· |
Net income increased 21 per cent from the year-earlier quarter to C$511 million, with diluted earnings per share (EPS) rising 20 per cent to C$1.08. The results included an after-tax gain of C$131 million, or C$0.28 per diluted share, from a rail-line sale to a Toronto-area transit agency. |
· |
Excluding the gain on the rail-line sale, CN reported adjusted diluted first-quarter 2010 EPS of C$0.80, compared with adjusted diluted EPS of C$0.64 for the same quarter of 2009. (1) |
· |
Revenues increased six per cent to C$1,965 million, while carloadings rose 16 per cent and revenue ton-miles increased 14 per cent. |
· |
Operating income increased 25 per cent to C$603 million. |
· |
CN’s operating ratio was 69.3 per cent, compared with an adjusted operating ratio of 71.7 per cent for first-quarter 2009. (1) |
· |
Free cash flow increased to C$493 million from C$207 million for the year-earlier period. (1) |
(1) |
See discussion and reconciliation of non-GAAP adjusted performance-measures in the attached supplementary schedule, Non-GAAP Measures. |
(2) |
See Forward-Looking Statements for a summary of the key assumptions and risks regarding CN’s 2010 outlook. |
Media |
Investment Community |
Mark Hallman |
Robert Noorigian |
Director, Communications & Public Affairs |
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 | |||||
|
|
March 31 | ||||
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
(Unaudited) | ||||
Revenues |
$ |
1,965 |
|
$ |
1,859 | |
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
| |
|
Labor and fringe benefits |
|
470 |
|
|
454 |
|
Purchased services and material |
|
258 |
|
|
291 |
|
Fuel |
|
238 |
|
|
182 |
|
Depreciation and amortization |
|
205 |
|
|
203 |
|
Equipment rents |
|
60 |
|
|
82 |
|
Casualty and other |
|
131 |
|
|
166 |
Total operating expenses |
|
1,362 |
|
|
1,378 | |
|
|
|
|
|
|
|
Operating income |
|
603 |
|
|
481 | |
|
|
|
|
|
|
|
Interest expense |
|
(92) |
|
|
(112) | |
Other income (Note 2) |
|
162 |
|
|
161 | |
Income before income taxes |
|
673 |
|
|
530 | |
|
|
|
|
|
|
|
Income tax expense (Note 6) |
|
(162) |
|
|
(106) | |
Net income |
$ |
511 |
|
$ |
424 | |
|
|
|
|
|
|
|
Earnings per share (Note 9) |
|
|
|
|
| |
|
Basic |
$ |
1.08 |
|
$ |
0.91 |
|
Diluted |
$ |
1.08 |
|
$ |
0.90 |
|
|
|
|
|
|
|
Weighted-average number of shares |
|
|
|
|
| |
|
Basic |
|
471.0 |
|
|
468.3 |
|
Diluted |
|
474.9 |
|
|
472.3 |
See accompanying notes to unaudited consolidated financial statements. |
CANADIAN NATIONAL RAILWAY COMPANY |
CONSOLIDATED BALANCE SHEET (U.S. GAAP) |
(In millions) |
|
|
|
|
|
|
|
|
|
|
March 31 |
|
December 31 |
|
March 31 | |||
|
|
2010 |
|
|
2009 |
|
|
2009 |
|
|
(Unaudited) |
|
|
|
|
|
(Unaudited) |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
748 |
|
$ |
352 |
|
$ |
349 |
Accounts receivable (Note 3) |
|
781 |
|
|
797 |
|
|
940 |
Material and supplies |
|
235 |
|
|
170 |
|
|
273 |
Deferred income taxes |
|
88 |
|
|
105 |
|
|
77 |
Other |
|
95 |
|
|
66 |
|
|
138 |
|
|
1,947 |
|
|
1,490 |
|
|
1,777 |
|
|
|
|
|
|
|
|
|
Properties |
|
22,269 |
|
|
22,630 |
|
|
23,947 |
Intangible and other assets |
|
1,166 |
|
|
1,056 |
|
|
1,787 |
|
|
|
|
|
|
|
|
|
Total assets |
$ |
25,382 |
|
$ |
25,176 |
|
$ |
27,511 |
|
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and other |
$ |
1,229 |
|
$ |
1,167 |
|
$ |
1,280 |
Current portion of long-term debt |
|
108 |
|
|
70 |
|
|
527 |
|
|
1,337 |
|
|
1,237 |
|
|
