A Message from the Management Corporate Data Our Business Performance of FY2008 Financial Section Appendices Forward-Looking Statements

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1 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2009 For the Year Ended March 31, 2009

2 Profile 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. The Company also operates a network of conventional railway centered on the Nagoya and Shizuoka areas. JR Central and its consolidated subsidiaries are strengthening affiliated businesses by making full use of the Company s stations and trains.

3 Contents A Message from the Management 2 Profile 4 Company History 5 Organization Chart 6 Board of Directors, Corporate Auditors and Corporate Officers 7 Operating Area 8 Corporate Governance 10 Our Business Safety and Reliability 12 Transportation Service 16 Sales and Marketing 20 Technological Development/Enhancement of Technical Capability 22 Promoting a Tokaido Shinkansen Bypass by the Superconducting Maglev 24 Affiliated Businesses 26 Corporate Social Responsibility 28 Performance of FY2008 Summary of the Important Managerial Information Such as Performance 30 Financial Section 33 Appendices Transportation Data 62 Financial Data 64 Capital Investment 68 Operating Environment 70 International Railway Comparison 72 Financial Comparison of Three JR Companies 74 Stock Information 76 Forward-Looking Statements In this annual report, forward-looking statements, such as those regarding business plans, strategies, and financial forecasts, are based on assumptions that reflect information available at the time of writing. The accuracy of such statements, therefore, is inherently uncertain because it is affected by future macroeconomic trends and business environment developments, notably, consumption trends, competitive challenges, and changes in relevant laws and legal provisions. Notes: 1. Fiscal 2008, the year under review, refers to the one-year period ended March 31, 2009 (FY / FY 2008). 2. In this report, figures of financial information are truncated,while statistical data and all percentages are rounded. 1

4 A Message from the Management In regard to the railway business, JR Central prioritizes maintaining safe and reliable transportation in its fundamental policy. Based on this primary principle, we also continue its fundamental policy of stably and sufficiently fulfilling its long-term mission to maintain and develop, in an integrated fashion, both the Tokaido Shinkansen which serves as Japan s main transportation artery and the conventional railway network in the Tokai (such as Nagoya or Shizuoka) region, and we constantly strive to provide services that are chosen by the customers and improve the efficiency of its business operation. Since railway business, which is the core business of the JR Central Group, requires massive capital investments and longterm technological developmentwith considerable lead times, the time frame for recovering investments is extremely long. Due to such business structure, it is vital that we manage its railway business from a long-term perspective, rather than overemphasize short-term profitability. Therefore, we are further improving the quality of our regular railway services, and promoting medium/long-term projects in a systematic manner while enhancing our financial constitution Railway business Safety measures In order to further improve the safety of our railway business, we shall continue to steadily engage in anti-quake reinforcement of embankments and bridge columns of the Tokaido Shinkansen, Yoshiyuki Kasai Chairman and strengthen our earthquake countermeasures. We are also steadily engaging in installation aimed at the conclusion of the introduction of ATS-PT (Pattern checking type-automatic Train Stop) during FY 2011 on the conventional lines. Strengthening Tokaido Shinkansen transportation service In regard to the Tokaido Shinkansen, while relentlessly striving to improve transportation services, we provide safe and punctual transportation unparalleled anywhere in the world. Along with continuing to introduce Series N700 trainsets in a concentrated manner, we shall also increase the number of regular Nozomi services operated with the Series N700. Furthermore, we shall flexibly adjust train services in accordance with peak times, based on the train systems improved via the timetable revisions of March We shall also continue efforts toward penetration of an Internet connection service onboard the Series N700, begun in March In addition, we will continue to steadily engage in renovations, such as expanding the Shinkansen platforms and drawing out tracks at Shin-Osaka Station to improve flexibility of transport. Also, we will continue to renovate major stations such as Tokyo and Shin-Osaka in order to offer further comfort and convenience to travelers, and to steadily engage in the replacement of platform fences at Shin-Yokohama Station. As far as sales are concerned, we are striving to enrich service and increase membership of EX Reservations based on EX-IC (Express IC) Service which has seen completion with expansion of area of use to the Sanyo Shinkansen and the commencement of corporate memberships in August In regards to our IC card for conventional lines, TOICA, we are steadily engaging in preparations, for example, to expand the area of use and add electronic money functions in the spring of Furthermore, we will continue to actively develop Sawayaka Walking and tourist promotion campaigns, such as those for Kyoto. Promoting a Superconducting Maglev Tokaido Shinkansen Bypass Currently, the Tokaido Shinkansen, which is vital to our business, is in its best state ever in terms of equipment and service. We aim to continue their further improvement through the efforts mentioned above. However, as the Tokaido Shinkansen approaches its 45th year of service, we have entered a time when we must think about how to create a backup system and take drastic measures to prepare for dealing with aging facilities and large-scale disasters. Therefore, it is necessary for us to realize an alternate bypass that uses Superconducting Maglev technology, which we have been developing, as quickly as possible and to operate it in an integrated fashion along with the Tokaido Shinkansen. That is why we decided in December 2007 to start preparations for constructing a Tokaido Shinkansen Bypass that utilizes Superconducting Maglev under the assumption that we will bear the cost of track construction with the goal of commencing operation between the Tokyo Metropolitan and Chukyo regions in 2025, the end of the 1st quarter of the 21st century. A Tokaido Shinkansen Bypass that utilizes Superconducting Maglev will not only serve to continually maintain and develop Japan s major transportation artery between the Tokyo, Chukyo and Kinki regions, which we are in charge of, it will also open up 2

5 great possibilities for not only JR Central, but Japan as a whole, by contributing to dramatic developments in technology and the global environment. Since this bypass will be realized as the Chuo Shinkansen stipulated in the Nationwide Shinkansen Railway Development Law, we are proceeding as necessary in accordance with the aforementioned law. In conjunction, we are continuing with efforts aimed at further improvement of Superconducting Maglev technology, which has already achieved levels sufficient for commercial operation, in preparation for practical application and commercial operation. We have also decided to invest 355 billion yen of our own capital into the Yamanashi Maglev Test line to upgrade facilities to practical application specifications and extend the line to 42.8km. These upgrades are advancing as we speak. Affiliated business In regard to non-railway businesses, in addition to steadily going forward with the plan for a new building at Nagoya Station in cooperation with related institutions, we are actively promoting businesses that can sufficiently take advantage of station location through such efforts as striving to develop businesses in the Shin- Yokohama Central Building that opened in In addition, by continuing to develop former company housing sites through such projects as the construction of Central Garden Residence Shizuoka and commercial facilities in order to effectively leverage held assets, and steadily engaging in efforts to break into the agriculture business in FY2009, we consistently endeavor to further increase the overall strength of the JR Central Group. Environmental conservation activities In regard to global environmental issues, we are continuing with projects that contribute to conservation of the global environment such as the introduction of the Series N700 which enables large reductions in energy consumption. Furthermore, along with aiming for the permeation of Eco Business Trips, we are actively seizing every opportunity to disseminate information in order to gain widespread understanding that the very nature of the railway puts little burden on the global environment. Reduction of long-term debt and payables We have reduced its long-term debt and payables, which had once totaled 5.5 trillion yen at its highest, by over 2 trillion yen, and we have steadily continued with efforts to strengthen our financial foundation. We will continue striving to reduce long-term debt and payables while enhancing the operation foundations of our businesses, such as the Tokaido Shinkansen, as well as steadily promoting efforts aimed at the construction of a Tokaido Shinkansen Bypass. Consolidated Business Activities and Performance for the year ended March 31, 2009 (FY 2008 or FY ) Amidst a harsh management environment caused by deterioration of the economy, the JR Central group has prioritized safe and reliable transportation which is the foundation of the railway business while aiming to further develop service. We also have continued to engage in efforts to improve the competency of our employees, enhance facilities, and streamline our work processes in an effort to strengthen earnings capabilities. However, due to the impact of the deteriorating economy, total passenger kilometers dropped by 0.9% year-on-year to billion passenger kilometers. As a result of making Nippon Sharyo, Ltd. (hereafter referred to as, Nippon Sharyo ) a consolidated subsidiary, operating revenues increased 0.7% year-on-year to trillion yen. Ordinary income decreased by 21.0% year-on-year due to increases in depreciation and amortization and non-personal expenses, while net income decreased by 21.1% year-on-year to 126 billion yen. We were able to achieve a decrease in long-term debt and payables by 81 billion yen which resulted in a long-term liability balance of trillion yen as of the end of March In addition, annual dividends for FY2008 were 9,000 yen per share as predicted and announced at the beginning of the fiscal year. Going forward, we will continue endeavoring to further improve our performance in order to strengthen our managerial foundations and maintain stable dividends. Chairman Yoshiyuki Kasai President Masayuki Matsumoto Masayuki Matsumoto President In addition, we are continuing with preparations to open the JR Central Museum (tentative name) in the spring of 2011 in order to widely introduce the advancements in high-speed railway technology. 3

6 Our Business Performance of FY2008 Financial Section Appendices Profile Company Name Central Japan Railway Company (JR Central) Established April 1st, 1987 Business Railways business, related businesses Management Philosophy Contribute to community development by adhering to sound management principles Provide modern, friendly, and reliable services Establish a cheerful, fresh, and active corporate culture General Principles of Safety Safety is the most important mission in transportation Security is based on observance of rules and exact works and is constructed of ceaseless practice Enforcement of confirmation and contact is most important for security For security we should cooperate unitedly beyond our official responsibility When we are open to doubt we should go a way to safe considering thoroughly Basic Information on a Non-consolidated Basis Paid in Capital Operating Revenues Number of Shares Outstanding Share Listings Number of Shareholders Number of Employees Operating Kilometers Number of Stations Number of Rolling Stock Double-and Multi-Tracked Section Electrified Section Centralized Traffic Control Automatic Signaling System (As of the end of FY ) 112 billion 1,241 billion 2.24 million (Cancelled 90,000 shares of treasury stock held by JR Central in May 2009) Nagoya, Tokyo and Osaka 133,995 16,595 1,970.8 kilometers 404 4, % (1,086.8km) 75.7% (1,491.7km) 97.5% (1,922.3km) 97.8% (1,927.3km) Head Offices and Other Offices Head Office JR Central Towers, 1-1-4, Meieki, Nakamura-ku, Nagoya, Aichi , Japan Tokyo Head Office JR Central Shinagawa Building -A Wing , Konan, Minatoku, Tokyo , Japan Conventional Lines Operations Division JR Central Taiko Building, Meieki 1-3-4, Nakamura-ku, Nagoya, Aichi , Japan Shizuoka Branch Office 4, Kurogane-cho, Aoi-ku, Shizuoka, Shizuoka , Japan Mie Regional Office Ust-Tsu 12F, 700, Hadokoro-cho, Tsu, Mie , Japan Iida Regional Office 5356, Kami-Iida, Iida, Nagano , Japan Shinkansen Operations Division Marunouchi Chuo Building, 1-9-1, Marunouchi, Chiyoda-ku, Tokyo , Japan Kansai Branch Office Shin-Osaka Central Tower 7F, , Nishi-nakajima, Yodogawa-ku, Osaka, Osaka , Japan Washington D.C. Office th Street, N.W., Suite 520, Washington, DC 20006, U.S.A. Tel: Fax: London Office Level 17 City Tower, 40 Basinghall Street, London, EC2V 5DE, U.K. Tel: Fax: Sydney Office Suite 2502, Gateway, 1 Macquarie Place, Sydney, N.S.W., 2000, Australia Tel: Fax:

7 Company History April Central Japan Railway Company (JR Central) is established. March New stations are established on the Tokaido Shinkansen (Shin-Fuji, Kakegawa, Mikawa-Anjo). JR Tokai Bus Company is established (now a consolidated subsidiary). In April automobile transport business was transferred to the company. March New-model DMU is introduced to the Hida Express on thetakayama line. February JR Central starts topographical and geological surveys along entire proposed route of the Chuo Shinkansen between Tokyo and Osaka 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 Test Line and approval is received. October JR Central takes over the Tokaido Shinkansen facilities. March The first Nozomi (Series 300) begins commercial operation on the Tokaido Shinkansen. 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). June JR Central Building Co., Ltd. is established (now a consolidated subsidiary). April Running tests start on the Yamanashi Maglev Test Line. October JR Central lists on the first section of the Nagoya, Tokyo and Osaka stock exchanges and also the Kyoto Stock Exchange (merged with the Osaka Stock Exchange in March 2001). March New Series 700 is introduced to Nozomi on the Tokaido Shinkansen. December Construction of JR Central Towers is completed. March JR Nagoya Takashimaya opens (operated by JR Tokai Takashimaya Co., Ltd.). May Nagoya Marriot Associa Hotel opens (operated by JR Tokai Hotels Co., Ltd.). 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. July A new research center is constructed at Komaki City in Aichi Prefecture. October The new Shinagawa Shinkansen station opens. The timetable is drastically revised by the upgrading of the maximum speed on all Tokaido Shinkansen trains to 270km/h. 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 in JR Central. March New Automatic Train Control (ATC) system is introduced into the Tokaido Shinkansen. April JR Central repurchases 268,686 shares of its common stock following a resolution of the Board of Directors as authorized under the company s Articles of Incorporation. The JNR Settlement Headquarters within the JRTT completes the sale of its entire shares in JR Central by selling 286,071 shares of common stock of the company. January Application for changes of Yamanashi Test Line Construction Plan was approved by the Minster of Land, Infrastructure and Transport. July JR Central introduced the new Series N700 for Nozomi services. October Making Nippon Sharyo a consolidated subsidiary of ours JR Central submitted a report to the Minister of Land, Infrastructure and Transportation concerning geological surveys between Tokyo and Osaka areas December JR Central started to conduct four surveys related to the Chuo Shinkansen received from the Ministry of Land, infrastructure and Transport May JR Central cancelled 90,000 shares of treasury stock that it held based on a resolution by the Board of Directors. April 1,1987Establishment of JR Central April 3,1997Superconducting Maglev running tests begin October 8,1997Shares are listed on the Nagoya, Tokyo, Osaka, and Kyoto Stock Exchanges December 20,1999Construction of JR Central Towers is completed October 1,2003 The Shinagawa Shinkansen Station is opened 5

8 Our Business Performance of FY2008 Financial Section Appendices Organization Chart (As of July, 2009) Board of Directors Secretarial Department Chairman Corporate Planning Division President General Technology Division Tokaido Shinkansen 21st Century Division Supervision Department Audit Department Public Relations Department Conventional Lines Operations Division Transportation and Marketing Department Rolling Stock Department Administration Department Engineering Department Legal Affairs Department Shizuoka Branch Office Personnel Department Mie Regional Office Iida Regional Office Corporate Auditors Finance Department Property Management Department Planning Department Supervision Department Board of Corporate Auditors Marketing Division Business Promotion Division Shinkansen Operations Division Transportation and Marketing Department Rolling Stock Department Construction Department Tracks and Structures Department Transportation Safety Department Electrical Engineering Department Overseas Offices : Washington D.C., London, Sydney Kansai Branch Office Employee Training Centers Nagoya Central Hospital Health Care Center Administration Management Center 6

9 Board of Directors, Corporate Auditors and Corporate Officers (As of July, 2009) Yoshiyuki Kasai Chairman Masayuki Matsumoto President Yoshiomi Yamada Executive Vice President Koushi Akutsu Executive Vice President Toyonori Noda Executive Vice President Kouei Tsuge Executive Vice President Board of Directors and Corporate Auditors Corporate Officers Chairman Yoshiyuki Kasai* President Masayuki Matsumoto* Executive Vice Presidents Yoshiomi Yamada* Koushi Akutsu* Toyonori Noda* Kouei Tsuge* Senior Executive Directors Tsutomu Morimura Jun-ichi Hirasawa Mitsuru Nakamura Executive Directors Shin Kaneko Naotoshi Yoshikawa Directors Yukihiro Masuda Katsumi Miyazawa Tadashi Morishita Yoshito Tsubouchi Yoshiki Suyama Hidenori Fujii Sumio Atsuchi Hideyuki Shoji Fujio Cho Kenji Koroyasu Toshitaka Hayakawa Corporate Auditors Masayuki Kono Takaharu Kachi Harumi Umeda Hiromu Emi Shigeo Kifuji *Representative Director Corporate Executive Officers Masaki Seki Osamu Nakayama Corporate Officers Takashi Ono Noriyuki Shirakuni Takatoshi Yoshida Yutaka Osada Sumio Kudo Sakae Ishikawa Shun-ichi Kosuge Mamoru Uno Kiyoshi Watanabe Makoto Baba Kimiaki Tanaka Atsushi Suzuki 7

10 Our Business Performance of FY2008 Financial Section Appendices Operating Area 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. The company also operates a network of 12 conventional lines centered on the Nagoya and Shizuoka areas. Hokkaido Railway Company SAPPORO Area: Approx. 380,000 km 2 Population: 127 million Source: Residential Register (Data as of ) JR Central Shinkansen Conventional Railway Other JR HACHINOHE NIIGATA East Japan Railway Company West Japan Railway Company NAGANO HIROSHIMA OKAYAMA KYOTO NAGOYA TOKYO HAKATA SHIN-YATSUSHIRO KAGOSHIMA-CHUO Kyushu Railway Company TAKAMATSU Shikoku Railway Company SHIN- OSAKA SHIZUOKA Central Japan Railway Company Shinjuku Shibuya Tokyo Shinagawa Operating Kilometers Tokaido Shinkansen Conventional Railway Tokaido Line Gotemba Line Minobu Line Iida Line Taketoyo Line Takayama Line Chuo Line Taita Line Kansai Line Kisei Line Meisho Line Sangu Line 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 Shin-Yokohama Subtotal 1,418.2km Total 1,970.8km 8

11 Inotani Takayama Line Shiojiri Tatsuno Kyoto Shin-Osaka Taita Line Mino-Akasaka Mino-Ota Ogaki Maibara Gifu Tajimi Nagoya Kameyama Meisho Line Ise-Okitsu Kansai Line Obu Taketoyo Taketoyo Line Matsusaka Sangu Line Taki Toba Chuo Line Iida Line Toyohashi Tokaido Line Tokaido Shinkansen Tokyo Kofu Shinagawa Minobu Line Gotemba Line Shin-Yokohama Fuji Kozu Atami Numazu Shizuoka Kisei Line Shingu Other Services Consolidated Operating Revenues Composition Non-Consolidated Operating Revenues Composition Affiliated Businesses Real Estate Merchandise and Other FY data Miscellaneous Conventional Railway Transportation Tokaido Shinkansen Note: Consolidated composition is based on the revenues from outside of JR Central's group 9

12 Our Business Performance of FY2008 Financial Section Appendices Corporate Governance At JR Central, we are striving to develop corporate governance in order to ensure sound, efficient and transparent management, develop the corporation over the long-term, and continually improve corporate value. Appropriate Management System The Board of Directors of JR Central is comprised of 22 members (three of which are external directors). We also employ an auditor system comprised of five auditors (three of which are external auditors). (*numbers are as of July 2009) The Board of Directors meets once a month, makes legal and appropriate decisions upon fully debating issues stipulated by the law and issues of importance to management, and monitors the status of director management. We also have established an executive board to fully discuss important issues related to management in advance of the Board of Directors meeting. Furthermore, in an effort to clarify the roles of the Board of Directors that is responsible for management decisions and supervising management, and corporate officers that are responsible for operation, in May 2003 we introduced a corporate officer system in an effort to quickly promote decisions by the Board of Directors and develop discussion. Auditors attend important meetings such as the Board of Directors meeting and executive board meetings and strive to ensure the legality of management plans from the discussion process along with implementing inspections of the work conducted at JR Central s headquarters, railway operations divisions, regional offices, field offices and subsidiaries to check the status of management based on plans enacted by the Board of Auditors. Internal audits are performed by the Audit Department on the work of JR Central, its subsidiaries, and related companies to determine whether such work is legal and appropriate based on laws, the articles of incorporation, and internal stipulations, the results of which are reported to management. In addition, in order to prevent operational and labor accidents, safety audits are periodically performed at each field office by the Transportation Safety Department and the results are reported to management. We also undergo appropriate accounting audits based on generally accepted accounting standards by the audit corporationtohmatsu, which has been selected to be our auditor. Auditors, internal audit departments, and accounting auditors are mutually linked by exchanging information periodically and as necessary. JR Central s Corporate Governance General Shareholders Meeting Selection Selection Selection Board of Directors Audit Auditors (Board) Cooperate President Board of executives Headquarters, Regional offices, Field offices Audit Internal Audit Department (Audit Department/Transportation Safety Department) Cooperate Audit Audit Cooperate Accounting Auditors Management/guidance Audit Group companies Audit 10

