shinkansen)

Shinkansen General Control Center

Tokai General Control Center

Conventional-Lines Earthquake Information Rapid Communications System

Tokaido Shinkansen Earthquake Rapid Alarm System (TERRA-S)

Transmit stop signal to train

Train Radio

Epicenter

Seismic wave

Relay Station

Stop ElectricitySubstation

Seismometer

Japan Meteorological Agency Office (Japan Meteorological Business Support Center)

Splicing equipment for earthquake early warning

DetectorDetector of the Japan Meteorological Agency

Diagram 1

Large-scale renovation

How ATC works

0No. of accidents resulting in fatalities or injuries of passengers on board since the Tokaido Shinkansen started service in 1964.

3.2Total cumulative safety-related investments since the Company’s founding

Speed of the own trainPreceding train

Receive the informationGround facilities

(for positional adjustments)

(3) Creates ATC signals (train speed comparing patterns) from positional information for the train ahead and one’s own train

(5) When the train’s speed exceeds the signal the brakes are applied

(4) Compares the speed with the signal

(2) Own train positional information

(1) Preceding train positional information (rail)

Derailment prevention guards (for non-ballast bridges)

Ensuring Safe and Reliable Transportation

Ensuring safety and reliability marks the foundation of the railway business. If we were to cause a major accident, the trust placed in the Company would be lost in an instant, and the Company’s very existence would be put in danger. With this frame of mind, the Company has worked to ensure safety across all its operations since its founding. Total safety-related investments have now exceeded 3 trillion yen, trending up from accounting for around 70% to close to 80% of all annual capital investment when excluding investments made towards the Chuo Shinkansen. We will also continue with steadfast initiatives aimed at further improving the technical skills and safety consciousness of employees, such as by implementing practical training and large-scale recovery training in preparation for emergency situations, etc.

General Principles of SafetyDiagram 1Refer to P51 for further related information (Column 1 “Learning safety from accidents”) trillion yen

accidents



From FY2016 we started training all employees in going beyond the call of duty in working together with staffs, etc. to respond appropriately in ensuring our customers’ safety should employees happen to be present when unforeseen circumstances occur while traveling to and from work, or while on a business trip. We will continue to train employees every year in the specific measures to take in an emergency, including the mental readiness needed to respond in such a manner as employees.

Employee training in preparation for contingencies

In addition to this, the General Education Center offers education on specialized knowledge/skills for each function, and provides sessions for various qualifications and trains conductors/drivers. It also hosts effective training beyond the borders of professions, holds lectures for both Shinkansen and conventional lines, and enhancing lectures involving borders of systems, etc.

Simulators for station staff and conductors

We already completed the anti-quake reinforcement of elevated track columns at the end of 2014, in sections in which there are more than 10 trains one way per hour at its peak of the day. We

are currently promoting the reinforcement in the Shizuoka area of the Tokaido line and the Fuji area of the Minobu line, where a long strong earthquake tremor is anticipated in a future Tokai Earthquake.

We have also introduced the “Shinkansen Multiple Inspection Train (Dr. Yellow)” to test the ground facilities, such as electrical facilities and tracks. This rolling stock, which is based on Series 700, aids safety and reliability by efficiently conducting high precision inspections at speeds of 270km/h.

To ensure safe and reliable transportation, we implement safety education and training for the staff engaging in train operations and facility maintenance. We conduct education and training especially for the staff engaging in train operations (such as drivers, conductors, directors, and those who handle signals or operate switch stands) according to the contents/time stipulated for each duty. We introduce simulators, which can perform simulation training of operations, etc. in case of emergencies, to field offices for drivers and conductors. We also conduct various training sessions using ground facilities, such as actual rolling stock/overhead contact lines/signaling equipment, so that employees of each system can swiftly and accurately respond to emergencies.

General Training Session Simulating Actual Accidents is conducted every year as an opportunity for us to enhance the fast-response restoration structure in case of accidents and to learn the work of other systems. We conducted practical training in FY2015, such as passenger evacuation guide training sessions, information communication training sessions, training sessions simulating repair of derailed rolling stock, and line facility restoration training, based on the assumption of natural disasters, such as earthquakes, and train fires.

We started the anti-earthquake renovation of the Nagoya Workshop, which conducts general overhauls and important equipment inspections* for rolling stock of our conventional lines, in 2014. This is scheduled to be completed at the end of FY2021. We have also been promoting anti-earthquake construction for stations with more than 5,000 passengers per day. We

were able to complete anti-earthquake construction efforts at 68 stations by FY2015. We are scheduled to complete anti-earthquake construction at four stations, including Kusanagi Station, in FY2016.

Technical skills training

Emergency conditions response training

Other training

*General overhauls (conventional lines): General overhauls required for conventional line rolling stock within eight years.

Important equipment inspections: Overhauls required for important equipment of conventional line rolling stock within four years or under the distance of 600,000km (electric trains)/500,000km (diesel railcars).

Dr. Yellow

Employee training in preparation for contingencies

Countermeasures for disasters, such as earthquakes, etc. (conventional lines) Operation management and safety measures (the Tokaido Shinkansen)

Operation management and safety measures (conventional lines)

Education and training

Safety audits

Internal audits are performed on the Company’s business organizations and affiliated companies from three main standpoints. The confirmation of the level of compliance with laws and regulations, etc., the confirmation of systems in place to prevent train and labor accidents, and the confirmation of the state of implementation of accident prevention measures. We strive to prevent violations of laws and regulations, the fading out of past countermeasures, and rules from losing their substance before such instances occur by having a third party inspect our business operations and share these results.

Reinforcement of structures

The safe and punctual operation of the Tokaido Shinkansen is supported by a number of systems, mainly the Computer aided Traffic Control (COMTRAC*). These systems accurately comprehend a massive amount of information, such as the operational status of trains and utilization status of facilities, control, and thoroughly manage the safety of the overall transportation services.*COMTRAC (COMputer-aided TRAffic Control): COMTRAC is the system that controls train routes, manages train operations, and operates/manages the allocation of staff (drivers and conductors) and rolling stock. Based on input data prescribing the operational conditions for each train (such as station departure and arrival time, platform, and order) in the computer, the system can monitor the status of all trains in operation at all times.

Operational control systems

Our Company currently incorporates operation management systems into most lines run on conventional lines. The operation management is done by the operation management system, including CTC (Centralized Traffic Control)*1 and the PRC (Programmed Route Control)*2. These manage train schedules, signal control, train tracing, and operation performance data, etc. These systems enable us to manage train and station information in a centralized manner at control centers. Such centralization not only enables normal train management but also allows orders and directives to be issued more rapidly even in emergency situations.*1 CTC: The CTC system not only remotely and integrally controls signaling equipment of stations, etc.

in order to efficiently manage train operations but also has the function to conduct real-time monitoring of operational status of trains.

*2 PRC: Equipment that automatically controls the route for each train via CTC, using daily operation plan information and the position of each train.

Operation management systems

At the Shinkansen General Control Center in Tokyo, various directives, such as transportation, operations, facilities, electrical power, and signals, utilize the above-mentioned systems and work in close cooperation to support the safety and reliability of the Shinkansen. Also, the Shinkansen Second General Control Center with the same functions as the General Control Center in Tokyo has been established in Osaka with the cooperation of JR West. This Center is to be used in the event that the Shinkansen General Control Center becomes inoperable due to a disaster, thereby strengthening our crisis management in case of emergency situations. Equipment at the Second General Control Center is on stand-by at all times with the power on. They are usually utilized for education/training of directors/maintenance staff. The Tokaido Shinkansen has been doubling as various facilities for ensuring safe and reliable transportation. We also reinforce our crisis management ability by doubling control centers.

Tokaido/Sanyo Shinkansen Second General Control Center

Shinkansen General Control Center

“The Shinkansen Multiple Inspection Train”(Dr. Yellow)

JR Central’s 12 conventional lines are operated and managed by two control centers; the Tokai General Control Center in Nagoya and the Shizuoka General Control Center. Each center monitors the operational status of trains and the utilization status of facilities 24 hours a day.

Tokai General Control Center (Nagoya)/Shizuoka General Control Center

JR Central efficiently monitors facility status with regard to the maintenance of railway tracks and electrical facilities on conventional lines, using the “Multiple Inspection Train” and “Track Inspection Train” (Dr. Tokai). The latest sensors and high performance cameras will be installed from 2016 to 2017 in an effort to improve our inspection capabilities.

Dr. Tokai

“Multiple Inspection Train” and “Track Inspection Train” (Dr. Tokai)

signal

Speed

Brake patterns

Ground unit (pattern occurrence)

Travel curve of train ATS-PT overview•A brake pattern is generated in the train based on the distance to the signal derived from information from the ground

•The emergency brakes are automatically applied to stop trains running at speeds in excess of this pattern by the time they get to the signal

•Continuous control is performed using brake patterns

Consecutively comparing speeds. The emergency brakes are applied when excessive speed is detected, regardless of the speed

ATS-PT continuously checks the speed for conventional lines according to the distance between the train and the signal, the curve and the points. It ensures safety by automatically applying emergency brakes in situations where the train risks overrunning. We completed the introduction of ATS-PT to all of our conventional lines* in 2012.*Introduced on the Meisho Line (Ieki ~ Ise-Okitsu section), which had been put out of service from October 2009 due to natural calamities, in conjunction with the recommencement of services in March 2016.

ATS-PT (Automatic Train Stop)

We will look to further improving safety by introducing tablet devices for drivers on conventional lines, which will be used for operational support by notifying drivers of slowdown sections using screen text and voice narration. This is scheduled to be introduced at the end of FY2017.

Introduction of tablet devices for drivers

Earthquake countermeasures for the Nagoya Workshop and station buildings

ATS-PT function

Tsunami evacuation guidance training

General Training Session Simulating Actual Accidents



(Trains / day) HikariNozomi Kodama

Note 1. Departures shown include extra trainsNote 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)

50

100

150

200

250

400

300

350

0’88.3

89

143

231

’94.3

158

34

81

273

’14.3

65

194

83

342

’05.3

145

290

65

80

201

’15.3

350

65

83

209

’16.3

358

65

83

20

25

30

35

40

45

50

300

0 0

350

400

450

500

550

600

(Billion passenger-kilometers) (Trillion yen)

Sources: GDP: Annual Report on National Accounts (Cabinet office, Government of Japan)

GDP Passenger-kilometers

’02.3

475

40.6

’03.3

480

39.6

’04.3

491

40.3

’05.3

498

41.6

’06.3

507

43.8

’07.3

516

44.5

’08.3

525

46.5

’09.3

506

46.0

’10.3

496

42.7

’11.3

513

43.7

’12.3

515

44.3

’13.3

520

46.9

’14.3

530

48.9

’15.3

525

50.1

’16.3

529

52.1

15

16

17

18

19

20

21

00 10 30 40 50

00 10 20 30 40 50

00 10 20 30 40 50

00 10 20 30 40 50

00 10 20 30 50

00 10 20 30 50

00 10 23

Hour Departure time

Note:Excerpt only for “Nozomi”

15

16

17

18

19

20

21

00 10 23 30 40 47 50 53

00 10 20 23 30 40 47 50 53

00 10 13 20 23 30 40 47 50 53

00 10 13 20 23 30 40 47 50 53

00 10 13 20 23 30 40 47 50 53

00 10 13 20 23 30 40 50 53

00 10 20 23

Hour Departure time Friday evening, etc. when many customers

take the Shinkansen

Example for Monday Example for Friday

Maximum of

10“Nozomi” services

operated each hour

Tokyo ~ Shin-Osaka

Time required

Tokyo ~ Shin-Osaka

Fare and surcharges*2

Number of Non-reserved

seats cars

Nozomi 2hr 22min*1 ¥14,450 3

Hikari Approx.3hr ¥14,140 5

Kodama Approx.4hr ¥14,140 10 *3

Tokaido Shinkansen

Since the introduction of “Nozomi” in 1992, JR Central has increased the number of services for “Nozomi”, which is the fastest train of Tokaido Shinkansen, with the aim of improving our transportation service. In 2014, we created the “10 Nozomi timetable”, which enabled a maximum of 10 “Nozomi” services operated each hour, for almost all time frames. This was made possible due to the fact that the renovation construction to add a new track, a new platform, and two more draw-out tracks from 2 to 4, for which back-to-back maintenance is possible, in Shin-Osaka Station was completed and that we now have a certain number of trainsets for the N700A type. This kind of capital investment over a mid to long-term span is needed to increase the number of services available. We currently operate 10 “Nozomi” per hour, mainly during the time frames with increased customer use. We strive to offer more flexible services to meet the demands. Diagram 1

We were able to increase the number of daily services offered

by 2% over the previous year to 358 in FY2015 by scheduling trains in this manner. Diagram 2 We also recorded the highest number of services offered in one day, 431, on August 16 2015 at the height of the Summer holiday season.

“10 Nozomi Timetable” and offering extra trains flexibly

Thanks to the revised timetable in 2015, we were able to increase the speed for the first time in 23 years. The maximum speed of the Tokaido Shinkansen became 285km/h. Due to this, the travel time required between Tokyo and Shin-Osaka was shortened by 3 minutes, which is as short as 2 hours and 22 minutes. The new timetable has not only improved convenience but also improved the timetable recovery

capability in case of emergency. Currently there is generally one “Nozomi” train running every hour at 285km/h. With revisions to the timetable in March 2016 we were able to increase the number of “Nozomi” and “Kodama” trains running at a maximum speed of 285km/h. We plan to continue upgrading our rolling stock to further increase the number of trains running at 285km/h.

Increasing the speed of the Tokaido Shinkansen

Diagram 2 Shifts in the number of daily departures for the Tokaido Shinkansen

Diagram 1 Example of “10 Nozomi timetable” Tokaido/Sanyo Shinkansen timetable (Departures from Tokyo Station (June 2016))

Shifts in GDP and the Tokaido Shinkansen Passenger-kilometersThe Tokaido Shinkansen Service

358 services,

passengers445,000285km/h

Since its inauguration in 1964, approximately 5.9 billion people have used the Tokaido Shinkansen, the transportation artery linking Japan’s three largest metropolitan areas, Tokyo, Nagoya, and Osaka. The Tokaido Shinkansen has literally supported Japan’s economic growth. We will continue operating Japan’s transportation artery while ensuring safety and reliability as the first priority.

Characteristics of the Tokaido Shinkansen

•No accidents resulting in fatalities or injuries of passengers on board since operations commenced

•Improvement of safety awareness/skills through human resources education/training

•Continual investment in safety-related facilities

Note: Results for FY2015. Including delays caused by natural disasters, etc.

•Average delay time: 0.2 minutes / 1 train in service

Safety

High Speeds

Environmental feasibility

High Frequency and

High Capacity

Comfort

Punctuality0accidents 0.2minutes

•The energy consumption amount per seat when traveling from Tokyo ~ Osaka is around 1/8th that of airplanes

•The CO2 emission rate for the same is around 1/12thNote: Comparison between the “Nozomi” Series N700 Tokaido Shinkansen and a B777-200 jet

•Wide open, quiet space

Approx.1/8 Approx.1/12

JR Central has strived to improve its transportation service to fulfill its mission of integrally maintaining/developing the Tokaido Shinkansen, which serves as Japan’s main transportation artery, and the conventional line network in the Tokai region. With continual long-term capital investments, we have improved the Tokaido Shinkansen service not only by bolstering the safety and accuracy, but also by the high speed, frequency and capacity, such as boosting speeds to 285km/h, or introducing the “10 Nozomi timetable”. We will look to further maintaining and enhancing the competitive advantages offered by the Tokaido Shinkansen as the earnings received from this service are vitally important in proceeding with the Chuo Shinkansen Project.

Refer to P51 for further related information (Column 2 “Improvement in the access time due to the inauguration of Shinagawa Station”)

Enhancing Transportation Service

•Maximum speed: 285km/h•Tokyo ~ Shin-Osaka: 2 hours 22 minutesNote: Accurate as of the March 2016 timetable revision (arrival time based on the fastest trains in service)

•Number of train services per day: 358

•Number of passengers per day: 445,000

•Number of seating available: 1,323 seats/train

Note: Results for FY2015 (including extra trains)

Note: Results for FY2015

Note: Each Tokaido Shinkansen trainset has 16 cars*1. Time required for the fastest train*2. For a reserved seat during the normal season (¥13,620 for all non-reserved seats)*3. May vary by train

Station stopsNozomi: Shinagawa, Shin-Yokohama, Nagoya, and KyotoHikari: Same as “Nozomi”, plus a few additional stations Kodama: Stops at each station



While security cameras are currently installed in the deck section of our N700A and Series N700 rolling stock, we will add security cameras into the passenger cars and deck passageways to further bolster security. We will also improve security cameras by linking them with emergency alarms, immediately showing the passenger’s circumstances to the driver’s cabin and conductor’s compartment.

Introduction plan of the N700A and additional specifications

Security cameras (image installed in passenger cars)

(Trainsets)Series N700 N700ASeries 300 Series 700

Note: The trainset figures are as of the end of each fiscal year (excluding retrained trains, etc.)

30

60

120

90

150

’09.3

32

41

60

’08.3

16

52

60

’07.3

61

60

’10.3

48

60

25

’11.3

64

9

60

’12.3

80

51

’13.3

80

6

47

’14.3

80

13

40

’15.3

19

80

32

’16.3

25

80

28

’20.3(plan)

51

80

0

3rd edition

Additions to 2nd edition specifications:•Shortening of Earthquake Brake distances by incorporating new brake lining(Brake distance shortened by around 5% compared to 2nd edition)

•Enhancement of ATC status monitoring functions•Enhancement of failure detection functions by improving the Bogie Vibration Detection System

•Implementation of a pantograph status monitoring system•Further miniaturization of power converter

2nd edition

Additions to 1st edition specifications:•Adoption of warm water bidet toilets•Installation of baby keeping gear

1st edition

•Installation of Wheel Mounted Brake Disk (later rolled out based on upgradings to the Series N700)

•Addition of Earthquake Brake functionality (later rolled out based on upgradings to the Series N700)

•Installation of a vibration detection machine•Installation of a cruise control device (later rolled out based on upgradings to the Series N700)

•Installation of an emergency call unit•Expansion of body inclining sections (later rolled out based on upgradings to the Series N700)

Commuter Passes Ordinary Tickets

100

200

300

400

(Million passengers)

’12.3

384

254

130

’11.3

386

254

132

’10.3

384

252

132

’09.3

391

252

139

’08.3

389

250

139

’07.3

381

245

136

387

’13.3

253

133

395

’14.3

260

135

391

’15.3

257

134

401

’16.3

262

138

0

3rd edition2nd edition1st edition

(Trainsets)

10

20

30

40

50

06

13 13

6

13

12

13

18

1

13

18

8

13

18

15

13

18

20

’13.3 ’14.3 ’15.3 ’16.3 ’17.3(plan)

’18.3(plan)

’19.3(plan)

’20.3(plan)

6

13

19

25

32

39

46

51

We have continued to introduce the N700A, which employs the results of our unique technological developments achieved since the birth of Series N700, including the “Wheel Mounted Brake Disk”, “Bogie Vibration Detection System”, and “Cruise Control System”, in an effort to replace Series 700 rolling stock, which is facing the need to be replaced. Additionally, we will begin introducing the new N700A (3rd edition) upgraded with the results of our latest technological development in FY2016. With the 3rd edition we were able to further improve safety and reliability, and reduce inspection and repair costs by bolstering monitoring functions for traveling rolling stock data in terms of pantographs, bogies, and ATC, in addition to further reducing the stopping distance of Earthquake Brake due to the development of a new brake lining. We plan to introduce a total of 51 N700A trainsets, including 3rd edition trainsets, by FY2019. We have also been upgrading all of the existing eighty Series N700 trainsets to improve further safety and reliability by equipping part of the latest functions introduced to the N700A, such as the “Wheel Mounted Brake Disk” and the “Cruise Control System”, which was completed in August 2015. Additionally, from FY2017 to FY2019 we plan to make additional upgradings to the Series N700 and N700A (1st edition and 2nd edition), introducing the above-mentioned features adopted by the N700A 3rd edition, such as further reducing the stopping distance of the Earthquake Brake.

These measures are due to end in FY2019 with the replacement of Series 700 trains in service, resulting in all of our Shinkansen rolling stock being N700A type capable of running at a maximum speed of 285km/h.

Introduction of the latest N700A and upgrading of Series N700

Express Train “Wide-View Shinano”

In regards to conventional line, we have steadily improved express services, introduced new rolling stock, and increased the frequency of trains. With regard to the express trains, we have introduced “Wide-View” rolling stock and established the “Wide-View” express network, which forms an integrated network with the Shinkansen, by ensuring connections with the Shinkansen. In terms of the popular “Wide-View Shinano,” “Wide- View Hida” and other express trains, we are flexibly increasing the frequency and the number of cars of train services to meet demand at busy times and for nearby events. In terms of local trains, we are striving to increase the frequency/cars of train services during peak-demand morning and evening periods, establish a rapid train system, and adjust services so that they are offered in certain intervals. Through

initiatives such as the above, we strive to offer timetables that are easier for customers to use.

Improvement of service on conventional line

Series Ki-Ha 25 (2nd edition) In terms of conventional line rolling stock, we have newly manufactured/introduced the latest rolling stock with considerations for energy efficiency, being barrier-free, riding comfort, etc. in a well-planned manner since the establishment of the company. In regard to our new diesel railcar, the Ki-Ha 25 (2nd edition), we introduced 16 rolling stock for the Takayama Line and Taita Line in FY2014, 36 rolling stock for the Kisei Line and the Sangu Line in FY2015 and, as of March 2016, all diesel railcar rolling stock used on the Company’s conventional line are now newly produced rolling stock produced after the Company’s founding.

New rolling stock

The Company is currently in the process of installing free passageways and over-track stations with the cooperation of local municipalities located along our train lines. These changes went into service at Abekawa Station in FY2015. These changes are due to go into service at Kusanagi Station, Shinjohara Station, Takayama Station and Kasugai Station in FY2016. Further, an agreement was reached with Iwata City in 2014 with regard to the installation of a new station between Fukuroi Station and Iwata Station on the Tokaido Line based on advance requests received from Iwata City. Construction on the new station is currently underway, with the new station scheduled to open at the end of FY2019.

Completed image of Takayama Station

Installation of free passageways, over-track stations, and new stations

We completed the restoration construction of the Meisho Line (between Ieki Station and Ise-Okitsu Station) - for which a substitute bus shuttle service was provided due to typhoon

damage in 2009 - along with progress made on soil/water projects by Mie Prefecture and Tsu City. We restarted operation of the entire line on March 26, 2016.

Resumption of services along the entire Meisho Line

Addition of security cameras in all of our passenger cars

Shifts in the number of trainsets by type for the Tokaido Shinkansen

Shifts in the number of passengers on conventional linesConventional line

We operate a network of 12 conventional lines, which form an integrated network with the Tokaido Shinkansen. These lines have contributed to the development of communities and the regional economy in the Tokai region, mainly around Nagoya and Shizuoka.



Legends

:Yamanashi Maglev Line

:Station Location

:Planning Route

N

0 25 50km

GifuPrefecture

NaganoPrefecture

AichiPrefecture

ShizuokaPrefecture

KanagawaPrefecture

YamanashiPrefecture Tokyo

Metropolis

Development PlanArticle 7

Environmental Impact Assessment

Start of Construction

Basic PlanArticle 4 Decided in November 1973

Instruction to ConstructArticle 8 Instructed on May 27, 2011

Researches and ReportsArticle 5 Topological and geological surveysOrdered in February 1990 Reported in October 2008Research on “the residual 4 items” *Ordered in December 2008 Reported in December 2009

The Transport Policy CouncilArticle 14-2 Consulted on February 24, 2010 Replied on May 12, 2011

Designation of Operator and ConstructorArticle 6 Consented on May 18, 2011 Designated on May 20, 2011

Consented on May 23, 2011 Decided on May 26, 2011

Construction Implementation PlanArticle 9 Submission on August 26, 2014 Approved on October 17, 2014

Line to be constructed Chuo Shinkansen

Section Tokyo Metropolis ~ Osaka City

Technology used for running Superconducting Magnetic Levitation system

Maximum design speed 505km/h

Estimated expense amount required for construction (including rolling stock costs) 9,030 billion yen

Other required mattersMain areas passed throughKofu City area, south-central Akaishi Mountains (Southern Alps), Nagoya City area, Nara City area

Section Between Shinagawa and Nagoya

StationsShinagawa Station, Kanagawa Prefecture Station (provisional name), Yamanashi Prefecture Station (provisional name), Nagano Prefecture Station (provisional name), Gifu Prefecture Station (provisional name), Nagoya Station

Line extension 285.6km

Construction costs

4,015.8 billion yen[Total construction costs of 5,523.5 billion yen (Includes rolling stock costs. Excludes the construction costs for the existing Yamanashi Maglev Line)]

Expected completion year 2027

50 years have passed since the inauguration of the Tokaido Shinkansen, which serves as Japanʼs main transportation artery. Therefore, we must think of drastic ways to respond to aging in 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 of the Great East Japan Earthquake, the need for a new line which enables us to offer multiple routes in our main transportation artery has become even more important to prepare for the risk from natural disasters. This is the very reason why we decided to complete the Chuo Shinkansen as quickly as possible, as it can alternate the role of the Tokaido Shinkansen by utilizing the Superconducting Maglev System, which we have developed, under the condition that we bear the cost of its construction. JR Central will operate the Chuo Shinkansen in an integrated manner along with the Tokaido Shinkansen. While steadily working towards the successful completion of this project and maintaining our ability to react in a flexible manner, we will make necessary investments to ensure safety and reliability, and to enhance competitiveness in the railway business, as well as ensure sound management and provide stable dividends. We will first realize the project between Tokyo and the City of Nagoya and strive to further extend to the City of Osaka as soon as possible after the company regains its business strength. In order to confirm that the principles of a privately owned company, such as freedom of management and autonomy of capital investment,

would not be hindered by application of the Act, we referred fundamental clauses regarding application of the Act to the Ministry of Land, Infrastructure, Transport and Tourism (the Ministry) and received a reply in January 2008 indicating that those principles would not be hindered.

According to the Act, JR Central follows the procedures for the Chuo Shinkansen (between the Tokyo Metropolis and the City of Osaka) as shown in Diagram 1 . Since receiving the order for construction in May 2011, we have taken the procedures of environmental assessment between Tokyo and the City of Nagoya, which is promoted as the first stage. In August 2014, we submitted the final Environment Impact Statement to the Minister of Land, Infrastructure, Transport and Tourism (the Minister) and made a public announcement. In addition, we simultaneously made necessary preparations to apply for the approval for the construction implementation plan along with the environmental assessment procedures. We submitted the application for the approval for the Construction Implementation Plan (Part 1) between Shinagawa and Nagoya to the Minister on the same day as the submission of the final Environment Impact Statement and received the approval in October. We are currently looking to coordinating closely with regional partners while surveying locations, implementing designs and acquiring land in a planned manner. In addition, we will steadily proceed with construction of the Southern Alps tunnel, Shinagawa Station, and Nagoya Station, which will be hard and require a long time to build, as well as sections where the necessary preparation has been completed, while also giving serious consideration to safety and the environment. We have continued to hold briefings introducing our project for individual municipalities and self-government associations along the planned route to explain the ways in which we work with local communities in as detailed a manner as possible, and introduce

region-oriented information etc. Further, we have proceeded with preparations for future construction work by continuing to work with center line surveys used to determine the central position of the route in six prefectures, which the planned route is set to pass through, and by holding site briefings used to explain compensation plans, etc. Additionally, constructions agreements were concluded for the Southern Alps tunnel and Shinagawa Station, among other construction works, and we held construction briefings for some construction works to provide local residents with an overview of the construction taking place and to explain the safety measures used, etc. The praying for safety ceremony and commencement ceremony were held in December 2015 for the Southern Alps tunnel construction (Yamanashi section), and in January 2016 for the Shinagawa Station construction (north section/south section), and large-scale construction work is now underway for both.

Significance of the Chuo Shinkansen Project using the Superconducting Maglev System~Promoting the Project while ensuring sound management and providing stable dividends

Progress of the Project

Diagram 1 Flow of work based on the Nationwide Shinkansen Railway Development Act

*Research on “the residual 4 items”•Items related to transportation capacity in response to the transportation demand•Items related to the development of facility and rolling stock technologies•Items related to construction costs •Other necessary items

This map is copied from a Japanese map (with a scale of 1 to 1,000,000) published by the Geographical Survey Institute with their authorization. (Authorization number: H25 Jo Fuku, 310)

Note) The estimated expense amount required for construction does not include interest.Overview of the development plan

Outline of the Construction Implementation Plan (Part1) of the Chuo Shinkansen section between Shinagawa and Nagoya

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

We are responsible for the entire construction cost of the Chuo Shinkansen, therefore all construction expenses and costs will be examined by the internally established “Chuo Shinkansen Construction Cost Reduction Committee”, which will thoroughly

reduce costs while ensuring safety. At the same time, we will flexibly distribute resources in an optimal fashion in accordance with the managerial environments.

Reducing costs thoroughly while ensuring safety

Tokyo and Osaka will be connected in as fast as 67 minutes by the Chuo Shinkansen using the Superconducting Maglev System, and the actual travel time required to move between the centers of Tokyo and Osaka City can be shortened to approximately half of airplanes. In addition, the amount of CO2

emissions that Superconducting Maglev System produces per seat between Tokyo and Osaka is approximately one-third of airplanes. As this shows, Superconducting Maglev is a transport system suitable for the 21st century in which global environment preservation is becoming more and more important.

Superconducting Maglev System and engagement in global environment preservation

Praying for safety at groundbreaking ceremony ahead of the construction of Southern Alps tunnel (Yamanashi section)

40 67Tokyo Metropolis ~

Nagoya CityTokyo Metropolis ~

Osaka City

500km/h

minutes minutes

Operating speed

Time required (fastest)

We are promoting the Chuo Shinkansen Project using the Superconducting Maglev System based on the Nationwide Shinkansen Railway Development Act (hereinafter referred to as “the Act”) to continually carry out our mission of operating a high-speed railway linking the Tokyo Metropolitan area, Chukyo, and Kinki regions, which is the lifeline of our business, and to ensure the future foundation of the company.

Promoting the Chuo Shinkansen Project Using Superconducting Maglev System



Overview of the Yamanashi Maglev Line

Progress on the Superconducting Maglev System Technology

The Principles of the Superconducting Maglev System

What is superconductivity?

0

18 40 17 40 40 40 4028 3 396

5 10 15 20 25 30 35 40

[Extended section] [Extended section]Initial section [facility upgraded]

Kilometers (km)

Elevation800m

600m

400m

200m

Incline (‰)

Yamanashi Maglev Line end pointInitial section end pointInitial section start pointYamanashi Maglev

Line starting point

42km800m0035km010m0016km610m000km000m00

SN SN SN SN N

S SN N

S N S N S N S N S

N S N S

By passing current through the Propulsion Coils on the ground, a magnetic field (north and south poles) is produced, thus the vehicle is propelled forward by the attractive force of opposite poles and the repulsive force of same poles acting between the ground coils and the Superconducting Magnets built into the vehicles.

SSS

NN N

The Levitation and Guidance Coils are installed on both sides of the guideway (track). When the on-board Superconducting Magnets pass through at high speed, an electric current is induced in the Levitation and Guidance Coils, causing them to become electromagnets. This generates a force that both pushes and pulls up the vehicle.

SN N N

The Levitation and Guidance Coils on both sides of the guideway keep the vehicle in the center of the guideway at all times by exerting an attractive force on the far side of the vehicle and a repulsive force on the near side when the vehicle moves off center to either side.

Propulsion System

Levitation System

Guidance System

Superconductivity is the phenomenon that the electrical resistance of certain materials approaches zero at very low temperatures. When an electrical current is applied to a coil in a superconductive state (superconducting coil), this current continues to flow almost indefinitely, resulting in the creation of a very large magnetic field. Niobium-titanium alloy has been used for the SCMAGLEV and superconductive state is achieved when cooling it with liquid helium to a temperature of minus 269°C.