1,807 |
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
5,145 |
|
|
5,119 |
|
|
5,594 |
Other liabilities and deferred credits |
|
1,199 |
|
|
1,196 |
|
|
1,371 |
Long-term debt |
|
6,189 |
|
|
6,391 |
|
|
7,836 |
|
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
|
|
Common shares |
|
4,301 |
|
|
4,266 |
|
|
4,188 |
Accumulated other comprehensive loss |
|
(980) |
|
|
(948) |
|
|
(126) |
Retained earnings |
|
8,191 |
|
|
7,915 |
|
|
6,841 |
|
|
11,512 |
|
|
11,233 |
|
|
10,903 |
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity |
$ |
25,382 |
|
$ |
25,176 |
|
$ |
27,511 |
See accompanying notes to unaudited consolidated financial statements. |
|
|
|
CANADIAN NATIONAL RAILWAY COMPANY |
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (U.S. GAAP) |
(In millions) |
|
|
|
|
|
|
|
Three months ended | ||||
|
March 31 | ||||
|
|
2010 |
|
|
2009 |
|
(Unaudited) | ||||
Common shares (1) |
|
|
|
|
|
Balance, beginning of period |
$ |
4,266 |
|
$ |
4,179 |
Stock options exercised and other |
|
56 |
|
|
9 |
Share repurchase program (Note 3) |
|
(21) |
|
|
- |
Balance, end of period |
$ |
4,301 |
|
$ |
4,188 |
|
|
|
|
|
|
Accumulated other comprehensive loss |
|
|
|
|
|
Balance, beginning of period |
$ |
(948) |
|
$ |
(155) |
Other comprehensive income (loss): |
|
|
|
|
|
Unrealized foreign exchange gain (loss) on: |
|
|
|
|
|
Translation of the net investment in foreign operations |
|
(207) |
|
|
251 |
Translation of US dollar-denominated long-term debt |
|
|
|
|
|
designated as a hedge of the net investment in U.S. subsidiaries |
|
199 |
|
|
(258) |
Pension and other postretirement benefit plans (Note 5): |
|
|
|
|
|
Amortization of prior service cost included in net |
|
|
|
|
|
periodic benefit cost |
|
1 |
|
|
1 |
Amortization of net actuarial loss included in net |
|
|
|
|
|
periodic benefit cost (income) |
|
1 |
|
|
- |
Other comprehensive loss before income taxes |
|
(6) |
|
|
(6) |
Income tax recovery (expense) |
|
(26) |
|
|
35 |
Other comprehensive income (loss) |
|
(32) |
|
|
29 |
Balance, end of period |
$ |
(980) |
|
$ |
(126) |
|
|
|
|
|
|
Retained earnings |
|
|
|
|
|
Balance, beginning of period |
$ |
7,915 |
|
$ |
6,535 |
Net income |
|
511 |
|
|
424 |
Share repurchase program (Note 3) |
|
(108) |
|
|
- |
Dividends |
|
(127) |
|
|
(118) |
Balance, end of period |
$ |
8,191 |
|
$ |
6,841 |
See accompanying notes to unaudited consolidated financial statements. |
CANADIAN NATIONAL RAILWAY COMPANY |
CONSOLIDATED STATEMENT OF CASH FLOWS (U.S. GAAP) |
(In millions) |
|
|
Three months ended | |||
|
|
March 31 | |||
|
|
2010 |
|
|
2009 |
|
|
(Unaudited) | |||
Operating activities |
|
|
|
|
|
Net income |
$ |
511 |
|
$ |
424 |
Adjustments to reconcile net income to net cash provided from operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
205 |
|
|
203 |
Deferred income taxes |
|
70 |
|
|
10 |
Gain on disposal of property (Note 2) |
|
(152) |
|
|
(157) |
Other changes in: |
|
|
|
|
|
Accounts receivable |
|
(1) |
|
|
1 |
Material and supplies |
|
(67) |
|
|
(53) |
Accounts payable and other |
|
101 |
|
|
(132) |
Other current assets |
|
1 |
|
|
36 |
Other |
|
(71) |
|
|
(14) |
Cash provided from operating activities |
|
597 |
|
|
318 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Property additions |
|
(134) |
|
|
(187) |
Acquisitions, net of cash acquired (Note 2) |
|
- |
|
|
(373) |
Disposal of property (Note 2) |
|
144 |
|
|
110 |
Other, net |
