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
1. | Press Release dated October 22, 2007 entitled, "CN reports Q3-2007 net income of C$485 million, or C$0.96 per diluted share, including C$0.03 per share benefit from favorable tax adjustments". |
2. |
Interim
Consolidated Financial Statements and Notes thereto (U.S.
GAAP)
|
3. |
Management’s
Discussion and
Analysis (U.S. GAAP)
|
4. |
Certificate
of
CEO
|
5. |
Certificate
of
CFO
|
North
America’s Railroad
|
·
|
Diluted
earnings per share of C$0.96, including a C$0.03 per share
benefit from favorable tax adjustments, increased two per cent
from the
year-earlier period.
|
·
|
Net
income of C$485 million, including a C$14-million benefit from
favorable tax adjustments, declined two per cent from net income
for the
same quarter of 2006.
|
·
|
Revenues
remained essentially flat at C$2,023 million, with several commodity
groups helping to offset significant weakness in forest
products.
|
·
|
Operating
income declined nine per cent to C$768 million, while CN’s operating
ratio increased by 3.5 points to 62.0 per
cent.
|
Contacts:
|
||
Media
|
Investment
Community
|
|
Mark
Hallman
|
Robert
Noorigian
|
|
Director
|
Vice-President
|
|
Communications,
Media & Eastern Region
|
Investor
Relations
|
|
(905)
669-3384
|
|
(514)
399-0052
|
Three
months ended September
30 |
Nine
months ended September
30 |
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(Unaudited)
|
||||||||||||||||
Revenues
|
$ |
2,023
|
$ |
2,032
|
$ |
5,956
|
$ |
5,929
|
||||||||
Operating
expenses
|
||||||||||||||||
Labor
and
fringe benefits
|
446
|
420
|
1,361
|
1,349
|
||||||||||||
Purchased
services and material
|
247
|
250
|
786
|
756
|
||||||||||||
Depreciation
and amortization
|
165
|
157
|
504
|
483
|
||||||||||||
Fuel
|
251
|
235
|
719
|
665
|
||||||||||||
Equipment
rents
|
59
|
49
|
187
|
135
|
||||||||||||
Casualty
and
other
|
87
|
77
|
259
|
267
|
||||||||||||
Total
operating expenses
|
1,255
|
1,188
|
3,816
|
3,655
|
||||||||||||
Operating
income
|
768
|
844
|
2,140
|
2,274
|
||||||||||||
Interest
expense
|
(78 | ) | (82 | ) | (251 | ) | (232 | ) | ||||||||
Other
income
(loss)
|
2
|
(10 | ) |
7
|
(16 | ) | ||||||||||
Income
before
income taxes
|
692
|
752
|
1,896
|
2,026
|
||||||||||||
Income
tax
expense (Note 8)
|
(207 | ) | (255 | ) | (571 | ) | (438 | ) | ||||||||
Net
income
|
$ |
485
|
$ |
497
|
$ |
1,325
|
$ |
1,588
|
||||||||
Earnings
per share (Note 9)
|
||||||||||||||||
Basic
|
$ |
0.97
|
$ |
0.95
|
$ |
2.62
|
$ |
3.00
|
||||||||
Diluted
|
$ |
0.96
|
$ |
0.94
|
$ |
2.59
|
$ |
2.95
|
||||||||
Weighted-average
number of shares
|
||||||||||||||||
Basic
|
499.7
|
522.5
|
505.0
|
529.5
|
||||||||||||
Diluted
|
506.4
|
530.2
|
512.1
|
538.0
|
September
30
|
December
31
|
September
30
|
||||||||||
2007
|
2006
|
2006
|
||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||
Assets
|
||||||||||||
Current
assets:
|
||||||||||||
Cash
and cash
equivalents
|
$ |
214
|
$ |
179
|
$ |
56
|
||||||
Accounts
receivable
|
641
|
692
|
1,035
|
|||||||||
Material
and
supplies
|
206
|
189
|
205
|
|||||||||
Deferred
income taxes (Notes 2, 8)
|
69
|
84
|
80
|
|||||||||
Other
|
316
|
192
|
107
|
|||||||||
1,446
|
1,336
|
1,483
|
||||||||||
Properties
|
19,883
|
21,053
|
20,216
|
|||||||||
Intangible
and
other assets
|
1,576
|
1,615
|
976
|
|||||||||
Total
assets
|
$ |
22,905
|
$ |
24,004
|
$ |
22,675
|
||||||
Liabilities
and shareholders' equity
|
||||||||||||
Current
liabilities:
|
||||||||||||
Accounts
payable and accrued charges
|
$ |
1,205
|
$ |
1,823
|
$ |
1,671
|
||||||
Current
portion of long-term debt (Note 4)
|
293
|
218
|
151
|
|||||||||
Other
|
56
|
73
|
69
|
|||||||||
1,554
|
2,114
|
1,891
|
||||||||||
Deferred
income taxes (Notes 2, 8)
|
4,940
|
5,215
|
4,884
|
|||||||||
Other
liabilities and deferred credits
|
1,410
|
1,465
|
1,474
|
|||||||||
Long-term
debt
(Note 4)
|
5,342
|
5,386
|
5,164
|
|||||||||
|
||||||||||||
Shareholders'
equity:
|
||||||||||||
Common
shares
|
4,359
|
4,459
|
4,476
|
|||||||||
Accumulated
other comprehensive loss
|
(257 | ) | (44 | ) | (520 | ) | ||||||
Retained
earnings
|
5,557
|
5,409
|
5,306
|
|||||||||
9,659
|
9,824
|
9,262
|
||||||||||
Total
liabilities and shareholders' equity
|
$ |
22,905
|
$ |
24,004
|
$ |
22,675
|
