Q3-2014 diluted earnings per share (EPS) of
C$1.04 increased 21 per cent over
adjusted diluted Q3-2013 EPS of C$0.86 (1)
CN generated record quarterly revenues and
improved operating ratio to 58.8 per cent
MONTREAL, Oct. 21,
2014 /CNW Telbec/ - CN (TSX: CNR) (NYSE: CNI) today reported
its financial and operating results for the third quarter and
nine-month period ended Sept. 30,
2014.
Third-quarter and nine-month 2014 financial
highlights
- Net income was C$853 million, or
C$1.04 per diluted share, compared
with net income of C$705 million, or
C$0.84 per diluted share, for the
year-earlier quarter. The Q3-2013 results included a C$19-million (C$0.02 per diluted share) income tax expense
resulting from the enactment of higher provincial corporate income
tax rates.
- Excluding the above Q3-2013 income tax expense, Q3-2014 diluted
EPS of C$1.04 increased 21 per cent
over last year's adjusted diluted EPS of C$0.86. (1)
- Operating income for the third quarter of 2014 increased 19 per
cent to C$1,286 million.
- Third-quarter 2014 revenues and carloadings set all-time
quarterly records, with revenues rising 16 per cent to C$3,118 million and carloadings increasing 11 per
cent to 1,475 thousand. Revenue ton-miles grew by 13 per cent.
- CN's operating ratio for Q3-2014 improved by one point to 58.8
per cent from 59.8 per cent for the year-earlier quarter.
- Free cash flow for the first nine months of 2014 was
C$2,045 million, up from C$1,307 million for the comparable period of
2013. (1)
Claude Mongeau,
president and chief executive officer, said: "CN delivered
outstanding third-quarter financial results while improving
customer service levels and maintaining industry-leading operating
efficiencies. Solid execution by our team of railroaders enabled us
to accommodate the significantly higher freight volume generated by
a record Canadian grain crop, strong energy markets, and new
business, particularly in intermodal and automotive.
"The results underscore CN's commitment to
investing ahead of the curve in resources and rail infrastructure
and playing our role as a true backbone of the 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 third-quarter 2014 net income would have been lower by
C$22 million, or C$0.03 per diluted share. (1)
Third-quarter 2014 revenues, traffic volumes and
expenses
Revenues for the third quarter of 2014 increased by 16 per cent to
an all-time quarterly high of C$3,118
million. Revenues increased for grain and fertilizers (29
per cent), petroleum and chemicals (21 per cent), metals and
minerals (17 per cent), automotive (17 per cent), intermodal (14
per cent), and forest products (eight per cent). Coal revenues
declined by three per cent.
The increase in revenues was mainly attributable
to higher freight volumes due to a record Canadian grain crop,
strong energy markets, particularly crude oil and frac sand, new
intermodal business including temporary diversions from U.S. west
coast ports, as well as new automotive business; the positive
translation impact of the weaker Canadian dollar on
U.S.-dollar-denominated revenues; and freight rate increases.
Carloadings for the third quarter rose 11 per
cent to 1,475 thousand, an all-time record quarterly
performance.
Revenue ton-miles, measuring the relative weight
and distance of rail freight transported by CN, increased by 13 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 two
per cent over the year-earlier period, driven by the positive
translation impact of the weaker Canadian dollar and freight rate
increases, partly offset by an increase in the average length of
haul.
Operating expenses for the quarter increased by
14 per cent to C$1,832 million. The
increase was mainly attributable to increased purchased services
and material expense, increased labor and fringe benefits expense,
the negative translation impact of a weaker Canadian dollar on
U.S.-dollar-denominated expenses and higher fuel costs.
Forward-Looking Statements
(2)
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.
Financial outlook and 2014 key assumptions
CN
maintains the 2014 financial outlook it issued on July 21, 2014. The Company expects to deliver
solid double-digit EPS growth in 2014 over adjusted diluted 2013
EPS of C$3.06, and to generate free
cash flow in the range of C$1.8 billion to
C$2 billion, excluding major asset sales.
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 to four percent, and that U.S. housing
starts will be in the range of one million units. CN is also
assuming U.S. motor vehicles sales will be approximately 16 million
units. In addition, CN is assuming the 2014/2015 grain crop in
Canada will be in-line with the
five-year average, and is now assuming the 2014/2015 grain crop in
the U.S. will be above the five-year average. With these
assumptions, CN assumes mid to high single-digit carload growth
along with continued pricing improvement above inflation. CN also
assumes that the value of the Canadian dollar in U.S. currency will
be in the range of $0.90 to $0.95 and
the price of crude oil (West Texas Intermediate) to be in the range
of US$95-$105 per barrel on average
for the full-year 2014. In 2014, CN plans to invest approximately
C$2.25 billion in its capital
program, of which approximately C$1.2
billion is targeted toward maintaining the safety and
integrity of the network, particularly track infrastructure. The
capital program also includes funds for projects supporting growth
and productivity.
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.
- See discussion and reconciliation of non-GAAP adjusted
performance measures in the attached supplementary schedule,
Non-GAAP Measures.
- 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.
Consolidated Statement of Income -
unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
September 30
|
|
September 30
|
In millions, except per share
data
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
Revenues
|
$
|
3,118
|
|
$
|
2,698
|
|
$
|
8,927
|
|
$
|
7,830
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
Labor and fringe
benefits
|
|
580
|
|
|
521
|
|
|
1,727
|
|
|
1,588
|
Purchased services
and material
|
|
378
|
|
|
318
|
|
|
1,156
|
|
|
987
|
Fuel
|
|
446
|
|
|
390
|
|
|
1,398
|
|
|
1,197
|
Depreciation and
amortization
|
|
258
|
|
|
241
|
|
|
771
|
|
|
726
|
Equipment
rents
|
|
83
|
|
|
68
|
|
|
244
|
|
|
204
|
Casualty and
other
|
|
87
|
|
|
76
|
|
|
267
|
|
|
222
|
Total operating expenses
|
|
1,832
|
|
|
1,614
|
|
|
5,563
|
|
|
4,924
|
Operating income
|
|
1,286
|
|
|
1,084
|
|
|
3,364
|
|
|
2,906
|
Interest
expense
|
|
(94)
|
|
|
(89)
|
|
|
(277)
|
|
|
(266)
|
Other income (loss)
(Note 3)
|
|
(2)
|
|
|
5
|
|
|
94
|
|
|
75
|
Income before income taxes
|
|
1,190
|
|
|
1,000
|
|
|
3,181
|
|
|
2,715
|
Income tax expense
(Note 7)
|
|
(337)
|
|
|
(295)
|
|
|
(858)
|
|
|
(738)
|
Net income
|
$
|
853
|
|
$
|
705
|
|
$
|
2,323
|
|
$
|
1,977
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (Note 10)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.04
|
|
$
|
0.84
|
|
$
|
2.83
|
|
$
|
2.34
|
Diluted
|
$
|
1.04
|
|
$
|
0.84
|
|
$
|
2.81
|
|
$
|
2.33
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares
(Note 10)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
817.0
|
|
|
839.3
|
|
|
822.2
|
|
|
846.2
|
Diluted
|
|
820.9
|
|
|
842.2
|
|
|
825.8
|
|
|
849.2
|
See accompanying notes to unaudited consolidated
financial statements.
