Form
20-F
|
Form
40-F X
|
Yes
|
No X
|
Yes
|
No X
|
Yes
|
No X
|
|
|
·
|
Net
income was C$573 million, or C$1.21 per diluted share, including a
deferred income tax recovery of C$42 million, or C$0.09 per diluted
share.
|
·
|
Revenues
increased 13 per cent over Q4-2007 to C$2,200 million, while operating
expenses rose 15 per cent to C$1,380
million.
|
·
|
Operating
income was C$820 million, an increase of 11 per cent from the year earlier
results, with the operating ratio increasing six-tenths of a point to 62.7
per cent.
|
·
|
Strong
full-year 2008 free cash flow of C$794 million.
(1)
|
Media
|
Investment
Community
|
Mark
Hallman
|
Robert
Noorigian
|
Director,
Communications, Media
|
Vice-President,
Investor Relations
|
(905)
669-3384
|
(514)
399-0052
|
CANADIAN
NATIONAL RAILWAY COMPANY
|
CONSOLIDATED
STATEMENT OF INCOME (U.S.
GAAP)
|
(In
millions, except per share
data)
|
Three
months ended
|
Year
ended
|
|||||||||||
December
31
|
December
31
|
|||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||
(Unaudited)
|
||||||||||||
Revenues
|
$
|
2,200
|
$
|
1,941
|
$
|
8,482
|
$
|
7,897
|
||||
Operating
expenses
|
||||||||||||
Labor
and fringe benefits
|
397
|
340
|
1,674
|
1,701
|
||||||||
Purchased
services and material
|
301
|
259
|
1,137
|
1,045
|
||||||||
Fuel
|
304
|
307
|
1,403
|
1,026
|
||||||||
Depreciation
and amortization
|
197
|
173
|
725
|
677
|
||||||||
Equipment
rents
|
79
|
60
|
262
|
247
|
||||||||
Casualty
and other
|
102
|
66
|
387
|
325
|
||||||||
Total
operating expenses
|
1,380
|
1,205
|
5,588
|
5,021
|
||||||||
Operating
income
|
820
|
736
|
2,894
|
2,876
|
||||||||
Interest
expense
|
(110)
|
(85)
|
(375)
|
(336)
|
||||||||
Other
income
|
19
|
159
|
26
|
166
|
||||||||
Income
before income taxes
|
729
|
810
|
2,545
|
2,706
|
||||||||
Income
tax recovery (expense)
|
(156)
|
23
|
(650)
|
(548)
|
||||||||
Net
income
|
$
|
573
|
$
|
833
|
$
|
1,895
|
$
|
2,158
|
||||
Earnings
per share
|
||||||||||||
Basic
|
$
|
1.22
|
$
|
1.70
|
$
|
3.99
|
$
|
4.31
|
||||
Diluted
|
$
|
1.21
|
$
|
1.68
|
$
|
3.95
|
$
|
4.25
|
||||
Weighted-average
number of shares
|
||||||||||||
Basic
|
468.1
|
489.8
|
474.7
|
501.2
|
||||||||
Diluted
|
472.5
|
495.9
|
480.0
|
508.0
|
||||||||
These
unaudited interim consolidated financial statements, expressed in Canadian
dollars, and prepared in accordance with U.S. generally accepted
accounting principles (U.S. GAAP), contain all adjustments (consisting of
normal recurring accruals) necessary to present fairly Canadian National
Railway Company's (the Company) financial position as at December 31, 2008
and December 31, 2007, and its results of operations, changes in
shareholders' equity and cash flows for the three months and years ended
December 31, 2008 and 2007. These consolidated financial
statements have been prepared using accounting policies consistent with
those used in preparing the Company's 2008 Annual Consolidated
Financial Statements and should be read in conjunction with such
statements, notes thereto and Management's Discussion and Analysis
(MD&A).
|
CANADIAN
NATIONAL RAILWAY COMPANY
|
CONSOLIDATED
BALANCE SHEET (U.S.
