Canadian National's First-Quarter 2001 Net Income Rises Three Per Cent to $202 Million, Excluding Non-Recurring Gains in 2001 and 2000.Business Editors MONTREAL--(BUSINESS WIRE)--April 23, 2001 Diluted Earnings Per Share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of Increase Seven Per Cent CENT, money. A copper coin of the United States of the value of ten mills; ten of them are equal to a dime, and one hundred, to one dollar. Each cent is required to contain one hundred and sixty-eight grains. Act of January 18th, 1837, 4 Sharsw. cont. of Story',s L. U. S. 2524. , Excluding Non-recurring Gains Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. National (NYSE NYSE See: New York Stock Exchange :CNI (1) (Certified NetWare Instructor) See Novell certification. (2) (Coalition for Networked Information, Washington, DC, www.cni.org) A partnership of the Association of Research Libraries, CAUSE and EDUCOM, founded in 1990. ) (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CNR See riser card. CNR - Communication and Network Riser .) overcame harsh winter weather and pockets of weakness in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. economy to post higher first-quarter 2001 net income and diluted earnings per share, excluding non-recurring gains in the 2001 and 2000 first quarters. Net income for the three-month period ended March 31, 2001, was $202 million, excluding a $73-million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. gain from the sale of CN's 50 per cent interest in the Detroit River Detroit River River, southeastern Michigan, U.S. Forming part of the boundary between Michigan and Ontario, Can., it connects Lake St. Clair with Lake Erie. It flows south for 32 mi (51 km) past Detroit and Windsor, Ont., where a bridge and tunnel connect the two cities. Tunnel Company. Including the gain, net income for the most recent quarter was $275 million. For the first quarter of 2000, net income was $196 million, excluding a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. $58-million after-tax gain related to an investment. Including it, net income for that quarter was $254 million. Diluted earnings per share for the latest quarter were $1.03, excluding the one-time gain (36 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. ). Including the gain, diluted earnings per share were $1.39. For the comparable period of 2000, diluted earnings per share were 96 cents, excluding the gain (28 cents per share). Including it, diluted earnings per share were $1.24. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for first-quarter 2001 was essentially flat at $385 million, while CN's operating ratio Operating Ratio A ratio that shows the efficiency of management by comparing operating expense to net sales: rose to 72.5 per cent, a 0.3-point increase from the year-earlier level. Revenue for the quarter increased two per cent to $1,398 million, while expenses also rose two per cent to $1,013 million. Carloads were flat at 952 thousand. CN President and Chief Executive Officer Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. M. Tellier said: "CN faced some significant challenges in the quarter, yet I am pleased to report the Company generated higher revenue, net income and earnings per share. "I am particularly pleased with our intermodal in·ter·mod·al adj. Relating to transportation by more than one means of conveyance, as by truck and rail: intermodal transport. performance - traffic and revenue rose significantly in this intensely truck-competitive line of business. Market share gains from new service offerings continued to drive the domestic segment, while our international intermodal business benefited from market share gains and continued strength in the container trade. Rates also improved. "Petroleum and chemicals revenue increased on account of colder weather, market share gains and increased production from plant expansions in the petroleum products segment. Strong Canadian aluminum shipments and market share gains in the steel, ore and concentrate segments contributed to higher metals and minerals revenue. Grain and fertilizers revenue also increased, largely because of strong canola canola see brassicanapus. exports from Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. soybean soybean, soya bean, or soy pea, leguminous plant (Glycine max, G. soja, or Soja max) of the family Leguminosae (pulse family), native to tropical and warm temperate regions of Asia, where it has been exports through the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east . "Automotive revenue, however, declined sharply as a result of weaker auto sales Auto Sales The major producers of domestic automobiles report sales monthly. These numbers are seasonally adjusted by the U.S. Department of Commerce and are available to the public one to five business