Adjusted diluted EPS for full-year 2013 increased nine per
cent to C$3.06 (1)
Full-year 2013 volumes and revenues set Company
records
MONTREAL,
Jan. 30, 2014 /CNW Telbec/ - CN (TSX:
CNR) (NYSE: CNI) today reported its financial and operating results
for the fourth quarter and year ended Dec.
31, 2013.
Fourth-quarter and full-year 2013 financial
highlights
- Fourth-quarter 2013 net income was C$635
million, or C$0.76 per diluted
share, compared with net income of C$610
million or, C$0.71 per diluted
share, for the year-earlier quarter.
- Full-year 2013 net income was C$2,612
million, or C$3.09 per diluted
share, compared with net income of C$2,680
million, or C$3.06 per diluted
share, for 2012.
- Full-year 2013 adjusted diluted EPS increased nine per cent to
C$3.06, with adjusted 2013 net income
of C$2,582 million versus adjusted
net income of C$2,456 million in
2012. (1)
- Q4-2013 operating income increased five per cent to
C$967 million, and full-year 2013
operating income also rose five per cent to C$3,873 million.
- Fourth-quarter 2013 operating ratio increased by 1.2 points to
64.8 per cent; full-year 2013 operating ratio was 63.4 per cent,
compared with 62.9 per cent for 2012.
- 2013 free cash flow totalled C$1,623
million, compared with free cash flow of C$1,661 million for 2012. (1)
Claude Mongeau,
president and chief executive officer, said: "CN's agenda of
Operational and Service Excellence delivered record volumes and
revenues in 2013. Key operating and service metrics remained solid,
and we continued to drive incremental improvement in our broad
safety record. CN reduced its accident rate per million train miles
by nine per cent in 2013, the latest sign of long-term gains in
safety. In the past 10 years, CN's main-track accidents have
declined by more than 50 per cent despite increased freight
volumes.
"CN sees good opportunities in 2014 in a number
of markets, including intermodal, oil-and-gas-related commodities,
Canadian and U.S. grain, and commodities related to the recovery in
the U.S. housing market. With continued supply chain collaboration
and solid execution, the CN team is focused on safely and
efficiently growing the Company's business at low incremental cost
and at a pace faster than the overall economy."
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 net income for the quarter and year ended Dec. 31, 2013, would have been lower by
C$19 million, or C$0.02 per diluted share, and C$37 million, or C$0.04 per diluted share, respectively.
(1)
Positive 2014 outlook, increased dividend
(2)
Mongeau said: "CN's 2014 outlook remains consistent with the 2014
financial guidance that we announced on Dec.
10, 2013. CN is aiming to deliver double-digit EPS growth in
2014 over adjusted diluted 2013 EPS of C$3.06, as well as 2014 free cash flow in the
range of C$1.6 billion to C$1.7
billion. CN is also planning for 2014 capital expenditures
of approximately C$2.1 billion,
compared with C$2.0 billion in 2013.
(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 16
per cent increase in CN's 2014 quarterly common-share
dividend."
Fourth-quarter 2013 revenues, traffic volumes
and expenses
Revenues for the fourth quarter of 2013 increased by eight per cent
to C$2,745 million. Revenues
increased for petroleum and chemicals (22 per cent), metals and
minerals (12 per cent), forest products (11 per cent), intermodal
(11 per cent), automotive (four per cent), and grain and
fertilizers (two per cent). Coal revenues declined by nine per
cent.
The increase in revenues was mainly attributable
to higher freight volumes due to strong energy markets, market
share gains, as well as growth in the North American economy; the
positive translation impact of the weaker Canadian dollar on
U.S.-dollar-denominated revenues; freight rate increases; and the
impact of a higher fuel surcharge, as a result of higher volumes
and year-over-year increases in applicable fuel prices.
Carloadings for the quarter rose three per cent
to 1,310 thousand.
Revenue ton-miles, measuring the relative weight
and distance of rail freight transported by CN, increased by five
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, increased by
four per cent.
Operating expenses for the quarter increased by
10 per cent to C$1,778 million. The
increase was primarily due to higher labor and fringe benefits
expense as a result of increased pension expense and higher
incentive compensation; the negative translation impact of the
weaker Canadian dollar on U.S.-dollar-denominated expenses; and
increased purchased services and material expense, in part due to
weather-related conditions. These factors were partly offset by
lower casualty and other expense.
The fourth-quarter 2013 operating ratio was 64.8
per cent, compared with 63.6 per cent for the year-earlier
quarter.
