Canadian National Cuts Expenses Sharply, Improves Operating Ratio, Posts Satisfactory Second-Quarter Financial Results (Part 3 of 3 - Financial Tables).MONTREAL--(BUSINESS WIRE)--July 20, 1998--CN(ME:CNR See riser card. CNR - Communication and Network Riser .) (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CNR.) (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. ) Note 4 - Pro-forma impact of Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. Central Corporation acquisition If the Company had acquired its investment in IC on January January: see month. 1, 1997, based on the historical amounts reported by IC, net of the amortization of the difference between the Company's cost to acquire IC and the underlying equity in net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. of IC (based on preliminary estimates of the fair values of IC's properties and equipment and estimates of their remaining useful lives as well as estimates of the fair values of other IC assets and liabilities) net income would have been $155 million or $1.62 per share for the second quarter of 1998 and $276 million or $2.88 per share for the six months ended June June: see month. 30, 1998 (excluding an 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. special charge of $38 million (U.S.$27 million) recorded by IC related to the merger) compared to $164 million or $1.72 per share and $243 million or $2.56 per share for the second quarter and the six months ended June 30, 1997, respectively, excluding the cumulative effect of a change in accounting policy for track replacement costs. Net income would have included equity in earnings of IC of $40 million and $82 million for the quarter and six months ended June 30, 1998, respectively (excluding an after-tax special charge of $38 (U.S.$27 million) recorded by IC related to the merger), compared to $34 million and $64 million for the quarter and six months ended June 30, 1997, respectively. Net income would also have included after-tax interest expense related to the acquisition of $20 million and $41 million for the quarter and six months ended June 30, 1998, respectively, compared to $23 million and $45 million for the quarter and six months ended June 30, 1997, respectively. The pro-forma figures do not reflect synergies, and accordingly, do not account for any potential increases in 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. , any estimated cost savings, facilities consolidation or adjustments to conform accounting practices. Note 5 - Acquisition debt and other financing activities Credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities In connection with the acquisition of IC, the Company entered into a U.S.$800 million one-year adj. 1. completing its life cycle within a year. Adj. 1. one-year - completing its life cycle within a year; "a border of annual flowering plants" annual phytology, botany - the branch of biology that studies plants term loan facility and a U.S.$1,000 million five-year revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. Concurrently con·cur·rent adj. 1. Happening at the same time as something else. See Synonyms at contemporary. 2. Operating or acting in conjunction with another. 3. Meeting or tending to meet at the same point; convergent. , the Company terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: its previous revolving credit facilities. As at June 30, 1998, the Company has drawn U.S.$800 million (Cdn$1,174 million) under the term facility and U.S.$590 million (Cdn$866 million) under the revolving credit facility. The credit facilities provide for interest on borrowings at prevailing rates and contain customary financial covenants. It is the Company's intention to repay a significant portion of these amounts with proceeds received in late June 1998 from the sale of accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and proceeds received on July July: see month. 7, 1998 from the issuance of U.S.$925 million of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . Sale of accounts receivable On June 25, 1998, the Company entered into a revolving agreement to sell eligible 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 . The agreement allows for sales of accounts receivable up to a maximum of $250 million and expires in June 2003. At June 30, 1998, $150 million and U.S.$50 million (Cdn$73 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, pursuant to the agreement. Commercial paper In June 1998, the Company initiated a commercial paper program. The program enables the Company to issue commercial paper up to a maximum aggregate principal amount of $600 million or the U.S. dollar equivalent and is supported by the revolving credit facility. At June 30, 1998, a total amount of U.S.$150 million (Cdn$220 million) had been issued, of which U.S.$140 million (Cdn$199 million) was used to repay a portion of the revolving credit facility. Commercial paper debt is due within one year but has been classified as long-term debt, reflecting the Company's intent to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. the short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. borrowing through subsequent issuances of commercial paper. Capital leases During the first quarter of 1998, the Company recorded $130 million of capital lease obligations in connection with the financing of 40 new locomotives This is a list of locomotives (classes, or individual locomotives) that currently have articles in Wikipedia.