|
7 |
|
|
4 |
Cash provided from (used by) investing activities |
|
17 |
|
|
(446) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Issuance of long-term debt |
|
- |
|
|
1,440 |
Reduction of long-term debt |
|
(18) |
|
|
(1,272) |
Issuance of common shares due to exercise of stock |
|
|
| ||
options and related excess tax benefits realized |
|
52 |
|
|
2 |
Repurchase of common shares |
|
(129) |
|
|
- |
Dividends paid |
|
(127) |
|
|
(118) |
Cash provided from (used by) financing activities |
|
(222) |
|
|
52 |
Effect of foreign exchange fluctuations on US |
|
|
|
|
|
dollar-denominated cash and cash equivalents |
|
4 |
|
|
12 |
Net increase (decrease) in cash and cash equivalents |
|
396 |
|
|
(64) |
Cash and cash equivalents, beginning of period |
|
352 |
|
|
413 |
Cash and cash equivalents, end of period |
$ |
748 |
|
$ |
349 |
|
|
|
|
|
|
Supplemental cash flow information |
|
|
|
|
|
Net cash receipts from customers and other |
$ |
2,057 |
|
$ |
1,904 |
Net cash payments for: |
|
|
|
|
|
Employee services, suppliers and other expenses |
|
(1,230) |
|
|
(1,366) |
Interest |
|
(91) |
|
|
(106) |
Personal injury and other claims |
|
(14) |
|
|
(30) |
Pensions |
|
(100) |
|
|
- |
Income taxes |
|
(25) |
|
|
(84) |
Cash provided from operating activities |
$ |
597 |
|
$ |
318 |
See accompanying notes to unaudited consolidated financial statements. | |||||
|
|
|
|
|
|
CANADIAN NATIONAL RAILWAY COMPANY |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (U.S. GAAP) |
CANADIAN NATIONAL RAILWAY COMPANY |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (U.S. GAAP) |
CANADIAN NATIONAL RAILWAY COMPANY |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (U.S. GAAP) |
The following table provides the 2010 activity for all cash settled awards: |
|
|
| |||||
| ||||||||
|
|
|
RSUs |
|
Voluntary Incentive Deferral Plan (VIDP) | |||
In millions |
|
|
Nonvested |
Vested |
|
Nonvested |
Vested | |
Outstanding at December 31, 2009 |
|
|
1.5 |
0.7 |
|
- |
1.6 | |
Granted |
|
|
0.5 |
- |
|
- |
- | |
Payout |
|
|
- |
(0.7) |
|
- |
- | |
Outstanding at March 31, 2010 |
|
|
2.0 |
- |
|
- |
1.6 |
The following table provides valuation and expense information for all cash settled awards: | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
In millions, unless otherwise indicated |
RSUs (1) |
|
|
VIDP (2) |
|
|
Total | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003 |
|
|
| |||
Year of grant |
2010 |
2009 |
|
2008 |
|
2007 |
|
2006 |
|
onwards |
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Stock-based compensation expense (recovery) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
recognized over requisite service period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Three months ended March 31, 2010 |
$ |
5 |
$ |
12 |
|
$ |
10 |
|
$ |
- |
|
N/A |
|
$ |
9 |
|
$ |
36 | ||
Three months ended March 31, 2009 |
|
N/A |
$ |
9 |
|
$ |
1 |
|
$ |
- |
|
$ |
(2) |
|
$ |
- |
|
$ |
8 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Liability outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
March 31, 2010 |
$ |
5 |
$ |
25 |
|
$ |
21 |
|
$ |
- |
|
|
N/A |
|
$ |
108 |
|
$ |
159 | |
December 31, 2009 |
|
N/A |
$ |
13 |
|
$ |
11 |
|
$ |
38 |
|
|
N/A |
|
$ |
102 |
|
$ |
164 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Fair value per unit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
March 31, 2010 ($) |
$ |
39.43 |
$ |
55.98 |
|
$ |
54.55 |
|
N/A |