Three
months ended
September
30
|
Nine months
ended
September
30
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(Unaudited)
|
||||||||||||||||
Common
shares (1)
|
||||||||||||||||
Balance,
beginning of period
|
$ |
4,417
|
$ |
4,543
|
$ |
4,459
|
$ |
4,580
|
||||||||
Stock
options
exercised and other
|
16
|
8
|
83
|
90
|
||||||||||||
Share
repurchase programs (Note 4)
|
(74 | ) | (75 | ) | (183 | ) | (194 | ) | ||||||||
Balance,
end
of period
|
$ |
4,359
|
$ |
4,476
|
$ |
4,359
|
$ |
4,476
|
||||||||
Accumulated
other comprehensive loss
|
||||||||||||||||
Balance,
beginning of period
|
$ | (180 | ) | $ | (521 | ) | $ | (44 | ) | $ | (222 | ) | ||||
Other
comprehensive income (loss):
|
||||||||||||||||
Unrealized
foreign exchange gain (loss) on:
|
||||||||||||||||
Translation
of
the net investment in foreign operations
|
(381 | ) |
50
|
(914 | ) | (214 | ) | |||||||||
Translation
of
U.S. dollar-denominated long-term debt
|
||||||||||||||||
designated
as
a hedge of the net investment in U.S. subsidiaries
|
328
|
(44 | ) |
766
|
163
|
|||||||||||
Pension
and
other postretirement benefit plans:
|
||||||||||||||||
Amortization
of:
|
||||||||||||||||
Prior
service
cost (Note 6)
|
5
|
-
|
16
|
-
|
||||||||||||
Net
actuarial
loss (Note 6)
|
13
|
-
|
38
|
-
|
||||||||||||
Derivative
instruments:
|
||||||||||||||||
Decrease
in
unrealized holding gains on fuel
|
||||||||||||||||
derivative
instruments
|
-
|
(10 | ) |
-
|
(57 | ) | ||||||||||
Other
comprehensive loss before income taxes
|
(35 | ) | (4 | ) | (94 | ) | (108 | ) | ||||||||
Income
tax
recovery (expense)
|
(42 | ) |
5
|
(119 | ) | (190 | ) | |||||||||
Other
comprehensive income (loss)
|
(77 | ) |
1
|
(213 | ) | (298 | ) | |||||||||
Balance,
end
of period
|
$ | (257 | ) | $ | (520 | ) | $ | (257 | ) | $ | (520 | ) | ||||
Retained
earnings
|
||||||||||||||||
Balance,
beginning of period
|
$ |
5,554
|
$ |
5,212
|
$ |
5,409
|
$ |
4,891
|
||||||||
Adoption
of
new accounting pronouncements (Note 2)
|
-
|
-
|
95
|
-
|
||||||||||||
Restated
balance, beginning of period
|
5,554
|
5,212
|
5,504
|
4,891
|
||||||||||||
Net
income
|
485
|
497
|
1,325
|
1,588
|
||||||||||||
Share
repurchase programs (Note 4)
|
(378 | ) | (318 | ) | (956 | ) | (916 | ) | ||||||||
Dividends
|
(104 | ) | (85 | ) | (316 | ) | (257 | ) | ||||||||
Balance,
end
of period
|
$ |
5,557
|
$ |
5,306
|
$ |
5,557
|
$ |
5,306
|
(1)
|
During
the
three and nine months ended September 30, 2007, the Company issued
0.5
million and 2.9 million common shares, respectively, as a result
of stock
options exercised. At September 30, 2007, the Company had 494.5
million
common shares outstanding.
|
Three
months
ended September
30 |
Nine
months ended September
30 |
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(Unaudited)
|
||||||||||||||||
Operating
activities
|
||||||||||||||||
Net
income
|
$ |
485
|
$ |
497
|
$ |
1,325
|
$ |
1,588
|
||||||||
Adjustments
to
reconcile net income to net cash provided from
|
||||||||||||||||
operating
activities:
|
||||||||||||||||
Depreciation
and amortization
|
165
|
159
|
506
|
486
|
||||||||||||
Deferred
income taxes
|
75
|
74
|
125
|
(20 | ) | |||||||||||
Other
changes
in:
|
||||||||||||||||
Accounts
receivable
|
(252 | ) | (71 | ) | (38 | ) | (420 | ) | ||||||||
Material
and
supplies
|
(6 | ) |
30
|
(26 | ) | (54 | ) | |||||||||
Accounts
payable and accrued charges
|
(65 | ) |
134
|
(471 | ) |
149
|
||||||||||
Other
net
current assets and liabilities
|
42
|
9
|
51
|
92
|
||||||||||||
Other
|
(14 | ) |
22
|
(40 | ) |
57
|
||||||||||
Cash
provided
from operating activities
|
430
|
854
|
1,432
|
1,878
|
||||||||||||
Investing
activities
|
||||||||||||||||
Property
additions
|
(350 | ) | (384 | ) | (897 | ) | (826 | ) | ||||||||
Other,
net
|
14
|
6
|
26
|
(39 | ) | |||||||||||
Cash
used by
investing activities
|
(336 | ) | (378 | ) | (871 | ) | (865 | ) | ||||||||
Financing
activities
|
||||||||||||||||
Issuance
of
long-term debt
|
1,841
|
-
|
3,325
|
3,125
|
||||||||||||
Reduction
of
long-term debt
|
(1,420 | ) | (153 | ) | (2,469 | ) | (2,855 | ) | ||||||||
Issuance
of
common shares due to exercise of stock options
|
||||||||||||||||
and
related excess tax benefits realized
|
14
|
4
|
73
|
78
|
||||||||||||
Repurchase
of
common shares
|