The steam-powered locomotive played a key role during the development and golden age of railroading, but, despite its long and picturesque history, it has upgrade program, as well as the exercising of certain purchase options on existing operating leases Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. . Note 6 - Earnings per share Effective January 1, 1997, the Company adopted a new accounting policy with respect to the accounting for track replacement costs. As such, the Company has restated the 1997 comparative earnings per share figures to include the cumulative effect of a change in accounting policy, as required under Financial Accounting Standards (FAS) 128, "Earnings per Share". Basic and 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 , excluding the cumulative effect of this change in accounting policy for the six-month period ended June 30, 1997 is $2.63 per share and $2.59 per share, respectively. Note 7 - Accumulated other comprehensive income In 1997 the Financial Accounting Standards Board issued a Statement on Financial Accounting Standards entitled “Comprehensive Income”. This statement required all income statement items to be reported either as a regular item in the income statement and or a special item as Effective January 1, 1998, the Company adopted FAS 130, "Reporting Comprehensive Income". This statement requires that all items that are recognized under accounting standards as components of comprehensive income be reported in an annual financial statement and displayed with the same prominence prominence /prom·i·nence/ (prom´i-nins) a protrusion or projection. frontonasal prominence as other annual financial statements. Quarterly financial statements are to include a total for comprehensive income. The components of comprehensive income are as follows: -0-
___________________________________________________________________
(In millions) Three months ended Six months ended
June 30 June 30
___________________________________________________________________
1998 1997 1998 1997
___________________________________________________________________
Net income $143 $152 $247 $812
___________________________________________________________________
Other comprehensive
income:
Unrealized foreign
exchange loss on
translation of U.S.
dollar denominated
long-term debt (91) - (91) -
Unrealized foreign
exchange gain on
translation of IC
net investment 99 - 99 -
___________________________________________________________________
Other comprehensive
income before income
taxes 8 - 8 -
Income tax expense
on other comprehensive
income items (3) - (3) -
___________________________________________________________________
Other comprehensive
income 5 - 5 -
___________________________________________________________________
Comprehensive income $148 $152 $252 $812
___________________________________________________________________
Note 8 - Subsequent event - Issuance of U.S.$925 million of long-
term debt
On July 7, 1998, the Company issued and sold U.S.$925 million of
long-term debt, the proceeds of which were used to repay the U.S.$800
million drawn on the term loan facility and a portion of the
revolving credit facility. The issuance of long-term debt includes
U.S.$200 million 6.80 percent notes due 2018, U.S.$475 million 6.90
percent notes due 2028, and U.S.$250 million puttable reset
securities (PURS). The PURS have an initial coupon rate of 6.45
percent until July 15, 2006 (the reset date), at which time it may be
reset and the maturity extended to July 15, 2036, if certain
conditions are met.
The PURS, a service mark of Goldman, Sachs & Co.(Goldman), are
securities which contain imbedded simultaneous put and call options
at par. At the time of issuance, the Company sold to Goldman the
option to call the securities on the reset date. If the call option
is exercised, the imbedded put option is automatically triggered,
resulting in the redemption of the original PURS. Goldman will then
have the right to remarket the securities at a new coupon rate for an
additional 30-year term ending July 15, 2036. The new coupon rate
will be determined according to a pre- set mechanism. If the call
option is not exercised, the put option is deemed to have been
exercised, resulting in the redemption of the PURS on July 15, 2006.