|
Consolidated Statement of Comprehensive Income -
unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
September 30
|
|
|
September 30
|
In millions
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
853
|
|
$
|
705
|
|
$
|
2,323
|
|
$
|
1,977
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
(Note 11)
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss) on
foreign currency translation
|
|
44
|
|
|
(11)
|
|
|
39
|
|
|
24
|
Net change in pension
and other postretirement benefit plans
|
|
32
|
|
|
57
|
|
|
95
|
|
|
173
|
Amortization of gain
on treasury lock
|
|
(1)
|
|
|
-
|
|
|
(1)
|
|
|
-
|
Other comprehensive income before income
taxes
|
|
75
|
|
|
46
|
|
|
133
|
|
|
197
|
Income tax recovery
(expense)
|
|
32
|
|
|
(32)
|
|
|
18
|
|
|
(20)
|
Other comprehensive income
|
|
107
|
|
|
14
|
|
|
151
|
|
|
177
|
Comprehensive income
|
$
|
960
|
|
$
|
719
|
|
$
|
2,474
|
|
$
|
2,154
|
See accompanying notes to unaudited consolidated
financial statements.
|
Consolidated Balance Sheet -
unaudited
|
|
|
|
|
|
|
|
|
|
|
September 30
|
|
December
31
|
|
September
30
|
In millions
|
|
2014
|
|
|
2013
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
176
|
|
$
|
214
|
|
$
|
182
|
|
Restricted cash and
cash equivalents (Note 4)
|
|
467
|
|
|
448
|
|
|
529
|
|
Accounts receivable
(Note 4)
|
|
939
|
|
|
815
|
|
|
868
|
|
Material and
supplies
|
|
372
|
|
|
274
|
|
|
317
|
|
Deferred and
receivable income taxes
|
|
72
|
|
|
137
|
|
|
74
|
|
Other
|
|
82
|
|
|
89
|
|
|
67
|
Total current assets
|
|
2,108
|
|
|
1,977
|
|
|
2,037
|
Properties
|
|
27,410
|
|
|
26,227
|
|
|
25,383
|
Intangible and other
assets
|
|
2,155
|
|
|
1,959
|
|
|
377
|
Total assets
|
$
|
31,673
|
|
$
|
30,163
|
|
$
|
27,797
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders'
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and
other
|
$
|
1,718
|
|
$
|
1,477
|
|
$
|
1,499
|
|
Current portion of
long-term debt (Note 4)
|
|
485
|
|
|
1,021
|
|
|
1,488
|
Total current liabilities
|
|
2,203
|
|
|
2,498
|
|
|
2,987
|
Deferred income
taxes
|
|
6,920
|
|
|
6,537
|
|
|
5,884
|
Pension and other
postretirement benefits, net of current portion
|
|
554
|
|
|
541
|
|
|
589
|
Other liabilities and
deferred credits
|
|
893
|
|
|
815
|
|
|
760
|
Long-term
debt
|
|
7,356
|
|
|
6,819
|
|
|
6,010
|
Shareholders' equity
|
|
|
|
|
|
|
|
|
|
Common
shares
|
|
3,965
|
|
|
4,015
|
|
|
4,036
|
|
Accumulated other
comprehensive loss (Note 11)
|
|
(1,699)
|
|
|
(1,850)
|
|
|
(3,080)
|
|
Retained
earnings
|
|
11,481
|
|
|
10,788
|
|
|
10,611
|
Total shareholders' equity
|
|
13,747
|
|
|
12,953
|
|
|
11,567
|
Total liabilities and shareholders'
equity
|
$
|
31,673
|
|
$
|
30,163
|
|
$
|
27,797
|
See accompanying notes to unaudited consolidated
financial statements.
|
Consolidated Statement of Changes in Shareholders'
Equity - unaudited
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
September 30
|
|
September 30
|
In millions
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
Common shares (1)
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of
period
|
$
|
3,975
|
|
$
|
4,063
|
|
$
|
4,015
|
|
$
|
4,108
|
|
Stock options
exercised and other
|
|
13
|
|
|
8
|
|
|
31
|
|
|
35
|
|
Share repurchase
programs (Note 4)
|
|
(23)
|
|
|
(35)
|
|
|
(81)
|
|
|
(107)
|
Balance, end of period
|
$
|
3,965
|
|
$
|
4,036
|
|
$
|
3,965
|
|
$
|
4,036
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss
(Note 11)
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of
period
|
$
|
(1,806)
|
|
$
|
(3,094)
|
|
$
|
(1,850)
|
|
$
|
(3,257)
|
|
Other comprehensive
income
|
|
107
|
|
|
14
|
|
|
151
|
|
|
177
|
Balance, end of period
|
$
|
(1,699)
|
|
$
|
(3,080)
|
|
$
|
(1,699)
|
|
$
|
(3,080)
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of
period
|
$
|
11,174
|
|
$
|
10,416
|
|
$
|
10,788
|
|
$
|
10,167
|
|
Net income
|
|
853
|
|
|
705
|
|
|
2,323
|
|
|
1,977
|
|
Share repurchase
programs (Note 4)
|
|
(342)
|
|
|
(330)
|
|
|
(1,014)
|
|
|
(988)
|
|
Dividends
|
|
(204)
|
|
|
(180)
|
|
|
(616)
|
|
|
(545)
|
Balance, end of period
|
$
|
11,481
|
|
$
|
10,611
|
|
$
|
11,481
|
|
$
|
10,611
|
See accompanying notes to unaudited consolidated
financial statements.
|
|
|
(1)
|
During the three and nine months ended September 30,
2014, the Company issued 0.4 million and 0.9 million common shares,
respectively, as a result of stock options exercised and
repurchased 4.9 million and 16.8 million common shares,
respectively, under its current share repurchase program. At
September 30, 2014, the Company had 814.7 million common shares
outstanding.
|
|
During the three and nine months ended September 30,
2013, the Company issued 0.1 million and 1.2 million common shares,
respectively, as a result of stock options exercised and
repurchased 7.1 million and 22.1 million common shares,
respectively, under its previous share repurchase program. At
September 30, 2013, the Company had 835.9 million common shares
outstanding.