(452 | ) | (393 | ) | (1,139 | ) | (1,110 | ) | ||||||||
Dividends
paid
|
(104 | ) | (85 | ) | (316 | ) | (257 | ) | ||||||||
Cash
used by
financing activities
|
(121 | ) | (627 | ) | (526 | ) | (1,019 | ) | ||||||||
Net
increase (decrease) in cash and cash equivalents
|
(27 | ) | (151 | ) |
35
|
(6 | ) | |||||||||
Cash
and cash
equivalents, beginning of period
|
241
|
207
|
179
|
62
|
||||||||||||
Cash
and cash equivalents, end of period
|
$ |
214
|
$ |
56
|
$ |
214
|
$ |
56
|
||||||||
Supplemental
cash flow information
|
||||||||||||||||
Net
cash
receipts from customers and other
|
$ |
1,770
|
$ |
1,949
|
$ |
5,930
|
$ |
5,521
|
||||||||
Net
cash
payments for:
|
||||||||||||||||
Employee
services, suppliers and other expenses
|
(1,106 | ) | (924 | ) | (3,387 | ) | (3,097 | ) | ||||||||
Interest
|
(86 | ) | (86 | ) | (273 | ) | (227 | ) | ||||||||
Workforce
reductions
|
(8 | ) | (10 | ) | (24 | ) | (37 | ) | ||||||||
Personal
injury and other claims
|
(12 | ) | (18 | ) | (58 | ) | (60 | ) | ||||||||
Pensions
|
(27 | ) | (21 | ) | (50 | ) | (46 | ) | ||||||||
Income
taxes
|
(101 | ) | (36 | ) | (706 | ) | (176 | ) | ||||||||
Cash
provided
from operating activities
|
$ |
430
|
$ |
854
|
$ |
1,432
|
$ |
1,878
|
Vision
2008 Share Unit
|
Voluntary
Incentive
|
|||||||||||||||||||||||
RSUs
|
Plan
(Vision)
|
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 | ) |
-
|
-
|
-
|
(0.2 | ) | ||||||||||||||||
Conversion
into VIDP
|
-
|
(0.1 | ) |
-
|
-
|
-
|
0.1
|
|||||||||||||||||
Outstanding
at September 30, 2007
|
2.5
|
-
|
0.8
|
-
|
0.2
|
1.9
|
In millions, unless otherwise indicated |
RSUs
(1)
|
Vision
(1)
|
VIDP
(2)
|
Total
|
||||||||||||||||||||||||
Year of grant |
2007
|
2006
|
2005
|
2004
|
2005
|
2003
onwards
|
||||||||||||||||||||||
Stock-based
compensation expense
|
||||||||||||||||||||||||||||
recognized
over requisite service
period
|
||||||||||||||||||||||||||||
Nine
months
ended September 30, 2007
|
$ |
17
|
$ |
19
|
$ |
19
|
$ |
5
|
$ |
13
|
$ |
30
|
$ |
103
|
||||||||||||||
Nine
months
ended September 30, 2006
|
N/A
|
$ |
8
|
$ |
12
|
$ |
5
|
$ |
6
|
$ |
5
|
$ |
36
|
|||||||||||||||
Liability
outstanding
|
||||||||||||||||||||||||||||
September
30,
2007
|
$ |
17
|
$ |
40
|
$ |
53
|
$ |
4
|
$ |
20
|
$ |
115
|
$ |
249
|
||||||||||||||
December
31,
2006
|
N/A
|
$ |
21
|
$ |
34
|
$ |
8
|
$ |
8
|
$ |
99
|
$ |
170
|
|||||||||||||||
Fair
value per unit
|
||||||||||||||||||||||||||||
September
30,
2007
|
$ |
48.31
|
$ |
53.97
|
$ |
56.56
|
$ |
56.76
|
$ |
37.20
|
$ |
56.76
|
N/A
|
|||||||||||||||
Fair
value of awards vested during period
|
||||||||||||||||||||||||||||
Nine
months
ended September 30, 2007
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
5
|
$ |
-
|
$ |
3
|
$ |
8
|
||||||||||||||
Nine
months
ended September 30, 2006
|
N/A
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
2
|
$ |
2
|
|||||||||||||||
Nonvested
awards at September 30,
2007
|
||||||||||||||||||||||||||||
Unrecognized
compensation cost
|
$ |
15
|
$ |
14
|
$ |
5
|
$ |
5
|
$ |
9
|
$ |
10
|
$ |
58
|
||||||||||||||
Remaining
recognition period (years)
|
2.25
|
1.25
|
0.25
|
1.25
|
1.25
|
3.25
|
N/A
|
|||||||||||||||||||||
Assumptions
(3)
|
||||||||||||||||||||||||||||
Stock
price
($)
|
$ |
56.76
|
$ |
56.76
|
$ |
56.76
|
$ |
56.76
|
$ |
56.76
|
$ |
56.76
|
N/A
|
|||||||||||||||
Expected
stock
price volatility (4)
|
20% | 20% | 21% |
N/A
|
20% |
N/A
|
N/A
|
|||||||||||||||||||||
Expected
term
(years) (5)
|
2.25
|
1.25
|
0.25
|
N/A
|
1.25
|
N/A
|
N/A
|
|||||||||||||||||||||
Risk-free
interest rate (6)
|
4.07% | 4.20% | 4.20% |
N/A
|
4.13% |
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
|
$
|
52.79
|
|||||||||||||
Forfeited
|
(0.1 | ) |
$
|
36.92
|
||||||||||||
Exercised
|
(2.9 | ) |
$
|
20.25
|
||||||||||||
Outstanding
at September 30, 2007 (1)
|
14.8
|
$
|
24.52
|
4.8
|
$
|
477
|
||||||||||
Exercisable
at September 30, 2007 (1)
|
12.5
|
$
|
21.15
|
4.2
|
$
|
446
|
(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)
|
||||||||||||||||||||
Nine
months
ended September 30, 2007
|
$ |
6
|
$ |
1
|
$ |
2
|
$ |
-
|
$ |
9
|
||||||||||
Nine
months
ended September 30, 2006
|
N/A
|
$ |
7
|
$ |
2
|
$ |
3
|
$ |
12
|
|||||||||||
Fair
value per unit
|
||||||||||||||||||||
At
grant date
($)
|
$ |