Higher

Temperature of liquid helium

Higher

Electrical resistance

-273-269

0Temperature

June 1990JR Central applies to the Minister of Transport for the approval of the construction plan of the Yamanashi Maglev Line and gains approval.

April 1997 Running tests start on the Yamanashi Maglev Line.

March 2000

The Superconducting Magnetic Levitation Technological Practicality Evaluation Committee of the Ministry of Transport (hereafter, the “Evaluation Committee”) acknowledges that “there is potential from a technological standpoint that the technology could have practical applications”

December 2003

JR Central records the world speed record for a manned rail vehicle at 581km/h

November 2004

JR Central performs exercises of trains passing each other at 1,026km/h relative to one another

March 2005

The Evaluation Committee of the Ministry of Land, Infrastructure, Transport and Tourism acknowledges that “the core technologies for practical application have been established”

September 2006

A facility investment plan is established to extend the Yamanashi Maglev Line and upgrade facilities

January 2007

Application for changes of “Yamanashi Maglev Line Construction Plan” is approved by the Minister of Land, Infrastructure and Transport (hereafter, the “Minister”)

July 2009

The Evaluation Committee of the Ministry of Land, Infrastructure, Transport and Tourism acknowledges that “the technologies required for commercial services have been established from a comprehensive and systematic standpoint, and it is possible to move forward with detailing the specifications for commercial services and the technical standards”

May 2011The Minister determines development plans for the Chuo Shinkansen (between Tokyo and the City of Osaka), which is based on a Superconducting Magnetic Levitation System

December The Minister establishes the technical standards for Superconducting Maglev

August 2013

Work extending the Yamanashi Maglev Line to 42.8km and renewing the facilities is completed, and running tests starts with the Series L0

April 2015JR Central records a travel distance of 4,064km in one dayJR Central records the world speed record for a manned rail vehicle at 603km/h

We started running tests on the initial 18.4km section of the Yamanashi Maglev Line in April 1997. The level of the Superconducting Maglev Technology was evaluated in multiple stages, resulting in the Superconducting Magnetic Levitation Technological Practicality Evaluation Committee of the Ministry acknowledging that the Superconducting Maglev Technology had already achieved levels sufficient for commercial service in July 2009. The Minister established the technological standards of the Superconducting Maglev in December 2011. Work extending the Yamanashi Maglev Line to 42.8km and completing fully renewing the facilities was completed in August

2013, and running tests were started with the Series L0 (el zero) rolling stock based on commercial line specifications. In April 2015 we recorded the maximum daily running distance of 4,064km, and beat our own world record for the fastest running train with a record of 603km/h. We will continue conducting evaluations to establish a maintenance system suitable for commercial services while also further striving to refine the Superconducting Maglev System Technology and reduce costs for the construction/operation/maintenance of commercial lines using rolling stock and facilities built to commercial line specifications.

Initiatives with the Yamanashi Maglev Line

We have been conducting “Superconducting Maglev Ride” since FY2014, and over 30,000 people have experienced the high-speed travel at 500km/h, and the high level of performance of Superconducting Maglev Technology, with many giving their

positive impressions, such us “traveled in extreme comfort”. Diagram 1 We will also continue promoting “Superconducting

Maglev Ride” in a well-planned manner.

“Superconducting Maglev Ride” for public

*1 Special investment of 196.5 billion yen (including consumption tax) planned for test infrastructure (aboveground facilities for general purpose use), etc., such as civil engineering structures along initial sections of track. The above amount is the amount paid from FY1990 to FY2015.

*2 355 billion yen (including tax) in construction costs planned as a new investment framework for work extending the Yamanashi Maglev Line to 42.8km and renewing the facilities. The above amount is the amount paid from FY2006 to FY2015.

*3 The above amount is the amount paid separate to the amounts listed for*1 and*2 from FY1987 when the company was founded to FY2015.

We have invested heavily in developing the practical technologies required to establish Superconducting Maglev commercial lines. We will proceed with initiatives to realize Superconducting Maglev Project in the north east corridor of the United States while constructing Superconducting Maglev-based Chuo Shinkansen ourselves. The construction, operation and maintenance for these projects all rely on technologies we have developed.

Accumulated investment amount

Special investments for the Yamanashi Maglev Line *1 170.5billion yen

Extension of the Yamanashi Maglev Line and upgrading of facilities *2 337.7billion yen

Investment in proprietary Superconducting Maglev technological development *3 145.3billion yen

Total 653.6billion yen

Investment in the Yamanashi Maglev Line and Superconducting Maglev technological development

Investment in the Yamanashi Maglev Line and Superconducting Maglev technological development

Diagram 1 “Superconducting Maglev Ride”

JR Central has promoted technological development based on our long-term belief that the Superconducting Maglev System is the most suitable for use on the Chuo Shinkansen due to its speed and advanced technology. The Superconducting Maglev System Technology has already been established as a practical technology, and we are currently continuing to conduct evaluations to establish a maintenance system suitable for commercial services while also further striving to refine the Superconducting Maglev System Technology and reduce costs for the construction/operation/maintenance of commercial lines.

Refining the Superconducting Maglev System Technology and Reducing Costs

Accumulated traveling distance (Yamanashi Maglev Line)

Accumulated investment amount (consumption tax included for some investments)

653.6billion yen

1.59million kmApprox.



*1 Our “EX service” lineup refers to the “Express Reservation” service offered by JR Central and JR West, and the “PLUS EX” service offered by JR Central.

*2 As of March 2016

JR Central has continuously implemented travel campaigns for Kyoto and Nara, which are the largest and sustainable tourist resources in our market area, and the Company is promoting the use of the Shinkansen mainly from the Tokyo Metropolitan area to the Kansai region. We will especially run promotional advertisements for the Kyoto Campaign based on a concept of enabling customers to re-acknowledge Japanese beauty and profundity. In FY2016, we will roll out tourism campaigns covering the Ise-Shima region, which is in the spotlight as the venue of the Ise-Shima Summit in May. In addition, we will continue to promote mutual travel between the Tokyo Metropolitan region, the Nagoya region, and the Kansai region by expanding travel products offered in coordination with events happening near the railway line, such as theme park anniversary events.

JR Central promotes initiatives, such as the “Shupo Campaign” which introduces a number of tourism resources along our conventional lines, for the promotion of the limited express trains on conventional lines with local community. “Sawayaka Walking”, a free walking event starting from JR Central train stations where participants can visit the local tourist spots, enters its 25th year in October 2016 having established itself as a cornerstone community-based event. We will coordinate with local communities in preparing even more spectacular walking courses. We have been using “Japan Highlights Travel” (in Japanese and English, etc.), a portal site that has a collection of tourism information along the Tokaido Shinkansen, to stimulate travel demand with the cooperation of local municipalities and tourism associations.

We have been offering these “Express Reservation” service and “PLUS EX” service only to members, largely target passengers who frequently ride the Shinkansen for business or other reasons. And these services require a designated credit card and a member’s IC card for use. Now we aim to start a new online reservation and ticketless boarding service in an attempt to improve the convenience for non-members to be on board Tokaido Shinkansen and Sanyo Shinkansen by summer 2017. This service is to be available to anyone with an ordinal credit card and a widely popular commuting type IC card. We are also making preparations to have the service available in multiple languages for overseas visitors to Japan. By enabling a broader range of customers to book Shinkansen tickets whenever they feel like it, and to freely change their

reservation up to the last moment using this online reservation and ticketless boarding service, the convenience of our Shinkansen lines will improve the convenience.

Members of either service can quickly and smoothly ride the Shinkansen by simply touching their member IC card at the automatic ticketing gates after reserving their seats with a smartphone or other device beforehand. Members do not need to visit the ticket sales booth in the station in advance, greatly reducing total travel time. Additionally, as members can change their reservation as many times as they want without any additional charges. Members can always select the most convenient train from a vast selection of trains including the “Nozomi”, which has a maximum of 10 departures every hour. Both services boast a combined total of 2.89 million members as of March 2016, and these services are used approximately 160,000 times every weekday.

Improving Convenience for the Tokaido Shinkansen

Stimulating Tourist Demand

“Express Reservation” Service and “PLUS EX” Service

Deployment of various tourism campaigns

We are expanding tourist products to increase Shinkansen use for travel on weekends and holidays for members of both services that typically only ride the Shinkansen for business. For example, “EX Family Hayatoku”, is for groups reserving multiple seats on weekends or holidays up to three days before the travel date. “IC Hayatoku Type 21”, is for persons booking

“Nozomi” tickets for services departing during the middle of the day period when use is comparatively light up to 21 days before the travel date. “Kodama Rakutabi IC Hayatoku” and “Isshoni Kodama Hayatoku” are products offering affordable “Kodama” fares when booked up to three days in advance of the travel date.

Enhancement of tourist products for “Express Reservation” and “PLUS EX” members

JR Central has been operating a travel club “50+”, which anyone over 50 years old can participate. The number of members as of the end of FY2015 is approximately 830,000, and approximately 220,000 members enjoyed “50+” brand products by over the same fiscal year. We not only inform the members of seasonal tourism information through the magazine and

the Internet but also inform them of exclusive travel products, such as tours that enable customers to enjoy special viewing experiences of shrines and temples. In addition to these initiatives, in FY2016 we will be preparing plans in response to the diverse range of needs of a more active set of customers who have just reached their 50s.

50+(Fifty Plus)

JR Central is working with travel agencies to increase the number of tourists visiting Japan. We also offer travel products, etc. for foreign tourists through the Internet, etc., using the “FLEX JAPAN” brand, to stimulate the tourism demand for the Tokaido Shinkansen.

We also collaborate with municipalities located along train lines and local transportation companies to promote the sales of excursion packages for foreign tourists visiting Japan, targeting areas such as “Takayama/Hokuriku”, “Ise/Kumano/Wakayama”, “Tateyama Kurobe Alpine Route” and “Mt.Fuji/Shizuoka”.

Products for foreign tourists

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

Shifts in “Express Reservation” usage and the membership numbers

“Kyoto campaign”

Membership

0

0.50

1.00

1.50

2.00

2.50

30

0

60

90

120

150

1803.00

Membership (million people) (Thousand)

Number of uses (Daily average on weekdays)

’16.3

2.89

’15.3

2.66

’14.3

2.36

’13.3

2.17

119

155

’12.3

1.98

110

138134

New online seat reservation and ticketless boarding service[Service due to start summer 2017]


Commuting typeIC card

CreditCard

Tap!

“Shupo” “Japan Highlights Travel”

“Express Reservation” and “PLUS EX”, are membership reservation services which make the most out of the continually departing Tokaido Shinkansen. These services enable members to reserve seats and change reservations easily online, while eliminating the need to pick up tickets. And they are used in approximately 30% of all seat bookings for the Tokaido Shinkansen. In the summer of 2017, we are also planning to introduce a new online reservation and ticketless boarding service for non-members and overseas visitors traveling to Japan. In terms of tourism, we will roll out measures to stimulate demand, such as the Kyoto campaign, and continue to strengthen our relationship with local residents and travel agencies at tourist spots in our operating areas. We will also strive to increase Shinkansen ridership by providing attractive travel products and bolstering initiatives aimed at member bases.


155,000uses

2.89million

Record of “EX service*1” use (Daily average on weekdays)*2

Number of “EX service*1” members*2

*1. The membership numbers are as of the end of each month and include the total of JR Central and JR West.*2. Include “PLUS EX” members from March 2013



Overseas expansion and consulting of total Tokaido Shinkansen systems

JR Central promotes a consulting business as part of the overseas expansion of high-speed railway systems in which JR Central itself does not lead implementing body of development projects. JR Central proposes the deployment of high-speed railway as a total system, which includes civil engineering structures, tracks, electrical equipment, signaling equipment, rolling stock, operation management systems, maintenance and repairing, etc., to overseas markets. When overseas high-speed railway projects become concrete, we not only coordinate with relevant Japanese companies but also provide support and consultation to ensure safe and reliable operation of the high-speed railway by supplying various manuals regarding operations/maintenance, and conducting education/training for staff, etc.

Making efforts to promote Japan's high-speed rail system as a global standard

We will continue to promote initiatives to establish the Japanese high-speed rail system, which is based on the core principle of “Crash Avoidance”, as a global standard, through the International High-Speed Rail Association (IHRA).

Previously we have developed and put into practical use switchover robots for Derailment prevention guards using robotics technology, and a Bogie temperature detection system using highly advanced sensor technologies, etc. With the introduction of devices which led to this technological development, we have succeeded in improving inspection precision while

saving on manpower through the new development of a maintenance system that continually monitors rolling stock data. We will continue to focus our technological development efforts on upgrading the function and cutting down on labor costs associated with rolling stock and equipment inspections and maintenance using status monitoring technologies, etc.

Improving maintenance and labor saving using status monitoring technologies, etc.

JR Central is proposing high-speed railway systems called the “N700-I Bullet” and “SCMAGLEV” to overseas markets. The N700-I Bullet is a Tokaido Shinkansen total system based on the principle of “Crash Avoidance” of which the Series N700 rolling stock is the main component. The SCMAGLEV is a Superconducting Maglev System developed by JR Central that can realize commercial services at a speed of 500km/h.

The Texas Project The Texas Project, which is set to use the N700-I Bullet, is a business venture which aims at linking two major city centers, Dallas and Houston, with high-speed rail. The main development body, Texas Central Partners (TCP), continues to ramp up development activities through the procurement of construction funds and the formulation of preliminary designs ahead of project commercialization. JR Central is responsible for continuing with promotional activities about this project, and providing TCP with technical support. Furthermore, a local subsidiary, the High-Speed-Railway Technology Consulting Corporation, was founded in May 2016

as part of preparations for the implementation of technical support for TCP.

The Northeast Corridor Project An SCMAGLEV line is supposed to connect Washington D.C. with New York, and JR Central is currently initiating promotional activities to ensure that the initial section from Washington D.C. to Baltimore goes ahead with the cooperation of both the Japanese and U.S. governments. The awareness toward this project has continues to rise on the U.S. side. Secretary of Transportation of the U.S. and the Governor of Maryland observed the Yamanashi Maglev Line in 2015, and the U.S. government approved a federal grant of 27.8 million USD for the State of Maryland.

The N700-I Bullet and SCMAGLEV

We received a request for technical support from Taiwan High Speed Rail Corporation, which operates Taiwan’s high speed rail system based on Japan’s high speed rail system, and we

have been providing technical consulting since April 2014. We will continue to provide technical support to the greatest degree possible, based on the requests from them.

Technical consulting with Taiwan High Speed Rail

Promoting Technological Development at the Komaki Research Center

JR Central opened its own R&D center in Komaki, Aichi Prefecture in July 2002, and is promoting R&D activities to strengthen technological development that will support our future with the aim of enhancing our technical capabilities and developing human resources. The main distinctive feature of the Komaki R&D Center is full-scale testing equipment. Through the 14 years since the Center’s founding we have worked to improve our testing equipment, and leaded to proprietary technological development results that include the development of the Series N700 and N700A rolling stock, the development of countermeasures to derailment/deviation for the Tokaido Shinkansen, the development of large-scale renovation methods for civil engineering structures in relation to our Shinkansen trains, and the development of the next generation overhead contact line for our Shinkansen trains. While ensuring safety and reliability as our top priority, we will continue to adopt the latest technology on upcoming Tokaido Shinkansen rolling stocks, etc. Additionally, we will not only further promote cost reduction in facility maintenance/updates, such as large-scale renovation, etc., but also promote research and development for practical technologies, which lead to efficiency in inspections and maintenance, and that of transportation service, etc. We also proceed more accurate forecasting and detection, etc. with regard to abnormal weather and large-scale natural disasters.

We have succeeded in developing a Shinkansen rolling stock drive system that uses silicon carbide (SiC), a next-gen semiconductor, as a power semiconductor element used to reduce the size and weight of the drive system and to improve energy efficiency. We now have a view to the practical application of this drive system and are currently reviewing its introduction into the next generation of the Tokaido Shinkansen trains. This is a world-first, radical new development in high-speed trains, in terms of greatly reducing the weight of the drive system and further reducing its size. This has reduced the weight of the drive system by

some 20% (around 10t per trainset), and has allowed for further size reductions compared to the drive system for the Series N700, promoting greater energy efficiency and allowing for more freedom in design through the relaxing of rolling stock equipment layout restrictions.

Downsizing and lightening the drive system of Shinkansen rolling stock through the use of SiC elements

CI using SiC elements

Cooling fin

Approx. 1,000 mm

SiC elements

In the event of an earthquake, in addition to quickly bringing Shinkansen rolling stock to a stop, we are (1) installing “Derailment prevention guards” to prevent derailments, (2) “Deviation prevention stoppers” to prevent deviation of rolling stock in the unlikely event of a derailment, and (3) implementing countermeasures to suppress major displacements of structures as instances of implementing countermeasures to derailment/deviation. The Komaki R&D Center developed a new elevated bridge displacement suppression control with a new vibration control device as part of the countermeasures initiated for (3). This structure absorbs the seismic energy from frictional heat using a displacement suppression construction method

that allows for construction in a manner that does not require offices or shops, etc. under the elevated bridge to relocate. Looking ahead, we will continue to roll out measures using the conventional damper-brace method in areas where construction is difficult, and strive to reduce costs.

Elevated bridge displacement suppression control with new vibration control device

New seismic control device

Strengthening of steel plate lining



Acquisition of large amounts of field data

(From rolling stocks in commercial services, aboveground facilities, test rolling stock, etc.)

Understanding phenomena

occurring in the field

Theoretical analysis and simulation

Examining using testing

equipment

Computer-based theoretical analysis

Verification using full scale large testing

equipment

Field-based verification

(From testing on main lines, etc.)

Washington D.C.

Baltimore

Dallas

New York

Houston

Target lines for the N700-I Bullet:Dallas ~ Houston (State of Texas)

Target lines for the SCMAGLEV:Northeast Corridor. (Washington D.C. ~ New York)

Railway business is supported by employees who thoroughly execute their tasks using various skills and cooperating with each other, and supported by various types of equipment, such as rolling stock, civil engineering structures, tracks, and electric and signal communications equipment, functioning seamlessly. In order for a railway operator to ensure safety and strengthen its future managerial foundation, it is vital to continue developing its core technologies which are the base of the foundation. Looking ahead, we will continue to proceed with development using the latest technology in relation to rolling stock and other equipment towards further improving safety and enriching our transportation service, and have this lead back to the building of an efficient management structure that emphasizes reducing unnecessary costs in its railway business.

JR Central offers consultation to overseas high-speed railway projects by utilizing our comprehensive technologies regarding the highest level high speed railway system in the world. JR Central believes that the overseas deployment of its high speed railway system will be a meaningful project that enables Japanese manufacturers to maintain and strengthen their technology and skills through the expansion of the international high-speed railway market, and it also leads to the stable provision of equipment, and the technological innovation and cost reduction of railway-related equipment. We target countries and regions that can be expected to introduce total systems involving new high speed passenger railway lines in which JR Central’s superior high speed railway systems can be used to their full potential. Furthermore, we realize the need for target countries and regions to have a complete legal system where intellectual property rights and the sanctity of agreements are established as socially-accepted ideas, a stable political situation, and an economic power that is able to invest in large-scale infrastructure investments. Therefore, the U.S. is our current main target for marketing activities.

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

U.S. Department of Transportation Secretary Foxx observing the Yamanashi Maglev Line

Target lines for overseas expansion

Basic railway R&D cycle



The JR Central Group undertakes business in the areas of “Transportation”, “Merchandise and Other”, “Real Estate” and “Other”. The “Transportation” segment involves railway business and bus business. The “Merchandise and Other” segment manages department stores and provides sales services for goods and food in stations and trains, utilizing the merit of having good railway station locations to attract customers. The “Real Estate” segment develops commercial facilities in stations and areas under elevated track columns and also leases real estate such as station buildings. In the “Other” segment, we manage hotels at major stations, travel agencies, and advertising agencies, etc. We also manufacture rolling stock and maintain, inspect, and repair our railway facilities in this segment. Operating revenues of consolidated subsidiaries, excluding JR Central, totaled 569.6 billion yen (simply aggregated) in FY2015.

Line-ups of JR Central Group affiliated business

In terms of the merchandising businesses, we will enhance customer-attracting capabilities and product capabilities by updating products and renovating stores, etc. Additionally, in regard to our Real Estate business, we renewed the “Nagoya Umaimon-dori” restaurant zone within Nagoya Station, among renewing other locations in the station. We will also continue to carry out renewals for commercial facilities inside existing station buildings in FY2016. We are also working to help revitalize local communities through the “IIMONOTANBOU” website that introduces appealing products found along our train routes, and will be making preparations to commence online sales operations in 2016.

(Billion yen)

0

100

200

300

400

500

518.1(29)

’11.3

528.6(31)

’10.3

507.3(31)

’09.3

462.4(30)

’08.3

436.2(30)

’07.3

410.5(30)

’06.3

385.0(30)

’05.3

382.0(29)

’04.3

369.3(30)

’03.3

355.6(30)

’02.3

335.0(30)

’01.3

210.1(19)

’00.3

511.2(29)

’12.3

525.9(29)

’13.3

243.6

12.9

63.9

249.0

556.1(29)

’14.3

557.7(29)

’15.3

569.6(28)

’16.3

Real Estate OtherTransportation Merchandise and Other

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

The development of Nagoya Station, which boasts the highest number of passengers of any other JR Central’s stations, forms a pillar of JR Central’s affiliated businesses. Further, as JR Central only holds Tokaido Shinkansen stations and related facilities in the Tokyo Metropolitan area and the Kansai region, the Company has engaged in developing business which effectively uses the limited space available, such as the area inside Shinkansen stations and under elevated tracks. As such,

we are securing a revenue base by engaging in businesses that are expected to generate synergic effects with the railway business, such as areas that make full use of the good location of railway stations. JR Central Towers (or “Towers”), the skyscraper complex with a height of 245 meters and total floor area of approx. 417,000m2, built on Nagoya Station, is the core of the JR Central Group’s affiliated businesses. Towers has a department

JR Central Towers

Other initiatives

store, a hotel and offices operated by three of our subsidiaries. After the grand opening in 2000, Towers significantly increased the revenues from our affiliated businesses. Diagram 1

The office business is run by JR CENTRAL BUILDING CO., LTD. (wholly-owned subsidiary of JR Central, belonging to the “Real Estate” segment), which owns property of Towers. Since its opening, the offices have continually recorded high occupancy level, which almost remained at full occupancy during FY2015. As for the department store business, JR Tokai Takashimaya Co., Ltd., belonging to the “Merchandise and Other” segment, operates JR Nagoya Takashimaya, which attracts many visitors by leveraging the store’s location directly above the station. Thanks to renovation of sales space and proactive sales

promotions, etc., the sales of the year ending February 2016 was 130.1 billion yen (103.2% YoY), which is the highest ever and approximately twice as much as that in 2000 when the store commenced its operation. With regard to the hotel business, Nagoya Marriott Associa Hotel is run by JR Tokai Hotels Co., Ltd. (wholly-owned subsidiary of JR Central, belonging to the “Other” segment). The location directly above the station allows for a spectacular high-rise view and the high-grade facilities have gained wide acclaim. This has led to the hotel maintaining a high occupancy rate of more than 89% in FY2015 (annual average). The combined operating revenues of these three companies were 175.0 billion yen in FY2015 (simply aggregated).

Diagram 1 Shifts in the Operating Revenues of Consolidated Subsidiaries (simply aggregated)

As seen in JR Central Towers and the “JR Gate Tower” Project in Nagoya Station, we have improved the revenue base by engaging in businesses that are expected to generate synergic effects with the railway business, such as areas that make full use of the good location of railway stations. We will continue to expand our revenues and profits in cooperation with group companies.


Refer to P51 for related information (Table 1 “List of Consolidated Subsidiaries”)

52.6billion yen

569.6billion yen

Operating Revenues of Consolidated Subsidiaries (simply aggregated)

FY1989 FY2015(3 companies) (28 companies)

“Nagoya Umaimon-dori” “IIMONOTANBOU” website

The “JR Gate Tower” Project is a project to construct another skyscraper complex comprised of offices, commercial facilities, a hotel, a bus terminal and parking lots, along with other facilities next to Towers. The height is approximately 220 meters, and the total floor area is approximately 260,000m2. It is approximately 60% of the scale of Towers. It creates a highly convenient and attractive urban space with Towers, providing even more activities around Nagoya Station. From the standpoint of efficient management by the JR Central Group, JR CENTRAL BUILDING CO., LTD. will be in charge of the overall management/operation of the building in the same manner as Towers. “Nagoya JR Gate Tower Hotel” is scheduled to occupy the building, along with commercial facilities such as the “Takashimaya Gate Tower Mall”. “Takashimaya Gate Tower Mall” will have approximately 150 fashion/goods stores. We will aim to effectively deploy businesses through the 2 department stores in an integrated manner by offering stores in categories/price range that are not covered by the current JR Nagoya Takashimaya. “Nagoya JR Gate Tower Hotel” will have 350 rooms in total. It will be a hotel with the focus on lodging that provides a sense of high quality and great functions, while offering the convenience of being directly connected to the station as well as providing a comfortable sleeping environment. Furthermore, in addition to a restaurant floor that boasts one of the largest number of restaurants on offer in Japan (in conjunction with Towers), electronics retails stores, fitness clubs, childcare facilities, medical care facilities and other facilities are also scheduled to occupy the building. The building construction is proceeding according to plan, with the building framework being completed in December 2015. The leasing out of offices is also proceeding smoothly, and

we will ensure all preparations are completed as we steadily move forward with the interior finishing and building equipment installation as these aspects of the construction process reach their peak, and begin implementing full-fledged sales and promotional activities ahead of the start of occupancy of offices in November 2016, and the opening of the “Takashimaya Gate Tower Mall” and “Nagoya JR Gate Tower Hotel” in April 2017.

“JR Gate Tower” Project

JR Gate Tower (left) and JR Central Towers (center/right)

“Takashimaya Gate Tower Mall” completion image

“Nagoya JR Gate Tower Hotel” completion image



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

JR Central has established a set of Environmental Action Guidelines consisting of the following seven items as part of its engagement in global environment preservation.

JR Central has formulated the “Implementation Plan of Low Carbon Society Phase II”, in which our Energy Consumption Unit as of FY2030 will be improved by 25% compared with that of FY1995 (refer to the Japan Business Federation (Keidanren) website for further details), and is striving to make sure that the plan is executed. Up to now we established a “Voluntary Plan” in which we achieved our target of a 15% reduction in energy consumption as of the end of FY2010, and we have proactively developed and introduced energy-conserving rolling stock. We will continue promoting proactive initiatives, such as the continuous development and introduction of energy-conserving rolling stock, while setting train services flexibly through the “10 Nozomi Timetable”, etc. to meet the demand of passengers.

Environmental Superiority of Railway In terms of transportation volume and CO2 emissions in passenger transportation, even though railway accounts for 29% of the passenger transportation volume in Japan, it is only responsible for 5% of CO2 emissions. Diagram 1 Compared with an airplane (B777-200), the Tokaido Shinkansen (Series N700 “Nozomi”) consumes approximately 1/8 of the amount of energy per seat when traveling between Tokyo and Osaka, and discharges about 1/12 of the CO2 emissions. The data show that the Tokaido Shinkansen has overwhelming environmental superiority. Diagram 2

Guidelines and Objectives

Series 300 (Not Equipped with Coverall Hoods)

N700A (Equipped with Coverall Hoods)

We are proactively developing and introducing energy-conserving rolling stock in our effort to further reduce Shinkansen energy consumption. We have introduced 80 mainline Series N700 trainsets in an intensive manner for five years since FY2007. Twenty five trainsets of the latest N700A rolling stock have been introduced as of FY2015, with a further 26 trainsets scheduled to be introduced from FY2016 to FY2019. Energy consumption volume for N700A to travel between Tokyo

and Shin-Osaka at the maximum speed of 285km/h is 23% less than Series 300 and 16% less than Series 700 which travel at the maximum speed of 270km/h. It means that N700A has significantly improved energy consumption while accelerating the speed. The result is that our Energy Consumption Unit at the end of FY2015 improved by approximately 33% compared with that of FY1990. We will aim to further achieve energy efficiency by promoting the introduction of N700A.

Series N700 and N700A trains have been highly improved in the environmental performance both in terms of speed and comfort due to the introduction of technologies mentioned as follows.

Initiatives with Shinkansen

Introducing Energy-Conserving Rolling Stock

Great environmental performance of Series N700 and N700A

Environmental Action Guidelines Environmental goal

Diagram 2 Comparison of the Tokaido Shinkansen and Airplane (between Tokyo and Osaka)

Diagram 3 Reduction in Running Resistance (Coverall Hoods)

Comparison of Electricity Consumption by the Tokaido Shinkansen Rolling Stock Type

Shifts in the Ratio of the Tokaido Shinkansen Energy-Conserving Rolling Stock and Energy Consumption Unit

Diagram 4 Electric Power Regenerative Braking System

B777-200

Shinkansen

Series N700“Nozomi”

Airplane

90MJ

746MJ

*1

*2

Energy Consumption per Seat

1/8Approximately

of airplane

B777-200

Shinkansen

Series N700“Nozomi”

Airplane

4.2kg-CO2

50kg-CO2

*1

*2

CO2 Emission per Seat

1/12Approximately

of airplane

*1. Calculation based on running performance of Series N700 “Nozomi” (Tokyo - Shin-Osaka) conducted by JR Central*2. Calculated by JR Central using ANA's "Annual Report 2011" B777-200 (Haneda - Itami/Kansai Airport) for reference

1 Provide comfortable transportation services to promote further use of railways which offer superior global environment preservation

2 Promote technological development that contributes to global environment preservation

3 Use fuel and energy efficiently4 Promote waste controlling and recycling5 Appropriately manage chemical substances6 Procure environmentally friendly goods and materials7 Contribute to society and raise awareness for global

environment preservation

270km/h270km/h

285km/h

Series 300(1992 )

Series 700(1999 )

N700A(2013 )

100% 92% 77%

-16%-23%

Note:Simulated run from Tokyo to Shin-Osaka at the maximum speed above’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12

(FY)

0

20

40

60

80

100

0

20

40

60

80

100

Energy-conserving rolling stock

Series 300/ Series 700

Series 0/ Series 100

(%) (%)

’13 ’14 ’15

Compared to FY1990

around 33% improvement

Even more energy-conserving rolling stock

Series N700/ N700A

Ener

gy C

onsu

mpt

ion

Uni

t (Ra

tio u

sing

an

FY19

90 b

asis

)

Ene

rgy-

cons

ervi

ng r

ollin

g s

tock

rat

io

1Reduction in running

resistance We reduce the running resistance by introducing the nose shape with great aerodynamic attributes, using flush windowpanes, which have no unevenness between the outside panel and windowpane, and installing coverall hoods between all cars, etc.

2 Reducing rolling stock weight

A light and simple-structured bolsterless bogie is used, with light aluminum alloy used for the body frame. Furthermore, we employed a high performance and small alternating-current traction motor. Through these changes, we have reduced the rolling stock weight.

3 Introducing the Body Inclining System

The Body Inclining System is introduced to Series N700/N700A for the first time in the Shinkansen in order to increase the speed at curves currently subject to speed restriction. This system makes it possible to increase speed with comfort, shortening travel hours, and reducing the frequency of speed acceleration and deceleration.

4Expansion of Electric Power

Regenerative Braking System

The Electric Power Regenerative Braking System, in which the motor is used as a generator during braking to produce electricity and return it to the overhead contact line, is used in the Shinkansen for the first time. While 12 of the 16 cars in one trainset of Series 700 were regenerative, 14 of the 16 cars in one trainset of Series N700 and N700A are regenerative. The Electric Power Regenerative Braking System provides all of the braking power needed for one trainset during normal braking.

5 Lighter, smaller blower-less CI in all motor cars

The power converter (CI) converts electricity from the overhead contact line and sends it to the motor at the time of acceleration and returns the electricity generated by the motor back to the overhead contact line at the time of deceleration. JR Central was the first to put the blower-less power converter, which uses the wind from running for air cooling, into practical use in the Shinkansen and uses the system in part of the rolling stock of Series N700. For N700A, these CI were made 17% smaller and lighter and installed on all motor cars.