GAAP)
|
(In
millions)
|
December
31
|
December
31
|
||||
2008
|
2007
|
||||
(Unaudited)
|
|||||
Assets
|
|||||
Current
assets:
|
|||||
Cash
and cash equivalents
|
$
|
413
|
$
|
310
|
|
Accounts
receivable
|
913
|
370
|
|||
Material
and supplies
|
200
|
162
|
|||
Deferred
income taxes
|
98
|
68
|
|||
Other
|
132
|
138
|
|||
1,756
|
1,048
|
||||
Properties
|
23,203
|
20,413
|
|||
Intangible
and other assets
|
1,761
|
1,999
|
|||
Total
assets
|
$
|
26,720
|
$
|
23,460
|
|
Liabilities
and shareholders' equity
|
|||||
Current
liabilities:
|
|||||
Accounts
payable and other
|
$
|
1,386
|
$
|
1,336
|
|
Current
portion of long-term debt
|
506
|
254
|
|||
1,892
|
1,590
|
||||
Deferred
income taxes
|
5,511
|
4,908
|
|||
Other
liabilities and deferred credits
|
1,353
|
1,422
|
|||
Long-term
debt
|
7,405
|
5,363
|
|||
Shareholders'
equity:
|
|||||
Common
shares
|
4,179
|
4,283
|
|||
Accumulated
other comprehensive loss
|
(155)
|
(31)
|
|||
Retained
earnings
|
6,535
|
5,925
|
|||
10,559
|
10,177
|
||||
Total
liabilities and shareholders' equity
|
$
|
26,720
|
$
|
23,460
|
|
Certain of the 2007 figures have been restated to conform to the 2008 presentation. | |||||
These
unaudited interim consolidated financial statements, expressed in Canadian
dollars, and prepared in accordance with U.S. GAAP, contain all
adjustments (consisting of normal recurring accruals) necessary to present
fairly the Company’s financial position as at December 31, 2008 and
December 31, 2007, and its results of operations, changes in shareholders'
equity and cash flows for the three months and years ended December 31,
2008 and 2007. These consolidated financial statements have
been prepared using accounting policies consistent with those used in
preparing the Company's 2008 Annual Consolidated Financial Statements and
should be read in conjunction with such statements, notes thereto and
MD&A.
|
|||||
Subsequent
event
|
|||||
The
Company's agreement to acquire the principal lines of Elgin, Joliet and
Eastern Railway Company (EJ&E) for a purchase price of approximately
U.S.$300 million received all necessary regulatory approvals, including
the U.S. Surface Transportation Board (STB) ruling rendered on December
24, 2008. The STB's decision will become effective on January
23, 2009 and the Company expects to close the transaction shortly
thereafter and pay the purchase price with cash on
hand. The Company will account for the acquisition using the
purchase method of accounting pursuant to Statement of Financial
Accounting Standards (SFAS) No. 141(R), "Business Combinations," which
became effective for acquisitions closing on or after January 1,
2009.
|
CANADIAN
NATIONAL RAILWAY COMPANY
|
CONSOLIDATED
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (U.S.