13 Fundamental Corporate Governance Policies At JR Central, the Board of Directors decides on the following fundamental corporate governance policies. 1.System to ensure that the execution of duties by directors and employees is in accordance with laws and the articles of incorporation The Board of Directors monitors the status of director management along with making legal and appropriate decisions upon fully debating issues stipulated by the law and issues of importance to management. The department in charge of internal audits performs internal audits of the work of directors, corporate officers and employees to determine whether such work is legal and appropriate based on laws, the articles of incorporation, and internal stipulations. A system to obtain advice as necessary from external experts, such as retained lawyers, is in place and we strive to ensure that operation is carried out in a legal manner. 2.System related to storing and managing information concerning the execution of duties of directors Those documents for which a storage need has been determined in accordance with internal regulations are properly stored and managed. 3.Stipulations and systems related to managing the danger of loss Decisions made in regards to items for which each department is responsible are processed as stipulated in accordance with their importance, such as by seeking approval by upper managers and/or through meetings,. In addition, in regards to preventing railway operation accidents, effective countermeasures are actively promoted as a result of discussions by Railway Safety Promotion Committees. 4.System to ensure that the duties of the director are executed efficiently An efficient work system is introduced by clearly stipulating the duties of each department and its authority in accordance with internal regulations, and by properly assigning personnel in accordance with the task and work load. 5.System for ensuring the suitability of work performed by corporate groups comprised of JR Central and subsidiaries In accordance with internal regulations, we manage and provide guidance for affiliated companies as needed based on agreements signed with these companies that stipulate how important items are to be discussed and reported. The department in charge of internal audits performs audits to ensure that affiliates are engaging in business in an appropriate manner. 6.System related to employees that have been assigned to auditors at their request to assist with the auditor s duties and matters related to the independence of those employees from directors Some of JR Central s employees will be designated as auditor staff for the purpose of assisting such auditor with the execution of their duties. The Personnel Department shall hear the opinions of the auditor in advance in regards to auditor staff personnel. 7.System to enable directors and employees to report to an auditor, and other systems for reporting to auditors If directors, corporate officers, or employees discover facts that may cause great loss to the Company or important facts that infringe upon laws or the articles of incorporation, in accordance with internal regulations they must immediately report such to an auditor or the Board of Auditors. Furthermore, directors, corporate officers, and employees shall report on the execution of their duties if requested to do so by an auditor or the Board of Auditors. 8.Other systems to ensure that audits of auditors are performed effectively Auditors shall attend important meetings such as executive board meetings in addition to Board of Directors meetings to ensure that the process of deliberation of management issues is conducted legally. The department in charge of internal audits shall strengthen its links with auditors and accounting auditors in an effort to enhance audits. Risk-management System At JR Central, we have established Railway Safety Promotion Committees at headquarters, railway operation divisions, regional offices and in each area in order to establish and promote safety countermeasures through an integrated organization that stretches from headquarters to each field office from the perspective of preventing railway operation accidents and labor accidents. Furthermore, along with having an emergency response center on call 24 hours a day at each railway operation division in order to deal with emergencies such as accidents or disasters, we have also created a fast-response restoration team that can be called in at anytime in response to the scale and impact of an accident or disaster. Also, in preparation for emergencies such as large-scale natural disasters, we have established a second General Control Center for the Tokaido Shinkansen that can assume the tasks of the Central Control Center. Dealing with Internal Control related to Financial Reporting We have taken all possible measures to deal with internal control related to financial reporting. As for the FY2008 introduction of a system that is based on the Financial Instruments and Exchange Law, we confirmed JR Central and JR Central Group systems, their implementation statuses, then submitted an Internal Control Report in June 2009 to advisory ministries/agencies, which concluded that internal control for financial reporting was valid. 11

14 Our Business Performance of FY2008 Financial Section Appendices Safety and Reliability Initiatives for Securing and Enhancing Safe and Reliable Transportation JR Central believes that ensuring safe and reliable transportation is the fundamental principle of the railways business, andhas worked since its inception to improve its systems and introduce the latest technologies for its rolling stock and equipment. Accordingly, we are continually implementing education and training for staff in charge of train operations and facility maintenance, and also improving our ability to respond quickly to all situations including emergencies through the implementation of practical training based on various types of simulated accidents or disasters. Safety-Related Investments Last 5 years (Non-consolidated) (Billions of Yen) Train Accidents Total Capital Investments Number of overall train accidents Safety-Related Investments Number of railway crossing accidents Policies for Ensuring and Enhancing Safety JR Central has carefully implemented a wide range of safety-related capital investment including the upgrading of ATC (Automatic Train Control) and CTC (Centralized Traffic Control) systems for the Tokaido Shinkansen, the introduction of CTC on conventional lines, the upgrading of safety devices on level crossings, strengthening of elevated track columns, embankments, and bridges as earthquake countermeasures, the improvement of electrical facilities, and the replacement of rolling stock. Further, note that while JR Central appropriately implements various inspections of structures including tunnels and bridges, the company is also developing more efficient and effective inspection methods and has continually introduced various inspection equipment and systems. Furthermore, the installation work to complete the introduction of ATS-PT on conventional lines by FY2011 is proceeding steadily. As described above, JR Central has worked actively since its inception to promote passenger safety and has spent a total of approximately 2.1 trillion yen (approximately 56% of total capital investment) over the 22 years up until the end of FY Of the billion yen in total non-consolidated capital investments that took place in FY2009.3,178.9 billion yen (67%) were safety-related investments. Trends in Accident Numbers JR Central works to prevent accidents by placing top priority on ensuring safe and reliable transportation. On conventional lines, in order to prevent a potentially serious accident occurring at a level crossing, we have improved our hardware by installing various level crossing safety devices and strengthening the functionality of the ATS (Automatic Train Stop) system. As a result of these efforts, the number of railway accidents during FY was 20, which represents fewer accidents than a half of the initial number of accidents at the time the company was founded. Preparing for Natural Disasters In regard to Shinkansen earthquake countermeasures, we have already completed anti-quake reinforcement of elevated track columns, except on parts related to development projects; in particular, elevated track columns that were deemed to require reinforcement as a result of an anti-quake diagnosis performed on all Tokaido Shinkansen track after the Hanshin-Awaji Earthquake, and elevated track columns between Mishima and Toyohashi Stations, which were designated as requiring reinforcement since the expected wave patterns for a future Tokai Earthquake published by the Japanese government in 2003 suggest ground motion in this area could be particularly strong. In conjunction, we are also proceeding with the antiquake reinforcement of bridges and embankments, and in 2008 we engaged in efforts to further strengthen structures in the same section. Furthermore, we are engaged in work to strengthen facilities on conventional lines, such as construction to prevent bridges from falling down and anti-quake reinforcement of elevated track columns. In regard to earthquake prevention systems, in 1992 JR Central became the first company to introduce an Earthquake Rapid Alarm System, which was introduced on the Tokaido Shinkansen, and we have made efforts to introduce a Conventional-Lines Earthquake Information Communications System. By completing the Tokaido Shinkansen Earthquake Rapid Alarm System (TERRA-S) in 2005, the amount of time required from earthquake detection to alarm issuance was reduced from three seconds to two seconds. Furthermore, to increase the speed and accuracy of earthquake detection the number of seismometers alongside railway lines was increased from 25 to 50 in In addition, the number of TERRA-S detection points was increased from 14 to 21. Also, from November 2008 we have been leveraging emergency earthquake information for advanced users sent out by the Japan Meteorological Agency in an effort to further improve safety against earthquakes. We are also devising measures to minimize the impact of other natural disasters on its railway operations. For example, we are conducting various kinds of trainings to restore the diagrams into good condition as early as possible, including training for the rapid communication of information in accordance with prescribed communication network. To protect railway lines from rain, wind, snow and other inclement weather, we are improving facilities including embankments and cutting slopes, and installing and improving facilities and devices for the prevention and detection of falling rocks. Additionally, in extreme situations when wind speeds or rainfall exceeds certain levels, operations are restricted to guarantee safe and reliable transportation. 12

15 Train Control System in the Case of Earthquakes Tokai General Control Center Earthquake Rapid Alarm System General Control Center of Tokaido-Sanyo Shinkansen Locations of Seismometers and Detection Points Tsuruga Sayama Shimofusa Tokyo Minobu Harima Kawane Train Radio Transmit train to stop Relay Station Substation Stop Electricity Shin- Osaka Awazi Seismometers alongside railway lines (50) Conventional Earthquake Data Transmission System splicing equipment for earthquake early warning Detector Seismometer Detection points (21) Detector S Wave Japan Meteorological Agency (Japan Meteorological Business Support Center) P Wave Epicenter Education and Training To ensure safe and reliable transportation, JR Central implements safety education and training for the employees engaging in train operations and facility maintenance. In particular, we regularly confirm the knowledge and skills of staff in charge of train operation in order to be thoroughly prepared to maintain safety. We also work to strengthen our ability to respond to accidents by holding training sessions that simulate actual accidents, such as the simulated repair of derailed rolling stock, as well as damage repair trainings that include the restoration of track, power cable and signal communication facilities, and various competitions. In addition, at JR Central, which is seeing a swift generational change, in order to see that technological know-how is passed down to the incoming generation of employees, we are striving to improve skills of employees by implementing group training that improves professional skill, specialty training, and OJT at each workplace for new hires and according to the various career stages of employees. Furthermore, we are steadily engaged in efforts that allow vast amounts of knowledge and experience to be passed down to younger employees by rehiring in principle those former employees who have reached retirement age and still wish to continue working as contract employees. The Series N700 Driving simulator General training session simulating actual accidents 13

16 Our Business Safety and Reliability Performance of FY2008 Financial Section Appendices Tokaido Shinkansen Shinkansen Operation System The safe and punctual operation of the Tokaido Shinkansen is supported by the complete safety control through utilizing various systems, with the Shinkansen Operation System (COMTRAC*) as the core, which accurately control vast volumes of data such as the operational status of trains and the utilization of facilities. At the General Control Center, various directives, such as transportation, usage, facility, electrical power, and signal, utilize these systems and work in close cooperation to support the safe and reliable transportation. * COMTRAC (COMputer-aided TRAffic Control) COMTRAC is the system that controls train routes, train operations, and 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) the system can monitor the status of all trains in operation. High-Speed Multipurpose Inspection Train (Doctor Yellow) Comparison between New ATC and Previous ATC New ATC Previous ATC ATC (Automatic Train Control) System The ATC system continually displays a signal to the driver showing the train s maximum permitted speed which varies according to the distance from the train in front of it and track conditions. If the train exceeds the permitted speed, the ATC automatically applies the brake to bring the train's speed back within the permitted range. We introduced a new ATC system that uses the various cutting-edge technologies to enhance reliability with the renewal of Tokaido Shinkansen ATC ground equipment in March Unlike the existing multi-step brake control system, the new system is onestep brake control system that ensures smoother one-step braking from full speed to a complete stop. This improves passenger comfort, facilitates flexible timetable scheduling and raises system reliability. Doctor Yellow JR Central runs a multipurpose inspection train, known as Doctor Yellow, to test the Shinkansen s facilities such as electrical facilities and track. This train, which is based on the Series 700, is equipped with the latest devices to efficiently conduct high precision measurements and inspections at speeds of 270 kilometers an hour, and it therefore plays an important role in supporting the safety and reliability of the Tokaido Shinkansen. Operating Management System of Shinkansen Shinkansen General Control Center Centralized Information Control COMputer-aided TRAffic Control Programmed Man-Machine Electronic Route Advanced Data Control Processor Processing Centralized Substation Control Shinkansen Management Information System Centralized Traffic Control Passenger Information Control ATC Display panels / Automatic announcement system 14

17 Conventional Railway Conventional Railway Operation System JR Central s 12 conventional lines are controlled from two control centers ; the Tokai General Control Center and Shizuoka General Control Center. Each of the centers monitors the operational status of trains and the utilization of facilities 24 hours a day. Centralized Traffic Control (CTC) The CTC system efficiently controls train operations through the centralized remote control of station signals. The system is also equipped with functions for real-time monitoring of the operational status of trains. By using the CTC system, JR Central is able to manage train and station information at its control centers. Such centralization allows orders and directives to be issued more rapidly, not only in ordinary situations but also in emergency situations. And JR Central has implemented the CTC system on almost all of its lines, thus ensuring reliable train management. ATS: Automatic Train Stop ATS is a system for automatically applying train emergency brakes in situations where the train risks overrunning. JR Central has introduced ATS-ST systems on all lines. They have functions such as immediately applying the emergency brake if the train passes over an ATS ground coil located short of signals which control departures and arrivals of trains in a station when such signal indicates that the train should stop. We have also expanded the functions of the conventional ATS and improved safety. To further promote safety on conventional lines, as current ATS-ST systems need replacement due to aging, we are replacing the systems with an ATS-PT system, which exerts continual monitors the train s speed in accordance with the distance between the running train and signals indicating a stop sign and applies the emergency brakes if the train exceeds allowable speeds. We plan to finish the introduction of the ATS-PT system by the end of FY2010 on the Tokaido line (between Atami and Maibara), Chuo Line (between Nagoya and Nakatsugawa), Takayama Line (between Gifu and Mino-Ota), Kansai Line (between Nagoya and Kawarada) - and on all lines by the end of FY2011. Doctor Tokai As for the maintenance and management of railway tracks and electrical facilities, the use of the Doctor Tokai multiple inspection train, introduced in 1997, has enabled the efficient and early monitoring of facility conditions. Following on from Doctor Tokai's long track record of steady and reliable inspections for approximately ten years, JR Central introduced an additional track inspection train, known as Doctor, in April The new train is equipped with the latest technologies, and allows us to further improve our ability to carry out a frequent high precision track testing. CTC Area Inotani Shiojiri Takayama Line Tatsuno Mino-Akasaka Chuo Line Mino-Ota Ogaki Gifu Kofu Maibara Taita Line Iida Line Tajimi Minobu Line Kyoto Kansai Line Nagoya Gotemba Line Kameyama Obu Fuji Shin-Osaka Taketoyo Line Kozu Toyohashi Numazu Atami Meisho Line Taketoyo Tokaido Line Shizuoka Matsusaka Ise-Okitsu Taki Sangu Line Tokaido Shinkansen Shingu Kisei Line Toba CTC system completion area Comparison between ATS-ST and ATS-PT ATS-ST Speed Introduction of ATS-PT Inotani Shiojiri Takayama Line Tatsuno Mino-Akasaka Chuo Line Ogaki Mino-Ota Gifu Nakatsugawa Kofu Maibara Taita Line Iida Line Tajimi Minobu Line Kansai Line Kyoto Nagoya Gotemba Line Kawarada Obu Kameyama Fuji Taketoyo Line Kozu Shin-Osaka Toyohashi Taketoyo Numazu Atami Meisho Line Shizuoka Matsusaka Ise-Okitsu Taki Sangu Line Tokaido Line Shingu Kisei Line Driver is warned Ground coil Ground coil (Alarming point) (Speed check) ATS-PT Speed Braking Pattern Ground coil (Pattern generation) Toba Signal Ground coil below signal (Immediate stop) To be introduced by FY2010 To be introduced by FY2011 Tokyo Speed is continuously checked. At any given speed, if the speed exceeds the pattern the emergency brake activates. Signal train s running curve Track Inspection Train Doctor 15

18 Our Business Transportation Service Performance of FY2008 Financial Section Appendices Providing Services Customers Will Choose We are working to improve our services establishing easy-to-use timetables, improving facilities, and introducing new rolling stock to increase speed and passengers comfort. Japan s GDP and Tokaido Shinkansen Passenger-kilometers (100 million passengerkilometers) Passenger-kilometers(JNR) Passenger-kilometers (JR Central) Sources: GDP: Annual Report on National Accounts Tokaido Shinkansen Data (FY2009.3) Total daily number of trains 323 Average daily passenger ridership 409 thousand Yearly passenger ridership 149 million Maximum operating speed 270km/h Average delay from schedule per train 0.6 minutes *1. As of the beginning of April 2009 *2. Including delays due to uncontrollable causes, such as natural disasters Tokaido Shinkansen Service (Nozomi, Hikari, Kodama) Nozomi Hikari Kodama TokyoShin-Osaka, time required TokyoShin-Osaka, fare/surcharge * 2 2 hr 25 min* 1 14,050 Approx. 3 hr 13,750 Approx. 4 hr 13,750 *1 Based on the fastest Nozomi services at the time *2 For a reserved seat of ordinary cars (normal season) Non-reserved seats are all 13,240 *3 May vary by train * 1 * 2 Number of non-reserved seat cars Stops Nozomi:Shinagawa,Shin-Yokohama, Nagoya and Kyoto Hikari:Same as Nozomi, plus a few additional stations Kodama:Every station * 3 Tokaido Shinkansen Since its inauguration in 1964, 4.8 billion people have used the Tokaido Shinkansen, the transportation artery linking Japan s three largest metropolitan areas, Tokyo, Nagoya, and Osaka, which has supported Japan s economic growth. The Tokaido Shinkansen mainly has the following features. Safety Because of safety measures, such as the comprehensive training of employees and the introduction of a training control system that uses the most sophisticated electronic technologies, the Tokaido Shinkansen has maintained a flawless safety record of no accidents resulting in fatalities or injuries of passengers onboard during more than 40 years of commercial train operation. Punctuality In FY2009.3, the average delay from schedule per train was a mere 0.6 minutes. The Tokaido Shinkansen boasts high punctuality, making it especially relied upon among business travelers. Comfort We consistently endeavor to provide passengers with the most comfortabletraveling environment that accurately responds to the needs of the times through introducing new rolling stock with enhanced riding comfort and noise suppression, constantly renovating stations and installing new facilities such as elevators and escalators. The Series N700 rolling stock, which began commercial operation in July 2007, offers an even more comfortable interior space that meets the various needs of our passengers as well as services that introduce the latest technology. In addition, in March 2009 we launched a wireless LAN Internet connection service onboard the Series N700. (Available between Tokyo and Shin-Osaka) High Speeds The Tokaido Shinkansen s Nozomi services connect the city centers of Tokyo and Osaka in 2 hours and 30 minutes which is virtually the same time that this route takes by air, if one includes the time necessary to travel between airports and city centers, as well as check-in and transit times. With the debut of the Series N700 in July 2007, the travel time reduced to 2 hours and 25 minutes thereby making the Tokaido Shinkansen more convenient. Frequency and Capacity Considering that 323 regular trains per day(excluding extra services) are currently operated and that a trainset has a seating capacity of around 1,300, the capacity advantage of the Tokaido Shinkansen over other transportation means is substantial. Also, up to nine Nozomi services are operated per hour for the Tokyo Shin-Osaka route, which provides passengers with a high-volume and high-frequency travel option, available at any time to suit their schedule. The Express Reservation service allows users to change their reservations via mobile phones or PCs as many times as they like prior to departure without having to physically visit a station, so that they can take maximum advantage of the overwhelmingly frequent Tokaido Shinkansen services. Shinkansen train (Series N700,700,300) 16