6Optimization of cabin lighting

and introduction of LED lighting

In the cabins of regular cars on N700A, lighting has been optimized in accordance with the bright seat colors. LED lights with dimmer function have also been employed in the toilets and powder rooms. These measures have contributed in achieving a reduction in energy consumption of lighting by approximately 20% compared to Series N700. We are now installing LED lights in passenger cabins to reduce power consumed for lighting starting with rolling stock introduced in FY2016.

7 Using eco-friendly materialsApproximately 90% (weight ratio) of the waste generated by scrapped the Shinkansen rolling stock is recyclable. With N700A, 100% recyclable polyester has been used for seat cushions, and conventional fiber-reinforced plastic(FRP) bogie skirts, which cover bogies to lower air resistance, have been replaced with stainless steel ones to utilize highly recyclable materials.

Power running (Power consumption)The regenerated power returned to the overhead contact line is reused when accelerating other trains

Brakes (Power generation)The motor is used as a generator during braking to produce electricity and return it to the overhead contact line

83%

3%

77%

9%

2%

6%

29%

5%

6%

6%5%

5%

52%

7%

3%

Transportation volume

(passenger-kilometer)

Energyconsumption

CO2 emission rate

Railway

Bus

Airplane

Car

Others

Source: For transportation volume/energy consumption, created based on data from Transportation Related Statistics (Ministry of Land, Infrastructure, Transport and Tourism), and for CO2 emissions, the National Institute for Environmental Studies, Greenhouse Gas Inventory Office of Japan.* The total of items in the breakdown may not be 100% due to rounding.

Distribution of Passenger Transportation Share, in terms of Transportation Volume, Energy Consumption and CO2

Emissions

Diagram 133% improvement

Energy Consumption Unit for the Tokaido Shinkansen in FY2015*

Compared to FY1990

Railways have the outstanding characteristic of being highly energy efficient compared to other transportation modes and having minimal adverse impact on the global environment. In addition to directly reducing the load on the environment by improving energy efficiency in its railway operations, such as by lowering power consumption in rolling stock, JR Central also thinks the suppression of the load placed on the environment across its entire Transportation section, brought about by having as many passengers as possible opt to use railway services that reduce the burden on the global environment, as linked to efforts related to the engagement in global environment preservation.


Diagram 3

Diagram 4

ESG Information


Classification Main InitiativesPrincipal Effects of

Environment preservation

418.7

0.2

0.8

129.3

0.0

0.0

549.1

4.6

92.8

26.5

42.0

0.1

0.0

166.2

Environment preservation cost(100 million yen)*1

Investment Expenditures

•Energy-conserving rolling stock ratios: 100% (Shinkansen electric cars), 100% (conventional line (electric cars and diesel railcars))

Non-CFC rectifiers: 53 in operation

•Recycling rate for refuse and waste: 57%•Recycling rate for construction waste: 58%

•Energy efficiency of Series N700A 23% (more efficient than Series 300)

*Comparison between the Series 300 (traveling at 270km/h) and the N700A (traveling at 285km/h)

•Acquisition of ISO14001 certification in Technology Research and Development Department

•Participation in environmental partnership organizing club (EPOC)

•Protection of the surrounding environment by increasing the height of and modifying noise-blocking wall, shaving of rail surface, etc.

Global environment preservation cost

Research and development cost

Resource recycling cost

Environment conservation cost along railway lines

Management activity cost

Social activity cost

•Introduction of energy-conserving rolling stock•Improved energy-efficiency at stations and office buildings•Installation of non-CFC type equipment, etc.

•Development of energy-conserving rolling stock•Development related to environment preservation along railway lines, etc.

•Proper disposal and recycling of station and train refuse, etc.•Proper disposal and recycling of items generated by workshops and construction work

•Environmental advertising•Environmental management education etc.

•Support and cooperation for organizations and other groups undertaking environment preservation

•Countermeasures for noise and vibration•Proper management of environmental load substances, etc.

*1. Fractions of 10 million yen are omitted*2. Totals do not add up due to rounding

[Approach to environment preservation cost]•Compilation is applicable only to JR Central.•The applicable period is April 1, 2015 to March 31, 2016.•“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.•In the event of multiple-purpose expenditures, the full amount with greater environment preservation effect is included in the calculation.

Total*2

INPUT

OUTPUT

Electricity Fuel(Amount of converted crude oil)

*The electricity and fuel CO2 emission coefficients are based on a report of the law (Energy Saving Act) concerning the streamlining of energy use.

*Figures in parentheses are for operations (reprinted)

(Station, train, and office refuse 16,000t)(Construction waste 210,000t)(Rolling stock waste 7,000t) *Recycled amount reprinted

Refuse and waste

234,000tCO2 emissions 1.514 million t

Water

3.287million m3

(2.08 billion kWh)

2.85 billion kWh

(14,000 kL)

31,000 kL

136,000tRecycled

(Including internal reuse)http://english.jr-central.co.jp/company/company/material_procurement/_pdf/green_guide_line.pdfURL

By replacing the electricity compensation devices from FY2011 to FY2018, which inhibit voltage reduction as rolling stock travels away from a substation, with a facility with less electricity loss, we expect to be able to reduce the electricity use on the Shinkansen by approximately 3%.

Also, by replacing part of the frequency converters from FY2014 to FY2021, which convert 50Hz electricity to 60Hz electricity required to operate the Shinkansen, with a stationary type with less loss, we expect to be able to reduce Shinkansen electricity consumption by approximately 2%.

Enhancement of electricity supply efficiency by replacing ground facilities

JR Central implements a green procurement policy, prioritizing the procurement of eco-friendly materials. To this end, we established the “JR Central Green Procurement Guidelines”

for the purpose of enhancing coordination with our business partners and working with them to contribute to engagement in global environment preservation.

Green Procurement Guidelines

JR Central proposes the idea of “Eco Business Trips”. “Eco Business Trips” refer to “business trips that contribute to environment preservation”, or the mindset of “selecting transportation and business trip methods that will emit a smaller amount of greenhouse gas when traveling mid to long distances (or making business trips)”. We will actively showcase the

information of “Eco Business Trips” through advertisement campaigns to spread it in society, as we believe that this initiative will lead to further prevention of global warming.

Proposal of Eco Business Trips

“Eco Business Trips” poster

Effective Use of Resources/Use of Natural Energies and Introduction of Energy-Efficient Facilities

We promote effective utilization of resources through the 3R (Reduce, Reuse, and Recycle) initiative, etc. Specifically, we aim to reduce emissions of waste materials during construction, utilize rain water, recycle tickets/uniforms, and recycle rolling stock, etc. Furthermore, we strive to leverage natural energies and introduce energy-efficient facilities when constructing new buildings and renovating existing buildings.

In March 2015 we electrified the Taketoyo Line (between Obu and Taketoyo, 19.3km), which transports commuters in the Nagoya

metropolitan area. This electrification process will result in an annual reduction of CO2 emissions of approximately 2,600 tons.*

Environmental load reduction through electrification of the Taketoyo Line

*Estimated from operating results for FY2015

Electric cars

Diesel railcars

Note:Based on simulated test runs between Toyohashi and Ogaki (rapid operation)

Note:Result from running Series Ki-Ha 40 with new/conventional engines (Conventional engine: DMF15HS, new model engine: C-DMF14HZ)

Conventional type(rolling stock with conventional engine)Energy-efficient type (cars with new model energy-efficient type engines)

100(Base)

71

Conventional type(Series 117, 110km/h)

Energy-efficient type (Series 313, 120km/h) 69

100(Base)

Note:Values denote the number of rolling stock as of the end of each fiscal year (they include some event trains, retained trains, and test trains)(FY)

(Cars)

0

400

800

1,200

1,600

’91 ’92’90 ’93 ’94 ’97 ’98 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’14’13 ’15’99’95 ’96

Energy-conserving rolling stock Conventional type rolling stock

988 936 919 918 877 850748 733 698

517 480 432 426 426 425 408272 153 127 127 107 107 50 0 0 0

440 465 469 481 490 542 626 639775 881 887 885 885 885 885 888 1,091

1,112 1,112 1,112 1,166 1,210 1,242 1,242 1,265 1,222

JR Central has also been striving to conserve energy of rolling stock on conventional lines. We will promote the introduction of rolling stock with better energy efficiency by introducing the Electric Power Regenerative Braking System, higher efficiency power control conversion methods, lighter rolling stock, etc. to electric cars, and will do the same for diesel railcars by

introducing lighter rolling stock and high mileage diesel engines, etc. As a result of these initiatives, all of the conventional line rolling stock is energy-conserving rolling stock. Additionally, we will look to further reducing the load on the environment by using LED lights in new rolling stock.

Introducing energy-conserving rolling stock

Initiatives with Conventional Lines

Comparison of electricity consumption and diesel fuel consumption of cars on conventional lines (electric cars and diesel railcars)

Shift in the introduction of energy-conserving rolling stock on conventional lines (electric cars and diesel railcars)

At the SCMAGLEV and Railway Park, which opened in March 2011, we introduced a solar energy generation system on the expansive roof. The system has a generation capacity of approximately 500kW, or roughly 610,000kWh annually, which can cover approximately 30% of the SCMAGLEV and Railway Park’s energy needs.

At the General Education Center, which was newly built in September 2011, we aim to conserve energy by introducing a ventilation system which uses ice thermal storage achieved from the utilization of nighttime electricity service as its heat source and LED lighting, etc. Furthermore, we designed the building to use natural energy effectively by improving external insulation efficiency by arranging a rooftop garden and taking advantage of natural wind and light as much as possible. As a result, we were able to obtain “Rank S”, which is the highest assessment level under the “Comprehensive Assessment System for Built Environment Efficiency (CASBEE)”.

SCMAGLEV and Railway Park

General Education Center

Hamamatsu Workshop, which conducts general overhauls of Shinkansen rolling stock, began the renovation construction in July 2010. Along with this, in FY2015 the rooftop of the workshop was used for installing a solar power generation system with the capacity to generate approximately 300kW or about 300,000kWh annually. In addition to this, high-efficiency transformer facilities, boilers and other equipment will be introduced in an effort to increase energy savings across the entire Workshop by approximately 10%.

Hamamatsu Workshop

JR Central started conducting anti-earthquake measures and upgrading facilities in February 2014 in the Nagoya Workshop where general overhauls, etc. of conventional line rolling stock are conducted. We aim to reduce approximately 20% of electricity consumption for the entire workshop by introducing high ceiling LED lighting and transforming equipment as energy saving measures.

Nagoya Workshop

With the “JR Gate Tower” Project, we plan to work on creating energy-efficient buildings and reducing the environmental burden by introducing regional air-conditioning systems, adopting LED lighting, installing solar power generation panels, creating green areas in the 15th floor courtyard and on roofs of low-rise buildings, etc. We will not only aim to achieve “Rank S” of environmental performance, which is the highest rank on the “CASBEE” scale but also to reduce approximately 25% of CO2 emissions from the building compared to standard model buildings according to the CASBEE Nagoya 2010 standard.

“JR Gate Tower” Project

Facility and workshop status

Activity status for FY2015

Based on the “PRTR Law (Pollutant Release and Transfer Register Law)”, we report the amount of emission and transfer of relevant substances to local municipalities and manage those substances appropriately.

Management of chemical substances

In FY2015, specific hazardous substances were detected exceeding the standard value from part of the soil when we conducted soil surveys in the Nagoya Workshop prior to construction. We reported the matter to relevant administrative agencies and took appropriate measures. Looking ahead, we plan to successively carry out further surveys as construction progresses. We will submit a report should any substances exceeding the standard value set be detected in such surveys, and will take appropriate measures as instructed by laws and regulations and the administrative authorities.

Measures against soil contaminationLegal Compliance

JR Central has established a system to comply with relevant environmental laws.

The investments, costs, and their principal effect involved in environment preservation activities during FY2015 are estimated as listed below.

Environmental accounting

The main resources and energy utilized as well as waste generated during JR Central’s business activities for FY2015 are as shown below.

Environmental load in business activities

INPUT/OUTPUT

Environmental Accounting

SCMAGLEV and Railway Park (solar power generation system)

General Education Center (rooftop gardening)

ESG Information


Due to the characteristics of the work, railway business requires so-called late-night work (work between 10 p.m. and 5 a.m.). However, the Labor Standards Act at the time of the company's establishment prohibited late-night work of women in principle, excluding some job types. Due to this situation, the ratio of female employees as of the end of FY1996 was only 1.3%. In response to the revision of the Labor Standards Act in 1997, we have actively employed female employees. As of the end of FY2015, the number of female employees was approximately 2,000 (approximately 10% of the overall employees). JR Central has also been fostering an environment to support employees

in achieving a balance of work and private, with things such as childcare, by establishing work systems, enhancing various allowance systems, etc. Specifically, in terms of childcare support, we have implemented systems that go above and beyond that called for by law in relation to childcare leave periods, exemption periods for overtime work, and maternity leave periods, etc. With the enactment of the Act to Advance Women’s Success in their Working Life in April 2016, and with these initiatives in mind, we have established an action plan for maintaining and improving the ratio of employees taking childcare leave with a view to proactively promoting the involvement of both men and women in the act of childcare [No. of employees taking childcare leave in FY2015: Approx. 490].

Promoting female employees in active roles

JR Central currently has four labor unions, and has signed labor agreements with all of them [Total union membership of 19,334 employees as of March 31, 2016]. We hold joint management council

meetings and engage in collective bargaining based on these labor agreements, and will continue to strive to build healthy and stable labor-management relations.

Healthy labor-management relations

The basic education system mainly involves “on-the-job training (OJT)”, in which employees learn the knowledge and skills required for work through daily operations in each workplace. They also acquire additional knowledge/skills from “group training”, which is held in the General Education Center*1, etc., and various “self-betterment” opportunities, such as internal/external correspondence training systems, etc. that help employees learn knowledge/skills on their own. In FY2015, approximately 260 group training sessions were held, and approximately 9,500 employees in total participated in the training. In addition, approximately 6,000 employees in total voluntarily participated in internal correspondence training. In FY2016, we have established new “Fore-runner Training” aimed at broadening the horizons and improving the level of insight of employees in professional positions, and enhancing employee capabilities in general. In this program, we will provide the opportunity to learn the

basic knowledge on leadership and other skills that are required of them as employees that play a central role in each workplace. Looking ahead, we will continue to brush up our training program to expand the learning opportunities for our employees. Furthermore, we will coordinate with our internal Health Care Center*2 to enrich trainings regarding mental health-related “self-care” methods and training methods to ensure that each and every employee can go about their work with a sound body and mind. As a result of these initiatives, we have an extremely high employee retention rate despite the fact that we employ many new employees every year (approximately 670 employees in FY2016 first recruitment), as the labor turnover rate of approximately 1% indicates.

Basic Policy of Human Resources development

* 1. The General Education Center conducts employee training including personnel from affiliated companies that are engaged in railway operations.

* 2. Health Care Centers are set up in each area of Tokyo, Shizuoka, Nagoya, and Osaka, and consist of industrial physicians, public health nurses, nurses, and clinical psychologists. These Centers are responsible for employee health maintenance and touring workplaces, and providing health care education and consultation services, etc.

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

Contribution to Local Communities

JR Central cooperates with the requests of local municipalities to establish new stations, improve station buildings, develop plazas in front of stations, and promote railway elevation projects, etc., thereby contributing to community development. Based on relevant laws, such as the so-called Barrier-Free Law, JR Central cooperates with governments and municipalities to jointly establish and improve facilities to enable all passengers, including disabled and elderly passengers, to use our service safely and with a sense of security. General improvements to stations used by over 5,000 passengers per day have been completed, with the exception of stations for which over-track station plans, etc. are in place. We are currently proceeding with initiatives to sequentially add and improve elevator and multi-purpose toilet facilities at stations used by over 3,000 passengers per day according to the new Basic Policy put forth by the government, with improvements either complete, or plans underway, at some 90% of the stations targeted for improvement at the current time. Further, nearly all of JR Central’s trains include support facilities for

Improving the level of convenience of stations, etc.

International Exchanges

JR Central proactively undertakes a wide range of international operations, such as gathering up-to-date railway information from around the world via the company's network of overseas offices (Washington D.C., London, and Sydney), participating in international conferences to exchange technological and management information with railway operators in the world, and issuing press releases overseas as part of our PR activities, etc. We also offer technical cooperation in the field of railways in response to government requests and promote human resources development by hosting interns from overseas universities and international organizations, etc.

passengers in a wheelchair. Directions and train boarding support is provided, where necessary, for passengers in a wheelchair and other passengers with a physical disability.

As an acute care hospital, Nagoya Central Hospital, located in Nakamura-ku, Nagoya, performs over 1,500 surgeries year round, providing some of the most advanced medical care services available using the latest medical equipment. The hospital is also a committed emergency health care provider, coordinating with local ambulance services to take in over 4,000 ambulance calls per year. Looking ahead, the Nagoya Central Hospital will look to leveraging its distinctive features and expertise to further contribute to the local community.

“SCMAGLEV and Railway Park” ~A museum of memories and dreams~ We opened the “SCMAGLEV and Railway

Park” in March 2011 in Kinjo Futo, Minato-ku, Nagoya as part of our participation in the “Monozukuri (manufacturing) Culture Exchange Area Project”, hosted by the City of Nagoya. At the “SCMAGLEV and Railway Park”, we introduce the “progress of the high-speed railway technology” through displays of rolling stock mainly of the Tokaido Shinkansen as well as conventional lines and Superconducting Maglev. In May 2016, the number of visitors reached the 3.58 million.

Roll out of initiatives in coordination with communities located along our lines As part of sales and marketing, we are deepening ties with communities located along our lines while rolling out initiatives such as the “Shupo” campaign, “Sawayaka Walking”, and “Japan Highlights Travel”. Furthermore, as a new initiative aimed at revitalizing local communities, we launched the “IIMONOTANBOU” website in December 2015 as a means of attracting visitors to these regions by introducing famous local delicacies and other fine products around our railway lines.

Setting general hospitals for local communities

(Nagoya Central Hospital)

Participating in programs to vitalize local communities

Refer to P51 for related information (Column 3 “Overcoming the “1st year elementary school wall””)

JR Central views its employees as its greatest management resource. It is ultimately the people who operate railways and protect the safety of its operation. The railway business is also referred to as experience engineering, and employee skills development does not happen in short term. Therefore, we focus on human resources development and skill development from a long-term perspective based on long-term employment in order to develop employees with the awareness to thoroughly execute their duties and great skills. We aim to establish them and promote their activities through various programs.

Railways, which are a mode of public transportation, are extremely closely connected to local communities. We are enhancing the convenience of stations, which are the gateway to local communities, as well as contributing to local communities, such as operating medical facilities and museums, etc. in the Nagoya region, where our head office is located, in addition to rolling out sales and marketing efforts and launching websites introducing local delicacies and fine products in conjunction with communities located along our railway lines.

1%Around

Human Resources Development Cooperation with Local Communities

Turnover rate

ESG Information


Compensation for officers is comprised of certain basic compensation and a bonus. Basic compensation is based on comprehensive consideration of the title, length of service, etc., and the bonus is based on the performance and commissioned work, etc. of each FY. Each amount is appropriately decided in Board of Directors meetings within the range of compensation, etc., which was decided in the 25th General Shareholders Meeting held on June 22, 2012. Furthermore, compensation for Outside Directors shall be set to the fixed basic compensation set from July 2016. Compensation for Outside Audit and Supervisory Board Members is comprised solely of certain basic compensation. The appropriate amount is decided through discussions of Outside Audit and Supervisory Board Members within the range of compensation, etc., which was decided in the 20th General Shareholders Meeting held on June 22, 2007.

Name Name of other company, etc. Titles

Kenji Koroyasu

Furukawa Electric Co., Ltd.

Outside Audit and Supervisory Board Member

Takashi Saeki

TOHO GAS Co., Ltd.Chairman and Representative Director

UNY Group Holdings Co., Ltd.

Outside Director

The Ogaki Kyoritsu Bank, Ltd.


Aichi Tokei Denki Co., Ltd.


Shigeo Kifuji

ISHII IRON WORKS CO., LTD.


Mori Building CO., LTD.


(Note) Director Fujio Cho resigned from his post as Outside Director at TOYOTA INDUSTRIES CORPORATION on June 11, 2015, and as Outside Auditor at DENSO Corporation on June 19 of the same year.

Name Principal activity

Fujio Cho

Attended 11 out of 13 meetings of the Board of Directors held in FY2015. In the Board of Directors meetings, he has stated his opinions based on his experience of corporate management, etc.

Kenji Koroyasu

Attended all 13 meetings of the Board of Directors held in FY2015. In the Board of Directors meetings, he has stated his opinions based on his experience as a public prosecutor and lawyer, etc.

Takashi Saeki

Attended all 13 meetings of the Board of Directors held in FY2015. In the Board of Directors meetings, he has stated his opinions based on his experience of corporate management, etc.

Hajime Ishizu

Attended all 13 meetings of the Board of Directors, and attended all 14 meetings of the Audit and Supervisory Board held in FY2015. In the Board of Directors meetings and meetings of the Audit and Supervisory Board, he has stated his opinions based on his experience in transportation administration, etc.

Hiroyuki Ota

Attended all 13 meetings of the Board of Directors, and attended all 14 meetings of the Audit and Supervisory Board held in FY2015. In the Board of Directors meetings and meetings of the Audit and Supervisory Board, he has stated his opinions based on his experience in police administration, etc.

Shigeo Kifuji

Attended all 13 meetings of the Board of Directors, and attended all 14 meetings of the Audit and Supervisory Board held in FY2015. In the Board of Directors meetings and meetings of the Audit and Supervisory Board, he has stated his opinions based on his experience as a public prosecutor and lawyer, etc.

Name Reasons for election

Fujio Cho

Mr. Cho was appointed as an Outside Director because of his corporate management experience and his great insight.

Kenji Koroyasu

Mr. Koroyasu was appointed as an Outside Director because of his experience as a public prosecutor and lawyer and his great insight.

Takashi Saeki

Mr. Saeki was appointed as an Outside Director because of his corporate management experience and his great insight.

Hajime Ishizu

Mr. Ishizu was appointed as an Outside Audit and Supervisory Board Member because of his experience in transportation administration and his great insight.

Hiroyuki Ota

Mr. Ota was appointed as an Outside Audit and Supervisory Board Member because of his experience in police administration and his great insight.

Shigeo Kifuji

Mr. Kifuji was appointed as an Outside Audit and Supervisory Board Member because of his experience as a public prosecutor and lawyer and his great insight.

Classification

Basic Compensation Bonus Total amount for the

compensation/bonus, etc.(Million yen)

Number of target officers(People)

Total amount

(Million yen)

Number of target officers(People)

Total amount

(Million yen)

No. of officers(Excluding

Outside Directors) 13 564 13 232 797

Audit and Supervisory Board Members

(Excluding Outside Auditors) 2 94 - - 94

Outside Officers6 114 3 6 121

JR Central strives to enhance our corporate governance to ensure soundness, efficiency, and transparency of management, to implement long-term development of the company, and to enhance sustainable corporate value.

JR Central's Corporate Governance System

The Board of Directors of JR Central is comprised of 16 members (three of whom are outside directors). JR Central also employs an auditor system, and its Audit and Supervisory Board consists of five members (three of whom are outside auditors). (The figures are as of June 23, 2016) The Board of Directors meets at least once a month, and makes legal and appropriate decisions upon fully discussing issues stipulated by the law - following conscientious briefings that are given to bring all concerned up to speed on the background to issues discussed, and the progress status for such - and issues of importance to management and monitors the work of directors. To broaden deliberations, we have also established a Management Meeting in which important issues related to management are discussed in advance of the Board of Directors meeting. We request Audit and Supervisory Board Members to attend meetings of the Board of Directors, the Management Meeting and other important meetings as we endeavor to ensure the legality of management measures during the deliberation process. Further, JR Central strives to ensure the appropriate execution of business by managing, and providing guidance to, affiliated companies where necessary. Although we introduced the corporate officer system in May 2003, we introduced an executive system in June 2012 with the aim of further accelerating decision-making, enhancing discussions, and further clarifying roles for directors and corporate officers, who are responsible for operation, in order to appropriately respond to changes in the business environment influencing our management decision in a timely manner. Audit and Supervisory Board Members not only attend

important meetings such as the Board of Directors and the Management Meetings but also inspect the state of the execution carried out at head offices, railway operations divisions, branch offices, field offices and affiliated companies based on plans enacted by the Audit and Supervisory Board to strictly promote their audit work. Ensuring effective audit made by members of the Audit and Supervisory Board, JR Central also provides an assistant system in which our employees are assigned as full-time staff to support auditors work. Internal audits are performed by the Audit Department on the work of JR Central, its affiliated companies, and related companies to confirm that execution is legally and appropriately made based on laws, articles of incorporation, and internal regulations. The results of internal audits are reported to management. In addition, to prevent operational and labor accidents, safety audits are performed by the Transportation Safety Department, and the results are also reported to management. Based on generally accepted accounting standards, JR Central has appropriate accounting audits made by an audit corporation, and by Deloitte Touche Tohmatsu LLC, which has been selected to be our accounting auditor. Audit and Supervisory Board Members, internal audit departments, and accounting auditors cooperate with each other by exchanging information periodically or as necessary and receive necessary information from each department involved in internal control to confirm the status of implementation of each item stipulated in the Fundamental Corporate Governance Policies.

Based on our policy to make the most appropriate execution system for Outside Directors and Outside Audit and Supervisory Board Members, JR Central appoints three Outside Directors and three Outside Audit and Supervisory Board Members. The Company determines the level of independence of Outside Directors and Outside Audit and Supervisory Board Members based on the criteria for independence established by the Japan Exchange Group, Inc. in order to ensure that the opinions provided by Outside Directors and Outside Audit and Supervisory Board Members on matters raised are formed from on an independent standpoint, and are based on the high degree of experience and insight accumulated outside the Company. JR Central receives beneficial opinions about the execution of our business from Outside Directors and Outside Audit and

Supervisory Board Members, who provide advice based on their various experience and great insight gained outside of the company from their independent standpoints, both in and out of Board of Directors and Audit and Supervisory Board. We utilize the advice given by Outside Directors and Outside Audit and Supervisory Board Members to execute audits by Outside Audit and Supervisory Board Members, internal audits, safety audits, accounting audits, as well as items stipulated in the Fundamental Corporate Governance Policies. Each Outside Director and Outside Audit and Supervisory Board Member is submitted to the Tokyo Stock Exchange and the Nagoya Stock Exchange as an independent officer who does not have any possible conflict of interest with general shareholders.

Overview of Corporate Governance System

Activity status of Outside Directors and Outside Audit and Supervisory Board Members

[FY2015]

Election of Outside Directors and Outside Audit and Supervisory Board Members

[As of June 23, 2016]

State of main posts held concurrently for Outside Directors and Outside Audit and Supervisory Board Members

[As of March 31, 2016]

Total amount of compensation, etc. by officer classification, total amount of compensation, etc. by type, and number of target officers

[FY2015]

Outside Directors and Outside Audit and Supervisory Board Members

Contents of Compensation for Officers

Board of Directors

President and Representative Director

Head Office, Regional offices, Field offices

Management Meeting

General Shareholders Meeting

Audit and Supervisory BoardAudit

Investigate

Report

Audit

Audit

AuditManagement / Guidance

Audit

Selection Selection Selection

Cooperate

Cooperate

CooperateInternal Audit Department (Audit Department/Transportation Safety Department)

Affiliated Companies

Accounting A

uditors

Corporate Governance

ESG Information

Dir

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Dir

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rs

Aud

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ry B

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Mem

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s

Aud

it an

d S

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Mem

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Dir

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Boa

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General principleSupplementary

principleDisclosed contents

Principle 1-4 Cross-shareholdings

[1] Policy concerning cross-shareholdingsJR Central holds cross-shareholdings based on a general consideration of the necessity of such from the perspective that maintaining and strengthening long-term, stable business relations through the holding of shares will lead to the smoother execution of business operations and increases in corporate value over the mid- to long-term.

[2] Criteria for the exercising of voting rightsIn terms of the exercising of cross-shareholding voting rights, JR Central closely examines the contents of each resolution and decides how to vote in consideration of improving the corporate value of the Company over the mid- to long-term and the sustainable growth of business partners, etc.

Principle 1-7Related party transactions

All transactions involving Directors which may pose a conflict of interest, and transactions between Directors and the Company, require the approval of, and reporting to, the Board of Directors as stipulated in relevant laws and regulations and rules governing the Board of Directors. Every year confirmations are made on a regular basis with officers as to whether related party transactions have been made between officers or relatives and the Company.

Principle 3-1Full disclosure

[1] •JR Central was founded in 1987 as part of the reform of the national railway system with a mission of integrally maintaining, developing and future-proofing the Tokaido Shinkansen, which serves as Japan's main transportation artery linking Tokyo, Nagoya and Osaka, and the conventional line network in the Tokai region with a central focus around Nagoya and Shizuoka.In light of this mission, JR Central established a Management Philosophy to act as a guideline for the corporate activities and human resource development of the Company, with an emphasis placed on its core involvement in the railway business. This Management Philosophy can be found on the Company’s website at the URL below.

http://english.jr-central.co.jp/company/company/about/outline.htmlURL

•In the railway business, JR Central sets the highest priority on ensuring safety and reliability. JR Central's fundamental policy is to stably and fully execute the long-term social mission described in detail above through the continuous efforts of providing services that are preferred by customers as well as the streamlining of work, etc.This Management Philosophy is included in the “A Message from the Management” section of the “Annual Report”, and can be found at the following URL.

http://english.jr-central.co.jp/company/ir/annualreport/index.htmlURL

•Specific measures to be implemented in the current business year based on this Management Philosophy are described in “Key Measures and Capital Investment”, and can be found at the URL below.Key Measures and Capital Investment

http:// english.jr-central.co.jp/company/company/achievement/capital-investment/key-measures.htmlURL

[2] The basic outlook on corporate governance is described in “1.1. Basic Outlook” in the “Corporate Governance Report”.

[3] Details on the policy and procedures concerning the setting of Director compensation are described in “2.1. [Director Compensation-related] Disclosure of Policy for Determining the Amount of Compensation and the Calculation Method for Such” in the “Corporate Governance Report”.

[4] The election of Directors and Audit and Supervisory Board Members is conferred to General Shareholders Meetings following a resolution of the Board of Directors concerning the appropriate election of candidates deemed to be the most fitting for the role as selected based upon a general consideration of their abilities, knowledge, and work history, etc.

[5] Directors and Audit and Supervisory Board Members are elected in an appropriate manner in consideration of the work history, etc. written in the General Shareholders Meeting Reference Materials.

Principle 4-1Roles and responsibilities of the

Board

Supplementary principle

4-1-1

The Board of Directors is involved in decision making processes concerning matters stipulated in relevant laws and regulations and the articles of incorporation, matters put in their charge at a General Shareholders Meeting, and important matters related to the execution of business. A specific outline of such matters is established in the rules governing the Board of Directors. Further, the Board of Directors clearly defines the division of duties and job functions for each department based on internal regulations, clarifies the scope of authority for Directors and corporate officers, while also defining the division of roles of Directors and areas in which corporate officers are put in charge.

Principle 4-9Independence standards and qualification for Independent

Directors

The Company determines the level of independence of Outside Directors and Outside Audit and Supervisory Board Members based on the criteria for independence established by the Japan Exchange Group, Inc. in order to ensure that the opinions provided by Outside Directors and Outside Audit and Supervisory Board Members on matters raised are formed from on an independent standpoint, and are based on the high degree of experience and insight accumulated outside the Company.

Principle 4-11Preconditions for Board and Audit and Supervisory Board

effectiveness


4-11-1

The election of Directors is conferred to General Shareholders Meetings following a resolution of the Board of Directors concerning the appropriate election of candidates deemed to be the most fitting for the role as selected based upon a general consideration of their abilities, knowledge, and work history, etc. The number of Directors elected, and the division of Director roles, etc. is determined based on a general consideration of the level of progress of each project at the time based on a policy of establishing the most appropriate management structure for the execution of the Company’s business activities.


4-11-2

The status of Directors and Audit and Supervisory Board Members holding important concurrent positions is as described in business reports and General Shareholders Meeting Reference Materials. All concurrently held positions bear no hindrance on the Director or Audit and Supervisory Board Member’s ability to fulfill the roles and responsibilities of such a position for the Company.