Full-year 2013 revenues, traffic volumes and
expenses
2013 revenues increased seven per cent to C$10,575 million. Revenues increased for
petroleum and chemicals (18 per cent), intermodal (nine per cent),
metals and minerals (seven per cent), forest products (six per
cent), automotive (two per cent), and grain and fertilizers (one
per cent). Coal revenues declined by three per cent.
The rise in total revenues was largely due to
freight rate increases; higher freight volumes due to strong energy
markets, market share gains, as well as growth in the North
American economy; the positive translation impact of the weaker
Canadian dollar on U.S.-dollar-denominated revenues; and the impact
of a higher fuel surcharge, mainly as a result of higher
volumes.
Carloadings for the year increased three per
cent to 5,190 thousand.
Revenue ton-miles increased by four per cent
over 2012, while rail freight revenue per revenue ton-mile
increased by three per cent.
Operating expenses for 2013 increased by seven
per cent to C$6,702 million, mainly
due to higher labor and fringe benefits expense; the negative
translation impact of the weaker Canadian dollar on
U.S.-dollar-denominated expenses; and increased purchased services
and material expense, in part due to weather-related conditions.
These factors were partly offset by lower casualty and other
expense.
The operating ratio was 63.4 per cent in 2013,
compared with 62.9 per cent in 2012.
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.
2014 key assumptions
CN has made a number of economic and market assumptions in
preparing its 2014 outlook. The Company is forecasting that North
American industrial production for the year will increase by about
three per cent. CN also expects U.S. housing starts to be in the
range of 1.1 million units and U.S. motor vehicles sales to be
approximately 16 million units. In addition, CN is assuming a U.S.
2013/2014 grain crop above the five-year average, a Canadian
2013/2014 grain crop well above the five-year average, and
2014/2015 grain crops in both countries in-line with the five-year
average. With these assumptions, CN assumes mid-single digit
carload growth, along with continued pricing improvement above
inflation. CN also assumes a Canadian-U.S. exchange rate of
approximately C$0.95 and the price of
crude oil (West Texas
Intermediate) to be in the range of US$95-$105 per barrel. In 2014, CN plans to
invest approximately C$2.1 billion on
capital programs, of which more than C$1.2
billion is targeted toward track infrastructure to continue
operating a safe railway and improve the productivity and fluidity
of the network. The capital programs include funds for 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. |
|
|
Starting with the fourth quarter of 2013, the Company has
redefined its free cash flow measure as the difference between net
cash provided by operating activities and net cash used in
investing activities; adjusted for changes in restricted cash and
cash equivalents, and the impact of major acquisitions, if any. The
Company believes that free cash flow, as redefined, is a better
measure of its available cash for debt obligations and for
discretionary uses such as payment of dividends and strategic
opportunities. The results for 2013 using the Company's prior
measure would translate into free cash flow after dividends and
other adjustments of C$918 million, compared with C$1,006 million
in 2012. |
|
2) |
See Forward-Looking statements for a
summary of the key assumptions and risks regarding CN's 2014
outlook. |
CN is a true backbone of the economy,
transporting approximately C$250
billion worth of goods annually for a wide range of business
sectors, ranging from resource products to manufactured products to
consumer goods, across a rail network spanning Canada and mid-America. CN - Canadian National
Railway Company, along with its operating railway subsidiaries --
serves the cities and ports of Vancouver, Prince
Rupert, B.C., Montreal,
Halifax, New Orleans, and Mobile, Ala., and the metropolitan areas of
Toronto, Edmonton, Winnipeg, Calgary, Chicago, Memphis, Detroit, Duluth,
Minn./Superior, Wis., 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 |
|
|
|
2013 |
|
2012 |
|
|
2013 |
|
2012 |
|
|
|
Revenues |
$ |
2,745 |
$ |
2,534 |
|
$ |
10,575 |
$ |
9,920 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