13.36
|
$ |
13.80
|
$ |
9.19
|
$ |
8.61
|
N/A
|
|||||||||||
Fair
value of awards vested during period
|
||||||||||||||||||||
Nine
months
ended September 30, 2007
|
$ |
-
|
$ |
4
|
$ |
3
|
$ |
-
|
$ |
7
|
||||||||||
Nine
months
ended September 30, 2006
|
N/A
|
$ |
-
|
$ |
3
|
$ |
34
|
$ |
37
|
|||||||||||
Nonvested
awards at September 30, 2007
|
||||||||||||||||||||
Unrecognized
compensation cost
|
$ |
5
|
$ |
5
|
$ |
4
|
$ |
-
|
$ |
14
|
||||||||||
Remaining
recognition period (years)
|
3.4
|
2.4
|
1.3
|
-
|
N/A
|
|||||||||||||||
Assumptions
(1)
|
||||||||||||||||||||
Grant
price
($)
|
$ |
52.79
|
$ |
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
|
Nine
months ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Service
cost
|
$ |
38
|
$ |
29
|
$ |
114
|
$ |
109
|
||||||||
Interest
cost
|
186
|
180
|
557
|
538
|
||||||||||||
Expected
return on plan assets
|
(234 | ) | (227 | ) | (703 | ) | (680 | ) | ||||||||
Amortization
of prior service cost
|
5
|
5
|
15
|
14
|
||||||||||||
Amortization
of net actuarial loss
|
13
|
22
|
40
|
68
|
||||||||||||
Net
periodic benefit cost
|
$ |
8
|
$ |
9
|
$ |
23
|
$ |
49
|
||||||||
(b)
Components of net periodic benefit cost for postretirement
benefits
|
||||||||||||||||
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Service
cost
|
$ |
1
|
$ |
1
|
$ |
3
|
$ |
3
|
||||||||
Interest
cost
|
4
|
3
|
11
|
11
|
||||||||||||
Curtailment
|
-
|
-
|
(3 | ) |
-
|
|||||||||||
Amortization
of prior service cost
|
-
|
-
|
1
|
-
|
||||||||||||
Recognized
net
actuarial gain
|
-
|
-
|
(2 | ) | (4 | ) | ||||||||||
Net
periodic benefit cost
|
$ |
5
|
$ |
4
|
$ |
10
|
$ |
10
|
(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
|
Nine
months ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
In
millions, except per share data
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Net
income
|
$ |
485
|
$ |
497
|
$ |
1,325
|
$ |
1,588
|
||||||||
Weighted-average
shares outstanding
|
499.7
|
522.5
|
505.0
|
529.5
|
||||||||||||
Effect
of stock options
|
6.7
|
7.7
|
7.1
|
8.5
|
||||||||||||
Weighted-average
diluted shares outstanding
|
506.4
|
530.2
|
512.1
|
538.0
|
||||||||||||
Basic
earnings per share
|
$ |
0.97
|
$ |
0.95
|
$ |
2.62
|
$ |
3.00
|
||||||||
Diluted
earnings per share
|
$ |
0.96
|
$ |
0.94
|
$ |
2.59
|
$ |
2.95
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
(Unaudited)
|
||||||||||||||||
Statistical
operating data
|
||||||||||||||||
Rail
freight
revenues ($ millions)
|
1,821
|
1,857
|
5,423
|
5,430
|
||||||||||||
Gross
ton
miles (GTM) (millions)
|
88,498
|
88,880
|
258,583
|
264,565
|
||||||||||||
Revenue
ton
miles (RTM) (millions)
|
46,481
|
47,066
|
136,997
|
139,644
|
||||||||||||
Carloads
(thousands)
|
1,204
|
1,241
|
3,539
|
3,678
|
||||||||||||
Route
miles
(includes Canada and the U.S.)
|
20,219
|
19,919
|
20,219
|
19,919
|
||||||||||||
Employees
(end
of period)
|
22,325
|
21,681
|
22,325
|
21,681
|
||||||||||||
Employees
(average for the period)
|
22,262
|
21,670
|
21,764
|
21,663
|
||||||||||||
Productivity
|
||||||||||||||||
Operating
ratio (%)
|
62.0
|
58.5
|
64.1
|
61.6
|
||||||||||||
Rail
freight
revenue per RTM (cents)
|
3.92
|
3.95
|
3.96
|
3.89
|
||||||||||||
Rail
freight
revenue per carload ($)
|
1,512
|
1,496
|
1,532
|
1,476
|
||||||||||||
Operating
expenses per GTM (cents)
|
1.42
|
1.34
|
1.48
|
1.38
|
||||||||||||
Labor
and
fringe benefits expense per GTM (cents)
|
0.50
|
0.47
|
0.53
|
0.51
|
||||||||||||
GTMs
per
average number of employees (thousands)
|
3,975
|
4,102
|
11,881
|
12,213
|
||||||||||||
Diesel
fuel
consumed (U.S. gallons in millions)
|
96
|
96
|
290
|
300
|
||||||||||||
Average
fuel
price ($/U.S. gallon) (1)
|
2.39
|
2.33
|
2.29
|
2.12
|
||||||||||||
GTMs
per U.S.
gallon of fuel consumed
|
922
|
926
|
892
|
882
|
||||||||||||
Safety
indicators
|
||||||||||||||||
Injury
frequency rate per 200,000 person hours (2)
|
2.2
|
2.3
|
1.8
|
2.1
|
||||||||||||
Accident
rate
per million train miles (2)
|
3.0
|
2.8
|
2.4
|
2.3
|
||||||||||||
Financial
ratio
|
||||||||||||||||
Debt
to total
capitalization ratio (% at end of period)
|
36.8
|
36.5
|
36.8
|
36.5
|
(1)
|
2006
includes the impact of the Company's fuel hedging
program.
|
(2)
|
Based
on
Federal Railroad Administration (FRA) reporting
criteria.