4-11-3

The Board of Directors meets once or more a month to make legal and appropriate decisions upon fully discussing issues stipulated by the law - following conscientious briefings that are given to bring all concerned up to speed on the background to issues discussed, and the progress status for such. Further, the status of the execution of duties by Directors is monitored by having Directors report back on business functions under their charge when needed. JR Central receives valuable broad-view advice on management from Outside Directors, which is brought into consideration in regulating the management of the Company. Additionally, round-table conferences for opinion exchanges between Outside Directors, Outside Audit and Supervisory Board Members and members of management are set up ahead of meetings of the Board of Directors in order to further improve the effectiveness of the Board of Directors. Through the above-mentioned initiatives, we find at meetings of the Board of the Directors that the effectiveness of the entire Board of Directors to be ensured to a satisfactory degree.

Principle 4-14Director and Audit and

Supervisory training


4-14-2

All Directors and Audit and Supervisory Board Members of the Company have the sufficient ability and insight to fulfill their roles and responsibilities, and perform their duties with an appropriate sense of responsibility as entrusted by all shareholders while continuing to refine their skills and knowledge by actively participating in external training programs, etc. JR Central takes the appropriate measures to ensure that all Directors and Audit and Supervisory Board Members perform the duties required of them, such as in instances where relevant laws and regulations are revised, for example, by making the content of such revisions commonly known through meetings, etc., and by holding training events to share management issues faced by the Company so that the Company can make decisions concerning such issues in an appropriate manner.

Principle 5-1Policy for constructive dialogue

with shareholders

JR Central has established a “Policy for Promoting Constructive Dialog with Shareholders” as follows.•JR Central positions the General Shareholders Meeting as the most important opportunity for dialog with

shareholders and strives to improve the quality of questions and answers session in the meeting as a means of contributing to sustainable growth and enhancing corporate value over the mid- to long-term. All dialog with shareholders is overseen by the General Manager of the Administration Department, and questions, opinions and requests are fielded from shareholders and responded to in the form of an individual meeting or over the telephone, etc. where reasonable to do so.

•Of this, dialog with institutional investors is overseen by the Director General of the Corporate Planning Division, and the IR team is placed in the Business Administration Department, Corporate Planning Division in order to further improve shareholder dialog by organically coordinating with the Administration, Finance, and Legal Departments, etc. Dialog response is the purview of IR team, and a response is made together with members of management and Director, where reasonable, based on a general consideration of the requests and interests, etc. put forth by the institutional investor. Specifically, we strive to improve upon dialog measures by not only holding individual meetings, but also holding conference calls and facility tours, etc., where necessary, in addition to holding financial results briefings biannually.

•We also strive to enrich the broader provision of information to shareholders by sending reports on information presented at financial results briefings biannually, in addition to posting this information on our website. Moreover, we work to ensure that a sufficient degree of information concerning decisions made on important measures and important capital investments reaches as large a number of stakeholders as possible using the mass media services to deliver detailed information at press conferences held by the President, and by presenting such information to the press.

•The content of discussions with shareholders is reported to members of management and, if necessary, feedback is given to the Board of Directors.

•Under no circumstances is insider information communicated during discussions with shareholders. Furthermore, the 14 day period in the lead up to the day in which financial results are announced each quarter is designated as a “silent period” in which the Company refrains from discussing financial results.

JR Central has announced its stance on, and the initiatives it has put in place, in relation to the Corporate Governance Code (hereafter, “the Code”) found within “Corporate Governance Report”*. Of the principles set forth in the Code, those that are not implemented are principles that assume the formulation of mid-term management plans and the presentation of numerical targets (supplementary principle 4-1-2 and principle 5-2). The reason for this as provided in the report is as follows. “In the railway business, the core pillar of JR Central’s business, ensuring safety and reliability is an issue of utmost importance, and all aspects of our business, from our daily business operations, to employee training and capital investment, are implemented with the highest priority given to increasing the level of reliability of the services we provide and, as such, we do not implement a system of management whereby company-wide mid-term business plans are formulated and managerial targets are pursued in a manner that can neatly serve as a cross-sectional look at the state of the business at set moments. While JR Central does not formulate mid-term management

plans and establish numerical targets in this manner, the Company does promote its railway business from a long-term perspective. Specifically, in addition to the construction of the Chuo Shinkansen, which is now underway, other measures that require a long-term capital investment, such as large-scale renovation for the Tokaido Shinkansen, the implementation of earthquake countermeasures, and plans to upgrade rolling stock in service, are established with a long-term perspective in mind, and we are steadily proceeding forward these projects. Plans and results of other major measures are announced publicly as appropriate, and steady progress continues to be made in these areas. We will continue to announce annual income and expenditure plans, key measures, and capital investment plans each year in light of our immediate management environment, and will continue to steadily enhance our management foundation in order to firmly maintain a sound management outlook based on efficient operational management stemming from the securing of safety and reliability.” Further, matters disclosed based on each principle of the code are as follows.

Respond to the Corporate Governance Code

*“Corporate Governance Report” can be found on the Japan Exchange Group, Inc. website.

Disclosure based on Corporate Governance Code principles

ESG Information


JR Central resolved the Fundamental Corporate Governance Policies* in Board of Directors meetings.

Resolved Matter Approval (number of votes)

Disapproval (number of votes)

Abstention (number of votes)

Approval Rate(%) Result of Voting

Proposal 1 1,684,066 19,428 79 98.01 Adopted

Proposal 2

Yoshiyuki Kasai 1,674,324 27,844 1,959 97.41 Adopted

Yoshiomi Yamada 1,656,091 46,076 1,959 96.35 Adopted

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

Shin Kaneko 1,674,548 27,620 1,959 97.42 Adopted

Yutaka Osada 1,674,564 27,604 1,959 97.43 Adopted

Katsumi Miyazawa 1,675,380 26,788 1,959 97.47 Adopted

Yoshiki Suyama 1,676,536 25,631 1,959 97.54 Adopted

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

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

Kimiaki Tanaka 1,676,519 25,648 1,959 97.54 Adopted

Hideyuki Shoji 1,676,515 25,652 1,959 97.54 Adopted

Atsuhito Mori 1,673,542 28,625 1,959 97.37 Adopted

Torkel Patterson 1,676,383 25,784 1,959 97.53 Adopted

Fujio Cho 1,645,687 57,581 862 95.75 Adopted

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

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

http://english.jr-central.co.jp/company/company/about/governance.htmlURLThe following resolutions were passed at the 29th Ordinary General Meeting of Shareholders held June 23, 2016.

(1)Contents of the resolved matters:Proposal 1: Appropriation of retained earnings

(2)Number of votes, indicating approval, disapproval, and abstention regarding the resolved matters, requirements for the resolved matters to be adopted, and results of voting:

(3)Reason for not adding some of the votes of shareholders who attended the ordinary general meeting of shareholders to the final number of votes:

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

Proposal 2:Election of sixteen (16) Directors

Matters concerning year-end dividendsSixty five (65) yen per common share of the CompanyOther matters concerning the appropriation of retained earnings:•Line item relating to retained earnings showing an increase and the amount thereofGeneral reserve: 300,000,000,000 yen

•Line item relating to retained earnings showing a decrease and the amount thereofRetained earnings carried forward: 300,000,000,000 yen

(i)

(ii)

Yoshiyuki Kasai, Yoshiomi Yamada, Koei Tsuge, Shin Kaneko, Yutaka Osada, Katsumi Miyazawa, Yoshiki Suyama, Shun-ichi Kosuge, Mamoru Uno, Kimiaki Tanaka, Hideyuki Shoji, Atsuhito Mori, Torkel Patterson, Fujio Cho, Kenji Koroyasu and Takashi Saeki were elected as Directors.

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

JR Central not only stipulates internal regulations based on the law, etc. but also conducts employee education on various occasions with the aim of thoroughly complying with the law, etc. when executing work. In addition, we also have established a whistle-blowing system. We have whistle-blowing windows not only within the Company but

also in an external law firm in order to establish a system in which employees, etc. can report any violation of the law, etc. at work. We also post flyers describing the whistle-blowing system and contact information for the window in all workplaces with the aim of widely disseminating the system.

Compliance/Whistle-blowing system

JR Central has established the “Railway Safety Promotion Committees”, etc. at the head office, railway operation divisions, branch offices, and in each area from the perspective of preventing train and labor accidents and formulates and promotes safety countermeasures through an integrated organization that stretches from the head office to each field office. JR Central also manages a control center, which plays a key role in information communication, on call 24 hours a day at

each railway operation division to respond to emergencies, such as accidents and disasters, and has also established a fast-response restoration structure in which employees can be gathered anytime according to the scale or impact of an accident or disaster. Additionally, in preparation for emergencies such as large-scale natural disasters, we have established the second Shinkansen General Control Center that can substitute for the Shinkansen General Control Center for the Tokaido Shinkansen.

Risk-management system

In terms of internal control related to financial reporting, we periodically investigate the system/execution situation, etc. within JR Central and JR Central Group companies in accordance with a basic framework offered by the Business

Accounting Council in order to confirm that they are effectively functioning. JR Central also engages in efforts to maintain the level of internal control related to financial reporting by providing feedback from these investigations to duties.

Response to internal control related to financial reporting

Our policy on dividends has always been to decide the specific dividend amount in accordance with the management environment/performance in each FY based on the principle of continuously providing stable dividends. JR Central considers that shareholder returns through dividends are appropriate in principle, and we do not plan to purchase

additional treasury stock at this point. In addition, although we will promote projects, such as construction of the Chuo Shinkansen, etc., we plan to procure the fund through issuance of corporate bonds and borrowing at this point. We do not plan to utilize the treasury stock or increase the capital.

Concept of capital policy and shareholder return

*The Fundamental Corporate Governance Policies can be found at the URL below.

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

of all voting rights that can be exercised were required.

ESG Information


Secretarial Department

Corporate Planning Division

General Technology Division

Audit Department

Public Relations Department

Administration Department

Legal Affairs Department

Supervision Department

Transportation and Marketing Department

Rolling Stock Department

Engineering Department

Shizuoka Branch Office

Mie Regional Office

Iida Regional Office

Personnel Department

Finance Department

Property Management Department

Marketing Division

Business Promotion Division

Construction Department

Transportation Safety Department

Overseas Offices: Washington D.C., London, Sydney

General Education Center

Nagoya Central Hospital

Health Care Center

SCMAGLEV and Railway Park

Administration Management Center

Conventional LinesOperations Division

Planning Department

Supervision Department

Transportation and Marketing Department

Rolling Stock Department

Tracks and Structures Department

Electrical Engineering Department

Kansai Branch Office

ShinkansenOperations Division

Chuo Shinkansen Promotion Division

Chairman

Board of Directors

President

Audit and Supervisory Board Members

Audit and Supervisory Board

Senior Corporate Executive Officers

Noriyuki Shirakuni (Ph.D.)

Yoshito Tsubouchi

Yoshiki Suyama

Shun-ichi Kosuge

Mamoru Uno (Ph.D.)

Sumio AtsuchiKimiaki TanakaHideyuki Shoji

Corporate Executive Officers

Tokuji Matsuno

Takanori MizunoMotoaki Terai

Corpotrate Officers

Takao Yamaguchi

Toshio Otake (Ph.D.)

Mamoru Tanaka

Shin Iwata

Akihiko ItoRyo Ejiri (Ph.D.)

Atsuhito MoriEiji Sugizaki

Hajime Ikuta

Atsushi Honda (Ph.D.)

Yutaka Hatano

Shunsuke Niwa Tatsuhiko YamadaHiroto Takeuchi (Ph.D.)

Tomohisa FuruhashiNobuhiro HayakawaMasayuki Ueno

Hiroshi SuzukiTakayuki Oyama

Director General of the Maglev Systems Development Division of the Chuo Shinkansen Promotion Division and in charge of controlling the Rolling Stock Section

General Manager of the Construction Department and General Manager of the Nagoya Construction Subdivision of the Chuo Shinkansen Construction Department of the Chuo Shinkansen Promotion Division

Deputy Director General of the Maglev Systems Development Division of the Chuo Shinkansen Promotion Division

Deputy Director General of the Corporate Planning Division and General Manager of the Information Systems Department of the Corporate Planning Division

Deputy Director General of the Chuo Shinkansen Promotion Division and General Manager of the Chuo Shinkansen Construction Department of the Chuo Shinkansen Promotion Division

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 Tokyo Project Development Department of the Corporate Planning Division

Deputy Director General of the Corporate Planning Division and General Manager of the Investment Planning Department of the Corporate Planning Division

Deputy Director General of the Chuo Shinkansen Promotion Division and General Manager of the Planning and Promotion Department of the Chuo Shinkansen Promotion Division

Deputy Director General of the Maglev Systems Development Division of the Chuo Shinkansen Promotion Division and General Manager of Yamanashi Maglev Center of the Maglev Systems Development Division of the Chuo Shinkansen Promotion Division

Director General of the General Technology Division and in charge of the Overseas High Speed Railway Project and in charge of controlling the Tracks and Structures Section

Director General of the Chuo Shinkansen Promotion Division and in charge of controlling the Construction Section

Director General of the Marketing Division

Director General of the Business Promotion Division

Director General of the Shinkansen Operations Division

Deputy Director General of the General Technology Division and General Manager of the Technology Research and Development Department of the General Technology Division

Deputy Director General of the General Technology Division and General Manager of the Technology Planning Department of the General Technology Division

General Manager of the Administration Department

General Manager of the Public Relations Department

General Manager of the Transportation Safety Department

Director General of the Shizuoka Branch Office

General Manager of the Property Management Department

General Manager of the Finance Department

General Manager of the General Education Center

Director General of the Kansai Branch Office

Director General of the Conventional Lines Operations Division

Deputy General Manager of the Construction Department

Deputy Director General of the Shinkansen Operations Division and General Manager of the Rolling Stock Department of the Shinkansen Operations Division

Director General of the Corporate Planning Division and in charge of the Finance Department

Deputy Director General of the Chuo Shinkansen Promotion Division

In charge of the Secretarial Department, the Audit Department, the Public Relations Department, the Administration Department, the Legal Affairs Department, the Personnel Department, and the Property Management Department

Chairman Emeritus and Representative Director

Yoshiyuki Kasai

Chairman and Representative Director

Yoshiomi Yamada


Koei Tsuge

Executive Vice President and Representative Director

Shin Kaneko

Yutaka Osada

Katsumi Miyazawa

Directors

Yoshiki SuyamaShun-ichi KosugeMamoru Uno (Ph.D.)

Kimiaki TanakaHideyuki ShojiAtsuhito MoriTorkel PattersonFujio Cho (Outside)

Kenji Koroyasu (Outside)

Takashi Saeki (Outside)

Full-time Audit and Supervisory Board Members

Hidenori FujiiHiromu EmiHajime Ishizu (Outside)

Hiroyuki Ota (Outside)

Audit and Supervisory Board Member

Shigeo Kifuji (Outside)

In charge of the Administrative Departments and in charge of the Chuo Shinkansen Promotion Division

In charge of the Shinkansen and Conventional Lines Operations Division and in charge of Transportation Safety Section and in charge of controlling the Electrical Engineering Section

In charge of the Technology Section and in charge of controlling the Transportation Section

Board of Directors and Audit and Supervisory Board Members Corporate Officers


Shin Kaneko


Yutaka Osada


Katsumi Miyazawa

Chairman Emeritus and Representative Director

Yoshiyuki Kasai

Chairman and Representative Director

Yoshiomi Yamada


Koei Tsuge

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

Profile

Organization Chart

Name

Central Japan Railway Company (JR Central)

Established

April 1, 1987

Business activities

Railways business, Affiliated businesses

Key data

(As of the end of March 2016)

Capital 112 billion yen

Operating Revenues 1,357.9 billion yen

Number of Shares Outstanding 206,000,000

Share Listings Nagoya/Tokyo Stock Exchange

Number of Shareholders 95,042

Number of Employees 18,164

Operating Kilometers 1,970.8 km

Number of Stations 405

Number of Rolling Stock 4,836

Double-and Multi-Tracked Section 55.1% (1,086.8km)

Electrified Section 76.7% (1,511.0km)

CTC System Adoption Rate 97.5% (1,922.3km)

Automatic Signaling System 97.8% (1,927.3km)

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

Head Office Meieki 1-1-4, Nakamura-ku, Nagoya-shi, Aichi 450-6101, JapanJR Central Towers

Head Office (Tokyo) JR Central Shinagawa Building -A Wing 2-1-85, Konan, Minato-ku, Tokyo 108-8204, Japan

Conventional Lines Operations Division

JR Central Taiko Building, Meieki 1-3-4, Nakamura-ku, Nagoya-shi, Aichi 453-8520, Japan

Shizuoka Branch Office 4, Kurogane-cho, Aoi-ku, Shizuoka-shi, Shizuoka 420-0851, Japan

Mie Regional OfficeUst-Tsu 12F, 700, Hadokoro-cho, Tsu-shi, Mie 514-0009, Japan

Iida Regional Office5356, Kami-Iida, Iida-shi, Nagano 395-0000, Japan

Shinkansen Operations Division

Marunouchi Chuo Building, 1-9-1, Marunouchi, Chiyoda-ku, Tokyo 100-0005, Japan

Kansai Branch Office Shin-Osaka Hankyu Building 10F, 1-1-1, Miyahara, Yodogawa-ku, Osaka-shi, Osaka 532-0003, Japan

Washington D.C. Office 900 17th Street, N.W., Suite 520, Washington, DC 20006, U.S.A.

London Office6th Floor, 4 Eastcheap, EC3M 1AE, London, U.K.

Sydney Office Suite 5.01A, Level5, 20 Hunter Street, Sydney, NSW 2000, Australia

Corporate Data

ESG Information & Corporate Data


Sangu Line

Tokaido Line

Tokaido Shinkansen

Inotani

Shiojiri

Tatsuno

KofuTokyo

Shinagawa

Shin-Yokohama

Kozu

AtamiNumazu

Fuji

Shizuoka

Toyohashi

Obu

Nagoya

Tajimi

Mino-Ota

Gifu

Mino-Akasaka

OgakiMaibara

Kyoto

Shin-Osaka

Ise-Okitsu

Kameyama

Matsusaka

Toba

Shingu

Taki

Taketoyo

Meisho Line

Gotemba Line

Kansai Line

Kisei Line

Chuo Line

Takayama Line

Minobu LineIida Line

Taita Line

Taketoyo Line

Operating Kilometers by line

Tokaido Shinkansen

Tokaido Line

Gotemba Line

Minobu Line

Iida Line

Taketoyo Line

Takayama Line

Chuo Line

Taita Line

Kansai Line

Kisei Line

Meisho Line

Sangu Line

Conventional Line Total

Total

552.6km

360.1km

60.2km

88.4km

195.7km

19.3km

189.2km

174.8km

17.8km

59.9km

180.2km

43.5km

29.1km

1,418.2km

1,970.8km

Conventional Lines

JR Central Shinkansen Conventional Lines

0 500km

Area of Japan: Approx. 380,000 km2

Population: 128 million (As of January 1, 2015)

Kyoto Nagoya Tokyo

Shin-OsakaShizuoka

JR Central

Operating Areas History

JR Central operates the Tokaido Shinkansen, the main transportation artery linking Tokyo, Nagoya, and Osaka, and a network of 12 conventional lines centered on the Nagoya and Shizuoka City areas.

1987 April • Central Japan Railway Company (JR Central) is established.

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). In April of the same year, automobile transport business is transferred to the company.

1989 March • A new model diesel railcar is introduced to the “Hida” Express on the Takayama Line.

1990 February • JR Central starts topographical and geological surveys along the Chuo Shinkansen following orders of the Minister of Transport.

June • JR Central applies to the Minister of Transport for the approval of plans to build the Yamanashi Maglev Line and gains approval.

1991 October • JR Central takes over the Tokaido Shinkansen facilities.

1992 March • The first “Nozomi” begins commercial service on the Tokaido Shinkansen using Series 300 rolling stock.

July • JR Tokai Hotels Co., Ltd. is established (now a consolidated subsidiary).

December • JR Central Department Store Co., Ltd. is established. Company name changed to JR Tokai Takashimaya Co., Ltd. in September 1997 (now a consolidated subsidiary).

1994 June • JR CENTRAL BUILDING CO., LTD. is established (now a consolidated subsidiary).

1997 April • Running operation starts on the Yamanashi Maglev Line.

October • JR Central lists on the first section of the Nagoya, Tokyo and Osaka stock exchanges (integrated with the Tokyo Stock Exchange in July 2013) and also on the Kyoto Stock Exchange (merged with the Osaka Stock Exchange in March 2001).

1999 March • Series 700 rolling stock is introduced to “Nozomi” on the Tokaido Shinkansen.

December • Construction of JR Central Towers is completed.

2000 March • JR Nagoya Takashimaya opens (operated by JR Tokai Takashimaya Co., Ltd.).

May • Nagoya Marriott Associa Hotel opens (operated by JR Tokai Hotels Co., Ltd.).

2001 March • JR Tokai Real Estate Co., Ltd. is established (now a consolidated subsidiary).December • JR Central is excluded from the jurisdiction of the JR Law through the enactment of

amendment to the JR Law.

2002 July • A new research center is constructed in Komaki City in Aichi Prefecture.

2003 October • Shinagawa Station on the Tokaido Shinkansen opens. The timetable is drastically revised by the increase of the maximum speed on all Tokaido Shinkansen trains to 270km/h.

2005 July • The Japan National Railways (JNR) Settlement Headquarters, an independent division within the Japan Railway Construction, Transport and Technology Agency (JRTT), sells 600,000 shares of JR Central.

2006 March • New Automatic Train Control (ATC) system is introduced into the Tokaido Shinkansen.

April • JR Central repurchases 268,686 shares of its treasury stock based on the decision made by the Board of Directors authorized by the articles of incorporation.

• 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.

2007 January • Application for changes of “Yamanashi Maglev Line Construction Plan” is approved by the Minister of Land, Infrastructure and Transport.

July • JR Central introduces the new Series N700 rolling stock for the Tokaido Shinkansen “Nozomi” services.

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

(the “Minister”) concerning topographical and geological surveys of the Chuo Shinkansen in response to the order received in 1990.

December • JR Central starts conducting the remaining four surveys under Article 5 of the Nationwide Shinkansen Railway Development Act (hereinafter referred to as "the Act") related to the Chuo Shinkansen in response to the order by the Minister.

2009 May • JR Central cancels 90,000 shares of treasury stock.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.

2011 May • The Minister designates JR Central as the operator and constructor of the Chuo Shinkansen between Tokyo and Osaka City.

• The Minister approves the development plan and instructs JR Central to construct the Chuo Shinkansen.

2012 May • JR Central cancels 90,000 shares of treasury stock.

2013 February • JR Central introduces the new Series N700A rolling stock for the Tokaido Shinkansen “Nozomi” services.

August • Extension of the Yamanashi Maglev Line to 42.8km and upgrading of facilities are completed, and the running operation is restarted.

2014 October • The Minister approves the Construction Implementation Plan (Part 1) between Shinagawa and Nagoya along the Chuo Shinkansen.

2015 March • The Taketoyo Line (between Obu and Taketoyo stations) is electrified.• Increase of the maximum speed of the Tokaido Shinkansen to 285km/h.

April 1, 1987 Establishment of JR Central

October 8, 1997 Shares are listed

December 20, 1999 Construction of JR Central Towers is completed

October 1, 2003 Shinagawa Station on the Tokaido Shinkansen is opened

August 29, 2013 Opening ceremony of Yamanashi Maglev Line

March, 2015 Increase of the maximum speed to 285km/h

Corporate Data

Corporate Data


Segment-by-Segment Performance for FY2015 JR Central Group have prioritized safe and reliable transportation in our core railway business, and enhanced our services in the same time. And we have continually endeavored to improve the competency of our employees, to enhance facilities, to increase efficiency and to reduce costs throughout our business, including capital investments, in an effort to enhance profitability. As a result, the overall railway performance for the term (passenger-kilometers) rose favorably in terms of both business and tourism use, increasing by 3.8% YoY to 61.467 billion passenger-kilometers. The operating revenue also increased by 4.0% YoY to 1,738.4 billion yen, ordinary income increased by 19.5% YoY to 511.4 billion yen, and net income attributable to owners of the parent increased by 27.8% YoY to 337.4 billion yen. Long-term debt was reduced by 205.4 billion yen. The balance as of the end of the term is 1,945.0 billion yen. The year-end dividend was set at 65 yen, an increase of 5 yen to the expected dividend per share announced in January 2016 due to increases in passenger volume for business and travel. As a result, the annual per share dividend was set at 125 yen. Business performance in each segment was as follows.

1) Transportation We steadily proceeded large-scale renovation to maintain and improve the soundness of civil engineering structures along the Tokaido Shinkansen in constant pursuit of cost reduction. In terms of earthquake countermeasures, in addition to implementing countermeasures to derailment/deviation, we completed anti-quake reinforcement to the Oi Repair and Inspection Depot in March 2016 as part of anti-quake measures implemented for train depot structures, and have also moved ahead with the renovation of the Hamamatsu Workshop, which conducts the Shinkansen rolling stock general overhauls, in an effort to improve earthquake resistance. Furthermore, in addition to established a maximum travel speed of 285km/h beginning in March 2015, we utilized the “10 Nozomi Timetable” to flexibly schedule trains to meet demands by operating as many transport services as possible during busy seasons, such as summer and New Year seasons, etc. On January 3, 2016, we had approximately 468,000 customers (between Odawara and Shizuoka for “Nozomi” and “Hikari”, and between Shin-Yokohama and Odawara for “Kodama”), which was the highest number ever. We have also continuing to introduce N700A, the latest model rolling stock, and finished upgrading Series N700 to mirror N700A's functions (by equipping trains with Wheel Mounted Brake Disk and the Cruise Control System, etc.) in August 2015. In addition, we are continuing the replacement to new automatic ticketing gates, and have worked to enhance passenger service and ensure safe and reliable transportation, including installing new movable platform fences at Nozomi stop-stations frequently used by large volumes of passengers, with installations complete on all platforms at Nagoya Station and Kyoto Station. In terms of conventional lines, we have continued proceeding earthquake countermeasures, such as anti-earthquake constructions in the Nagoya Workshop, which conducts general overhauls for conventional line rolling stock, etc., in addition to anti-quake reinforcement for elevated track columns, etc. We have also systematically promoted measures against rainfall, falling rocks, and the improvement of safety devices on grade crossings. Furthermore, in addition to establishing a highly convenient transportation system with the electrification of the Taketoyo

Line in March 2015, we completed the introduction of the newly developed Series Ki-Ha 25 diesel railcars to the Kisei Line and the Sangu Line. We completed the restoration construction of the Meisho Line (between Ieki Station and Ise-Okitsu Station) - for which a substitute bus shuttle service was provided due to typhoon damage in October 2009 - in line with progress made on soil/water projects by Mie Prefecture and Tsu City. We restarted operation of the entire line on March 26, 2016. Additionally, we further ensured safety and reliability and improved our transportation service by implementing practical training in anticipation of earthquakes and other natural disasters, etc. In terms of sales and marketing, we worked to stimulate demand by expanding our travel product range, introducing the “IC Hayatoku Type 21” and “Isshoni Kodama Hayatoku” products in FY2015, in addition to the “EX Family Hayatoku”, targeting Express Reservation and PLUS EX members. We also strove to increase the use of our products among passengers in their 50s or above in the “50+” travel club by introducing affordable packages only available to online members, in addition to our regular product lineup. Furthermore, we have aimed to expand the number of passengers by promoting various campaigns making use of tourist resources in Kyoto, Nara, and Tokyo, etc., enhancing travel products in connection with these campaigns, and implementing events and sales promotions based around “Shupo” and the “400th Anniversary of the Death of Tokugawa Ieyasu”. We have also promoted proactive sales and marketing by deploying excursion packages using the Tokaido Shinkansen, Takayama Line, and Hokuriku Line by using the Kanazawa inauguration of the Hokuriku Shinkansen as an opportunity. We also worked to expand the network of store accepting electronic money with TOICA. Due to the successive use of the railway for business and tourism, performance for the Tokaido Shinkansen increased by 4.1% YoY to 52.166 billion passenger-kilometers for FY2015. For conventional line, it increased by 2.6% YoY to 9.302 billion passenger-kilometers. In our bus business, we have worked to create products tailored to customers' needs and ensure profitability with safety as the first priority. As a result of the aforementioned, operating revenues for the term increased by 4.0% YoY to 1,358.1 billion yen, and operating income increased by 18.0% YoY to 556.8 billion yen.

2) Merchandise and Other In our merchandise and other businesses, we have worked to bolster earning power through JR Nagoya Takashimaya through renovation of sales spaces, an attractive product lineup, and services suited to customer needs. We also worked to increase revenue by reviewing our lunch box lineup on sale inside Tokaido Shinkansen trains and at major stations. As a result of the aforementioned, operating revenues for the term increased by 2.5% YoY to 239.6 billion yen, and operating income reduced by 2.1% YoY to 8.7 billion yen.

3) Real Estate In terms of real estate, we steadily moved forward with the construction of the “JR Gate Tower” Project in Nagoya Station, with plans for office tenants to move in from November 2016, and proceeded with the formulation of management plans and PR and promotional activities for the grand opening in April 2017 of commercial facilities such as the “Takashimaya Gate

Tower Mall,” “Nagoya JR Gate Tower Hotel”. Further, in terms of station commercial facilities, we implemented initiatives aimed at enhancing our competitive strength and earning power by renovating “ASTY Shizuoka”, “ASTY Kyoto” and “MAY ONE” in Hamamatsu Station, alongside expanding the “Nagoya Umaimon-dori” restaurant zone in Nagoya Station. Additionally, we started the sale of apartments in “Central Garden Residence Okazaki”, a condominium apartment building developed on a site used for company housing in Okazaki City, Aichi. As a result of the aforementioned, operating revenues for the term reduced by 0.7% YoY to 66.0 billion yen, and operating income reduced by 5.9% YoY to 15.6 billion yen.

4) Other With our hotel business, we have worked on creating attractive products and on enhancing our sales capabilities. We have also worked to offer higher quality services to respond to the increasing number of foreign customers. Further, we have actively pursued sales activities in the lead up to the opening of the “Nagoya JR Gate Tower Hotel” in April 2017. With our travel business, we have proactively marketed attractive travel products in collaboration with travel campaigns for locations such as Kyoto/Nara and Tokyo, and have promoted sales of products only available to “50+” online members. In our rolling stock manufacturing business, we have endeavored to increase orders for the manufacture of rolling stock, construction machinery, and other items. As a result of the aforementioned, operating revenues for the term increased by 1.7% YoY to 243.0 billion yen, and operating loss was 1.7 billion yen.

Efforts for FY2016 We will continue to ensure that our railway business provides safe and reliable transportation as the top priority for FY2016. Moreover, we will steadily promote earthquake countermeasures, implement large-scale renovation of the civil engineering structures, and also begin introducing the new type of N700A rolling stock (3rd edition) that has been upgraded with the latest technology. Our Chuo Shinkansen Project, which uses the Superconducting Maglev Technology, will steadily move ahead with large-scale construction, while giving serious consideration to safety, the environment, and coordination with towns and cities along the planned route. Meanwhile, we will make preparations ahead of the planned summer 2017 roll out of the new Shinkansen online reservation and ticketless boarding service, and steadily move forward overseas projects that utilize the high-speed rail and Superconducting Maglev system. We will also make thorough preparations ahead of the opening of the “JR Gate Tower”. At the same time, we will make every effort to reduce costs and increase efficiency across all operations including capital investment and will strive to improve our business strength.