Labor and fringe benefits |
|
594 |
|
463 |
|
|
2,182 |
|
1,952 |
|
Purchased services and material |
|
364 |
|
340 |
|
|
1,351 |
|
1,248 |
|
Fuel |
|
422 |
|
400 |
|
|
1,619 |
|
1,524 |
|
Depreciation and amortization |
|
254 |
|
237 |
|
|
980 |
|
924 |
|
Equipment rents |
|
71 |
|
64 |
|
|
275 |
|
249 |
|
Casualty and other |
|
73 |
|
108 |
|
|
295 |
|
338 |
Total operating expenses |
|
1,778 |
|
1,612 |
|
|
6,702 |
|
6,235 |
Operating income |
|
967 |
|
922 |
|
|
3,873 |
|
3,685 |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(91) |
|
(86) |
|
|
(357) |
|
(342) |
|
|
|
|
|
|
|
|
|
|
|
Other income (loss) |
|
(2) |
|
(5) |
|
|
73 |
|
315 |
Income before income taxes |
|
874 |
|
831 |
|
|
3,589 |
|
3,658 |
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
(239) |
|
(221) |
|
|
(977) |
|
(978) |
Net income |
$ |
635 |
$ |
610 |
|
$ |
2,612 |
$ |
2,680 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
(1) |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.76 |
$ |
0.71 |
|
$ |
3.10 |
$ |
3.08 |
|
Diluted |
$ |
0.76 |
$ |
0.71 |
|
$ |
3.09 |
$ |
3.06 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares (1) |
|
|
|
|
|
|
|
|
|
|
Basic |
|
833.8 |
|
860.5 |
|
|
843.1 |
|
871.1 |
|
Diluted |
|
837.1 |
|
863.9 |
|
|
846.1 |
|
875.4 |
(1) |
On October 22, 2013, the Board of
Directors of the Company approved a two-for-one common stock split
in the form of a stock dividend of one additional common share of
CN for each share outstanding, which was paid on November 29, 2013,
to shareholders of record on November 15, 2013. All share and per
share data presented herein reflect the impact of the stock
split. |
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, 2013 and December 31, 2012, and its results of operations,
comprehensive income, changes in shareholders' equity and cash
flows for the three months and years ended December 31, 2013 and 2012. These consolidated
financial statements have been prepared using accounting policies
consistent with those used in preparing the Company's 2013 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 |
|
|
2013 |
|
2012 |
|
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
635 |
$ |
610 |
|
$ |
2,612 |
$ |
2,680 |
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss) |
|
|
|
|
|
|
|
|
|
|
Foreign exchange gain (loss) on: |
|
|
|
|
|
|
|
|
|
|
|
Translation of the net investment in foreign
operations |
|
219 |
|
71 |
|
|
440 |
|
(128) |
|
|
Translation of US dollar-denominated long-term
debt designated as a hedge of the net investment in U.S.
subsidiaries |
|
(197) |
|
(66) |
|
|
(394) |
|
123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and other postretirement
benefit plans: |
|
|
|
|
|
|
|
|
|
|
|
Net actuarial gain (loss) arising during the
year |
|
1,544 |
|
(660) |
|
|
1,544 |
|
(660) |
|
|
Prior service cost arising during the year |
|
- |
|
(6) |
|
|
- |
|
(6) |
|
|
Amortization of net actuarial loss included in net
periodic benefit cost (income) |
|
57 |
|
27 |
|
|
226 |
|
119 |
|
|
Amortization of prior service cost included in net
periodic benefit cost (income) |
|
1 |
|
2 |
|
|
5 |
|
7 |
Other comprehensive income (loss)
before income taxes |
|
1,624 |
|
(632) |
|
|
1,821 |
|
(545) |
Income tax recovery (expense) |
|
(394) |
|
178 |
|
|
(414) |
|
127 |
Other comprehensive income
(loss) |
|
1,230 |
|
(454) |
|
|
1,407 |
|
(418) |
Comprehensive income |
$ |
1,865 |
$ |
156 |
|
$ |
4,019 |
$ |
2,262 |
CANADIAN NATIONAL RAILWAY
COMPANY |
CONSOLIDATED BALANCE SHEET
(U.S. GAAP) - unaudited |
(In millions) |
|
|
|
|
|
|
December
31 |
|
December 31 |
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
214 |
|
$ |
155 |
|
Restricted cash and cash equivalents |
|
448 |
|
|
521 |
|
Accounts receivable |
|
815 |
|
|
831 |
|
Material and supplies |
|
274 |
|
|
230 |
|
Deferred and receivable income taxes |
|
137 |
|
|
43 |
|
Other |
|
89 |
|
|
89 |
Total current assets |
|
1,977 |
|
|
1,869 |
|
|
|
|
|
|
Properties |
|
26,227 |
|
|
24,541 |
Intangible and other assets |
|
1,959 |
|
|
249 |
Total assets |
$ |
30,163 |
|
$ |
26,659 |
|
|
|
|
|
|
Liabilities and shareholders'
equity |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable and other |
$ |
1,477 |
|
$ |
1,626 |
|
Current portion of long-term debt |
|
1,021 |
|
|
577 |
Total current liabilities |
|
2,498 |
|
|
2,203 |
|
|