19 Timetable Revisions from October 2003 to March 2008 In October 2003, JR Central upgraded the maximum speed of all trains to 270km/h, opened Shinagawa Station and drastically revised the timetable so that a maximum of seven Nozomi services were operated each hour. We further boosted transportation capacity by allowing up to eight Nozomi services per hour in March 2005, and in March 2006 we aimed to further improve convenience to the Sanyo section by increasing the number of Nozomi services that directly link the Tokaido and Sanyo Shinkansen sections and operating two Nozomi services between Tokyo and Hakata per hour. In July 2007 we commenced commercial operation of the Series N700 and in March 2008 we began operation of one Series N700 per hour for direct service between Tokyo and Hakata. This revision also increased the number of Nozomi services between Tokyo and Hiroshima from two to three and had all trains stop at Shinagawa and Shin-Yokohama Stations, thus increasing the convenience of trains on the Tokaido section as well as those with direct service to the Sanyo section. Tokaido Shinkansen Daily Departures (Trains / day) March 2009 Timetable Revision In March 2009, JR Central implemented a timetable revision. (1) Increase in the number of Nozomi services per hour to maximum nine. (2) Increase the number of direct services between the Tokaido and Sanyo sections. The number of Nozomi services with direct service between the Tokaido and Sanyo sections was increased from a maximum of four per hour to five per hour. (3) Operation of two Series N700 per hour A Series N700 was introduced for Nozomi operation between Tokyo and Hiroshima, and the Series N700 is now used for the two Nozomi services with direct service between the Tokaido and Sanyo sections which are operated each hour. The number of services operated with the Series N700 is now 88 (as of the March 14th timetable revision). The new Series N700 JR Central and JR West jointly developed Series N700 which employs the latest technologies. With a maximum speed of 270 km/h for the Tokaido section and 300 km/h for the Sanyo section, the Series N700 increased the speed on curves by adopting a body inclining system for the first time in Japan s Shinkansen history and improved acceleration performance thereby enabling a shortening of travel time. In addition, we have improved ride quality including comfort and quietness, made environmental adaptations and achieved drastic savings in energy consumption. We have made the Series N700 more energy efficient by drastically reducing wind resistance, for example through employing a cover-all hood. The Series N700 improves maximum speed from 220km/h to 270km/h in comparison with the first type of the Shinkansen (Series 0),while reducing energy consumption by 32%. If the Series N700 runs at the same maximum speed as the Series 0 (220km/h), energy consumption is reduced by 49%. (1) Specifications of the Series N700 Along with starting new services that introduce the latest technologies, the Series N700 offers an even more comfortable interior space that meets the various needs of our passengers. 1. Offering a Relaxing, Comfortable, and Quality Cabin Environment Enhanced riding comfort and quietness (installing an advanced semi-active suspension system and cover-all hood) Completely separating smoking and nonsmoking sections by making all seats non-smoking and installing smoking rooms Improvement of First class Green car quality (adopting Synchronized Comfort Seats) 2. Offering the Ultimate Internal Environment for Business people Increasing the number of outlets for mobile devices (All seats in Green Cars, window seats, and seats at the front and back in regular cars) Making seatback tables large enough for note PCs Improving quietness in vestibules, and realizing an ultimate conversing environment (for mobile telephone users) Aiming to perfect a stable Internet connection environment that enables use during high-speed operation by utilizing Wireless LAN (between Tokyo and Shin-Osaka) Nozomi Hikari Kodama Note: Departures shown are as of the beginning of each fiscal year, and exclude extra services Smoking Room Seats for Green Car (First Class) Multifunction Toilet Space (with ostomate-accessible facility) Outlet for Mobile Devices and Seatback Table The pictures above are all those of the Series N700 17

20 Our Business Performance of FY2008 Financial Section Appendices Transportation Service 3. Perfecting Train Services so that Passengers can feel more Comfortable Enlarging information displays for onboard electronic news caption Enlarging multifunction toilet space and establishing facilities for ostomates for the first time on a Shinkansen train Establishing security cameras on vestibules in order to improve train security (2) Plans for introducing the Series N700 In FY2007, Series N700 trainsets begun to be introduced for Nozomi services directly linking the Tokaido and Sanyo Shinkansen sections. Thereafter the Series N700 is sequentially being introduced. JR Central plans a concentrated introduction of 80 trainsets over the five years ending until FY2011. We plan to introduce 96 trainsets in all when combined with the 16 trainsets to be introduced by JR West. All regular Nozomi services are scheduled to be operated by the Series N700 by FY2011. At JR Central we have already completed the introduction of 32 trainsets (as of the March 2009 timetable revision). Renewed Entry Gate at Tokyo Station Investment in Stations for Further Convenience and Comfort In order to offer further convenience and comfort at stations, JR Central has changed station layouts to make ticket offices more accessible, upgraded waiting rooms for passengers, and conducted renovation of retail tenants on station premises. We are also continuing to steadily make improvements to passengerrelated facilities, such as replacing the platform fence at Shin-Yokohama Station in addition to continuing improvements as Tokyo and Shin-Osaka stations. Shin-Osaka Station Platform Expansion (completion image) Enhancing the Transportation Infrastructure of the Tokaido Shinkansen Based on JR Central's belief that in order to support Japan's main transportation artery and contribute to society it is necessary to further develop our transportation infrastructure, we are engaged in efforts to further improve the transportation infrastructure of the Tokaido Shinkansen. Enhancing train operation power facilities Since it is necessary to provide a stable power source in order to configure train schedules in a more flexible manner during peak periods of concentrated use, we have continued work to enhance power facilities, such as newly constructing frequency converter transformer substations, and such work was completed in March Large-scale Renovations at Shin-Osaka Station At the Tokaido Shinkansen Shin-Osaka Station, we plan to add another line and platform on the north side of the current track #26, construct a new #27 track, and increase the number of draw-out tracks from two to four. Additionally, improvements will be made to the crosswalk from the north side of the station and station concourse in preparation for the opening of the (Tentative) Shin-Osaka Hankyu Building in Commencement of use of the track #27 will take place at the end of FY2012 and commencement of use of all facilities including draw-out tracks will take place during FY2013. These improvements will dramatically increase our transport flexibility and improve our ability to deal with disasters, while at the same time providing us with the infrastructure to allow the maximum number of Nozomi services per hour to

21 Conventional Railway JR Central operates a network of 12 conventional lines, which form an integrated network with the Tokaido Shinkansen. These lines have contributed substantially to the development of communities and the regional economy around Nagoya and Shizuoka areas. Improvement of Service on Conventional Railway In regards to JR Central s conventional railway network, we are surely and steadily improving services such as introducing faster and more modern rolling stock, and increasing the frequency of trains. One measure is the introduction of Wide View rolling stock on limited express trains. We have synchronized the timetables of both Tokaido Shinkansen and conventional lines limited express to create an integrated network of the Tokaido Shinkansen and Wide View trains. Commuter trains have benefited from the increased frequency of train services during peak-demand morning and evening periods and from the introduction of expanded rapid-train services that reduce travel times. Moreover, train departures are being adjusted to provide service at regular intervals, in order to provide timetables that better serve passenger needs. Daily Departures (Trains / day) Series 313 March 2009 Timetable Revision While leveraging the transportation infrastructure that we have developed through the introduction of new rolling stock and timetable revisions, we have further improved convenience by increasing the number of trains during the afternoon and rush hours in the evening and the morning on the Kansai Line in the Nagoya area, and also by increasing the number of departures on the Tokaido and Chuo Lines in March As a result of increasing the number of departures on each line, transferring from conventional lines to the Tokaido Shinkansen in the early morning has become even smoother. New Manufacturing Plan for Conventional Line Rolling Stock In regard to conventional line rolling stock, in consideration of energy efficiency, making facilities barrier free, and comfort, we newly produced and introduced 204 Series 313 rolling stock in As a continuation of this, we aim to further improve safety and transportation service by newly producing 120 Series 313 rolling stock as well as 10 Series Ki-Ha 25 rolling stock and using them to replace aging rolling stock. We plan to gradually commence commercial operation of this new rolling stock between 2010 and The completion of this replacement will mean that almost all electric trains will be operated with new rolling stock produced after the establishment of JR Central. Local Trains Express Trains Note: Departures shown are as of the beginning of each fiscal year, and exclude extra services Conventional Railway Ridership (million passengers) Total Commuter Passes Ordinary Tickets Passenger Volume in Nagoya Metropolitan Area (FY88.3=100) *Nagoya metropolitan area: Tokaido Line (Obu-Nagoya) Tokaido Line (Nagoya-Gifu) Chuo Line (Nagoya-Kozoji) Kansai Line (Nagoya-Yokkaichi) *Based on sum of daily average passenger volume in each section above 19

22 Our Business Sales and Marketing Performance of FY2008 Financial Section Appendices Providing a More Convenient Service We are introducing a reservation system that utilizes information technology, offering customers the opportunity to buy various special tickets, and implementing various measures to stimulate travel demand. Users of Express Reservation service can quickly receive tickets from the ticket machines for members only Express Reservation service Membership (Thousands) Membership (JR West) Membership (JR Central) Usage(Daily average on weekdays) Touch the EX-IC card at ticket gates to enter Usage (Daily average on weekdays) (Thousands) Service Expansion for Express Reservation JR Central is rolling out the Express Reservation service, which makes use of the latest IT, in order to enable passengers to use the Tokaido Shinkansen more conveniently. The Express Reservation service lets passengers use their mobile phones or PCs to make or change reservations on the Tokaido Shinkansen, allowing them to pick up their tickets at an automatic ticket vending machine without having to line up at a ticket office window. In March 2008, we introduced the new EX-IC (Express IC) Service which is a service that leverages IC cards. With the EX-IC Service passengers can make reservations using mobile phones or PCs and get on board without picking up paper tickets at stations; all they need to do is touch their Express IC Card on the sensors of the automatic ticket gates in the Shinkansen station. In August 2009, we expanded IC service to the Sanyo section and began offering an EX-IC Service for corporate members. Express Reservations not only shortens the total travel time of passengers, also allows passengers to change reservations as many times as possible prior to departure in accordance with their schedule. Along with the fact that regular reserved seats can be purchased for a price lower than that of normal unreserved seats, this service has become very popular amongst passengers that use the Tokaido Shinkansen frequently for business and therefore become a service through which one can take full advantage of the Tokaido Shinkansen. Concept image of using the Express IC Card along with TOICA Transferring between the Shinkansen and local lines is seamless with the use of TOICA and an Express IC Card Gifu Boarding trains with its commuter pass function Nagoya EX-IC service Tokaido Shinkansen Touch the two IC cards at ticket gates Tokyo Boarding trains with the amount remaining on the IC card Shinjuku Mutual use of IC cards for conventional lines Making transferring between the Shinkansen and conventional lines in the Tokyo, Nagoya and Osaka areas seamless Express IC Card IC card TOICA for conventional lines Boarding local lines with an IC cards for conventional lines Boarding the Shinkansen by inserting both tickets and touching the Express IC Card to the transfer entry gate. Getting off at local line stations with an IC cards for conventional lines Moving between the three large cities will become smoother through mutual use. Express IC Card+ICOCA Express IC Card+Suica * IC cards for conventional lines cannot be used for travel that extends through TOICA, ICOCA or Suica areas. 20

23 Also, along with expanding the service area of the conventional line IC card TOICA, which was introduced in the Nagoya area in November 2006, to the Shizuoka area in March 2008, we have also enabled mutual use of JR East's Suica card and JR West s ICOCA card. As a result, passengers can now transfer smoothly between the Tokaido Shinkansen (between Tokyo and Shin-Osaka) and conventional lines by merely simultaneously touching the ticket gates with their EX- IC card and either conventional line IC card, such as TOICA. Furthermore, in order to further increase the convenience of TOICA we are steadily making preparations to expand the usage area, introduce service that enables the Shinkansen to be boarded with TOICA commuter passes, and add an electronic money function to TOICA in the spring of Offering Travel Products that Meet Various Needs In order to make the Tokaido Shinkansen even more convenient for passengers, we offer for members of the Express Reservation service IC Hayatoku which is cost-efficient through making reservations three days prior to departure, in conjunction with the expansion of EX-IC service to the Sanyo Shinkansen section in August Differing from our normal early purchase discount products, IC Hayatoku offers the convenience of being able to switch to EX-IC Service even if it is less than three days prior to departure. Furthermore, we offer a great variety of ticket packages in addition to Express Reservations. For example, we are offering Shinkansen multi-trip tickets that can be used for either reserved or non-reserved seats on all Nozomi, Hikari and Kodama trains. To take maximum advantage of available transport capacity, we are expanding our product lineup in cooperation with travel agencies and offering reasonably-priced tour packages to promote the use of Hikari and early morning Nozomi services, which have a relative excess of capacity. Measures to Stimulate Tourism Demand At JR Central, we have continued to develop Kyoto Campaign to evoke tourism demand via the Tokaido Shinkansen by introducing the allure of Kyoto. Furthermore, we are also running Nara Campaign, not only Kyoto, that actively introduce tourist spots in Nara. JR Central 50 + (Fifty-Plus) is a membership-based travelers service that offers attractive and reasonably-priced tour packages to customers 50 years of age and older. There are no registration or membership fees. In addition, we have also launched our Tokyo Bookmark campaign as a way to increase demand for travel from the Kansai/Nagoya regions to the Tokyo metropolitan area. This campaign leverages an Internet blog through which customers can recommend tourist spots in the metropolitan area to each other and offers attractive package tours through coordination with travel agencies. Furthermore, as a way to promote the use of conventional lines, in addition to launching Sawayaka Walking event in which participation fee is free and participants walk to tourist spots along JR Central train lines, we have also launched Shupo campaign in which passengers from large regions, such as Kansai and Kyushu, transfer from Shinkansen to the Takayama Line/Chuo Line and visit tourist spots along those lines. JR Central 50 + (Fifty-Plus) Membership (Thousands) Membership Accumulated tour participants JR Central 50 + (Fifty-Plus)Membership Magazine Accumulated tour participants (Thousands) Kyoto campaign, Spring 2009 version (Daigo-Temple) Nara campaign, Asuka version 21

24 Our Business Performance of FY2008 Financial Section Appendices Technological Development/Enhancement of Technical Capability Creating the Future through Research and Development It is important for our railway business that the employees with various technical skills steadily cooperate with each other. In order for us to further ensure safety and strengthen our future management foundation it is vital that we never stop improving the technical capability which is the base of this concept. Based on those beliefs, we are aggressively tackling the issue of technical development, and are achieving significant results. Komaki Research Center Vehicle Dynamic Simulator Low-Noise Wind Tunnel Promoting Technological Development at JR Central Research Center JR Central opened its own R&D center in Komaki (Aichi Prefecture) in July 2002, to further strengthen our efforts toward technological development that will support our future, to enhance our technical capabilities, and to foster technically skilled human resources. The research institute is promoting R&D activities focusing on Improving railway technology and Addressing challenges in new fields. Under the slogan of Improving railway technology we strive to ensure safe and reliable transportation and enhance the transportation service of the Tokaido Shinkansen by performing demonstration tests using large-scale test devices, measuring/analyzing running test data, and performing theoretical analysis through simulations. These efforts are linked to the development of higher levels of safety and service and reductions in costs, such as making maintenance more energy efficient. Further, under the slogan of Addressing challenges in new fields, JR Central is aiming to use technologies borne from research and development in its specialist fields of environmental, energy-related and other technologies deriving from railway field in order to achieve breakthroughs in new areas. Such new areas include research and development of functional materials including photocatalytic materials. Research and Development of the Series N700 The Series N700 rolling stock began commercial operation in July The results of various research and development conducted at the Research Center are reflected in this new rolling stock. For example, in order to further improve riding comfort the Series N700 introduced a newly developed train body inclining system and an advanced semi-active suspension system that was developed by utilizing the Vehicle Dynamic Simulator. These developments allow the Series N700 to maintain riding comfort while traveling on curves at 270 km/h and also to reduce the level of vibrations transmitted to the interior of the cars. In order to improve the environment along tracks, we utilize Low-noise wind tunnel devices and developed Improved rolling stock nose shape, All-covering hoods, and a New pantograph configuration. Furthermore, we have installed smoking rooms with our original photocatalytic devices to reduce tobacco odor in order to completely separate smoking and nonsmoking sections. Introduction of a Rolling Stock Field Test Simulator In order to enable independently implemented demonstrative tests, a rolling stock running test device was introduced at the Komaki Research Center and actual tests were started in April This rolling stock running test device works by running a Shinkansen rolling stock atop track wheels that correspond to rails, and reproducing running conditions by imposing various vibrations that are generated during running. We are leveraging the rolling stock running test device in our efforts aimed at the further pursuit of safety and stability, and the very best riding comfort, as well as our efforts to make rolling stock lighter and more energy efficient. Rolling Stock Field Test Simulator 22

25 Body inclining system and Advanced semi-active suspension system Body inclining system New ATC (Leading car) Train control and communication network (Each car) Semi-active suspension system Photocatalytic Glass Nano-sheet technology Conventional products particles fouling Body inclining control device (Each car) glass Weak adhesion Easy wearing Rough surface Easy fouling Nano-sheet photocatalyst nano-sheets fouling Expand air spring Higher vibration-control performance by semi-active suspension system glass Strong adhesion Durable film Smooth surface Anti-fouling photocatalyst Self-cleaning Action on Super-hydrophilic water Surfaces sunlight Water sheet forms Fouling is removed Photocatalytic Glass Development We are developing photo catalysts that are self-cleaning by coating the surface of glass with flaky photocatalysts called nano sheets. Because it is flaky this photocatalytic membrane is very hard and superior in terms of adhesiveness, making it suitable for the windows of Shinkansen rolling stock. Currently, the Series N700 experimental rolling stock that has been installed with these photocatalysts is undergoing performance tests. Superconducting Fly Wheel System (Electricity Storage Device) Development A fly wheel is an electricity storage device that converts electric energy into rotational energy and stores it. It is suitable for the electrical system stability in railways, factories and natural energy generation such as wind electricity, and its practical application is in demand. JR Central has developed a superconducting fly wheel system with a 50kWh storage capacity, and has started tests that involve linked operation with real load electric power systems at the Komaki Research Facility. In this system, superconducting magnets are used to levitate a 26t fly wheel thereby enabling a great reduction in energy loss from friction as it is rotated without touching anything. Furthermore, this is the largest system in the world that levitates a rotating body without touching it. System reliability and demonstration tests will be carried out in the days to come. Also, this development was commissioned from the New Energy Development Organization (NEDO) from FY2005 to FY2007. Making Nippon Sharyo into a Consolidated Subsidiary In August 2008, JR Central signed a capital and business alliance agreement with Nippon Sharyo and made a tender offer for its common stock whereby Nippon Sharyo became a consolidated subsidiary on October 15th of the same year. We will leverage this complementary relationship as we make efforts to improve our overall technical skill in regards to rolling stock development. Nano-sheet photocatalytic glass (water sheet) Ordinary glass (water droplets) Superconducting Flywheel Energy Storage System Cryostat Superconducting Magnetic Bearing Active Magnetic Bearings Stator iron core Rotor iron core Freezer NbTi Superconducting coil Establishment of C&C Office-Overseas High Speed Railway Project In July 2009, we established the Consulting and Coordination Office-Overseas High Speed Railways Project that will provide consulting services and coordination between JR Central Group companies and domestic manufacturers in order to leverage our overall skill regarding high-speed railway, which has been cultivated through the Tokaido Shinkansen, and deal with high-speed railway projects overseas. Motor/Generator Flywheel (Approx.26t) 23