GAAP)
|
(In
millions)
|
|
|||||||||||
|
Three
months ended
|
Year
ended
|
|||||||||
|
December
31
|
December
31
|
|||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||
|
(Unaudited)
|
||||||||||
Common shares
|
|||||||||||
Balance,
beginning of period
|
$
|
4,171
|
$
|
4,359
|
$
|
4,283
|
$
|
4,459
|
|||
Stock
options exercised and other
|
9
|
6
|
68
|
89
|
|||||||
Share
repurchase programs
|
(1)
|
(82)
|
(172)
|
(265)
|
|||||||
Balance,
end of period
|
$
|
4,179
|
$
|
4,283
|
$
|
4,179
|
$
|
4,283
|
|||
|
|||||||||||
Accumulated other comprehensive
loss
|
|||||||||||
Balance,
beginning of period
|
$
|
54
|
$
|
(257)
|
$
|
(31)
|
$
|
(44)
|
|||
Other
comprehensive income (loss):
|
|||||||||||
Unrealized
foreign exchange gain (loss) on:
|
|||||||||||
Translation
of the net investment in foreign operations
|
860
|
(90)
|
1,259
|
(1,004)
|
|||||||
Translation
of U.S. dollar-denominated long-term debt
|
|||||||||||
designated
as a hedge of the net investment in U.S. subsidiaries
|
(877)
|
22
|
(1,266)
|
788
|
|||||||
Pension
and other postretirement benefit plans:
|
|||||||||||
Net
actuarial gain (loss) arising during the period
|
(452)
|
391
|
(452)
|
391
|
|||||||
Prior
service cost arising during the period
|
(3)
|
(12)
|
(3)
|
(12)
|
|||||||
Amortization
of net actuarial loss (gain) included in net
|
|||||||||||
periodic
benefit cost
|
-
|
11
|
(2)
|
49
|
|||||||
Amortization
of prior service cost included in net
|
|||||||||||
periodic
benefit cost
|
3
|
5
|
21
|
21
|
|||||||
Derivative
instruments
|
-
|
(1)
|
-
|
(1)
|
|||||||
Other
comprehensive income (loss) before income taxes
|
(469)
|
326
|
(443)
|
232
|
|||||||
Income
tax recovery (expense)
|
260
|
(100)
|
319
|
(219)
|
|||||||
Other
comprehensive income (loss)
|
(209)
|
226
|
(124)
|
13
|
|||||||
Balance,
end of period
|
$
|
(155)
|
$
|
(31)
|
$
|
(155)
|
$
|
(31)
|
|||
|
|||||||||||
Retained
earnings
|
|||||||||||
Balance,
beginning of period
|
$
|
6,073
|
$
|
5,557
|
$
|
5,925
|
$
|
5,409
|
|||
Adoption
of new accounting pronouncements (1)
|
-
|
-
|
-
|
95
|
|||||||
|
|||||||||||
Restated
balance, beginning of period
|
6,073
|
5,557
|
5,925
|
5,504
|
|||||||
Net
income
|
573
|
833
|
1,895
|
2,158
|
|||||||
Share
repurchase programs
|
(3)
|
(363)
|
(849)
|
(1,319)
|
|||||||
Dividends
|
(108)
|
(102)
|
(436)
|
(418)
|
|||||||
Balance,
end of period
|
$
|
6,535
|
$
|
5,925
|
$
|
6,535
|
$
|
5,925
|
(1)
|
On
January 1, 2007, the Company adopted Financial Accounting Standards Board
(FASB) Interpretation (FIN) No. 48, “Accounting for Uncertainty in Income
Taxes,” and early adopted the measurement date provisions of Statement of
Financial Accounting Standards (SFAS) No. 158, “Employers’ Accounting for
Defined Benefit Pension and Other Postretirement Plans, an amendment of
FASB Statements No. 87, 88, 106, and 132(R).” The application
of FIN No. 48 on January 1, 2007 had the effect of decreasing the net
deferred income tax liability and increasing Retained earnings by $98
million. The application of SFAS No. 158 on January 1, 2007 had
the effect of decreasing Retained earnings by $3
million.
|
CANADIAN
NATIONAL RAILWAY COMPANY
|
CONSOLIDATED
STATEMENT OF CASH FLOWS (U.S.