|
|
|
|
Deferred income taxes |
|
6,537 |
|
|
5,555 |
Pension and other postretirement
benefits, net of current portion |
|
541 |
|
|
784 |
Other liabilities and deferred
credits |
|
815 |
|
|
776 |
Long-term debt |
|
6,819 |
|
|
6,323 |
|
|
|
|
|
|
Shareholders'
equity |
|
|
|
|
|
|
Common shares |
|
4,015 |
|
|
4,108 |
|
Accumulated other comprehensive loss |
|
(1,850) |
|
|
(3,257) |
|
Retained earnings |
|
10,788 |
|
|
10,167 |
Total shareholders' equity |
|
12,953 |
|
|
11,018 |
Total liabilities and shareholders'
equity |
$ |
30,163 |
|
$ |
26,659 |
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, 2013 and
December 31, 2012, and its results of
operations, comprehensive income, changes in shareholders' equity
and cash flows for the three months and years ended December 31, 2013 and 2012. These consolidated
financial statements have been prepared using accounting policies
consistent with those used in preparing the Company's 2013 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 |
|
|
|
2013 |
|
2012 |
|
|
2013 |
|
2012 |
|
|
|
Common shares
(1) |
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
$ |
4,036 |
$ |
4,120 |
|
$ |
4,108 |
$ |
4,141 |
|
Stock options exercised and other |
|
5 |
|
23 |
|
|
40 |
|
128 |
|
Share repurchase programs |
|
(26) |
|
(35) |
|
|
(133) |
|
(161) |
Balance, end of period |
$ |
4,015 |
$ |
4,108 |
|
$ |
4,015 |
$ |
4,108 |
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive
loss |
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
$ |
(3,080) |
$ |
(2,803) |
|
$ |
(3,257) |
$ |
(2,839) |
|
Other comprehensive income (loss) |
|
1,230 |
|
(454) |
|
|
1,407 |
|
(418) |
Balance, end of period |
$ |
(1,850) |
$ |
(3,257) |
|
$ |
(1,850) |
$ |
(3,257) |
|
|
|
|
|
|
|
|
|
|
Retained earnings |
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
$ |
10,611 |
$ |
9,988 |
|
$ |
10,167 |
$ |
9,378 |
|
Net income |
|
635 |
|
610 |
|
|
2,612 |
|
2,680 |
|
Share repurchase programs |
|
(279) |
|
(270) |
|
|
(1,267) |
|
(1,239) |
|
Dividends |
|
(179) |
|
(161) |
|
|
(724) |
|
(652) |
Balance, end of period |
$ |
10,788 |
$ |
10,167 |
|
$ |
10,788 |
$ |
10,167 |
(1) |
During the three months and year ended December
31, 2013, the Company issued 0.2 million and 1.4 million common
shares, respectively, as a result of stock options exercised and
repurchased 5.5 million and 27.6 million common shares,
respectively, under its share repurchase programs. At December 31,
2013, the Company had 830.6 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 |
|
|
2013 |
|
2012 |
|
|
2013 |
|
2012 |
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
|
Net income |
$ |
635 |
$ |
610 |
|
$ |
2,612 |
$ |
2,680 |
Adjustments to reconcile net income to
net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
254 |
|
237 |
|
|
980 |
|
924 |
|
Deferred income taxes |
|
162 |
|
120 |
|
|
331 |
|
451 |
|
Gain on disposal of property |
|
- |
|
- |
|
|
(69) |
|
(281) |
Changes in operating assets and
liabilities: |
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
55 |
|
17 |
|
|
32 |
|
(20) |
|
Material and supplies |
|
46 |
|
43 |
|
|
(38) |
|
(30) |
|
Accounts payable and other |
|
(99) |
|
(11) |
|
|
(245) |
|
129 |
|
Other current assets |
|
(15) |
|
(7) |
|
|
13 |
|
(13) |
Pensions and other, net |
|
60 |
|
(285) |
|
|
(68) |
|
(780) |
Net cash provided by operating
activities |
|
1,098 |
|
724 |
|
|
3,548 |
|
3,060 |
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
Property additions |
|
(788) |
|
(610) |
|
|
(1,973) |
|
(1,731) |
Disposal of property |
|
- |
|
- |
|
|
52 |
|
311 |
Change in restricted cash and cash
equivalents |
|
81 |
|
(3) |
|
|
73 |
|
(22) |
Other, net |
|
6 |
|
16 |
|
|
(4) |
|
21 |
Net cash used in investing
activities |
|
(701) |
|
(597) |
|
|
(1,852) |
|
(1,421) |
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
Issuance of debt (1) |
|
867 |
|
493 |
|
|
1,850 |
|
493 |
Repayment of debt (1) |
|
(754) |
|
(195) |
|
|
(1,413) |
|
(140) |
Issuance of common shares due to
exercise of stock options and related excess tax benefits
realized |
|
3 |
|
20 |
|
|
31 |
|
117 |
Repurchase of common shares |
|
(305) |
|
(305) |
|
|
(1,400) |
|
(1,400) |
Dividends paid |
|
(179) |
|
(161) |
|
|
(724) |
|
(652) |
Net cash used in financing
activities |
|
(368) |
|
(148) |
|
|
(1,656) |
|
(1,582) |