|
Three
months ended September 30
|
Nine
months ended September 30
|
|||||||||||||||||||||||
Variance
|
Variance
|
|||||||||||||||||||||||
2007
|
2006
|
Fav
(Unfav)
|
2007
|
2006
|
Fav
(Unfav)
|
|||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||
Revenues
(in millions of dollars)
|
||||||||||||||||||||||||
Petroleum
and chemicals
|
317
|
298
|
6 | % |
920
|
871
|
6 | % | ||||||||||||||||
Metals
and minerals
|
208
|
226
|
(8 | %) |
631
|
643
|
(2 | %) | ||||||||||||||||
Forest
products
|
392
|
450
|
(13 | %) |
1,216
|
1,333
|
(9 | %) | ||||||||||||||||
Coal
|
99
|
93
|
6 | % |
287
|
277
|
4 | % | ||||||||||||||||
Grain
and fertilizers
|
330
|
309
|
7 | % |
961
|
907
|
6 | % | ||||||||||||||||
Intermodal
|
361
|
369
|
(2 | %) |
1,020
|
1,041
|
(2 | %) | ||||||||||||||||
Automotive
|
114
|
112
|
2 | % |
388
|
358
|
8 | % | ||||||||||||||||
Other
revenue
|
202
|
175
|
15 | % |
533
|
499
|
7 | % | ||||||||||||||||
2,023
|
2,032
|
-
|
5,956
|
5,929
|
-
|
|||||||||||||||||||
Revenue
ton miles (millions)
|
||||||||||||||||||||||||
Petroleum
and chemicals
|
8,369
|
8,049
|
4 | % |
24,288
|
23,938
|
1 | % | ||||||||||||||||
Metals
and minerals
|
4,301
|
4,611
|
(7 | %) |
12,414
|
13,441
|
(8 | %) | ||||||||||||||||
Forest
products
|
10,021
|
10,874
|
(8 | %) |
30,652
|
32,439
|
(6 | %) | ||||||||||||||||
Coal
|
3,500
|
3,500
|
-
|
10,344
|
10,518
|
(2 | %) | |||||||||||||||||
Grain
and fertilizers
|
11,241
|
10,839
|
4 | % |
32,809
|
32,305
|
2 | % | ||||||||||||||||
Intermodal
|
8,339
|
8,487
|
(2 | %) |
24,114
|
24,685
|
(2 | %) | ||||||||||||||||
Automotive
|
710
|
706
|
1 | % |
2,376
|
2,318
|
3 | % | ||||||||||||||||
46,481
|
47,066
|
(1 | %) |
136,997
|
139,644
|
(2 | %) | |||||||||||||||||
Rail
freight revenue / RTM (cents)
|
||||||||||||||||||||||||
Total
rail freight revenue per RTM
|
3.92
|
3.95
|
(1 | %) |
3.96
|
3.89
|
2 | % | ||||||||||||||||
Commodity
groups:
|
||||||||||||||||||||||||
Petroleum
and chemicals
|
3.79
|
3.70
|
2 | % |
3.79
|
3.64
|
4 | % | ||||||||||||||||
Metals
and minerals
|
4.84
|
4.90
|
(1 | %) |
5.08
|
4.78
|
6 | % | ||||||||||||||||
Forest
products
|
3.91
|
4.14
|
(6 | %) |
3.97
|
4.11
|
(3 | %) | ||||||||||||||||
Coal
|
2.83
|
2.66
|
6 | % |
2.77
|
2.63
|
5 | % | ||||||||||||||||
Grain
and fertilizers
|
2.94
|
2.85
|
3 | % |
2.93
|
2.81
|
4 | % | ||||||||||||||||
Intermodal
|
4.33
|
4.35
|
-
|
4.23
|
4.22
|
-
|
||||||||||||||||||
Automotive
|
16.06
|
15.86
|
1 | % |
16.33
|
15.44
|
6 | % | ||||||||||||||||
Carloads
(thousands)
|
||||||||||||||||||||||||
Petroleum
and chemicals
|
153
|
152
|
1 | % |
448
|
445
|
1 | % | ||||||||||||||||
Metals
and minerals
|
257
|
270
|
(5 | %) |
749
|
778
|
(4 | %) | ||||||||||||||||
Forest
products
|
147
|
165
|
(11 | %) |
450
|
513
|
(12 | %) | ||||||||||||||||
Coal
|
90
|
99
|
(9 | %) |
275
|
317
|
(13 | %) | ||||||||||||||||
Grain
and fertilizers
|
152
|
150
|
1 | % |
439
|
437
|
-
|
|||||||||||||||||
Intermodal
|
343
|
348
|
(1 | %) |
978
|
994
|
(2 | %) | ||||||||||||||||
Automotive
|
62
|
57
|
9 | % |
200
|
194
|
3 | % | ||||||||||||||||
1,204
|
1,241
|
(3 | %) |
3,539
|
3,678
|
(4 | %) | |||||||||||||||||
Rail
freight revenue / carload (dollars)
|
||||||||||||||||||||||||
Total
rail freight revenue per carload
|
1,512
|
1,496
|
1 | % |
1,532
|
1,476
|
4 | % | ||||||||||||||||
Commodity
groups:
|
||||||||||||||||||||||||
Petroleum
and chemicals
|
2,072
|
1,961
|
6 | % |
2,054
|
1,957
|
5 | % | ||||||||||||||||
Metals
and minerals
|
809
|
837
|
(3 | %) |
842
|
826
|
2 | % | ||||||||||||||||
Forest
products
|
2,667
|
2,727
|
(2 | %) |
2,702
|
2,598
|
4 | % | ||||||||||||||||
Coal
|
1,100
|
939
|
17 | % |
1,044
|
874
|
19 | % | ||||||||||||||||
Grain
and fertilizers
|
2,171
|
2,060
|
5 | % |
2,189
|
2,076
|
5 | % | ||||||||||||||||
Intermodal
|
1,052
|
1,060
|
(1 | %) |
1,043
|
1,047
|
-
|
|||||||||||||||||
Automotive
|
1,839
|
1,965
|
(6 | %) |
1,940
|
1,845
|
5 | % |
Three
months ended
|
Nine
months ended
|
|||||||||||||||||||||||
September
30, 2007
|
September
30, 2007
|
|||||||||||||||||||||||
Tax
|
Tax
|
|||||||||||||||||||||||
In
millions, except per share data
|
