Adjusted diluted EPS for full-year 2012 increased 16 per
cent to C$5.61
(1)
Full-year 2012 volumes and earnings highest in Company
history
MONTREAL,
Jan. 22, 2013 /PRNewswire/ - CN (TSX:
CNR) (NYSE: CNI) today reported its financial and operating results
for the fourth quarter and year ended Dec.
31, 2012.
Fourth-quarter and full-year 2012 financial
highlights
- Record fourth-quarter and full-year 2012 carloads, revenues and
revenue ton-miles.
- Fourth-quarter 2012 net income was C$610
million, or C$1.41 per diluted
share, compared with net income of C$592
million or, C$1.32 per diluted
share, for the year-earlier quarter.
- Q4-2012 diluted earnings per share (EPS) of C$1.41 increased eight per cent over year-earlier
adjusted diluted EPS of C$1.30
(adjusted net income of C$581
million), which excluded an income tax recovery.
(1)
- Full-year 2012 net income was C$2,680
million, or C$6.12 per diluted
share, compared with net income of C$2,457
million, or C$5.41 per diluted
share, for 2011.
- Full-year 2012 adjusted diluted EPS increased 16 per cent to
C$5.61, with adjusted 2012 net income
of C$2,456 million versus adjusted
net income of C$2,194 million in
2011. (1)
- Q4-2012 operating income increased 10 per cent to C$922 million, while full-year 2012 operating
income rose 12 per cent to C$3,685
million.
- Fourth-quarter 2012 operating ratio improved by 1.1 points to
63.6 per cent; full-year 2012 operating ratio was 62.9 per cent, a
0.6-point improvement.
- 2012 free cash flow totalled C$1,006
million, after voluntary pension plan contributions of
C$700 million, compared with free
cash flow of C$1,175 million for
2011. (1)
Claude Mongeau, president and
chief executive officer, said: "CN's team of railroaders delivered
impressive fourth-quarter results on the strength of a seven per
cent increase in revenues, capping a very strong 2012
performance.
"Thanks to our supply chain collaboration focus and solid
execution, CN's growth last year continued to outpace that of the
overall economy, generating the highest volumes and earnings in
Company history.
"In 2012, we experienced strong growth in commodities related to
oil and gas, particularly crude oil, and saw continued market share
gains in overseas and domestic intermodal. CN also benefited from
strong coal and petroleum coke exports, increased wheat and soybean
exports, as well as higher lumber and panels shipments to
the United States."
Foreign currency impact on results
Although CN reports its earnings in Canadian dollars, a large
portion of its revenues and expenses is denominated in U.S.
dollars. As such, the Company's results are affected by
exchange-rate fluctuations. On a constant currency basis that
excludes the impact of fluctuations in foreign currency exchange
rates, CN's fourth-quarter 2012 net income would have been higher
by C$11 million, or C$0.03 per diluted share, while its 2012 net
income would have been lower by C$14
million, or C$0.03 per diluted
share. (1)
Positive 2013 outlook, increased dividend
(2)
Mongeau said: "For 2013, CN anticipates continued gradual
improvement in the economy and further growth opportunities in
intermodal, energy and other resource markets. Despite the
challenge of an approximate C$150-million headwind related to increased
pension expense and the impact of depreciation studies, CN is
aiming for high single-digit growth in 2013 diluted earnings per
share over adjusted diluted earnings per share of C$5.61 for 2012. CN also expects to generate 2013
free cash flow in the range of C$800 million
to C$900 million, including a normalized, higher level of
cash taxes. (1)
"Given CN's strong balance sheet and its solid outlook for
earnings and free cash flow generation, I am pleased to announce
that the Company's Board of Directors has approved a 15 per cent
increase in CN's 2013 quarterly common-share dividend."
Fourth-quarter 2012 revenues, traffic volumes and
expenses
Revenues for the fourth quarter of 2012 increased by seven per cent
to C$2,534 million. Revenues
increased for coal (15 per cent), petroleum and chemicals (13 per
cent), grain and fertilizers (11 per cent), intermodal (seven per
cent), and automotive (five per cent). Revenues declined for forest
products (two per cent), and metals and minerals (one per
cent).
Carloadings for the quarter rose three per cent to 1,270
thousand.
Revenue ton-miles, measuring the relative weight and distance of
rail freight transported by CN, increased by eight per cent over
the year-earlier quarter.
Rail freight revenue per revenue ton-mile, a measurement of
yield defined as revenue earned on the movement of a ton of freight
over one mile, declined by one per cent.
Total operating expenses increased by five per cent to
C$1,612 million.
Full-year 2012 revenues, traffic volumes and expenses
2012 revenues increased 10 per cent to C$9,920 million, with all business units
registering gains: petroleum and chemicals (15 per cent), coal (15
per cent), metals and minerals (13 per cent), intermodal (11 per
cent), automotive (11 per cent), forest products (five per cent),
and grain and fertilizers (four per cent).
The rise in total revenues was largely attributable to higher
freight volumes, due in part to growth in North American and Asian
economies, and the Company's performance above market conditions in
a number of segments, as well as increased volumes in the second
quarter as a result of a labor disruption at a key competitor;
freight rate increases; the impact of a higher fuel surcharge as a
result of year-over-year increases in applicable fuel prices and
higher volumes; and the positive translation impact of the weaker
Canadian dollar on U.S. dollar-denominated revenues.
Carloadings for the year increased four per cent to 5,059
thousand.