26 Our Business Performance of FY2008 Financial Section Appendices Promoting a Tokaido Shinkansen Bypass by the Superconducting Maglev JR Central, whose mission is to operate high-speed railway linking the three major metropolitan areas of Tokyo, Chukyo and Kinki, aims for the realization of a Tokaido Shinkansen Bypass that utilizes the Superconducting Maglev and is proceeding with procedures and works necessary to do so. What is superconductivity? Electric resistance Higher Temperatures of liquid helium Superconductivity is the phenomenon of zero electric resistance that results when the temperature of certain metals, alloys and oxides falls below a certain level. When an electrical current is applied to a coil in a superconductive state (superconductive coil), this current continues to flow permanently, resulting in the creation of a very large magnetic field. Niobium-titanium alloy has been used in the Superconducting Maglev to increase superconductive stability and a superconductive state is achieved by cooling Niobium-titanium to a temperature of minus 269. The Principles of the Superconducting Maglev System Propulsion System Temperatures Higher Promoting a Tokaido Shinkansen Bypass (Chuo Shinkansen) A Tokaido Shinkansen Bypass that utilizes the Superconducting Maglev will enable us to continually carry out our mission of operation of high-speed railway linking the Tokyo Metropolitan, Chukyo regions and Kinki regions, which is vital to our business, and will provide the future foundation for existence of our company. It will soon be 45 years since the inauguration of the Tokaido Shinkansen which presently fulfills this role, and we have entered a time when we must think of drastic ways to deal with feared future aging and large-scale disasters based on the fact that it takes a very long time to construct and realize a railway. It is for this reason that we must realize as quickly as possible a bypass that can substitute this role and that utilizes Superconducting Maglev which JR Central has developed under the condition that JR Central will bear the cost of rail construction, and operate it in an integrated manner along with the Tokaido Shinkansen. Then, that is why we made it clear in April 2007 that as the first step in this project we set the goal to start commercial operation between Tokyo Metropolitan and Chukyo regions by 2025 which is the end of the first quarter of the 21st century. In the following December, we determined that it is possible to maintain sound operation and stable dividends while investing as needed to ensure safe and reliable transportation and enhance competitiveness even if we were to bear the financial burden of track construction, and decided to proceed with the necessary procedures and works to realize such a bypass as a Chuo Shinkansen in accordance with the Nationwide Shinkansen Railway Development Law under the assumption that JR Central will bear the financial burden. Furthermore, in conjunction with this decision, in order to confirm that the rules of a privately owned company, such as autonomy of capital investment and discretion of management, will not be hindered by application of the Nationwide Shinkansen Railway Development Law, we referred fundamental clauses regarding application of the law to the Ministry of Land, Infrastructure and Transportation and received a reply in January of As part of our efforts aimed at realizing a Tokaido Shinkansen Bypass that utilizes Superconducting Maglev, we submitted a report to the Minister of Land, Infrastructure and Transportation in October 2008 concerning topographical and geological surveys conducted since 1990 in accordance with Article 5 of the Nationwide Shinkansen Railway Development Law. Furthermore, in December 2008 we received instructions to implement the remaining four surveys from the Minister of Land, Infrastructure and Transportation. We will strive to report the results of the surveys as quickly as possible. Flow of Work based on the Nationwide Shinkansen Railway Development Law By passing current through propulsion coils on the ground, a magnetic field (north and south poles) is produced, thus the train 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. Article 4 Article 5 Article 6 Article 7 Article 8 Master Plan Surveys Designation of Operation Entity & Construction Entity Development Program Instructions for Construction November 1973 Master Plan decided February 1990 Instructions for topographical and geological surveys October 2008 Submission of a report concerning topographical and geological surveys December 2008 Instructions for the remaining four surveys Surveys instructed Items related to transportation capacity versus passenger demand Items related to the development of facilities and rolling stock Items related to construction costs Other necessary items Levitation System Article 9 Work Implementation Programs Start of Construction Levitation and guidance coils are installed on either side of the guideway (track). When the superconductive magnets on the car passes at high speed, an electric current passes through the levitation and guidance coils on either side to become electromagnetic, generating a force that both pushes up (repulsive force) and pulls up (suction power) the car (the superconducting magnet). Yamanashi Maglev Test Line Investment and the Superconducting Maglev Technology Development In the realization of a Tokaido Shinkansen Bypass (Chuo Shinkansen), JR Central considers that the employment of Superconducting Maglev is most suitable due to its advanced nature and high-speed, and JR Central has spent 20 years since its inception developing Superconducting Maglev. In June 1990 in particular after confirming the attitude toward integrated management of the Tokaido Shinkansen and the Chuo Shinkansen to the Ministry of Transportation(former), we decided that JR Central would bear the burden for a portion of the costs for construction of engineering structures for the Yamanashi Test Line and technological development associated with practical application, and construction on the test line commenced in November of the same year. From April 1997 until July 2009, 750,000 kilometers accumulative of running tests have been performed on the 18.4km stretch of track at the Yamanashi Maglev Test Line; that s approximately 19 times the circumference of the globe. In addition, our technology development has obtained extremely good results, such as by setting the world s fastest 24

27 speed record for railway of 581km/h in December 2003, and we can attest that Superconducting Maglev is safe and has already achieved levels sufficient for commercial operation at the present time. The current state of this level of technology was confirmed by the Ministry of Land, Transportation, and Infrastructure s Superconducting Magnetic Levitation Technological Practicality Evaluation Committee (hereafter referred to as Evaluation Committee) which was held in July JR Central will continue its efforts to further improve Superconducting Maglev technology aimed at practical application and commercial operation. In addition, in September 2006, JR Central decided to invest 355 billion yen of its own capital in the upgrading of facilities at the Yamanashi Maglev Test Line to practical application specifications, and to extend the line to 42.8km. This construction is proceeding with the objective of completion by the end of FY2013 and we aim to complete it as quickly as possible in a steady and speedy manner. Reducing costs thoroughly while ensuring safety The burden of the cost for track construction of the bypass rests entirely on our own capital, and all costs are examined by the internally established the Tokaido Shinkansen Bypass Construction Cost Reduction Committee which continues to thoroughly reduce costs while ensuring safety. At the same time, we will be flexible in terms of managing this project so that we may distribute resources in an optimal fashion in accordance with operational status. A Superconducting Maglev Tokaido Shinkansen Bypass and Global Environmental Conservation JR Central has been developing Superconducting Maglev technology for over 20 years since the establishment of our company and as a result that the technology is safe and has already achieved levels sufficient for commercial operation. The level of electromagnetic radiation is quite low, even when compared to international standards, and the difference in rail type compared with conventional railroad enables quiet running due the absence of friction. In addition, by leveraging the results of technological development aimed at reducing noise, such as noiseproof covers installed above guideways, we have confirmed that it is possible to adequately reduce wind roar. Furthermore, from the standpoint of global environmental conservation, Superconducting Maglev makes it possible to suppress the amount of CO2 emissions per seat to one-third that of airlines while offering the same or more functions than them. In constructing a Superconducting Maglev Tokaido Shinkansen Bypass, JR Central is devoting much consideration to the natural environment and living environment while taking the necessary steps as required by related laws, such as the Environmental Impact Assessment Law and the Natural Parks Law. The comparison of accelerating/decelerating performance among high-speed railway systems Yamanashi Maglev Test Line Superconducting Maglev TRShanghai TGV Series N700Nozomi Overview of the Yamanashi Maglev Test Line Starting point of the Yamanashi Maglev Test Line Starting point of the priority section Ending point of the priority section Ending point of the Yamanashi Maglev Test Line elevation (extension) Priority section (upgrade) (extension) grade (0/00) length (km) History of the Yamanashi Maglev Test Line March March September January May July 28 Construction begins on the Yamanashi Maglev Test Line Test runs begin (record the maximum design speed of 550 km/h) The technical prospects for practical application of the Superconducting Maglev is acknowledged by the Evaluation Committee under the Ministry of Transport, currently reorganized into the Ministry of Land, Infrastructure and Transport The Evaluation Committee acknowledges that the foundation technology for Superconducting Maglev is established for practical application Investment plan of the renovation and extension of the Yamanashi Maglev Test Line is decided Application for changes of Yamanashi Test Line Construction Plan was approved by the Minster of Land, Infrastructure and Transport Upgrade and Extension works began on the Yamanashi Maglev Test Line The Evaluation Committee determined that, the technology required for a commercial line has been cyclopaedically and systematically established, and it is possible to move forward with actually creating detailed technological standards and specifications for a commercially viable line 25

28 Our Business Affiliated Businesses Performance of FY2008 Financial Section Appendices Aiming for the Development of the Whole JR Central Group JR Central realizes that it must diversify its revenue base by actively expanding affiliated business to maintain stable management in the future. As seen in the opening of JR Central Towers and Shin-Yokohama Central Building that has just opened in March 2008, we are promoting business expansion into areas that are expected to generate synergic effects with the railway business itself, such as areas that make full use of the locational advantage of the railway station. JR Central will actively run businesses, in cooperation with affiliated companies, enhancing the collective strength of our business group. Operating Revenues of Consolidated Subsidiaries (simple calculation) ( billion) Transportation Merchandise and Other Real Estate Other Services Outlook of Group Businesses JR Central Group undertakes business in the areas of Transportation, Merchandise and Other, Real Estate, and Other Services. The Merchandise and Other segment manages department stores and provides sales services for goods and foods in stations and trains, making use of the railway s ability to attract customers. The Real Estate segment is involved with developing commercial facilities in stations and areas under elevated track columns, as well as leasing real estate such as station buildings. As far as our Other Services segment is concerned, in addition to developing hotels at major stations, travel businesses, and advertising agencies, we are also manufacturing rolling stock, and maintaining, inspecting and repairing our railway facilities. All of our segments have a strong link to railway, and their profitability is stable. Operating revenues of consolidated subsidiaries totaled billion (simple calculations) in FY Consolidated Subsidiaries (As of July, 2009) Segment JR Tokai Bus Company Company Name Paid-in Capital Shareholding (Millions of yen) (%) Business Activities 1, Bus services Transportation JR Tokai Logistics Company Logistics business Note: Each of figures in parentheses indicates number of consolidated subsidiaries at fiscal year-end Merchandise and Other Tokai Transport Service Company JR Tokai Takashimaya Co., Ltd. JR-Central Passengers Co., Ltd. Tokai Kiosk Company JR Tokai Food Service Co., Ltd. JR Tokai Corporation JR Central Building Co., Ltd , , Railway business Department store operations Food and beverage sales Wholesale and retail sales Wholesale and retail sales Food and beverage sales Wholesale and retail sales Real estate leasing JR Tokai Real Estate Co., Ltd. 16, Real estate leasing and sales Shin-Yokohama Station Development Co., Ltd. 9, Real estate leasing Toyohashi Station Building Co., Ltd. 1, Real estate leasing Tokyo Station Development Co., Ltd. 1, Real estate leasing Real Estate Nagoya Terminal Station Building Co., Ltd Real estate leasing Shizuoka Terminal Development Co., Ltd Real estate leasing Hamamatsu Terminal Development Co., Ltd Real estate leasing Nagoya Station Area Development Corporation Real estate leasing JR Development and Management Corporation of Shizuoka Real estate leasing JR Development and Management Corporation of Kansai Real estate leasing JR Tokai Hotels Co., Ltd. 14, Hotel business Nagoya Terminal Hotel Co., Ltd. 1, Hotel business Shizuoka Terminal Hotel Co., Ltd Hotel business JR Tokai Tours Travel agency services JR Tokai Agency Co., Ltd Advertising Other Services Nippon Sharyo, Ltd. JR Tokai Construction Co., Ltd. 11, Manufacturing of railway rolling stock Construction Chuoh Linen Supply Co., Ltd Linen supply services JR Tokai Information Systems Company Development, improvement and maintenance of computer system The Japan Mechanised Works and Maintenance of Way Co., Ltd Track maintenance Tokai Rolling Stock & Machinery Co., Ltd Rolling stock and machinery maintenance Shin-Yokohama Central Building JR Central Consultants Company Construction consulting business Note:Two affiliated companies, Shinsei Technos Co., Ltd. and Railway Information Systems Co., Ltd., are accounted for by the equity method. 26

29 Future Projects In order to further develop our businesses, in reflection of the intentions of Nagoya City we are planning the development of a new building (Nagoya Station New Building Plan) in front of Nagoya Station based on the Basic City Development Concept for the 1-1 Meieki area in which JR Central played a coordinating role in cooperation with the Japan Post Group in December We are continuing with preparations, such as discussing the project with related agencies, and aim for a grand opening in Also, in regard to Central Garden Residence Shizuoka, which we are promoting in order to effectively leverage former company housing sites, construction is proceeding in hopes of handing over the condominiums and opening a part of commercial facilities in Furthermore, we are engaged in efforts to enhance the overall strength of the JR Group such as by making steady efforts to enter into agriculture business during We will also continue to steadily implement the reorganization and renovation of commercial facilities at major stations, such as Tokyo Station, in conjunction with improvements made to station facilities. New Building Project at Nagoya Station (Completion Image) JR Central Towers JR Central Towers, grandly opened in May 2000, is the core of the JR Central Group s affiliated businesses diversification. It houses rental office space, a department store, a hotel and other facilities, all of which are managed by three of our consolidated subsidiaries (JR Central Building Co., Ltd., JR Tokai Takashimaya Co., Ltd., and JR Tokai Hotels Co., Ltd.). The combined operating revenues of these three companies were billion in FY2009.3(simple calculation) which were lower than the previous year s results due to the impact of the slowdown in the economy, however JR Central is further enhancing and developing business at JR Central Towers, which has become well-established. JR Central Towers The office business is run by JR Central Building Co.,Ltd., a wholly-owned subsidiary of JR Central, which owns JR Central Towers. Since its opening, JR Central Towers has continually recorded high levels of occupancy, and occupancy was maintained at close to 100% during the fiscal year ending March The Towers Plaza, a complex of restaurants on the 12th and 13th floors, was completely renovated in celebration of this year, 2009, which is the 10th anniversary of commercial opening. Finally, a large number of customers enjoyed the Towers Lights, one of Japan s largest illumination shows, which has become a winter season staple attraction in Nagoya. JR Nagoya Takashimaya This department store run by JR Tokai Takashimaya Co., Ltd., a joint venture of JR Central and Takashimaya Co., Ltd. By leveraging the store s location directly above the station, we are able to attract a large number of visitors from not only Nagoya but the surrounding region as well. We are continuing to put effort into increasing our appeal through suitable renovation of retail areas at appropriate times, and implementation of information-dissemination type promotions and events. Towers Lights Nagoya Marriott Associa Hotel This hotel is operated by JR Tokai Hotels Co., Ltd., a wholly-owned subsidiary of JR Central. JR Tokai Hotels Co., Ltd., which has concluded a franchise contract with Marriot International Inc., and provides services appropriate to an international luxury city hotel. Shin-Yokohama Central Building We opened the Shin-Yokohama Central Building in March of This is a multipurpose building that houses the Hotel Associa Shin-Yokohama, leasing offices, and the commercial facility Cubic Plaza Shin-Yokohama which is home to Takashimaya Food Maison, Sanseido Bookstore, and Bic Camera, etc. We make efforts to increase its profitability as the core of JR Central Group s affiliated business second to the JR Central Towers, leveraging the space directly above Shin-Yokohama Station. Shin-Yokohama Central Building (Atrium on 10th Floor) 27

30 Our Business Performance of FY2008 Corporate Social Responsibility Financial Section Appendices As a Railway Operator with High Public Interests JR Central s greatest responsibility is to provide safe and reliable transportation services for the Tokaido Shinkansen linking Tokyo, Nagoya, and Osaka, as well as the conventional railway centered on the Nagoya and Shizuoka areas. Furthermore, we have been working to improve railways characteristics of little burden on the global environment and to promote its usage, as well as to promote barrier-free facilities. Comparison of CO2 Emissions From operation between Tokyo and Osaka Tokaido Shinkansen (Series 700"Nozomi" ) (5.1kg - CO2 / Seat) Aircraft (B ) (51kg - CO2 / Seat) Note: 1.Comparison of CO2 emissions from carrying one seat 2.Calculated by JR Central based on actual runs between Tokyo and Shin-Osaka 3.Calculated by JR Central based on data from ANA CSR Report 2007 between Haneda and Osaka (Itami and Kansai) Introduction of New Energy-Saving Type (Shinkansen) Series 0 Series 100 Series 300 Series 700 Series N700 Note:The figures are as of the end of each fiscal year (excluding retained trains and inspection trains) Energy Consumption Levels of Shinkansen Trains Introduction of New Energy-Saving Type (Conventional Railway) Series 0 Series 100 Series 300 Series 700 Series N / 270/ Note:Based on simulated test runs between Tokyo and Shin-Osaka New Energy-Saving Type Conventional Type Note:The figures are as of the end of each term (including retained trains and inspection trains, and excluding coaches) Energy Consumption Levels of Conventional Railway Electric Trains Conventional type Series 113 Energy-saving type Series 313 Note: Based on simulated test runs of the Series 113 for conventional type and the Series 313 for energy-saving type (calculated by energy regenerating ratio of 75% for Series 313) between Nagoya and Nakatsugawa (round trip, stopping all the stations) Energy Consumption Levels of Conventional Railway Diesel-Powered Trains With conventional engine With new energysaving engine Note: Based on runs of the Series Ki-Ha 40 boarded with conventional and new energy-saving engines Contribution to Global Environment Conservation Railways have a minimal impact on the environment. For example, CO2 emissions from operation between Tokyo and Osaka produced by the Tokaido Shinkansen are around one-tenth those of airplanes. This illustrates the overwhelming advantage of railways as an environment-friendly transportation mode. JR Central makes its contribution to the conservation of the global environment through further enhancing the environmentally-beneficial characteristics of railways, and making railway transportation services even more attractive to encourage passenger use. (1) Improving the Energy Efficiency of Rolling Stock As an environment-conscious company, JR Central is introducing new energyefficient rolling stock in earnest. Especially for the Tokaido Shinkansen, we have unified all of our rolling stock into the high-speed/low-energy consumption type either the Series 700 or the Series 300 in the October 2003 timetable revision. Furthermore, the company intends to promote further energy conservation through the introduction of Series N700 rolling stock which allows more reduction in electric power consumption in comparison to Series 700 rolling stock. As for conventional railway, as a result of steadily replacing older rolling stock with more energy-efficient rolling stock our percentage of energy-saving rolling stock as of the end of March 2009 exceeded 87% for conventional railway electric trains and was 100% for diesel trains. (2) Eco Business Trips Proposal JR Central has proposed the concept of Eco Business Trips as an effective effort to prevent global warming. Eco Business Trips refers to, business trips that contribute to ecology (preserving the environment), in other words, considering and acting on the idea of selecting methods of transportation and business trip configurations that emit low levels of greenhouse effect causing gases when traveling over medium to long distances (business trips). Making the switch to railway use not only has a large CO2 emission reduction effect, but is also a greenhouse gas emission reduction measure that is extremely easy to implement since there is no initial investment or outstanding maintenance costs associated with it. JR Central aims to spread the concept of Eco Business Trips and is actively engaging in activities to disseminate information, such as advertising. (3) Other Environment Conservation Measures JR Central works to conserve resources by separating its rubbish and recycling its train tickets. In addition, JR Central is also accelerating the introduction of alternative energies and energy efficient systems that contribute to environmental conservation. As part of our efforts, we have installed solar photovoltaic power generation systems on a trial basis at the Tokaido Shinkansen s Kyoto Station and at our R&D center in Komaki, Aichi Prefecture. Also, Nagoya Station, JR Central Towers, Komaki Research Facility and Nagoya Central Hospital incorporate co-generation systems that make effective use of exhaust heat generated during power generation in air conditioning, thereby improving energy efficiency and reducing CO2 emissions. In addition, we strictly manage materials that put a burden on the environment and continue to engage in safe business practices while actively striving to reduce the amounts of these substances. For example, substations for conventional lines are in the process of introducing a type of rectifier that uses pure water, which has almost zero impact on the global environment, as its coolant, so as to substantially cut back on the use of alternative chlorofluorocarbon (CFC) that has some greenhouse gas effects. 28