Reported
|
adjustments
|
Adjusted
|
Reported
|
adjustments
|
Adjusted
|
||||||||||||||||||
Revenues
|
$ |
2,023
|
$ |
-
|
$ |
2,023
|
$ |
5,956
|
$ |
-
|
$ |
5,956
|
||||||||||||
Operating
expenses
|
1,255
|
-
|
1,255
|
3,816
|
-
|
3,816
|
||||||||||||||||||
Operating
income
|
768
|
-
|
768
|
2,140
|
-
|
2,140
|
||||||||||||||||||
Interest
expense
|
(78 | ) |
-
|
(78 | ) | (251 | ) |
-
|
(251 | ) | ||||||||||||||
Other
income
|
2
|
-
|
2
|
7
|
-
|
7
|
||||||||||||||||||
Income
before income taxes
|
692
|
-
|
692
|
1,896
|
-
|
1,896
|
||||||||||||||||||
Income
tax expense
|
(207 | ) | (14 | ) | (221 | ) | (571 | ) | (44 | ) | (615 | ) | ||||||||||||
Net
income
|
$ |
485
|
$ | (14 | ) | $ |
471
|
$ |
1,325
|
$ | (44 | ) | $ |
1,281
|
||||||||||
Basic
earnings per share
|
$ |
0.97
|
$ | (0.03 | ) | $ |
0.94
|
$ |
2.62
|
$ | (0.09 | ) | $ |
2.53
|
||||||||||
Diluted
earnings per share
|
$ |
0.96
|
$ | (0.03 | ) | $ |
0.93
|
$ |
2.59
|
$ | (0.09 | ) | $ |
2.50
|
||||||||||
Three
months ended
|
Nine
months ended
|
|||||||||||||||||||||||
September
30, 2006
|
September
30, 2006
|
|||||||||||||||||||||||
Tax
|
Tax
|
|||||||||||||||||||||||
In
millions, except per share data
|
|
Reported | adjustments |
Adjusted
|
|
Reported | adjustments |
Adjusted
|
||||||||||||||||
Revenues
|
$ |
2,032
|
$ |
-
|
$ |
2,032
|
$ |
5,929
|
$ |
-
|
$ |
5,929
|
||||||||||||
Operating
expenses
|
1,188
|
-
|
1,188
|
3,655
|
-
|
3,655
|
||||||||||||||||||
Operating
income
|
844
|
-
|
844
|
2,274
|
-
|
2,274
|
||||||||||||||||||
Interest
expense
|
(82 | ) |
-
|
(82 | ) | (232 | ) |
-
|
(232 | ) | ||||||||||||||
Other
loss
|
(10 | ) |
-
|
(10 | ) | (16 | ) |
-
|
(16 | ) | ||||||||||||||
Income
before income taxes
|
752
|
-
|
752
|
2,026
|
-
|
2,026
|
||||||||||||||||||
Income
tax expense
|
(255 | ) |
-
|
(255 | ) | (438 | ) | (250 | ) | (688 | ) | |||||||||||||
Net
income
|
$ |
497
|
$ |
-
|
$ |
497
|
$ |
1,588
|
$ | (250 | ) | $ |
1,338
|
|||||||||||
Basic
earnings per share
|
$ |
0.95
|
$ |
-
|
$ |
0.95
|
$ |
3.00
|
$ | (0.48 | ) | $ |
2.52
|
|||||||||||
Diluted
earnings per share
|
$ |
0.94
|
$ |
-
|
$ |
0.94
|
$ |
2.95
|
$ | (0.46 | ) | $ |
2.49
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
30
|
September
30
|
|||||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Cash
provided
from operating activities
|
$ |
430
|
$ |
854
|
$ |
1,432
|
$ |
1,878
|
||||||||
Cash
used by
investing activities
|
(336 | ) | (378 | ) | (871 | ) | (865 | ) | ||||||||
Cash
provided
before financing activities
|
94
|
476
|
561
|
1,013
|
||||||||||||
Adjustments:
|
||||||||||||||||
Change
in
accounts receivable securitization
|
152
|
-
|
(52 | ) |
375
|
|||||||||||
Dividends
paid
|
(104 | ) | (85 | ) | (316 | ) | (257 | ) | ||||||||
Free
cash
flow
|
$ |
142
|
$ |
391
|
$ |
193
|
$ |
1,131
|
Three
months ended
September
30
|
Nine
months ended
September
30
|
||||||||||||||||
$
in
millions, except per share data, or unless otherwise
indicated
|
2007
|
2006(b)
|
2007
|
2006(b)
|
|||||||||||||
(Unaudited)
|
|||||||||||||||||
Financial
results
|
|||||||||||||||||
Revenues
|
$ |
2,023
|
$ |
2,032
|
$ |
5,956
|
$ |
5,929
|
|||||||||
Operating
income
|
$ |
768
|
$ |
844
|
$ |
2,140
|
$ |
2,274
|
|||||||||
Net
income
(a)
|
$ |
485
|
$ |
497
|
$ |
1,325
|
$ |
1,588
|
|||||||||
Operating
ratio
|
62.0% |
58.5%
|
|
64.1% |
61.6%
|
||||||||||||
Basic
earnings
per share (a)
|
$ |
0.97
|
$ |
0.95
|
$ |
2.62
|
$ |
3.00
|
|||||||||
Diluted
earnings per share (a)
|
$ |
0.96
|
$ |
0.94
|
$ |
2.59
|
$ |
2.95
|
|||||||||
Dividend
declared per share
|
$ |
0.2100
|
$ |
0.1625
|
$ |
0.6300
|
$ |
0.4875
|
|||||||||
Financial
position
|
|||||||||||||||||
Total
assets
|
$ |
22,905
|
$ |
22,675
|
$ |
22,905
|
$ |
22,675
|
|||||||||
Total
long-term financial liabilities
|
$ |
11,692
|
$ |
11,522
|
$ |
11,692
|
$ |
11,522
|
|||||||||
Statistical
operating data and productivity measures
|
|||||||||||||||||
Employees
(average for the period )
|
22,262
|
21,670
|
21,764
|
21,663
|
|||||||||||||
Gross
ton
miles (GTM) per average number of employees (thousands
)
|
3,975
|
4,102
|
11,881
|
12,213
|
|||||||||||||
GTMs
per U.S.