Revenue ton-miles increased by seven per cent over 2011, while
rail freight revenue per revenue ton-mile increased by three per
cent.
Total operating expenses for 2012 increased by nine per cent to
C$6,235 million, mainly due to higher
labor and fringe benefits expense, increased purchased services and
material expense, as well as increased fuel costs.
Forward-Looking Statements
Certain information included in this news release constitutes
"forward-looking statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and under Canadian securities laws.
CN cautions that, by their nature, these forward-looking statements
involve risks, uncertainties and assumptions. The Company cautions
that its assumptions may not materialize and that current economic
conditions render such assumptions, although reasonable at the time
they were made, subject to greater uncertainty. Such
forward-looking statements are not guarantees of future performance
and involve known and unknown risks, uncertainties and other
factors which may cause the actual results or performance of the
Company or the rail industry to be materially different from the
outlook or any future results or performance implied by such
statements. To the extent that CN has provided guidance that are
non-GAAP financial measures, the Company may not be able to provide
a reconciliation to the GAAP measures, due to unknown variables and
uncertainty related to future results. Key assumptions used in
determining forward-looking information are set forth below.
Key assumptions
CN has made a number of economic and market assumptions in
preparing its 2013 outlook. The Company is forecasting that North
American industrial production for the year will increase by about
2.0 per cent. CN also expects U.S. housing starts to be in the
range of 950,000 units and U.S. motor vehicles sales to be
approximately 15 million units. In addition, CN is assuming that
2013/2014 grain crop production in both Canada and the U.S. will be in-line with their
respective five-year averages. With respect to the 2012/2013 crop,
production in Canada was slightly
above the five-year average while production in the U.S. was below
the five-year average. With these assumptions, CN assumes carload
growth of three to four per cent, along with continued pricing
improvement above inflation. CN also assumes the Canadian-U.S.
exchange rate to be around parity for 2013 and that the price of
crude oil (West Texas Intermediate) for the year to be in the range
of US$90-$100 per barrel. In 2013, CN
plans to invest approximately C$1.9
billion in capital programs, of which more than C$1 billion will be targeted on track
infrastructure to maintain a safe and fluid railway network. In
addition, the Company will invest in projects to support a number
of productivity and growth initiatives.
Important risk factors that could affect the
forward-looking statements include, but are not limited to, the
effects of general economic and business conditions, industry
competition, inflation, currency and interest rate fluctuations,
changes in fuel prices, legislative and/or regulatory developments,
compliance with environmental laws and regulations, actions by
regulators, various events which could disrupt operations,
including natural events such as severe weather, droughts, floods
and earthquakes, labor negotiations and disruptions, environmental
claims, uncertainties of investigations, proceedings or other types
of claims and litigation, risks and liabilities arising from
derailments, and other risks detailed from time to time in reports
filed by CN with securities regulators in Canada and the
United States. Reference should be made to "Management's
Discussion and Analysis" in CN's annual and interim reports, Annual
Information Form and Form 40-F filed with Canadian and U.S.
securities regulators, available on CN's website, for a summary of
major risk factors.
CN assumes no obligation to update or revise
forward-looking statements to reflect future events, changes in
circumstances, or changes in beliefs, unless required by applicable
Canadian securities laws. In the event CN does update any
forward-looking statement, no inference should be made that CN will
make additional updates with respect to that statement, related
matters, or any other forward-looking statement.
1) |
See discussion and reconciliation of non-GAAP adjusted
performance-measures in the attached supplementary schedule,
Non-GAAP Measures. |
2) |
See Forward-Looking statements for a summary of the key
assumptions and risks regarding CN's 2013 outlook. |
|
|
CN - Canadian National Railway Company and its operating railway
subsidiaries - spans Canada and
mid-America, from the Atlantic and Pacific oceans to the
Gulf of Mexico, serving the ports
of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New
Orleans, and Mobile, Ala.,
and the key metropolitan areas of Toronto, Buffalo, Chicago, Detroit, Duluth,
Minn./Superior, Wis.,
Green Bay, Wis., Minneapolis/St. Paul, Memphis, and Jackson, Miss., with connections to all points
in North America. For more
information on CN, visit the Company's website at www.cn.ca.
CANADIAN NATIONAL RAILWAY
COMPANY |
CONSOLIDATED STATEMENT OF INCOME
(U.S. GAAP) - unaudited |
(In millions, except per share
data) |
|
|
Three months ended |
|
Year ended |
|
|
December 31 |
|
December 31 |
|
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
2011 |
|
|
|
Revenues |
$ |
2,534 |
|
$ |
2,377 |
|
$ |
9,920 |
|
$ |
9,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Labor and fringe benefits |
|
463 |
|
|
511 |
|
|
1,952 |
|
|
1,812 |
|
Purchased services and material |
|
340 |
|
|
295 |
|
|
1,248 |
|
|
1,120 |
|
Fuel |
|
400 |
|
|
382 |
|
|
1,524 |
|
|
1,412 |
|
Depreciation and amortization |
|
237 |
|
|
231 |
|
|
924 |
|
|
884 |
|
Equipment rents |
|
64 |
|
|
63 |
|
|
249 |
|
|
228 |
|
Casualty and other |
|
108 |
|
|
56 |
|
|
338 |
|
|
276 |
Total operating expenses |
|
1,612 |
|
|
1,538 |
|
|
6,235 |
|
|
5,732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
922 |
|
|
839 |
|
|
3,685 |
|
|
3,296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(86) |
|
|
(85) |
|
|
(342) |
|
|
(341) |
|
|
|
|
|
|
|
|
|
|
|
|
Other income (loss) |
|
(5) |
|
|
21 |
|
|
315 |
|
|
401 |
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
831 |
|
|
775 |
|
|
3,658 |
|
|
3,356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
(221) |
|
|
(183) |
|
|
(978) |
|
|
(899) |
Net income |
$ |
610 |
|
$ |
592 |
|
$ |
2,680 |
|
$ |
2,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.42 |
|
$ |
1.33 |
|
$ |
6.15 |
|
$ |
5.45 |
|
Diluted |
$ |
1.41 |
|
$ |
1.32 |
|
$ |
6.12 |
|
$ |
5.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of
shares |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
430.3 |
|
|
444.3 |
|
|
435.6 |
|
|
451.1 |
|
Diluted |
|
432.0 |
|
|
447.3 |
|
|
437.7 |
|
|
454.4 |
These unaudited interim consolidated financial
statements, expressed in Canadian dollars, and prepared in
accordance with U.S. generally accepted accounting principles (U.S.
