Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F | Form 40-F X |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes | No X |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes | No X |
Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes | No X |
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
Item 1 | Press Release dated July 23, 2007, titled “CN reports diluted Q2-2007 earnings per share of C$1.01, or adjusted diluted EPS of C$0.95, excluding a deferred income tax recovery of C$0.06 per share”. |
Item 2 |
Interim
Consolidated Financial
Statements and Notes thereto (U.S. GAAP)
|
Item 3 |
Management’s
Discussion And Analysis (U.S. GAAP)
|
Item 4 |
Certificate
of
CEO
|
Item 5 |
Certificate
of
CFO
|
•
|
Net
income was
C$516 million, or C$1.01 per diluted share, including a deferred
income
tax recovery of C$30 million (C$0.06 per diluted share) resulting
from the
enactment of a lower federal corporate tax rate in Canada. Second-quarter
2006 net income was C$729 million, or C$1.35 per diluted share, including
a deferred income tax recovery of C$250 million (C$0.46 per diluted
share)
resulting primarily from the enactment of lower federal and provincial
corporate tax rates in Canada.
|
•
|
Excluding
the
deferred income tax recoveries for both years, diluted earnings per
share
for the latest quarter increased by seven per cent, with adjusted
2007
second-quarter net income of C$486 million, or C$0.95 per diluted
share,
compared with adjusted net income of C$479 million, or C$0.89 per
diluted
share, for the same quarter of 2006. (1)
|
•
|
Revenues
for
second-quarter 2007 increased one per cent to C$2,027
million.
|
•
|
Operating
income also increased one per cent to C$811 million; CN’s operating ratio
for the period deteriorated by two-tenths of a point to 60.0 per
cent.
|
Contacts:
|
|
Media
|
Investment
Community
|
Mark
Hallman
|
Robert
Noorigian
|
Director,
Communications,
Media & Eastern Region
|
Vice-President,
Investor Relations
|
(905)
669-3384
|
(514)
399-0052
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30
|
June
30
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(Unaudited)
|
||||||||||||||||
Revenues
|
$ |
2,027
|
$ |
2,000
|
$ |
3,933
|
$ |
3,897
|
||||||||
Operating
expenses
|
||||||||||||||||
Labor
and fringe benefits
|
430
|
436
|
915
|
929
|
||||||||||||
Purchased
services and material
|
263
|
248
|
539
|
506
|
||||||||||||
Depreciation
and amortization
|
168
|
162
|
339
|
326
|
||||||||||||
Fuel
|
249
|
226
|
468
|
430
|
||||||||||||
Equipment
rents
|
62
|
39
|
128
|
86
|
||||||||||||
Casualty
and other
|
44
|
84
|
172
|
190
|
||||||||||||
Total
operating expenses
|
1,216
|
1,195
|
2,561
|
2,467
|
||||||||||||
Operating
income
|
811
|
805
|
1,372
|
1,430
|
||||||||||||
Interest
expense
|
(85 | ) | (75 | ) | (173 | ) | (150 | ) | ||||||||
Other
income (loss)
|
1
|
(5 | ) |
5
|
(6 | ) | ||||||||||
Income
before income taxes
|
727
|
725
|
1,204
|
1,274
|
||||||||||||
Income
tax recovery (expense) (Note 7)
|
(211 | ) |
4
|
(364 | ) | (183 | ) | |||||||||
Net
income
|
$ |
516
|
$ |
729
|
$ |
840
|
$ |
1,091
|
||||||||
Earnings
per share (Note 8)
|
||||||||||||||||
Basic
|
$ |
1.02
|
$ |
1.38
|
$ |
1.65
|
$ |
2.05
|
||||||||
Diluted
|
$ |
1.01
|
$ |
1.35
|
$ |
1.63
|
$ |
2.01
|
||||||||
Weighted-average
number of shares
|
||||||||||||||||
Basic
|
505.2
|
529.9
|
507.7
|
533.0
|
||||||||||||
Diluted
|
512.3
|
538.5
|
515.1
|
541.8
|
||||||||||||
See
accompanying notes to unaudited consolidated financial statements.
|
June
30
|
December
31
|
June
30
|
||||||||||
2007
|
2006
|
2006
|
||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||
Assets
|
||||||||||||
Current
assets:
|
||||||||||||
Cash
and cash
equivalents
|
$ |
241
|
$ |
179
|
$ |
207
|
||||||
Accounts
receivable
|
425
|
692
|
957
|
|||||||||
Material
and
supplies
|
204
|
189
|
235
|
|||||||||
Deferred
income taxes (Notes 2, 7)
|
73
|
84
|
71
|
|||||||||
Other
|
159
|
192
|
118
|
|||||||||
1,102
|
1,336
|
1,588
|
||||||||||
Properties
|
20,401
|
21,053
|
19,924
|
|||||||||
Intangible
and
other assets
|
1,664
|
1,615
|
970
|
|||||||||
Total
assets
|
$ |
23,167
|
$ |
24,004
|
$ |
22,482
|
||||||
Liabilities
and shareholders' equity
|
||||||||||||
Current
liabilities:
|
||||||||||||
Accounts
payable and accrued charges
|
$ |
1,427
|
$ |
1,823
|
$ |
1,511
|
||||||
Current
portion of long-term debt (Note 3)
|
366
|
218
|
127
|
|||||||||
Other
|
62
|
73
|
77
|
|||||||||
1,855
|
2,114
|
1,715
|
||||||||||
Deferred
income taxes (Notes 2, 7)
|
4,885
|
5,215
|
4,788
|
|||||||||
Other
liabilities and deferred credits
|
1,443
|
1,465
|
1,451
|
|||||||||
Long-term
debt
(Note 3)
|
5,193
|
5,386
|
5,294
|
|||||||||
Shareholders'
equity:
|
||||||||||||
Common
shares
|
4,417
|
4,459
|
4,543
|
|||||||||
Accumulated
other comprehensive loss
|
(180 | ) | (44 | ) | (521 | ) | ||||||
Retained
earnings
|
5,554
|
5,409
|
5,212
|
|||||||||
9,791
|
9,824
|
9,234
|
||||||||||
Total
liabilities and shareholders' equity
|
$ |
23,167
|
$ |
24,004
|
$ |
22,482
|
||||||
See
accompanying notes to unaudited consolidated financial
statements.