(Billion yen)

0

15

30

45

60

’12.3

62.7

’13.3

64.9

’14.3

67.4

’15.3

66.5

’16.3

66.0

3) Real Estate

(Billion yen)

0

50

100

150

200

250

’12.3

225.8

’14.3

250.6

’15.3

238.9

’16.3

243.0

’13.3

233.1

4) Other

(Billion yen)

0

300

600

900

1,200

’12.3

1,182.6

’13.3

1,243.0

’14.3

1,276.1

’15.3

1,305.6

’16.3

1,358.1

1) Transportation

(Billion yen)

0

50

100

150

200

’12.3

205.2

’13.3

209.5

’14.3

220.7

’15.3

233.8

’16.3

239.6

2) Merchandise and Other

Note:Operating revenues by segment include sales to other segments in addition to sales to external customers

Performance forecast for FY2016 (consolidated)

(Billion yen) YoY

Operating Revenues 17,360 99.9%

Operating Income 5,770 99.7%

Ordinary income 5,200 101.7%

Net income attributable to owners of the parent 3,630 107.6%

Note: As of the release of the financial report for FY2015

Summary of Performance

Shifts in Operating Revenues

Corporate Data

Corporate Data


FY2011 FY2012 FY2013 FY2014 FY2015(Billion yen) (Billion yen) (Billion yen) (Billion yen) (Billion yen)

Operating Revenues ¥1,508.3 ¥1,585.3 ¥1,652.5 ¥1,672.2 ¥1,738.4Operating expenses 1,135.8 1,159.1 1,157.9 1,165.6 1,159.7Operating income 372.5 426.1 494.6 506.5 578.6Income before income taxes 263.8 326.1 402.7 428.1 508.1Net income attributable to owners of the parent*1 132.7 199.9 255.6 264.1 337.4Depreciation and amortization 257.0 240.1 276.2 271.5 242.3Capital expenditure*2 290.6 281.1 200.1 214.5 238.3Total assets 5,214.0 5,231.1 5,178.1 5,217.9 5,268.5Total equity 1,363.2 1,557.9 1,802.2 2,063.9 2,352.5Equity 1,321.6 1,513.3 1,753.7 2,020.1 2,316.3Equity Ratio 25.3% 28.9% 33.9% 38.7% 44.0%

Operating income/Total assets 7.1% 8.2% 9.5% 9.7% 11.0%

Return on Equity 10.5% 14.1% 15.7% 14.0% 15.6%(Yen) (Yen) (Yen) (Yen) (Yen)

Net income per share*3 ¥67,470.45 ¥1,016.12 ¥1,299.23 ¥1,342.15 ¥1,714.64Annual dividends per share*3 9,500.00 105.00 115.00 120.00 125.00

*1: Net income attributable to owners of the parent in or before FY2014 indicates net income in each FY.*2: Increase in tangible fixed assets and intangible fixed assets*3: On October 1, 2012, the Company implemented a 100-for-1 stock split and employed a share unit system by which one share unit equals 100 shares. Along with this, net income per share and annual dividends per

share were calculated based on the assumption that the said stock split was made in the beginning of FY2012.

FY2011 FY2012 FY2013 FY2014 FY2015(Billion yen) (Billion yen) (Billion yen) (Billion yen) (Billion yen)

Operating Revenues ¥1,184.5 ¥1,245.0 ¥1,277.2 ¥1,306.6 ¥1,357.9 Railways Business 1,175.6 1,235.9 1,268.5 1,297.8 1,349.7 Affiliated Businesses 8.9 9.0 8.6 8.7 8.2Operating expenses 839.0 845.9 816.3 831.1 800.3 Railways Business 833.2 840.1 808.9 826.5 794.1 Affiliated Businesses 5.7 5.7 7.4 4.6 6.1Operating income 345.5 399.1 460.8 475.4 557.6Income before income taxes 239.7 301.8 370.4 397.8 491.7Net income 120.8 187.8 240.3 260.2 328.6Depreciation and amortization 241.4 223.7 260.3 255.8 227.0Total capital investments 298.4 301.6 229.0 257.2 259.1Total assets 5,033.5 5,042.9 4,986.0 5,013.4 5,059.4Total equity 1,258.2 1,436.3 1,661.3 1,931.0 2,219.9Equity 1,258.2 1,436.3 1,661.3 1,931.0 2,219.9Equity Ratio 25.0% 28.5% 33.3% 38.5% 43.9%

Operating income/Total assets 6.8% 7.9% 9.2% 9.5% 11.1%

Return on Equity 10.0% 13.9% 15.5% 14.5% 15.8%(Yen) (Yen) (Yen) (Yen) (Yen)

Net income per share* ¥61,328.43 ¥953.32 ¥1,220.16 ¥1,321.21 ¥1,668.31Annual dividends per share* 9,500.00 105.00 115.00 120.00 125.00

* On October 1, 2012, the Company implemented a 100-for-1 stock split and employed a share unit system by which one share unit equals 100 shares. Along with this, net income per share and annual dividends per share were calculated based on the assumption that the said stock split was made in the beginning of FY2012.

Segment Company Name Capital(Million yen)

Capital Ratio(%) Main Business

Transportation

JR Tokai Bus Company 1,747 100.0 Bus services

JR TOKAI LOGISTICS COMPANY 300 90.0 Logistics business

Tokai Transport Service Company 295 100.0 Railway business, entrusted business

Merchandiseand

Other

JR Tokai Takashimaya Co., Ltd 10,000 59.2 Department store operations

JR-CENTRAL PASSENGERS Co., Ltd. 998 100.0 Wholesale and retail sales, food and beverage service

Tokai Kiosk Company 700 100.0 Wholesale and retail sales

Tokai Food Service co., Ltd, 295 51.6 Food and beverage service

JR Tokai Corporation 100 70.0 Wholesale and retail sales

Real Estate

JR CENTRAL BUILDING CO., LTD. 45,000 100.0 Real estate leasing

JR Tokai Real Estate Co., Ltd. 16,500 100.0 Real estate leasing and sales

Shin-Yokohama Station Development Co., Ltd. 9,304 100.0 Real estate leasing

Toyohashi Station Building Co., Ltd. 1,880 52.5 Real estate leasing

Tokyo Station Development Co., Ltd. 1,750 100.0 Real estate leasing

Shizuoka Terminal Development Company Limited 624 67.0 Real estate leasing

HAMAMATSU TERMINAL DEVELOPMENT CO., Ltd. 600 76.8 Real estate leasing

Nagoya Station Area Development Corporation 480 100.0 Real estate leasing

JR DEVELOPMENT AND MANAGEMENT CORPORATION OF SHIZUOKA 363 100.0 Real estate leasing

JR Development and Management Corporation of Kansai 30 100.0 Real estate leasing

Other

JR Tokai Hotels Co., Ltd. 14.000 100.0 Hotel business

JR Tokai Tours 490 70.0 Travel agency services

JR TOKAI AGENCY CO., LTD. 61 90.0 Advertising

NIPPON SHARYO, LTD. 11,810 51.2 Manufacturing of railway rolling stock

JR TOKAI CONSTRUCTION Co., Ltd. 300 100.0 Construction

CHUOH LINEN SUPPLY Co., Ltd. 150 87.6 Linen supply services

JR TOKAI Information Systems Company 100 100.0 Development, improvement and maintenance of systems

The Japan Mechanised Works and Maintenance of Way Co., LTD 100 92.1 Track maintenance and inspection

JR Tokai Financial Management Co., Ltd. 80 100.0 Contracted accounting operations and financial business

Tokai Rolling Stock & Machinery Co., Ltd. 80 88.4 Rolling stock and machinery inspections and repair

JR Central Consultants Company 50 100.0 Construction consulting business

7km

15km

Shinjuku

Shibuya

Tokaido ShinkansenShinagawa

Tokyo International

Airport

Shin-Yokohama

Tokyo

Area in which the access will be improved

Financial Highlights Other Related Materials

Corporate Data

Consolidated • List of consolidated subsidiaries (Table 1) • Improvement in the access time due to the inauguration of Shinagawa Station (Column 2)

• Overcoming the “1st year Elementary School Wall” - Support for employees intending to balance child rearing and work (Column 3)

• Learning safety from accidents (Column 1)

Non-consolidated

With the inauguration of the Tokaido Shinkansen in 1964, the time required traveling between Tokyo and Osaka was shortened to 3 hours and 10 minutes from 6 hours and 30 minutes (originally 4 hours). Furthermore, with the introduction of the “Nozomi” in 1992, that time was shortened to 2 hours and 30 minutes. In October 2003, the investment in rolling stock and ground facilities that we had continuously engaged in for approximately 15 years culminated with the upgrading of the maximum speed of all trains to 270km/h and the drastic timetable revision that resulted in a maximum of seven “Nozomi” services operated each hour. We also simultaneously opened the Shinagawa Station with the drastic timetable revision, thereby shortening the total travel time of passengers traveling from or to southwest Tokyo by 20 to 30 minutes.

Difficulties balancing child rearing and work that arise temporarily when a child enters elementary school are referred to generally as the “1st year elementary school wall”. Even at JR Central there are a number of employees who resign due to environmental changes brought on by their child entering elementary school, such as a shortening of the time the child can be kept at child care facilities, and the end of company-based child care support systems. In response JR Central now makes child care leave available until the employee’s child reaches three years of age, and has established a new “Child Care Leave (Elementary School)” system whereby parents can take a leave of absence of up to six months from April 1 of the year their child enters elementary school as a means of adapting to this change. With these systems in place, JR Central supports employees intending to balance child rearing and work in overcoming this temporary hardship, and to continue working with the Company on a full-time basis.

“Learning Safety from Accidents” is a booklet that has been published seven times since FY2007 that introduces, in illustrations, past accidents and disasters in an easy to understand format. The booklet is distributed to the General Education Center and field offices for use in training and workplace OJT. This booklet is prepared based on a theme of how past events have been used as lessons, and serves as an educational tool used to aid readers in gaining an accurate understanding why the current rules and equipment are established in the manner they are.

Note 1: Two affiliated companies, SHINSEI TECHNOS CO., LTD. and RAILWAY INFORMATION SYSTEMS CO., LTD., are accounted for by the equity method.

Corporate Data


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

1) Overview of FY2015In FY2015, amid the continuing satisfactory level of

railway use, JR Central strived to enhance services placing

the top priority on ensuring safe and reliable transportation

in the railway business, which is the core of our operations.

In our railway business, in terms of the Tokaido

Shinkansen, we have steadily proceeded with a large-

scale renovation and earthquake countermeasures, such

as countermeasures to derailment and deviation. Also,

we utilized the “10 Nozomi Timetable” to schedule trains

flexibly. Furthermore, we have worked to enhance passenger

service and ensure safe and reliable transportation by

introducing the N700A, and by upgrading rolling stock of

the series N700 in October 2015.

In terms of the conventional lines, we have

systematically promoted earthquake countermeasures, such

as anti-earthquake reinforcement for elevated columns,

etc., measures against rainfall and falling rocks, and

improvement of safety devices on grade crossings. Also,

we completed the introduction of the newly developed

Series Ki-Ha 25 diesel railcars to the Kisei Line and the

Sangu Line.

In terms of sales and marketing, we have promoted

proactive initiatives, such as measures to expand the number

of members and usage of “Express Reservation”, etc.

In non-railway business, we have strived to strengthen

existing businesses, and steadily moved forward with the

“JR Gate Tower” Project at Nagoya Station.

Our commitment to the aforementioned series of measures

led to continuing favorable railway transportation volume

for both business and tourism. Therefore, transportation

revenues for JR Central increased. Overall consolidated

operating revenues also increased due to an increase in

sales in the merchandise and other segment centering on JR

Tokai Takashimaya Co., Ltd., and NIPPON SHARYO, LTD.

On the other hand, operating expenses slightly decreased

despite an increase in expenses of the group companies,

including NIPPON SHARYO, LTD., due to, among others,

a decrease in depreciation and amortization associated

with the Yamanashi Maglev Line. Moreover, non-operating

income/loss improved due to a decrease in interest expenses

as well as a decrease in losses from early redemption of

bonds.

As a result, both revenue and income increased for

FY2015 with operating revenue ending at 1,738.4 billion

yen, operating income at 578.6 billion yen, and net income

attributable to owners of the parent at 337.4 billion yen.

2) Operating Performancea) Operating Revenue

Operating revenue increased by 66.1billion yen (4.0%)

YoY to 1,738.4 billion yen.

In terms of our transportation business, JR Central’s

transportation revenues increased by 51.4billion yen

(4.1%) YoY to 1,294.7 billion yen. Passenger volume

on the Tokaido Shinkansen rose 4.1% YoY, pushing up

transportation revenues 4.2% YoY to 1,192.0 billion yen.

Passenger volume on conventional lines increased by 2.6%

YoY with transportation revenues increasing 2.9% YoY to

102.6 billion yen.

In our non-transportation businesses, operating revenues

for the merchandise and other segment and other segment

increased respectively by 2.5% YoY, and real estate segment

decreased by 0.7%.

b) Operating Expenses

Operating expenses slightly decreased by 5.9 billion

yen (0.5%) YoY to end at 1,159.7 billion yen despite an

increase in expenses of the group companies, including

NIPPON SHARYO, LTD due to, among others, a decrease in

depreciation and amortization associated with the Yamanashi

Maglev Line.

c) Operating Income

Operating income increased by 72.0 billion yen (14.2%)

YoY to 578.6billion yen.

d) Non-Operating Income/Loss

Non-operating income/loss improved 11.2 billion yen over

the FY2014 due to a decrease in interest expenses as well as

in losses from the early redemption of bonds.

e) Net Income Attributable to Owners of the Parent

As a result, net income attributable to owners of the

parent increased by 73.3 billion yen (27.8%) YoY to

337.4 billion yen.

3) Cash FlowCash and cash equivalents (hereinafter, “capital”) as of

the end of FY2015 increased by 188.3 billion yen YoY to

318.3 billion yen.

Capital gained from operating activities increased

by 30.6 billion yen YoY to 601.4 billion yen due to

continuing favorable railway transportation volume for

both business and tourism and an increase in JR Central’s

transportation revenues.

Capital expended through investing activities decreased

by 93.6 billion yen YoY to 170.3 billion yen due to a

decrease in expenses for fund management.

Capital expended through financing activities

decreased by 9.4 billion yen YoY to 242.8 billion yen

due to a decrease in payments for long-term debt and

payables.

4) Long-Term Debt and PayablesDuring FY2015, we decreased long-term debt and

payables by 205.4 billion yen on a consolidated basis,

and 220.6 billion yen on a non-consolidated basis. Long-

term debt and payables at the end of FY2015 were 1,945.0

billion yen on a consolidated basis and 1,915.6 billion

yen on a nonconsolidated basis.

When JR Central purchased the Tokaido Shinkansen

facilities in October 1991, we were burdened with total

long-term debt and payables of more than five times our

annual transportation revenues, including the liabilities

inherited from Japanese National Railways at the time

of its break-up and privatization. We regarded reducing

long-term debt and payables as our most important

financial task, and we have endeavored to trim debt and

payables as rapidly as possible. Consequently, the 5,456.2

billion yen in total long-term debt and payables at the

end of March 1992, immediately after we acquired the

Tokaido Shinkansen assets, has been lowered by 3,540.6

billion yen.

JR Central will continue working to enhance the

earning capability and make every effort to pursue

efficiency and cost reduction across all operations

including capital investment while steadily promoting

efforts to strengthen our managerial foundation for

various businesses, such as the Tokaido Shinkansen, and

to construct the Chuo Shinkansen. At the same time, we

will strive to improve our financial strength as the entire

group by, among others, procuring capital effectively as

well as efficiently.

5) Net Asset BalanceNet asset balance at the end of FY2015 increased by

288.5 billion yen over the end of FY2014 to end at 2,352.5

billion yen, and our equity ratio rose from 38.7% at the

end of FY2014 to 44.0% at the end of FY2015.

6) Capital ProcurementIn order to procure capital from various sources

and facilitate smooth fundraising, we have acquired

issuer credit ratings from Moody’s Japan, Rating and

Investment Information, Inc., Standard and Poor’s

Ratings Japan K.K. and Japan Credit Rating Agency, Ltd.

The rating is respectively Aa3, AA, AA-, and AAA.

Furthermore, in order to secure short-term liquidity, we

have established a commitment of 100 billion yen as of

the end of FY2015.

Financial Section

CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 5352

Consolidated Balance Sheet

Central Japan Railway Company and Consolidated Subsidiaries March 31, 2016

ASSETSMillions of Yen

(Note 2)Thousands of U.S. Dollars

(Note 2)

2016 2015 2016

CURRENT ASSETS:

Cash and cash equivalents (Note 10) ¥ 318,352 ¥ 130,002 $ 2,842,428

Time deposits (Note 10) 32,000 114,000 285,714

Trade receivables (Note 10) 85,524 90,957 763,607

Allowance for doubtful accounts (37) (22) (330)

Inventories 38,214 38,636 341,196

Deferred tax assets (Note 9) 24,222 26,708 216,267

Prepaid expenses and other 32,440 31,901 289,642

Total current assets 530,716 432,183 4,738,535

NONCURRENT ASSETS:

Investments and other assets:

Investment securities (Notes 4 and 10) 109,730 137,066 979,732

Investments in and advances to unconsolidated subsidiaries and affiliates (Note 4) 16,593 13,450 148,151

Asset for retirement benefits (Note 7) 4,015 5,929 35,848

Deferred tax assets (Note 9) 148,760 149,077 1,328,214

Prepaid expenses and other 43,995 45,535 392,812

Total investments and other assets 323,096 351,058 2,884,785

Property, plant and equipment (Note 3.f):

Buildings and structures 4,677,518 4,643,280 41,763,553

Machinery, rolling stock and vehicles 1,380,116 1,344,884 12,322,464

Land 2,356,273 2,356,186 21,038,151

Construction in progress 225,268 169,240 2,011,321

Other 176,848 184,573 1,579,000

Total 8,816,025 8,698,165 78,714,508

Accumulated depreciation (4,401,293) (4,263,426) (39,297,258)

Net property, plant and equipment 4,414,731 4,434,739 39,417,241

Total noncurrent assets 4,737,827 4,785,798 42,302,026

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

March 31, 2016

LIABILITIES AND EQUITYMillions of Yen


(Note 2)

2016 2015 2016

CURRENT LIABILITIES: Short-term loans payable (Notes 5 and 10) ¥ 24,800 ¥ 31,368 $ 221,428

Current portion of long-term debt (Notes 5 and 10) 112,236 139,879 1,002,107

Current portion of long-term accounts payable—railway facilities (Notes 6 and 10) 77,665 86,073 693,437

Trade payables (Note 10) 179,047 183,033 1,598,633

Provision for bonuses 27,991 27,715 249,919

Income taxes payable (Note 10) 105,953 71,528 946,008

Advances received 42,781 41,137 381,973

Other (Note 9) 68,792 78,130 614,214

Total current liabilities 639,269 658,868 5,707,758

NONCURRENT LIABILITIES:Long-term debt (Notes 5 and 10) 1,201,290 1,280,954 10,725,803

Long-term accounts payable—railway facilities (Notes 6 and 10) 553,856 643,611 4,945,142

Provision for large-scale renovation of the Shinkansen infrastructure (Note 3.j) 245,000 280,000 2,187,500

Liability for retirement benefits (Note 7) 207,625 205,501 1,853,794

Other (Note 9) 68,936 85,079 615,500

Total noncurrent liabilities 2,276,709 2,495,146 20,327,758

CONTINGENCIES (Note 13):

EQUITY (Notes 8 and 16):Common stock—authorized, 824,000,000 shares;

issued, 206,000,000 shares in 2016 and 2015 112,000 112,000 1,000,000

Capital surplus 53,499 53,500 477,669

Retained earnings 2,241,207 1,927,407 20,010,776

Treasury stock—at cost, 9,200,776 shares in 2016 and 9,200,743 shares in 2015 (103,157) (103,156) (921,044)

Accumulated other comprehensive income:

Unrealized gain on available-for-sale securities 22,227 38,663 198,455

Deferred loss on hedges (2) (24) (17)

Remeasurements of defined benefit plans (Note 7) (9,375) (8,192) (83,705)

Total 2,316,397 2,020,196 20,682,116

Noncontrolling interests 36,168 43,770 322,928

Total equity 2,352,566 2,063,967 21,005,053

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

Financial Section


Consolidated Statement of Income Consolidated Statement of Changes in Equity

Consolidated Statement of Comprehensive Income

Central Japan Railway Company and Consolidated Subsidiaries Year Ended March 31, 2016

Millions of Yen (Note 2)

Thousands of U.S. Dollars

(Note 2)2016 2015 2014 2016

OPERATING REVENUES ¥ 1,738,409 ¥ 1,672,295 ¥ 1,652,547 $ 15,521,508

OPERATING EXPENSES (Note 3.l):Transportation, other services and cost of sales (Note 3.j) 982,295 983,074 979,083 8,770,491 Selling, general and administrative expenses 177,436 182,622 178,851 1,584,250

Total operating expenses 1,159,732 1,165,696 1,157,935 10,354,750

Operating income 578,677 506,598 494,612 5,166,758

OTHER INCOME (EXPENSES):Interest and dividend income 2,790 2,287 1,987 24,910 Interest expense (Note 6) (65,533) (72,272) (80,325) (585,116)Other—net (Note 3.s) (7,832) (31,915) (13,535) (69,928)

Other expenses—net (70,575) (101,900) (91,873) (630,133)

INCOME BEFORE INCOME TAXES 508,101 404,698 402,738 4,536,616

INCOME TAXES (Note 9):Current 165,344 135,387 143,576 1,476,285 Deferred 11,754 12,547 (906) 104,946

Total income taxes 177,098 147,934 142,670 1,581,232

NET INCOME 331,003 256,763 260,068 2,955,383

NET (LOSS) INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (6,437) (7,370) 4,381 (57,473)

NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT ¥ 337,440 ¥ 264,134 ¥ 255,686 $ 3,012,857

Yen U.S. Dollars2016 2015 2014 2016

PER SHARE OF COMMON STOCK (Note 3.r): Basic net income ¥ 1,714.64 ¥ 1,342.15 ¥ 1,299.23 $ 15.31 Cash dividends applicable to the year 125.00 120.00 115.00 1.12

See notes to consolidated financial statements.




(Note 2)2016 2015 2014 2016

NET INCOME ¥ 331,003 ¥ 256,763 ¥ 260,068 $ 2,955,383

OTHER COMPREHENSIVE (LOSS) INCOME (Note 14):Unrealized (loss) gain on available-for-sale securities (16,719) 18,741 5,581 (149,276)Deferred gain (loss) on hedges 42 (59) (25) 375 Remeasurements of defined benefit plans (1,898) (6,725) (16,946)Share of other comprehensive income in affiliates (105) 201 25 (937)

Total other comprehensive (loss) income (18,681) 12,157 5,582 (166,794)

COMPREHENSIVE INCOME ¥ 312,322 ¥ 268,921 ¥ 265,650 $ 2,788,589

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the parent ¥ 319,842 ¥ 272,616 ¥ 261,659 $ 2,855,732 Noncontrolling interests (7,520) (3,694) 3,991 (67,142)


Central Japan Railway Company and Consolidated Subsidiaries Year Ended March 31, 2016Thousands Millions of Yen (Note 2)

Accumulated OtherComprehensive Income

Outstanding Number of Shares of

Common Stock

Unrealized Gain on

Available-for-Sale Securities

Deferred (Loss) Gain

on Hedges

Remeasurementsof Defined

Benefit PlansCommon Capital Retained Treasury Noncontrolling Total

Stock Surplus Earnings Stock Total Interests EquityBALANCE, APRIL 1, 2013 196,799 ¥ 112,000 ¥ 53,500 ¥ 1,435,445 ¥ (103,155) ¥15,508 ¥ 18 ¥ 1,513,317 ¥ 44,654 ¥ 1,557,972

Net income attributable to owners of the parent 255,686 255,686 255,686 Dividends from surplus, ¥110 per share (21,670) (21,670) (21,670)Purchase of treasury stock (0) (0) (0) (0)Net change in the year 5,985 (12) ¥ 465 6,437 3,827 10,264

BALANCE, MARCH 31, 2014(APRIL 1, 2014, as previously reported) 196,799 112,000 53,500 1,669,462 (103,155) 21,493 5 465 1,753,771 48,481 1,802,252

Cumulative effect of accounting change (Note 3.k) 17,450 17,450 (580) 16,869 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

Net income attributable to owners of the parent 264,134 264,134 264,134 Dividends from surplus, ¥120 per share (23,640) (23,640) (23,640)Purchase of treasury stock (0) (1) (1) (1)Net change in the year 17,169 (30) (8,657) 8,482 (4,130) 4,351

BALANCE, MARCH 31, 2015 196,799 112,000 53,500 1,927,407 (103,156) 38,663 (24) (8,192) 2,020,196 43,770 2,063,967

Net income attributable to owners of the parent 337,440 337,440 337,440 Dividends from surplus, ¥120 per share (23,640) (23,640) (23,640)Purchase of treasury stock (0) (0) (0) (0)Change in the parent's ownership interest due to transactions with noncontrolling interests (1) (1) (1)Net change in the year (16,436) 21 (1,183) (17,597) (7,601) (25,199)

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

Thousands of U.S.Dollars (Note 2)

Accumulated OtherComprehensive Income

Unrealized Gain on

Available-for-Sale Securities

Deferred Loss

on Hedges

Remeasurementsof Defined

Benefit PlansCommon Capital Retained Treasury Noncontrolling Total

Stock Surplus Earnings Stock Total Interests EquityBALANCE, MARCH 31, 2015 $1,000,000 $ 477,678 $17,208,991 $ (921,035) $ 345,205 $ (214) $ (73,142) $18,037,464 $ 390,803 $18,428,276

Net income attributable to owners of the parent 3,012,857 3,012,857 3,012,857 Dividends from surplus, $1.07 per share (211,071) (211,071) (211,071)Purchase of treasury stock (0) (0) (0)Change in the parent's ownership interest due to transactions with noncontrolling interests (8) (8) (8)Net change in the year (146,750) 187 (10,562) (157,116) (67,866) (224,991)

BALANCE, MARCH 31, 2016 $1,000,000 $477,669 $20,010,776 $ (921,044) $ 198,455 $ (17) $(83,705) $20,682,116 $322,928 $21,005,053


Financial Section


Consolidated Statement of Cash Flows




(Note 2)2016 2015 2014 2016

OPERATING ACTIVITIES:Income before income taxes ¥ 508,101 ¥ 404,698 ¥ 402,738 $ 4,536,616 Adjustments for:

Income taxes—paid (133,119) (148,296) (139,513) (1,188,562)Depreciation and amortization 242,369 271,568 276,269 2,164,008 Equity in earnings of affiliates (560) (339) (326) (5,000)Proceeds from contribution for construction (3,944) (2,221) (1,284) (35,214)Reduction of noncurrent assets related to contribution for construction 4,244 3,545 1,854 37,892 Loss on retirement of noncurrent assets 8,769 10,001 15,104 78,294 Gain on sales of noncurrent assets—net (1,322) (1,395) (2,386) (11,803)Changes in assets and liabilities: Decrease in provision for large-scale

renovation of the Shinkansen infrastructure (35,000) (35,000) (35,000) (312,500) Decrease (increase) in trade receivables 5,743 8,052 (24,259) 51,276 Decrease (increase) in inventories 1,421 (518) 14,763 12,687 Increase (decrease) in trade payables 1,324 6,654 (1,603) 11,821 Increase (decrease) in advances received 1,644 (11,752) 8,503 14,678 Increase in liability for retirement benefits 1,657 4,561 4,143 14,794 Other—net 165 61,249 21,552 1,473

Net cash provided by operating activities 601,495 570,806 540,557 5,370,491

INVESTING ACTIVITIES:Placement of time deposits (162,900) (279,000) (95,000) (1,454,464)Withdrawal of time deposits 244,900 215,010 65,002 2,186,607 Purchases of marketable securities (120,000) (50,000) (35,000) (1,071,428)Proceeds from redemption of marketable securities 120,000 50,000 35,000 1,071,428 Purchases of property, plant and equipment (236,164) (197,469) (202,118) (2,108,607)Proceeds from contribution for construction 4,909 4,929 3,825 43,830 Purchases of investment securities (2,013) (203) (108) (17,973)Proceeds from sales of investment securities 5,262 434 902 46,982 Other—net (24,300) (7,670) (2,958) (216,964)

Net cash used in investing activities (170,305) (263,970) (230,454) (1,520,580)

FINANCING ACTIVITIES:Net (decrease) increase in short-term loans payable (5,712) 6,581 (1,889) (51,000)Proceeds from long-term debt 215,141 259,600 189,600 1,920,901 Repayments of long-term debt (322,464) (353,699) (319,950) (2,879,142)Payments for long-term accounts payable—railway facilities (98,163) (126,202) (138,848) (876,455)Cash dividends paid (23,640) (23,640) (21,670) (211,071)Cash dividends paid to noncontrolling interests (79) (434) (434) (705)Other—net (7,928) (14,483) (16,572) (70,785)

Net cash used in financing activities (242,847) (252,279) (309,764) (2,168,276)

NET INCREASE IN CASH AND CASH EQUIVALENTS 188,343 54,556 338 1,681,633

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 130,002 75,445 75,106 1,160,732

CASH AND CASH EQUIVALENTS INCREASEDBY MERGER WITH AN UNCONSOLIDATED SUBSIDIARY 7 62

CASH AND CASH EQUIVALENTS, END OF YEAR ¥ 318,352 ¥ 130,002 ¥ 75,445 $ 2,842,428

ADDITIONAL CASH FLOW INFORMATION:Interest paid ¥ 65,636 ¥ 72,683 ¥ 81,070 $ 586,035


Notes to Consolidated Financial Statements

1.INCORPORATION OF CENTRAL JAPAN RAILWAY COMPANY

Central Japan Railway Company (Tokai Ryokaku Tetsudo Kabushiki Gaisha, the "Company") was incorporated on April 1, 1987, as a private business company, pursuant to the Law for Japanese National Railways Restructuring enacted upon the resolution of the Japanese Diet.

The business of the Japanese National Railways (the "JNR") was succeeded by the following newly established organizations: seven railway companies including the Company, the former Shinkansen Holding Corporation (a predecessor entity to the Railway Development Fund (1991–1997), which was subsequently succeeded by the Corporation for Advanced Transport and Technology (the "CATT") (1997–2003) and in turn by the Japan Railway Construction, Transport and Technology Agency (the "JRTT")), the former Railway Telecommunication Co., Ltd., Railway Information Systems Co., Ltd., and the Railway Technical Research Institute (the "RTRI") which reorganized as a public interest corporation as of April 1, 2011. The JNR itself became the JNR Settlement Corporation (the "JNRSC"). All of the assets and liabilities of the JNR were transferred to such organizations, including the JNRSC.

Prior to December 1, 2001, the Law Concerning Passenger Railway Companies and Japan Freight Railway Company (the "Law") required that authorization be obtained from the Minister of Land, Infrastructure, Transport and Tourism (the "Minister of Transport") regarding fundamentals such as: (1) commencement of business other than railway and its related business, (2) the appointment or dismissal of representative directors and corporate auditors, (3) the issuance of new shares and bonds, (4) long-term loans payable, (5) amendments to the Articles of Incorporation, (6) operating plans, (7) sales of material assets, (8) appropriations of earnings and (9) merger or dissolution. As of December 1, 2001, since the Law was revised and the Company was no longer in scope of the Law, the Company was not required to obtain the aforementioned authorizations.

On October 8, 1997, the Company's shares were listed on the Nagoya and Tokyo stock exchanges in Japan. The JNRSC, which held all 2,240,000 of the Company's outstanding shares prior to the listing, sold 1,353,929 shares in the initial public offerings. Pursuant to the Law for Disposal of Debts and Liabilities of the JNRSC enacted in October of 1998, the Company's shares held by the JNRSC were transferred to Japan Railway Construction Public Corporation (the "JRCPC"). On October 1, 2003, the CATT and the JRCPC were fully integrated, pursuant to the Law of Japan Railway Construction, Transport and Technology enacted on October 1, 2003, and designated as the JRTT. In July 2005, the JRTT sold 600,000 shares of the Company. On April 5, 2006, the JRTT also sold its remaining 286,071 shares of the Company. As a result of this sale, all of the Company's shares held by the JRTT were sold.

The shares above do not reflect the effect of the hundred-for-one stock split effective as of October 1, 2012.

2.BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations, and in accordance with accounting principles generally

accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards.

In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2015 and 2014 consolidated financial statements to conform to the classifications used in 2016.