GAAP), contain all adjustments (consisting of normal recurring
accruals) necessary to present fairly Canadian National Railway
Company's (the Company) financial position as at December 31, 2012 and December 31, 2011, and its results of operations,
comprehensive income, changes in shareholders' equity and cash
flows for the three months and years ended December 31, 2012 and 2011. These consolidated
financial statements have been prepared using accounting policies
consistent with those used in preparing the Company's 2012 Annual
Consolidated Financial Statements and should be read in conjunction
with such statements, notes thereto and Management's Discussion and
Analysis (MD&A).
CANADIAN NATIONAL RAILWAY
COMPANY |
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME (U.S. GAAP) - unaudited |
(In millions) |
|
|
|
Three months
ended |
|
Year
ended |
|
|
|
December 31 |
|
December 31 |
|
|
|
|
2012 |
|
2011 |
|
|
2012 |
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
610 |
$ |
592 |
|
$ |
2,680 |
$ |
2,457 |
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss) |
|
|
|
|
|
|
|
|
|
|
Foreign exchange gain (loss) on: |
|
|
|
|
|
|
|
|
|
|
|
Translation of the net investment in foreign
operations |
|
71 |
|
(185) |
|
|
(128) |
|
130 |
|
|
Translation of US dollar-denominated long-term
debt designated as a hedge of the net investment in U.S.
subsidiaries |
|
(66) |
|
180 |
|
|
123 |
|
(122) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and other postretirement
benefit plans |
|
|
|
|
|
|
|
|
|
|
|
Net actuarial loss arising during the year |
|
(660) |
|
(1,541) |
|
|
(660) |
|
(1,541) |
|
|
Prior service cost arising during the year |
|
(6) |
|
(28) |
|
|
(6) |
|
(28) |
|
|
Amortization of net actuarial loss included in net
periodic benefit cost (income) |
|
27 |
|
2 |
|
|
119 |
|
8 |
|
|
Amortization of prior service cost included in net
periodic benefit cost (income) |
|
2 |
|
2 |
|
|
7 |
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments |
|
- |
|
(1) |
|
|
- |
|
(2) |
Other comprehensive loss before income
taxes |
|
(632) |
|
(1,571) |
|
|
(545) |
|
(1,551) |
Income tax recovery |
|
178 |
|
379 |
|
|
127 |
|
421 |
Other comprehensive loss |
|
(454) |
|
(1,192) |
|
|
(418) |
|
(1,130) |
Comprehensive income
(loss) |
$ |
156 |
$ |
(600) |
|
$ |
2,262 |
$ |
1,327
|
CANADIAN NATIONAL RAILWAY
COMPANY |
CONSOLIDATED BALANCE SHEET (U.S.
GAAP) - unaudited |
(In millions) |
|
December
31 |
|
December 31 |
|
|
2012 |
|
|
2011 |
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
155 |
|
$ |
101 |
|
Restricted cash and cash equivalents |
|
521 |
|
|
499 |
|
Accounts receivable |
|
831 |
|
|
820 |
|
Material and supplies |
|
230 |
|
|
201 |
|
Deferred and receivable income taxes |
|
43 |
|
|
122 |
|
Other |
|
89 |
|
|
105 |
Total current assets |
|
1,869 |
|
|
1,848 |
|
|
|
|
|
|
Properties |
|
24,541 |
|
|
23,917 |
Intangible and other assets |
|
249 |
|
|
261 |
Total assets |
$ |
26,659 |
|
$ |
26,026 |
|
|
|
|
|
|
Liabilities and shareholders'
equity |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable and other |
$ |
1,626 |
|
$ |
1,580 |
|
Current portion of long-term debt |
|
577 |
|
|
135 |
Total current liabilities |
|
2,203 |
|
|
1,715 |
|
|
|
|
|
|
Deferred income taxes |
|
5,555 |
|
|
5,333 |
Pension and other
postretirement benefits, net of current portion |
|
784 |
|
|
1,095 |
Other liabilities and deferred
credits |
|
776 |
|
|
762 |
Long-term debt |
|
6,323 |
|
|
6,441 |
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
Common shares |
|
4,108 |
|
|
4,141 |
|
Accumulated other comprehensive loss |
|
(3,257) |
|
|
(2,839) |
|
Retained earnings |
|
10,167 |
|
|
9,378 |
Total shareholders' equity |
|
11,018 |
|
|
10,680 |
Total liabilities and shareholders'
equity |
$ |
26,659 |
|
$ |
26,026 |
These unaudited interim consolidated financial
statements, expressed in Canadian dollars, and prepared in
accordance with U.S. GAAP, contain all adjustments (consisting of
normal recurring accruals) necessary to present fairly the
Company's financial position as at December
31, 2012 and December 31,
2011, and its results of operations, comprehensive income,
changes in shareholders' equity and cash flows for the three months
and years ended December 31, 2012 and
2011. These consolidated financial statements have been prepared
using accounting policies consistent with those used in preparing
the Company's 2012 Annual Consolidated Financial Statements and
should be read in conjunction with such statements, notes thereto
and MD&A.