days after the end of each month. , temporary plant shut downs and one-time gains in the comparable period of 2000. Coal revenue was unchanged, while forest products revenue declined because of weaker commodity prices for lumber lumber, term for timber that has been cut into boards for use as a building material. The major steps in producing lumber involve logging (the felling and preparation of timber for shipment to sawmills), sawing the logs into boards, grading the boards according to , fewer housing starts in the United States and weaker demand for paper." In total, four of CN's seven business units recorded revenue gains - intermodal (13 per cent); petroleum and chemicals (five per cent); metals and minerals (two per cent); and grain and fertilizers (two per cent). Revenue declined for automotive (14 per cent) and forest products (two per cent). Coal revenue was flat. The two per cent increase in CN's operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for first-quarter 2001 was predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. due to higher costs for fuel, partially offset by lower expenses for labor and fringe benefits fringe benefits, n.pl the benefits, other than wages or salary, provided by an employer for employees (e.g., health insurance, vacation time, disability income). and purchased services. The financial results in this press release are reported in Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents and were determined on the basis of United States generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (U.S. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). Canadian National Railway Company Canadian National Railway Company (NYSE: CNI, TSX: CNR) is a Canadian rail transportation company that operates the Canadian National Railway. It was created in December, 1918 as a Crown corporation of the Government of Canada to nationalize several bankrupt rail systems spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. , Prince Rupert Prince Rupert, city (1991 pop. 16,620), W British Columbia, Canada, on Kaien Island, in Chatham Sound near the mouth of the Skeena River, S of the Alaska border. , B.C., Montreal Montreal (mŏn'trēôl`), Fr. Montréal (môNrāäl`), city (1991 pop. 1,017,666), S Que., Canada, on Montreal island, surrounded by St. Lawrence River and Rivière des Prairies. , Halifax Halifax, city, Canada Halifax, city (1991 pop. 114,455), provincial capital, S central N.S., Canada, on the Atlantic Ocean. It is the largest city in the Maritime Provinces and is one of Canada's principal ice-free Atlantic ports. , New Orleans New Orleans (ôr`lēənz –lənz, ôrlēnz`), city (2006 pop. 187,525), coextensive with Orleans parish, SE La., between the Mississippi River and Lake Pontchartrain, 107 mi (172 km) by water from the river mouth; founded , and Mobile, Ala ALA aminolevulinic acid. Ala alanine. ala (a´lah) pl. a´lae [L.] a winglike process. ., and the key cities of Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing , Buffalo, Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. , Detroit Detroit, city, United States Detroit (dĭtroit`), city (1990 pop. 1,027,974), seat of Wayne co., SE Mich., on the Detroit River and between lakes St. Clair and Erie; inc. as a city 1815. , Memphis, St. Louis Louis, titular duke of Burgundy Louis, 1682–1712, titular duke of Burgundy; grandson of King Louis XIV of France. He became heir to the throne on the death (1711) of his father, Louis the Great Dauphin. , Jackson Jackson. 1 City (1990 pop. 37,446), seat of Jackson co., S Mich., on the Grand River; inc. 1857. It is an industrial and commercial center in a farm region. , Miss., with connections to all points in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. .
CANADIAN NATIONAL RAILWAY COMPANY
CONSOLIDATED STATEMENT OF INCOME (U.S. GAAP)
---------------------------------------------------------------------
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(In millions, except per share data)
Three months ended
March 31
------------------
2001 2000
---------------------------------------------------------------------
(Unaudited)
Revenues $1,398 $1,372
Operating expenses 1,013 990
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Operating income 385 382
Interest expense (80) (76)
Other income (Note 3) 112 89
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Income before income taxes 417 395
Income tax expense (142) (141)
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Net income $275 $254
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Earnings per share (Note 6)
Basic earnings per share $1.44 $1.27
Diluted earnings per share $1.39 $1.24
Weighted average number of shares
Basic 191.3 200.7
Diluted 199.9 207.8
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See accompanying notes to consolidated financial statements.