|
|
N/A |
|
$ |
61.64 |
|
|
N/A | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Fair value of awards vested during the period |
|
|
|
|
|
|
|
|
|
|
| |||||||||
Three months ended March 31, 2010 |
$ |
- |
$ |
- |
|
$ |
- |
|
$ |
- |
|
|
N/A |
|
$ |
1 |
|
$ |
1 | |
Three months ended March 31, 2009 |
|
N/A |
$ |
- |
|
$ |
- |
|
$ |
- |
|
|
N/A |
|
$ |
1 |
|
$ |
1 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Nonvested awards at March 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Unrecognized compensation cost |
$ |
14 |
$ |
12 |
|
$ |
3 |
|
$ |
- |
|
|
N/A |
|
$ |
1 |
|
$ |
30 | |
Remaining recognition period (years) |
|
2.8 |
|
1.8 |
|
|
0.8 |
|
|
N/A |
|
|
N/A |
|
|
N/A (3) |
|
|
N/A | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Assumptions (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Stock price ($) |
$ |
61.64 |
$ |
61.64 |
|
$ |
61.64 |
|
|
N/A |
|
|
N/A |
|
$ |
61.64 |
|
|
N/A | |
Expected stock price volatility (5) |
|
29% |
|
31% |
|
|
23% |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A | |
Expected term (years) (6) |
|
2.8 |
|
1.8 |
|
|
0.8 |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A | |
Risk-free interest rate (7) |
|
1.96% |
|
1.54% |
|
|
0.72% |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A | |
Dividend rate ($) (8) |
$ |
1.08 |
$ |
1.08 |
|
$ |
1.08 |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
(1) |
Compensation cost is based on the fair value of the awards at period-end using the lattice-based valuation model that uses the assumptions as presented herein. | |||||||||||||||||||
(2) |
Compensation cost is based on intrinsic value. |
|
|
|
|
| ||||||||||||||
(3) |
The remaining recognition period has not been quantified as it relates solely to the 25% Company grant and the dividends earned thereon, representing a minimal number of units. | |||||||||||||||||||
(4) |
Assumptions used to determine fair value are at March 31, 2010. | |||||||||||||||||||
(5) |
Based on the historical volatility of the Company's stock over a period commensurate with the expected term of the award. | |||||||||||||||||||
(6) |
Represents the remaining period of time that awards are expected to be outstanding. |
| ||||||||||||||||||
(7) |
Based on the implied yield available on zero-coupon government issues with an equivalent term commensurate with the expected term of the awards. | |||||||||||||||||||
(8) |
Based on the annualized dividend rate. |
|
|
|
|
|
|
|
|
|
|
CANADIAN NATIONAL RAILWAY COMPANY |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (U.S. GAAP) |
|
Options outstanding | |||||||
|
Number |
Weighted-average |
|
Weighted-average |
Aggregate | |||
|
of options |
exercise price |
|
years to expiration |
intrinsic value | |||
|
In millions |
|
|
|
|
|
In millions | |
Outstanding at December 31, 2009 (1) |
11.6 |
$ |
30.98 |
|
|
|
| |
Granted |
0.7 |
$ |
54.70 |
|
|
|
| |
Exercised |
(1.6) |
$ |
25.74 |
|
|
|
| |
Outstanding at March 31, 2010 (1) |
10.7 |
$ |
32.83 |
|
4.8 |
$ |
308 | |
Exercisable at March 31, 2010 (1) |
8.4 |
$ |
29.29 |
|
3.7 |
$ |
272 | |
|
|
|
|
|
|
|
| |
(1) |
Stock options with a US dollar exercise price have been translated to Canadian dollars using the foreign exchange rate in effect at the balance sheet date. |
CANADIAN NATIONAL RAILWAY COMPANY |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (U.S. GAAP) |