CANADIAN NATIONAL RAILWAY COMPANY
SELECTED RAILWAY STATISTICS (1)
___________________________________________________________________
Three months ended Six months ended
June 30 June 30
___________________________________________________________________
1998 1997 1998 1997
___________________________________________________________________
(Unaudited)
Rail Operations
Freight revenues
($ millions) 1,008 1,092 2,056 2,101
Gross ton miles
(billions) 55.3 58.6 112.1 112.6
Revenue ton miles
(RTM) (millions) 28,478 30,282 57,947 58,731
Route miles (includes
Canada and the U.S.) 14,226 16,757 14,226 16,757
Operating expenses
per RTM (cents) 2.66 2.84 2.82 2.94
Freight revenue
per RTM (cents) 3.54 3.61 3.55 3.58
Carloads (thousands) 618 643 1,249 1,249
Freight revenue
per carload ($) 1,631 1,698 1,646 1,682
Diesel fuel consumed
(Canadian gallons
in millions) 59 67 127 136
Average fuel price
($/Canadian gallon) 1.05 1.22 1.10 1.28
Revenue ton miles per
Canadian gallon of
fuel consumed 483 452 456 432
Locomotive bad order
ratio (percent) 8.2 10.3 8.3 10.6
Freight car bad order
ratio (percent) 2.9 3.6 2.7 4.1
___________________________________________________________________
Productivity
Operating ratio
(percent) 73.5 76.8 78.1 80.5
Freight revenue per
route mile
($ thousands) 71 65 145 125
Revenue ton miles per
route mile (thousands) 2,002 1,807 4,073 3,505
Freight revenue per
average number of
employees
($ thousands) 45 47 95 93
Revenue ton miles per
average number of
employees (thousands) 1,285 1,306 2,667 2,597
___________________________________________________________________
Employees
Number at end of
period 22,387 23,644 22,387 23,644
Average number
during period 22,158 23,178 21,729 22,614
Labour and fringe
benefits per RTM
(cents) 1.09 1.05 1.13 1.11
Injury frequency rate
per 200,000 person
hours 1.2 1.8 1.3 1.7
Accident rate per
million train miles 1.1 2.4 1.4 3.0
___________________________________________________________________
Financial
Debt to total
capitalization ratio
(percent at end of
period) 44.5 28.5 44.5 28.5
Return on assets at
end of period
(percent) 1.6 2.3 2.7 3.4(2)
___________________________________________________________________
(1) Excludes Illinois Central Corporation.
(2) Adjusted to exclude the cumulative effect of the change in
accounting policy for track replacement costs.
CANADIAN NATIONAL RAILWAY COMPANY
SUPPLEMENTARY INFORMATION (1)
Three months ended Six months ended
June 30 June 30
___________________________________________________________________
Variance Variance
1998 1997 Fav / 1998 1997 Fav /
(Unfav) (Unfav)
(percent) (percent)
___________________________________________________________________
(Unaudited)
Revenue ton
miles (millions)
Industrial
products 6,044 5,793 4 12,138 11,642 4
Forest products 5,749 5,913 (3) 11,558 11,233 3
Grain and grain
products 4,336 6,035 (28) 10,119 11,942 (15)
Coal, sulphur,
and fertilizers 6,685 6,701 - 13,116 12,868 2
Intermodal 5,088 4,954 3 9,779 9,403 4
Automotive 576 886 (35) 1,237 1,643 (25)
___________________________________________________________________
28,478 30,282 (6) 57,947 58,731 (1)
Freight revenue /
RTM (cents)
Industrial
products 3.71 3.81 (3) 3.67 3.77 (3)
Forest products 3.67 3.60 2 3.63 3.61 -
Grain and grain
products 2.88 2.88 - 2.94 2.75 7
Coal, sulphur,
and fertilizers 2.32 2.58 (10) 2.42 2.57 (6)
Intermodal 3.83 3.94 (3) 3.80 3.95 (4)
Automotive 17.01 13.09 30 16.57 13.76 20
Total 3.54 3.61 (2) 3.55 3.58 (1)
___________________________________________________________________
Carloads
(thousands)
Industrial
products 123 120 3 251 240 5
Forest products 88 88 - 178 172 3
Grain and grain
products 47 63 (25) 104 119 (13)
Coal, sulphur,
and fertilizers 104 108 (4) 210 215 (2)
Intermodal 190 189 1 371 360 3
Automotive 66 75 (12) 135 143 (6)
___________________________________________________________________
618 643 (4) 1,249 1,249 -
Freight revenue /
carload (dollars)
Industrial
products 1,821 1,842 (1) 1,773 1,829 (3)
Forest products 2,398 2,420 (1) 2,354 2,360 -
Grain and grain
products 2,660 2,762 (4) 2,856 2,756 4
Coal, sulphur,
and fertilizers 1,490 1,602 (7) 1,514 1,540 (2)
Intermodal 1,026 1,032 (1) 1,003 1,031 (3)
Automotive 1,485 1,547 (4) 1,519 1,580 (4)
Total 1,631 1,698 (4) 1,646 1,682 (2)
___________________________________________________________________
(1) Excludes Illinois Central Corporation.
CONTACT: Canadian National Railway Company
Mark Hallman (Media), 416/ 217-6390
http://www.cn.ca
or
Canadian National Railway Company
Robert Noorigian (Investment Community),
514/399-0052
http://www.cn.ca
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