CANADIAN NATIONAL RAILWAY COMPANY
CONSOLIDATED STATEMENT OF OPERATING INCOME (U.S. GAAP)
---------------------------------------------------------------------
---------------------------------------------------------------------
(In millions)
Three months ended March 31
--------------------------------
Variance
2001 2000 Fav(Unfav)
---------------------------------------------------------------------
(Unaudited)
Revenues
Petroleum and chemicals $231 $219 5%
Metals and minerals 97 95 2%
Forest products 245 250 (2%)
Coal 85 85 -
Grain and fertilizers 321 316 2%
Intermodal 237 209 13%
Automotive 127 148 (14%)
Other items 55 50 10%
------------------------------------------------------
1,398 1,372 2%
Operating expenses
Labor and fringe benefits 378 391 3%
Purchased services 133 140 5%
Depreciation and amortization 132 132 -
Fuel 143 109 (31%)
Equipment rents 76 70 (9%)
Material 63 62 (2%)
Operating taxes 44 41 (7%)
Casualty and other 44 45 2%
------------------------------------------------------
1,013 990 (2%)
------------------------------------------------------
Operating income $385 $382 1%
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Operating ratio 72.5% 72.2% (0.3)
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See accompanying notes to consolidated financial statements.
CANADIAN NATIONAL RAILWAY COMPANY
CONSOLIDATED BALANCE SHEET (U.S. GAAP)
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(In millions)
March 31 December 31 March 31
2001 2000 2000
---------------------------------------------------------------------
(Unaudited) (Unaudited)
Assets
Current assets:
Cash and cash equivalents $40 $15 $180
Accounts receivable (Note 4) 736 726 751
Material and supplies 137 110 141
Deferred income taxes 116 114 131
Other 152 143 192
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1,181 1,108 1,395
Properties 16,070 15,638 14,660
Other assets and deferred
charges (Note 3) 430 568 377
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Total assets $17,681 $17,314 $16,432
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Liabilities and
shareholders' equity
Current liabilities:
Accounts payable and
accrued charges $1,257 $1,389 $1,281
Current portion of
long-term debt 458 434 270
Other 86 82 90
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1,801 1,905 1,641
Deferred income taxes 3,537 3,375 3,055
Other liabilities and
deferred credits 1,129 1,205 1,297
Long-term debt 4,034 3,886 3,951
Convertible preferred securities 363 345 335
Shareholders' equity:
Common shares 4,385 4,349 4,482
Accumulated other
comprehensive income (loss) 97 151 (5)
Retained earnings 2,335 2,098 1,676
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6,817 6,598 6,153
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Total liabilities and
shareholders' equity $17,681 $17,314 $16,432
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See accompanying notes to consolidated financial statements.
CANADIAN NATIONAL RAILWAY COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (U.S. GAAP)
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(In millions)
Three months ended
March 31
------------------
2001 2000
---------------------------------------------------------------------
(Unaudited)
Common shares (1)
Balance, beginning of period $4,349 $4,597
Stock options exercised and
employee share plans 36 6
Share repurchase program - (121)
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Balance, end of period $4,385 $4,482
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Accumulated other comprehensive income (loss)
Balance, beginning of period $151 $(6)
Other comprehensive income (loss):
Unrealized foreign exchange loss on
translation of U.S. dollar denominated
long-term debt designated as a hedge of
the net investment in U.S. subsidiaries (152) (3)
Unrealized foreign exchange gain on translation of the net
investment in U.S.
subsidiaries 247 5
Unrealized holding loss on investment
in 360networks Inc. (Note 3) (151) -
Unrealized holding loss on fuel derivative
instruments (Note 5) (7) -
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Other comprehensive income (loss)
before income taxes (63) 2
Income tax (expense) recovery on other
comprehensive income (loss) items 9 (1)
---------------------------------------------------------------------
Other comprehensive income (loss) (54) 1
---------------------------------------------------------------------
Balance, end of period $97 $(5)
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Retained earnings
Balance, beginning of period $2,098 $1,531
Net income 275 254
Share repurchase program - (74)
Dividends (38) (35)
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Balance, end of period $2,335 $1,676
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See accompanying notes to consolidated financial statements.
(1) During the first quarter of 2001, the Company issued 1.1 million
shares as a result of stock options exercised. At March 31, 2001,
the Company had 191.7 million common shares outstanding.