The following table provides valuation and expense information for all stock option awards: | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
In millions, unless otherwise indicated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Year of grant |
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
|
Total | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
recognized over requisite service period (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Three months ended March 31, 2010 |
$ |
2 |
|
$ |
1 |
|
$ |
1 |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
4 | ||||
Three months ended March 31, 2009 |
|
N/A |
|
$ |
5 |
|
$ |
- |
|
$ |
1 |
|
$ |
1 |
|
$ |
- |
|
$ |
7 | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Fair value per unit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
At grant date ($) |
$ |
13.07 |
|
$ |
12.60 |
|
$ |
12.44 |
|
$ |
13.36 |
|
$ |
13.80 |
|
$ |
9.19 |
|
|
N/A | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Fair value of awards vested during the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Three months ended March 31, 2010 |
$ |
- |
|
$ |
4 |
|
$ |
3 |
|
$ |
3 |
|
$ |
3 |
|
$ |
- |
|
$ |
13 | ||||
Three months ended March 31, 2009 |
|
N/A |
|
$ |
- |
|
$ |
3 |
|
$ |
3 |
|
$ |
3 |
|
$ |
3 |
|
$ |
12 | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Nonvested awards at March 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Unrecognized compensation cost |
$ |
7 |
|
$ |
5 |
|
$ |
2 |
|
$ |
1 |
|
$ |
- |
|
$ |
- |
|
$ |
15 | ||||
Remaining recognition period (years) |
|
3.8 |
|
|
2.8 |
|
|
1.8 |
|
|
0.8 |
|
|
- |
|
|
- |
|
|
N/A | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Assumptions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Grant price ($) |
$ |
54.70 |
|
$ |
42.14 |
|
$ |
48.51 |
|
$ |
52.79 |
|
$ |
51.51 |
|
$ |
36.33 |
|
|
N/A | ||||
Expected stock price volatility (2) |
|
28% |
|
|
39% |
|
|
27% |
|
|
24% |
|
|
25% |
|
|
25% |
|
|
N/A | ||||
Expected term (years) (3) |
|
5.4 |
|
|
5.3 |
|
|
5.3 |
|
|
5.2 |
|
|
5.2 |
|
|
5.2 |
|
|
N/A | ||||
Risk-free interest rate (4) |
|
2.44% |
|
|
1.97% |
|
|
3.58% |
|
|
4.12% |
|
|
4.04% |
|
|
3.50% |
|
|
N/A | ||||
Dividend rate ($) (5) |
$ |
1.08 |
|
$ |
1.01 |
|
$ |
0.92 |
|
$ |
0.84 |
|
$ |
0.65 |
|
$ |
0.50 |
|
|
N/A | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
(1) |
Compensation cost is based on the grant date fair value using the Black-Scholes option-pricing model that uses the assumptions at the grant date. | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
(2) |
Based on the average of the historical volatility of the Company's stock over a period commensurate with the expected term of the award and the implied volatility from traded options on the Company's stock. | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
(3) |
Represents the period of time that awards are expected to be outstanding. The Company uses historical data to estimate option exercise and employee termination, and groups of employees that have similar historical exercise behavior are considered separately. | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
(4) |
Based on the implied yield available on zero-coupon government issues with an equivalent term commensurate with the expected term of the awards. | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
(5) |
Based on the annualized dividend rate. |
CANADIAN NATIONAL RAILWAY COMPANY |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (U.S. GAAP) |