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange
fluctuations on US dollar-denominated cash and cash
equivalents |
|
3 |
|
1 |
|
|
19 |
|
(3) |
Net increase (decrease) in cash and
cash equivalents |
|
32 |
|
(20) |
|
|
59 |
|
54 |
Cash and cash equivalents, beginning
of period |
|
182 |
|
175 |
|
|
155 |
|
101 |
Cash and cash equivalents, end of
period |
$ |
214 |
$ |
155 |
|
$ |
214 |
$ |
155 |
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow
information |
|
|
|
|
|
|
|
|
|
Net cash receipts from customers and
other |
$ |
2,842 |
$ |
2,481 |
|
$ |
10,640 |
$ |
9,877 |
Net cash payments for: |
|
|
|
|
|
|
|
|
|
|
Employee services, suppliers and other
expenses |
|
(1,389) |
|
(1,239) |
|
|
(5,558) |
|
(5,241) |
|
Interest |
|
(85) |
|
(89) |
|
|
(344) |
|
(364) |
|
Personal injury and other claims |
|
(17) |
|
(22) |
|
|
(61) |
|
(79) |
|
Pensions |
|
(18) |
|
(257) |
|
|
(239) |
|
(844) |
|
Income taxes |
|
(235) |
|
(150) |
|
|
(890) |
|
(289) |
Net cash provided by operating
activities |
$ |
1,098 |
$ |
724 |
|
$ |
3,548 |
$ |
3,060 |
(1) |
The Company has revised the Consolidated
Statement of Cash Flows to present the cash flows from the
issuances and repayments of commercial paper on a net basis,
consistent with the presentation adopted for 2013. The Company
chose to present such cash flows on a net basis since the issuance
and repayments of commercial paper are part of the Company's cash
management activities and this debt matures in less than 90
days.
During the three months and year ended December 31, 2013, on a
gross basis the Company issued $743 million and $3,255 million of
commercial paper, respectively, and made repayments of $1,084
million and $2,987 million of commercial paper, respectively.
During the three months and year ended December 31, 2013, on a net
basis the Company had net repayments of $341 million and net
issuances of $268 million of commercial paper,
respectively.
During the three months and year ended December 31, 2012, on a
gross basis the Company issued nil and $1,861 million of commercial
paper, respectively, and made repayments of $171 million and $1,943
million of commercial paper, respectively. During the three
months and year ended December 31, 2012, on a net basis the Company
had net repayments of $171 million and $82 million of commercial
paper, respectively. |
CANADIAN NATIONAL RAILWAY
COMPANY |
SELECTED RAILROAD STATISTICS
(U.S. GAAP) - unaudited |
|
|
|
|
|
|
|
Three months ended |
|
Year ended |
|
December 31 |
|
December 31 |
|
2013 |
2012 |
|
2013 |
2012 |
|
|
Statistical operating
data |
|
|
|
|
|
|
|
|
|
|
|
Rail freight revenues ($
millions) |
2,494 |
2,280 |
|
9,587 |
8,938 |
Gross ton miles (GTM) (millions) |
103,221 |
97,873 |
|
401,390 |
383,754 |
Revenue ton miles (RTM)
(millions) |
54,667 |
52,124 |
|
210,133 |
201,496 |
Carloads (thousands) |
1,310 |
1,270 |
|
5,190 |
5,059 |
Route miles (includes Canada and the
U.S.) (1) |
20,000 |
20,100 |
|
20,000 |
20,100 |
Employees (end of period) |
23,721 |
23,430 |
|
23,721 |
23,430 |
Employees (average for the
period) |
23,703 |
23,532 |
|
23,705 |
23,466 |
|
|
|
|
|
|
Productivity |
|
|
|
|
|
|
|
|
|
|
|
Operating ratio (%) |
64.8 |
63.6 |
|
63.4 |
62.9 |
Rail freight revenue per RTM
(cents) |
4.56 |
4.37 |
|
4.56 |
4.44 |
Rail freight revenue per carload
($) |
1,904 |
1,795 |
|
1,847 |
1,767 |
Operating expenses per GTM
(cents) |
1.72 |
1.65 |
|
1.67 |
1.62 |
Labor and fringe benefits expense per
GTM (cents) |
0.58 |
0.47 |
|
0.54 |
0.51 |
GTMs per average number of employees
(thousands) |
4,355 |
4,159 |
|
16,933 |
16,354 |
Diesel fuel consumed (US gallons in
millions) |
101.7 |
99.9 |
|
403.7 |
388.7 |
Average fuel price ($/US gallon) |
3.65 |
3.53 |
|
3.55 |
3.47 |
GTMs per US gallon of fuel
consumed |
1,015 |
980 |
|
994 |
987 |
|
|
|
|
|
|
Safety indicators |
|
|
|
|
|
|
|
|
|
|
|
Injury frequency rate per 200,000
person hours (2) |
2.27 |
1.48 |
|
1.69 |
1.42 |
Accident rate per million train miles
(2) |
2.14 |
1.77 |
|
1.92 |
2.10 |
|
|
|
|
|
|
Financial ratio |
|
|
|
|
|
|
|
|
|
|
|
Debt-to-total capitalization ratio (%
at end of period) (3) |
37.7 |
38.5 |
|
37.7 |
38.5 |
(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. |
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,
as such certain of the 2012 comparative data and related
productivity measures have been restated.