GAAP)
|
(In
millions)
|
Three
months ended
|
Year
ended
|
||||||||||
December
31
|
December
31
|
||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||
(Unaudited)
|
|||||||||||
Operating
activities
|
|||||||||||
Net
income
|
$
|
573
|
$
|
833
|
$
|
1,895
|
$
|
2,158
|
|||
Adjustments
to reconcile net income to net cash
|
|||||||||||
provided
from operating activities:
|
|||||||||||
Depreciation
and amortization
|
197
|
172
|
725
|
678
|
|||||||
Deferred
income taxes
|
43
|
(207)
|
230
|
(82)
|
|||||||
Gain
on sale of Central Station Complex
|
-
|
(92)
|
-
|
(92)
|
|||||||
Gain
on sale of investment in English Welsh and Scottish
Railway
|
-
|
(61)
|
-
|
(61)
|
|||||||
Other
changes in:
|
|||||||||||
Accounts
receivable
|
(173)
|
267
|
(432)
|
229
|
|||||||
Material
and supplies
|
25
|
44
|
(23)
|
18
|
|||||||
Accounts
payable and other
|
(28)
|
99
|
(127)
|
(396)
|
|||||||
Other
current assets
|
2
|
(9)
|
37
|
84
|
|||||||
Other
|
(139)
|
(122)
|
(274)
|
(119)
|
|||||||
Cash
provided from operating activities
|
500
|
942
|
2,031
|
2,417
|
|||||||
Investing
activities
|
|||||||||||
Property
additions
|
(480)
|
(490)
|
(1,424)
|
(1,387)
|
|||||||
Acquisitions,
net of cash acquired
|
(50)
|
(25)
|
(50)
|
(25)
|
|||||||
Sale
of Central Station Complex
|
-
|
351
|
-
|
351
|
|||||||
Sale
of investment in English Welsh and Scottish Railway
|
-
|
114
|
-
|
114
|
|||||||
Other,
net
|
32
|
26
|
74
|
52
|
|||||||
Cash
used by investing activities
|
(498)
|
(24)
|
(1,400)
|
(895)
|
|||||||
Financing
activities
|
|||||||||||
Issuance
of long-term debt
|
1,003
|
846
|
4,433
|
4,171
|
|||||||
Reduction
of long-term debt
|
(793)
|
(1,120)
|
(3,589)
|
(3,589)
|
|||||||
Issuance
of common shares due to exercise of stock options and
|
|||||||||||
related
excess tax benefits realized
|
6
|
4
|
54
|
77
|
|||||||
Repurchase
of common shares
|
(4)
|
(445)
|
(1,021)
|
(1,584)
|
|||||||
Dividends
paid
|
(108)
|
(102)
|
(436)
|
(418)
|
|||||||
Cash
provided from (used by) financing activities
|
104
|
(817)
|
(559)
|
(1,343)
|
|||||||
Effect
of foreign exchange fluctuations on U.S. dollar-
|
|||||||||||
denominated
cash and cash equivalents
|
19
|
(5)
|
31
|
(48)
|
|||||||
Net
increase in cash and cash equivalents
|
125
|
96
|
103
|
131
|
|||||||
Cash
and cash equivalents, beginning of period
|
288
|
214
|
310
|
179
|
|||||||
Cash
and cash equivalents, end of period
|
$
|
413
|
$
|
310
|
$
|
413
|
$
|
310
|
|||
Supplemental
cash flow information
|
|||||||||||
Net
cash receipts from customers and other
|
$
|
1,987
|
$
|
2,209
|
$
|
8,012
|
$
|
8,139
|
|||
Net
cash payments for:
|
|||||||||||
Employee
services, suppliers and other expenses
|
(1,171)
|
(979)
|
(4,920)
|
(4,323)
|
|||||||
Interest
|
(124)
|
(67)
|
(396)
|
(340)
|
|||||||
Workforce
reductions
|
(5)
|
(7)
|
(22)
|
(31)
|
|||||||
Personal
injury and other claims
|
(29)
|
(28)
|
(91)
|
(86)
|
|||||||
Pensions
|
(50)
|
(25)
|
(127)
|
(75)
|
|||||||
Income
taxes
|
(108)
|
(161)
|
(425)
|
(867)
|
|||||||
Cash
provided from operating activities
|
$
|
500
|
$
|
942
|
$
|
2,031
|
$
|
2,417
|
|||
Certain
of the 2007 figures have been restated to conform to the 2008
presentation.
|
CANADIAN
NATIONAL RAILWAY COMPANY
|
SELECTED
RAILROAD STATISTICS (1)
(U.S.