The consolidated financial statements are stated in Japanese yen, the currency of the country in which the Company is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥112 to $1, the approximate rate of exchange as of March 31, 2016. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate. Japanese yen figures of less than one million yen are rounded down to the nearest million of yen, except for per share information, and U.S. dollar figures of less than one thousand U.S. dollars are also rounded down to the nearest thousand of U.S. dollars, except for per share information.

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.Principles of Consolidation

—The accompanying consolidated financial statements as of March 31, 2016, include the accounts of the Company and its 28 (29 in 2015 and 2014) significant subsidiaries (together, the "Companies").

Shizuoka Terminal Hotel, Ltd., a consolidated subsidiary, was excluded from the scope of consolidation due to a merger with JR Tokai Hotels, Ltd., another consolidated subsidiary, on April 1, 2015.

Under the control and influence concepts, those companies in which the Company, directly or indirectly, is able to exercise control over operations are consolidated, and those companies over which the Company has the ability to exercise significant influence are accounted for by the equity method.

Investments in two affiliates are accounted for by the equity method. Investments in the remaining unconsolidated subsidiaries and affiliates are stated at cost. If the equity method of accounting had been applied to the investments in these companies, the effect on the accompanying consolidated financial statements would not be material.

The difference between the cost of acquisition and the fair value of the equity of an acquired subsidiary at the date of acquisition is fully amortized when incurred.

All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit included in assets resulting from transactions within the Companies is also eliminated.

A certain consolidated subsidiary has adopted a fiscal year ending on February 28, which is different from that of the Company. The necessary adjustments for preparing consolidated financial statements as of the Company's year-end were appropriately made, such as adjustments for significant intercompany accounts and transactions

Central Japan Railway Company and Consolidated Subsidiaries

Financial Section


which occur between the fiscal year-end of the subsidiary and that of the Company.

b.Business Combinations— On September 13, 2013, the Accounting Standards Board

of Japan (the "ASBJ") issued revised ASBJ Statement No. 21, "Accounting Standard for Business Combinations," revised ASBJ Statement No. 22, "Accounting Standard for Consolidated Financial Statements," and revised ASBJ Statement No. 7, "Accounting Standard for Business Divestitures." Major accounting changes from the previous standards are as follows:

(a) Transactions with noncontrolling interest—A parent's ownership interest in a subsidiary might change if the parent purchases or sells ownership interests in its subsidiary. The carrying amount of noncontrolling interest is adjusted to reflect the change in the parent's ownership interest in its subsidiary while the parent retains its controlling interest in its subsidiary. Under the previous accounting standard, any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted is accounted for as an adjustment of goodwill or as profit or loss in the consolidated statement of income. Under the revised accounting standard, such difference is accounted for as capital surplus as long as the parent retains control over its subsidiary.

(b) Presentation of the consolidated balance sheet—In the consolidated balance sheet, "minority interest" under the previous accounting standard is changed to "noncontrolling interest" under the revised accounting standard.

(c) Presentation of the consolidated statement of income—In the consolidated statement of income, "income before minority interest" under the previous accounting standard is changed to "net income" under the revised accounting standard, and "net income" under the previous accounting standard is changed to "net income attributable to owners of the parent" under the revised accounting standard.

(d) Provisional accounting treatments for a business combination—If the initial accounting for a business combination is incomplete by the end of the reporting period in which the business combination occurs, an acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. Under the previous accounting standard, the impact of adjustments to provisional amounts recorded in a business combination on profit or loss is recognized as profit or loss in the year in which the measurement is completed. Under the revised accounting standard, during the measurement period, which shall not exceed one year from the acquisition, the acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and that would have affected the measurement of the amounts recognized as of that date. Such adjustments shall be recognized as if the accounting for the business combination had been completed at the acquisition date.

(e) Acquisition-related costs—Acquisition-related costs are costs, such as advisory fees or professional fees, which an acquirer incurs to effect a business combination. Under the previous accounting standard, the acquirer accounts for acquisition-related costs by including them in the acquisition costs of the investment. Under the revised accounting standard, acquisition-related costs shall be accounted for as expenses in the periods in which the costs are incurred.

The Company applied the revised accounting standards for (a)

transactions with noncontrolling interest, (b) presentation of the consolidated balance sheet, (c) presentation of the consolidated statement of income, and (e) acquisition-related costs above, effective April 1, 2015, and (d) provisional accounting treatments for a business combination above for a business combination which occurred on or after April 1, 2015. The revised accounting standards for (a) transactions with noncontrolling interest and (e) acquisition-related costs were applied prospectively as permitted in the transitional treatment of the revised standards.

With respect to (b) presentation of the consolidated balance sheet and (c) presentation of the consolidated statement of income, the applicable line items in the 2015 and 2014 consolidated financial statements have been accordingly reclassified and presented in line with those in 2016.

Cash flows arising from purchases of or proceeds from sales of investments in subsidiaries that do not result in the change in the scope of consolidation are classified as financing activities in the consolidated statement of cash flows for the year ended March 31, 2016.

The effects of the application of the revised accounting standards on the consolidated financial statements were immaterial.

c.Cash Equivalents —Cash equivalents are short-term investments that are readily

convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits, certificates of deposit, commercial paper and others, all of which mature or become due within three months of the date of acquisition.

d.Inventories— Inventories are stated at the lower of cost, principally

determined by the retail method for merchandise, by the specific identification method for land and buildings held for sale in lots, by the specific identification method for work in process and by the moving-average cost method for materials and supplies, or net selling value.

e.Investment Securities—All investment securities are classified and accounted for,

depending on management's intent, as available-for-sale securities, which are principally comprised of investment securities, and are reported at fair value, with unrealized gain and loss, net of applicable taxes, reported in a separate component of equity.

Nonmarketable available-for-sale securities are stated at cost determined by the moving-average cost method. For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by a charge to income.

f.Property, Plant and Equipment—Property, plant and equipment are stated at cost. Certain

contributions in aid for construction of railways and other property are deducted directly from the cost of the related assets. The accumulated contributions deducted from the cost of property, plant and equipment as of March 31, 2016 and 2015 amounted to ¥277,750 million ($2,479,910 thousand), and ¥275,321 million, respectively.

Depreciation is computed substantially by the declining-balance method over the estimated useful lives of the assets. Additional depreciation is provided for the Shinkansen rolling stock based on kilometers traveled.

The range of useful lives is principally from 2 to 60 years for buildings and structures, and from 2 to 20 years for machinery, rolling stock and vehicles.

Depreciation of certain railway structures, except for the Shinkansen railway facilities, is computed by the replacement-accounting method.

g.Long-Lived Assets—The Companies review their long-lived assets for impairment

whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.

h.Software Costs—Software costs are amortized by the straight-line method over five

years.

i.Deferred Charges—Bond issuance costs are fully charged to income as incurred.

j.Provision for Large-Scale Renovation of the Shinkansen Infrastructure

—Provision for large-scale renovation of the Shinkansen infrastructure is provided based on the Nationwide Shinkansen Railway Development Law. In accordance with the Nationwide Shinkansen Railway Development Law and Regulations, the Company reversed the provision in the amount of ¥35,000 million ($312,500 thousand) for the year ended March 31, 2016 and ¥35,000 million for the years ended March 31, 2015 and 2014.

k.Retirement and Pension Plans—The Company and 27 consolidated subsidiaries have unfunded

retirement plans covering substantially all of their employees. Six consolidated subsidiaries have noncontributory defined benefit pension plans and one consolidated subsidiary has a defined contribution pension plan, some of those subsidiaries also have unfunded retirement plans. Some of the subsidiaries adopt the simplified accounting method for calculation of liability of retirement benefits and retirement benefit expenses.

Liability for retirement benefits is mainly calculated based on the projected benefit obligations and plan assets at the balance sheet date. The projected benefit obligations are attributed to periods on a benefit formula basis. Actuarial gains and losses are amortized on a straight-line basis mainly over five years, which is within the average remaining service period. Prior service costs are amortized on a straight-line basis mainly over five years, which is within the average remaining service period.

The ASBJ issued ASBJ Statement No. 26, "Accounting Standard for Retirement Benefits" in May 2012 and ASBJ Guidance No. 25, "Guidance on Accounting Standard for Retirement Benefits” in March 2015, which replaced the accounting standard for retirement benefits that had been issued by the Business Accounting Council in 1998 with an effective date of April 1, 2000, and the other related practical guidance, and were followed by partial amendments from time to time through 2009.

(a) Under the revised accounting standard, actuarial gains and losses and past service costs that are yet to be recognized in profit or loss are recognized within equity (accumulated other comprehensive income), after adjusting for tax effects, and any resulting deficit or surplus is recognized as a liability (liability for retirement benefits) or asset (asset for retirement benefits).

(b) The revised accounting standard does not change how to

recognize actuarial gains and losses and past service costs in profit or loss. Those amounts are recognized in profit or loss over a certain period no longer than the expected average remaining service period of the employees. However, actuarial gains and losses and past service costs that arose in the current period and have not yet been recognized in profit or loss are included in other comprehensive income, and actuarial gains and losses and past service costs that were recognized in other comprehensive income in prior periods and then recognized in profit or loss in the current period, are treated as reclassification adjustments (see Note 14).

(c) The revised accounting standard also made certain amendments relating to the method of attributing expected benefit to periods, the discount rate, and expected future salary increases.

This accounting standard and the guidance for (a) and (b) above are effective for the end of annual periods beginning on or after April 1, 2013, and for (c) above are effective for the beginning of annual periods beginning on or after April 1, 2014, or for the beginning of annual periods beginning on or after April 1, 2015, subject to certain disclosure in March 2015, all with earlier application being permitted from the beginning of annual periods beginning on or after April 1, 2013. However, no retrospective application of this accounting standard to consolidated financial statements in prior periods is required.

The Companies applied the revised accounting standard and guidance for retirement benefits for (a) and (b) above, effective March 31, 2014, and for (c) above, effective April 1, 2014.

With respect to (c) above, the Companies changed the method of attributing the expected benefit to periods from a straight-line basis to a benefit formula basis, and the method of determining the discount rate, and recorded the effect above as of April 1, 2014, in retained earnings. As a result, retained earnings as of April 1, 2014, increased by ¥17,450 million. The effect of this change on the consolidated statement of income for the year ended March 31, 2015, was immaterial.

l.Research and Development Costs

—Research and development costs are charged to income as incurred. Research and development costs charged to income were ¥75,199 million ($671,419 thousand), ¥107,370 million and ¥93,533 million for the years ended March 31, 2016, 2015 and 2014, respectively.

m.Leases—Lease assets of finance leases that were not deemed to transfer

ownership of the leased property are depreciated and amortized by the straight-line method over the lease period.

n.Income Taxes—The provision for income taxes is computed based on the pretax

income included in the consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to the temporary differences.

o.Appropriations of Retained Earnings—Appropriations of retained earnings are reflected in the

consolidated financial statements for the following year upon shareholders' approval.

p.Consumption Tax—Unless otherwise stated, all figures are presented net of tax.

q.Derivatives and Hedging Activities—The Companies use derivative financial instruments mainly to

Financial Section


5.SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBTThe interest rates applicable to short-term loans payable were 0.16% as of March 31, 2016, 0.36% as of March 31, 2015, and 0.32% as of March 31, 2014.Long-term debt as of March 31, 2016 and 2015, consisted of the following:

Millions of Yen Thousands of U.S. Dollars

2016 2015 2016The Company

Unsecured 2.04% bonds due 2018 ¥ 18,795Unsecured 2.39% bonds due 2026 ¥ 29,788 29,787 $ 265,964Unsecured 1.88% bonds due 2016 19,997Unsecured 1.78% bonds due 2017 19,998Unsecured 1.78% bonds due 2017 19,998Unsecured 1.75% bonds due 2017 19,998Unsecured 2.31% bonds due 2027 19,982 19,981 178,410Unsecured 1.69% bonds due 2018 9,999Unsecured 2.3% bonds due 2027 14,993 14,993 133,866Unsecured 1.79% bonds due 2020 19,894Unsecured 1.83% bonds due 2018 9,997Unsecured 2.39% bonds due 2028 19,985 19,984 178,437Unsecured 2.391% bonds due 2028 30,000 30,000 267,857Unsecured 2.646% bonds due 2038 10,000 10,000 89,285Unsecured 1.557% bonds due 2019 19,800Unsecured 2.166% bonds due 2029 30,000 30,000 267,857Unsecured 2.312% bonds due 2029 30,000 30,000 267,857Unsecured 2.556% bonds due 2039 10,000 10,000 89,285Unsecured 1.667% bonds due 2019 10,000Unsecured 2.321% bonds due 2029 30,000 30,000 267,857Unsecured 2.157% bonds due 2029 40,000 40,000 357,142Unsecured 2.375% bonds due 2039 10,000 10,000 89,285Unsecured 1.472% bonds due 2020 14,100Unsecured 2.212% bonds due 2030 30,000 30,000 267,857Unsecured 2.111% bonds due 2030 20,000 20,000 178,571Unsecured 1.797% bonds due 2030 10,000 10,000 89,285Unsecured 2.083% bonds due 2031 20,000 20,000 178,571Unsecured 1.895% bonds due 2031 10,000 10,000 89,285Unsecured 0.262% bonds due 2015 20,000Unsecured 1.824% bonds due 2032 10,000 10,000 89,285Unsecured 0.13% bonds due 2016 15,000Unsecured 1.725% bonds due 2033 10,000 10,000 89,285Unsecured 1.807% bonds due 2033 15,000 15,000 133,928Unsecured 1.786% bonds due 2033 15,000 15,000 133,928Unsecured 1.629% bonds due 2033 10,000 10,000 89,285Unsecured 1.623% bonds due 2034 15,000 15,000 133,928Unsecured 1.584% bonds due 2034 15,000 15,000 133,928Unsecured 1.502% bonds due 2034 20,000 20,000 178,571Unsecured 1.309% bonds due 2032 15,000 15,000 133,928Unsecured 1.917% bonds due 2044 10,000 10,000 89,285Unsecured 1.362% bonds due 2034 20,000 20,000 178,571Unsecured 1.014% bonds due 2035 20,000 20,000 178,571Unsecured 1.685% bonds due 2045 10,000 10,000 89,285Unsecured 1.196% bonds due 2035 15,000 133,928Unsecured 1.297% bonds due 2035 15,000 133,928Unsecured 1.21% bonds due 2035 15,000 133,928Unsecured 1.018% bonds due 2036 15,000 133,928U.S. dollar 4.25% bonds due 2045 issued abroad 36,375 324,776Unsecured loans from Japanese banks and others, with interest rates ranging from

0.71% to 5.6% (2016), from 0.76% to 6.6% (2015), due 2015 to 2045 637,962 639,293 5,696,089Subsidiaries

Unsecured and secured loans from Japanese banks and others, with interest rates ranging from 0.53% to 3.15% (2016), from 0.53% to 4.65% (2015), due 2015 to 2022 29,438 14,214 262,839

Total 1,313,527 1,420,834 11,727,919Less current portion (112,236) (139,879) (1,002,107)Long-term debt, less current portion ¥ 1,201,290 ¥ 1,280,954 $ 10,725,803

Annual maturities of long-term debt outstanding at the principal amounts as of March 31, 2016, were as follows:

Year Ending March 31 Millions of Yen Thousands of U.S. Dollars

2017 ¥ 112,236 $ 1,002,107 2018 100,574 897,9822019 82,047 732,5622020 110,493 986,5442021 58,369 521,151Thereafter 850,496 7,593,714

Total ¥ 1,314,216 $ 11,734,071

4.INVESTMENT SECURITIESInformation regarding investment securities with readily determinable fair values classified as available-for-sale as of March 31, 2016 and 2015, was as follows:

Millions of Yen 2016

Unrealized Unrealized Fair Cost Gain Loss Value

Equity securities ¥ 62,188 ¥ 35,842 ¥ 3,151 ¥ 94,879Trust fund investment and other 276 45 321

Total ¥ 62,464 ¥ 35,887 ¥ 3,151 ¥ 95,200

Millions of Yen2015


Equity securities ¥ 60,185 ¥ 56,863 ¥ 55 ¥ 116,992 Trust fund investment and other 276 67 343

Total ¥ 60,461 ¥ 56,931 ¥ 55 ¥ 117,336

Thousands of U.S. Dollars2016


Equity securities $ 555,250 $ 320,017 $ 28,133 $ 847,133Trust fund investment and other 2,464 401 2,866

Total $ 557,714 $ 320,419 $ 28,133 $ 850,000The information for available-for-sale securities whose fair value is not readily determinable as of March 31, 2016 and 2015, is disclosed in Note 10.The impairment losses on investments in an unconsolidated subsidiary for the years ended March 31, 2016 and 2015, were ¥19,061 million

($170,187 thousand) and ¥5,648 million, respectively. The impairment loss on available-for-sale equity securities for the year ended March 31, 2014 was not presented as the effect was immaterial.

manage their exposures to fluctuations in foreign exchange and in interest rates. Foreign currency swaps are utilized by the Companies to reduce foreign exchange risks. Interest rate swaps are utilized by the Companies to reduce interest rate risks. The Companies do not enter into derivatives for trading or speculative purposes.

Foreign currency swaps, which qualify for hedge accounting and specific matching criteria, are not remeasured at market value, but the hedged debt is translated at the contracted rates of the foreign currency swaps. 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.

r.Per Share Information—Basic net income per share is computed by dividing net income

attributable to owners of the parent available to common shareholders by the weighted-average number of common shares outstanding for the period.

The net income attributable to owners of the parent available to common shareholders used in the computation for 2016, 2015 and 2014 was ¥337,440 million ($3,012,857 thousand), ¥264,134 million and ¥255,686 million, respectively. The average number of common shares used in the computation for 2016, 2015 and 2014 was 196,799,236 shares, 196,799,298 shares and 196,799,336 shares, respectively.

Diluted net income per share is not presented in the accompanying consolidated financial statements as the Companies do not have any dilutive securities.

Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective years, including dividends to be paid after the end of the year.

s.Change in Presentation (Consolidated Statement of Income)—Prior to April 1, 2015, the loss on redemption of bonds was

disclosed separately in the other income (expenses) section of the consolidated statement of income. Since during this fiscal year ended March 31, 2016, the materiality of the amount decreased, such amount is included in the other-net in the other income (expense) section. The amounts of loss on redemption of bonds separately disclosed for the years ended March 31, 2015 and 2014 were ¥13,676 million and ¥13,357 million, respectively.

t.Accounting Changes and Error Corrections—In December 2009, the ASBJ issued ASBJ Statement No. 24,

"Accounting Standard for Accounting Changes and Error Corrections" and ASBJ Guidance No. 24, "Guidance on Accounting Standard for Accounting Changes and Error Corrections." Accounting treatments under this standard and guidance are as follows: (1) Changes in Accounting Policies—When a new accounting policy is applied following revision of an accounting standard, the new policy is applied retrospectively unless the revised accounting standard includes specific transitional provisions, in which case the entity shall comply with the specific transitional provisions. (2) Changes in Presentation—When the presentation of financial statements is changed, prior-period financial statements are reclassified in accordance with the new presentation. (3) Changes in Accounting Estimates—A change in an accounting estimate is accounted for in the period of the change if the change affects that period only, and is accounted for prospectively if the change affects both the period of the change and future periods. (4) Corrections of Prior-Period Errors—When an error in prior-period financial statements is discovered, those statements are restated.

Financial Section


7.RETIREMENT AND PENSION PLANSEmployees whose service with the Company and consolidated subsidiaries is terminated are entitled to retirement and pension benefits determined by

reference to accumulated points during their employment calculated by their position or basic rates of pay at the time of termination, length of service and other conditions under which the termination occurs. Some of the subsidiaries adopt the simplified accounting method for calculation of liability of retirement benefits and retirement benefit expenses.

Years Ended March 31, 2016, 2015 and 20141.The changes in defined benefit obligation for the years ended March 31, 2016, 2015 and 2014, were as follows:


2016 2015 2014 2016Balance at beginning of year (as previously reported) ¥ 226,219 ¥ 230,925 ¥ 227,177 $ 2,019,812

Cumulative effect of accounting change (25,696)Balance at beginning of year (as restated) 226,219 205,228 227,177 2,019,812

Current service cost 15,065 13,227 12,770 134,508Interest cost 1,099 2,900 3,407 9,812Actuarial losses (gains) 4,323 19,841 (920) 38,598Benefits paid (18,232) (15,068) (11,512) (162,785)Prior service cost (66) 2 (589)Others 121 90 1,080

Balance at end of year ¥ 228,531 ¥ 226,219 ¥ 230,925 $ 2,040,455 The retirement benefit expenses recognized by the consolidated subsidiaries, which adopt the simplified accounting method, are included in the current

service cost.

2.The changes in plan assets for the years ended March 31, 2016, 2015 and 2014, were as follows:


2016 2015 2014 2016Balance at beginning of year ¥ 26,647 ¥ 20,231 ¥ 17,893 $ 237,919

Expected return on plan assets 321 290 269 2,866Actuarial (losses) gains (2,124) 5,763 1,682 (18,964)Contributions from the employer 997 1,124 1,135 8,901Benefits paid (921) (854) (748) (8,223)Others 90

Balance at end of year ¥ 24,920 ¥ 26,647 ¥ 20,231 $ 222,500

3.Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets as of March 31, 2016 and 2015, was as follows:


2016 2015 2016Funded defined benefit obligation ¥ 23,067 ¥ 21,606 $ 205,955 Plan assets (24,920) (26,647) (222,500) Total (1,853) (5,041) (16,544)Unfunded defined benefit obligation 205,463 204,613 1,834,491Net liability arising from defined benefit obligation 203,610 199,572 1,817,946Liability for retirement benefits 207,625 205,501 1,853,794Asset for retirement benefits (4,015) (5,929) (35,848)Net liability arising from defined benefit obligation ¥ 203,610 ¥ 199,572 $ 1,817,946

4.The components of net periodic benefit costs for the years ended March 31, 2016, 2015 and 2014, were as follows:


2016 2015 2014 2016Service cost ¥ 15,065 ¥ 13,227 ¥ 12,770 $ 134,508 Interest cost 1,099 2,900 3,407 9,812Expected return on plan assets (321) (290) (269) (2,866)Recognized actuarial losses (gains) 3,840 3,742 (91) 34,285Amortization of prior service cost 36 79 86 321Amortization of transitional obligation 199 199Net periodic benefit costs ¥ 19,721 ¥ 19,859 ¥ 16,103 $ 176,080

The retirement benefit expenses recognized by the consolidated subsidiaries, which adopt the simplified accounting method, are included in service cost.

5.Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit plans for the years ended March 31, 2016, 2015 and 2014, were as follows:


2016 2015 2014 2016Actuarial gains ¥ (2,607) ¥ (10,334) $ (23,276)Prior service cost 102 79 910Transitional obligation 199

Total ¥ (2,504) ¥ (10,055) $ (22,357)

6.Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement benefit plans as of March 31, 2016 and 2015, were as follows:


2016 2015 2016Unrecognized actuarial losses ¥ (10,839) ¥ (8,232) $ (96,776)Unrecognized prior service cost (13) (116) (116)

Total ¥ (10,853) ¥ (8,349) $ (96,901)

The Company has entrusted cash for the repayment of a portion of its outstanding bonds based on debt assumption agreements with financial institutions; however, the Company is not released from the primary responsibility for the liability by these agreements. The outstanding bonds covered by these agreements as of March 31, 2016 and 2015, were as follows:


2016 2015 2016Secured 3.95% bonds due 2016 ¥ 29,000 ¥ 29,000 $ 258,928Secured 2.825% bonds due 2017 49,800 49,800 444,642Secured 2.18% bonds due 2018 29,900 29,900 266,964Secured 2.6% bonds due 2020 49,800 49,800 444,642Unsecured 2.39% bonds due 2022 18,995 18,995 169,598Unsecured 2.2% bonds due 2022 18,200 18,200 162,500Unsecured 1.74% bonds due 2022 20,000 20,000 178,571Unsecured 1.42% bonds due 2017 10,000 10,000 89,285Unsecured 1.15% bonds due 2022 25,000 25,000 223,214Unsecured 1.31% bonds due 2033 10,000 10,000 89,285Unsecured 2.015% bonds due 2023 9,000 9,000 80,357Unsecured 2.2% bonds due 2024 9,900 9,900 88,392Unsecured 2.19% bonds due 2019 9,900 9,900 88,392Unsecured 1.875% bonds due 2019 20,000 20,000 178,571Unsecured 2.21% bonds due 2024 9,650 9,650 86,160Unsecured 1.775% bonds due 2020 20,000 20,000 178,571Unsecured 1.77% bonds due 2017 20,000 20,000 178,571Unsecured 1.695% bonds due 2016 20,000Unsecured 2.14% bonds due 2018 18,400 18,400 164,285Unsecured 2.405% bonds due 2026 9,900 9,900 88,392Unsecured 2% bonds due 2016 30,000 30,000 267,857Unsecured 2.04% bonds due 2018 18,800 167,857Unsecured 1.88% bonds due 2016 20,000 178,571Unsecured 1.78% bonds due 2017 20,000 178,571Unsecured 1.78% bonds due 2017 20,000 178,571Unsecured 1.75% bonds due 2017 20,000 178,571Unsecured 1.69% bonds due 2018 10,000 89,285Unsecured 1.79% bonds due 2020 19,900 177,678Unsecured 1.83% bonds due 2018 10,000 89,285Unsecured 1.557% bonds due 2019 19,800 176,785Unsecured 1.667% bonds due 2019 10,000 89,285Unsecured 1.472% bonds due 2020 14,100 125,892

Total ¥ 600,045 ¥ 437,445 $ 5,357,544The aforementioned bonds for which the Company entered into debt assumption agreements have been derecognized in the consolidated balance sheet and

disclosed as contingent liabilities (see Note 13).The Company has credit commitments from banks. Total unused credit available to the Company as of March 31, 2016, was ¥100,000 million

($892,857 thousand).All assets of the Company were pledged for the above secured bonds of ¥158,500 million ($1,415,178 thousand), as an enterprise mortgage, which gives

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.

6.LONG-TERM ACCOUNTS PAYABLE—RAILWAY FACILITIESBased on legal defeasance agreements with special purpose entities, the Company has transferred the debt repayment obligations for certain long-term

accounts payable—railway facilities to the special purpose entities, and has provided the special purpose entities with Japanese national government bonds or cash for the payments of principal and interest on the long-term accounts payable—railway facilities. As a result of these transactions, the balance of long-term accounts payable—railway facilities was reduced by ¥79,632 million ($711,000 thousand) and ¥154,438 million as of March 31, 2016 and 2015, respectively (see Note 13).

Annual maturities of long-term accounts payable—railway facilities as of March 31, 2016, were as follows:

Year Ending March 31 Millions of Yen Thousands of U.S. Dollars

2017 ¥ 77,665 $ 693,437 2018 4,822 43,0532019 5,120 45,7142020 5,438 48,5532021 5,777 51,580Thereafter 532,697 4,756,223

Total ¥ 631,521 $ 5,638,580Interest expense on the aforementioned long-term accounts payable—railway facilities amounted to ¥41,718 million ($372,482 thousand), ¥46,784 million

and ¥52,375 million for the years ended March 31, 2016, 2015 and 2014, respectively.

Financial Section


Net deferred tax assets as of March 31, 2016 and 2015, were reflected in the accompanying consolidated balance sheets under the following captions:


2016 2015 2016Current assets ¥ 24,222 ¥ 26,708 $ 216,267Investments and other assets 148,760 149,077 1,328,214Current liabilities—other (11) (1) (98)Noncurrent liabilities—other (7,024) (6,152) (62,714)Net deferred tax assets ¥ 165,946 ¥ 169,630 $ 1,481,660

Reconciliations between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated statements of income for the years ended March 31, 2016 and 2014, were as follows:

2016Normal effective statutory tax rate 32.7%Increase in valuation allowance 1.6Effect of tax rate reduction 1.6Deduction of R&D promotion tax system (1.4)Other—net 0.3Actual effective tax rate 34.9%

2014Normal effective statutory tax rate 37.6%Deduction of R&D promotion tax system (2.8)Other—net 0.6Actual effective tax rate 35.4%

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 year ended March 31, 2015.

New tax reform laws enacted in 2016 in Japan changed the normal effective statutory tax rate for the fiscal year beginning on or after April 1, 2016 and 2017, from approximately 31.9% to 30.6% and the normal effective statutory tax rate for the fiscal year beginning on or after April 1, 2018, to approximately 30.3%. The effect of these changes was to decrease deferred tax assets, net of deferred tax liabilities, in the consolidated balance sheet as of March 31, 2016, by ¥7,794 million ($69,589 thousand) and to increase income taxes - deferred in the consolidated statement of income for the year then ended by ¥8,162 million ($72,875 thousand).

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 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 and to increase income taxes - deferred in the consolidated statement of income for the year then ended by ¥17,296 million.

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 consolidated statement of income for the year ended March 31, 2014 was immaterial.

9.INCOME TAXESThe Companies are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of

approximately 32.7% for the year ended March 31, 2016, 35.2% for the year ended March 31, 2015, and 37.6% for the year ended March 31, 2014.The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities as of March 31, 2016

and 2015, were as follows:


2016 2015 2016Deferred tax assets:

Depreciation and amortization ¥ 68,936 ¥ 69,401 $ 615,500 Liability for retirement benefits 64,403 67,421 575,026Loss on write down of investment securities 9,782 3,868 87,339Software 9,688 10,674 86,500Provision for bonuses 8,604 9,066 76,821Unrealized profit on property, plant and equipment 7,420 7,438 66,250Accrued railway usage charges 3,491 3,920 31,169Other 43,264 49,285 386,285

Total 215,590 221,077 1,924,910Less valuation allowance (29,337) (22,685) (261,937)

Deferred tax assets 186,252 198,391 1,662,964

Deferred tax liabilities:Unrealized gain on available-for-sale securities 10,144 17,656 90,571Deferred gain on transfer of certain fixed assets 4,923 4,664 43,955Other 5,237 6,439 46,758

Deferred tax liabilities 20,306 28,760 181,303

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

7.Plan assetsa.Components of plan assets

Plan assets as of March 31, 2016 and 2015, consisted of the following:

2016 2015Equities 59% 62%General security account 26 23Bonds 11 11Others 4 4

Total 100% 100%The employee retirement benefit trust for the Companies’ contributory pension plans accounted for 47% and 51% of total plan assets for the years ended

March 31, 2016 and 2015, respectively.

b.Method of determining the expected rate of return on plan assetsThe expected rate of return on plan assets is determined considering the long-term rates of return which are expected currently and in the future from the various components of the plan assets.

8.Assumptions used for the years ended March 31, 2016, 2015 and 2014, were set forth as follows:

2016 2015 2014Discount rate Mainly 0.4% Mainly 0.4% Mainly 1.5%Expected rate of return on plan assets 1.2% to 2.0% 1.2% to 2.0% 1.1% to 2.0%

9.Defined Contribution PlanTotal contribution by the Companies for the defined contribution plan was ¥117 million ($1,044 thousand) for the year ended March 31, 2016, ¥113

million for the year ended March 31, 2015, and ¥106 million for the year ended March 31, 2014.

8.EQUITYJapanese companies are subject to the Companies Act of Japan (the

"Companies Act"). The significant provisions in the Companies Act that affect financial and accounting matters are summarized below:

a.DividendsUnder the Companies Act, companies can pay dividends at any time

during the fiscal year in addition to the year-end dividend upon resolution at the shareholders’ meeting. For companies that meet certain criteria including (1) having a Board of Directors, (2) having independent auditors, (3) having an Audit & Supervisory Board, and (4) the term of service of the directors being prescribed as one year rather than the normal two-year term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year if the Company has prescribed so in its articles of incorporation.

The Companies Act permits companies to distribute dividends-in-kind (noncash assets) to shareholders subject to a certain limitation and additional requirements.

Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of equity after dividends must be maintained at no less than ¥3 million.

b.Increases/Decreases and Transfer of Common Stock, Reserve and Surplus

The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) 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 limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings-unappropriated can be transferred among the accounts within equity under certain conditions upon resolution of the shareholders.c.Treasury Stock and Treasury Stock Acquisition Righvts

The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by a specific formula.