(a) Components of net periodic benefit income for pensions | ||||
|
|
|
|
|
|
|
Three months ended | ||
|
|
March 31 | ||
In millions |
|
2010 |
|
2009 |
Service cost |
$ |
27 |
$ |
22 |
Interest cost |
|
208 |
|
222 |
Expected return on plan assets |
|
(252) |
|
(252) |
Recognized net actuarial loss |
|
1 |
|
1 |
Net periodic benefit (income) |
$ |
(16) |
$ |
(7) |
|
|
|
|
|
(b) Components of net periodic benefit cost for other postretirement benefits | ||||
|
|
|
|
|
|
|
Three months ended | ||
|
|
March 31 | ||
In millions |
|
2010 |
|
2009 |
Service cost |
$ |
1 |
$ |
1 |
Interest cost |
|
3 |
|
4 |
Curtailment gain |
|
- |
|
(3) |
Amortization of prior service cost |
|
1 |
|
1 |
Recognized net actuarial gain |
|
- |
|
(1) |
Net periodic benefit cost |
$ |
5 |
$ |
2 |
CANADIAN NATIONAL RAILWAY COMPANY |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (U.S. GAAP) |
CANADIAN NATIONAL RAILWAY COMPANY |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (U.S. GAAP) |
(i) |
the lack of specific technical information available with respect to many sites; |
(ii) |
the absence of any government authority, third-party orders, or claims with respect to particular sites; |
(iii) |
the potential for new or changed laws and regulations and for development of new remediation technologies and uncertainty regarding the timing of the work with respect to particular sites; |
(iv) |
the ability to recover costs from any third parties with respect to particular sites; and |
CANADIAN NATIONAL RAILWAY COMPANY |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (U.S. GAAP) |
(a) |
contracts granting the Company the right to use or enter upon property owned by third parties such as leases, easements, trackage rights and sidetrack agreements; |
(b) |
contracts granting rights to others to use the Company’s property, such as leases, licenses and easements; |
(c) |
contracts for the sale of assets and securitization of accounts receivable; |
(d) |
contracts for the acquisition of services; |
(e) |
financing agreements; |
(f) |
trust indentures, fiscal agency agreements, underwriting agreements or similar agreements relating to debt or equity securities of the Company and engagement agreements with financial advisors; |
(g) |
transfer agent and registrar agreements in respect of the Company’s securities; |
(h) |
trust and other agreements relating to pension plans and other plans, including those establishing trust funds to secure payment to certain officers and senior employees of special retirement compensation arrangements; |
(i) |
pension transfer agreements; |
(j) |
master agreements with financial institutions governing derivative transactions; and |
(k) |
settlement agreements with insurance companies or other third parties whereby such insurer or third party has been indemnified for any present or future claims relating to insurance policies, incidents or events covered by the settlement agreements. |
CANADIAN NATIONAL RAILWAY COMPANY |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (U.S. GAAP) |
In millions |
|
March 31, 2010 |
|
|
December 31, 2009 | |||||
|
|
|
Carrying |
|
Fair |
|
|
Carrying |
|
Fair |
|
|
|
amount |
|
value |
|
|
amount |
|
value |
Financial assets |
|
|
|
|
|
|
|
|
| |
|
Investments |
$ |
22 |
$ |
110 |
|
$ |
22 |
$ |
111 |
Financial liabilities |
|
|
|
|
|
|
|
|
| |
|
Long-term debt (including current portion) |
$ |
6,297 |
$ |
6,991 |
|
$ |
6,461 |