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30
|
June
30
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(Unaudited)
|
||||||||||||||||
Common
shares (1)
|
||||||||||||||||
Balance,
beginning of period
|
$ |
4,426
|
$ |
4,591
|
$ |
4,459
|
$ |
4,580
|
||||||||
Stock
options
exercised and other
|
44
|
11
|
67
|
82
|
||||||||||||
Share
repurchase programs (Note 3)
|
(53 | ) | (59 | ) | (109 | ) | (119 | ) | ||||||||
Balance,
end
of period
|
$ |
4,417
|
$ |
4,543
|
$ |
4,417
|
$ |
4,543
|
||||||||
Accumulated
other comprehensive loss
|
||||||||||||||||
Balance,
beginning of period
|
$ | (50 | ) | $ | (245 | ) | $ | (44 | ) | $ | (222 | ) | ||||
Other
comprehensive income (loss):
|
||||||||||||||||
Unrealized
foreign exchange gain (loss) on:
|
||||||||||||||||
Translation
of
the net investment in foreign operations
|
(477 | ) | (250 | ) | (533 | ) | (264 | ) | ||||||||
Translation
of
U.S. dollar-denominated long-term debt
|
||||||||||||||||
designated
as
a hedge of the net investment in U.S. subsidiaries
|
391
|
201
|
438
|
207
|
||||||||||||
Pension
and
other postretirement benefit plans:
|
||||||||||||||||
Amortization
of:
|
||||||||||||||||
Prior
service
cost (Note 5)
|
6
|
-
|
11
|
-
|
||||||||||||
Net
actuarial
loss (Note 5)
|
13
|
-
|
25
|
-
|
||||||||||||
Derivative
instruments:
|
||||||||||||||||
Decrease
in
unrealized holding gains on fuel
|
||||||||||||||||
derivative
instruments
|
-
|
(20 | ) |
-
|
(47 | ) | ||||||||||
Other
comprehensive loss before income taxes
|
(67 | ) | (69 | ) | (59 | ) | (104 | ) | ||||||||
Income
tax
expense
|
(63 | ) | (207 | ) | (77 | ) | (195 | ) | ||||||||
Other
comprehensive loss
|
(130 | ) | (276 | ) | (136 | ) | (299 | ) | ||||||||
Balance,
end
of period
|
$ | (180 | ) | $ | (521 | ) | $ | (180 | ) | $ | (521 | ) | ||||
Retained
earnings
|
||||||||||||||||
Balance,
beginning of period
|
$ |
5,434
|
$ |
4,856
|
$ |
5,409
|
$ |
4,891
|
||||||||
Adoption
of
new accounting pronouncements (Note 2)
|
-
|
-
|
95
|
-
|
||||||||||||
Restated
balance, beginning of period
|
5,434
|
4,856
|
5,504
|
4,891
|
||||||||||||
Net
income
|
516
|
729
|
840
|
1,091
|
||||||||||||
Share
repurchase programs (Note 3)
|
(291 | ) | (288 | ) | (578 | ) | (598 | ) | ||||||||
Dividends
|
(105 | ) | (85 | ) | (212 | ) | (172 | ) | ||||||||
Balance,
end
of period
|
$ |
5,554
|
$ |
5,212
|
$ |
5,554
|
$ |
5,212
|
||||||||
See
accompanying notes to unaudited consolidated financial
statements.
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30
|
June
30
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(Unaudited)
|
||||||||||||||||
Operating
activities
|
||||||||||||||||
Net
income
|
$ |
516
|
$ |
729
|
$ |
840
|
$ |
1,091
|
||||||||
Adjustments
to
reconcile net income to net cash provided from
|
||||||||||||||||
operating
activities:
|
||||||||||||||||
Depreciation
and amortization
|
169
|
163
|
341
|
327
|
||||||||||||
Deferred
income taxes
|
43
|
(141 | ) |
50
|
(94 | ) | ||||||||||
Other
changes
in:
|
||||||||||||||||
Accounts
receivable
|
38
|
(419 | ) |
214
|
(349 | ) | ||||||||||
Material
and
supplies
|
(1 | ) | (12 | ) | (20 | ) | (84 | ) | ||||||||
Accounts
payable and accrued charges
|
(4 | ) |
35
|
(406 | ) |
15
|
||||||||||
Other
net
current assets and liabilities
|
27
|
50
|
9
|
83
|
||||||||||||
Other
|
(49 | ) |
-
|
(26 | ) |
35
|
||||||||||
Cash
provided
from operating activities
|
739
|
405
|
1,002
|
1,024
|
||||||||||||
Investing
activities
|
||||||||||||||||
Property
additions
|
(344 | ) | (287 | ) | (547 | ) | (442 | ) | ||||||||
Other,
net
|
2
|
9
|
12
|
(45 | ) | |||||||||||
Cash
used by
investing activities
|
(342 | ) | (278 | ) | (535 | ) | (487 | ) | ||||||||
Financing
activities
|
||||||||||||||||
Issuance
of
long-term debt
|
1,050
|
2,323
|
1,484
|
3,125
|
||||||||||||
Reduction
of
long-term debt
|
(904 | ) | (1,992 | ) | (1,049 | ) | (2,702 | ) | ||||||||
Issuance
of
common shares due to exercise of stock options
|
||||||||||||||||
and
related
excess tax benefits realized
|
41
|
8
|
59
|
74
|
||||||||||||
Repurchase
of
common shares
|
(344 | ) | (347 | ) | (687 | ) | (717 | ) | ||||||||
Dividends
paid
|
(105 | ) | (85 | ) | (212 | ) | (172 | ) | ||||||||
Cash
used by
financing activities
|
(262 | ) | (93 | ) | (405 | ) | (392 | ) | ||||||||
Net
increase in cash and cash equivalents
|
135
|
34
|
62
|
145
|
||||||||||||
Cash
and cash
equivalents, beginning of period
|
106
|
173
|
179
|
62
|
||||||||||||
Cash
and cash equivalents, end of period
|
$ |
241
|
$ |
207
|
$ |
241
|
$ |
207
|
||||||||
Supplemental
cash flow information
|
||||||||||||||||
Net
cash
receipts from customers and other
|
$ |
2,145
|
$ |
1,601
|
$ |
4,160
|
$ |
3,572
|
||||||||
Net
cash
payments for:
|
||||||||||||||||
Employee
services, suppliers and other expenses
|
(1,103 | ) | (996 | ) | (2,281 | ) | (2,173 | ) | ||||||||
Interest
|
(73 | ) | (53 | ) | (187 | ) | (141 | ) | ||||||||
Workforce
reductions
|
(7 | ) | (11 | ) | (16 | ) | (27 | ) | ||||||||
Personal
injury and other claims
|
(26 | ) | (16 | ) | (46 | ) | (42 | ) | ||||||||
Pensions
|
(22 | ) | (24 | ) | (23 | ) | (25 | ) | ||||||||
Income
taxes
|
(175 | ) | (96 | ) | (605 | ) | (140 | ) | ||||||||
Cash
provided
from operating activities
|
$ |
739
|
$ |
405
|
$ |
1,002
|
$ |
1,024
|
||||||||
See
accompanying notes to unaudited consolidated financial
statements.