CANADIAN NATIONAL RAILWAY
COMPANY |
CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY (U.S. GAAP) - unaudited |
(In millions) |
|
Three months ended |
|
Year ended |
|
December 31 |
|
December 31 |
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
2011 |
|
|
|
Common shares
(1) |
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
$ |
4,120 |
|
$ |
4,149 |
|
$ |
4,141 |
|
$ |
4,252 |
|
Stock options exercised and other |
|
23 |
|
|
24 |
|
|
128 |
|
|
74 |
|
Share repurchase programs |
|
(35) |
|
|
(32) |
|
|
(161) |
|
|
(185) |
Balance, end of period |
$ |
4,108 |
|
$ |
4,141 |
|
$ |
4,108 |
|
$ |
4,141 |
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive
loss |
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
$ |
(2,803) |
|
$ |
(1,647) |
|
$ |
(2,839) |
|
$ |
(1,709) |
|
Other comprehensive loss |
|
(454) |
|
|
(1,192) |
|
|
(418) |
|
|
(1,130) |
Balance, end of period |
$ |
(3,257) |
|
$ |
(2,839) |
|
$ |
(3,257) |
|
$ |
(2,839) |
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings |
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
$ |
9,988 |
|
$ |
9,154 |
|
$ |
9,378 |
|
$ |
8,741 |
|
Net income |
|
610 |
|
|
592 |
|
|
2,680 |
|
|
2,457 |
|
Share repurchase programs |
|
(270) |
|
|
(224) |
|
|
(1,239) |
|
|
(1,235) |
|
Dividends |
|
(161) |
|
|
(144) |
|
|
(652) |
|
|
(585) |
Balance, end of period |
$ |
10,167 |
|
$ |
9,378 |
|
$ |
10,167 |
|
$ |
9,378 |
(1) |
During the three months and year ended December 31, 2012,
the Company issued 0.5 million and 3.2 million common shares,
respectively, as a result of stock options exercised and
repurchased 3.6 million and 16.9 million common shares,
respectively, under its share repurchase programs. At December 31,
2012, the Company had 428.4 million common shares
outstanding.
|
CANADIAN NATIONAL RAILWAY
COMPANY |
CONSOLIDATED STATEMENT OF CASH
FLOWS (U.S. GAAP) - unaudited |
(In millions) |
|
Three months
ended |
|
Year
ended |
|
December 31 |
|
December 31 |
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
2011 |
|
|
|
Operating
activities |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
610 |
|
$ |
592 |
|
$ |
2,680 |
|
$ |
2,457 |
Adjustments to reconcile net income to
net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
237 |
|
|
231 |
|
|
924 |
|
|
884 |
|
Deferred income taxes |
|
120 |
|
|
204 |
|
|
451 |
|
|
531 |
|
Gain on disposal of property |
|
- |
|
|
- |
|
|
(281) |
|
|
(348) |
Changes in operating assets and
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
17 |
|
|
(34) |
|
|
(20) |
|
|
(51) |
|
Material and supplies |
|
43 |
|
|
70 |
|
|
(30) |
|
|
11 |
|
Accounts payable and other |
|
(11) |
|
|
(68) |
|
|
129 |
|
|
34 |
|
Other current assets |
|
(7) |
|
|
(11) |
|
|
(13) |
|
|
(2) |
Pensions and other, net |
|
(285) |
|
|
(393) |
|
|
(780) |
|
|
(540) |
Net cash provided by operating
activities |
|
724 |
|
|
591 |
|
|
3,060 |
|
|
2,976 |
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
|
|
|
|
|
Property additions |
|
(610) |
|
|
(613) |
|
|
(1,731) |
|
|
(1,625) |
Disposal of property |
|
- |
|
|
- |
|
|
311 |
|
|
369 |
Change in restricted cash and cash
equivalents |
|
(3) |
|
|
(10) |
|
|
(22) |
|
|
(499) |
Other, net |
|
16 |
|
|
4 |
|
|
21 |
|
|
26 |
Net cash used in investing
activities |
|
(597) |
|
|
(619) |
|
|
(1,421) |
|
|
(1,729) |
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
|
|
|
|
|
|
Issuance of debt |
|
493 |
|
|
1,165 |
|
|
2,354 |
|
|
1,361 |
Repayment of debt |
|
(195) |
|
|
(858) |
|
|
(2,001) |
|
|
(1,083) |
Issuance of common
shares due to exercise of stock options and related excess tax
benefits realized |
|
20 |
|
|
21 |
|
|
117 |
|
|
77 |
Repurchase of common shares |
|
(305) |
|
|
(256) |
|
|
(1,400) |
|
|
(1,420) |
Dividends paid |