gallon of fuel consumed
|
922
|
926
|
892
|
882
|
Three
months ended September 30
|
Nine
months ended September 30
|
|||||||||||||||||||||||
In
millions, unless otherwise indicated
|
2007
|
2006
|
% |
2007
|
2006
|
%
|
||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||
Rail
freight
revenue
|
$ |
1,821
|
$ |
1,857
|
(2 | %) | $ |
5,423
|
$ |
5,430
|
-
|
|||||||||||||
Other
revenue
|
202
|
175
|
15 | % |
533
|
499
|
7 | % | ||||||||||||||||
Total
revenues
|
$ |
2,023
|
$ |
2,032
|
-
|
$ |
5,956
|
$ |
5,929
|
-
|
||||||||||||||
Rail
freight revenue:
|
||||||||||||||||||||||||
Petroleum
and
chemicals
|
$ |
317
|
$ |
298
|
6 | % | $ |
920
|
$ |
871
|
6 | % | ||||||||||||
Metals
and
minerals
|
208
|
226
|
(8 | %) |
631
|
643
|
(2 | %) | ||||||||||||||||
Forest
products
|
392
|
450
|
(13 | %) |
1,216
|
1,333
|
(9 | %) | ||||||||||||||||
Coal
|
99
|
93
|
6 | % |
287
|
277
|
4 | % | ||||||||||||||||
Grain
and
fertilizers
|
330
|
309
|
7 | % |
961
|
907
|
6 | % | ||||||||||||||||
Intermodal
|
361
|
369
|
(2 | %) |
1,020
|
1,041
|
(2 | %) | ||||||||||||||||
Automotive
|
114
|
112
|
2 | % |
388
|
358
|
8 | % | ||||||||||||||||
Total
rail
freight revenue
|
$ |
1,821
|
$ |
1,857
|
(2 | %) | $ |
5,423
|
$ |
5,430
|
-
|
|||||||||||||
Total
revenue
ton miles (RTM)
|
46,481
|
47,066
|
(1 | %) |
136,997
|
139,644
|
(2 | %) | ||||||||||||||||
Rail
freight
revenue/RTM (cents)
|
3.92
|
3.95
|
(1 | %) |
3.96
|
3.89
|
2 | % |
Three
months ended September 30
|
Nine
months ended September 30
|
|||||||||||||||||||||||
2007
|
2006
|
% |
2007
|
2006
|
% | |||||||||||||||||||
Revenues
(millions)
|
$ |
317
|
$ |
298
|
6 | % | $ |
920
|
$ |
871
|
6 | % | ||||||||||||
RTMs
(millions)
|
8,369
|
8,049
|
4 | % |
24,288
|
23,938
|
1 | % | ||||||||||||||||
Revenue/RTM
(cents)
|
3.79
|
3.70
|
2 | % |
3.79
|
3.64
|
4 | % |
Three
months ended September 30
|
Nine
months ended September 30
|
|||||||||||||||||||||||
2007
|
2006
|
% |
2007
|
2006
|
% | |||||||||||||||||||
Revenues
(millions)
|
$ |
208
|
$ |
226
|
(8 | %) | $ |
631
|
$ |
643
|
(2 | %) | ||||||||||||
RTMs
(millions)
|
4,301
|
4,611
|
(7 | %) |
12,414
|
13,441
|
(8 | %) | ||||||||||||||||
Revenue/RTM
(cents)
|
4.84
|
4.90
|
(1 | %) |
5.08
|
4.78
|
6 | % |
Three
months ended September 30
|
Nine
months ended September 30
|
|||||||||||||||||||||||
2007
|
2006
|
% |
2007
|
2006
|
% | |||||||||||||||||||
Revenues
(millions)
|
$ |
392
|
$ |
450
|
(13 | %) | $ |
1,216
|
$ |
1,333
|
(9 | %) | ||||||||||||
RTMs
(millions)
|
10,021
|
10,874
|
(8 | %) |
30,652
|
32,439
|
(6 | %) | ||||||||||||||||
Revenue/RTM
(cents)
|
3.91
|
4.14
|
(6 | %) |
3.97
|
4.11
|
(3 | %) |
Three
months ended September 30
|
Nine
months ended September 30
|
|||||||||||||||||||||||
2007
|
2006
|
%
|
2007
|
2006
|
%
|
|||||||||||||||||||
Revenues
(millions)
|
$ |
99
|
$ |
93
|
6 | % | $ |
287
|
$ |
277
|
4 | % | ||||||||||||
RTMs
(millions)
|
3,500
|
3,500
|
-
|
10,344
|
10,518
|
(2 | %) | |||||||||||||||||
Revenue/RTM
(cents)
|
2.83
|
2.66
|
6 | % |
2.77
|
2.63
|
5 | % |
Three
months ended September 30
|
Nine
months ended September 30
|
|||||||||||||||||||||||
2007
|
2006
|
%
|
2007
|
2006
|
%
|
|||||||||||||||||||
Revenues
(millions)
|
$ |
330
|
$ |
309
|
7 | % | $ |
961
|
$ |
907
|
6 | % | ||||||||||||
RTMs
(millions)
|
11,241
|
10,839
|
4 | % |
32,809
|
32,305
|
2 | % | ||||||||||||||||
Revenue/RTM
(cents)
|
2.94
|
2.85
|
3 | % |
2.93
|
2.81
|
4 | % |
Three
months ended September 30
|
Nine
months ended September 30
|
|||||||||||||||||||||||
2007
|
2006
|
%
|
2007
|
2006
|
%
|
|||||||||||||||||||
Revenues
(millions)
|
$ |
361
|
$ |
369
|
(2 | %) | $ |
1,020
|
$ |
1,041
|
(2 | %) | ||||||||||||
RTMs
(millions)
|
8,339
|
8,487
|
(2 | %) |
24,114
|
24,685
|
(2 | %) | ||||||||||||||||
Revenue/RTM
(cents)
|
4.33
|
4.35
|
-
|
4.23
|
4.22
|
-
|
Three
months ended September 30
|
Nine
months ended September 30
|
|||||||||||||||||||||||
2007
|
2006
|
%
|
2007
|
2006
|
%
|
|||||||||||||||||||
Revenues
(millions)
|
$ |
114
|
$ |
112
|
2 | % | $ |
388
|
$ |
358
|
8 | % | ||||||||||||
RTMs
(millions)
|
710
|
706
|
1 | % |
2,376
|
2,318
|
3 | % | ||||||||||||||||
Revenue/RTM
(cents)
|
16.06
|
15.86
|
1 | % |
16.33
|
15.44
|
6 | % |
Three
months ended September 30
|
Nine
months ended September 30
|
|||||||||||||||||||||||||||||||||||||||||
Percentage
of
revenues
|
Percentage
of
revenues
|
|||||||||||||||||||||||||||||||||||||||||
In
millions
|
2007
|
2006
|
%
|
2007
|
2006
|
2007
|
2006
|
%
|
2007
|
2006
|
||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||||||||||||
Labor
and
fringe benefits
|
$ |
446
|
$ |
420
|
(6 | %) | 22.0 | % | 20.7 | % | $ |
1,361
|
$ |
1,349
|
(1 | %) | 22.9 | % | 22.8 | % | ||||||||||||||||||||||
Purchased
services and material
|
247
|
250
|
1 | % | 12.2 | % | 12.3 | % |
786
|
756
|
(4 | %) | 13.2 | % | 12.7 | % | ||||||||||||||||||||||||||
Depreciation
and amortization
|
165
|
157
|
(5 | %) | 8.2 | % | 7.7 | % |