|
Consolidated Statement of Cash Flows -
unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
September 30
|
|
September 30
|
In millions
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
853
|
|
$
|
705
|
|
$
|
2,323
|
|
$
|
1,977
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
258
|
|
|
241
|
|
|
771
|
|
|
726
|
|
Deferred income
taxes
|
|
67
|
|
|
13
|
|
|
215
|
|
|
169
|
|
Gain on disposal of
property (Note 3)
|
|
-
|
|
|
-
|
|
|
(80)
|
|
|
(69)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
26
|
|
|
(3)
|
|
|
(73)
|
|
|
(23)
|
|
|
Material and
supplies
|
|
(11)
|
|
|
11
|
|
|
(92)
|
|
|
(84)
|
|
|
Accounts payable and
other
|
|
100
|
|
|
57
|
|
|
196
|
|
|
(146)
|
|
|
Other current
assets
|
|
13
|
|
|
17
|
|
|
24
|
|
|
28
|
|
Pensions and other,
net
|
|
22
|
|
|
25
|
|
|
(38)
|
|
|
(128)
|
Net cash provided by operating
activities
|
|
1,328
|
|
|
1,066
|
|
|
3,246
|
|
|
2,450
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
Property
additions
|
|
(620)
|
|
|
(539)
|
|
|
(1,350)
|
|
|
(1,185)
|
Disposal of property
(Note 3)
|
|
76
|
|
|
-
|
|
|
173
|
|
|
52
|
Change in restricted
cash and cash equivalents
|
|
1
|
|
|
(32)
|
|
|
(19)
|
|
|
(8)
|
Other, net
|
|
(9)
|
|
|
(8)
|
|
|
(24)
|
|
|
(10)
|
Net cash used in investing
activities
|
|
(552)
|
|
|
(579)
|
|
|
(1,220)
|
|
|
(1,151)
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of debt,
excluding commercial paper (Note 4)
|
|
-
|
|
|
210
|
|
|
347
|
|
|
715
|
Repayment of debt,
excluding commercial paper
|
|
(222)
|
|
|
(104)
|
|
|
(795)
|
|
|
(1,000)
|
Net issuance of
commercial paper
|
|
64
|
|
|
58
|
|
|
73
|
|
|
609
|
Issuance of common
shares due to exercise of stock options
and related excesstax
benefits realized
|
|
11
|
|
|
5
|
|
|
24
|
|
|
28
|
Repurchase of common
shares (Note 4)
|
|
(383)
|
|
|
(383)
|
|
|
(1,095)
|
|
|
(1,095)
|
Dividends
paid
|
|
(204)
|
|
|
(180)
|
|
|
(616)
|
|
|
(545)
|
Net cash used in financing
activities
|
|
(734)
|
|
|
(394)
|
|
|
(2,062)
|
|
|
(1,288)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign
exchange fluctuations on USdollar-denominated cash and cash
equivalents
|
|
7
|
|
|
2
|
|
|
(2)
|
|
|
16
|
Net increase (decrease) in cash and cash
equivalents
|
|
49
|
|
|
95
|
|
|
(38)
|
|
|
27
|
Cash and cash
equivalents, beginning of period
|
|
127
|
|
|
87
|
|
|
214
|
|
|
155
|
Cash and cash equivalents, end of
period
|
$
|
176
|
|
$
|
182
|
|
$
|
176
|
|
$
|
182
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow
information
|
|
|
|
|
|
|
|
|
|
|
|
Net cash receipts
from customers and other
|
$
|
3,213
|
|
$
|
2,633
|
|
$
|
8,945
|
|
$
|
7,798
|
Net cash payments
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee services,
suppliers and other expenses
|
|
(1,561)
|
|
|
(1,256)
|
|
|
(4,757)
|
|
|
(4,169)
|
|
Interest
|
|
(87)
|
|
|
(85)
|
|
|
(297)
|
|
|
(259)
|
|
Personal injury and
other claims
|
|
(14)
|
|
|
(16)
|
|
|
(38)
|
|
|
(44)
|
|
Pensions (Note
6)
|
|
(6)
|
|
|
(11)
|
|
|
(106)
|
|
|
(221)
|
|
Income
taxes
|
|
(217)
|
|
|
(199)
|
|
|
(501)
|
|
|
(655)
|
Net cash provided by operating
activities
|
$
|
1,328
|
|
$
|
1,066
|
|
$
|
3,246
|
|
$
|
2,450
|
See accompanying notes to unaudited consolidated
financial statements.
|
Notes to Unaudited Consolidated Financial Statements
1 - Basis of presentation
In management's opinion, the accompanying unaudited Interim
Consolidated Financial Statements and Notes thereto, expressed in
Canadian dollars, and prepared in accordance with U.S. generally
accepted accounting principles (U.S. GAAP) for interim financial
statements, contain all adjustments (consisting of normal recurring
accruals) necessary to present fairly Canadian National Railway
Company's ("CN" or the "Company") financial position as at
September 30, 2014, December 31, 2013 and September 30, 2013, and its results of
operations, changes in shareholders' equity and cash flows for the
three and nine months ended September 30,
2014 and 2013.
To be consistent with the basis of presentation used in
preparing the Company's 2013 Annual Consolidated Financial
Statements, these unaudited Interim Consolidated Financial
Statements and Notes thereto reflect the fourth quarter 2013 common
stock split and net basis disclosure of commercial paper as
described below.
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, paid on November 29, 2013 to shareholders of record on
November 15, 2013. At the effective
date of the stock split, all equity-based benefit plans and share
repurchase programs were adjusted to reflect the issuance of such
additional shares. All share and per share data presented herein
reflect the impact of the stock split.
Beginning with the fourth quarter of 2013, the Company revised
the Consolidated Statement of Cash Flows to present on a net basis
the issuances and repayments of commercial paper, all of which have
a maturity of less than 90 days and which were previously reported
on a gross basis.
These unaudited Interim Consolidated Financial Statements and
Notes thereto have been prepared using accounting policies
consistent with those used in preparing the Company's 2013 Annual
Consolidated Financial Statements. While management believes that
the disclosures presented are adequate to make the information not
misleading, these unaudited Interim Consolidated Financial
Statements and Notes thereto should be read in conjunction with the
Company's 2013 Annual Consolidated Financial Statements and Notes
thereto.
2 - Recent accounting pronouncement
On May 28, 2014, the Financial
Accounting Standards Board (FASB) issued Accounting Standards
Update (ASU) 2014-09, Revenue from Contracts with Customers,
which establishes principles for reporting the nature, amount,
timing and uncertainty of revenues and cash flows arising from an
entity's contracts with customers. The core principle of the new
standard is that an entity recognizes revenue to represent the
transfer of goods or services to customers in an amount that
reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. This standard is
effective for annual and interim reporting periods beginning after
December 15, 2016 and will replace
most existing revenue recognition guidance within U.S. GAAP. Early
adoption is not permitted. The standard permits the use of either
the retrospective or cumulative effect transition method. The
Company is evaluating the effect that ASU 2014-09 will have on its
Consolidated Financial Statements, related disclosures, as well as
which transition method to apply.