|
(161) |
|
|
(144) |
|
|
(652) |
|
|
(585) |
Net cash used in financing
activities |
|
(148) |
|
|
(72) |
|
|
(1,582) |
|
|
(1,650) |
Effect of foreign
exchange fluctuations on US dollar-denominated cash and cash
equivalents |
|
1 |
|
|
9 |
|
|
(3) |
|
|
14 |
Net increase (decrease) in cash and
cash equivalents |
|
(20) |
|
|
(91) |
|
|
54 |
|
|
(389) |
Cash and cash equivalents, beginning
of period |
|
175 |
|
|
192 |
|
|
101 |
|
|
490 |
Cash and cash equivalents, end of
period |
$ |
155 |
|
$ |
101 |
|
$ |
155 |
|
$ |
101 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow
information |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash receipts from customers and
other |
$ |
2,481 |
|
$ |
2,336 |
|
$ |
9,877 |
|
$ |
8,995 |
|
Net cash payments for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee services, suppliers and other
expenses |
|
(1,239) |
|
|
(1,092) |
|
|
(5,241) |
|
|
(4,643) |
|
|
Interest |
|
(89) |
|
|
(80) |
|
|
(364) |
|
|
(329) |
|
|
Personal injury and other claims |
|
(22) |
|
|
(49) |
|
|
(79) |
|
|
(97) |
|
|
Pensions |
|
(257) |
|
|
(365) |
|
|
(844) |
|
|
(468) |
|
|
Income taxes |
|
(150) |
|
|
(159) |
|
|
(289) |
|
|
(482) |
Net cash provided by operating
activities |
$ |
724 |
|
$ |
591 |
|
$ |
3,060 |
|
$ |
2,976 |
CANADIAN NATIONAL
RAILWAY COMPANY |
SELECTED RAILROAD
STATISTICS (U.S. GAAP) - unaudited |
|
|
|
|
|
|
|
|
Three months
ended |
|
Year
ended |
|
December 31 |
|
December 31 |
|
2012 |
2011 |
|
2012 |
|
2011 |
|
|
Statistical operating data |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rail freight revenues ($ millions) |
2,280 |
2,132 |
|
8,938 |
|
8,111 |
Gross ton miles (GTM) (millions) |
97,873 |
92,128 |
|
383,754 |
|
357,927 |
Revenue ton miles (RTM) (millions) |
52,124 |
48,156 |
|
201,496 |
|
187,753 |
Carloads (thousands) |
1,270 |
1,232 |
|
5,059 |
|
4,873 |
Route miles (includes Canada and the U.S.)
(1) |
20,100 |
20,000 |
|
20,100 |
|
20,000 |
Employees (end of period) |
23,430 |
23,339 |
|
23,430 |
|
23,339 |
Employees (average for the period) |
23,532 |
23,433 |
|
23,466 |
|
23,079 |
|
|
|
|
|
|
|
Productivity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating ratio (%) |
63.6 |
64.7 |
|
62.9 |
|
63.5 |
Rail freight revenue per RTM (cents) |
4.37 |
4.43 |
|
4.44 |
|
4.32 |
Rail freight revenue per carload ($) |
1,795 |
1,731 |
|
1,767 |
|
1,664 |
Operating expenses per GTM (cents) |
1.65 |
1.67 |
|
1.62 |
|
1.60 |
Labor and fringe benefits expense per GTM
(cents) |
0.47 |
0.55 |
|
0.51 |
|
0.51 |
GTMs per average number of employees
(thousands) |
4,159 |
3,932 |
|
16,354 |
|
15,509 |
Diesel fuel consumed (US gallons in millions) |
99.9 |
94.3 |
|
388.7 |
|
367.7 |
Average fuel price ($/US gallon) |
3.53 |
3.55 |
|
3.47 |
|
3.39 |
GTMs per US gallon of fuel consumed |
980 |
977 |
|
987 |
|
973 |
|
|
|
|
|
|
|
Safety indicators |
|
|
|
|
|
|
|
|
|
|
|
|
|
Injury frequency rate per 200,000 person hours
(2) |
1.34 |
1.32 |
|
1.31 |
|
1.55 |
Accident rate per million train miles
(2) |
1.77 |
1.96 |
|
2.10 |
|
2.25 |
|
|
|
|
|
|
|
Financial ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt-to-total capitalization ratio (% at end of
period) (3) |
38.5 |
38.1 |
|
38.5 |
|
38.1 |
(1) |
Rounded to the nearest hundred miles. |
(2) |
Based on Federal Railroad Administration (FRA)
reporting criteria. |
(3) |
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. |
Certain of the 2011 comparative figures have been restated to
conform with the 2012 presentation. Such statistical data and
related productivity measures are based on estimated data available
at such time and are subject to change as more complete information
becomes available.
CANADIAN NATIONAL RAILWAY COMPANY |
SUPPLEMENTARY INFORMATION (U.S.