GAAP)
|
Three
months ended
|
Year
ended
|
||||
December
31
|
December
31
|
||||
2008
|
2007
|
2008
|
2007
|
||
(Unaudited)
|
|||||
Statistical
operating data
|
|||||
Rail
freight revenues ($ millions)
|
1,977
|
1,763
|
7,641
|
7,186
|
|
Gross
ton miles (GTM) (millions)
|
81,871
|
89,315
|
339,854
|
347,898
|
|
Revenue
ton miles (RTM) (millions)
|
42,382
|
47,151
|
177,951
|
184,148
|
|
Carloads
(thousands)
|
1,078
|
1,205
|
4,615
|
4,744
|
|
Route
miles (includes Canada and the U.S.)
|
20,961
|
20,421
|
20,961
|
20,421
|
|
Employees
(end of period)
|
22,227
|
22,696
|
22,227
|
22,696
|
|
Employees
(average for the period)
|
22,461
|
22,796
|
22,695
|
22,389
|
|
Productivity
|
|||||
Operating
ratio (%)
|
62.7
|
62.1
|
65.9
|
63.6
|
|
Rail
freight revenue per RTM (cents)
|
4.66
|
3.74
|
4.29
|
3.90
|
|
Rail
freight revenue per carload ($)
|
1,834
|
1,463
|
1,656
|
1,515
|
|
Operating
expenses per GTM (cents)
|
1.69
|
1.35
|
1.64
|
1.44
|
|
Labor
and fringe benefits expense per GTM (cents)
|
0.48
|
0.38
|
0.49
|
0.49
|
|
GTMs
per average number of employees (thousands)
|
3,645
|
3,918
|
14,975
|
15,539
|
|
Diesel
fuel consumed (U.S. gallons in millions)
|
93
|
102
|
380
|
392
|
|
Average
fuel price ($/U.S. gallon)
|
2.88
|
2.70
|
3.39
|
2.40
|
|
GTMs
per U.S. gallon of fuel consumed
|
880
|
876
|
894
|
887
|
|
Safety
indicators
|
|||||
Injury
frequency rate per 200,000 person hours (2)
|
1.7
|
2.1
|
1.8
|
1.9
|
|
Accident
rate per million train miles (2)
|
2.8
|
3.6
|
2.6
|
2.7
|
|
Financial
ratio
|
|||||
Debt
to total capitalization ratio (% at end of period)
|
42.8
|
35.6
|
42.8
|
35.6
|
|
(1)
Includes data relating to companies acquired as of the date of
acquisition.
|
|||||
(2)
Based on Federal Railroad Administration (FRA) reporting
criteria.
|
Certain
statistical data and related productivity measures are based on estimated
data available at such time and are subject to change as more complete
information becomes available.
|
CANADIAN
NATIONAL RAILWAY COMPANY
|
SUPPLEMENTARY
INFORMATION (U.S.
GAAP)
|
Three
months ended December 31
|
Year
ended December 31
|
||||||
Variance
|
Variance
|
||||||
2008
|
2007
|
Fav
(Unfav)
|
2008
|
2007
|
Fav
(Unfav)
|
||
(Unaudited)
|
|||||||
Revenues
(millions of dollars)
|
|||||||
Petroleum
and chemicals
|
359
|
306
|
17%
|
1,346
|
1,226
|
10%
|
|
Metals
and minerals
|
237
|
195
|
22%
|
950
|
826
|
15%
|
|
Forest
products
|
366
|
336
|
9%
|
1,436
|
1,552
|
(7%)
|
|
Coal
|
132
|
98
|
35%
|
478
|
385
|
24%
|
|
Grain
and fertilizers
|
381
|
350
|
9%
|
1,382
|
1,311
|
5%
|
|
Intermodal
|
390
|
362
|
8%
|
1,580
|
1,382
|
14%
|
|
Automotive
|
112
|