3 - Disposal of property
2014
Guelph
On September 4, 2014, the Company
closed a transaction with Metrolinx to sell a segment of the
Guelph subdivision located between
Georgetown and Kitchener, Ontario, together with the rail
fixtures and certain passenger agreements (collectively the
"Guelph"), for cash proceeds of $76
million before transaction costs. The Company did not meet
all the conditions to record the sale under the full accrual method
for real estate transactions as it continues to have substantial
continuing involvement on the Guelph. The sale is expected to be recognized
in 2018, when the Company will have relinquished substantially all
of the risks and rewards of ownership on the Guelph.
Deux-Montagnes
On February 28, 2014, the Company
closed a transaction with Agence Métropolitaine de Transport to
sell the Deux-Montagnes
subdivision between Saint-Eustache
and Montreal, Quebec, including
the Mont-Royal tunnel, together
with the rail fixtures (collectively the "Deux-Montagnes"), for
cash proceeds of $97 million before
transaction costs. Under the agreement, the Company obtained the
perpetual right to operate freight trains over the Deux-Montagnes at its then current level of
operating activity, with the possibility of increasing its
operating activity for additional consideration. The transaction
resulted in a gain on disposal of $80
million ($72 million
after-tax) that was recorded in Other income under the full accrual
method of accounting for real estate transactions.
2013
Exchange of easements
On June 8, 2013, the Company entered
into an agreement with another Class I railroad to exchange
perpetual railroad operating easements including the track and
roadway assets on specific rail lines (collectively the "exchange
of easements") without monetary consideration. The Company has
accounted for the exchange of easements at fair value pursuant to
FASB Accounting Standards Codification (ASC) 845, Nonmonetary
Transactions. The transaction resulted in a gain on exchange of
easements of $29 million
($18 million after-tax) that was
recorded in Other income.
Lakeshore West
On March 19, 2013, the Company
entered into an agreement with Metrolinx to sell a segment of the
Oakville subdivision in
Oakville and Burlington, Ontario, together with the rail
fixtures and certain passenger agreements (collectively the
"Lakeshore West"), for cash proceeds of $52
million before transaction costs. Under the agreement, the
Company obtained the perpetual right to operate freight trains over
the Lakeshore West at its then current level of operating activity,
with the possibility of increasing its operating activity for
additional consideration. The transaction resulted in a gain on
disposal of $40 million ($36 million after-tax) that was recorded in Other
income under the full accrual method of accounting for real estate
transactions.
4 - Financing activities
Shelf prospectus and registration statement
On February 11, 2014, under its
current shelf prospectus and registration statement which expires
January 2016, the Company issued
$250 million 2.75% Notes due 2021 in
the Canadian capital markets, which resulted in net proceeds of
$247 million, intended for general
corporate purposes, including the redemption and refinancing of
outstanding indebtedness and share repurchases.
Revolving credit facility
The Company has an $800 million
revolving credit facility agreement with a consortium of lenders.
The agreement, which contains customary terms and conditions,
allows for an increase in the facility amount, up to a maximum of
$1.3 billion, as well as the option
to extend the term by an additional year at each anniversary date,
subject to the consent of individual lenders. The Company exercised
such option and on March 14, 2014,
the expiry date of the agreement was extended by one year to
May 5, 2019. The Company plans to use
the credit facility for working capital and general corporate
purposes, including backstopping its commercial paper program. As
at September 30, 2014 and
December 31, 2013, the Company had no
outstanding borrowings under its revolving credit facility and
there were no draws during the nine months ended September 30, 2014.
Commercial paper
The Company has a commercial paper program, which is backed by its
revolving credit facility, enabling it to issue commercial paper up
to a maximum aggregate principal amount of $800 million, or the US dollar equivalent. As at
September 30, 2014, the Company had
total borrowings of $350 million
($273 million as at December 31, 2013) presented in Current portion
of long-term debt on the Consolidated Balance Sheet at a
weighted-average interest rate of 1.12% (1.14% as at December 31, 2013).
Accounts receivable securitization program
The Company has an agreement to sell an undivided co-ownership
interest in a revolving pool of accounts receivable to unrelated
trusts for maximum cash proceeds of $450
million. On July 23, 2014, the
expiry date of the agreement was extended by one year to
February 1, 2017.
The Company accounts for the proceeds of its accounts receivable
securitization program as a secured borrowing under ASC 860,
Transfers and Servicing. As such, as at September 30, 2014, the Company recorded
$50 million ($250 million as at December 31, 2013) of proceeds received under the
accounts receivable securitization program in the Current portion
of long-term debt on the Consolidated Balance Sheet at a
weighted-average interest rate of 1.23% (1.18% as at December 31, 2013) which is secured by and
limited to $56 million ($281 million as at December 31, 2013) of accounts receivable.
Bilateral letter of credit facilities and Restricted cash
and cash equivalents
The Company has a series of bilateral letter of credit facility
agreements with various banks to support its requirements to post
letters of credit in the ordinary course of business. On
March 14, 2014, the expiry date of
these agreements was extended by one year to April 28, 2017. Under these agreements, the
Company has the option from time to time to pledge collateral in
the form of cash or cash equivalents, for a minimum term of one
month, equal to at least the face value of the letters of credit
issued. As at September 30, 2014, the
Company had letters of credit drawn of $493
million ($481 million as at
December 31, 2013) from a total
committed amount of $514 million
($503 million as at December 31, 2013) by the various banks. As at
September 30, 2014, cash and cash
equivalents of $467 million
($448 million as at December 31, 2013) were pledged as collateral and
recorded as Restricted cash and cash equivalents on the
Consolidated Balance Sheet.
Share repurchase programs
On October 22, 2013, the Board of
Directors of the Company had approved a share repurchase program
which allowed for the repurchase of up to 30.0 million common
shares between October 29, 2013 and
October 23, 2014, pursuant to a
normal course issuer bid at prevailing market prices plus brokerage
fees, or such other prices as may be permitted by the Toronto Stock
Exchange. The Company repurchased a total of 22.3 million common
shares for $1.4 billion under this
share repurchase program.