GAAP) - unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31 |
|
Year ended December 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2012 |
2011 |
% Change
Fav (Unfav) |
|
% Change at
constant
currency
Fav (Unfav) (1) |
|
2012 |
2011 |
% Change
Fav (Unfav) |
|
% Change at
constant
currency
Fav (Unfav) (1) |
|
|
Revenues (millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
Petroleum and chemicals |
427 |
377 |
13% |
|
16% |
|
1,640 |
1,420 |
15% |
|
15% |
Metals and minerals |
274 |
278 |
(1%) |
|
1% |
|
1,133 |
1,006 |
13% |
|
12% |
Forest products |
323 |
329 |
(2%) |
|
- |
|
1,331 |
1,270 |
5% |
|
4% |
Coal |
171 |
149 |
15% |
|
17% |
|
712 |
618 |
15% |
|
15% |
Grain and fertilizers |
459 |
413 |
11% |
|
13% |
|
1,590 |
1,523 |
4% |
|
4% |
Intermodal |
498 |
464 |
7% |
|
8% |
|
1,994 |
1,790 |
11% |
|
11% |
Automotive |
128 |
122 |
5% |
|
7% |
|
538 |
484 |
11% |
|
10% |
Total rail freight revenues |
2,280 |
2,132 |
7% |
|
9% |
|
8,938 |
8,111 |
10% |
|
10% |
Other revenues |
254 |
245 |
4% |
|
5% |
|
982 |
917 |
7% |
|
6% |
Total revenues |
2,534 |
2,377 |
7% |
|
8% |
|
9,920 |
9,028 |
10% |
|
9% |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue ton miles (millions) |
|
|
|
|
|
|
|
|
|
|
|
Petroleum and chemicals |
10,154 |
8,532 |
19% |
|
19% |
|
37,449 |
32,962 |
14% |
|
14% |
Metals and minerals |
5,000 |
5,119 |
(2%) |
|
(2%) |
|
20,236 |
18,899 |
7% |
|
7% |
Forest products |
7,141 |
7,345 |
(3%) |
|
(3%) |
|
29,674 |
29,336 |
1% |
|
1% |
Coal |
5,754 |
4,685 |
23% |
|
23% |
|
23,570 |
19,980 |
18% |
|
18% |
Grain and fertilizers |
12,826 |
11,900 |
8% |
|
8% |
|
45,417 |
45,468 |
- |
|
- |
Intermodal |
10,614 |
9,950 |
7% |
|
7% |
|
42,396 |
38,563 |
10% |
|
10% |
Automotive |
635 |
625 |
2% |
|
2% |
|
2,754 |
2,545 |
8% |
|
8% |
|
52,124 |
48,156 |
8% |
|
8% |
|
201,496 |
187,753 |
7% |
|
7% |
Rail freight revenue / RTM
(cents) |
|
|
|
|
|
|
|
|
|
|
|
Total rail freight revenue per RTM |
4.37 |
4.43 |
(1%) |
|
- |
|
4.44 |
4.32 |
3% |
|
2% |
Commodity groups: |
|
|
|
|
|
|
|
|
|
|
|
Petroleum and chemicals |
4.21 |
4.42 |
(5%) |
|
(3%) |
|
4.38 |
4.31 |
2% |
|
1% |
Metals and minerals |
5.48 |
5.43 |
1% |
|
3% |
|
5.60 |
5.32 |
5% |
|
4% |
Forest products |
4.52 |
4.48 |
1% |
|
3% |
|
4.49 |
4.33 |
4% |
|
3% |
Coal |
2.97 |
3.18 |
(7%) |
|
(5%) |
|
3.02 |
3.09 |
(2%) |
|
(3%) |
Grain and fertilizers |
3.58 |
3.47 |
3% |
|
5% |
|
3.50 |
3.35 |
4% |
|
4% |
Intermodal |
4.69 |
4.66 |
1% |
|
2% |
|
4.70 |
4.64 |
1% |
|
1% |
Automotive |
20.16 |
19.52 |
3% |
|
6% |
|
19.54 |
19.02 |
3% |
|
2% |
|
|
|
|
|
|
|
|
|
|
|
|
Carloads (thousands) |
|
|
|
|
|
|
|
|
|
|
|
Petroleum and chemicals |
150 |
139 |
8% |
|
8% |
|
594 |
560 |
6% |
|
6% |
Metals and minerals |
246 |
261 |
(6%) |
|
(6%) |
|
1,024 |
1,013 |
1% |
|
1% |
Forest products |
109 |
109 |
- |
|
- |
|
445 |
443 |
- |
|
- |
Coal |
103 |
110 |
(6%) |
|
(6%) |
|
435 |
464 |
(6%) |
|
(6%) |
Grain and fertilizers |
171 |
152 |
13% |
|
13% |
|
597 |
592 |
1% |
|
1% |
Intermodal |
437 |
408 |
7% |
|
7% |
|
1,742 |
1,584 |
10% |
|
10% |
Automotive |
54 |
53 |
2% |
|
2% |
|
222 |
217 |
2% |
|
2% |
|
1,270 |
1,232 |
3% |
|
3% |
|
5,059 |
4,873 |
4% |
|
4% |
Rail freight revenue / carload
(dollars) |
|
|
|
|
|
|
|
|
|
|
|
Total rail freight revenue per carload |
1,795 |
1,731 |
4% |
|
6% |
|
1,767 |
1,664 |
6% |
|
6% |
Commodity groups: |
|
|
|
|
|
|
|
|
|
|
|
Petroleum and chemicals |
2,847 |
2,712 |
5% |
|
7% |
|
2,761 |
2,536 |
9% |
|
8% |
Metals and minerals |
1,114 |
1,065 |
5% |
|
7% |
|
1,106 |
993 |
11% |
|
10% |
Forest products |
2,963 |
3,018 |
(2%) |
|
- |
|
2,991 |
2,867 |
4% |
|
4% |
Coal |
1,660 |
1,355 |
23% |
|
25% |
|
1,637 |
1,332 |
23% |
|
22% |
Grain and fertilizers |
2,684 |
2,717 |
(1%) |
|
1% |
|
2,663 |
2,573 |
3% |
|
3% |
Intermodal |
1,140 |
1,137 |
- |
|
1% |
|
1,145 |
1,130 |
1% |
|
1% |
Automotive |
2,370 |
2,302 |
3% |
|
5% |
|
2,423 |
2,230 |
9% |
|
8% |
(1) See supplementary schedule
entitled Non-GAAP Measures for an explanation of this Non-GAAP
measure.
|
Such statistical data and related productivity
measures are based on estimated data available at such time and are
subject to change as more complete information becomes
available.