31 Contribution to Community Development Railway stations serve as the gateway to communities. To better fulfill this role, JR Central is cooperating with the requests of local governments to establish new stations, improve station buildings, develop plazas in front of stations, and facilitate railway elevation projects, thereby contributing to community development. We are also renovating stations to abide by related laws, such as the Barrier-Free Transportation Law, so that passengers, including the physically challenged and the elderly, can use our railway safely and comfortably. In particular, in accordance with fundamental government policy, we promote barrier free facilities through the continued installation of elevators and escalators at stations used by more than 5,000 passengers a day. Furthermore, we established the Nagoya Central Hospital in Nakamura Ward, Nagoya City which offers advanced and cutting-edge medical treatment with its experienced staff and the latest medical equipment. Along with providing highquality medical treatment and nursing care as qualified by the hospital function evaluation (Ver. 5.0) by the Japan Council for Quality Health Care in September 2008, with its emergency medical treatment facilities and links to regional medical treatment centers, this hospital contributes to the local community as a core hospital of the Nagoya area. Construction of the JR Central Museum (tentative name) JR Central is planning the construction of a JR Central Museum (tentative name) in response to a request from Nagoya City to participate in the Monozukuri Culture Exchange Area Project. JR Central believes the museum to deepen the general public s understanding of railway, widely contribute to society, and ultimately lead to the promotion of industrial tourism. The characteristics of the museum is broken down into three parts: 1) introduction of advancements in highspeed railway technology ; 2) offering of a place to learn about the impact of railway on society; and, 3) leveraging models, etc. that make learning fun and providing a barrier-free facility, and we began construction in August 2009 in preparation for opening in spring of International Exchange JR Central undertakes a wide range of international business 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 to overseas interests as part of our PR activities. We also participate in cooperation over railway technologies in response to government requests. We not only contribute to bi-directional human resource development by accepting interns from overseas universities and international organizations, but JR Central and JR West organized the International High-Speed Railway Conference in 1994, 1997, 2000 and 2004 with the aim of publicizing the superiority of the Shinkansen, such as environmental performance. Also, at the International Symposium on Climate Change and Transport Strategy held in December 2007 and co-sponsored by the Institution for Transport Policy Studies, experts such as Lord Nicholas Stern (professor at the London School of Economics) gathered from many countries gave lectures and held debates concerning the present state of global warming and the role that transportation organizations should play in the future. As the pioneer of high-speed railway with the most proven performance in the field, we will strive to attain deeper understanding on us in the international community through PR activities and information exchange with railway operators around the world. New Station (Minami-Odaka Station) Elevator installation(kyoto station) Nagoya Central Hospital Completion Image of JR Central Museum (tentative) Interns from overseas universities 29

32 Performance of FY2008 Our Business Financial Section Appendices Summary of the Important Managerial Information such as Performance Segment-by-segment performance for FY Amidst a harsh management environment caused by deterioration of the economy, the JR Central group prioritizes safe and reliable transportation which is the foundation of the railway business while aiming to further develop service. We also continue to engage in efforts to improve the competency of our employees, enhance facilities, and streamline our work processes in an effort to strengthen earnings capabilites. However, due to the impact of the deteriorating economy, total passenger kilometers has dropped by 0.9% year-on-year to billion passenger kilometers. As a result of making Nippon Sharyo a consolidated subsidiary, operating revenues increased 0.7% year-on-year to trillion yen. Ordinary income decreased by 21.0% year-on-year to billion yen due to increases in depreciation and amortization and non-personal expenses, while net income decreased by 21.1% year-on-year to 126 billion yen. We were able to achieve a decrease in long-term debt and payables on a consolidated basis by 81 billion yen which resulted in a long-term liability balance of trillion yen as of the end of March In addition, annual dividends of FY2008 were 9,000 yen per share as predicted and announced at the beginning of the fiscal year. This works out as follows when looking at business performance by segment. Operating Revenues (Transportation) (Billions of Yen) Transportation In regard to the Tokaido Shinkansen, along with continuing to actively introduce Series N700 rolling stock, we strove to provide highly convenient transportation service based on an organized train system through operating one Nozomi service per hour with the Series N700; an increase in the number of Shinkansen with direct service between the Tokaido and Sanyo sections; and, having all trains stop at Shinagawa and Shin-Yokohama Stations in In addition, in order that passengers can comfortably use the Shinkansen during peak hours, we have taken maximum advantage of transportation capacity and flexibly increased the number of trains. Furthermore, in March 2009, we completed the reinforcement of power facilities for train operation, introduced a timetable that offers maximum nine Nozomi services per hour, and revised the timetable so that it offers, for example, two Nozomi services operated with the Series N700 per hour. In addition to further improving convenience in this manner, we have completed the digitization of train radios, and launched an Internet connection service onboard the Series N700. In regard to conventional lines, we increased the number of departures of rapid and local trains on the Chuo Line and Tokaido Line in the Nagoya region in 2008, and in March 2009, along with revising the timetable to increase the number of rapid trains during afternoon time periods on the Kansai Line and make connecting to the Shinkansen from the Tokaido Line and Chuo Line easier during the early morning and evening, we opened Minami Odaka Station on the Tokaido Line thereby striving to offer service that leverages an organized transportation infrastructure. In terms of sales, in addition to striving to firmly establish EX-IC (Express IC) Service with existing members, we continued with preparations to expand the usage area of EX-IC Service to the Sanyo Shinkansen and launched its service for corporate members in August Furthermore, in addition to striving to offer various travel products through launching tourism promotion campaigns for Kyoto, Nara, Ise and Tokyo, we actively engaged in developing appealing products for the JR Central 50 + (Fifty Plus) travel club of which membership is open to people 50 years of age and older. However, even though we made the efforts mentioned above, the impact of the deteriorating economy resulted in a 1.1% decrease year-on-year in passenger kilometers for the Tokaido Shinkansen this term to billion; and, passenger kilometers for conventional lines was billion, which is at par with last term. In regard to our bus business, we continued with efforts to make work more efficient based on fierce competition spurred by deregulation. As a result of the above, operating revenues fell by 1.6% year-on-year to trillion yen, and operating income fell by 12.4% year-on-year to billion yen as a result of increases in depreciation and amortization and non-personal expenses. 30

33 Merchandise and Other In regard to merchandise and other business, at JR Nagoya Takashimaya we strove to develop an attractive line of products, renovate sales floors and enhance our selling strategy so that it meets the needs of customers. Furthermore, we continued with renovations of retail space in major stations in conjunction with improvements to station facilities and anti-quake reinforcement of elevated track columns. However, even though we made the efforts mentioned above, the impact of the deteriorating economy resulted in a 0.7% decrease year-on-year to billion yen in operating revenues and a 32.1% decrease year-on-year in operating income to 5.4 billion yen due to increases in sales related expenses. Real Estate In regard to real estate, in order to leverage station location in a more effective manner and increase patronage, along with striving for smooth operation of the Shin-Yokohama Central Building, which opened in the spring of 2008 and is comprised of commercial facilities, offices, and hotels, we continued with renovations of commercial facilities at major stations and in JR Central Towers Tower Plaza. Furthermore, in December 2008 we announced our basic concept for the Nagoya Station New Building plan and continued to make preparations for its realization. In conjunction with this, in regard to the development of sites of former company housing, which is being done from the perspective of effectively leveraging held assets, in addition to handing over the Term II condominiums at Nagoya Central Garden in March 2009, we continued with construction of Central Garden Residence Shizuoka and commercial facilities. As a result of engaging in the efforts mentioned above, operating revenues increased by 6.7% year-on-year to 70.4 billion yen, and operating income increased by 20.4% year-on-year to 13.9 billion yen. Other Serivces In regard to our hotel business, we continued to strive to improve service at the Nagoya Marriott Associa Hotel so as to attract many customers. Furthermore, we strove for smooth operation of the Hotel Associa Shin-Yokohama which is located in the Shin-Yokohama Central Building. In regard to our travel business, we actively sold products attractive to JR Central 50 + (fifty plus) members as well as products for promoting use of trains that have available seats in off-peak time. In regard to our railway rolling stock manufacturing business, we strove to deal with the demand for replacing railway rolling stock and construction machinery. As a result of engaging in the efforts mentioned above, operating revenues increased by 23.0% year-on-year to billion yen in conjunction with making Nippon Sharyo a consolidated subsidiary, and operating income decreased by 25.9% year-on-year to 2.8 billion yen due to increases in expenses such as the onetime amortization of generated goodwill. Operating Revenues (Merchandise and Other) (Billions of Yen) Operating Revenues (Real Estate) (Billions of Yen) Operating Revenues (Other Services) (Billions of Yen) 31

34 Performance of FY2008 Our Business Financial Section Appendices Summary of the Important Managerial Information such as Performance Expected performance for the year ending March 2010 It is predicted that the fiscal year ending March 2010 will continue to be harsh. While continuing to prioritize the securing of safe and stable transportation, JR Central will continue with the concentrated introduction of the Series N700 and other measures as all JR Central Group companies strive to provide a higher quality of service. We will work to make operations more efficient and cost-effective at all levels, enhancing our profitability. Through these efforts, we predict that operating revenues shall be trillion yen; operating income shall be 258 billion yen; and current net income shall be 72 billion yen. FY Forecasts Operating revenues Operating income Net income Capital investments Consolidated (2010/2009) 1, % % % % (Billions of Yen) Operating revenues Operating income Net income Capital investments Non-Consolidated (2010/2009) 1, % % % % The numbers are as of the publishment of the financial report for the three months ended June 30,

35 Financial Section Contents Management s Discussion and Analysis of Consolidated Financial Condition and Results of Operations (MD&A) 34 Consolidated Balance Sheets 36 Consolidated Statements of Income 38 Consolidated Statements of Changes in Equity 39 Consolidated Statements of Cash Flows 40 Notes to Consolidated Financial Statements 41 Non-Consolidated Balance Sheets 50 Non-Consolidated Statements of Income 52 Non-Consolidated Statements of Changes in Equity 53 Notes to Non-Consolidated Financial Statements 54 Independent Auditors, Report 61 33

36 Financial Section Our Business Performance of FY2008 Appendices Management s Discussion and Analysis of Consolidated Financial 1) Overview of FY2008 While the first half of this term was steady, results during the second half were greatly affected by the quick deterioration of the economy. In regards to our railway business, the Tokaido Shinkansen provided highly convenient transportation services based on the train systems improved via the timetable revisions of March 2008 to include, for example, one Nozomi service operated with the Series N700 every hour. Furthermore, in March 2009 the timetable was revised to introduce maximum nine Nozomi services, thereby further improving convenience. Moreover, in addition to striving to penetrate EX-IC (Express IC) Service, which alleviates the need for paper tickets, we tried arousing travel demand to various destinations such as Kyoto. In regard to conventional lines, we also engaged in the timetable revisions implemented mainly to improve urban area transportation services of the Nagoya region in March However, as a result of the economic downturn, transportation revenues for JR Central (non-consolidated) saw a decrease for the first time in six years. In regard to non-railway businesses, in addition to striving for smooth operation of the Shin-Yokohama Central Building, we steadily continued with renovations of Towers Plaza located in JR Central Towers and commercial facilities at major stations, as well as development of sites of former company housing. Furthermore, in conjunction with the consolidation of Nippon Sharyo, operating revenues of group companies increased resulting in an increase of consolidated revenues. In regard to operating expenses, in addition to an increase in depreciation and amortization due to introduction of the Series N700, expenses accompanying the consolidation of Nippon Sharyo increased. As a result of the above, both an increase in revenues and a decrease in income were seen this term with operating revenues posting at trillion yen; operating income at billion yen; and net income at 126 billion yen. 2) Operating Performance a) Operating Revenues Operating revenues increased by 10.7 billion yen (0.7%) year-on-year to trillion yen. In the transportation business, the non-consolidated transportation revenues decreased by 22.6 billion yen (1.9%) yearon-year to trillion yen. The passengers volume for the Tokaido Shinkansen decreased by 1.1%, and transportation revenues of the Tokaido Shinkansen decreased 2.0% year-on-year to trillion yen. Furthermore, in regard to conventional lines, while the passengers volume was at par with last term, transportation revenues decreased by 1.1% year-on-year to billion yen. In regard to non-railway business, the merchandise and other business saw a year-on-year decrease in revenue of 0.7%, while the real estate business and other services each saw a year-on-year increase in revenue by 6.7% and 23.0%, respectively. b) Operating Expenses In regard to operating expenses, in addition to an increase in depreciation and amortization due to introduction of the Series N700, non-personnel expenses, such as energy expenses, increased. Furthermore, due to an increase in amortization of goodwill that accompanied the consolidation of Nippon Sharyo, total operating expenses increased by 62.9 billion yen (5.6%) year-on-year to trillion yen. c) Operating Income Operating income decreased by 52.1 billion yen (12.0%) year-on-year to billion yen. d) Other Income (Expenses) In regard to other income (expenses), whereas paid interest decreased by 12.3 billion yen in conjunction with a shrinking of long-term debt and a decrease in average interest, 15.7 billion yen of valuation loss on held shares was recorded. In addition, while revenues from the bearing of construction costs in conjunction with external construction, such as continuous overhead crossing construction, was accounted for as other income, corresponding fixed asset advanced depreciation deductions were accounted for as other expenses. e) Net Income After making corporate tax adjustments to the above, net income for this term decreased by 33.7 billion yen (21.1%) year-on-year to 126 billion yen. 34

37 Condition and Results of Operations (MD&A) 3) Cash Flow Status Cash and cash equivalents at the end of this term had risen by 20.9 billion yen year-on-year to 55.5 billion yen. Furthermore, long-term debt and payables decreased by 81 billion yen to trillion yen as of the end of this term. Cash in-flow obtained through operating activities decreased by 41.2 billion yen year-on-year to billion yen due to increases in corporate tax payments in addition to a decrease in transportation revenues from the Tokaido Shinkansen. Cash out-flow in investment activities increased by 25.9 billion yen year-on-year to billion yen due to expenditure related to acquiring fixed assets in conjunction with capital investments, and an increase in expenditure related to acquiring Nippon Sharyo. Cash out-flow in financial activities decreased by 90.3 billion yen year-on-year to billion yen due to the issuance of short-term corporate bonds in addition to an increase in the amount of corporate bonds issued. 4) Shrinking Long-Term Debt and Payables During this term we decreased long-term debt and payables by 81 billion yen on a consolidated basis, and 82.5 billion yen on a non-consolidated basis. Long-term debt and payables at the end of this term was trillion yen on a consolidated basis, and trillion yen on a non-consolidated basis. When we purchased the Tokaido Shinkansen facilities in October 1991, we were burdened with total long-term debt and payables of over five times its annual transportation revenues, including the liabilities inherited from JNR at its break-up and privatization. Because we considered the reduction of these long-term debt and payables to be its important financial issue, we have endeavored to reduce the debt and payables as rapidly as possible. Consequently, total long-term debt and payables of trillion at the end of fiscal 1991, which was immediately after we took over the Tokaido Shinkansen assets, has been reduced by However, at the end of fiscal 2008, outstanding long-term debt and payables still stood at more than 3.1 trillion. In addition to continuing to strengthen earnings capabilities and striving to cut operating expenses, we shall steadily promote efforts aimed at the construction of a Tokaido Shinkansen Bypass through efforts to make capital investment and cash reserves more efficient, and strive to shrink long-term debt and payables. 5) Net Asset Balance Net asset balance at the end of this term had increased by billion yen to trillion yen, and our equity ratio increased from 17.8% at the end of the previous term to 19.4% at the end of this term. 6) Capital Procurement In order to procure capital from various sources and facilitate smooth fund raising, we have acquired a rating from Moody s Investors Service, Inc., and Rating and Investment Information, Inc. (R&I). Credit ratings for corporate bonds issued during fiscal 2008 are Aa2 from Moody s Investors Service and AA from R&I. Furthermore, in order to secure short-term liquidity, we have established a commitment line of 100 billion yen as of the end of fiscal

38 Our Business Performance of FY2008 Consolidated Balance Sheets Financial Section Appendices Total current assets ,526 67,225 (79) 47,109 24,531 32, ,210 34,609 59,116 (7) 15,331 23,486 37, ,711 $ 566, ,969 (806) 480, , ,695 2,318,469 70,647 80, ,887 Total investments and other assets 11, ,272 31, ,550 10, ,206 31, , ,724 1,859, ,491 3,026,020 Total Net property, plant and equipment 4,297,681 1,183,889 2,363, , ,436 8,130,167 (3,431,396) 4,698,770 4,232,590 1,113,966 2,343, ,681 99,842 7,933,438 (3,244,038) 4,689,399 43,853,887 12,080,500 24,118,714 1,740,072 1,167,714 82,960,887 (35,014,244) 47,946,643 Total noncurrent assets 4,995,320 4,979,526 50,972,663 TOTAL ASSETS 5,222,531 5,149,238 $ 53,291,132 See notes to consolidated financial statements. 36

39 Total current liabilities 14,999 27, , , ,967 25,761 38,196 50,408 63, ,832 9,998 21, ,786 98, ,486 24,971 67,475 34,910 57, , $ 153, ,000 1,993,010 1,579,826 1,162, , , , ,277 6,988,081 Total noncurrent liabilities 1,407,270 1,579, , ,599 76,701 3,489,340 1,291,293 1,830, , ,994 68,142 3,583,162 14,359,897 16,113,285 2,210,877 2,138, ,686 35,605,510 Total 112,000 53,500 1,157,467 (2,773) 3 (309,122) 1,011, ,000 53,588 1,049,775 8,764 (309,106) 915,021 1,142, ,918 11,810,887 (28,295) 30 (3,154,306) 10,317,091 37,282 15, ,450 Total equity 1,048, ,763 10,697,541 TOTAL LIABILITIES AND EQUITY 5,222,531 5,149,238 $ 53,291,132 See notes to consolidated financial statements. 37

40 Our Business Performance of FY2008 Consolidated Statements of Income Financial Section Appendices 1,570,253 1,559,467 1,491, $ 16,022,989 Total operating expenses Operating income 1,015, ,159 1,187, , , ,217 1,125, , , ,672 1,088, ,487 10,364,826 1,756,725 12,121,551 3,901,438 1,842 1, ,795 (126,020) (138,350) (150,393) (1,285,939) (309) (3,170) (147) (3,153) (29,071) (25,173) (23,465) (296,642) (15,856) 2,096 3,683 (161,795) Other expenses net (169,416) (162,991) (169,446) (1,728,734) 212, , ,040 2,172,704 92, ,801 97, ,469 (6,779) (4,821) (3,344) (69,173) Total income taxes 85, ,979 94, , ,716 1,417 10, , , ,144 $ 1,286, , , , , , , $ See notes to consolidated financial statements. 38

41 39 Consolidated Statements of Changes in Equity See notes to consolidated financial statements. 2,237 (268) 1, ,970 2 (2) 1,970 $ 1,142,857 $ 1,142,857 $ 546,815 (897) $ 545,918 $ 10,711,989 1,286,244 (181,102) (6,244) $ 11,810,887 $ 89,429 (117,724) $ (28,295) $ (3,154,153) (153) (26,724) 26,724 $ (3,154,306) $ 9,336,937 (153) 1,286,244 (181,102) (26,724) 19,583 (117,724) 30 $ 10,317,091 $ 160, ,795 $ 380,450 $ 9,497,592 (153) 1,286,244 (181,102) (26,724) 19,583 (117,724) ,795 $ 10,697,541 $ 30 $ 30