|
RSUs
|
Vision
2008 Share Unit
Plan
(Vision)
|
Voluntary
Incentive Deferral
Plan (VIDP) |
||||||||||||||||||||||
In millions |
Nonvested
|
Vested
|
Nonvested
|
Vested
|
Nonvested
|
Vested
|
||||||||||||||||||
Outstanding
at
December 31, 2006
|
2.0
|
-
|
0.8
|
-
|
0.3
|
1.9
|
||||||||||||||||||
Granted
|
0.7
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Forfeited
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Vested
during
period
|
(0.2 | ) |
0.2
|
-
|
-
|
(0.1 | ) |
0.1
|
||||||||||||||||
Payout
|
-
|
(0.1 | ) |
-
|
-
|
-
|
(0.1
|
) | ||||||||||||||||
Conversion
into VIDP
|
-
|
(0.1 | ) |
-
|
-
|
-
|
0.1
|
|||||||||||||||||
Outstanding
at June 30, 2007
|
2.5
|
-
|
0.8
|
-
|
0.2
|
2.0
|
In
millions, unless otherwise indicated
|
RSUs(1)
|
Vision(1)
|
VIDP(2)
|
Total
|
||||||||||||||||||||||||
2003
|
||||||||||||||||||||||||||||
Year
of grant
|
2007
|
2006
|
2005
|
2004
|
2005
|
onwards
|
||||||||||||||||||||||
Stock-based
compensation expense recognized
over requisite service period
|
||||||||||||||||||||||||||||
Six
months
ended June 30, 2007
|
$ |
13
|
$ |
12
|
$ |
12
|
$ |
3
|
$ |
7
|
$ |
19
|
$ |
66
|
||||||||||||||
Six
months
ended June 30, 2006
|
N/A
|
$ |
5
|
$ |
8
|
$ |
3
|
$ |
6
|
$ |
10
|
$ |
32
|
|||||||||||||||
Liability
outstanding
|
||||||||||||||||||||||||||||
June
30,
2007
|
$ |
13
|
$ |
33
|
$ |
46
|
$ |
2
|
$ |
15
|
$ |
118
|
$ |
227
|
||||||||||||||
December
31,
2006
|
N/A
|
$ |
21
|
$ |
34
|
$ |
8
|
$ |
8
|
$ |
99
|
$ |
170
|
|||||||||||||||
Fair
value per unit
|
||||||||||||||||||||||||||||
June
30,
2007
|
$ |
41.80
|
$ |
47.50
|
$ |
53.81
|
$ |
54.20
|
$ |
29.94
|
$ |
54.20
|
N/A
|
|||||||||||||||
Fair
value of awards vested during period
|
||||||||||||||||||||||||||||
Six
months
ended June 30, 2007
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
5
|
$ |
-
|
$ |
3
|
$ |
8
|
||||||||||||||
Six
months
ended June 30, 2006
|
N/A
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
2
|
$ |
2
|
|||||||||||||||
Nonvested
awards at June 30, 2007
|
||||||||||||||||||||||||||||
Unrecognized
compensation cost
|
$ |
14
|
$ |
14
|
$ |
9
|
$ |
7
|
$ |
9
|
$ |
11
|
$ |
64
|
||||||||||||||
Remaining
recognition period (years)
|
2.5
|
1.5
|
0.5
|
1.5
|
1.5
|
3.5
|
N/A
|
|||||||||||||||||||||
Assumptions
(3)
|
||||||||||||||||||||||||||||
Stock
price
($)
|
$ |
54.20
|
$ |
54.20
|
$ |
54.20
|
$ |
54.20
|
$ |
54.20
|
$ |
54.20
|
N/A
|
|||||||||||||||
Expected
stock
price volatility (4)
|
20% | 20% | 21% |
N/A
|
20% |
N/A
|
N/A
|
|||||||||||||||||||||
Expected
term
(years) (5)
|
2.5
|
1.5
|
0.5
|
N/A
|
1.5
|
N/A
|
N/A
|
|||||||||||||||||||||
Risk-free
interest rate (6)
|
4.58% | 4.58% | 4.55% |
N/A
|
4.75% |
N/A
|
N/A
|
|||||||||||||||||||||
Dividend
rate
($) (7)
|
$ |
0.84
|
$ |
0.84
|
$ |
0.84
|
N/A
|
$ |
0.84
|
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, except for time-vested
RSUs.
|
(2)
|
Compensation
cost is based on intrinsic
value.
|
(3)
|
Assumptions
used to determine fair value are at
period-end.
|
(4)
|
Based
on
the historical volatility of the Company's stock over a period
commensurate with the expected term of the
award.
|
(5)
|
Represents
the remaining period of time that awards are expected to be
outstanding.
|
(6)
|
Based
on
the implied yield available on zero-coupon government issues with
an
equivalent term commensurate with the expected term of the
awards.
|
(7)
|
Based
on
the annualized dividend rate.
|
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, 2006 (1)
|
16.9
|
$ |
23.29
|
|||||||||||||
Granted
|
0.9
|
$ |
52.78
|
|||||||||||||
Forfeited
|
-
|
$ |
-
|
|||||||||||||
Exercised
|
(2.4 | ) | $ |
20.16
|
||||||||||||
Outstanding
at June 30, 2007 (1)
|
15.4
|
$ |
24.85
|
5.1
|
$ |
451
|
||||||||||
Exercisable
at June 30, 2007 (1)
|
13.0
|
$ |
21.29
|
4.4
|
$ |
429
|
(1)
|
Stock
options with a U.S. dollar exercise price have been translated to
Canadian
dollars using the foreign exchange rate in effect at the balance
sheet
date.
|
In
millions, unless otherwise indicated
|
||||||||||||||||||||
Year
of grant
|
2007
|
2006
|
2005
|
Prior
to
2005
|
Total
|
|||||||||||||||
Stock-based
compensation expense
|
||||||||||||||||||||
recognized
over requisite service period (1)
|
||||||||||||||||||||
Six
months
ended June 30, 2007
|
$ |
5
|
$ |
1
|
$ |
1
|
$ |
-
|
$ |
7
|
||||||||||
Six
months
ended June 30, 2006
|
N/A
|
$ |
5
|
$ |
1
|
$ |
3
|
$ |
9
|
|||||||||||
Fair
value per unit
|
||||||||||||||||||||
At
grant date
($)
|
$ |
13.36
|
$ |
13.80
|
$ |
9.19
|
$ |
8.61
|
N/A
|
|||||||||||
Fair
value of awards vested during period
|
||||||||||||||||||||
Six
months
ended June 30, 2007
|
$ |
-
|
$ |
4
|
$ |
3
|
$ |
-
|
$ |
7
|
||||||||||
Six
months
ended June 30, 2006
|
N/A
|
$ |
-
|
$ |
3
|
$ |
33
|
$ |
36
|
|||||||||||
Nonvested
awards at June 30, 2007
|
||||||||||||||||||||
Unrecognized
compensation cost
|
$ |
6
|
$ |
5
|
$ |
5
|
$ |
-
|
$ |
16
|
||||||||||
Remaining
recognition period (years)
|
3.6
|
2.6
|
1.6
|
-
|
N/A
|
|||||||||||||||
Assumptions
(1)
|
||||||||||||||||||||
Stock
price
($)
|
$ |
52.78
|
$ |
51.51
|
$ |
36.33
|
$ |
23.59
|
N/A
|
|||||||||||
Expected
stock
price volatility (2)
|
24% | 25% | 25% | 30% |
N/A
|
|||||||||||||||
Expected
term
(years) (3)
|
5.2
|
5.2
|
5.2
|
6.2
|
N/A
|
|||||||||||||||
Risk-free
interest rate (4)
|
4.12% | 4.04% | 3.50% | 5.13% |
N/A
|
|||||||||||||||
Dividend
rate
($) (5)
|
$ |
0.84
|
$ |
0.65
|
$ |
0.50
|
$ |
0.30
|
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 historical volatility of the Company's stock over a period
commensurate with the expected term of the
award.
|
(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.