116
|
(3%)
|
469
|
504
|
(7%)
|
|
Total
rail freight revenue
|
1,977
|
1,763
|
12%
|
7,641
|
7,186
|
6%
|
|
Other
revenues
|
223
|
178
|
25%
|
841
|
711
|
18%
|
|
Total
revenues
|
2,200
|
1,941
|
13%
|
8,482
|
7,897
|
7%
|
|
Revenue
ton miles (millions)
|
|||||||
Petroleum
and chemicals
|
7,678
|
8,473
|
(9%)
|
32,346
|
32,761
|
(1%)
|
|
Metals
and minerals
|
3,982
|
4,305
|
(8%)
|
17,953
|
16,719
|
7%
|
|
Forest
products
|
7,848
|
9,156
|
(14%)
|
33,847
|
39,808
|
(15%)
|
|
Coal
|
3,697
|
3,432
|
8%
|
14,886
|
13,776
|
8%
|
|
Grain
and fertilizers
|
10,592
|
12,550
|
(16%)
|
42,507
|
45,359
|
(6%)
|
|
Intermodal
|
8,027
|
8,493
|
(5%)
|
33,822
|
32,607
|
4%
|
|
Automotive
|
558
|
742
|
(25%)
|
2,590
|
3,118
|
(17%)
|
|
42,382
|
47,151
|
(10%)
|
177,951
|
184,148
|
(3%)
|
||
Rail
freight revenue / RTM (cents)
|
|||||||
Total
rail freight revenue per RTM
|
4.66
|
3.74
|
25%
|
4.29
|
3.90
|
10%
|
|
Commodity
groups:
|
|||||||
Petroleum
and chemicals
|
4.68
|
3.61
|
30%
|
4.16
|
3.74
|
11%
|
|
Metals
and minerals
|
5.95
|
4.53
|
31%
|
5.29
|
4.94
|
7%
|
|
Forest
products
|
4.66
|
3.67
|
27%
|
4.24
|
3.90
|
9%
|
|
Coal
|
3.57
|
2.86
|
25%
|
3.21
|
2.79
|
15%
|
|
Grain
and fertilizers
|
3.60
|
2.79
|
29%
|
3.25
|
2.89
|
12%
|
|
Intermodal
|
4.86
|
4.26
|
14%
|
4.67
|
4.24
|
10%
|
|
Automotive
|
20.07
|
15.63
|
28%
|
18.11
|
16.16
|
12%
|
|
Carloads
(thousands)
|
|||||||
Petroleum
and chemicals
|
123
|
151
|
(19%)
|
547
|
599
|
(9%)
|
|
Metals
and minerals
|
228
|
261
|
(13%)
|
1,025
|
1,010
|
1%
|
|
Forest
products
|
116
|
134
|
(13%)
|
511
|
584
|
(13%)
|
|
Coal
|
95
|
86
|
10%
|
375
|
361
|
4%
|
|
Grain
and fertilizers
|
143
|
162
|
(12%)
|
579
|
601
|
(4%)
|
|
Intermodal
|
332
|
346
|
(4%)
|
1,377
|
1,324
|
4%
|
|
Automotive
|
41
|
65
|
(37%)
|
201
|
265
|
(24%)
|
|
1,078
|
1,205
|
(11%)
|
4,615
|
4,744
|
(3%)
|
||
Rail
freight revenue / carload (dollars)
|
|||||||
Total
rail freight revenue per carload
|
1,834
|
1,463
|
25%
|
1,656
|
1,515
|
9%
|
|
Commodity
groups:
|
|||||||
Petroleum
and chemicals
|
2,919
|
2,026
|
44%
|
2,461
|
2,047
|
20%
|
|
Metals
and minerals
|
1,039
|
747
|
39%
|
927
|
818
|
13%
|
|
Forest
products
|
3,155
|
2,507
|
26%
|
2,810
|
2,658
|
6%
|
|
Coal
|
1,389
|
1,140
|
22%
|
1,275
|
1,066
|
20%
|
|
Grain
and fertilizers
|
2,664
|
2,160
|
23%
|
2,387
|
2,181
|
9%
|
|
Intermodal
|
1,175
|
1,046
|
12%
|
1,147
|
1,044
|
10%
|
|
Automotive
|
2,732
|
1,785
|
53%
|
2,333
|
1,902
|
23%
|
Such
statistical data and related productivity measures are based on estimated
data available at such time and are subject to change as more complete
information becomes available.