$ |
7,152 |
|
Three months ended | ||||
|
March 31 | ||||
In millions, except per share data |
|
2010 |
|
|
2009 |
|
|
|
|
|
|
Net income |
$ |
511 |
|
$ |
424 |
|
|
|
|
|
|
Weighted-average shares outstanding |
|
471.0 |
|
|
468.3 |
Effect of stock options |
|
3.9 |
|
|
4.0 |
Weighted-average diluted shares outstanding |
|
474.9 |
|
|
472.3 |
|
|
|
|
|
|
Basic earnings per share |
$ |
1.08 |
|
$ |
0.91 |
Diluted earnings per share |
$ |
1.08 |
|
$ |
0.90 |
CANADIAN NATIONAL RAILWAY COMPANY |
SELECTED RAILROAD STATISTICS (1) (U.S. GAAP) |
|
|
| |
|
Three months ended | ||
|
March 31 | ||
|
2010 |
2009 | |
|
(Unaudited) | ||
Statistical operating data |
|
|
|
|
|
| |
Rail freight revenues ($ millions) |
|
1,788 |
1,696 |
Gross ton miles (GTM) (millions) |
|
83,990 |
73,557 |
Revenue ton miles (RTM) (millions) |
|
44,080 |
38,691 |
Carloads (thousands) |
|
1,108 |
954 |
Route miles (includes Canada and the U.S.) |
|
20,910 |
21,104 |
Employees (end of period) |
|
21,747 |
22,083 |
Employees (average for the period) |
|
21,481 |
22,260 |
|
|
| |
Productivity |
|
|
|
|
|
| |
Operating ratio (%) |
|
69.3 |
74.1 |
Rail freight revenue per RTM (cents) |
|
4.06 |
4.38 |
Rail freight revenue per carload ($) |
|
1,614 |
1,778 |
Operating expenses per GTM (cents) |
|
1.62 |
1.87 |
Labor and fringe benefits expense per GTM (cents) |
|
0.56 |
0.62 |
GTMs per average number of employees (thousands) |
|
3,910 |
3,304 |
Diesel fuel consumed (US gallons in millions) |
|
91 |
85 |
Average fuel price ($/US gallon) |
|
2.39 |
1.98 |
GTMs per US gallon of fuel consumed |
|
923 |
865 |
|
|
| |
Safety indicators |
|
|
|
|
|
| |
Injury frequency rate per 200,000 person hours (2) |
|
1.67 |
1.29 |
Accident rate per million train miles (2) |
|
1.88 |
2.13 |
|
|
| |
Financial ratio |
|
|
|
|
|
| |
Debt-to-total capitalization ratio (% at end of period) |
|
35.4 |
43.4 |
(1) Includes data relating to companies acquired as of the date of acquisition. | |||
(2) Based on Federal Railroad Administration (FRA) reporting criteria. |
CANADIAN NATIONAL RAILWAY COMPANY |
SUPPLEMENTARY INFORMATION (U.S. GAAP) |
|
|
Three months ended March 31 | ||
|
|
|
|
Variance |
|
|
2010 |
2009 |
Fav (Unfav) |
|
|
(Unaudited) | ||
Revenues (millions of dollars) |
|
|
|
|
Petroleum and chemicals |
|
321 |
340 |
(6%) |
Metals and minerals |
|
210 |
198 |
6% |
Forest products |
|
288 |
302 |
(5%) |
Coal |
|
132 |
103 |
28% |
Grain and fertilizers |
|
372 |
357 |
4% |
Intermodal |
|
351 |
319 |
10% |
Automotive |
|
114 |
77 |
48% |
Total rail freight revenues |
|
1,788 |
1,696 |
5% |
Other revenues |
|
177 |
163 |
9% |
Total revenues |
|
1,965 |
1,859 |
6% |
|
|
|
|
|
Revenue ton miles (millions) |
|
|
|
|
Petroleum and chemicals |
|
7,864 |
7,527 |
4% |
Metals and minerals |
|
3,904 |
3,252 |
20% |
Forest products |
|
7,176 |
6,614 |
8% |
Coal |
|
4,326 |
2,841 |
52% |
Grain and fertilizers |
|
12,114 |
10,558 |
15% |
Intermodal |
|
8,065 |
7,476 |
8% |
Automotive |
|
631 |
423 |
49% |
|
|
44,080 |
38,691 |
14% |
Rail freight revenue / RTM (cents) |
|
|
|
|
Total rail freight revenue per RTM |
|
4.06 |
4.38 |
(7%) |
Commodity groups: |
|
|
|
|
Petroleum and chemicals |
|
4.08 |
4.52 |
(10%) |
Metals and minerals |
|
5.38 |
6.09 |
(12%) |
Forest products |
|
4.01 |
4.57 |
(12%) |
Coal |
|
3.05 |
3.63 |
(16%) |
Grain and fertilizers |
|
3.07 |
3.38 |
(9%) |
Intermodal |
|
4.35 |
4.27 |
2% |
Automotive |
|
18.07 |
18.20 |
(1%) |