42 Financial Section Our Business Performance of FY2008 Consolidated Statements of Cash Flows Appendices Net cash provided by operating activities 212,925 (121,678) 258,319 (141) (6,325) 6,809 18,871 (39) 33,333 10, (17,313) 5,540 (433) 59, , ,471 (98,024) 228,461 (227) (31,820) 31,957 25,029 2,682 33,333 (39) 129 5,382 (2,237) (4,619) 39, , ,040 (111,059) 215,225 (228) (15,017) 16,772 39,968 (3,246) 33,333 (19,733) (845) 20, (9,656) 27, , $ 2,172,704 (1,241,612) 2,635,908 (1,438) (64,540) 69, ,561 (397) 340, , (176,663) 56,530 (4,418) 605,367 4,689,765 Net cash used in investing activities (272,744) 10, (11,991) (16,625) (1,800) (292,511) (262,276) 14,353 1,331 (6,509) (13,441) (266,542) (201,648) 13, (22,003) (8,522) (218,395) (2,783,102) 105,010 3,663 (122,357) (169,642) (18,378) (2,984,806) Net cash used in financing activities ,453 (100,372) (252,814) (17,748) (372) (22,512) (146,170) 2, ,141 (113,382) (258,186) (15,776) (11) (60,606) (236,496) 4, ,851 (116,932) (252,144) (14,739) (308,988) (11) 20,998 (345,430) 2,010 2,525,030 (1,024,204) (2,579,734) (181,102) (3,795) (229,735) (1,491,530) CASH AND CASH EQUIVALENTS, END OF THE YEAR 20,916 34,609 55,526 (2,174) 36,783 34, (135,939) 172,723 36, , ,162 $ 566, , , ,785 $ 1,295,826 See notes to consolidated financial statements. 40

43 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 ("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 ( ), which was subsequently succeeded by the Corporation for Advanced Transport and Technology (the "CATT") ( ) and in turn by the Japan Railway Construction, Transport and Technology Agency (the "JRTT")), former Railway Telecommunication Co., Ltd., Railway Information Systems Co., Ltd. and the Railway Technical Research Institute. JNR itself became JNR Settlement Corporation (the "JNRSC"). All of the assets and liabilities of JNR were transferred to such organizations, including 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 and Transport (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, Tokyo and Osaka stock exchanges in Japan. 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 JNRSC enacted in October of 1998, the Company's shares held by 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 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. 2. BASIS OF PRESENTING 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 Law (formerly, the Japanese Securities and Exchange Law) and its related accounting regulations and in conformity with accounting principles generally accepted in Japan, which are different in certain respects as to 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 2008 consolidated balance sheet and in the 2008 and 2007 consolidated statements of income and consolidated statements of cash flows to conform to the classifications used in 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 98 to $1, the approximate rate of exchange at March 31, 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 less than million yen are rounded down to the nearest million yen, except for per share information and U.S. dollar figures less than thousand of U.S. dollar are also rounded down to the nearest thousand of U.S. dollar, except for per share information. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Principles of Consolidation The accompanying consolidated financial statements as of March 31, 2009 include the accounts of the Company and its 31 (30 in 2008 and 2007) significant subsidiaries (together, the "Companies"). The Company conducted a tender offer for the shares of common stock of Nippon Sharyo, Ltd., during the period from August 18, 2008 to October 7, 2008, which resulted in Nippon Sharyo, Ltd. becoming a consolidated subsidiary for the third quarter of 2009 fiscal year. Under the control or influence concept, those companies in which the Company, directly or indirectly, is able to exercise control over operations are fully 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 affiliated companies are accounted for by the equity method. Investments in the remaining unconsolidated subsidiaries and affiliated companies 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 an acquisition and the fair value of the equity of the 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 eliminated. A 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 at the Company's year end were appropriately made, such as adjustments for significant intercompany accounts and transaction which occur between the fiscal year end of the subsidiary and that of the Company. 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. c. Inventories Merchandise is stated at cost principally determined by the retail method. Land and buildings held for sale in lots are stated at cost determined by the specific identification method. Work in process is stated at cost principally determined by the specific identification method. Materials and supplies are carried at cost principally determined by the moving-average cost method. As stated in Note 4 of the consolidated financial statements, these consolidated balance sheets prices are measured at the lower of cost or net selling value. d. Land and Buildings Held for Sale Land and buildings held for sale were included inventories in the year ended March 31, 2009 (see Note 3.c). 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 valuation difference, net of applicable taxes, reported in a separate component of equity. Non-marketable 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. 41

44 Financial Section Our Business Performance of FY2008 Appendices 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. 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 ground structures except for the Shinkansen railway ground facilities are substantially computed by the replacement-accounting method. g. Long-lived Assets The Companies review their long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be 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 5 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 Company's provision plan authorized by the Minister of Transport over 15 years from October 1, 2002 in accordance with the Nationwide Shinkansen Railway Development Law. k. Retirement and Pension Plans The Company and 30 consolidated subsidiaries have unfunded retirement plans covering substantially all of their employees. Six consolidated subsidiaries have noncontributory funded pension plans as an alternative for, or in addition to, the unfunded retirement plan. Two consolidated subsidiaries have non-contributory defined benefit pension plans as in addition to the unfunded retirement plans. The provision for retirement benefits is mainly calculated based on the projected benefit obligations and plan assets at the balance sheet date. l. Leases Lease assets of finance leases that deem not to transfer ownership of the leased property, are depreciated and amortized by the straight-line method over the leases period. m. Income Taxes The provision for income taxes is computed based on the pretax income included in the consolidated statements 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 difference. n. Appropriations of Retained Earnings Appropriations of retained earnings are reflected in the financial statements for the following year upon shareholders' approval. o. Consumption Tax Consumption tax is levied in Japan on the domestic sales of goods and services at the rate of 5%. Unless otherwise stated, all figures are presented net of tax. 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, retroactively adjusted for stock splits. The net income available to common shareholders used in the computation for 2009, 2008 and 2007 was 126,052 million ($1,286,244 thousand), 159,774 million and 137,144 million, respectively. The average number of common shares used in the computation for 2009, 2008 and 2007 was 1,968,861 shares, 1,969,951 shares and 1,975,924 shares, respectively. The difference in the average number of common shares presented between consolidated financial statements and non-consolidated financial statements consists of the shares of the Company's common stocks held by affiliated companies. 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 statements of income are dividends applicable to the respective years including dividends to be paid after the end of the year. q. New Accounting Pronouncements Asset Retirement Obligations On March 31, 2008, the Accounting Standards Board of Japan (the "ASBJ") published a new accounting standard for asset retirement obligations, ASBJ Statement No. 18 "Accounting Standard for Asset Retirement Obligations" and ASBJ Guidance No. 21 "Guidance on Accounting Standard for Asset Retirement Obligations." Under this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either by law or contract that results from the acquisition, construction, development and the normal operation of a tangible fixed asset and is associated with the retirement of such tangible fixed asset. The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement obligation is incurred, the liability should be recognized when a reasonable estimate of asset retirement obligation can be made. Upon initial recognition of a liability for an asset retirement obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of the liability. The asset retirement cost is subsequently allocated to expense through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its present value each period. Any subsequent revisions to the timing or the amount of the original estimate of undiscounted cash flows are reflected as an increase or a decrease in the carrying amount of the liability and the capitalized amount of the related asset retirement cost. This standard is effective for fiscal years beginning on or after April 1, 2010 with early adoption permitted for fiscal years beginning on or before March 31, Construction Contracts Under the current Japanese GAAP, either the completed-contract method or the percentage-of-completion method is permitted to account for construction contracts. In December 2007, the ASBJ issued a new accounting standard for construction contracts. Under this new accounting standard, the construction revenue and construction costs should be recognized by the percentage-of-completion method, if the outcome of a construction contract can be estimated reliably. When total construction revenue, total construction costs and the stage of completion of the contract at the balance sheet date can be reliably measured, the outcome of a construction contract can be estimated reliably. If the outcome of a construction contract cannot be reliably estimated, the completed-contract method shall be applied. When it is probable that total construction costs will exceed total construction revenue, an estimated loss on the contract should be immediately recognized by providing for loss on construction contracts. This standard is applicable to construction contracts and software development contracts and effective for fiscal years beginning on or after April 1, 2009 with early adoption permitted for fiscal years beginning on or before March 31, 2009 but after December 27,

45 4. ACCOUNTING CHANGE Inventories Prior to April 1, 2007, inventories were stated at cost, principally determined by the retail method for merchandise, by the moving-average cost method for materials and supplies and by the specific identification method for land and buildings for sale in lots. On July 5, 2006, the ASBJ issued ASBJ Statement No. 9, "Accounting Standard for Measurement of Inventories," which is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted. This standard requires that inventories held for sale in the ordinary course of business be measured at the lower of cost or net selling value, which is defined as the selling price less additional estimated manufacturing costs and estimated direct selling expenses. The replacement cost may be used in place of the net selling value, if appropriate. The Companies adopted the new accounting standard for measurement of inventories in the year ended March 31, The effect of adoption of this accounting standard was to decrease income before income taxes and minority interests for the year ended March 31, 2008 by approximately 1,319 million. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is computed substantially by the declining-balance method. Property, plant and equipment acquired on and after April 1, 2007 are depreciated substantially by the declining-balance method in accordance with the revised corporate tax law, which is effective for fiscal years beginning on and after April 1, The effect of this treatment was to decrease income before income taxes and minority interests for the year ended March 31, 2008 by approximately 4,493 million. Property, plant and equipment had been depreciated up to 95% of acquisition cost with 5% of residual value carried until previous fiscal years. However, such 5% portion of property, plant and equipment is systematically amortized over 5 years starting in the following year in which the carrying value of property, plant and equipment reaches 5% of the acquisition cost in accordance with the revised corporate tax law. The effect of this treatment was to decrease income before income taxes and minority interests for the year ended March 31, 2008 by approximately 6,051 million. Leases On March 30, 2007, the ASBJ issued ASBJ Statement No. 13, "Accounting Standard for Lease Transactions," which revised the previous accounting standard for lease transactions issued on June 17, The revised accounting standard for lease transactions was effective for fiscal years beginning on or after April 1, Under the previous accounting standard, finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized, however, other finance leases are permitted to be accounted for as operating lease transactions if certain "as if capitalized" information is disclosed in the note to the lessee's financial statements. The revised accounting standard requires that all finance lease transactions should be capitalized to recognize lease assets and lease obligations in the balance sheet. The Company applied the revised accounting standard effective April 1, The effect of adoption of this accounting standard was negligible. 5. INVESTMENT SECURITIES Information regarding investment securities with readily determinable fair values classified as available-for-sale as of March 31, 2009 and 2008 was as follows: , , , , , , ,895 61, $ 622, , $ 50,449 $ 110,897 $ 562, ,908 Proceeds from sales of available-for-sale securities for the years ended March 31, 2009, 2008 and 2007 were 359 million ($3,663 thousand), 1,331 million and 11 million, respectively. Gross realized gains on these sales, computed on the moving-average cost basis, were 112 million ($1,142 thousand), 829 million and nil for the years ended March 31, 2009, 2008 and 2007, respectively. Gross realized losses on these sales were nil for these period. Available-for-sale securities whose fair value is not readily determinable as of March 31, 2009 and 2008 were as follows: Total ,350 15,350 14,508 5,000 19,508 $ 156,632 $ 156,632 The carrying values of debt securities by contractual maturities for securities classified as available-for-sale securities as of March 31, 2009 are as follows: Total $ $ 887 Certain securities, which amounted to 87 million ($887 thousand) and 78 million as of March 31, 2009 and 2008, respectively, were included in the prepaid expenses and other (current) on the accompanying consolidated balance sheets. 43

46 Financial Section Our Business Performance of FY2008 Appendices 6. SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBT The annual average interest rates applicable to short-term loans payable were 0.92% for 2009, 1.00% for 2008 and 0.83% for Long-term debt as of March 31, 2009 and 2008 consisted of the following: Total Long-term debt, less current maturities ,000 50,000 30,000 50,000 10,000 10,000 25,000 10,000 10,000 10,000 10,000 10,000 10,000 30,000 19,987 29,981 19,990 19,995 19,995 19,996 19,972 9,998 14,990 19,987 9,991 19,977 30,000 10,000 30, ,691 16,000 3,000 58,540 1,562,094 (154,823) 1,407,270 30,000 50,000 30,000 50,000 10,000 10,000 25,000 10,000 10,000 10,000 10,000 10,000 10,000 30,000 19,985 29,980 19,989 19,994 19,994 19,996 19,970 9,998 14, ,375 76,009 1,390,284 (98,990) 1,291,293 $ 306, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,122 6,884, ,265 30, ,358 15,939,723 (1,579,826) $ 14,359,897 44

47 The annual maturities of long-term debt outstanding as of March 31, 2009 are as follows: Thereafter Total 154, , , , , ,296 1,562,094 $ 1,579,826 1,716,877 1,334,826 1,538,540 1,072,734 8,696,920 $ 15,939,723 The Company has been released from the debt repayment obligation for a portion of the bonds issued by depositing equivalent assets under debt assumption agreements with financial institutions and accounts for outstanding bonds covered by these agreements as contingent liabilities. The balance of bonds released from their debt repayment obligation amounted to million ($204,081 thousand) as of March 31, 2009 (see Note 12). The Company has credit commitments from banks in order to ensure short-term liquidity. Total unused credit available to the Company at March 31, 2009 was 100,000 million ($1,020,408 thousand). All assets of the Company were pledged for the above secured bonds of 180,000 million ($1,836,734 thousand), including aforementioned off-balanced bonds of million ($204,081 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. The carrying amounts of assets pledged as collateral for current portion of long-term debt of 282 million ($2,877 thousand) and the above secured long-term debt of consolidated subsidiaries of 1,181 million ($12,051 thousand) at March 31, 2009 were as follows: Total 7. LONG-TERM ACCOUNTS PAYABLE RAILWAY FACILITIES Long-term accounts payable railway facilities as of March 31, 2009 and 2008 consisted of the following: 1, ,282 $ 15,224 8,061 $ 23,285 Total Long-term accounts payable railway facilities, less current maturities ,029,884 79, ,358 9,195 1,693,070 (113,967) 1,579,102 1,205, , ,835 9,510 1,945,885 (115,486) 1,830,398 $ 10,509, ,571 5,860,795 93,827 17,276,213 (1,162,928) $ 16,113,285 Based on debt assumption agreements with financial institutions and a special purpose entity, the Company has transferred the debt repayment obligation for certain long-term accounts payable railway facilities to these financial institutions and the special purpose entity, and has provided these financial institutions and the special purpose entity 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 437,500 million ($4,464,285 thousand) and 410,988 million as of March 31, 2009 and 2008, respectively, and the related loss on long-term accounts payable railway facilities by 29,071 million ($296,642 thousand) and 25,173 million for the years ended March 31, 2009 and 2008, respectively (see Note 12). The annual maturities of long-term accounts payable railway facilities as of March 31, 2009 are as follows: Total 113, , , , ,584 1,072,629 1,693,070 $ 1,162,928 1,213,020 1,264,275 1,317,459 1,373,306 10,945,225 $ 17,276,213 Interest expense on the aforementioned long-term accounts payable railway facilities amounted to 93,843 million ($957,581 thousand), 108,017 million and 121,525 million for the years ended March 31, 2009, 2008 and 2007, respectively. 45

48 Financial Section Our Business Performance of FY2008 Appendices 8. RETIREMENT AND PENSION PLANS The Company and 30 consolidated subsidiaries have unfunded retirement plans covering substantially all of their employees. Six consolidated subsidiaries have noncontributory funded pension plans, as an alternative for, or in addition to, the unfunded retirement plans. Two consolidated subsidiaries have non-contributory defined benefit pension plans as in addition to the unfunded retirement plans. One consolidated subsidiary sets employee pension trust. The net provision for retirement benefits at March 31, 2009 and 2008 consisted of the following: Net liability 242,213 (14,133) (1,535) (6,430) (10,515) 209,599 The prepaid pension cost was recorded as prepaid expenses and other in the consolidated balance sheet at March 31, The components of net periodic benefit costs for the years ended March 31, 2009, 2008 and 2007 were as follows: ,624 (5,192) (9,287) (5,181) ,994 $ 2,471,561 (144,214) (15,663) (65,612) (107,307) $ 2,138,765 Net periodic benefit costs Assumptions used for the years ended March 31, 2009, 2008 and 2007 were set forth as follows: ,222 3,634 (155) 127 2,857 1,786 20,473 11,536 3,624 (53) 2,843 3,673 21,624 11,438 3,734 (52) 2,077 3,440 20,637 $ 124,714 37,081 (1,581) 1,295 29,153 18,246 $ 208,908 Mainly 1.5% 0.85% to 2.0% 5 years Mainly 5 years 15 years (a certain consolidated subsidiary only) Mainly 1.5% 0.85% to 2.0% 5 years Mainly 5 years 2007 Mainly 1.5% 0.85% to 1.5% 5 years Mainly 5 years 9. EQUITY Since May 1, 2006, Japanese companies have been 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. 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 such as; (1) having the Board of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one year rather than two years of normal 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 (non-cash 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 Capital Stock, Reserve and Surplus The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal retained earnings (a component of retained earnings) or as a legal capital surplus (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total of aggregate amount of legal retained earnings and legal capital surplus equals to 25% of the capital stock. Under the Companies Act, the total amount of legal capital surplus and legal retained earnings may be reversed without limitation. The Companies Act also provides that capital stock, legal retained earnings, legal capital surplus, other capital surplus and other retained earnings can be transferred among the accounts 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 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. 46

49 10. INCOME TAXES The Companies are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 40% for the years ended March 31, 2009 and The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities at March 31, 2009 and 2008 were as follows: Total Deferred tax assets ,799 63,117 16,955 10,324 7,126 6,073 2,729 42, ,130 (19,831) 214,299 84,449 56,739 13,883 10,066 7,383 6,064 3,052 37, ,612 (17,991) 201,621 $ 875, , , ,346 72,714 61,969 27, ,645 2,389,081 (202,368) 2,186,713 Net deferred tax assets 6,175 1,832 3,747 11, ,543 4,436 5, , ,533 Net deferred tax assets as of March 31, 2009 and 2008 were reflected in the accompanying consolidated balance sheets under the following captions: 63,010 18,693 38, ,948 $ 2,066,765 Net deferred tax assets Since the difference between normal effective statutory tax rate and the actual effective tax rate was not significant, the reconciliation was not presented for the years ended March 31, 2009 and LEASES As lessee, the minimum rental commitments under noncancelable operating leases at March 31, 2009 and 2008 are due as follows: Total As lessor, the minimum rental commitments under noncancelable operating leases at March 31, 2009 and 2008 are due as follows: , ,272 (1) (4,258) 202,543 1,234 1,664 2,898 23, ,206 (159) 190, ,367 $ 250,316 1,859,918 (10) (43,459) $ 2,066, $ 12,591 16,980 $ 29,571 Total 1,834 7,310 9, $ 18,714 74,602 $ 93, CONTINGENCIES As of March 31, 2009, the Company has joint and several obligations with the Railway Technical Research Institute to make payments on long-term accounts payable of 30,707 million ($313,336 thousand) by the Institute. The proceeds are being used for the enhancement of technology development for the Maglev system. As discussed in Notes 7 and 8, based on debt assumption agreements with the financial institutions and the special purpose entity, the Company has transferred the debt repayment obligation for certain bonds and long-term payables to such financial institutions and the special purpose entity. At March 31, 2009, the Company had contingent obligations of million ($204,081 thousand) for the bonds and 437,500 million ($4,464,285 thousand) for long-term payables, respectively. 47