The following table provides the information related to the
share repurchase programs for the three and nine months ended
September 30, 2014 and 2013:
|
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
In millions, except per share
data
|
|
2014
|
2013
|
|
2014
|
2013
|
Number of common
shares repurchased (1)
|
|
|
4.9
|
|
7.1
|
|
|
16.8
|
|
22.1
|
Weighted-average
price per share (2)
|
|
$
|
75.55
|
$
|
51.17
|
|
$
|
65.40
|
$
|
49.51
|
Amount of
repurchase
|
|
$
|
365
|
$
|
365
|
|
$
|
1,095
|
$
|
1,095
|
(1)
|
Includes common shares purchased in the first
quarters of 2014 and 2013 pursuant to private agreements between
the Company and arm's length third-party
sellers.
|
(2)
|
Includes brokerage fees.
|
See Note 12 – Subsequent event for additional information on the
Company's new share repurchase program approved on October 21, 2014.
5 - Stock plans
The Company has various stock-based incentive plans for eligible
employees. A description of the Company's major plans is provided
in Note 10 – Stock plans to the Company's 2013 Annual Consolidated
Financial Statements. The following table provides total
stock-based compensation expense for awards under all plans, as
well as the related tax benefit recognized in income, for the three
and nine months ended September 30,
2014 and 2013:
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
In millions
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Cash settled awards
|
|
|
|
|
|
|
|
|
|
Share Unit Plan
(1)
|
$
|
40
|
$
|
17
|
|
$
|
85
|
$
|
38
|
Voluntary Incentive
Deferral Plan (VIDP)
|
|
19
|
|
4
|
|
|
40
|
|
17
|
Total cash settled awards
|
|
59
|
|
21
|
|
|
125
|
|
55
|
Stock option awards
|
|
2
|
|
3
|
|
|
7
|
|
7
|
Total stock-based compensation
expense
|
$
|
61
|
$
|
24
|
|
$
|
132
|
$
|
62
|
Tax benefit
recognized in income
|
$
|
16
|
$
|
7
|
|
$
|
35
|
$
|
15
|
(1)
|
The nine months ended September 30, 2013 includes the
reversal of approximately $20 million of stock-based compensation
expense related to the forfeiture of performance share units by
former executives.
|
Cash settled awards
Share Unit Plan
Following approval by the Board of Directors in January 2014, the Company granted 0.8 million
performance share units (PSUs), previously known as restricted
share units to designated management employees entitling them to
receive payout in cash based on the Company's share price. The PSUs
granted are generally scheduled for payout after three years ("plan
period") and vest conditionally upon the attainment of a target
relating to return on invested capital over the plan period.
Payout is conditional upon the attainment of a minimum share
price calculated using the average of the last three months of the
plan period. In addition, commencing at various dates, for senior
and executive management employees ("executive employees"), payout
on PSUs is also conditional on compliance with the conditions of
their benefit plans or award agreements, including but not limited
to non-compete, non-solicitation, and non-disclosure of
confidential information conditions. Current or former executive
employees who breach such conditions of their benefit plans or
award agreements will forfeit the PSU payout. Should the Company
reasonably determine that a current or former executive employee
may have violated the conditions of their benefit plans or award
agreements; the Company may at its discretion change the manner of
vesting of the PSUs to suspend payout on any PSUs pending
resolution of such matter.
The following table provides the 2014 activity for all cash
settled awards:
|
|
|
PSUs
|
|
VIDP
|
In millions
|
|
Nonvested
|
Vested
|
|
Nonvested
|
Vested
|
Outstanding at
December 31, 2013
|
|
1.7
|
0.9
|
|
-
|
2.3
|
|
Granted
(Payout)
|
|
0.8
|
(0.9)
|
|
-
|
(0.1)
|
Outstanding at September 30,
2014
|
|
2.5
|
-
|
|
-
|
2.2
|
The following table provides valuation and expense information
for all cash settled awards:
In millions, unless otherwise
indicated
|
|
|
PSUs (1)
|
VIDP (2)
|
|
Total
|
Year of grant
|
2014
|
2013
|
2012
|
2011
|
2010
|
2009
|
|
|
|
|
Stock-based compensation expense (recovery)
recognized over requisite service period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
September 30, 2014
|
$
|
22
|
$
|
30
|
$
|
35
|
$
|
(2)
|
$
|
-
|
$
|
-
|
|
$
|
40
|
$
|
125
|
Nine months ended
September 30, 2013 (3)
|
|
N/A
|
$
|
12
|
$
|
22
|
$
|
17
|
$
|
(4)
|
$
|
(9)
|
|
$
|
17
|
$
|
55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liability outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2014
|
$
|
23
|
$
|
65
|
$
|
96
|
$
|
-
|
$
|
-
|
$
|
-
|
|
$
|
178
|
$
|
362
|
December 31,
2013
|
|
N/A
|
$
|
34
|
$
|
61
|
$
|
80
|
$
|
-
|
$
|
-
|
|
$
|
145
|
$
|
320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value per unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2014
($)
|
$
|
71.29
|
$
|
78.27
|
$
|
79.26
|
|
N/A
|
|
N/A
|
|
N/A
|
|
$
|
79.51
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of awards vested during the
period
|
|
|
|
|
Nine months ended
September 30, 2014
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
N/A
|
|
N/A
|
|
$
|
1
|
$
|
1
|
Nine months ended
September 30, 2013
|
|
N/A
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
N/A
|
|
$
|
1
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested awards at September 30,
2014
|
|
|
|
|
|
Unrecognized
compensation cost
|
$
|
30
|
$
|
23
|
$
|
5
|
$
|
-
|
|
N/A
|
|
N/A
|
|
$
|
2
|
$
|
60
|
Remaining recognition
period (years)
|
|
2.3
|
|
1.3
|
|
0.3
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
N/A
(4)
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumptions (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock price
($)
|
$
|
79.51
|
$
|
79.51
|
$
|
79.51
|
|
N/A
|
|
N/A
|
|
N/A
|
|
$
|
79.51
|
|
N/A
|
Expected stock price
volatility (6)
|
|
14%
|
|
13%
|
|
13%
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
N/A
|
Expected term
(years) (7)
|
|
2.3
|
|
1.3
|
|
0.3
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
N/A
|
Risk-free interest
rate (8)
|
|
1.13%
|
|
1.03%
|
|
0.92%
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
N/A
|
Dividend rate
($) (9)
|
$
|
1.00
|
$
|
1.00
|
$
|
1.00
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
N/A
|
(1)
|
Compensation cost is based on the fair value of the
awards at period-end using the lattice-based valuation model that
uses the assumptions as presented herein.
|
(2)
|
Compensation cost is based on intrinsic
value.
|
(3)
|
Includes the reversal of approximately $20 million of
stock-based compensation expense related to the forfeiture of PSUs
by former executives.
|
(4)
|
The remaining recognition period has not been
quantified as it relates solely to the 25% Company grant and the
dividends earned thereon, representing a minimal number of
units.
|
(5)
|
Assumptions used to determine fair value are at
September 30, 2014.
|
(6)
|
Based on the historical volatility of the Company's
stock over a period commensurate with the expected term of the
award.
|
(7)
|
Represents the remaining period of time that awards
are expected to be outstanding.
|
(8)
|
Based on the implied yield available on zero-coupon
government issues with an equivalent term commensurate with the
expected term of the awards.
|
(9)
|
Based on the annualized dividend
rate.
|
Stock option awards
Following approval by the Board of Directors in January 2014, the Company granted 1.0 million
conventional stock options to designated senior management
employees. The stock option plan allows eligible employees to
acquire common shares of the Company upon vesting at a price equal
to the market value of the common shares at the date of grant. The
options issued by the Company are conventional options that vest
over a period of time. The right to exercise options generally
accrues over a period of four years of continuous employment.