|
|
|
|
|
Carloads (thousands) |
|
|
|
|
Petroleum and chemicals |
|
134 |
128 |
5% |
Metals and minerals |
|
240 |
180 |
33% |
Forest products |
|
103 |
100 |
3% |
Coal |
|
110 |
90 |
22% |
Grain and fertilizers |
|
146 |
132 |
11% |
Intermodal |
|
326 |
292 |
12% |
Automotive |
|
49 |
32 |
53% |
|
|
1,108 |
954 |
16% |
Rail freight revenue / carload (dollars) |
|
|
|
|
Total rail freight revenue per carload |
|
1,614 |
1,778 |
(9%) |
Commodity groups: |
|
|
|
|
Petroleum and chemicals |
|
2,396 |
2,656 |
(10%) |
Metals and minerals |
|
875 |
1,100 |
(20%) |
Forest products |
|
2,796 |
3,020 |
(7%) |
Coal |
|
1,200 |
1,144 |
5% |
Grain and fertilizers |
|
2,548 |
2,705 |
(6%) |
Intermodal |
|
1,077 |
1,092 |
(1%) |
Automotive |
|
2,327 |
2,406 |
(3%) |
CANADIAN NATIONAL RAILWAY COMPANY |
NON-GAAP MEASURES - unaudited |
|
|
Three months ended |
|
|
Three months ended | |||||||||
|
|
March 31, 2010 |
|
|
March 31, 2009 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In millions, except per share data |
Reported |
|
Adjustments |
|
Adjusted |
|
|
Reported |
|
Adjustments |
|
|
Adjusted | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
1,965 |
$ |
- |
$ |
1,965 |
|
$ |
1,859 |
$ |
- |
$ |
1,859 | |
Operating expenses |
|
1,362 |
|
- |
|
1,362 |
|
|
1,378 |
|
(46) |
|
1,332 | |
Operating income |
|
603 |
|
- |
|
603 |
|
|
481 |
|
46 |
|
527 | |
Interest expense |
|
(92) |
|
- |
|
(92) |
|
|
(112) |
|
- |
|
(112) | |
Other income |
|
162 |
|
(152) |
|
10 |
|
|
161 |
|
(157) |
|
4 | |
Income before income taxes |
|
673 |
|
(152) |
|
521 |
|
|
530 |
|
(111) |
|
419 | |
Income tax expense |
|
(162) |
|
21 |
|
(141) |
|
|
(106) |
|
(11) |
|
(117) | |
Net income |
$ |
511 |
$ |
(131) |
$ |
380 |
|
$ |
424 |
$ |
(122) |
$ |
302 | |
Operating ratio |
|
69.3% |
|
|
|
69.3% |
|
|
74.1% |
|
|
|
71.7% | |
Basic earnings per share |
$ |
1.08 |
$ |
(0.28) |
$ |
0.80 |
|
$ |
0.91 |
$ |
(0.26) |
$ |
0.65 | |
Diluted earnings per share |
$ |
1.08 |
$ |
(0.28) |
$ |
0.80 |
|
$ |
0.90 |
$ |
(0.26) |
$ |
0.64 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CANADIAN NATIONAL RAILWAY COMPANY |
NON-GAAP MEASURES - unaudited |
|
|
Three months ended | ||||
|
|
March 31 | ||||
In millions |
|
|
2010 |
|
|
2009 |
|
|
|
| |||
Cash provided from operating activities |
|
$ |
597 |
|
$ |
318 |
Cash provided from (used by) investing activities |
|
|
17 |
|
|
(446) |
Cash provided (used) before financing activities |
|
|
614 |
|
|
(128) |
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
Change in accounts receivable securitization |
|
|
2 |
|
|
68 |
Dividends paid |
|
|
(127) |
|
|
(118) |
Acquisition of EJ&E |
|
|
- |
|
|
373 |
Effect of foreign exchange fluctuations on US dollar-denominated |
|
|
|
|
| |
cash and cash equivalents |
|
|
4 |
|
|
12 |
Free cash flow |
|
$ |
493 |
|
$ |
207 |
|
|
| ||||
Actual foreign currency translation impact on net income in terms of basic or diluted earnings per share |
|
|
$ |
0.04 | ||
Constant currency rate applied to the increase in US dollar net income in the first quarter of |
|
|
||||
2010 when compared to the first quarter of 2009 |
0.05 | |||||
Impact on 2010 net income in terms of basic or diluted earnings per share using constant currency |
|
$ |
0.09 |
Canadian National Railway Company |
|||||
Date: April 26, 2010 |
By: |
/s/ Cristina Circelli |
|||
Name: |
Cristina Circelli |
||||
Title: |
Deputy Corporate Secretary and
General Counsel |