|
CANADIAN
NATIONAL RAILWAY COMPANY
|
NON-GAAP
MEASURES - unaudited
|
Adjusted
performance measures
During
the three months and year ended December 31, 2008, the Company reported
adjusted net income of $531 million, or $1.12 per diluted share, and
$1,778 million, or $3.71 per diluted share, respectively. The
fourth quarter adjusted figures exclude the impact of a net deferred
income tax recovery of $42 million ($0.09 per diluted share) resulting
from the resolution of various income tax matters and adjustments related
to tax filings of prior years. The year-to-date December 31,
2008 adjusted figures exclude a deferred income tax recovery of $117
million ($0.24 per diluted share), of which $83 million was due to the
resolution of various income tax matters and adjustments related to tax
filings of prior years, $23 million was due to the enactment of corporate
income tax rate changes in Canada and $11 million was due to net capital
losses arising from the reorganization of a subsidiary.
During the three months and
year ended December 31, 2007, the Company reported adjusted net income of
$444 million, or $0.90 per diluted share, and $1,725 million, or $3.40 per
diluted share, respectively. These adjusted figures exclude the impact of
a net deferred income tax recovery of $284 million ($0.57 per diluted
share) in the fourth quarter and $328 million ($0.64 per diluted share)
for the year ended December 31, 2007 that resulted mainly from the
enactment of corporate income tax rate changes in Canada. Also
excluded from adjusted net income for both the three- and twelve-month
periods were the gains on sale of the Central Station Complex of $92
million or $64 million after-tax ($0.13 per diluted share) and the
Company’s investment in English Welsh and Scottish Railway of $61 million
or $41 million after-tax ($0.08 per diluted share).
Management believes that
adjusted net income and adjusted earnings per share are useful measures of
performance that can facilitate period-to-period comparisons, as they
exclude items that do not necessarily arise as part of the normal
day-to-day operations of the Company and could distort the analysis of
trends in business performance. The exclusion of such items in adjusted
net income and adjusted earnings per share does not, however, imply that
such items are necessarily non-recurring. These adjusted measures do not
have any standardized meaning prescribed by GAAP and may, therefore, not
be comparable to similar measures presented by other companies. The reader
is advised to read all information provided in the Company’s 2008 Annual
Consolidated Financial Statements, Notes thereto and Management’s
Discussion and Analysis (MD&A). The following tables provide a
reconciliation of net income and earnings per share, as reported for the
three months and years ended December 31, 2008 and 2007, to the adjusted
performance measures presented
herein.
|
Three
months ended
|
Year
ended
|
||||||||||||
December
31, 2008
|
December
31, 2008
|
||||||||||||
In
millions, except per share data
|
Reported
|
Adjustments
|
Adjusted
|
Reported
|
Adjustments
|
Adjusted
|
|||||||
Revenues
|
$
|
2,200
|
$
|
-
|
$
|
2,200
|
$
|
8,482
|
$
|
-
|
$
|
8,482
|
|
Operating
expenses
|
1,380
|
-
|
1,380
|
5,588
|
-
|
5,588
|
|||||||
Operating
income
|
820
|
-
|
820
|
2,894
|
-
|
2,894
|
|||||||
Interest
expense
|
(110)
|
-
|
(110)
|
(375)
|
-
|
(375)
|
|||||||