Options are not generally exercisable during the first 12 months
after the date of grant and expire after 10 years. At September 30, 2014, 19.2 million common shares
remained authorized for future issuances under this plan. The total
number of options outstanding at September
30, 2014 was 7.8 million.
The following table provides the activity of stock option awards
during 2014, and for options outstanding and exercisable at
September 30, 2014, the
weighted-average exercise price and the weighted-average years to
expiration. The table also provides the aggregate intrinsic value
for in-the-money stock options, which represents the value that
would have been received by option holders had they exercised their
options on September 30, 2014 at the
Company's closing stock price of $79.51 on the Toronto Stock Exchange.
|
|
Options outstanding
|
|
|
Number
|
Weighted-average
|
Weighted-average
|
Aggregate
|
|
|
of options
|
exercise
price
|
years to
expiration
|
intrinsic
value
|
|
|
In millions
|
|
|
|
|
|
In millions
|
Outstanding at
December 31, 2013 (1)
|
7.7
|
$
|
30.97
|
|
|
|
|
|
Granted
|
1.0
|
$
|
58.74
|
|
|
|
|
|
Exercised
|
(0.9)
|
$
|
23.17
|
|
|
|
|
Outstanding at September 30, 2014
(1)
|
7.8
|
$
|
36.19
|
|
5.8
|
$
|
335
|
Exercisable at
September 30, 2014 (1)
|
5.2
|
$
|
29.40
|
|
4.6
|
$
|
262
|
(1)
|
Stock options with a US dollar exercise price have
been translated to Canadian dollars using the foreign exchange rate
in effect at the balance sheet date.
|
The following table provides valuation and expense information
for all stock option awards:
In millions, unless otherwise
indicated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year of grant
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
Total
|
Stock-based compensation expense recognized over
requisite service period (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
September 30, 2014
|
|
$
|
4
|
|
$
|
1
|
|
$
|
1
|
|
$
|
1
|
|
$
|
-
|
|
$
|
-
|
|
$
|
7
|
Nine months ended
September 30, 2013
|
|
|
N/A
|
|
$
|
4
|
|
$
|
1
|
|
$
|
1
|
|
$
|
1
|
|
$
|
-
|
|
$
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value per unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At grant date
($)
|
|
$
|
11.09
|
|
$
|
8.52
|
|
$
|
7.74
|
|
$
|
7.83
|
|
$
|
6.55
|
|
$
|
6.30
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of awards vested during the
period
|
|
|
|
|
|
|
|
|
|
Nine months ended
September 30, 2014
|
|
$
|
-
|
|
$
|
2
|
|
$
|
2
|
|
$
|
3
|
|
$
|
2
|
|
$
|
-
|
|
$
|
9
|
Nine months ended
September 30, 2013
|
|
|
N/A
|
|
$
|
-
|
|
$
|
2
|
|
$
|
3
|
|
$
|
2
|
|
$
|
4
|
|
$
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested awards at September 30,
2014
|
|
|
|
|
|
|
|
Unrecognized
compensation cost
|
|
$
|
5
|
|
$
|
2
|
|
$
|
1
|
|
$
|
1
|
|
$
|
-
|
|
$
|
-
|
|
$
|
9
|
Remaining recognition
period (years)
|
|
|
3.3
|
|
|
2.3
|
|
|
1.3
|
|
|
0.3
|
|
|
-
|
|
|
-
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumptions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant price
($)
|
|
$
|
58.74
|
|
$
|
47.47
|
|
$
|
38.35
|
|
$
|
34.47
|
|
$
|
27.38
|
|
$
|
21.07
|
|
|
N/A
|
Expected stock price
volatility (2)
|
|
|
23%
|
|
|
23%
|
|
|
26%
|
|
|
26%
|
|
|
28%
|
|
|
39%
|
|
|
N/A
|
Expected term
(years) (3)
|
|
|
5.4
|
|
|
5.4
|
|
|
5.4
|
|
|
5.3
|
|
|
5.4
|
|
|
5.3
|
|
|
N/A
|
Risk-free interest
rate (4)
|
|
|
1.51%
|
|
|
1.41%
|
|
|
1.33%
|
|
|
2.53%
|
|
|
2.44%
|
|
|
1.97%
|
|
|
N/A
|
Dividend rate
($) (5)
|
|
$
|
1.00
|
|
$
|
0.86
|
|
$
|
0.75
|
|
$
|
0.65
|
|
$
|
0.54
|
|
$
|
0.51
|
|
|
N/A
|
(1)
|
Compensation cost is based on the grant date fair
value using the Black-Scholes option-pricing model that uses the
assumptions at the grant date.
|
(2)
|
Based on the average of the historical volatility of
the Company's stock over a period commensurate with the expected
term of the award and the implied volatility from traded options on
the Company's stock.
|
(3)
|
Represents the period of time that awards are
expected to be outstanding. The Company uses historical data to
estimate option exercise and employee termination, and groups of
employees that have similar historical exercise behavior are
considered separately.
|
(4)
|
Based on the implied yield available on zero-coupon
government issues with an equivalent term commensurate with the
expected term of the awards.
|
(5)
|
Based on the annualized dividend
rate.
|
6 - Pensions and other postretirement benefits
The Company has various retirement benefit plans under which
substantially all of its employees are entitled to benefits at
retirement age, generally based on compensation and length of
service and/or contributions. Senior and executive management
employees ("executive employees") subject to certain minimum
service and age requirements, are also eligible for an additional
retirement benefit under their Special Retirement Stipend
Agreements (SRS), the Supplemental Executive Retirement Plan (SERP)
or the Defined Contribution Supplemental Executive Retirement Plan
(DC SERP). Current or former executive employees who breach the
non-compete, non-solicitation and non-disclosure of confidential
information conditions of the SRS, SERP or DC SERP plans will
forfeit the retirement benefit under these plans. Should the
Company reasonably determine that a current or former executive
employee may have violated the conditions of their SRS, SERP, or DC
SERP plan, the Company may at its discretion withhold or suspend
payout of the retirement benefit pending resolution of such
matter.