CANADIAN NATIONAL RAILWAY COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (U.S. GAAP)
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---------------------------------------------------------------------
(In millions)
Three months ended
March 31
------------------
2001 2000
---------------------------------------------------------------------
(Unaudited)
Operating activities
Net income $275 $254
Non-cash items in income:
Depreciation and amortization 134 135
Deferred income taxes 87 92
Gain on sale of investments (Note 3) (101) (84)
Changes in:
Accounts receivable (Note 4) - 49
Material and supplies (25) (26)
Accounts payable and accrued charges (163) (52)
Other net current assets and liabilities 3 (73)
Payments for workforce reduction (49) (61)
Other (56) 17
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Cash provided from operating activities 105 251
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Investing activities
Net additions to properties (129) (137)
Net (costs) proceeds from disposal
of properties (6) 11
Proceeds from sale of investment (Note 3) 107 -
---------------------------------------------------------------------
Cash used by investing activities (28) (126)
---------------------------------------------------------------------
Dividends paid to shareholders (38) (35)
Financing activities
Issuance of long-term debt 268 -
Reduction of long-term debt (312) (41)
Issuance of common shares 30 4
Repurchase of common shares - (178)
---------------------------------------------------------------------
Cash used by financing activities (14) (215)
---------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents 25 (125)
Cash and cash equivalents, beginning of period 15 305
---------------------------------------------------------------------
Cash and cash equivalents, end of period $40 $180
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
CANADIAN NATIONAL RAILWAY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge (U.S. GAAP) --------------------------------------------------------------------- --------------------------------------------------------------------- Note 1 - Basis of presentation In the opinion of management, the accompanying unaudited interim consolidated financial statements, prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with U.S. generally accepted accounting principles (U.S. GAAP), contain all adjustments (consisting of normal recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. ) necessary to present fairly the Company's financial position as at March 31, 2001, December December: see month. 31 and March 31, 2000, its results of operations and cash flows for the three months ended March 31, 2001 and 2000. While management believes that the disclosures presented are adequate to make the information not misleading, these consolidated financial statements and notes should be read in conjunction with the Company's Annual Consolidated Financial Statements. Note 2 - Acquisition of Wisconsin Wisconsin, state, United States Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee Central Transportation Corporation On January January: see month. 29, 2001, the Company, through an indirect wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , and Wisconsin Central Transportation Corporation (WC) entered into a merger agreement (the Merger), providing for the acquisition of WC by the Company for a purchase price of approximately $1,200 million (U.S.$800 million or U.S.$17.15 per share) payable in cash. The acquisition will be initially financed by debt and cash on hand. The Merger was approved by the shareholders of WC at a special meeting held on April 4, 2001. In accordance with the terms of the Merger, the Company's obligation to consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. the Merger is subject to the Company having obtained from the U.S. Surface Transportation Board (STB See set-top box. STB - set-top box ) a final, unappealable decision that approves the Merger or exempts it from regulation and does not impose on the parties conditions that would significantly and adversely affect the anticipated economic benefits of the Merger to the Company. On April 9, 2001, the Company and WC filed a common control application with the STB seeking regulatory approval of the proposed merger. The STB is expected to decide within 30 days from the date of filing as to whether the Merger will be treated as a minor transaction. The Company believes the transaction should be treated as a minor one by the STB, but if it is not, the Company has the right to terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. the Merger without penalty. The Company and WC also simultaneously filed a pre-merger notification and competitive impact brief with Canada's Competition Bureau, requesting an advance ruling certificate in favor of upon the side of; favorable to; for the advantage of. See also: favor the transaction. The Company anticipates final STB and Competition Bureau rulings on the proposed merger by the Autumn of 2001. If the acquisition is completed, the Company will account for the acquisition