|
Three
months ended
June
30
|
Six
months ended
June 30 |
|||||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Service
cost
|
$ |
38
|
$ |
40
|
$ |
76
|
$ |
80
|
||||||||
Interest
cost
|
185
|
179
|
371
|
358
|
||||||||||||
Expected
return on plan assets
|
(235 | ) | (226 | ) | (469 | ) | (453 | ) | ||||||||
Amortization
of prior service cost
|
5
|
5
|
10
|
9
|
||||||||||||
Amortization
of net actuarial loss
|
14
|
23
|
27
|
46
|
||||||||||||
Net
periodic benefit cost
|
$ |
7
|
$ |
21
|
$ |
15
|
$ |
40
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30
|
June
30
|
|||||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Service
cost
|
$ |
1
|
$ |
1
|
$ |
2
|
$ |
2
|
||||||||
Interest
cost
|
3
|
4
|
7
|
8
|
||||||||||||
Curtailment
|
-
|
-
|
(3 | ) |
-
|
|||||||||||
Amortization
of prior service cost
|
1
|
-
|
1
|
-
|
||||||||||||
Recognized
net
actuarial gain
|
(1 | ) | (3 | ) | (2 | ) | (4 | ) | ||||||||
Net
periodic benefit cost
|
$ |
4
|
$ |
2
|
$ |
5
|
$ |
6
|
(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
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30
|
June
30
|
|||||||||||||||
In
millions, except per share data
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Net
income
|
$ |
516
|
$ |
729
|
$ |
840
|
$ |
1,091
|
||||||||
Weighted-average
shares outstanding
|
505.2
|
529.9
|
507.7
|
533.0
|
||||||||||||
Effect
of stock options
|
7.1
|
8.6
|
7.4
|
8.8
|
||||||||||||
Weighted-average
diluted shares outstanding
|
512.3
|
538.5
|
515.1
|
541.8
|
||||||||||||
Basic
earnings per share
|
$ |
1.02
|
$ |
1.38
|
$ |
1.65
|
$ |
2.05
|
||||||||
Diluted
earnings per share
|
$ |
1.01
|
$ |
1.35
|
$ |
1.63
|
$ |
2.01
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30
|
June
30
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(Unaudited)
|
||||||||||||||||
Statistical
operating data
|
||||||||||||||||
Rail
freight revenues ($ millions)
|
1,848
|
1,820
|
3,602
|
3,573
|
||||||||||||
Gross
ton miles (GTM) (millions)
|
88,344
|
89,454
|
170,085
|
175,685
|
||||||||||||
Revenue
ton miles (RTM) (millions)
|
46,423
|
46,917
|
90,516
|
92,578
|
||||||||||||
Carloads
(thousands)
|
1,204
|
1,246
|
2,335
|
2,437
|
||||||||||||
Route
miles (includes Canada and the U.S.)
|
20,219
|
19,908
|
20,219
|
19,908
|
||||||||||||
Employees
(end of period)
|
22,243
|
21,790
|
22,243
|
21,790
|
||||||||||||
Employees
(average for the period)
|
22,005
|
21,797
|
21,516
|
21,659
|
||||||||||||
Productivity
|
||||||||||||||||
Operating
ratio (%)
|
60.0
|
59.8
|
65.1
|
63.3
|
||||||||||||
Rail
freight revenue per RTM (cents)
|
3.98
|
3.88
|
3.98
|
3.86
|
||||||||||||
Rail
freight revenue per carload ($)
|
1,535
|
1,461
|
1,543
|
1,466
|
||||||||||||
Operating
expenses per GTM (cents)
|
1.38
|
1.34
|
1.51
|
1.40
|
||||||||||||
Labor
and fringe benefits expense per GTM (cents)
|
0.49
|
0.49
|
0.54
|
0.53
|
||||||||||||
GTMs
per average number of employees (thousands)
|
4,015
|
4,104
|
7,905
|
8,111
|
||||||||||||
Diesel
fuel consumed (U.S. gallons in millions)
|
98
|
100
|
194
|
204
|
||||||||||||
Average
fuel price ($/U.S. gallon) (1)
|
2.30
|
2.17
|
2.24
|
2.02
|
||||||||||||
GTMs
per U.S. gallon of fuel consumed
|
901
|
895
|
877
|
861
|
||||||||||||
Safety
indicators
|
||||||||||||||||
Injury
frequency rate per 200,000 person hours (2)
|
1.6
|
1.9
|
1.6
|
2.1
|
||||||||||||
Accident
rate per million train miles (2)
|
1.7
|
2.5
|
2.2
|
2.0
|
||||||||||||
Financial
ratio
|
||||||||||||||||
Debt
to total capitalization ratio (% at end of period)
|
36.2
|
37.0
|
36.2
|
37.0
|
(1)
|
2006
includes the impact of the Company's fuel hedging
program.
|
(2)
|
Based
on
Federal Railroad Administration (FRA) reporting
criteria.
|
Three
months ended June 30
|
Six
months ended June 30
|
||||||||||||||||||||||||
Variance
|
Variance
|
||||||||||||||||||||||||
2007
|
2006
|
Fav
(Unfav)
|
2007
|
2006
|
Fav
(Unfav)
|
||||||||||||||||||||
(Unaudited)
|
|||||||||||||||||||||||||
Revenues
(in millions of dollars)
|
|||||||||||||||||||||||||
Petroleum
and chemicals
|
300
|
281
|
7 | % |
603
|
573
|
5 | % | |||||||||||||||||
Metals
and minerals
|
225
|
217
|
4 | % |
423
|
417
|
1 | % | |||||||||||||||||
Forest
products
|
414
|
445
|
(7 | %) |
824
|
883
|
(7 | %) | |||||||||||||||||
Coal
|
99
|
99
|
-
|
188
|
184
|
2 | % | ||||||||||||||||||
Grain
and fertilizers
|
322
|
300
|
7 | % |
631
|
598
|
6 | % | |||||||||||||||||
Intermodal
|
346
|
357
|
(3 | %) |
659
|
672
|
(2 | %) | |||||||||||||||||
Automotive
|
142
|
121
|
17 | % |
274
|
246
|
11 | % | |||||||||||||||||
Other
revenue
|
179
|
180
|
(1 | %) |
331
|
324
|
2 | % | |||||||||||||||||
2,027
|
2,000
|
1 | % |
3,933
|
3,897
|
1 | % | ||||||||||||||||||
Revenue
ton miles (millions)
|
|||||||||||||||||||||||||
Petroleum
and chemicals
|
8,049
|
7,762
|
4 | % |
15,919
|
15,889
|
-
|
||||||||||||||||||
Metals
and minerals
|
4,263
|
4,533
|
(6 | %) |
8,113
|
8,830
|
(8 | %) | |||||||||||||||||
Forest
products
|
10,526
|
10,859
|
(3 | %) |
20,631
|
21,565
|
(4 | %) | |||||||||||||||||
Coal
|
3,744
|
3,762
|
-
|
6,844
|
7,018
|
(2 | %) | ||||||||||||||||||
Grain
and fertilizers
|
10,780
|
10,753
|
-
|
21,568
|
21,466
|
-
|
|||||||||||||||||||
Intermodal
|
8,184
|
8,440
|
(3 | %) |
15,775
|
16,198
|
(3 | %) | |||||||||||||||||
Automotive
|
877
|
808
|
9 | % |
1,666
|
1,612
|
3 | % | |||||||||||||||||
46,423
|
46,917
|
(1 | %) |
90,516
|
92,578
|
(2 | %) | ||||||||||||||||||
Rail
freight revenue / RTM (cents)
|
|||||||||||||||||||||||||
Total
rail freight revenue per RTM
|
3.98
|
3.88
|
3 | % |
3.98
|
3.86
|
3 | % | |||||||||||||||||
Commodity
groups:
|
|||||||||||||||||||||||||
Petroleum
and chemicals
|
3.73
|
3.62
|
3 | % |
3.79
|
3.61
|
5 | % | |||||||||||||||||
Metals
and minerals
|
5.28
|
4.79
|
10 | % |
5.21
|
4.72
|
10 | % | |||||||||||||||||
Forest
products
|
3.93
|
4.10
|
(4 | %) |
3.99
|
4.09
|
(2 | %) | |||||||||||||||||
Coal
|
2.64
|
2.63
|
-
|
2.75
|
2.62
|