50 Financial Section Our Business Performance of FY2008 Appendices 13. SEGMENT INFORMATION The Companies' primary business activities include transportation, merchandise and other, real estate and other services. The transportation segment includes the Company's railway and bus operations. The merchandise and other segment includes department store, wholesale, retail sales and food service. The real estate segment includes real estate rental business. Other services segment includes hotel, travel, advertising, construction, railway rolling stock production and other business. Information by these industry segments of the Companies for the years ended March 31, 2009, 2008 and 2007 were as follows: (1) Sales and Operating Income Total 1,227,725 12,597 1,240, , ,101 8, , ,925 46,022 24,465 70,488 56, , , , ,334 (158,130) (158,130) (158,564) 1,570,253 1,570,253 1,187,912 Operating income 359,662 5,457 13,931 2, ,341 Total 1,247,489 12,782 1,260, , ,019 8, , ,692 44,430 21,629 66,059 54,492 73, , , ,965 (145,417) (145,417) (145,687) 1,559,467 1,559,467 1,125,004 Operating income 410,730 8,042 11,567 3, ,462 Total 1,200,353 11,714 1,212, , ,197 8, , ,278 41,895 20,703 62,599 48,857 61,823 97, , ,294 (138,732) (138,732) (138,175) 1,491,269 1,491,269 1,088,782 Operating income 377,539 7,562 13,741 4,200 (556) 402,487 Total $ 12,527, ,540 12,656,346 8,986,326 $ 1,970,428 84,500 2,054,928 1,999,234 $ 469, , , ,102 $ 1,055,143 1,150,878 2,206,021 2,176,889 $ (1,613,571) (1,613,571) (1,618,000) $ 16,022,989 16,022,989 12,121,551 Operating income $ 3,670,020 $ 55,694 $ 142,163 $ 29,132 $ 4,429 $ 3,901,438 As discussed in Note 4, the Companies adopted the new accounting standard for measurement of inventories in the year ended March 31, The effects of this change were to increase operating costs and expense in transportation segment by 3 million, to increase operating costs and expense in merchandise and other segment by 189 million, to increase operating costs and expense in real estate segment by 1,125 million and to decrease operating income of each segment by almost the same amount for the year ended March 31, As discussed in Note 4, property, plant and equipment acquired on and after April 1, 2007 are depreciated by the declining-balance method in accordance with the revised corporate tax law, which is effective for fiscal years beginning on and after April 1, The effects of this change were to increase depreciation expense in transportation segment by 4,309 million, to increase depreciation expense in merchandise and other segment by 67 million, to increase depreciation expense in real estate segment by 75 million, to increase depreciation expense in other services segment by 42 million and to decrease operating income of each segment by almost the same amount for the year ended March 31,

51 As discussed in Note 4, property, plant and equipment had been depreciated up to 95% of acquisition cost with 5% of residual value carried until previous fiscal years. However, such 5% portion of property, plant and equipment is systematically amortized over 5 years starting in the following year in which the carrying value of property, plant and equipment reaches 5% of the acquisition cost in accordance with the revised corporate tax law. The effects of this change were to increase depreciation expense in transportation segment by 5,800 million, to increase depreciation expense in merchandise and other segment by 39 million, to increase depreciation expense in real estate segment by 172 million, to increase depreciation expense in other services segment by 38 million and to decrease operating income of each segment by almost the same amount for the year ended March 31, (2) Assets, Depreciation and Amortization, Impairment Loss and Capital Expenditures 4,890, , ,069 73,129 3,424 3, ,035 13,446 20, ,472 3,641 5,603 (282,941) 5,222, , ,969 4,865, , ,603 73,631 3,087 4,550 5,164, ,225 1, ,927 $ 49,906,479 2,426,591 2,368,051 $ 746,214 34,938 37,683 $ 3,194, , ,234 $ 2,331,358 37,175 57,185 $ (2,887,153) $ 53,291,132 2,635,908 2,673,153 The amount of corporate assets included in the eliminations or corporate column was 47,097 million ($480,581 thousand), 66,785 million and 86,240 million for the years ended March 31, 2009, 2008 and 2007, respectively. Corporate assets principally consisted of long-term investments. Geographic segment information and information for overseas sales are not presented since the Companies have no significant overseas operations. 14. SUBSEQUENT EVENTS a. Retirement of Treasury Stock On April 28, 2009, the Board of Directors resolved to retire the treasury stock in accordance with Article 178 of the Companies Act. Based on the resolution, on May 11, 2009, the Company retired 90,000 shares of treasury stock. Total number of outstanding shares after retirement of the treasury stock is 2,150,000 shares. b. Appropriations of Retained Earnings The following appropriations of retained earnings at March 31, 2009 were approved at the Company's shareholders meeting held on June 23, 2009: $ 90,551 49

52 Our Business Performance of FY2008 Non-Consolidated Balance Sheets Financial Section Appendices Total current assets 38,800 23,476 8,493 19,516 35, ,531 31,210 23,512 7,960 20,513 41, , $ 395, ,551 86, , ,654 1,280,928 Total investments and other assets 58, , ,971 23, ,018 80, , ,046 25, , ,448 2,014,469 1,765, ,501 4,612,428 Total Net property, plant and equipment 7,319, , ,413 7,667,061 (3,252,905) 4,414,155 7,209, ,501 99,259 7,557,396 (3,115,064) 4,442,331 74,684,510 2,526,163 1,024,643 78,235,316 (33,192,907) 45,042,409 Total noncurrent assets 4,866,173 4,856,436 49,654,837 TOTAL 4,991,705 4,981,337 $ 50,935,765 See notes to non-consolidated financial statements. 50

53 Total current liabilities 14,999 92, , , ,967 20,025 33,778 24, , ,290 9,998 90, ,251 77, ,486 20,706 61,875 26,633 1,139 49, , $ 153, ,285 1,436,020 1,365,244 1,162, , , ,387 2, ,688 6,451,938 Total noncurrent liabilities 1,350,758 1,579, , ,906 36,967 3,384,402 1,237,090 1,830, , ,101 36,248 3,489,172 13,783,244 16,113,285 2,210,877 2,050, ,258 34,534,725 Total equity 112,000 53,586 12,504 1,107,067 (1,977) (308,168) 975, ,000 53,586 12,504 1,003,384 8,611 (308,168) 881,919 1,142, , ,591 11,296,602 (20,172) (3,144,571) 9,949,102 TOTAL 4,991,705 4,981,337 $ 50,935,765 See notes to non-consolidated financial statements. 51

54 Financial Section Our Business Performance of FY2008 Non-Consolidated Statements of Income Appendices Total operating revenues 1,232,257 8,906 1,241,163 1,252,217 9,028 1,261,246 1,203,957 8,357 1,212, $ 12,574,051 90,877 12,664,928 Total operating expenses Operating income 872,963 6, , , ,178 6, , , ,850 4, , ,823 8,907,785 61,888 8,969,673 3,695,255 Other expenses net 2,348 (124,375) (29,071) (11,139) (162,238) 1,987 (136,710) (25,173) 2,757 (157,138) 1,122 (148,242) (23,465) 7,729 (162,857) 23,959 (1,269,132) (296,642) (113,685) (1,655,500) 199, , ,966 2,039,755 Total income taxes 85,274 (6,808) 78, ,792 (5,072) 101,719 90,801 (2,976) 87, ,142 (69,478) 800, , , ,141 $ 1,239,091 61, , , , , , $

55 Non-Consolidated Statements of Changes in Equity 2, ,000 53,500 12, ,136 25, ,256 (268) ,141 (14,739) (331) 2,136 (308,988) ,141 (14,739) (331) (308,988) 906 2,136 1, ,000 53,586 12, , ,953 (15,776) 27,251 (18,639) (308,168) 762, ,953 (15,776) (18,639) 1, ,000 53,586 12,504 1,003, ,431 (17,748) 8,611 (10,589) (308,168) 881, ,431 (17,748) (10,589) 1, ,000 53,586 12,504 1,107,067 (1,977) (308,168) 975,012 $ 1,142,857 $ 546,795 $ 127,591 $ 10,238,613 1,239,091 (181,102 ) $ 87,879 (108,051 ) $ (3,144,571 ) $ 8,999,164 1,239,091 (181,102 ) (108,051 ) $ 1,142,857 $ 546,795 $ 127,591 $ 11,296,602 $ (20,172 ) $ (3,144,571 ) $ 9,949,102 53

56 Financial Section Our Business Performance of FY2008 Notes to Non-Consolidated Financial Statements Appendices 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 ("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 ( ), which was subsequently succeeded by the Corporation for Advanced Transport and Technology (the "CATT") ( ) and in turn by the Japan Railway Construction, Transport and Technology Agency (the "JRTT")), former Railway Telecommunication Co., Ltd., Railway Information Systems Co., Ltd. and the Railway Technical Research Institute. JNR itself became JNR Settlement Corporation (the "JNRSC"). All of the assets and liabilities of JNR were transferred to such organizations, including 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 and Transport (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, Tokyo and Osaka stock exchanges in Japan. 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 JNRSC enacted in October of 1998, the Company's shares held by 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 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. 2. BASIS OF PRESENTING NON-CONSOLIDATED FINANCIAL STATEMENTS The accompanying non-consolidated 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 Financial Instruments and Exchange Law (formerly, the Japanese Securities and Exchange Law), the Law for Railway Business Enterprise and related accounting regulations, and in conformity with accounting principles generally accepted in Japan, which are different in certain respects as to 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, non-consolidated statements of cash flows and certain disclosures are not presented herein in accordance with accounting principles generally accepted in Japan. In preparing these non-consolidated financial statements, certain reclassifications and rearrangements have been made to the Company's 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 2008 non-consolidated balance sheet and in the 2008 and 2007 non-consolidated statements of income to conform to the classifications used in The non-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 98 to $1, the approximate rate of exchange at March 31, 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 less than million yen are rounded down to the nearest million yen, except for per share information and U.S. dollar figures less than thousand of U.S. dollar are also rounded down to the nearest thousand of U.S. dollar, except for per share information. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Non-consolidation The non-consolidated financial statements do not include the accounts of subsidiaries. Investment in subsidiaries and affiliated companies 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. c. Supplies Supplies are carried at cost determined by the moving-average cost method. These balance sheet prices are measured at the lower of cost 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 valuation difference, net of applicable taxes, reported in a separate component of equity. Non-marketable 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. Depreciation is computed on 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. 54

57 The range of useful lives is principally from 3 to 60 years for buildings and structures, from 10 to 20 years for rolling stock, and from 4 to 17 years for machinery and equipment. Depreciation of certain railway ground structures except for the Shinkansen railway ground facilities are computed by the replacement-accounting method. f. Long-lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be 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 5 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 Company's provision plan authorized by the Minister of Transport over 15 years from October 1, 2002 in accordance with the Nationwide Shinkansen Railway Development Law. j. Retirement and Pension Plans The Company has an unfunded retirement plan covering substantially all employees. The provision for retirement benefits is mainly calculated based on the projected benefit obligations at the balance sheet date. k. Leases Lease assets of finance leases that deem not 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 non-consolidated statements 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 financial statements for the following year upon shareholders' approval. n. Consumption Tax Consumption tax is levied in Japan on the domestic sales of goods and services at the rate of 5%. Unless otherwise stated, all figures are presented net of tax. o. 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, retroactively adjusted for stock splits. The net income available to common shareholders used in the computation for 2009, 2008 and 2007 was 121,431 million ($1,239,091 thousand), 153,953 million and 130,141 million, respectively. The average number of common shares used in the computation for 2009, 2008 and 2007 was 1,972,027 shares, 1,972,027 shares and 1,978,000 shares, respectively. Diluted net income per share is not presented in the accompanying non-consolidated financial statements as the Company does not have any dilutive securities. Cash dividends per share presented in the accompanying non-consolidated statements of income are dividends applicable to the respective years including dividends to be paid after the end of the year. p. New Accounting Pronouncements Asset Retirement Obligations On March 31, 2008, the ASBJ published a new accounting standard for asset retirement obligations, ASBJ Statement No. 18 "Accounting Standard for Asset Retirement Obligations" and ASBJ Guidance No. 21 "Guidance on Accounting Standard for Asset Retirement Obligations." Under this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either by law or contract that results from the acquisition, construction, development and the normal operation of a tangible fixed asset and is associated with the retirement of such tangible fixed asset. The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement obligation is incurred, the liability should be recognized when a reasonable estimate of asset retirement obligation can be made. Upon initial recognition of a liability for an asset retirement obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of the liability. The asset retirement cost is subsequently allocated to expense through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its present value each period. Any subsequent revisions to the timing or the amount of the original estimate of undiscounted cash flows are reflected as an increase or a decrease in the carrying amount of the liability and the capitalized amount of the related asset retirement cost. This standard is effective for fiscal years beginning on or after April 1, 2010 with early adoption permitted for fiscal years beginning on or before March 31,

58 Financial Section Our Business Performance of FY2008 Appendices 4. ACCOUNTING CHANGE Inventories Prior to April 1, 2007, inventories were stated at cost, determined by the moving-average cost method. On July 5, 2006, the ASBJ issued ASBJ Statement No. 9, "Accounting Standard for Measurement of Inventories," which is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted. This standard requires that inventories held for sale in the ordinary course of business be measured at the lower of cost or net selling value, which is defined as the selling price less additional estimated manufacturing costs and estimated direct selling expenses. The replacement cost may be used in place of the net selling value, if appropriate. The Company adopted the new accounting standard for measurement of inventories in the year ended March 31, The effect of adoption of this accounting standard was to decrease income before income taxes for the year ended March 31, 2008 by approximately 47 million. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is computed by the declining-balance method. Property, plant and equipment acquired on and after April 1, 2007 are depreciated by the declining-balance method in accordance with the revised corporate tax law, which is effective for fiscal years beginning on and after April 1, The effect of this treatment was to decrease income before income taxes for the year ended March 31, 2008 by approximately 4,393 million. Property, plant and equipment had been depreciated up to 95% of acquisition cost with 5% of residual value carried until previous fiscal years. However, such 5% portion of property, plant and equipment is systematically amortized over 5 years starting in the following year in which the carrying value of property, plant and equipment reaches 5% of the acquisition cost in accordance with the revised corporate tax law. The effect of this treatment was to decrease income before income taxes for the year ended March 31, 2008 by approximately 5,785 million. Leases On March 30, 2007, the ASBJ issued ASBJ Statement No. 13, "Accounting Standard for Lease Transactions," which revised the previous accounting standard for lease transactions issued on June 17, The revised accounting standard for lease transactions was effective for fiscal years beginning on or after April 1, Under the previous accounting standard, finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized, however, other finance leases are permitted to be accounted for as operating lease transactions if certain "as if capitalized" information is disclosed in the note to the lessee's financial statements. The revised accounting standard requires that all finance lease transactions should be capitalized to recognize lease assets and lease obligations in the balance sheet. The Company applied the revised accounting standard effective April 1, The effect of adoption of this accounting standard was negligible. 5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment as of March 31, 2009 and 2008, consisted of the following: Total Net property, plant and equipment ,331, ,447 3,422, , ,579 3, ,413 7,667,061 (3,252,905) 4,414,155 2,328, ,239 3,398, , ,489 99,259 7,557,396 (3,115,064) 4,442,331 $ 23,789,836 5,249,459 34,922,757 8,186,408 5,026,316 35,897 1,024,643 78,235,316 (33,192,907) $ 45,042, INVESTMENT SECURITIES The carrying amounts and aggregate fair values of investment securities in subsidiaries whose market values are available at March 31, 2009 and 2008 were as follows: ,079 26,026 (1,052) 2009 $276,305 $265,571 $(10,734) 56

59 7. LONG-TERM DEBT Long-term debt as of March 31, 2009 and 2008, consisted of the following: Total Long-term debt, less current maturities ,000 50,000 30,000 50,000 10,000 10,000 25,000 10,000 10,000 10,000 10,000 10,000 10,000 30,000 19,987 29,981 19,990 19,995 19,995 19,996 19,972 9,998 14,990 19,987 9,991 19,977 30,000 10,000 30, ,691 1,484,553 (133,794) 1,350,758 30,000 50,000 30,000 50,000 10,000 10,000 25,000 10,000 10,000 10,000 10,000 10,000 10,000 30,000 19,985 29,980 19,989 19,994 19,994 19,996 19,970 9,998 14, ,375 1,314,274 (77,184) 1,237,090 $ 306, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,122 6,884,646 15,148,488 (1,365,244) $ 13,783,244 57

60 Financial Section Our Business Performance of FY2008 Appendices The annual maturities of long-term debt outstanding as of March 31, 2009, are as follows: Total 133, , , ,178 99, ,245 1,484,553 $ 1,365,244 1,586,673 1,272,387 1,358,959 1,011,683 8,553,542 $ 15,148,488 The Company has been released from the debt repayment obligation for a portion of the bonds issued by depositing equivalent assets under debt assumption agreements with financial institutions and accounts for all outstanding bonds covered by these agreements as contingent liabilities. The balance of bonds released from their debt repayment obligation amounted to million ($204,081 thousand) as of March 31, 2009 (see Note 12). The Company has credit commitments from banks in order to ensure short-term liquidity. Total unused credit available to the Company at March 31, 2009 was 100,000 million ($1,020,408 thousand). All assets of the Company were pledged for the above secured bonds of 180,000 million ($1,836,734 thousand), including aforementioned off-balanced bonds of million ($204,081 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. 8. LONG-TERM ACCOUNTS PAYABLE RAILWAY FACILITIES Long-term accounts payable railway facilities as of March 31, 2009 and 2008, consisted of the following: Total Long-term accounts payable railway facilities, less current maturities ,029,884 79, ,358 9,195 1,693,070 (113,967) 1,579,102 1,205, , ,835 9,510 1,945,885 (115,486) 1,830,398 $ 10,509, ,571 5,860,795 93,827 17,276,213 (1,162,928) $ 16,113,285 Based on debt assumption agreements with financial institutions and a special purpose entity, the Company has transferred the debt repayment obligation for certain long-term accounts payable railway facilities to such financial institutions and special purpose entity, and has provided such financial institutions and special purpose entity 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 such transactions, the balance of long-term accounts payable railway facilities derecognized amounted to 437,500 million ($4,464,285 thousand) and 410,988 million as of March 31, 2009 and 2008, respectively, and the related loss on long-term accounts payable railway facilities amounted to 29,071 million ($296,642 thousand) and 25,173 million for the years ended March 31, 2009 and 2008, respectively (see Note 12). The annual maturities of long-term accounts payable railway facilities as of March 31, 2009, are as follows: Total 113, , , , ,584 1,072,629 1,693,070 $ 1,162,928 1,213,020 1,264,275 1,317,459 1,373,306 10,945,225 $ 17,276,213 Interest expense on the aforementioned long-term accounts payable railway facilities amounted to 93,843 million ($957,581 thousand), 108,017 million and 121,525 million for the years ended March 31, 2009, 2008 and 2007, respectively. 58

61 9. EQUITY Since May 1, 2006, Japanese companies have been 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 such as; (1) having the Board of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one year rather than two years of normal 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 (non-cash 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 Capital Stock, Reserve and Surplus The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal retained earnings (a component of retained earnings) or as a legal capital surplus (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total of aggregate amount of legal retained earnings and legal capital surplus equals 25% of the capital stock. Under the Companies Act, the total amount of legal capital surplus and legal retained earnings may be reversed without limitation. The Companies Act also provides that capital stock, legal retained earnings, legal capital surplus, other capital surplus and other retained earnings can be transferred among the accounts 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 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. INCOME TAXES The Company is subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 40% for the years ended March 31, 2009 and The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities at March 31, 2009 and 2008, were as follows: Total Deferred tax assets Net deferred tax assets ,764 63,086 16,876 8,050 7,126 35, ,736 (14,974 ) 196,762 4,274 4, ,487 81,244 56,678 13,858 8,324 7,383 36, ,066 (15,442 ) 188,624 4,274 5,789 10, ,560 $ 824, , ,204 82,142 72, ,655 2,160,571 (152,796 ) 2,007,775 43,623 43,623 $ 1,964,152 Since the difference between normal effective statutory tax rate and the actual effective tax rate was not significant, the reconciliation was not presented for the years ended March 31, 2009 and