Under the Companies Act, stock acquisition rights are presented as a separate component of equity.

The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

10.FINANCIAL INSTRUMENTS AND RELATED DISCLOSURESa.Policy for Financial Instruments

The Companies use financial instruments, mainly debt including bank loans and bonds, based on their capital financing plan. Cash surpluses, if any, are invested in low risk financial assets, such as bank deposits.

Derivatives are used, not for speculative purposes, but to manage exposure to financial risks as described in Note 11.

b.Nature and Extent of Risks Arising from Financial InstrumentsTrade receivables are exposed to customer credit risk. Investment

securities, mainly equity instruments of customers and suppliers of the Companies, are exposed to the risk of market price fluctuations.

Payment terms of trade payables and income taxes payable are within one year.

Short-term bank loans are used to fund the Companies’ ongoing operations. Bonds and long-term loans are used for renewal of long-term debt and capital spending. Please see Note 5 for a maturity analysis for bank loans and bonds payable.

Long-term accounts payable—railway facilities were incurred in the amount of ¥5,095,661 million in 1991 for the purchase of the Shinkansen railway ground facilities and serially repaid to the JRTT. Payment terms are 25.5 years for ¥4,494,466 million and 60 years for ¥601,195 million. Payment term and interest rate of the payable were determined based on the agreements on the purchase of the Shinkansen railway ground facilities. The interest rate of a part of such payable is variable and determined by the JRTT.

Derivatives include foreign currency swaps, which are used to manage exposure to market risks of changes in foreign exchange of foreign currency bonds, and interest rate swaps, which are used to manage exposure to market risks of changes in interest rates of long-term debt. Please see Note 11 for the detail of derivatives.

c.Risk Management for Financial InstrumentsCredit Risk ManagementCredit risk is the risk of economic loss arising from a counterparty's

failure to repay or service debt according to the contractual terms. The Companies manage their credit risk from trade receivables by monitoring of payment terms and balances of major customers by each business administration department to identify the default risk of customers in the early stage.

Market Risk Management Investment securities are managed by monitoring market values and

financial position of issuers on a regular basis.Foreign currency swaps are used to manage exposure to market risks of

changes in foreign exchange of foreign currency bonds. Interest rate swaps are used to manage exposure to market risks of changes in interest rates of long-term debt.

d.Fair Values of Financial Instruments Fair values of financial instruments are based on quoted prices in

active markets. If a quoted price is not available, other rational valuation techniques are used instead. Also, please see Note 11 for the details of fair value for derivatives.

Financial Section


(2) Financial Instruments Whose Fair Value Cannot Reliably be DeterminedCarrying Amount

March 31, 2016 Millions of Yen Thousands of U.S. DollarsInvestments in equity instruments that do not have a quoted market price in an active market: Investment securities ¥ 14,529 $ 129,723 Investments in unconsolidated subsidiaries and affiliates 12,275 109,598

Total ¥ 26,805 $ 239,330

Carrying AmountMarch 31, 2015 Millions of YenInvestments in equity instruments that do not have a quoted market price in an active market: Investment securities ¥ 19,730 Investments in unconsolidated subsidiaries and affiliates 12,091

Total ¥ 31,822

e.Maturity Analysis for Financial Assets and Securities with Contractual Maturities

Millions of Yen

March 31, 2016 Due within One YearDue after One Year through Five Years

Due after Five Years

Cash and cash equivalents ¥ 318,352Time deposits 32,000Trade receivables 85,361 ¥ 162

Total ¥ 435,713 ¥ 162


March 31, 2016 Due within One YearDue after One Year through Five Years

Due after Five Years

Cash and cash equivalents $ 2,842,428 Time deposits 285,714Trade receivables 762,151 $ 1,446

Total $ 3,890,294 $ 1,446 f. Annual Maturities of long-term debt and long-term accounts payable—railway facilities

Please see Note 5 for annual maturities of long-term debt and Note 6 for long-term accounts payable—railway facilities.

11.DERIVATIVESThe Companies enter into foreign currency swap agreements to manage exposure to market risks of changes in foreign exchange of foreign currency

bonds, and interest rate swap agreements to manage exposure to market risks of changes in interest rates of certain liabilities.Derivative transactions are mainly entered into to hedge foreign exchange exposures and interest rate exposures incorporated within their business.

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.Derivative transactions entered into by the Companies have been made in accordance with internal policies and have been subject to due internal

formalities.

Derivative Transactions to Which Hedge Accounting Is Applied Millions of Yen

March 31, 2016 Hedged Item Contract AmountContract Amount

Due after One Year Fair Value

Foreign currency swaps:(fixed amount payment in yen, fixed amount receipt in U.S. dollars) Foreign currency bonds ¥ 37,015 ¥ 37,015 *

Interest rate swaps:(fixed rate payment, floating rate receipt) Long-term debt ¥ 193,473 ¥ 156,473 *

Millions of Yen



Interest rate swaps:(fixed rate payment, floating rate receipt) Long-term debt ¥ 162,900 ¥ 142,800 *




Foreign currency swaps:(fixed amount payment in yen, fixed amount receipt in U.S. dollars) Foreign currency bonds $ 330,491 $ 330,491 *

Interest rate swaps:(fixed rate payment, floating rate receipt) Long-term debt $ 1,727,437 $ 1,397,080 *

*These foreign currency swaps or interest rate swaps which qualify for hedge accounting are accounted for in combination with hedged items such as the foreign currency bonds or long-term debt, and the fair values of these swaps are included in those of hedged items in Note 10.

(1) Fair Value of Financial InstrumentsMillions of Yen

March 31, 2016 Carrying Amount Fair Value Unrealized Gain/(Loss)Cash and cash equivalents ¥ 318,352 ¥ 318,352Time deposits 32,000 32,000Trade receivables 85,524 85,524Investment securities 95,200 95,200

Total ¥ 531,077 ¥ 531,077

Short-term loans payable ¥ (24,800) ¥ (24,800) Trade payables (179,047) (179,047)Income taxes payable (105,953) (105,953)Long-term debt (1,313,527) (1,482,643) ¥ (169,115)Long-term accounts payable—railway facilities (631,521) (1,327,184) (695,662)

Total ¥ (2,254,851) ¥ (3,119,629) ¥ (864,778)

Millions of Yen March 31, 2015 Carrying Amount Fair Value Unrealized Gain/(Loss)Cash and cash equivalents ¥ 130,002 ¥ 130,002Time deposits 114,000 114,000Trade receivables 90,957 90,957Investment securities 117,336 117,336

Total ¥ 452,296 ¥ 452,296

Short-term loans payable ¥ (31,368) ¥ (31,368) Trade payables (183,033) (183,033)Income taxes payable (71,528) (71,528)Long-term debt (1,420,834) (1,520,818) ¥ (99,984)Long-term accounts payable—railway facilities (729,685) (1,300,766) (571,080)

Total ¥ (2,436,450) ¥ (3,107,515) ¥ (671,065)

Thousands of U.S. DollarsMarch 31, 2016 Carrying Amount Fair Value Unrealized Gain/(Loss)Cash and cash equivalents $ 2,842,428 $ 2,842,428Time deposits 285,714 285,714Trade receivables 763,607 763,607Investment securities 850,000 850,000

Total $ 4,741,758 $ 4,741,758

Short-term loans payable $ (221,428) $ (221,428)Trade payables (1,598,633) (1,598,633)Income taxes payable (946,008) (946,008)Long-term debt (11,727,919) (13,237,883) $ (1,509,955)Long-term accounts payable—railway facilities (5,638,580) (11,849,857) (6,211,267)

Total $ (20,132,598) $ (27,853,830) $ (7,721,232)

Cash and Cash Equivalents and Time DepositsThe carrying values of cash and cash equivalents and time deposits

approximate fair value because of their short maturities.Investment Securities

The fair values of investment securities are measured at the quoted market price of the stock exchange. Fair value information for investment securities by classification is included in Note 4. Trade Receivables and Payables, Short-Term Loans Payable and Income Taxes Payable

The carrying values of trade receivables and payables, short-term loans payable and income taxes payable approximate fair value because of their short maturities.Long-Term Debt Including Current Portion

Domestic bonds are measured at the quoted market prices. Fair values of foreign currency bonds are measured in combination with foreign currency swaps, which qualify for hedge accounting and meet specific matching criteria and are accounted for by the method stated in the Note 3.q, by discounting the aggregated values of the bonds in combination with foreign

currency swaps at the Companies' assumed bond issuing rate. Fair values of long-term debt with floating interest rates are measured in

combination with interest rate swaps, which qualify for hedge accounting and are accounted for by the method stated in the Note 3.q, by discounting the aggregated values of the principals and interests at the Companies' assumed borrowing rate.

The fair values of other debt are determined by discounting the cash flows related to the debt at the Companies assumed bond issuing rate or corporate borrowing rate.Long-Term Accounts Payable—Railway Facilities Including Current Portion

Considering the legal characteristics, all terms and conditions of accounts payable-railway facilities are stipulated in the special law, and as no active market exists for this type of obligation, the fair values of these payables are determined by discounting the cash flow estimated for each due date at the Company’s assumed bond issuing rate. The estimated cash flows of the floating rate portion of these payables are calculated using the latest rate provided by the JRTT.

Financial Section


12.LEASESAs a lessee, the minimum rental commitments under noncancelable operating lease as of March 31, 2016 were due as follows. The minimum rental

commitments under noncancelable operating lease as of March 31, 2015, were not presented as the effect was immaterial.

Millions of YenThousands of U.S. Dollars

2016 2016Due within one year ¥ 468 $ 4,178 Due after one year 3,293 29,401

Total ¥ 3,762 $ 33,589 As a lessor, the minimum rental commitments under noncancelable operating leases as of March 31, 2016 and 2015, were due as follows:


2016 2015 2016Due within one year ¥ 2,008 ¥ 1,476 $ 17,928Due after one year 7,035 5,837 62,812

Total ¥ 9,043 ¥ 7,313 $ 80,741

13.CONTINGENCIESAs of March 31, 2016, the Company has joint and several obligations with the RTRI to make payments on long-term debt of ¥11,152 million

($99,571 thousand) issued by the RTRI. The proceeds are being used for the enhancement of technology development for the Maglev system.As discussed in Notes 5 and 6, based on debt assumption agreements with financial institutions and legal defeasance agreements with special purpose

entities, the Company has transferred the debt repayment obligations for certain bonds and long-term accounts payable—railway facilities to such financial institutions and special purpose entities. As of March 31, 2016, the Company had contingent obligations of ¥600,045 million ($5,357,544 thousand) for the bonds and ¥79,632 million ($711,000 thousand) for long-term accounts payable—railway facilities.

14.OTHER COMPREHENSIVE (LOSS) INCOMEThe components of other comprehensive (loss) income for the years ended March 31, 2016, 2015 and 2014, were as follows:


2016 2015 2014 2016Unrealized (loss) gain on available-for-sale securities:

(Loss) gain arising during the year ¥ (24,160) ¥ 25,964 ¥ 8,847 $ (215,714) Reclassification adjustments to profit 0 (158) (361) 0Amount before income tax effect (24,160) 25,806 8,486 (215,714)Income tax effect 7,440 (7,065) (2,905) 66,428

Total ¥ (16,719) ¥ 18,741 ¥ 5,581 $ (149,276) Deferred gain (loss) on hedges:

Gain (loss) arising during the year ¥ 65 ¥ (88) ¥ (40) $ 580Amount before income tax effect 65 (88) (40) 580Income tax effect (22) 29 15 (196)

Total ¥ 42 ¥ (59) ¥ (25) $ 375Remeasurements of defined benefit plans:

Adjustments arising during the year ¥ (6,381) ¥ (14,077) $ (56,973)Reclassification adjustments to profit 3,876 4,021 34,607Amount before income tax effect (2,504) (10,055) (22,357)Income tax effect 605 3,329 5,401

Total ¥ (1,898) ¥ (6,725) $ (16,946)Share of other comprehensive income in affiliates

(Loss) gain arising during the year ¥ (122) ¥ 167 ¥ 25 $ (1,089) Reclassification adjustments to profit 17 33 151

Total ¥ (105) ¥ 201 ¥ 25 $ (937)

Total other comprehensive (loss) income ¥ (18,681) ¥ 12,157 ¥ 5,582 $(166,794)

3.Information about Operating Revenues, Profit (Loss), Assets, Liabilities and Other ItemsMillions of Yen

2016Reportable Segment

Transportation Merchandise and Other Real Estate Total Other Total Reconciliations ConsolidatedOperating revenues:

External customers ¥ 1,346,347 ¥ 230,670 ¥ 38,618 ¥ 1,615,635 ¥ 122,774 ¥ 1,738,409 ¥ 1,738,409Intersegment transactions or transfers 11,815 9,025 27,471 48,312 120,252 168,564 ¥ (168,564)

Total ¥ 1,358,162 ¥ 239,695 ¥ 66,089 ¥ 1,663,947 ¥ 243,026 ¥ 1,906,974 ¥ (168,564) ¥ 1,738,409

Segment profit (loss) ¥ 556,892 ¥ 8,747 ¥ 15,637 ¥ 581,276 ¥ (1,722) ¥ 579,554 ¥ (876) ¥ 578,677Segment assets 4,648,963 105,259 342,344 5,096,567 212,356 5,308,923 (40,378) 5,268,544Other:

Depreciation and amortization 222,474 3,481 12,477 238,433 3,936 242,369 242,369Amounts of investments in equity in affiliates 8,705 8,705 8,705 8,705Increase in property, plant and equipment and intangible assets 202,549 7,855 24,338 234,743 3,635 238,379 238,379

15.SEGMENT INFORMATIONUnder ASBJ Statement No. 17, "Accounting Standard for Segment

Information Disclosures" and ASBJ Guidance No. 20, "Guidance on Accounting Standard for Segment Information Disclosures," an entity is required to report financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity for which separate financial information is available and such information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, segment information is required to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments.

1.Description of Reportable Segments The Companies' reportable segments are those for which separate

financial information is available and regular evaluation by the Companies' management is being performed in order to decide how resources are allocated among the Companies.

The Companies are composed of three reportable segments by nature of products and services: Transportation, Merchandise and Other and Real Estate are disclosed.

The Transportation segment manages the Companies' railway operations, such as the Tokaido Shinkansen and conventional railway operations in the Tokai area, bus operations and others. The Merchandise and Other segment includes a department store in JR Central Towers, retail sales in trains and stations and others. The Real Estate segment includes real estate leasing business, such as station building leasing, and real estate sales in lots.

2.Methods of Measurement for the Amounts of Operating Revenues, Profit (Loss), Assets, Liabilities and Other Items for Each Reportable Segment

The accounting policies of each reportable segment are consistent with those disclosed in Note 3, “Summary of Significant Accounting Policies.” Reportable segment profit represents operating income. Prices of intersegment transactions or transfers are determined based upon arm’s length transactions.

Millions of Yen2015

Reportable SegmentTransportation Merchandise and Other Real Estate Total Other Total Reconciliations Consolidated

Operating revenues:External customers ¥ 1,294,050 ¥ 225,038 ¥ 39,349 ¥ 1,558,437 ¥ 113,857 ¥ 1,672,295 ¥ 1,672,295Intersegment transactions or transfers 11,641 8,818 27,237 47,697 125,114 172,812 ¥ (172,812)

Total ¥ 1,305,691 ¥ 233,856 ¥ 66,587 ¥ 1,606,135 ¥ 238,971 ¥ 1,845,107 ¥ (172,812) ¥ 1,672,295

Segment profit ¥ 472,017 ¥ 8,935 ¥ 16,616 ¥ 497,570 ¥ 8,281 ¥ 505,851 ¥ 746 ¥ 506,598Segment assets 4,631,213 99,620 332,606 5,063,440 219,910 5,283,351 (65,369) 5,217,982Other:

Depreciation and amortization 251,092 3,383 13,148 267,624 3,944 271,568 271,568Amounts of investments in equity in affiliates 8,332 8,332 8,332 8,332Increase in property,plant and equipment and intangible assets 191,252 6,143 14,051 211,446 3,084 214,531 214,531

Millions of Yen2014


Operating revenues:External customers ¥ 1,264,827 ¥ 212,907 ¥ 39,182 ¥ 1,516,917 ¥ 135,630 ¥ 1,652,547 ¥ 1,652,547Intersegment transactions or transfers 11,291 7,891 28,239 47,422 114,982 162,405 ¥ (162,405)

Total ¥ 1,276,119 ¥ 220,798 ¥ 67,422 ¥ 1,564,340 ¥ 250,613 ¥ 1,814,953 ¥ (162,405) ¥ 1,652,547

Segment profit ¥ 460,130 ¥ 8,221 ¥ 13,832 ¥ 482,183 ¥ 10,581 ¥ 492,765 ¥ 1,847 ¥ 494,612Segment assets 4,749,578 92,155 323,578 5,165,312 217,708 5,383,020 (204,853) 5,178,166Other:

Depreciation and amortization 255,180 3,286 13,504 271,971 4,298 276,269 276,269Amounts of investments in equity in affiliates 7,700 7,700 7,700 7,700Increase in property,plant and equipment and intangible assets 179,856 4,621 11,665 196,144 4,050 200,194 200,194



Operating revenues:External customers $ 12,020,955 $ 2,059,553 $ 344,803 $ 14,425,312 $ 1,096,196 $ 15,521,508 $ 15,521,508Intersegment transactions or transfers 105,491 80,580 245,276 431,357 1,073,678 1,505,035 $(1,505,035)

Total $ 12,126,446 $ 2,140,133 $ 590,080 $ 14,856,669 $ 2,169,875 $ 17,026,553 $(1,505,035) $ 15,521,508

Segment profit (loss) $ 4,972,250 $ 78,098 $ 139,616 $ 5,189,964 $ (15,375) $ 5,174,589 $ (7,821) $ 5,166,758Segment assets 41,508,598 939,812 3,056,642 45,505,062 1,896,035 47,401,098 (360,517) 47,040,571Other:

Depreciation and amortization 1,986,375 31,080 111,401 2,128,866 35,142 2,164,008 2,164,008Amounts of investments in equity in affiliates 77,723 77,723 77,723 77,723Increase in property,plant and equipment and intangible assets 1,808,473 70,133 217,303 2,095,919 32,455 2,128,383 2,128,383

Notes:1. Other includes business in hotel, travel, advertising, rolling stock production and construction which are not included in a reportable segment.2. Reconciliations are as follows:

(1) The amount of the elimination of intersegment transactions included in the reconciliations was ¥(876) million ($(7,821) thousand), ¥746 million and ¥1,847 million for the years ended March 31, 2016, 2015 and 2014, respectively. (2) The reconciliations for segment assets include corporate assets, which are not allocated to a reportable segment, and the elimination of intersegment transactions.

Corporate assets principally consist of investment securities and certificates of deposits. The amounts of corporate assets were ¥320,737 million ($2,863,723 thousand), ¥303,610 million and ¥158,436 million for the years ended March 31, 2016, 2015 and 2014, respectively.The elimination of intersegment transactions consists of intersegment receivables and others. The amounts of the elimination were ¥361,116 million ($3,224,250 thousand), ¥368,979 million and ¥363,290 million for the years ended March 31, 2016, 2015 and 2014, respectively.

3. Segment profit (loss) is reconciled to operating income in the consolidated statement of income.4. Information about products and services was omitted since equivalent information was disclosed above. Information about geographical areas was not presented since the Companies have no significant overseas operations.

16.SUBSEQUENT EVENTSAppropriations of Retained Earnings

The following appropriation of retained earnings as of March 31, 2016, was approved at the Company's shareholders’ meeting held on June 23, 2016:Millions of Yen Thousands of U.S. Dollars

Year-end cash dividends, ¥65 ($0.58) per share ¥ 12,805 $ 114,330

Financial Section


Nonconsolidated Balance Sheet

Central Japan Railway Company March 31, 2016

ASSETSMillions of Yen


(Note 2)2016 2015 2016

CURRENT ASSETS:Cash and cash equivalents ¥ 308,951 ¥ 127,277 $ 2,758,491Time deposits 32,000 114,000 285,714Trade receivables 39,604 35,710 353,607Supplies 11,176 10,677 99,785Deferred tax assets (Note 8) 22,716 22,464 202,821Prepaid expenses and other 34,149 38,116 304,901

Total current assets 448,598 348,245 4,005,339

NONCURRENT ASSETS:Investments and other assets:

Investment securities 92,417 118,734 825,151Investments in and advances to subsidiaries and affiliates (Note 5) 182,075 184,325 1,625,669Deferred tax assets (Note 8) 134,382 134,898 1,199,839Prepaid expenses and other 36,378 33,054 324,803

Total investments and other assets 445,253 471,012 3,975,473Property, plant and equipment (Notes 3.e and 4):

Railway business property 7,968,043 7,912,012 71,143,241Construction in progress 207,814 165,753 1,855,482Other 164,899 163,702 1,472,312

Total 8,340,757 8,241,468 74,471,044Accumulated depreciation (4,175,182) (4,047,266) (37,278,410)

Net property, plant and equipment 4,165,574 4,194,202 37,192,625

Total noncurrent assets 4,610,827 4,665,215 41,168,098

TOTAL ASSETS ¥ 5,059,426 ¥ 5,013,460 $ 45,173,446

LIABILITIES AND EQUITYMillions of Yen


(Note 2)2016 2015 2016

CURRENT LIABILITIES:Short-term loans payable (Note 6) ¥ 129,677 ¥ 126,210 $ 1,157,830Current portion of long-term debt (Note 6) 109,171 135,930 974,741Current portion of long-term accounts payable—railway facilities 77,665 86,073 693,437Trade payables 133,584 140,984 1,192,714Provision for bonuses 21,431 21,164 191,348Income taxes payable 100,071 65,361 893,491Prepaid fares received 30,138 27,643 269,089Inter-line fares received 260 7,293 2,321Other 48,080 57,111 429,285

Total current liabilities 650,081 667,773 5,804,294

NONCURRENT LIABILITIES:Long-term debt (Note 6) 1,174,917 1,270,689 10,490,330Long-term accounts payable—railway facilities 553,856 643,611 4,945,142Provision for large scale renovation of the Shinkansen infrastructure (Note3.i) 245,000 280,000 2,187,500Provision for retirement benefits 179,399 178,432 1,601,776Other 36,262 41,855 323,767

Total noncurrent liabilities 2,189,435 2,414,589 19,548,526

CONTINGENCIES (Note 9)

EQUITY (Notes 7 and 10):Common stock—authorized, 824,000,000 shares;

issued, 206,000,000 shares in 2016 and 2015 112,000 112,000 1,000,000Capital surplus 53,500 53,500 477,678Retained earnings:

Legal reserve 12,504 12,504 111,642Unappropriated 2,124,277 1,819,258 18,966,758

Treasury stock—at cost, 8,999,156 shares in 2016 and 8,999,123 shares in 2015 (102,203) (102,203) (912,526)Unrealized gain on available-for-sale securities 19,831 36,037 177,062

Total equity 2,219,910 1,931,097 19,820,625

TOTAL LIABILITIES AND EQUITY ¥ 5,059,426 ¥ 5,013,460 $ 45,173,446

See notes to nonconsolidated financial statements

Nonconsolidated Statement of Income

Central Japan Railway Company Year Ended March 31, 2016



(Note 2)2016 2015 2014 2016

OPERATING REVENUES:Railway business ¥ 1,349,713 ¥ 1,297,852 ¥ 1,268,528 $ 12,051,008Other 8,278 8,749 8,693 73,910

Total operating revenues 1,357,991 1,306,602 1,277,222 12,124,919

OPERATING EXPENSES:Railway business (Note 3.i) 794,126 826,585 808,918 7,090,410Other 6,175 4,614 7,448 55,133

Total operating expenses 800,301 831,199 816,366 7,145,544

Operating income 557,689 475,403 460,855 4,979,366

OTHER INCOME (EXPENSES):Interest and dividend income 2,899 3,151 3,145 25,883Interest expense (65,379) (72,148) (80,069) (583,741)Other―net (Note 3.q) (3,426) (8,584) (13,190) (30,589)

Other expenses—net (65,907) (77,581) (90,113) (588,455)

INCOME BEFORE INCOME TAXES 491,782 397,821 370,741 4,390,910

INCOME TAXES (Note 8):Current 155,787 125,607 130,225 1,390,955Deferred 7,335 11,935 144 65,491

Total income taxes 163,123 137,542 130,369 1,456,455

NET INCOME ¥ 328,658 ¥ 260,278 ¥ 240,371 $ 2,934,446

Yen U.S. Dollars2016 2015 2014 2016

PER SHARE OF COMMON STOCK (Note 3.p):Basic net income ¥ 1,668.31 ¥ 1,321.21 ¥ 1,220.16 $ 14.89Cash dividends applicable to the year 125.00 120.00 115.00 1.12

See notes to nonconsolidated financial statements.

Financial Section


Nonconsolidated Statement of Changes in Equity

Central Japan Railway Company Year Ended March 31, 2016Thousands Millions of Yen (Note 2)

Outstanding Retained Earnings

Unrealized Number of Gain onShares of Common Capital Legal Treasury Available-for-Sale Total

Common Stock Stock Surplus Reserve Unappropriated Stock Securities EquityBALANCE, APRIL 1, 2013 197,001 ¥ 112,000 ¥ 53,500 ¥ 12,504 ¥ 1,346,832 ¥ (102,201) ¥ 13,749 ¥ 1,436,384

Net income 240,371 240,371Dividends from surplus, ¥110 per share (21,670) (21,670)Purchase of treasury stock (0) (0) (0)Net change in the year 6,240 6,240

BALANCE, MARCH 31, 2014(APRIL 1, 2014, as previously reported) 197,000 112,000 53,500 12,504 1,565,533 (102,201) 19,989 1,661,326Cumulative effect of accounting change (Note 3.j) 17,086 17,086

BALANCE, APRIL 1, 2014 (as restated) 197,000 112,000 53,500 12,504 1,582,619 (102,201) 19,989 1,678,412

Net income 260,278 260,278Dividends from surplus, ¥120 per share (23,640) (23,640)Purchase of treasury stock (0) (1) (1)Net change in the year 16,047 16,047

BALANCE, MARCH 31, 2015 197,000 112,000 53,500 12,504 1,819,258 (102,203) 36,037 1,931,097

Net income 328,658 328,658Dividends from surplus, ¥120 per share (23,640) (23,640)Purchase of treasury stock (0) (0) (0)Net change in the year (16,205) (16,205)

BALANCE, MARCH 31, 2016 197,000 ¥ 112,000 ¥ 53,500 ¥ 12,504 ¥ 2,124,277 ¥ (102,203) ¥ 19,831 ¥ 2,219,910

Thousands of U.S. Dollars (Note 2)

Retained EarningsUnrealized

Gain onCommon Capital Legal Treasury Available-for-Sale Total

Stock Surplus Reserve Unappropriated Stock Securities EquityBALANCE, MARCH 31, 2015 $ 1,000,000 $ 477,678 $ 111,642 $ 16,243,375 $ (912,526) $ 321,758 $ 17,241,937

Net income 2,934,446 2,934,446Dividends from surplus, $1.07 per share (211,071) (211,071)Purchase of treasury stock (0) (0)Net change in the year (144,687) (144,687)

BALANCE, MARCH 31, 2016 $ 1,000,000 $ 477,678 $ 111,642 $ 18,966,758 $ (912,526) $ 177,062 $ 19,820,625 See notes to nonconsolidated financial statements.

Notes to Nonconsolidated Financial Statements

1.INCORPORATION OF CENTRAL JAPAN RAILWAY COMPANYCentral Japan Railway Company (Tokai Ryokaku Tetsudo

Kabushiki Gaisha, the "Company") was incorporated on April 1, 1987, as a private business company, pursuant to the Law for Japanese National Railways Restructuring enacted upon the resolution of the Japanese Diet.

The business of the Japanese National Railways (the "JNR") was succeeded by the following newly established organizations: seven railway companies including the Company, the former Shinkansen Holding Corporation (a predecessor entity to the Railway Development Fund (1991–1997), which was subsequently succeeded by the Corporation for Advanced Transport and Technology (the "CATT") (1997–2003) and in turn by the Japan Railway Construction, Transport and Technology Agency (the "JRTT")), the former Railway Telecommunication Co., Ltd., Railway Information Systems Co., Ltd. and the Railway Technical Research Institute (the "RTRI") which reorganized as a public interest corporation as of April 1, 2011. The JNR itself became the JNR Settlement Corporation (the "JNRSC"). All of the assets and liabilities of the JNR were transferred to such organizations, including the JNRSC.

Prior to December 1, 2001, the Law Concerning Passenger Railway Companies and Japan Freight Railway Company (the "Law") required that authorization be obtained from the Minister of Land, Infrastructure, Transport and Tourism (the "Minister of Transport") regarding fundamentals such as: (1) commencement of business other than railway and its related business, (2) the appointment or dismissal of representative directors and corporate auditors, (3) the issuance of new shares and bonds, (4) long-term loans payable, (5) amendments to the Articles of Incorporation, (6) operating plans, (7) sales of material assets, (8) appropriations of earnings and (9) merger or dissolution. As of December 1, 2001, since the Law was revised and the Company was no longer in scope of the Law, the Company was not required to obtain the aforementioned authorizations.

On October 8, 1997, the Company's shares were listed on the Nagoya and Tokyo stock exchanges in Japan. The JNRSC, which held all 2,240,000 of the Company's outstanding shares prior to the listing, sold 1,353,929 shares in the initial public offerings. Pursuant to the Law for Disposal of Debts and Liabilities of the JNRSC enacted in October 1998, the Company's shares held by the JNRSC were transferred to Japan Railway Construction Public Corporation (the "JRCPC").On October 1, 2003, the CATT and the JRCPC were fully integrated, pursuant to the Law of Japan Railway Construction,

Transport and Technology enacted on October 1, 2003, and designated as the JRTT. In July 2005, the JRTT sold 600,000 shares of the Company. On April 5, 2006, the JRTT also sold its remaining 286,071 shares of the Company. As a result of this sale, all of the Company's shares held by the JRTT were sold.

The shares above do not reflect the effect of the hundred-for-one stock split effective as of October 1, 2012.

2.BASIS OF PRESENTATION OF NONCONSOLIDATED FINANCIAL STATEMENTSThe accompanying nonconsolidated financial statements have

been prepared from the accounts maintained by the Company in accordance with the provisions set forth in the Companies Act of Japan (the "Companies Act"), the Japanese Financial Instruments and Exchange Act, the Law for Railway Business Enterprise and their related accounting regulations, and in accordance with accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards.

As consolidated statements of cash flows and certain disclosures are presented in the consolidated financial statements of the Company, nonconsolidated statements of cash flows and certain disclosures are not presented herein in accordance with accounting principles generally accepted in Japan.

Effective for the year ended March 31, 2014, the Japanese Financial Instruments and Exchange Act and its related accounting regulations were amended to allow an entity to not disclose certain designated footnote information in its nonconsolidated financial statements if the entity prepares and discloses consolidated financial statements. Accordingly, the Company has omitted disclosure of certain footnote information in the accompanying nonconsolidated financial statements.

In preparing these nonconsolidated financial statements, certain reclassifications and rearrangements have been made to the nonconsolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2015 and 2014 nonconsolidated financial statements to conform to the classifications used in 2016.

The nonconsolidated financial statements are stated in Japanese yen, the currency of the country in which the Company is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of

Central Japan Railway Company

Financial Section


readers outside Japan and have been made at the rate of ¥112 to $1, the approximate rate of exchange as of March 31, 2016. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate. Japanese yen figures of less than one million yen are rounded down to the nearest million of yen, except for per share information, and U.S. dollar figures of less than one thousand U.S. dollars are also rounded down to the nearest thousand of U.S. dollars, except for per share information.

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.Nonconsolidation

—The nonconsolidated financial statements do not include the accounts of subsidiaries. Investments in subsidiaries and affiliates are stated at cost.

b.Cash Equivalents

—Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits, certificates of deposits, commercial paper and others, all of which mature or become due within three months of the date of acquisition.

c.Supplies—Supplies are stated at the lower of cost, determined by the

moving-average cost method, or net selling value.

d.Investment Securities—All investment securities are classified and accounted for,

depending on management's intent, as available-for-sale securities, which are principally comprised of investment securities, and are reported at fair value, with unrealized gain and loss, net of applicable taxes, reported in a separate component of equity.