5 | % | ||||||||||||||||||
Grain
and fertilizers
|
2.99
|
2.79
|
7 | % |
2.93
|
2.79
|
5 | % | |||||||||||||||||
Intermodal
|
4.23
|
4.23
|
-
|
4.18
|
4.15
|
1 | % | ||||||||||||||||||
Automotive
|
16.19
|
14.98
|
8 | % |
16.45
|
15.26
|
8 | % | |||||||||||||||||
Carloads
(thousands)
|
|||||||||||||||||||||||||
Petroleum
and chemicals
|
149
|
143
|
4 | % |
295
|
293
|
1 | % | |||||||||||||||||
Metals
and minerals
|
261
|
273
|
(4 | %) |
492
|
508
|
(3 | %) | |||||||||||||||||
Forest
products
|
151
|
171
|
(12 | %) |
303
|
348
|
(13 | %) | |||||||||||||||||
Coal
|
95
|
108
|
(12 | %) |
185
|
218
|
(15 | %) | |||||||||||||||||
Grain
and fertilizers
|
146
|
146
|
-
|
287
|
287
|
-
|
|||||||||||||||||||
Intermodal
|
330
|
338
|
(2 | %) |
635
|
646
|
(2 | %) | |||||||||||||||||
Automotive
|
72
|
67
|
7 | % |
138
|
137
|
1 | % | |||||||||||||||||
1,204
|
1,246
|
(3 | %) |
2,335
|
2,437
|
(4 | %) | ||||||||||||||||||
Rail
freight revenue / carload (dollars)
|
|||||||||||||||||||||||||
Total
rail freight revenue per carload
|
1,535
|
1,461
|
5 | % |
1,543
|
1,466
|
5 | % | |||||||||||||||||
Commodity
groups:
|
|||||||||||||||||||||||||
Petroleum
and chemicals
|
2,013
|
1,965
|
2 | % |
2,044
|
1,956
|
4 | % | |||||||||||||||||
Metals
and minerals
|
862
|
795
|
8 | % |
860
|
821
|
5 | % | |||||||||||||||||
Forest
products
|
2,742
|
2,602
|
5 | % |
2,719
|
2,537
|
7 | % | |||||||||||||||||
Coal
|
1,042
|
917
|
14 | % |
1,016
|
844
|
20 | % | |||||||||||||||||
Grain
and fertilizers
|
2,205
|
2,055
|
7 | % |
2,199
|
2,084
|
6 | % | |||||||||||||||||
Intermodal
|
1,048
|
1,056
|
(1 | %) |
1,038
|
1,040
|
-
|
||||||||||||||||||
Automotive
|
1,972
|
1,806
|
9 | % |
1,986
|
1,796
|
11 | % |
Three
months ended June 30, 2007
|
Six
months ended June 30, 2007
|
|||||||||||||||||||||||
Rate
|
Rate
|
|||||||||||||||||||||||
In
millions, except per share data
|
Reported
|
enactment
|
Adjusted
|
Reported
|
enactment
|
Adjusted
|
||||||||||||||||||
Revenues
|
$ |
2,027
|
$ |
-
|
$ |
2,027
|
$ |
3,933
|
$ |
-
|
$ |
3,933
|
||||||||||||
Operating
expenses
|
1,216
|
-
|
1,216
|
2,561
|
-
|
2,561
|
||||||||||||||||||
Operating
income
|
811
|
-
|
811
|
1,372
|
-
|
1,372
|
||||||||||||||||||
Interest
expense
|
(85 | ) |
-
|
(85 | ) | (173 | ) |
-
|
(173 | ) | ||||||||||||||
Other
income
|
1
|
-
|
1
|
5
|
-
|
5
|
||||||||||||||||||
Income
before income taxes
|
727
|
-
|
727
|
1,204
|
-
|
1,204
|
||||||||||||||||||
Income
tax expense
|
(211 | ) | (30 | ) | (241 | ) | (364 | ) | (30 | ) | (394 | ) | ||||||||||||
Net
income
|
$ |
516
|
$ | (30 | ) | $ |
486
|
$ |
840
|
$ | (30 | ) | $ |
810
|
||||||||||
Basic
earnings per share
|
$ |
1.02
|
$ | (0.06 | ) | $ |
0.96
|
$ |
1.65
|
$ | (0.06 | ) | $ |
1.59
|
||||||||||
Diluted
earnings per share
|
$ |
1.01
|
$ | (0.06 | ) | $ |
0.95
|
$ |
1.63
|
$ | (0.06 | ) | $ |
1.57
|
Three
months ended June 30, 2006
|
Six
months ended June 30, 2006
|
|||||||||||||||||||||||
Rate
|
Rate
|
|||||||||||||||||||||||
In
millions, except per share data
|
Reported
|
enactments
|
Adjusted
|
Reported
|
enactments
|
Adjusted
|
||||||||||||||||||
Revenues
|
$ |
2,000
|
$ |
-
|
$ |
2,000
|
$ |
3,897
|
$ |
-
|
$ |
3,897
|
||||||||||||
Operating
expenses
|
1,195
|
-
|
1,195
|
2,467
|
-
|
2,467
|
||||||||||||||||||
Operating
income
|
805
|
-
|
805
|
1,430
|
-
|
1,430
|
||||||||||||||||||
Interest
expense
|
(75 | ) |
-
|
(75 | ) | (150 | ) |
-
|
(150 | ) | ||||||||||||||
Other
loss
|
(5 | ) |
-
|
(5 | ) | (6 | ) |
-
|
(6 | ) | ||||||||||||||
Income
before income taxes
|
725
|
-
|
725
|
1,274
|
-
|
1,274
|
||||||||||||||||||
Income
tax recovery (expense)
|
4
|
(250 | ) | (246 | ) | (183 | ) | (250 | ) | (433 | ) | |||||||||||||
Net
income
|
$ |
729
|
$ | (250 | ) | $ |
479
|
$ |
1,091
|
$ | (250 | ) | $ |
841
|
||||||||||
Basic
earnings per share
|
$ |
1.38
|
$ | (0.48 | ) | $ |
0.90
|
$ |
2.05
|
$ | (0.48 | ) | $ |
1.57
|
||||||||||
Diluted
earnings per share
|
$ |
1.35
|
$ | (0.46 | ) | $ |
0.89
|
$ |
2.01
|
$ | (0.46 | ) | $ |
1.55
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30
|
June
30
|
|||||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Cash
provided
from operating activities
|
$ |
739
|
$ |
405
|
$ |
1,002
|
$ |
1,024
|
||||||||
Cash
used by
investing activities
|
(342 | ) | (278 | ) | (535 | ) | (487 | ) | ||||||||
Cash
provided
before financing activities
|
397
|
127
|
467
|
537
|
||||||||||||
Adjustments:
|
||||||||||||||||
Change
in
accounts receivable securitization
|
(65 | ) |
380
|
(204 | ) |
375
|
||||||||||
Dividends
paid
|
(105 | ) | (85 | ) | (212 | ) | (172 | ) | ||||||||
Free
cash
flow
|
$ |
227
|
$ |
422
|
$ |
51
|
$ |
740
|
Three
months ended June 30
|
Six
months ended June 30
|
|||||||||||||||
$
in
millions, except per share data, or unless otherwise
indicated
|
2007
|
2006(b)
|
2007
|
2006(b)
|
||||||||||||
(Unaudited)
|
||||||||||||||||
Financial
results
|
||||||||||||||||
Revenues
|
$ |
2,027
|
$ |
2,000
|
$ |
3,933
|
$ |
3,897
|
||||||||
Operating
income
|
$ |
811
|
$ |
805
|
$ |
1,372
|
$ |
1,430
|
||||||||
Net
income
(a)
|
$ |
516
|
$ |
729
|
$ |
840
|
$ |
1,091
|
||||||||
Operating
ratio
|
60.0 | % | 59.8 | % | 65.1 | % | 63.3 | % | ||||||||
Basic
earnings
per share (a)
|
$ |
1.02
|
$ |
1.38
|
$ |
1.65
|
$ |
2.05
|
||||||||
Diluted
earnings per share (a)
|
$ |
1.01
|
$ |
1.35
|
$ |
1.63
|
$ |
2.01
|
||||||||
Dividend
declared per share
|
$ |
0.2100
|
$ |
0.1625
|
$ |
0.4200
|
$ |
0.3250
|
||||||||
Financial
position
|
||||||||||||||||
Total
assets
|
$ |
23,167
|
$ |
22,482
|
$ |
23,167
|
$ |
22,482
|
||||||||
Total
long-term financial liabilities
|
$ |
11,521
|
$ |
11,533
|
$ |
11,521
|
$ |
11,533
|
||||||||
Statistical
operating data and productivity measures
|
||||||||||||||||
Employees
(average for the period)
|
22,005
|
21,797
|
21,516
|
21,659
|
||||||||||||
Gross
ton
miles (GTM) per average number of employees
(thousands)
|
4,015
|
4,104
|
7,905
|
8,111
|
||||||||||||
GTMs
per U.S.