62 Financial Section Our Business Performance of FY2008 Appendices 11. LEASES As lessee, the minimum rental commitments under noncancelable operating leases at March 31, 2009 and 2008 are due as follows: Total ,252 1,653 2, ,367 As lessor, the minimum rental commitments under noncancelable operating leases at March 31, 2009 and 2008 are due as follows: $ 12,775 16,878 $ 29,653 Total ,311 28,875 $ 5, ,887 $ 294, CONTINGENCIES As of March 31, 2009, the Company has joint and several obligations with the Railway Technical Research Institute to make payments on long-term accounts payable of 30,707 million ($313,336 thousand) by the Institute. The proceeds are being used for the enhancement of technology development for the Maglev system. As discussed in Notes 7 and 8, based on debt assumption agreements with the financial institutions and the special purpose entity, the Company has transferred the debt repayment obligation for certain bonds and long-term accounts payable railway facilities to such financial institutions and the special purpose entity. At March 31, 2009, the Company had contingent obligations of million ($204,081 thousand) for the bonds and 437,500 million ($4,464,285 thousand) for long-term accounts payable railway facilities, respectively. The Company also had contingent liabilities for guarantees of the loans of a subsidiary amounting to 43,205 million ($440,867 thousand) at March 31, SUBSEQUENT EVENTS a. Retirement of Treasury Stock On April 28, 2009, the Board of Directors resolved to retire the treasury stock in accordance with Article 178 of the Companies Act. Based on the resolution, on May 11, 2009, the Company retired 90,000 shares of treasury stock. Total number of outstanding shares after retirement of the treasury stock is 2,150,000 shares. b. Appropriations of Retained Earnings The following appropriations of retained earnings at March 31, 2009 were approved at the Company's shareholders meeting held on June 23, 2009: 8,874 $ 90,551 60

63 INDEPENDENT AUDITORS REPORT Deloitte Touche Tohmatsu To the Board of Directors of Central Japan Railway Company: June 23,

64 Our Business Performance of FY2008 Financial Section Appendix 1Transportation Data Appendices Rolling Stock Kilometers (million kilometers) Total Shinkansen Conventional Railway Top 10 Stations in terms of Number of Passengers (Daily average of FY 2008) (thousand passengers / day) Nagoya Tokyo Shin-Osaka Shizuoka Kanayama Hamamatsu Kyoto Mishima Shin-Yokohama Note:The figures for Tokyo,Shin-Yokohama,Kyoto,and Shin-Osaka Stations indicate Shinkansen passengers only Gifu Passenger Kilometers Shinkansen (hundred million passenger-kilometers) Total Ordinary tickets Commuter passes Conventional Railway (hundred million passenger-kilometers) Total Ordinary tickets Commuter passes

65 Passenger Ridership Shinkansen (million passengers) Total Ordinary tickets Commuter passes Conventional Railway (million passengers) Total Commuter passes Ordinary tickets Railway Passenger Operations Revenues Shinkansen (Billions of yen) Total Ordinary tickets Commuter passes Conventional Railway (Billions of yen) Total Ordinary tickets Commuter passes

66 Appendix 2Financial Data Our Business Performance of FY2008 Financial Section Appendices Operating Revenues (Billions of Yen) Consolidated Financial Highlights Central Japan Railway Company and Consolidated Subsidiaries For the Year: Operating Revenues Net Income (Billions of Yen) Operating Expenses Operating Income Income before Income Taxes and Minority Interests Net Income Depreciation and Amortization Capital Expenditures Depreciation and Amortization, and Capital Expenditures (Billions of Yen) Per Share of Common Stock (in Yen and U.S. Dollars): Net Income Cash Dividends Applicable to the Year At Year-End: Total Assets Equity Shareholder s Equity Depreciation and Amortization Capital Expenditures Equity Ratio Total Long-Term Debt and Payables (Billions of Yen) Net income/total Assets ROE (Return on Equity) Note: Fiscal yen figures have been converted into U.S. dollars at the rate of 98=US$1, the approximate rate of exchange at March 31,

67 Non-Consolidated Financial Highlights Central Japan Railway Company Operating Revenues (Billions of Yen) Net Income (Billions of Yen) Depreciation and Amortization, and Capital Investments (Billions of Yen) Per Share of Common Stock (in Yen and U.S. Dollars): Net Income Cash Dividends Applicable to the Year At Year-End: Depreciation and Amortization Capital Investments Total Assets Equity Total Long-Term Debt and Payables (Billions of Yen) Shareholder s Equity Equity Ratio Net Income/Total Assets ROE (Return on Equity) Note: Fiscal yen figures have been converted into U.S. dollars at the rate of 98=US$1, the approximate rate of exchange at March 31,

68 Appendix 2Financial Data Our Business Performance of FY2008 Financial Section Appendices Financial Results (Consolidated) (Billions of yen) Operating Revenues (Billions of yen) Operating Income Ordinary Income Net Income Financial Results (Non-Consolidated) (Billions of yen) Operating Revenues (Billions of yen) Operating Income Ordinary Income Net Income *The numbers forecasted for 10.3 are as of the publishment of the financial report for the three months ended June 30,

69 Total Shareholders Equity (Non-Consolidated) (Billions of yen) Total Long-Term Debt and Payables (Billions of yen) Long-Term Payable for Tokaido Shinkansen Latent Liabilities Born by the Shinkansen Leasing System Long-Term Loans Corporate Bonds Inherited Liabilities Average Interest Rate

70 Our Business Performance of FY2008 Financial Section Appendix 3Capital Investment Appendices Capital Investment and Depreciation (Non-Consolidated) (Billions of yen) Capital Investment Safety-related Investment Depreciation and Amortization FY2009 Key Measures and Related Capital Investment 1 Securing Safe and Reliable Transportation We will make every effort to continually secure safe and reliable transportation, which is the foundation of the railway business. qas for Tokaido-shinkansen,in regards to anti-earthquake measures, promoting the quake-resistant reinforcement of embankments and bridges. was for conventional lines,promoting disaster prevention measures such as measures to prevent rocks from falling, upgrading levelcrossing safety devices, and promoting installation work of ATS-PT. Capital Investment: 98 billion yen 2 Concentrated Introduction of the Series N700, Leveraging the New Timetable that Allows up to 9 Nozomi Services to be Operated, and Strengthening the Transportation Infrastructure of the Tokaido Shinkansen Along with introducing the Series N700 in a concentrated manner, we will provide train servicesflexibly by leveraging the new timetable that can provide up to 9 Nozomi services and promote measures aimed at strengthening the transportation infrastructure of the Tokaido Shinkansen. Quake-resistant Reinforcement of Embankments of the Tokaido Shinkansen Capital Investment: 102 billion yen qcontinuously promoting the concentrated introduction of the Series N700 and gradually increasing operation of regular "Nozomi" services operated by the Series N700. wproviding train services flexibly in peak seasons and hours by leveraging the new timetable revised in March 2009 which can provide up to 9 Nozomi services per hour emaking efforts to promote Internet access onboard the Series N700 rpromoting renovation work on Shin-Osaka Station to increase platforms and draw-out tracks tproceeding with the renovation of passenger-related facilities such as at Tokyo Station, Shin-Yokohama Station, and Shin-Osaka Station Shin-Osaka Station Platform Expansion (completion image) 3 Enhancing Transportation Services of Conventional Lines Capital Investment: 3 billion yen We will work on various measures to enhance transportation services of conventional lines. qoffering services that utilize the transportation structure improved through the timetable revision in March 2009 wworking on various measures to further improve our transportation services, such as replacement with new rolling stock scheduled from 2010 to 2013 eproactively developing our walking events, namely "SAWAYAKA Walking " rsteadily introducing barrier-free accessible facilities in cooperation with concerned local governments and other institutions 1. Installing elevators and escalators 2. Furnishing multifunction toilets and other improvements testablishing new conventional railway stations and promoting the elevation of stations or railway tracks 68 The Series 313

71 4 Promoting the Tokaido Shinkansen Bypass by the Superconducting Maglev and Proceeding with the Extension Work and Other Developments of the Yamanashi Test Line Capital Investment: 23 billion yen We will make efforts to aim to realize the Tokaido Shinkansen Bypass (Chuo Shinkansen) and to polish up the Superconducting Maglev technology to achieve an even higher technical level. qfor the Tokaido Shinkansen Bypass by the Superconducting Maglev, promoting the four kinds of surveys instructed by the Minister of Land, Infrastructure and Transportation in December 2008 wcontinuing efforts to polish up the Superconducting Maglev technology that has already reached a practical level to achieve an even higher technical level ein regard to the Yamanashi Maglev Test Line, proceeding with the construction works to extend its length to 42.8 km and completely renovating the facilities to practical specifications, aiming to complete them as quickly as possible in a steady and speedy manner 5 5 Proactively Implementing Marketing Initiatives Capital Investment: 12 billion yen Along with promoting the measures that enhance passengers convenience, such as expanding EX-IC (Express IC) and TOICA, we will implement marketing initiatives proactively to evoke tourism demand. qpromoting the expansion of "EX-IC Service" to Sanyo Shinkansen section and start of the service for the corporate membership in Summer 2009 wworking for the expansion of the service area of "TOICA," introduction of the service in which a passenger can get on board the Tokaido Shinkansen by commuter pass, and adding an electronic money function on "TOICA," planned in Spring 2010 ealong with offering attractive travel products that utilize tourist resources in Kyoto, Nara, Ise, Tokyo, Sanyo, Kyushu and other destinations, as much as possible, developing various campaign proactively Yamanashi Maglev Test Line 6 6 Promoting Further Activities in Technological Development and Strengthening Technological Competences Capital Investment: 1 billion yen We will strive to promote further activities in technological development and strengthen our technological competences in order to enhance continuously "technology," which is the foundation of railway management and development. Also, we will utilize our technologies overseas in high speed railway that we have cultivated. qfostering research and development at JR Central Research Center in Komaki (Aichi Prefecture) with a focus on "improving railway technology" and "addressing challenges in new fields" wmaking efforts to comprehensively enhance our technological competences in the rolling stock sector by leveraging the complementary relationship with Nippon Sharyo that became our consolidated subsidiary eestablishing a section that conducts consulting and coordinating activities for overseas high speed railway projects by leveraging our comprehensive technological competences in high speed railway that we have cultivated through the operation of the Tokaido Shinkansen 7 EX-IC Service 7 Developing Affiliated Businesses Capital Investment: 39 billion yen To further develop our affiliated businesses, we will promote the development of station buildings and land formerly used for company housings, and prepare for the launch into the agriculture business. qsteadily proceeding with the project of constructing a new building at Nagoya Station, such as coordinating with the organizations concerned wstriving to improve all businesses associated with the "Shin-Yokohama Central Building," which opened in 2008 ealong with promoting the construction of the "Central Garden Residence Shizuoka" and annexed commercial facilities, developing land generated through the re-allocation of our company housings to use it effectively rsteadily preparing for the launch into the agriculture business within FY2009 Rolling Stock Field Test Simulator 8 8 Efforts to Conserve the Global Environment and Prepare for Museum Opening Capital Investment: 1 billion yen We will proactively promote efforts to conserve the global environment and proceed with the preparation for constructing a museum. qproactively promoting efforts to contribute to the conservation of the global environment such as by introducing the Series N700, aiming to achieve compatibility with the global environment and realizing substantial energy-savings, and engaging in activities to disseminate information, aiming to spread the concept of "Eco Business Trips" wpreparing for the opening of the "JR Central Museum (tentative name)" to widely introduce advancements in high speed railway technology and other aspects New Building Project at Nagoya Station (Completion Image) Total Capital Investment FY2009 Introduction of Energy-saving Rolling Stock (Shinkansen) Non-consolidated 280 billion yen Consolidated 319 billion yen 69

72 Our Business Performance of FY2008 Financial Section Appendix 4Operating Environment Appendices International Comparison in Fundamentals GDP per Capita (2007) (U.S.$) Population Density (2006) (per square kilometer) Japan U.K. Germany France U.S. Japan U.K. Germany France U.S. Source: OECD Source: OECD Railway Operations in Japan Railways' Share in Total Domestic Passenger Transportation (% of passenger-kilometers) Ships Airlines Railways Automobiles Source: Ministry of Land, Infrastructure and Transport Data: FY Railways' Share in Total Domestic Passenger Transportation (by distance traveled) Ships Automobiles Airlines Non-JR Railways 0km-100km 100km-300km 300km-500km 500km-750km 750km-1000km 1000km- Source: Research and Analyses of Regional Freight and Passenger Flows Ministry of Land, Infrastructure and Transport Data: FY

73 Market Area Percentage of Japan as a Whole Population Density (As of the end of March 2008) JR Central s Market Area other GDP (nominal) (FY2007.3) Japan (as a whole) (Base) Population (As of the end of March 2008) JR Central s Market Area Note: JR Central s market area includes the following prefectures: Tokyo, Kanagawa, Chiba, Saitama, Ibaraki, Shizuoka, Yamanashi, Nagano, Aichi, Mie, Gifu, Shiga, Osaka, Kyoto, Hyogo, Nara Sources: Population Residential Register, Japan Geographic Data Center GDP Annual Report on Prefectural Accounts, Economic and Social Research Institute, Cabinet Office Comparison with Airline Transportation Services (As of June 2009) Between Tokyo and Osaka (552.6 km) Okayama (732.9 km) Hiroshima (894.2 km) Fukuoka (1,174.9 km) Travel Time Shinkansen Airlines 2 hr 25 min 1 hr (About 2 hr 30 min) 3 hr 12 min 1 hr 10 min (About 3 hr) 3 hr 48 min 1 hr 15 min (About 3 hr 10 min) 4 hr 51 min 1 hr 30 min (About 2 hr 40 min) Departures per day Shinkansen Airlines Notes:1. Travel times is in case of the fastest service 2. Travel times in parentheses include transfer and access times from airports to city centers 3. Travel time between Tokyo and Shin-Osaka stations by Shinkansen Market Share (against Airlines) JR Central JR West Tokyo Nagoya Osaka Okayama Hiroshima Fukuoka Tokyo Area Nagoya Area 69 thousand passengers per day Tokyo Area Osaka Area 130 thousand passengers per day Tokyo Area Okayama Prefecture 8 thousand passengers per day Tokyo Area Hiroshima Prefecture 15 thousand passengers per day Tokyo Area Fukuoka Prefecture 28 thousand passengers per day Railway Notes:1. Market share is the percentage of all railway and airline services based on the inter-prefectural data of the Inter-Regional Passenger Mobility Survey (FY2008.3), published by the Ministry of Land, Infrastructure and Transport Railway market share of FY is as follows according to our own estimate. Tokyo Area~Nagoya Area:100% Tokyo Area~Osaka Area:82% 2. Tokyo Area: Tokyo, Kanagawa, Chiba, Saitama, Ibaraki Nagoya Area: Aichi, Mie, Gifu Osaka Area: Osaka, Kyoto, Hyogo, Nara Airlines 71

74 Our Business Performance of FY2008 Financial Section Appendices Appendix 5 International Railway Comparison 1 Route Length (kilometers) JR Central (Japan) JR East (Japan) JR West (Japan) SNCF (France) DB AG (Germany) ATOC (U.K.) Amtrak (U.S.) Number of Employees 4 JR Central (Japan) JR East (Japan) JR West (Japan) SNCF (France) DB AG (Germany) TOCs (U.K.) Amtrak (U.S.) Passenger Revenues (millions of US$) 6 JR Central (Japan) JR East (Japan) JR West (Japan) SNCF (France) DB AG (Germany) TOCs (U.K.) Amtrak (U.S.) Number of Passengers (thousands) JR Central (Japan) JR East (Japan) JR West (Japan) SNCF (France) DB AG (Germany) TOCs (U.K.) Amtrak (U.S.) Sources: Statistique Internationale des Chemins de fer 2007 ( Union Internationale des Chemins des fer), Financial Report of the JRs 72

75 Passenger-Kilometers (million passenger-kilometers) JR Central (Japan) JR East (Japan) JR West (Japan) SNCF (France) DB AG (Germany) TOCs (U.K.) Amtrak (U.S.) Average Traffic Density (daily passenger-kilometers/route length) JR Central (Japan) JR East (Japan) JR West (Japan) SNCF (France) DB AG (Germany) TOCs (U.K.) Amtrak (U.S.) Passenger Revenues per Route Length (thousands of US$/route length) JR Central (Japan) JR East (Japan) JR West (Japan) SNCF (France) DB AG (Germany) TOCs (U.K.) Amtrak (U.S.) Passenger Revenues per Employee (thousands of US$/employee) JR Central (Japan) JR East (Japan) JR West (Japan) SNCF (France) DB AG (Germany) TOCs (U.K.) Amtrak (U.S.) 5. Sum of the data of SNCF and RFF 6. Data of the JRs are converted by the US$ exchange rate as of March 31,2008 The others are first converted to Japanese Yen, then converted in the same way as mentioned above 73

76 Appendices Our Business Performance of FY2008 Financial Section Appendix 6Financial Comparison of Three JR Companies (FY ) Consolidated ROE (Return on Equity) (%) Net income/total Assets (%) JR Central JR East JR West JR Central JR East JR West Operating Income / Operating Revenues (%) Interest Coverage Ratio (times) JR Central JR East JR West JR Central JR East JR West Total Long-Term Debt and Long-Term Payables / Operating Revenues (times) Equity Ratio (%) JR Central JR East JR West JR Central JR East JR West 1.(Operating income + Interest and dividend income) / Interest expense 74

77 Debt to Equity Ratio (%) Current Ratio (%) JR Central JR East JR West JR Central JR East JR West Shareholders Equity per Share ( ) Earnings per Share (EPS) ( ) JR Central JR East JR West JR Central JR East JR West Operating Revenues per Employee (thousands of yen) Dividend Payout Ratio (%) JR Central JR East JR West JR Central JR East JR West 2.JR East implemented a 100-for-1 stock split effective January 4,

78 Our Business Performance of FY2008 Financial Section Appendix 7Stock Information Appendices Stock Price (yen) Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Major Shareholders Name Mizuho Corporate Bank, Ltd. Japan Trustee Services Bank Ltd. (Trust Account 4G) Japan Trustee Services Bank Ltd. (Trust Account) The Master Trust Bank of Japan, Ltd. (Trust Account) The Nomura Trust and Banking Co., Ltd. (Holder in Retirement Benefit Trust for The Bank of Tokyo-Mitsubishi UFJ, Ltd.) The Bank of Tokyo-Mitsubishi UFJ, Ltd. Nippon Life Insurance Company Toyota Motor Corporation JR Central Employee Shareholding Association Mizuho Bank, Ltd. Notes Besides the above, JR Central holds 267,973 repurchased stocks. Cancelled 90,000 shares of treasury stock held by JR Central in May 2009 Total Number of shares held Percentage of total issued shares 97, % 96, % 93, % 78, % 71, % 66, % 50, % 40, % 38, % 34, % 666, % (As of March 31, 2009) 76

79 URL : For further information, please contact: Investor Relations, Corporate Planning Division Tel: , Fax: ir.msd@jr-central.co.jp International Department, Corporate Planning Division Tel: , Fax:

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