Nonmarketable available-for-sale securities are stated at cost determined by the moving-average cost method. For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by a charge to income.

e.Property, Plant and Equipment—Property, plant and equipment are stated at cost. Certain

contributions in aid for construction of railways and other property are deducted directly from the cost of the related assets.

The accumulated contributions deducted from the cost of property, plant and equipment as of March 31, 2016 and 2015 amounted to ¥271,895 million ($2,427,633 thousand), and ¥269,450 million, respectively.

Depreciation is computed by the declining-balance method over the estimated useful lives of the assets. Additional depreciation is provided for the Shinkansen rolling stock based on kilometers traveled.

The range of useful lives is principally from 3 to 50 years for buildings, from 3 to 60 years for structures, from 10 to 20 years for rolling stock and from 4 to 17 years for machinery and equipment.

Depreciation of certain railway structures, except for the Shinkansen railway facilities, is computed by the replacement-accounting method.

f.Long-Lived Assets—The Company reviews its long-lived assets for impairment

whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.

g.Software Costs—Software costs are amortized by the straight-line method over five

years.

h.Deferred Charges—Bond issuance costs are fully charged to income as incurred.

i.Provision for Large-Scale Renovation of the Shinkansen Infrastructure—Provision for large scale renovation of the Shinkansen

infrastructure is provided based on the Nationwide Shinkansen Railway Development Law. In accordance with the Nationwide Shinkansen Railway Development Law and Regulations, the Company reversed the provision in the amount of ¥35,000 million ($312,500 thousand) for the year ended March 31, 2016 and ¥35,000 million for the years ended March 31, 2015 and 2014.

j.Retirement and Pension Plans—The Company has an unfunded retirement plan covering

substantially all of its employees. The provision for retirement benefits is calculated based on the projected benefit obligations at the balance sheet date. The projected benefit obligations are attributed to periods on a benefit formula basis. Actuarial gains and losses are amortized on a straight-line basis over five years, which is within the average remaining service period. Accounting treatments for unrecognized actuarial gains and losses in the nonconsolidated financial statements are different from those in the consolidated financial statements.

The Accounting Standards Board of Japan (the “ASBJ”) issued ASBJ Statement No. 26, "Accounting Standard for Retirement Benefits" in May 2012 and ASBJ Guidance No. 25, "Guidance on Accounting Standard for Retirement Benefits” in March 2015, which replaced the accounting standard for retirement benefits that had been issued by the Business Accounting Council in 1998 with an effective date of April 1,

2000, and the other related practical guidance, and were followed by partial amendments from time to time through 2009.

The revised accounting standard made certain amendments relating to the method of attributing expected benefit to periods, the discount rate, and expected future salary increases.

This accounting standard and the guidance above are effective for the beginning of annual periods beginning on or after April 1, 2014, or for the beginning of annual periods beginning on or after April 1, 2015, subject to certain disclosure in March 2015, with earlier application being permitted from the beginning of annual periods beginning on or after April 1, 2013. However, no retrospective application of this accounting standard to nonconsolidated financial statements in prior periods is required.

The Company applied the revised accounting standard and guidance above, effective April 1, 2014.

The Company changed the method of attributing the expected benefit to periods from a straight-line basis to a benefit formula basis, and the method of determining the discount rate and recorded the effect of above as of April 1, 2014, in retained earnings. As a result, retained earnings as of April 1, 2014, increased by ¥17,086 million. The effect of this change on the nonconsolidated statement of income for the year ended March 31, 2015, was immaterial.

k.Leases—Lease assets of finance leases that were not deemed to transfer

ownership of the leased property are depreciated and amortized by the straight-line method over the lease period.

l.Income Taxes—The provision for income taxes is computed based on the pretax

income included in the nonconsolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to the temporary differences.

m.Appropriations of Retained Earnings—Appropriations of retained earnings are reflected in the

nonconsolidated financial statements for the following year upon shareholders' approval.

n.Consumption Tax—Unless otherwise stated, all figures are presented net of tax.

o.Derivatives and Hedging Activities— The Company uses derivative financial instruments mainly to

manage its exposure to fluctuations in foreign exchange and in interest rates. Foreign currency swaps are utilized by the Company to reduce foreign exchange risks. Interest rate swaps are utilized by the Company to reduce interest rate risks. The Company does not enter into

derivatives for trading or speculative purposes.Foreign currency swaps, which qualify for hedge accounting and

meet specific matching criteria, are not remeasured at market value, but the hedged debt is translated at the contracted rates of the foreign currency swaps. 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.

p.Per Share Information—Basic net income per share is computed by dividing net income

available to common shareholders by the weighted-average number of common shares outstanding for the period.

Cash dividends per share presented in the accompanying nonconsolidated statement of income are dividends applicable to the respective years, including dividends to be paid after the end of the year.

q.Changes in Presentation (Nonconsolidated Statement of Income)—Prior to April 1, 2015, the loss on redemption of bonds was

disclosed separately in the other income (expenses) section of the nonconsolidated statement of income. Since during this fiscal year ended March 31, 2016, the materiality of the amount decreased, such amount is included in the other-net in the other income (expense) section. The amounts of loss on redemption of bonds separately disclosed for the years ended March 31, 2015 and 2014 were ¥13,676 million and ¥13,357 million, respectively.

r.Accounting Changes and Error Corrections—In December 2009, the ASBJ issued ASBJ Statement No. 24,

"Accounting Standard for Accounting Changes and Error Corrections" and ASBJ Guidance No. 24, "Guidance on Accounting Standard for Accounting Changes and Error Corrections." Accounting treatments under this standard and guidance are as follows: (1) Changes in Accounting Policies—When a new accounting policy is applied following revision of an accounting standard, the new policy is applied retrospectively unless the revised accounting standard includes specific transitional provisions, in which case the entity shall comply with the specific transitional provisions. (2) Changes in Presentation—When the presentation of financial statements is changed, prior-period financial statements are reclassified in accordance with the new presentation. (3) Changes in Accounting Estimates—A change in an accounting estimate is accounted for in the period of the change if the change affects that period only, and is accounted for prospectively if the change affects both the period of the change and future periods. (4) Corrections of Prior-Period Errors—When an error in prior-period financial statements is discovered, those statements are restated.

Financial Section


4.PROPERTY, PLANT AND EQUIPMENTProperty, plant and equipment as of March 31, 2016 and 2015, consisted of the following:


2016 2015 2016Land ¥ 2,327,505 ¥ 2,326,793 $ 20,781,294Buildings 542,517 536,616 4,843,901Structures 3,746,906 3,722,682 33,454,517Rolling stock 885,509 874,398 7,906,330Machinery and equipment 628,886 613,900 5,615,053Lease assets 1,617 1,323 14,437Construction in progress 207,814 165,753 1,855,482

Total 8,340,757 8,241,468 74,471,044Accumulated depreciation (4,175,182) (4,047,266) (37,278,410)Net property, plant and equipment ¥ 4,165,574 ¥ 4,194,202 $ 37,192,625

5.INVESTMENTS IN SUBSIDIARIES AND AFFILIATESThe carrying amounts and aggregate fair values of investment securities in subsidiaries whose fair values are available as of March 31, 2016 and

2015, were as follows:

Millions of Yen

2016 2015

Carrying Amount

FairValue

UnrealizedLoss

Carrying Amount

FairValue

UnrealizedLoss

Subsidiaries ¥ 27,079 ¥ 20,365 ¥ (6,713) ¥ 27,079 ¥ 25,291 ¥ (1,787)


Carrying Amount

FairValue

UnrealizedLoss

Subsidiaries $ 241,776 $ 181,830 $ (59,937)The carrying amounts of investments in subsidiaries and affiliated companies whose fair value cannot be readily determined as of March 31, 2016 and

2015, were as follows:

Millions of YenThousands ofU.S. Dollars

2016 2015 2016Subsidiaries ¥ 119,962 ¥ 119,972 $ 1,071,089Affiliates 2,133 2,133 19,044

6.SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBTThe Company has credit commitments from banks. Total

unused credit available to the Company as of March 31, 2016, was ¥100,000 million ($892,857 thousand).

All assets of the Company were pledged for the secured bonds of ¥158,500 million ($1,415,178 thousand), which the Company entered into as debt assumption agreements and have been derecognized in the nonconsolidated balance sheet (see Note 9), as an enterprise mortgage, which gives 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.

7.EQUITYJapanese companies are subject to the Companies Act. The

significant provisions in the Companies Act that affect financial and accounting matters are summarized below:a.Dividends

Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders’ meeting. For companies that meet certain criteria including (1) having a Board of Directors, (2) having independent auditors, (3) having an Audit & Supervisory Board, and

(4) the term of service of the directors being prescribed as one year rather than the normal two-year term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation.

The Companies Act permits companies to distribute dividends-in-kind (noncash assets) to shareholders subject to a certain limitation and additional requirements.

Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of equity after dividends must be maintained at no less than ¥3 million.b.Increases/Decreases and Transfer of Common Stock, Reserve

and SurplusThe Companies Act requires that an amount equal to 10% of

dividends must be appropriated as a legal reserve (a component of retained earnings) 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 25% of the common stock. Under the Companies Act, the total amount of

8.INCOME TAXESThe Company is subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of

approximately 32.7% for the year ended March 31, 2016, 35.2% for the year ended March 31, 2015, and 37.6% for the year ended March 31, 2014.The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities as of March 31, 2016 and 2015, were as

follows:


2016 2015 2016Deferred tax assets:

Depreciation and amortization ¥ 68,891 ¥ 69,311 $ 615,098Provision for retirement benefits 54,457 57,038 486,223Software 9,586 10,592 85,589Provision for bonuses 6,557 6,920 58,544Accrued railway usage charges 3,491 3,920 31,169Other 39,008 41,980 348,285

Total 181,992 189,763 1,624,928Less valuation allowance (14,028) (14,775) (125,250)

Deferred tax assets 167,963 174,988 1,499,669

Deferred tax liabilities:Unrealized gain on available-for-sale securities 7,046 14,118 62,910 Deferred gain on transfer of certain fixed assets 3,590 3,248 32,053Reserve for special depreciation 186 249 1,660Other 41 9 366

Deferred tax liabilities 10,865 17,626 97,008

Net deferred tax assets ¥ 157,098 ¥ 157,362 $ 1,402,660

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:

2014Normal effective statutory tax rate 37.6%Deduction of R&D promotion tax system (3.0)Other—net 0.6Actual effective tax rate 35.2%

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, 2016 and 2015.

New tax reform laws enacted in 2016 in Japan changed the normal effective statutory tax rate for the fiscal year beginning on or after April 1, 2016 and 2017, from approximately 31.9% to 30.6% and the normal effective statutory tax rate for the fiscal year beginning on or after April 1, 2018, to approximately 30.3%. The effect of these changes was to decrease deferred tax assets, net of deferred tax liabilities, in the nonconsolidated balance sheet as of March 31, 2016, by ¥7,772 million ($69,392 thousand) and to increase income taxes - deferred in the nonconsolidated statement of income for the year then ended by ¥8,144 million ($72,714 thousand).

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 effect of these changes was to decrease deferred tax assets, net of deferred tax liabilities, in the nonconsolidated balance sheet as of March 31, 2015, by ¥15,375 million and to increase income taxes - deferred in the nonconsolidated statement of income for the year then ended by ¥16,836 million.

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.

additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings—unappropriated can be transferred among the accounts within equity under certain conditions upon resolution of the shareholders.c.Treasury Stock and Treasury Stock Acquisition Rights

The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot

exceed the amount available for distribution to the shareholders which is determined by a specific formula.

Under the Companies Act, stock acquisition rights are presented as a separate component of equity.

The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

Financial Section


INDEPENDENT AUDITOR’S REPORT

To the Board of Directors of Central Japan Railway Company:

We have audited the accompanying consolidated balance sheet of Central Japan Railway Company and its consolidated subsidiaries as of March 31, 2016, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, and the accompanying nonconsolidated balance sheet of Central Japan Railway Company as of March 31, 2016, and the related nonconsolidated statements of income, and changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory information, all expressed in Japanese yen.

Management’s Responsibility for the Consolidated and Nonconsolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated and nonconsolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated and nonconsolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these

consolidated and nonconsolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated and nonconsolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated and nonconsolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement

of the consolidated and nonconsolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated and nonconsolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated and nonconsolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion:(1)The consolidated financial statements referred to above

present fairly, in all material respects, the consolidated financial position of Central Japan Railway Company and its consolidated subsidiaries as of March 31, 2016, and the consolidated results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.

(2)The nonconsolidated financial statements referred to above present fairly, in all material respects, the financial position of Central Japan Railway Company as of March 31, 2016, and the results of its operations for the year then ended in accordance with accounting principles generally accepted in Japan.

Convenience TranslationOur audit also comprehended the translation of Japanese

yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made in accordance with the basis stated in Note 2 to the consolidated and nonconsolidated financial statements. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

9.CONTINGENCIESAs of March 31, 2016, the Company has joint and several obligations with the RTRI to make payments on long-term debt of ¥11,152 million

($99,571 thousand) by the RTRI. The proceeds are being used for the enhancement of technology development for the Maglev system.The Company also had contingent liabilities for guarantees of the loans of a certain subsidiary amounting to ¥5,265 million ($47,008 thousand)

as of March 31, 2016.The Company has entrusted cash for the repayment of a portion of the bonds based on debt assumption agreements with financial institutions;

however, the Company is not released from the primary responsibility for the liability by these agreements. The outstanding bonds covered by these agreements as of March 31, 2016, were as follows:


2016 2016Secured 3.95% bonds due 2016 ¥ 29,000 $ 258,928Secured 2.825% bonds due 2017 49,800 444,642Secured 2.18% bonds due 2018 29,900 266,964Secured 2.6% bonds due 2020 49,800 444,642Unsecured 2.39% bonds due 2022 18,995 169,598Unsecured 2.2% bonds due 2022 18,200 162,500Unsecured 1.74% bonds due 2022 20,000 178,571Unsecured 1.42% bonds due 2017 10,000 89,285Unsecured 1.15% bonds due 2022 25,000 223,214Unsecured 1.31% bonds due 2033 10,000 89,285Unsecured 2.015% bonds due 2023 9,000 80,357Unsecured 2.2% bonds due 2024 9,900 88,392Unsecured 2.19% bonds due 2019 9,900 88,392Unsecured 1.875% bonds due 2019 20,000 178,571Unsecured 2.21% bonds due 2024 9,650 86,160Unsecured 1.775% bonds due 2020 20,000 178,571Unsecured 1.77% bonds due 2017 20,000 178,571Unsecured 2.14% bonds due 2018 18,400 164,285Unsecured 2.405% bonds due 2026 9,900 88,392Unsecured 2% bonds due 2016 30,000 267,857Unsecured 2.04% bonds due 2018 18,800 167,857Unsecured 1.88% bonds due 2016 20,000 178,571Unsecured 1.78% bonds due 2017 20,000 178,571Unsecured 1.78% bonds due 2017 20,000 178,571Unsecured 1.75% bonds due 2017 20,000 178,571Unsecured 1.69% bonds due 2018 10,000 89,285Unsecured 1.79% bonds due 2020 19,900 177,678Unsecured 1.83% bonds due 2018 10,000 89,285Unsecured 1.557% bonds due 2019 19,800 176,785Unsecured 1.667% bonds due 2019 10,000 89,285Unsecured 1.472% bonds due 2020 14,100 125,892

Total ¥ 600,045 $ 5,357,544 Based on legal defeasance agreements with special purpose entities, the Company has transferred the debt repayment obligations for certain

long-term accounts payable—railway facilities to the special purpose entities, and has provided the special purpose entities with Japanese national government bonds or cash for the payment of principal and interest on the long-term accounts payable—railway facilities. As a result of these transactions, the balance of long-term accounts payable—railway facilities was reduced by ¥79,632 million ($711,000 thousand) as of March 31, 2016.

10. SUBSEQUENT EVENTSAppropriations of Retained Earnings

The following appropriation of retained earnings as of March 31, 2016, was approved at the Company's shareholders' meeting held on June 23, 2016:


Year-end cash dividends, ¥65 ($0.58) per share ¥ 12,805 $ 114,330

June 23, 2016

Deloitte Touche Tohmatsu LLCJP TOWER NAGOYA1-1-1 Meieki, Nakamura-ku Nagoya, Aichi 450-8530 Japan

Tel: +81(52)565 5511 Fax:+81(52)569 1394www.deloitte.com/jp

Member ofDeloitte Touche Tohmatsu Limited

Financial Section


Appendices

Financial and Transportation Data

328.6

Note: The figures for Tokyo, Shin-Osaka, Kyoto, Shinagawa, and Shin-Yokohama Stations indicate Shinkansen passengers only

Note: EBITDA figures are calculated as the sum of operating income and depreciation and amortization

0

50

100

150

200(Thousand passengers/day)

Shin-Osaka

78

Nagoya

205

Tokyo

97

Kanayama

66

Shizuoka

59

Hamamatsu

36

Kyoto

37

Shinagawa

34

Shin-Yokohama

32

Kariya

33

Note: The planned figures are as of the publication of the financial report for FY2015

Note: The planned figures are as of the publication of March 2016

0

1,000

2,000

3,000

4,000

5,000

6,000(Billion yen)

(%)

4.0

3.0

5.0

6.0

7.0

8.0

’17.3(plan)

1,908.6

’96.3

5,278.5

5.84

’95.3

5,346.3

5.90

’94.3

5,392.0

6.19

’93.3

5,422.3

6.39

’92.3

5,456.2

6.53

’91.3

5,195.6

6.08

’90.3

5,232.7

6.01

’89.3

5,223.0

6.35

’88.3

5,269.3

6.81

’99.3

4,922.2

5.16

’00.3

4,801.0

5.08

’01.3

4,560.8

5.01

’02.3

4,289.3

4.91

’03.3

4,125.5

4.75

’04.3

3,943.4

4.62

’05.3

3,665.8

4.51

’06.3

3,455.7

4.30

’07.3

3,415.6

4.08

’08.3

3,260.1

3.91

’09.3

3,177.6

3.71

’10.3

3,117.0

3.54

’11.3

3,001.5

3.36

’12.3

2,829.1

3.24

’13.3

2,614.9

3.14

’98.3

5,045.2

5.21

’97.3

5,164.3

5.43

’14.3

2,351.7

3.13

’15.3

2,136.3

3.10

’16.3

1,915.6

3.12

1,700

0

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

(Billion yen)

’13.3’12.3 ’14.3 ’15.3 ’16.3 ’17.3(plan)

511.4578.6

337.4

428.1

506.5

264.1

404.2

494.6

255.6

328.0

426.1

199.9263.8

372.5

132.7

1,508.3

1,585.3

1,652.5 1,672.21,738.4 1,736.0

577.0520.0

363.0

0

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400(Billion yen)

’13.3’12.3 ’14.3 ’15.3 ’16.3 ’17.3(plan)

490.5557.6

397.7

475.4

260.2

371.8

460.8

240.3

302.4

399.1

187.8239.8

345.5

120.8

1,184.51,245.0

1,277.2 1,306.61,357.9 1,358.0

553.0496.0

349.0

Average Interest RateLong-Term Accounts Payable - Railway FacilitiesLong-Term Debt Inherited Liabilities

Latent Liabilities Born by the Shinkansen Leasing SystemCorporate Bonds

Operating Income Ordinary income Net incomeOperating Revenues

Conventional Lines Total Shinkansen Conventional Lines

’13.3’12.3 ’14.3 ’15.3

217

0

400

200

600

800

1,000

1,200(Million kilometers)

217 216

913 930 954906

214

1,1461,123 1,129 1,168

’16.3

1,201

981

220

0

200

300

100

500

400

800

700

600

900(Billion yen)

778.1

617.7662.9

640.6561.6

607.9 629.5 666.3

770.8821.0

’10.3’08.3 ’12.3 ’14.3’07.3 ’11.3’09.3 ’13.3 ’15.3 ’16.3

0

10

20

900

800

1,000

1,200

1,100

(Billion yen)

994.4

16.6 16.916.6

1,011.01,069.6

1,053.0

17.1

1,096.7

Shinkansen Total Ordinary Tickets Commuter Passes

Total Ordinary Tickets Commuter Passes

Total Ordinary Tickets Commuter Passes

’13.3’12.3 ’14.3 ’15.3 ’16.3

1,192.0

1,175.2

16.8

1,113.8 1,143.4

1,126.5

100.9

34.0

0

20

40

60

80

120

100

(Billion yen)

99.4

65.3

34.0

66.6

97.0 99.7

34.0 34.3

65.762.9

Conventional Lines

’13.3’12.3 ’14.3 ’15.3 ’16.3

102.6

68.7

33.9

0

100

200

300

400

50

150

250

350

(Billion yen)

’17.3(plan)

’90.3 ’92.3 ’94.3 ’96.3 ’98.3 ’00.3 ’05.3 ’07.3 ’09.3 ’11.3’89.3 ’91.3 ’93.3 ’95.3 ’97.3 ’99.3 ’01.3 ’02.3 ’03.3 ’04.3 ’06.3 ’08.3 ’10.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3

Capital Investment Amounts (Excluding the Chuo Shinkansen) Capital Investment Amounts (Chuo Shinkansen)

120.3

’88.3

50.1

174.3159.5

197.8211.1

166.9 164.8 171.3 172.6159.2 156.8 151.5 157.6 161.5 169.8

155.5

128.5 128.3

209.8

277.4265.2

244.8

288.8298.4 301.6

229.0

257.2259.1

362.0Shinkansen

0

10

20

100

80

120

160

140

(Million passengers)

143

155143 149 157

129 135

1414 15 14

140

’13.3’12.3 ’14.3 ’15.3 ’16.3

163

148

15

133

395

135

0

100

200

300

400

(Million passengers)384 387

130 134

257

391

253254 260

Conventional Lines

’13.3’12.3 ’14.3 ’15.3 ’16.3

401

138

262

Shinkansen

’13.3’12.3 ’14.3 ’15.3 ’16.30

1,000

2,000

40,000

45,000

35,000

50,000

55,000

(Million passenger-kilometers)

1,391

47,429

1,390

42,915

1,389 1,444

44,30350,13448,87346,930

45,54048,744

52,166

50,734

1,431

Conventional Lines

0

4,000

2,000

6,000

8,000

10,000

(Million passenger-kilometers)

9,2298,952 9,038 9,069

5,4635,490 5,588 5,481

3,575 3,641 3,5873,462

’13.3’12.3 ’14.3 ’15.3 ’16.3

9,302

3,734

5,568

Operating Income Ordinary income Net income attributable to owners of the parentOperating Revenues

Note: The planned figures are as of the publication of the financial report for FY2015

Note: Net income attributable to the parent before March 2015 describes the net income in the year-end financial results. The planned figures are as of the publication of the financial report for FY2015

Shifts in Revenues/Income (Consolidated)

Shifts in Revenues/Income (Non-Consolidated)

Transportation revenues Top 10 Stations in terms of Number of Average Daily Passengers (FY2015)

Shifts in EBITDA (consolidated)

Shifts in Capital Investment Amounts (Non-consolidated)

Shifts in Total Long-Term Debt and Payables (Non-Consolidated)

Passenger Ridership

Passenger kilometers

Rolling Stock kilometers

Appendices


Source: Statistique Internationale des Chemins de fer (Union Internationale de Chemins de fer)*1. Period is as below JR Central: April 2015 - March 2016 SNCF: January 2011 - December 2011 DB AG: January 2013 - December 2013 ATOC: April 2013 - March 2014 Amtrak: October 2009 - September 2010*2.Data for Réseau Ferré de France (RFF)*3.Data for Network Rail Ltd.*4.Total number of employees including staff for freight transport, affiliated businesses, etc. JR Central

data is as of March 31, 2016. The others are the average of the period indicated under *1*5.Sum of the data of SNCF and RFF*6.JR Central figures converted to USD using the exchange rate set on March 31, 2016. Figures for other European companies are converted to JPY using the exchange rate set on the following dates, and then converted to USD. SNCF: December 30, 2011 DB AG: December 30, 2013 ATOC: March 31, 2014

Operating Kilometers Passenger-kilometers

0

20,000

40,000

60,000

80,000

100,000

0

10,000

20,000

30,000

40,000

79,906

59,171

10,331

86,094

61,467

Amtrak (U.S.)

DB AG (Germany)

ATOC (U.K.)

SNCF (France)

JR Central (Japan)

33,449

15,748

34,08230,013

1,971

*2

*3

Amtrak (U.S.)

DB AG (Germany)

ATOC (U.K.)

SNCF (France)

JR Central (Japan)

(Kilometers) (Million passenger-kilometers)

Number of Employees*4 Average Traffic Density

0

50,000

100,000

150,000

250,000

200,000

300,000

0

40,000

20,000

60,000

80,000293,765

35,26120,047

151,808

18,164

*5

*3

Amtrak (U.S.)

DB AG (Germany)

ATOC (U.K.)

SNCF (France)

JR Central (Japan)

6,54510,294

8307,859

85,215

Amtrak (U.S.)

DB AG (Germany)

ATOC (U.K.)

SNCF (France)

JR Central (Japan)

(People) (Passenger-kilometers/day/ Operating Kilometers)

Transportation Revenues*6 Transportation Revenues per Operating Kilometer*6

0

5,000

10,000

15,000

20,000

25,000

0

2,000

4,000

6,000

700 840

40570

Amtrak (U.S.)

DB AG (Germany)

ATOC (U.K.)

SNCF (France)

JR Central (Japan)

23,258

1,507

17,027

11,56013,255

Amtrak (U.S.)

DB AG (Germany)

ATOC (U.K.)

SNCF (France)

JR Central (Japan)

(Million USD) (Thousand USD/km)

Number of Passengers Transportation Revenues per Employee*6

0

1,000,000

2,000,000

1,500,000

500,000

0

200

400

600

800

80

380

80110

640

Amtrak (U.S.)

DB AG (Germany)

ATOC (U.K.)

SNCF (France)

JR Central (Japan)

2,008,020

29,141

1,090,462

550,930

1,562,060

Amtrak (U.S.)

DB AG (Germany)

ATOC (U.K.)

SNCF (France)

JR Central (Japan)

(Thousand passengers) (Thousand USD/employee)

5,870

Services (As of April 2016)

Tokyo ~ (Operating Kilometers)

Osaka(552.6km)

Okayama(732.9km)

Hiroshima(894.2km)

Fukuoka(1,174.9km)

Travel Time*1 Shinkansen 2 hr 22 min*3 3 hr 09 min 3 hr 44 min 4 hr 47 min*4

Airplane*2 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)

Number of services and departures/arrivals per day

Shinkansen*5 250 128 99 67

Airplane 108 20 34 110*1. Travel times are in the case of the fastest service*2. Travel times in parentheses include transfer and access times between city centers and airports*3. Travel time between Tokyo and Shin-Osaka stations*4. Travel time between Tokyo and Hakata stations*5. Number of services excludes extra services

Tokyo area–Nagoya area73 thousand passengers/day

Tokyo area–Osaka area136 thousand passengers/day

Tokyo area–Okayama9 thousand passengers/day

Tokyo area–Hiroshima15 thousand passengers/day

Tokyo area–Fukuoka29 thousand passengers/day

Railway Airlines

OsakaNagoyaTokyo Hiroshima Fukuoka

JR Central JR WestOkayama

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

69% 31%

67% 33%

100%

85% 15%

10% 90%

GDP per Capita (As of 2015) Population Density (As of 2014)

Note:Figures for Japan and the U.S. are forecast figures Source: OECD Note:2012 only for the U.S. Source: Statistics Bureau, the Ministry of Internal Affairs and Communications

0

15,000

30,000

45,000

0

100

200

300

400

Japan U.K. Germany France U.S.

35,16242,850

36,78938,378 38,378

Japan U.K. Germany France U.S.

341

265226

116

33

International Comparison in Fundamentals

(USD) (Person/km2)

Appendices

Market Share (against Airlines)

Comparison between the Shinkansen and Airline Transportation

Operating Environment

International Comparison of Railway Operators

International Comparison of Railway Operators*1

Appendices


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

[FTSE4Good Index Series]“FTSE4 Good Index Series” is a socially responsible investment index provided by the FTSE Group, a subsidiary of London Stock Exchange, and selects exceptional companies throughout the world.

[ECPI Indices]“ECPI Indices” is a socially responsible investment index provided by ECPI, which investigates ESG (Environmental, Social and Governance) in a company and provides its rating information. ECPI's main offices are located in Luxembourg and Italy.

Name Number of shares held Percentage of total issued shares

Mizuho Bank, Ltd. 9,783,300 4.75%

Japan Trustee Services Bank, Ltd. (Trust Account) 8,898,900 4.32%

The Master Trust Bank of Japan, Ltd. (Trust Account) 8,164,700 3.96%

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%

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

Nippon Life Insurance Company 5,000,000 2.43%

Toyota Motor Corporation 4,000,000 1.94%

The Dai-ichi Life Insurance Company, Ltd 3,423,900 1.66%

Sumitomo Mitsui Banking Corporation 3,230,000 1.57%

The Master Trust Bank of Japan, Ltd. (Trust Account for Retirement Benefits, Mitsubishi Corporation Account) 3,000,000 1.46%

The Norinchukin Bank 3,000,000 1.46%

Total 62,303,900 30.24%

Note:In addition to the above, JR Central holds 8,999,156 treasury stocks. (As of March 31, 2016)

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

Return on Equity

JR East JR WestJR Central

10.4

15.6

10.2

0

10

20(%)

Net Income/Operating Revenues

JR WestJR Central

19.4

5.9

0.0

10

20(%)

Asset Turnover


0.40.5

0.3

0.0

0.5

1.0(times)

Financial Leverage


3.2

2.3

3.2

0

2

4(times)

Operating Income/Total Assets

Operating Income/Operating Revenues


33.3

12.5

0

20

40(%)

Interest Coverage Ratio*2


6.4

8.97.5

0

5

10(times)

Total Long-Term Debt and Long-Term Payables / Operating Revenues


0.7

0.0

0.6

1.2(times)

0

50

100

Current Ratio


66.5

83.0

65.1

(%)

Earnings per Share


625

1,714

443

0

900

1,800(Yen)

Shareholders’ Equity per Share


6,232

11,770

4,534

0

6,000

12,000

(Yen)

Dividend Payout Ratio


20.8

7.3

30.4

0

15

30(%)


6.3 6.4

0

6

12(%)

11.0

JR East

8.6 17.0

1.1 1.1

1,600,000

2,600,000

2,400,000

2,200,000

2,000,000

1,800,000

16,000

18,000

20,000

22,000

24,000

26,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

4,000

6,000

8,000

10,000

12,000

14,000

Jul.2014

Sep.2014

Nov.2014

Jan.2015

Mar.2015

May.2015

(yen) (yen)

Jan.2008

Mar.2008

May2008

Jul.2008

Sep.2008

Nov.2008

Jan.2009

Mar.2009

May2009

Jul.2009

Sep.2009

Nov.2009

Jan.2010

Mar.2010

May2010

Jul.2010

Sep.2010

Nov.2010

Jan.2011

Mar.2011

May2011

Jul.2011

Sep.2011

Nov.2011

Jan.2012

Mar.2012

May2012

Jul.2012

Sep.2012

Nov.2012

Jan.2013

Mar.2013

May2013

Jul.2013

Sep.2013

Nov.2013

Jan.2014

Mar.2014

May2014

Jul.2015

Sep.2015

Nov.2015

Jan.2016

Mar.2016

May.2016

Note: On October 1, 2012, the Company implemented a 100-for-1 stock split and employed a share unit system by which one share unit equals 100 shares. Please refer to the left axis for stock prices before September 2012 and the right axis for stock prices after October 2012.

Appendices

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

Shifts in JR Central’s Stock Price

Major Shareholders

URL: http://english.jr-central.co.jp Tel: +81-52-564-2413, Fax: +81-52-587-1300 E-mail: [email protected]

Appendices


Annual Report 2016 - JR東海 · 2019-02-06 · Railway System information are truncated, ......

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