gallon of fuel consumed
|
901
|
895
|
877
|
861
|
Revenues
|
||||||||||||||||||||||||
Three
months ended June 30
|
Six
months ended June 30
|
|||||||||||||||||||||||
In
millions, unless otherwise indicated
|
2007
|
2006
|
%
|
Δ |
2007
|
2006
|
%
|
Δ | ||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||
Rail
freight
revenue
|
$ |
1,848
|
$ |
1,820
|
2 | % | $ |
3,602
|
$ |
3,573
|
1 | % | ||||||||||||
Other
revenue
|
179
|
180
|
(1 | %) |
331
|
324
|
2 | % | ||||||||||||||||
Total
revenues
|
$ |
2,027
|
$ |
2,000
|
1 | % | $ |
3,933
|
$ |
3,897
|
1 | % | ||||||||||||
Rail
freight revenue:
|
||||||||||||||||||||||||
Petroleum
and
chemicals
|
$ |
300
|
$ |
281
|
7 | % | $ |
603
|
$ |
573
|
5 | % | ||||||||||||
Metals
and
minerals
|
225
|
217
|
4 | % |
423
|
417
|
1 | % | ||||||||||||||||
Forest
products
|
414
|
445
|
(7 | %) |
824
|
883
|
(7 | %) | ||||||||||||||||
Coal
|
99
|
99
|
-
|
188
|
184
|
2 | % | |||||||||||||||||
Grain
and
fertilizers
|
322
|
300
|
7 | % |
631
|
598
|
6 | % | ||||||||||||||||
Intermodal
|
346
|
357
|
(3 | %) |
659
|
672
|
(2 | %) | ||||||||||||||||
Automotive
|
142
|
121
|
17 | % |
274
|
246
|
11 | % | ||||||||||||||||
Total
rail
freight revenue
|
$ |
1,848
|
$ |
1,820
|
2 | % | $ |
3,602
|
$ |
3,573
|
1 | % | ||||||||||||
Total
revenue
ton miles (RTM)
|
46,423
|
46,917
|
(1 | %) |
90,516
|
92,578
|
(2 | %) | ||||||||||||||||
Rail
freight
revenue/RTM (cents)
|
3.98
|
3.88
|
3 | % |
3.98
|
3.86
|
3 | % |
Three
months ended June 30
|
Six
months ended June 30
|
|||||||||||||||||||||||
2007
|
2006
|
%
|
Δ |
2007
|
2006
|
%
|
Δ | |||||||||||||||||
Revenues
(millions)
|
$ |
300
|
$ |
281
|
7 | % | $ |
603
|
$ |
573
|
5 | % | ||||||||||||
RTMs
(millions)
|
8,049
|
7,762
|
4 | % |
15,919
|
15,889
|
-
|
|||||||||||||||||
Revenue/RTM
(cents)
|
3.73
|
3.62
|
3 | % |
3.79
|
3.61
|
5 | % |
Three
months ended June 30
|
Six
months ended June 30
|
|||||||||||||||||||||||
2007
|
2006
|
%
|
Δ |
2007
|
2006
|
%
|
Δ | |||||||||||||||||
Revenues
(millions)
|
$ |
225
|
$ |
217
|
4 | % | $ |
423
|
$ |
417
|
1 | % | ||||||||||||
RTMs
(millions)
|
4,263
|
4,533
|
(6 | %) |
8,113
|
8,830
|
(8 | %) | ||||||||||||||||
Revenue/RTM
(cents)
|
5.28
|
4.79
|
10 | % |
5.21
|
4.72
|
10 | % |
Three
months ended June 30
|
Six
months ended June 30
|
|||||||||||||||||||||||
2007
|
2006
|
%
|
Δ |
2007
|
2006
|
%
|
Δ | |||||||||||||||||
Revenues
(millions)
|
$ |
414
|
$ |
445
|
(7 | %) | $ |
824
|
$ |
883
|
(7 | %) | ||||||||||||
RTMs
(millions)
|
10,526
|
10,859
|
(3 | %) |
20,631
|
21,565
|
(4 | %) | ||||||||||||||||
Revenue/RTM
(cents)
|
3.93
|
4.10
|
(4 | %) |
3.99
|
4.09
|
(2 | %) |
Three
months ended June 30
|
Six
months ended June 30
|
|||||||||||||||||||||||
2007
|
2006
|
%
|
Δ |
2007
|
2006
|
%
|
Δ | |||||||||||||||||
Revenues
(millions)
|
$ |
99
|
$ |
99
|
-
|
$ |
188
|
$ |
184
|
2 | % | |||||||||||||
RTMs
(millions)
|
3,744
|
3,762
|
-
|
6,844
|
7,018
|
(2 | %) | |||||||||||||||||
Revenue/RTM
(cents)
|
2.64
|
2.63
|
-
|
2.75
|
2.62
|
5 | % |
Three
months ended June 30
|
Six
months ended June 30
|
|||||||||||||||||||||||
2007
|
2006
|
%
|
Δ |
2007
|
2006
|
%
|
Δ | |||||||||||||||||
Revenues
(millions)
|
$ |
322
|
$ |
300
|
7 | % | $ |
631
|
$ |
598
|
6 | % | ||||||||||||
RTMs
(millions)
|
10,780
|
10,753
|
-
|
21,568
|
21,466
|
-
|
||||||||||||||||||
Revenue/RTM
(cents)
|
2.99
|
2.79
|
7 | % |
2.93
|
2.79
|
5 | % |
Three
months ended June 30
|
Six
months ended June 30
|
|||||||||||||||||||||||
2007
|
2006
|
%
|
Δ |
2007
|
2006
|
%
|
Δ | |||||||||||||||||
Revenues
(millions)
|
$ |
346
|
$ |
357
|
(3 | %) | $ |
659
|
$ |
672
|
(2 | %) | ||||||||||||
RTMs
(millions)
|
8,184
|
8,440
|
(3 | %) |
15,775
|
16,198
|
(3 | %) | ||||||||||||||||
Revenue/RTM
(cents)
|
4.23
|
4.23
|
-
|
4.18
|
4.15
|
1 | % |
Three
months ended June 30
|
Six
months ended June 30
|
|||||||||||||||||||||||
2007
|
2006
|
%
|
Δ |
2007
|
2006
|
%
|
Δ | |||||||||||||||||
Revenues
(millions)
|
$ |
142
|
$ |
121
|
17 | % | $ |
274
|
$ |
246
|
11 | % | ||||||||||||
RTMs
(millions)
|
877
|
808
|
9 | % |
1,666
|
1,612
|
3 | % | ||||||||||||||||
Revenue/RTM
(cents)
|
16.19
|
14.98
|
8 | % |
16.45
|
15.26
|
8 | % |
Three
months ended June 30
|
Six
months ended June 30
|
|||||||||||||||||||||||||||||||||||||||
Percentage
of
revenues