For the three and nine months ended September 30, 2014 and 2013, the components of
net periodic benefit cost (income) for pensions and other
postretirement benefits were as follows:
Components of net periodic benefit cost (income) for
pensions
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
In millions
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Service
cost
|
|
$
|
33
|
$
|
39
|
|
$
|
99
|
$
|
117
|
Interest
cost
|
|
|
178
|
|
165
|
|
|
533
|
|
494
|
Settlement
gain
|
|
|
-
|
|
-
|
|
|
-
|
|
(1)
|
Expected return on
plan assets
|
|
|
(245)
|
|
(240)
|
|
|
(734)
|
|
(719)
|
Amortization of prior
service cost
|
|
|
1
|
|
1
|
|
|
3
|
|
3
|
Amortization of net
actuarial loss
|
|
|
31
|
|
57
|
|
|
93
|
|
170
|
Net periodic benefit cost
(income)
|
|
$
|
(2)
|
$
|
22
|
|
$
|
(6)
|
$
|
64
|
|
|
|
|
|
|
|
|
|
|
|
Components of net periodic benefit cost for other
postretirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
In millions
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Service
cost
|
|
$
|
1
|
$
|
1
|
|
$
|
2
|
$
|
2
|
Interest
cost
|
|
|
2
|
|
3
|
|
|
8
|
|
8
|
Amortization of prior
service cost
|
|
|
1
|
|
-
|
|
|
2
|
|
1
|
Amortization of net
actuarial gain
|
|
|
(1)
|
|
(1)
|
|
|
(3)
|
|
(1)
|
Net periodic benefit cost
|
|
$
|
3
|
$
|
3
|
|
$
|
9
|
$
|
10
|
Company contributions to its various pension plans are made in
accordance with the applicable legislation in Canada and the
United States (U.S.) and are determined by actuarial
valuations. Actuarial valuations are generally required on an
annual basis both in Canada and
the U.S. The latest actuarial valuations for funding purposes for
the Company's Canadian pension plans, based on a valuation date of
December 31, 2013, were filed in
June 2014 and identified a
going-concern surplus of approximately $1.6
billion and a solvency deficit of approximately $1.7 billion calculated using the three-year
average of the Company's hypothetical wind-up ratio in accordance
with the Pension Benefit Standards Regulations, 1985. Under
Canadian legislation, the solvency deficit is required to be funded
through special solvency payments, for which each annual amount is
equal to one fifth of the solvency deficit, and is re-established
at each valuation date.
Pension contributions made in the first nine months of 2014 and
2013 of $106 million and $221 million, respectively, mainly represent
contributions to the Company's main pension plan, the CN Pension
Plan. These pension contributions are for the current service cost
as determined under the Company's current actuarial valuations for
funding purposes. The Company expects to make total cash
contributions in 2014 of approximately $130
million for all of the Company's pension plans. Voluntary
contributions can be treated as a prepayment against the Company's
required special solvency deficit payments. As at December 31, 2013, the Company had approximately
$470 million of accumulated
prepayments available to offset future required solvency deficit
payments. The Company applied approximately $250 million of such prepayments during the first
nine months of 2014 and will apply approximately $75 million for the remainder of the year.
Additional information relating to the pension plans is provided
in Note 11 – Pensions and other postretirement benefits to the
Company's 2013 Annual Consolidated Financial Statements.
7 - Income taxes
The Company recorded income tax expense of $337 million and $858
million for the three and nine months ended September 30, 2014, respectively, compared to
$295 million and $738 million, respectively, for the same periods
in 2013.
Included in the 2014 figure was an income tax recovery of
$18 million resulting from a change
in estimate of the deferred income tax liability related to
properties, which was recorded in the first quarter.
Included in the 2013 figures was a net income tax recovery of
$7 million consisting of a
$19 million and a $5 million income tax expense resulting from the
enactment of higher provincial corporate income tax rates, which
were recorded in the third and second quarter respectively; a
$15 million income tax recovery
resulting from the recognition of U.S. state income tax losses,
which was recorded in the second quarter; and a $16 million income tax recovery resulting from a
revision of the apportionment of U.S. state income taxes which was
recorded in the first quarter.
8 - Major commitments and contingencies
Commitments
As at September 30, 2014, the Company
had commitments to acquire railroad ties, rail, freight cars,
locomotives, and other equipment and services, as well as
outstanding information technology service contracts and licenses,
at an aggregate cost of $966 million
($482 million as at December 31, 2013). The Company also has
estimated remaining commitments of approximately $283 million (US$252
million), in relation to the U.S. federal government
legislative requirement to implement Positive Train Control (PTC)
by December 31, 2015.
In addition, the Company has estimated remaining commitments,
through to December 31, 2016, of
approximately $66 million
(US$59 million), in relation to the
acquisition of the principal lines of the former Elgin, Joliet
and Eastern Railway Company. These commitments are for railroad
infrastructure improvements, grade separation projects as well as
commitments under a series of agreements with individual
communities and a comprehensive voluntary mitigation program
established to address surrounding municipalities' concerns.
The Company also has agreements with fuel suppliers which allow
but do not require the Company to purchase approximately all of its
estimated remaining 2014 volume, approximately 80% of its
anticipated 2015 volume, 70% of its anticipated 2016 volume and 20%
of its anticipated 2017 volume at market prices prevailing on the
date of the purchase.
Contingencies
In the normal course of business, the Company becomes involved in
various legal actions seeking compensatory and occasionally
punitive damages, including actions brought on behalf of various
purported classes of claimants and claims relating to employee and
third-party personal injuries, occupational disease and property
damage, arising out of harm to individuals or property allegedly
caused by, but not limited to, derailments or other accidents.
Canada
Employee injuries are governed by the workers' compensation
legislation in each province whereby employees may be awarded
either a lump sum or a future stream of payments depending on the
nature and severity of the injury. As such, the provision for
employee injury claims is discounted. In the provinces where the
Company is self-insured, costs related to employee work-related
injuries are accounted for based on actuarially developed estimates
of the ultimate cost associated with such injuries, including
compensation, health care and third-party administration costs. A
comprehensive actuarial study is generally performed at least on a
triennial basis. For all other legal actions, the Company
maintains, and regularly updates on a case-by-case basis,
provisions for such items when the expected loss is both probable
and can be reasonably estimated based on currently available
information.
United States
Personal injury claims by the Company's employees, including claims
alleging occupational disease and work-related injuries, are
subject to the provisions of the Federal Employers' Liability Act
(FELA). Employees are compensated under FELA for damages assessed
based on a finding of fault through the U.S. jury system or through
individual settlements. As such, the provision is undiscounted.