CANADIAN NATIONAL RAILWAY
COMPANY |
SUPPLEMENTARY INFORMATION (U.S.
GAAP) - unaudited
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended December 31 |
|
Year
ended December 31 |
|
2013 |
2012 |
% Change
Fav (Unfav) |
% Change at
constant
currency
Fav (Unfav) (1) |
|
2013 |
2012 |
% Change
Fav (Unfav) |
% Change at
constant
currency
Fav (Unfav) (1) |
|
|
Revenues (millions of dollars) |
|
|
|
|
|
|
|
|
|
Petroleum and chemicals |
519 |
427 |
22% |
17% |
|
1,939 |
1,640 |
18% |
16% |
Metals and minerals |
306 |
274 |
12% |
7% |
|
1,216 |
1,133 |
7% |
5% |
Forest products |
357 |
323 |
11% |
6% |
|
1,413 |
1,331 |
6% |
4% |
Coal |
155 |
171 |
(9%) |
(12%) |
|
693 |
712 |
(3%) |
(4%) |
Grain and fertilizers |
469 |
459 |
2% |
(1%) |
|
1,610 |
1,590 |
1% |
- |
Intermodal |
555 |
498 |
11% |
10% |
|
2,167 |
1,994 |
9% |
8% |
Automotive |
133 |
128 |
4% |
- |
|
549 |
538 |
2% |
- |
Total rail freight revenues |
2,494 |
2,280 |
9% |
6% |
|
9,587 |
8,938 |
7% |
5% |
Other revenues |
251 |
254 |
(1%) |
(4%) |
|
988 |
982 |
1% |
(1%) |
Total revenues |
2,745 |
2,534 |
8% |
5% |
|
10,575 |
9,920 |
7% |
5% |
|
|
|
|
|
|
|
|
|
|
Revenue ton miles (millions) |
|
|
|
|
|
|
|
|
|
Petroleum and chemicals |
12,206 |
10,154 |
20% |
20% |
|
44,634 |
37,449 |
19% |
19% |
Metals and minerals |
5,320 |
5,000 |
6% |
6% |
|
21,342 |
20,236 |
5% |
5% |
Forest products |
7,313 |
7,141 |
2% |
2% |
|
29,630 |
29,674 |
- |
- |
Coal |
4,973 |
5,754 |
(14%) |
(14%) |
|
22,315 |
23,570 |
(5%) |
(5%) |
Grain and fertilizers |
12,624 |
12,826 |
(2%) |
(2%) |
|
43,180 |
45,417 |
(5%) |
(5%) |
Intermodal |
11,569 |
10,614 |
9% |
9% |
|
46,291 |
42,396 |
9% |
9% |
Automotive |
662 |
635 |
4% |
4% |
|
2,741 |
2,754 |
- |
- |
|
54,667 |
52,124 |
5% |
5% |
|
210,133 |
201,496 |
4% |
4% |
Rail freight revenue / RTM
(cents) |
|
|
|
|
|
|
|
|
|
Total rail freight revenue per RTM |
4.56 |
4.37 |
4% |
1% |
|
4.56 |
4.44 |
3% |
1% |
Commodity groups: |
|
|
|
|
|
|
|
|
|
Petroleum and chemicals |
4.25 |
4.21 |
1% |
(3%) |
|
4.34 |
4.38 |
(1%) |
(3%) |
Metals and minerals |
5.75 |
5.48 |
5% |
1% |
|
5.70 |
5.60 |
2% |
(1%) |
Forest products |
4.88 |
4.52 |
8% |
4% |
|
4.77 |
4.49 |
6% |
4% |
Coal |
3.12 |
2.97 |
5% |
2% |
|
3.11 |
3.02 |
3% |
2% |
Grain and fertilizers |
3.72 |
3.58 |
4% |
1% |
|
3.73 |
3.50 |
7% |
5% |
Intermodal |
4.80 |
4.69 |
2% |
1% |
|
4.68 |
4.70 |
- |
(1%) |
Automotive |
20.09 |
20.16 |
- |
(4%) |
|
20.03 |
19.54 |
3% |
- |
|
|
|
|
|
|
|
|
|
|
Carloads (thousands) |
|
|
|
|
|
|
|
|
|