|
Percentage
of
revenues
|
|||||||||||||||||||||||||||||||||||||||
In
millions
|
2007
|
2006
|
%
|
Δ |
2007
|
2006
|
2007
|
2006
|
%
|
Δ |
2007
|
2006
|
||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||||||||||
Labor
and
fringe benefits
|
$ |
430
|
$ |
436
|
1 | % | 21.2 | % | 21.8 | % | $ |
915
|
$ |
929
|
2 | % | 23.3 | % | 23.8 | % | ||||||||||||||||||||
Purchased
services and material
|
263
|
248
|
(6 | %) | 13.0 | % | 12.4 | % |
539
|
506
|
(7 | %) | 13.7 | % | 13.0 | % | ||||||||||||||||||||||||
Depreciation
and amortization
|
168
|
162
|
(4 | %) | 8.3 | % | 8.1 | % |
339
|
326
|
(4 | %) | 8.6 | % | 8.4 | % | ||||||||||||||||||||||||
Fuel
|
249
|
226
|
(10 | %) | 12.3 | % | 11.3 | % |
468
|
430
|
(9 | %) | 11.9 | % | 11.0 | % | ||||||||||||||||||||||||
Equipment
rents
|
62
|
39
|
(59 | %) | 3.1 | % | 2.0 | % |
128
|
86
|
(49 | %) | 3.2 | % | 2.2 | % | ||||||||||||||||||||||||
Casualty
and
other
|
44
|
84
|
48 | % | 2.1 | % | 4.2 | % |
172
|
190
|
9 | % | 4.4 | % | 4.9 | % | ||||||||||||||||||||||||
Total
|
$ |
1,216
|
$ |
1,195
|
(2 | %) | 60.0 | % | 59.8 | % | $ |
2,561
|
$ |
2,467
|
(4 | %) | 65.1 | % | 63.3 | % |
In
millions, except per share data
|
||||||||||||||||||||||||||||||||
2007
|
2006
|
2005
|
||||||||||||||||||||||||||||||
Quarters
|
Quarters
|
Quarters
|
||||||||||||||||||||||||||||||
Second
|
First
|
Fourth
|
Third
|
Second
|
First
|
Fourth
|
Third
|
|||||||||||||||||||||||||
Revenues
|
$ |
2,027
|
$ |
1,906
|
$ |
2,000
|
$ |
2,032
|
$ |
2,000
|
$ |
1,897
|
$ |
1,937
|
$ |
1,858
|
||||||||||||||||
Operating
income
|
$ |
811
|
$ |
561
|
$ |
756
|
$ |
844
|
$ |
805
|
$ |
625
|
$ |
720
|
$ |
665
|
||||||||||||||||
Net
income
|
$ |
516
|
$ |
324
|
$ |
499
|
$ |
497
|
$ |
729
|
$ |
362
|
$ |
430
|
$ |
411
|
||||||||||||||||
Basic
earnings
per share
|
$ |
1.02
|
$ |
0.64
|
$ |
0.97
|
$ |
0.95
|
$ |
1.38
|
$ |
0.68
|
$ |
0.80
|
$ |
0.75
|
||||||||||||||||
Diluted
earnings per share
|
$ |
1.01
|
$ |
0.63
|
$ |
0.95
|
$ |
0.94
|
$ |
1.35
|
$ |
0.66
|
$ |
0.78
|
$ |
0.74
|
||||||||||||||||
Dividend
declared per share
|
$ |
0.2100
|
$ |
0.2100
|
$ |
0.1625
|
$ |
0.1625
|
$ |
0.1625
|
$ |
0.1625
|
$ |
0.1250
|
$ |
0.1250
|
Three
months ended June 30
|
Six
months ended June 30
|
|||||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Track
and
roadway
|
$ |
274
|
$ |
231
|
$ |
421
|
$ |
343
|
||||||||
Rolling
stock
|
28
|
60
|
58
|
171
|
||||||||||||
Buildings
|
15
|
-
|
21
|
5
|
||||||||||||
Information
technology
|
18
|
22
|
35
|
34
|
||||||||||||
Other
|
11
|
5
|
20
|
16
|
||||||||||||
Gross
property
additions
|
346
|
318
|
555
|
569
|
||||||||||||
Less:
capital leases
|
2
|
31
|
8
|
127
|
||||||||||||
Property
additions
|
$ |
344
|
$ |
287
|
$ |
547
|
$ |
442
|
Three
months ended June 30
|
Six
months ended June 30
|
|||||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Cash
provided
from operating activities
|
$ |
739
|
$ |
405
|
$ |
1,002
|
$ |
1,024
|
||||||||
Cash
used by
investing activities
|
(342 | ) | (278 | ) | (535 | ) | (487 | ) | ||||||||
Cash
provided
before financing activities
|
397
|
127
|
467
|
537
|
||||||||||||
Adjustments:
|
||||||||||||||||
Change
in
accounts receivable securitization
|
(65 | ) |
380
|
(204 | ) |
375
|
||||||||||
Dividends
paid
|
(105 | ) | (85 | ) | (212 | ) | (172 | ) | ||||||||
Free
cash
flow
|
$ |
227
|
$ |
422
|
$ |
51
|
$ |
740
|
June
30,
|
2007
|
2006
|
|||||||
Debt-to-total
capitalization ratio (a)
|
36.2 | % | 37.0 | % | |||||
Add:
Present value of operating lease commitments plus
securitization
financing (b)
|
4.2 | % | 3.5 | % | |||||
Adjusted
debt-to-total capitalization ratio (c)
|
40.4 | % | 40.5 | % |
|
(a)
|
Debt-to-total
capitalization is calculated as total long-term debt plus
current portion
of long-term debt divided by the sum of total debt plus
total
shareholders’ equity.
|
|
(b)
|
The
operating lease commitments have been discounted using
the Company’s
implicit interest rate for each of the periods
presented.
|
|
(c)
|
Adjusted
debt-to-total capitalization is calculated as adjusted
debt (total
long-term debt, plus current portion of long-term debt,
plus the present
value of operating lease commitments, plus securitization
financing)
divided by the sum of adjusted debt plus total shareholders’
equity.