Other
income
|
19
|
-
|
19
|
26
|
-
|
26
|
|||||||
Income
before income taxes
|
729
|
-
|
729
|
2,545
|
-
|
2,545
|
|||||||
Income
tax expense
|
(156)
|
(42)
|
(198)
|
(650)
|
(117)
|
(767)
|
|||||||
Net
income
|
$
|
573
|
$
|
(42)
|
$
|
531
|
$
|
1,895
|
$
|
(117)
|
$
|
1,778
|
|
Basic
earnings per share
|
$
|
1.22
|
$
|
(0.09)
|
$
|
1.13
|
$
|
3.99
|
$
|
(0.24)
|
$
|
3.75
|
|
Diluted
earnings per share
|
$
|
1.21
|
$
|
(0.09)
|
$
|
1.12
|
$
|
3.95
|
$
|
(0.24)
|
$
|
3.71
|
CANADIAN
NATIONAL RAILWAY COMPANY
|
NON-GAAP
MEASURES - unaudited
|
Three
months ended
|
Year
ended
|
|||||||||||||
December
31, 2007
|
December
31, 2007
|
|||||||||||||
In
millions, except per share data
|
Reported
|
Adjustments
|
Adjusted
|
Reported
|
Adjustments
|
Adjusted
|
||||||||
Revenues
|
$
|
1,941
|
$
|
-
|
$
|
1,941
|
$
|
7,897
|
$
|
-
|
$
|
7,897
|
||
Operating
expenses
|
1,205
|
-
|
1,205
|
5,021
|
-
|
5,021
|
||||||||
Operating
income
|
736
|
-
|
736
|
2,876
|
-
|
2,876
|
||||||||
Interest
expense
|
(85)
|
-
|
(85)
|
(336)
|
-
|
(336)
|
||||||||
Other
income
|
159
|
(153)
|
6
|
166
|
(153)
|
13
|
||||||||
Income
before income taxes
|
810
|
(153)
|
657
|
2,706
|
(153)
|
2,553
|
||||||||
Income
tax recovery (expense)
|
23
|
(236)
|
(213)
|
(548)
|
(280)
|
(828)
|
||||||||
Net
income
|
$
|
833
|
$
|
(389)
|
$
|
444
|
$
|
2,158
|
$
|
(433)
|
$
|
1,725
|
||
Basic
earnings per share
|
$
|
1.70
|
$
|
(0.79)
|
$
|
0.91
|
$
|
4.31
|
$
|
(0.87)
|
$
|
3.44
|
||
Diluted
earnings per share
|
$
|
1.68
|
$
|
(0.78)
|
$
|
0.90
|
$
|
4.25
|
$
|
(0.85)
|
$
|
3.40
|
Free
cash flow
The
Company generated $311 million and $794 million of free cash flow for the
three months and year ended December 31, 2008, respectively, compared to
$635 million and $828 million of free cash flow for the same periods in
2007. Free cash flow does not have any standardized meaning
prescribed by GAAP and may, therefore, not be comparable to similar
measures presented by other companies. The Company believes
that free cash flow is a useful measure of performance as it demonstrates
the Company’s ability to generate cash after the payment of capital
expenditures and dividends. The Company defines free cash flow
as cash provided from operating activities, excluding changes in the
accounts receivable securitization program and changes in cash and cash
equivalents resulting from foreign exchange fluctuations, less cash used
by investing activities and the payment of dividends, calculated as
follows:
|
Three
months ended
|
Year
ended
|
||||||||||
December
31
|
December
31
|
||||||||||
In
millions
|
2008
|
2007
|
2008
|
2007
|
|||||||
Cash
provided from operating activities
|
$
|
500
|
$
|
942
|
$
|
2,031
|
$
|
2,417
|
|||
Cash
used by investing activities
|
(498)
|
(24)
|
(1,400)
|
(895)
|
|||||||
Cash
provided before financing activities
|
2
|
918
|
631
|
1,522
|
|||||||
Adjustments:
|
|||||||||||
Change
in accounts receivable securitization
|
398
|
(176)
|
568
|
(228)
|
|||||||
Dividends
paid
|
(108)
|
(102)
|
(436)
|
(418)
|
|||||||
Effect
of foreign exchange fluctuations on U.S. dollar-
|
|||||||||||
denominated
cash and cash equivalents
|
19
|
(5)
|
31
|
(48)
|
|||||||
Free
cash flow
|
$
|
311
|
$
|
635
|
$
|
794
|
$
|
828
|
Canadian
National Railway Company
|
|||||
Date: January
22, 2009
|
By:
|
/s/
Cristina Circelli
|
|||
Name:
|
Cristina
Circelli
|
||||
Title:
|
Deputy
Corporate Secretary and
General Counsel
|