Petroleum and chemicals |
159 |
150 |
6% |
6% |
|
611 |
594 |
3% |
3% |
Metals and minerals |
245 |
246 |
- |
- |
|
1,048 |
1,024 |
2% |
2% |
Forest products |
108 |
109 |
(1%) |
(1%) |
|
446 |
445 |
- |
- |
Coal |
100 |
103 |
(3%) |
(3%) |
|
416 |
435 |
(4%) |
(4%) |
Grain and fertilizers |
171 |
171 |
- |
- |
|
572 |
597 |
(4%) |
(4%) |
Intermodal |
473 |
437 |
8% |
8% |
|
1,875 |
1,742 |
8% |
8% |
Automotive |
54 |
54 |
- |
- |
|
222 |
222 |
- |
- |
|
1,310 |
1,270 |
3% |
3% |
|
5,190 |
5,059 |
3% |
3% |
Rail freight revenue / carload
(dollars) |
|
|
|
|
|
|
|
|
|
Total rail freight revenue per carload |
1,904 |
1,795 |
6% |
3% |
|
1,847 |
1,767 |
5% |
3% |
Commodity groups: |
|
|
|
|
|
|
|
|
|
Petroleum and chemicals |
3,264 |
2,847 |
15% |
10% |
|
3,173 |
2,761 |
15% |
13% |
Metals and minerals |
1,249 |
1,114 |
12% |
7% |
|
1,160 |
1,106 |
5% |
3% |
Forest products |
3,306 |
2,963 |
12% |
7% |
|
3,168 |
2,991 |
6% |
4% |
Coal |
1,550 |
1,660 |
(7%) |
(9%) |
|
1,666 |
1,637 |
2% |
- |
Grain and fertilizers |
2,743 |
2,684 |
2% |
(1%) |
|
2,815 |
2,663 |
6% |
4% |
Intermodal |
1,173 |
1,140 |
3% |
1% |
|
1,156 |
1,145 |
1% |
- |
Automotive |
2,463 |
2,370 |
4% |
- |
|
2,473 |
2,423 |
2% |
- |
(1) See
supplementary schedule entitled Non-GAAP Measures for an
explanation of this Non-GAAP measure. |
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, 2013, the Company reported adjusted
net income of $635 million, or
$0.76 per diluted share and
$2,582 million, or $3.06 per diluted share, respectively. The
adjusted figures for the year ended December
31, 2013 exclude a gain on exchange of perpetual railroad
operating easements including the track and roadway assets on
specific rail lines, of $29 million,
or $18 million after-tax
($0.02 per diluted share); and a gain
on disposal of a segment of the Oakville subdivision, together with the rail
fixtures and certain passenger agreements, of $40 million, or $36
million after-tax ($0.04 per
diluted share). The adjusted figures also exclude a $24 million ($0.03
per diluted share) income tax expense resulting from the enactment
of higher provincial corporate income tax rates.
For the three months and year ended December 31, 2012, the Company reported adjusted
net income of $610 million, or
$0.71 per diluted share and
$2,456 million, or $2.81 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 ($0.28 per diluted share); and a net income tax
expense of $28 million ($0.03 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.