of WC using the purchase method of accounting in accordance with Opinion No.16, "Business Combinations," of the Accounting Principles Board The Accounting Principles Board (APB) is the former authoritative body of the American Institute of Certified Public Accountants (AICPA). It was created by the American Institute of Certified Public Accountants in 1959 and issued pronouncements on accounting principles until 1973, of the American Institute of Certified Public Accountants With over 330,525 CPA members (in August 2006), the American Institute of Certified Public Accountants (AICPA) is the largest professional organization of Certified Public Accountants (CPAs) in the United States of America. . Under this method, the Company will prepare its financial statements reflecting the allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of the purchase price to acquire the WC shares based on the relative fair values of the assets and liabilities of WC. The results of operations of the Company will reflect the effects of the acquisition following the consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. of the Merger. Note 3 - Other income In March 2001, the Company completed the sale of its 50 percent interest in the Detroit River Tunnel Company (DRT DRT Dead right there Medtalk A macabre adjective referring to a Pt who has been clinical kaputt long enough to minimize the likelihood of resuscitation ) and recorded a gain of $101 million, $73 million after tax. The DRT is a 1.6-mile rail-only tunnel crossing the Canada-U.S. border between Detroit and Windsor, Ontario Windsor is the southernmost city in Canada and lies at the western end of the heavily populated Quebec City-Windsor Corridor. Windsor is located directly south of Detroit and is separated from that city by the Detroit River. The city has views of the Detroit skyline. . In March 2000, the Company exchanged its minority equity investments in certain joint venture companies for 11.4 million shares of 360networks Inc. and recorded a gain of $84 million, $58 million after tax. The Company accounts for its investment in 360networks Inc. in accordance with the Financial Accounting Standards Board's (FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). ) Statement of Financial Accounting Standards (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ) No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The shares held have been classified as "available-for-sale securities" whereby the investment is carried at market value on the balance sheet as part of Other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. and deferred charges. The change in the value of the investment has been recorded in Other comprehensive income as an unrealized holding loss of $151 million, $110 million after tax, for the current quarter. At the time of sale, the unrealized holding gain or loss, net of taxes, would be reversed and reported in income. At March 31, 2001, the market value of the Company's investment was $65 million. CANADIAN NATIONAL RAILWAY COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (U.S. GAAP) --------------------------------------------------------------------- --------------------------------------------------------------------- Note 4 - Financing activities On January 23, 2001, the Board of Directors of the Company approved a share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program which allows for the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of up to 10 million common shares of the Company's common stock between January 31, 2001 and January 30, 2002 pursuant to a normal course issuer bid, at prevailing market prices. At March 31, 2001, the Company had not repurchased any common stock under the share repurchase program. In 1998, the Company entered into a five-year revolving agreement to sell eligible freight trade receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed up to a maximum of $250 million of receivables outstanding at any point in time. At March 31, 2001, pursuant to the agreement, $147 million and U.S.$40 million (Cdn$64 million) had been sold on a limited recourse Limited recourse A term describing a type of loan in which the lender has limited or no claim against the parent company if the collateral is insufficient to repay the debt. See:Nonrecourse. basis compared to $147 million and U.S.