|
2012
&
|
||||||||||||||||||||||||||||
In
millions
|
Total
|
2007
|
2008
|
2009
|
2010
|
2011
|
thereafter
|
|||||||||||||||||||||
Long-term
debt
obligations (a)
|
$ |
4,660
|
$ |
54
|
$ |
184
|
$ |
320
|
$ |
-
|
$ |
897
|
$ |
3,205
|
||||||||||||||
Interest
on
long-term debt obligations
|
5,272
|
142
|
276
|
269
|
255
|
249
|
4,081
|
|||||||||||||||||||||
Capital
lease
obligations (b)
|
1,216
|
113
|
111
|
131
|
74
|
138
|
649
|
|||||||||||||||||||||
Operating
lease obligations (c)
|
617
|
81
|
136
|
111
|
91
|
66
|
132
|
|||||||||||||||||||||
Purchase
obligations (d)
|
936
|
549
|
285
|
50
|
44
|
8
|
-
|
|||||||||||||||||||||
Other
long-term liabilities reflected on
|
||||||||||||||||||||||||||||
the
balance
sheet (e)
|
986
|
46
|
70
|
54
|
50
|
47
|
719
|
|||||||||||||||||||||
Total
obligations
|
$ |
13,687
|
$ |
985
|
$ |
1,062
|
$ |
935
|
$ |
514
|
$ |
1,405
|
$ |
8,786
|
|
(a)
|
Presented
net of unamortized discounts, of which $836 million relates
to
non-interest bearing Notes due in 2094, and excludes capital
lease
obligations of $899 million which are included in “Capital lease
obligations.”
|
(b)
|
Includes
$899 million of minimum lease payments and $317 million
of imputed
interest at rates ranging from 3.0% to
7.9%.
|
|
(c)
|
Includes
minimum rental payments for operating leases having initial
non-cancelable
lease terms of one year or more. The Company also has operating
lease
agreements for its automotive fleet with minimum one-year
non-cancelable
terms for which its practice is to renew monthly thereafter.
The estimated
annual rental payments for such leases are approximately
$30 million and
generally extend over five years.
|
(d)
|
Includes
commitments for railroad ties, rail, freight cars, locomotives
and other
equipment and services, and outstanding information technology
service
contracts and
licenses.
|
|
(e)
|
Includes
expected payments for workers’ compensation, workforce reductions,
postretirement benefits other than pensions and environmental
liabilities
that have been classified as contractual settlement
agreements.
|
June
30
|
December
31
|
June
30
|
||||||||||
In
millions
|
2007
|
2006
|
2006
|
|||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||
Pension
asset
|
$ |
1,329
|
$ |
1,275
|
$ |
615
|
||||||
Pension
liability
|
202
|
195
|
156
|
|||||||||
Other
postretirement benefits liability
|
276
|
286
|
304
|
|||||||||
Provision
for
personal injury and other claims
|
520
|
602
|
630
|
|||||||||
Provision
for
environmental costs
|
117
|
131
|
127
|
|||||||||
Net
deferred
income tax provision
|
4,812
|
5,131
|
4,717
|
|||||||||
Properties
|
20,401
|
21,053
|
19,924
|
(1)
|
I
have
reviewed this report on Form 6-K of Canadian National
Railway
Company;
|
(2)
|
Based
on my
knowledge, this report does not contain any untrue statement
of a material
fact or omit to state a material fact necessary to make
the statements
made, in light of the circumstances under which such
statements were made,
not misleading with respect to the period covered by
this
report;
|
(3)
|
Based
on my
knowledge, the financial statements, and other financial
information
included in this report, fairly present in all material
respects the
financial condition, results of operations and cash flows
of the
registrant as of, and for, the periods presented in this
report;
|
(4)
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and
procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d- 15(e))
and internal
control over financial reporting (as defined in Exchange
Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
(a)
|
Designed
such
disclosure controls and procedures, or caused such disclosure
controls and
procedures to be designed under our supervision, to ensure
that material
information relating to the registrant, including its
consolidated
subsidiaries, is made known to us by others within those
entities,
particularly during the period in which this report is
being
prepared;
|
(b)
|
Designed
such
internal control over financial reporting, or caused
such internal control
over financial reporting to be designed under our supervision,
to provide
reasonable assurance regarding the reliability of financial
reporting and
the preparation of financial statements for external
purposes in
accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated
the
effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness
of the
disclosure controls and procedures, as of the end of
the period covered by
this report based on such evaluation; and
|
(d)
|
Disclosed
in
this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter
that has materially affected, or is reasonably likely
to materially
affect, the registrant’s internal control over financial reporting;
and
|
(5)
|
The
registrant's other certifying officer and I have disclosed,
based on our
most recent evaluation of internal control over financial
reporting, to
the registrant's auditors and the audit committee of
the registrant's
board of directors (or persons performing the equivalent
functions):
|
(a)
|
All
significant deficiencies and material weaknesses in the
design or
operation of internal control over financial reporting
which are
reasonably likely to adversely affect the registrant's
ability to record,
process, summarize and report financial information;
and
|
(b)
|
Any
fraud,
whether or not material, that involves management or
other employees who
have a significant role in the registrant's internal
control over
financial reporting.
|
/s/
E. Hunter
Harrison
|
|
E.
Hunter
Harrison
|
|
President
and
Chief Executive Officer
|
(1)
|
I
have
reviewed this report on Form 6-K of Canadian National Railway
Company;
|
(2)
|
Based
on my
knowledge, this report does not contain any untrue statement
of a material
fact or omit to state a material fact necessary to make the
statements
made, in light of the circumstances under which such statements
were made,
not misleading with respect to the period covered by this
report;
|
(3)
|
Based
on my
knowledge, the financial statements, and other financial
information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows
of the
registrant as of, and for, the periods presented in this
report;
|
(4)
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures
(as
defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) and
internal
control over financial reporting (as defined in Exchange
Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
(a)
|
Designed
such
disclosure controls and procedures, or caused such disclosure
controls and
procedures to be designed under our supervision, to ensure
that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities,
particularly during the period in which this report is being
prepared;
|
(b)
|
Designed
such
internal control over financial reporting, or caused such
internal control
over financial reporting to be designed under our supervision,
to provide
reasonable assurance regarding the reliability of financial
reporting and
the preparation of financial statements for external purposes
in
accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated
the
effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness
of the
disclosure controls and procedures, as of the end of the
period covered by
this report based on such evaluation; and
|
(d)
|
Disclosed
in
this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter
that has materially affected, or is reasonably likely to
materially
affect, the registrant’s internal control over financial reporting;
and
|
(5)
|
The
registrant's other certifying officer and I have disclosed,
based on our
most recent evaluation of internal control over financial
reporting, to
the registrant's auditors and the audit committee of the
registrant's
board of directors (or persons performing the equivalent
functions):
|
(a)
|
All
significant deficiencies and material weaknesses in the design
or
operation of internal control over financial reporting which
are
reasonably likely to adversely affect the registrant's ability
to record,
process, summarize and report financial information;
and
|
(b)
|
Any
fraud,
whether or not material, that involves management or other
employees who
have a significant role in the registrant's internal control
over
financial reporting.
|
/s/
Claude
Mongeau
|
|
Claude
Mongeau
|
|
Executive
Vice-President and Chief
|
|
Financial
Officer
|
Canadian National Railway Company | ||||
Date: | July 27, 2007 | By: | /s/ Cristina Circelli | |
|
||||
Name: | Cristina Circelli | |||
Title: | Deputy
Corporate Secretary and General Counsel |