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 therefore, may not be comparable to similar measures presented
by other companies. The reader is advised to read all information
provided in the Company's 2013 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, 2013 and
2012, to the adjusted performance measures presented herein.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended December 31, 2013 |
|
Year
ended December 31, 2013 |
In millions, except per share data |
|
Reported |
|
Adjustments |
|
Adjusted |
|
|
Reported |
|
Adjustments |
|
Adjusted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
2,745 |
$ |
- |
$ |
2,745 |
|
$ |
10,575 |
$ |
- |
$ |
10,575 |
Operating expenses |
|
1,778 |
|
- |
|
1,778 |
|
|
6,702 |
|
- |
|
6,702 |
Operating income |
|
967 |
|
- |
|
967 |
|
|
3,873 |
|
- |
|
3,873 |
Interest expense |
|
(91) |
|
- |
|
(91) |
|
|
(357) |
|
- |
|
(357) |
Other income (loss) |
|
(2) |
|
- |
|
(2) |
|
|
73 |
|
(69) |
|
4 |
Income before income taxes |
|
874 |
|
- |
|
874 |
|
|
3,589 |
|
(69) |
|
3,520 |
Income tax expense |
|
(239) |
|
- |
|
(239) |
|
|
(977) |
|
39 |
|
(938) |
Net income |
$ |
635 |
$ |
- |
$ |
635 |
|
$ |
2,612 |
$ |
(30) |
$ |
2,582 |
Operating ratio |
|
64.8% |
|
|
|
64.8% |
|
|
63.4% |
|
|
|
63.4% |
Effective tax rate |
|
27.3% |
|
|
|
27.3% |
|
|
27.2% |
|
|
|
26.6% |
Basic earnings per share |
$ |
0.76 |
$ |
- |
$ |
0.76 |
|
$ |
3.10 |
$ |
(0.03) |
$ |
3.07 |
Diluted earnings per share |
$ |
0.76 |
$ |
- |
$ |
0.76 |
|
$ |
3.09 |
$ |
(0.03) |
$ |
3.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended December 31, 2012 |
|
|
Year
ended 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 |
$ |
0.71 |
$ |
- |
$ |
0.71 |
|
$ |
3.08 |
$ |
(0.26) |
$ |
2.82 |
Diluted earnings per share |
$ |
0.71 |
$ |
- |
$ |
0.71 |
|
$ |
3.06 |
$ |
(0.25) |
$ |
2.81 |
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
therefore, may 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
$1.05 and $1.03 per US$1.00,
respectively, for the three months and year ended December 31, 2013, and $0.99 and $1.00 per
US$1.00, respectively, for the
corresponding periods in 2012.
On a constant currency basis, the Company's net
income for the three months and year ended December 31, 2013 would have been lower by
$19 million, or $0.02 per diluted share and $37 million, or $0.04 per diluted share, respectively. The
following table presents a reconciliation of 2013 net income as
reported to net income on a constant currency basis:
|
|
|
|
|
|
|
|
|
Three months
ended |
|
Year ended |
In millions |
December 31, 2013 |
|
December 31,
2013 |
|
|
|
|
|
Net income, as reported |
$ |
635 |
|
$ |
2,612 |
Add back: |
|
|
|
|
|
|
Positive impact due to the
weakening Canadian dollar included in net income |
|
(18) |
|
|
(33) |
Add: |
|
|
|
|
|
|
Decrease due to the weakening
Canadian dollar on additional year-over-year US$ net income |
|
(1) |
|
|
(4) |
Impact of foreign exchange using
constant currency rates |
|
(19) |
|
|
(37) |
Net income, on a constant currency
basis |
$ |
616 |
|
$ |
2,575 |
Free cash flow
Free cash flow does not have any standardized
meaning prescribed by GAAP and therefore, may 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. In the past,
the Company defined free cash flow as the difference between net
cash provided by operating activities and net cash used in
investing activities; adjusted for changes in restricted cash and
cash equivalents, the payment of dividends, changes in cash and
cash equivalents resulting from foreign exchange fluctuations, and
the impact of major acquisitions, if any.
Beginning with the fourth quarter of 2013, the Company has
redefined its free cash flow measure as the difference between net
cash provided by operating activities and net cash used in
investing activities; adjusted for changes in restricted cash and
cash equivalents and the impact of major acquisitions, if any. The
Company believes that free cash flow, as redefined, is a better
measure of the Company's available cash for debt obligations and
for discretionary uses such as payment of dividends and strategic
opportunities.
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Year ended |
|
December 31 |
|
December 31 |
In
millions |
|
2013 |
|
2012 |
|
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities |
$ |
1,098 |
$ |
724 |
|
$ |
3,548 |
$ |
3,060 |
Net cash used in investing
activities |
|
(701) |
|
(597) |
|
|
(1,852) |
|
(1,421) |
Net cash provided before financing
activities |
|
397 |
|
127 |
|
|
1,696 |
|
1,639 |
|
|
|
|
|
|
|
|
|
|
Adjustment: |
|
|
|
|
|
|
|
|
|
|
Change in restricted cash and cash
equivalents |
|
(81) |
|
3 |
|
|
(73) |
|
22 |
Free cash flow |
$ |
316 |
$ |
130 |
|
$ |
1,623 |
$ |
1,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
|
(179) |
|
(161) |
|
|
(724) |
|
(652) |
|
Effect of foreign exchange fluctuations on US
dollar-denominated cash and cash equivalents |
|
3 |
|
1 |
|
|
19 |
|
(3) |
Free cash flow - as previously
defined |
$ |
140 |
$ |
(30) |
|
$ |
918 |
$ |
1,006 |
SOURCE CN