$40 million (Cdn$61 million) at December 31, 2000. Note 5 - Derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. On January 1, 2001, the Company adopted SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities", as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. by SFAS No. 138 "Accounting for Certain Derivative Instruments and Certain Hedging Activities". At March 31, 2001, a portion of the Company's fuel requirements are being hedged using derivative instruments which are being carried at market value on the balance sheet. The effective portion of the cumulative change in the market value of the derivative instruments, which amounted to an unrealized holding loss of $7 million at March 31, 2001, has been recorded in Other comprehensive income. Since the Company's derivative instruments have been highly effective in hedging the changes in cash flows associated with forecasted purchases of diesel fuel, these pronouncements have not had a material impact on the statement of income. Upon the consumption of the hedged fuel, the Company will reclassify Verb 1. reclassify - classify anew, change the previous classification; "The zoologists had to reclassify the mollusks after they found new species" class, classify, sort out, assort, sort, separate - arrange or order by classes or categories; "How would you the amounts accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. in Other comprehensive income into income. Note 6 - Earnings per share The following table provides a reconciliation between basic and diluted earnings per share:
Three months ended
March 31
------------------
2001 2000
---------------------------------------------------------------------
(In millions, except per share data) (Unaudited)
Net income $275 $254
Income impact on assumed conversion
of preferred securities 3 3
---------------------------------------------------------------------
$278 $257
Weighted-average shares outstanding 191.3 200.7
Effect of dilutive securities
and stock options 8.6 7.1
---------------------------------------------------------------------
Weighted-average diluted shares outstanding 199.9 207.8
Basic earnings per share $1.44 $1.27
Diluted earnings per share $1.39 $1.24
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CANADIAN NATIONAL RAILWAY COMPANY
SELECTED RAILROAD STATISTICS (U.S. GAAP)
---------------------------------------------------------------------
---------------------------------------------------------------------
Three months ended
March 31
------------------
2001 2000
---------------------------------------------------------------------
(Unaudited)
Rail operations
Freight revenues ($ millions) 1,343 1,322
Gross ton miles (millions) 74,378 73,605
Revenue ton miles (RTM) (millions) 39,254 38,585
Route miles (includes Canada and the U.S.) 15,510 15,673
Operating expenses per RTM (cents) 2.58 2.57
Freight revenue per RTM (cents) 3.42 3.43
Carloads (thousands) 952 952
Freight revenue per carload ($) 1,411 1,389
Diesel fuel consumed (Liters in millions) 354 344
Average fuel price ($/Liter) 0.38 0.31
Revenue ton miles per liter of fuel consumed 111 112
Gross ton miles per liter of fuel consumed 210 214
Diesel fuel consumed (U.S. gallons
in millions) 93 91
Average fuel price ($/U.S. gallon) 1.42 1.18
Revenue ton miles per U.S. gallon
of fuel consumed 422 424
Gross ton miles per U.S. gallon
of fuel consumed 800 809
Locomotive bad order ratio (%) 6.8 6.6
Freight car bad order ratio (%) 6.5 5.7
---------------------------------------------------------------------
Productivity
Operating ratio (%) 72.5 72.2
Freight revenue per route mile ($ thousands) 87 84
Revenue ton miles per route mile (thousands) 2,531 2,462
Freight revenue per average number
of employees ($ thousands) 63 61
Revenue ton miles per average number
of employees (thousands) 1,850 1,768
---------------------------------------------------------------------
Employees
Number at end of period 21,009 21,953
Average number during period 21,222 21,825
Labor and fringe benefits
expense per RTM (cents) 0.96 1.01
Injury frequency rate per 200,000
person hours 4.5 6.4
Accident rate per million train miles 1.7 2.4
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Financial
Debt to total capitalization ratio
(% at end of period) 41.6 42.5
Return on assets (% at end of period) 1.8 1.8
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CANADIAN NATIONAL RAILWAY COMPANY
SUPPLEMENTARY INFORMATION (U.S. GAAP)
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Three months ended March 31
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Variance
2001 2000 Fav(Unfav)
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(Unaudited)
Revenue ton miles (millions)
Petroleum and chemicals 6,373 6,210 3%
Metals and minerals 2,358 2,223 6%
Forest products 6,985 7,175 (3%)
Coal 3,936 4,247 (7%)
Grain and fertilizers 12,459 12,003 4%
Intermodal 6,432 5,880 9%
Automotive 711 847 (16%)
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39,254 38,585 2%
Freight revenue / RTM (cents)
Petroleum and chemicals 3.62 3.53 3%
Metals and minerals 4.11 4.27 (4%)
Forest products 3.51 3.48 1%
Coal 2.16 2.00 8%
Grain and fertilizers 2.58 2.63 (2%)
Intermodal 3.68 3.55 4%
Automotive 17.86 17.47 2%
Total 3.42 3.43 -
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Carloads (thousands)
Petroleum and chemicals 134 128 5%
Metals and minerals 59 63 (6%)
Forest products 119 123 (3%)
Coal 138 135 2%
Grain and fertilizers 154 149 3%
Intermodal 273 266 3%
Automotive 75 88 (15%)
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952 952 -
Freight revenue / carload (dollars)
Petroleum and chemicals 1,724 1,711 1%
Metals and minerals 1,644 1,508 9%
Forest products 2,059 2,033 1%
Coal 616 630 (2%)
Grain and fertilizers 2,084 2,121 (2%)
Intermodal 868 786 10%
Automotive 1,693 1,682 1%
Total 1,411 1,389 2%
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