504
|
483
|
(4 | %) | 8.5 | % | 8.1 | % | ||||||||||||||||||||||||||
Fuel
|
251
|
235
|
(7 | %) | 12.4 | % | 11.6 | % |
719
|
665
|
(8 | %) | 12.1 | % | 11.2 | % | ||||||||||||||||||||||||||
Equipment
rents
|
59
|
49
|
(20 | %) | 2.9 | % | 2.4 | % |
187
|
135
|
(39 | %) | 3.1 | % | 2.3 | % | ||||||||||||||||||||||||||
Casualty
and
other
|
87
|
77
|
(13 | %) | 4.3 | % | 3.8 | % |
259
|
267
|
3 | % | 4.3 | % | 4.5 | % | ||||||||||||||||||||||||||
Total
|
$ |
1,255
|
$ |
1,188
|
(6 | %) | 62.0 | % | 58.5 | % | $ |
3,816
|
$ |
3,655
|
(4 | %) | 64.1 | % | 61.6 | % |
In
millions, except per share data
|
||||||||||||||||||||||||||||||||
2007
|
2006
|
2005
|
||||||||||||||||||||||||||||||
Quarters
|
Quarters
|
Quarter
|
||||||||||||||||||||||||||||||
Third
|
Second
|
First
|
Fourth
|
Third
|
Second
|
First
|
Fourth
|
|||||||||||||||||||||||||
Revenues
|
$ |
2,023
|
$ |
2,027
|
$ |
1,906
|
$ |
2,000
|
$ |
2,032
|
$ |
2,000
|
$ |
1,897
|
$ |
1,937
|
||||||||||||||||
Operating
income
|
$ |
768
|
$ |
811
|
$ |
561
|
$ |
756
|
$ |
844
|
$ |
805
|
$ |
625
|
$ |
720
|
||||||||||||||||
Net
income
|
$ |
485
|
$ |
516
|
$ |
324
|
$ |
499
|
$ |
497
|
$ |
729
|
$ |
362
|
$ |
430
|
||||||||||||||||
Basic
earnings
per share
|
$ |
0.97
|
$ |
1.02
|
$ |
0.64
|
$ |
0.97
|
$ |
0.95
|
$ |
1.38
|
$ |
0.68
|
$ |
0.80
|
||||||||||||||||
Diluted
earnings per share
|
$ |
0.96
|
$ |
1.01
|
$ |
0.63
|
$ |
0.95
|
$ |
0.94
|
$ |
1.35
|
$ |
0.66
|
$ |
0.78
|
||||||||||||||||
Dividend
declared per share
|
$ |
0.2100
|
$ |
0.2100
|
$ |
0.2100
|
$ |
0.1625
|
$ |
0.1625
|
$ |
0.1625
|
$ |
0.1625
|
$ |
0.1250
|
Three
months ended September 30
|
Nine
months ended September 30
|
|||||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Track
and
roadway
|
$ |
294
|
$ |
333
|
$ |
715
|
$ |
676
|
||||||||
Rolling
stock
|
30
|
38
|
88
|
209
|
||||||||||||
Buildings
|
11
|
8
|
32
|
13
|
||||||||||||
Information
technology
|
23
|
17
|
58
|
51
|
||||||||||||
Other
|
7
|
8
|
27
|
24
|
||||||||||||
Gross
property
additions
|
365
|
404
|
920
|
973
|
||||||||||||
Less:
capital leases
|
15
|
20
|
23
|
147
|
||||||||||||
Property
additions
|
$ |
350
|
$ |
384
|
$ |
897
|
$ |
826
|
Three
months ended September 30
|
Nine
months ended September 30
|
|||||||||||||||
In
millions
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Cash
provided
from operating activities
|
$ |
430
|
$ |
854
|
$ |
1,432
|
$ |
1,878
|
||||||||
Cash
used by
investing activities
|
(336 | ) | (378 | ) | (871 | ) | (865 | ) | ||||||||
Cash
provided
before financing activities
|
94
|
476
|
561
|
1,013
|
||||||||||||
Adjustments:
|
||||||||||||||||
Change
in
accounts receivable securitization
|
152
|
-
|
(52 | ) |
375
|
|||||||||||
Dividends
paid
|
(104 | ) | (85 | ) | (316 | ) | (257 | ) | ||||||||
Free
cash
flow
|
$ |
142
|
$ |
391
|
$ |
193
|
$ |
1,131
|
September
30,
|
2007
|
2006
|
|||||||
Debt-to-total
capitalization ratio (a)
|
36.8 | % | 36.5 | % | |||||
Add:
Present value of operating lease commitments plus
securitization
financing (b)
|
3.4 | % | 3.1 | % | |||||
Adjusted
debt-to-total capitalization ratio (c)
|
40.2 | % | 39.6 | % |
(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)
|
$ |
4,784
|
$ |
-
|
$ |
171
|
$ |
299
|
$ |
-
|
$ |
774
|
$ |
3,540
|
||||||||||||||
Interest
on
long-term debt obligations
|
5,561
|
57
|
294
|
283
|
270
|
265
|
4,392
|
|||||||||||||||||||||
Capital
lease
obligations (b)
|
1,149
|
90
|
106
|
127
|
71
|
133
|
622
|
|||||||||||||||||||||
Operating
lease obligations (c)
|
554
|
40
|
129
|
105
|
86
|
62
|
132
|
|||||||||||||||||||||
Purchase
obligations (d)
|
815
|
465
|
253
|
49
|
41
|
7
|
-
|
|||||||||||||||||||||
Other
long-term liabilities reflected on
|
||||||||||||||||||||||||||||
the
balance
sheet (e)
|
929
|
23
|
65
|
58
|
51
|
47
|
685
|
|||||||||||||||||||||
Total
obligations
|
$ |
13,792
|
$ |
675
|
$ |
1,018
|
$ |
921
|
$ |
519
|
$ |
1,288
|
$ |
9,371
|
(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 $851 million which are included in “Capital lease
obligations.”
|
(b)
|
Includes
$851 million of minimum lease payments and $298 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.
|
September
30
|
December
31
|
September
30
|
||||||||||
In
millions
|
2007
|
2006
|
2006
|
|||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||
Pension
asset
|
$ |
1,367
|
$ |
1,275
|
$ |
629
|
||||||
Pension
liability
|
199
|
195
|
159
|
|||||||||
Other
postretirement benefits liability
|
268
|
286
|
305
|
|||||||||
Provision
for
personal injury and other claims
|
500
|
602
|
647
|
|||||||||
Provision
for
environmental costs
|
109
|
131
|
131
|
|||||||||
Net
deferred
income tax provision
|
4,871
|
5,131
|
4,804
|
|||||||||
Properties
|
19,883
|
21,053
|
20,216
|
(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: October 26, 2007 | By: | /s/ Cristina Circelli | |||
Name: | Cristina Circelli | ||||
Title: | Deputy
Corporate Secretary and General Counsel |