CANADIAN NATIONAL RAILWAY COMPANY |
NON-GAAP MEASURES - unaudited |
Adjusted performance measures
For the three months and year ended December 31, 2012, the Company reported adjusted
net income of $610 million, or
$1.41 per diluted share and
$2,456 million, or $5.61 per diluted share, respectively. The
adjusted figures for the year ended December
31, 2012 exclude a gain on disposal of a segment of the
Bala and a segment of the
Oakville subdivisions, together
with the rail fixtures and certain passenger agreements, of
$281 million, or $252 million after-tax ($0.57 per diluted share); and a net income tax
expense of $28 million ($0.06 per diluted share) consisting of a
$35 million income tax expense
resulting from the enactment of higher provincial corporate income
tax rates that was partly offset by a $7
million income tax recovery resulting from the
recapitalization of a foreign investment.
For the three months and year ended December 31, 2011, the Company reported adjusted
net income of $581 million, or
$1.30 per diluted share and
$2,194 million, or $4.84 per diluted share, respectively. The
adjusted figures for the three months and year ended December 31, 2011 exclude an income tax recovery
of $11 million ($0.02 per diluted share) relating to certain fuel
costs attributed to various wholly owned subsidiaries in prior
periods. The adjusted figures for the year ended December 31, 2011 also exclude a net income tax
expense of $40 million ($0.08 per diluted share) resulting from the
enactment of state corporate income tax rate changes and other
legislated state tax revisions; a gain on disposal of a segment of
the Company's Kingston
subdivision, together with the rail fixtures and certain passenger
agreements, of $288 million, or
$254 million after-tax ($0.55 per diluted share); and a gain on disposal
of substantially all of the assets of IC RailMarine Terminal
Company of $60 million, or
$38 million after-tax ($0.08 per diluted share).
Management believes that adjusted net income and
adjusted earnings per share are useful measures of performance that
can facilitate period-to-period comparisons, as they exclude items
that do not necessarily arise as part of the normal day-to-day
operations of the Company and could distort the analysis of trends
in business performance. The exclusion of such items in adjusted
net income and adjusted earnings per share does not, however, imply
that such items are necessarily non-recurring. These adjusted
measures do not have any standardized meaning prescribed by GAAP
and may, therefore, not be comparable to similar measures presented
by other companies. The reader is advised to read all information
provided in the Company's 2012 Annual Consolidated Financial
Statements, Notes thereto and Management's Discussion and Analysis
(MD&A). The following tables provide a reconciliation of net
income and earnings per share, as reported for the three months and
year ended December 31, 2012 and
2011, to the adjusted performance measures presented herein.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Year ended |
|
December 31, 2012 |
|
December 31, 2012 |
In millions, except per share data |
|
Reported |
|
Adjustments |
|
Adjusted |
|
|
Reported |
|
Adjustments |
|
Adjusted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
2,534 |
$ |
- |
$ |
2,534 |
|
$ |
9,920 |
$ |
- |
$ |
9,920 |
Operating expenses |
|
1,612 |
|
- |
|
1,612 |
|
|
6,235 |
|
- |
|
6,235 |
Operating income |
|
922 |
|
- |
|
922 |
|
|
3,685 |
|
- |
|
3,685 |
Interest expense |
|
(86) |
|
- |
|
(86) |
|
|
(342) |
|
- |
|
(342) |
Other income (loss) |
|
(5) |
|
- |
|
(5) |
|
|
315 |
|
(281) |
|
34 |
Income before income taxes |
|
831 |
|
- |
|
831 |
|
|
3,658 |
|
(281) |
|
3,377 |
Income tax expense |
|
(221) |
|
- |
|
(221) |
|
|
(978) |
|
57 |
|
(921) |
Net income |
$ |
610 |
$ |
- |
$ |
610 |
|
$ |
2,680 |
$ |
(224) |
$ |
2,456 |
Operating ratio |
|
63.6% |
|
|
|
63.6% |
|
|
62.9% |
|
|
|
62.9% |
Effective tax rate |
|
26.6% |
|
|
|
26.6% |
|
|
26.7% |
|
|
|
27.3% |
Basic earnings per share |
$ |
1.42 |
$ |
- |
$ |
1.42 |
|
$ |
6.15 |
$ |
(0.51) |
$ |
5.64 |
Diluted earnings per share |
$ |
1.41 |
$ |
- |
$ |
1.41 |
|
$ |
6.12 |
$ |
(0.51) |
$ |
5.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Year ended |
|
December 31, 2011 |
|
December 31, 2011 |
In millions, except per share data |
|
Reported |
|
Adjustments |
|
Adjusted |
|
|
Reported |
|
Adjustments |
|
Adjusted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
2,377 |
$ |
- |
$ |
2,377 |
|
$ |
9,028 |
$ |
- |
$ |
9,028 |
Operating expenses |
|
1,538 |
|
- |
|
1,538 |
|
|
5,732 |
|
- |
|
5,732 |
Operating income |
|
839 |
|
- |
|
839 |
|
|
3,296 |
|
- |
|
