Canadian National reports record year in 1996 ( Part 1 of 3 - Financial Tables to Follow).

MONTREAL--(BUSINESS WIRE)--Jan. 21, 1997--(ME, TSE:CNR.) (NYSE:CNI.) Canadian National Railway Company today reported 1996 income from continuing operations of $505 million or $5.95 per share, excluding special charges of $381 million.

Total year 1996 operating income was $610 million versus $440 million last year.

CN's president and chief executive officer Paul M. Tellier said: "I am proud of what we have accomplished in 1996. We beat our 85.6 percent operating ratio target in reaching 85.3 percent and grew operating income by almost 40 percent. We have delivered in full on the game plan we set out at the time of the IPO. In the fourth quarter alone, operating income grew by 93 percent from the comparable 1995 period. 1996 was the best year in the history of this company."

Fourth quarter 1996 income from continuing operations was $181 million or $2.13 per share, excluding a special charges of $365 million. Operating income was $208 million with a 80.7 percent operating ratio.

Revenues were up 1.5 percent to $4,159 million for the year as a whole driven by a strong fourth quarter which ended at $1,080 million, a 12 percent increase over the comparable 1995 period. Overall, grain shipments for the year were weak, with a five percent decline, however other business units traffic was up three percent.

With a volume increase of 10 percent for the fourth quarter, operating expenses for this period were up $18 million to $872 million. Overall, 1996 operating expenses were down a full $109 million to $3,549 million. Labour expense was the key driver with a $95 million improvement over last year. This was achieved with a 14 percent labour productivity increase as measured, consistent with industry practice, in revenue-ton-mile per employee. At year end, CN's workforce stood just below 21,600 employees.

The special charges of $381 million have two components. First, a charge of $16 million in the first quarter for the completion of the company's IPO debt reduction program. And second, a charge of $365 million in the fourth quarter for labour force reductions. The latter is fully consistent with previously announced downsizing plans and covers a total of 2,250 reductions in 1996 and 1997. This involves no additional downsizing over that which was previously announced.

Net income, including these special charges, was $142 million or $1.67 per share for the year and a loss of $166 million or $1.96 per share for the fourth quarter.

"In 1996, we laid down a solid foundation for the challenges ahead." said Tellier. "1997 will be a pivotal year for CN. With the more competitive cost structure now in place, our future efforts will increasingly be on improving our customer service to fuel profitable revenue growth."

The company also announced today that its Board of Directors has increased its dividend for the first quarter of 1997 by 15 percent to Cdn $0.23 per share. The quarterly dividend will be paid on March 26, 1997, to shareholders of record at the close of business on March 7, 1997.

Canadian National is Canada's largest and North America's sixth largest railway based on revenues. CN serves all of Canada's major economic centres, natural resource regions and ports and it has strategic connections with all major U.S. railways.

CONTACT: Canadian National Railway Co., Montreal

Alain Bergeron (Media), 514/399-7210

Bob Noorigian (Investment Community), 514/399-0052