3,296 |
Interest expense |
|
(85) |
|
- |
|
(85) |
|
|
(341) |
|
- |
|
(341) |
Other income |
|
21 |
|
- |
|
21 |
|
|
401 |
|
(348) |
|
53 |
Income before income taxes |
|
775 |
|
- |
|
775 |
|
|
3,356 |
|
(348) |
|
3,008 |
Income tax expense |
|
(183) |
|
(11) |
|
(194) |
|
|
(899) |
|
85 |
|
(814) |
Net income |
$ |
592 |
$ |
(11) |
$ |
581 |
|
$ |
2,457 |
$ |
(263) |
$ |
2,194 |
Operating ratio |
|
64.7% |
|
|
|
64.7% |
|
|
63.5% |
|
|
|
63.5% |
Effective tax rate |
|
23.6% |
|
|
|
25.0% |
|
|
26.8% |
|
|
|
27.1% |
Basic earnings per share |
$ |
1.33 |
$ |
(0.02) |
$ |
1.31 |
|
$ |
5.45 |
$ |
(0.57) |
$ |
4.88 |
Diluted earnings per share |
$ |
1.32 |
$ |
(0.02) |
$ |
1.30 |
|
$ |
5.41 |
$ |
(0.57) |
$ |
4.84 |
Constant currency
Although CN conducts its business and reports
its earnings in Canadian dollars, a large portion of revenues and
expenses is denominated in US dollars. As such, the Company's
results are affected by exchange-rate fluctuations.
Financial results at "constant currency" allow
results to be viewed without the impact of fluctuations in foreign
currency exchange rates, thereby facilitating period-to-period
comparisons in the analysis of trends in business performance.
Measures at constant currency are considered non-GAAP measures and
do not have any standardized meaning prescribed by GAAP and may,
therefore, not be comparable to similar measures presented by other
companies. Financial results at constant currency are obtained by
translating the current period results denominated in US dollars at
the foreign exchange rates of the comparable period of the prior
year. The average foreign exchange rates were $0.99 and $1.00 per
US$1.00, respectively, for the three
months and year ended December 31,
2012, and $1.02 and
$0.99 per US$1.00, respectively, for the three months and
year ended December 31, 2011.
On a constant currency basis, the Company's 2012
fourth quarter net income would have been higher by $11 million, or $0.03 per diluted share, and the 2012
twelve-month net income would have been lower by $14 million, or $0.03 per diluted share, respectively. The
following table presents a reconciliation of 2012 net income as
reported to net income on a constant currency basis:
|
|
|
|
|
|
|
|
Three months
ended |
Year
ended |
In millions |
December 31,
2012 |
December 31,
2012 |
|
|
|
|
Net income, as reported |
$ |
610 |
$ |
2,680 |
|
|
|
|
|
|
Add back: |
|
|
|
|
|
Negative (positive) impact due to the
strengthening (weakening) Canadian dollar included in net
income |
|
9 |
|
(11) |
Add: |
|
|
|
|
|
Increase (decrease) due to the strengthening
(weakening) Canadian dollar on additional year-over-year US$ net
income |
|
2 |
|
(3) |
Impact of foreign exchange using
constant currency rates |
|
11 |
|
(14) |
Net income, on a constant currency
basis |
$ |
621 |
$ |
2,666 |
Free cash flow
The Company utilized $30
million and generated $1,006
million of free cash flow for the three months and year
ended December 31, 2012,
respectively, compared to utilized $153
million and generated $1,175
million for the same periods in 2011, respectively. Free
cash flow does not have any standardized meaning prescribed by GAAP
and may, therefore, not be comparable to similar measures presented
by other companies. The Company believes that free cash flow is a
useful measure of performance as it demonstrates the Company's
ability to generate cash after the payment of capital expenditures
and dividends. The Company defines free cash flow as the sum of net
cash provided by operating activities, adjusted for changes in cash
and cash equivalents resulting from foreign exchange fluctuations;
and net cash used in investing activities, adjusted for changes in
restricted cash and cash equivalents, if any, the impact of major
acquisitions, if any; and the payment of dividends, calculated as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
|
Year ended |
|
|
December 31 |
|
December 31 |
In
millions |
|
|
2012 |
|
|
2011 |
|
|
2012 |
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities |
|
$ |
724 |
|
$ |
591 |
|
$ |
3,060 |
|
$ |
2,976 |
Net cash used in investing
activities |
|
|
(597) |
|
|
(619) |
|
|
(1,421) |
|
|
(1,729) |
Net cash provided (utilized) before
financing activities |
|
|
127 |
|
|
(28) |
|
|
1,639 |
|
|
1,247 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
|
|
(161) |
|
|
(144) |
|
|
(652) |
|
|
(585) |
|
Change in restricted cash and cash
equivalents |
|
|
3 |
|
|
10 |
|
|
22 |
|
|
499 |
|
Effect of foreign exchange
fluctuations on US dollar-denominated cash and cash
equivalents |
|
|
1 |
|
|
9 |
|
|
(3) |
|
|
14 |
Free cash flow |
|
$ |
(30) |
|
$ |
(153) |
|
$ |
1,006 |
|
$ |
1,175 |
SOURCE CN