With limited exceptions where claims are evaluated on a
case-by-case basis, the Company follows an actuarial-based approach
and accrues the expected cost for personal injury, including
asserted and unasserted occupational disease claims, and property
damage claims, based on actuarial estimates of their ultimate cost.
A comprehensive actuarial study is performed annually.
For employee work-related injuries, including asserted
occupational disease claims, and third-party claims, including
grade crossing, trespasser and property damage claims, the
actuarial valuation considers, among other factors, the Company's
historical patterns of claims filings and payments. For unasserted
occupational disease claims, the actuarial study includes the
projection of the Company's experience into the future considering
the potentially exposed population. The Company adjusts its
liability based upon management's assessment and the results of the
study. On an ongoing basis, management reviews and compares the
assumptions inherent in the latest actuarial study with the current
claim experience and, if required, adjustments to the liability are
recorded.
As at September 30, 2014, the
Company had aggregate reserves for personal injury and other claims
of $318 million, of which
$49 million was recorded as a current
liability ($316 million as at
December 31, 2013, of which
$45 million was recorded as a current
liability).
Although the Company considers such provisions to be adequate
for all its outstanding and pending claims, the final outcome with
respect to actions outstanding or pending at September 30, 2014, or with respect to future
claims, cannot be reasonably determined. When establishing
provisions for contingent liabilities the Company considers, where
a probable loss estimate cannot be made with reasonable certainty,
a range of potential probable losses for each such matter, and
records the amount it considers the most reasonable estimate within
the range. However, when no amount within the range is a better
estimate than any other amount, the minimum amount in the range is
accrued. For matters where a loss is reasonably possible but not
probable, a range of potential losses cannot be estimated due to
various factors which may include the limited availability of
facts, the lack of demand for specific damages and the fact that
proceedings were at an early stage. Based on information currently
available, the Company believes that the eventual outcome of the
actions against the Company will not, individually or in the
aggregate, have a material adverse effect on the Company's
consolidated financial position. However, due to the inherent
inability to predict with certainty unforeseeable future
developments, there can be no assurance that the ultimate
resolution of these actions will not have a material adverse effect
on the Company's results of operations, financial position or
liquidity in a particular quarter or fiscal year.
Environmental matters
The Company's operations are subject to numerous federal,
provincial, state, municipal and local environmental laws and
regulations in Canada and the U.S.
concerning, among other things, emissions into the air; discharges
into waters; the generation, handling, storage, transportation,
treatment and disposal of waste, hazardous substances, and other
materials; decommissioning of underground and aboveground storage
tanks; and soil and groundwater contamination. A risk of
environmental liability is inherent in railroad and related
transportation operations; real estate ownership, operation or
control; and other commercial activities of the Company with
respect to both current and past operations.
Known existing environmental concerns
The Company has identified approximately 260 sites at which it is
or may be liable for remediation costs, in some cases along with
other potentially responsible parties, associated with alleged
contamination and is subject to environmental clean-up and
enforcement actions, including those imposed by the United
States Federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (CERCLA), also known as the Superfund
law, or analogous state laws. CERCLA and similar state laws, in
addition to other similar Canadian and U.S. laws, generally impose
joint and several liability for clean-up and enforcement costs on
current and former owners and operators of a site, as well as those
whose waste is disposed of at the site, without regard to fault or
the legality of the original conduct. The Company has been notified
that it is a potentially responsible party for study and clean-up
costs at approximately 10 sites governed by the Superfund law (and
analogous state laws) for which investigation and remediation
payments are or will be made or are yet to be determined and, in
many instances, is one of several potentially responsible
parties.
The ultimate cost of addressing these known contaminated sites
cannot be definitely established given that the estimated
environmental liability for any given site may vary depending on
the nature and extent of the contamination; the nature of
anticipated response actions, taking into account the available
clean-up techniques; evolving regulatory standards governing
environmental liability; and the number of potentially responsible
parties and their financial viability. As a result, liabilities are
recorded based on the results of a four-phase assessment conducted
on a site-by-site basis. A liability is initially recorded when
environmental assessments occur, remedial efforts are probable, and
when the costs, based on a specific plan of action in terms of the
technology to be used and the extent of the corrective action
required, can be reasonably estimated. The Company estimates the
costs related to a particular site using cost scenarios established
by external consultants based on the extent of contamination and
expected costs for remedial efforts. In the case of multiple
parties, the Company accrues its allocable share of liability
taking into account the Company's alleged responsibility, the
number of potentially responsible parties and their ability to pay
their respective share of the liability. Adjustments to initial
estimates are recorded as additional information becomes
available.
The Company's provision for specific environmental sites is
undiscounted and includes costs for remediation and restoration of
sites, as well as monitoring costs. Environmental expenses, which
are classified as Casualty and other in the Consolidated Statement
of Income, include amounts for newly identified sites or
contaminants as well as adjustments to initial estimates.
Recoveries of environmental remediation costs from other parties
are recorded as assets when their receipt is deemed
probable.
As at September 30, 2014, the
Company had aggregate accruals for environmental costs of
$118 million, of which $43 million was recorded as a current liability
($119 million as at December 31, 2013, of which $41 million was recorded as a current liability).
The Company anticipates that the majority of the liability at
September 30, 2014 will be paid out
over the next five years. However, some costs may be paid out over
a longer period. Based on the information currently available, the
Company considers its provisions to be adequate.
Unknown existing environmental concerns
While the Company believes that it has identified the costs likely
to be incurred for environmental matters in the next several years
based on known information, the discovery of new facts, future
changes in laws, the possibility of releases of hazardous materials
into the environment and the Company's ongoing efforts to identify
potential environmental liabilities that may be associated with its
properties may result in the identification of additional
environmental liabilities and related costs. The magnitude of such
additional liabilities and the costs of complying with future
environmental laws and containing or remediating contamination
cannot be reasonably estimated due to many factors, including:
(a)
|
the lack of specific
technical information available with respect to many
sites;
|
(b)
|
the absence of any
government authority, third-party orders, or claims with respect to
particular sites;
|
(c)
|
the potential for new
or changed laws and regulations and for development of new
remediation technologies and uncertainty regarding the timing of
the work with respect to particular sites; and
|
(d)
|
the determination of
the Company's liability in proportion to other
potentially responsible parties and the ability to recover
costs from any third parties with respect to particular
sites.
|
Therefore, the likelihood of any such costs being incurred or
whether such costs would be material to the Company cannot be
determined at this time. There can thus be no assurance that
liabilities or costs related to environmental matters will not be
incurred in the future, or will not have a material adverse effect
on the Company's financial position or results of operations in a
particular quarter or fiscal year, or that the Company's liquidity
will not be adversely impacted by such liabilities or costs,
although management believes, based on current information, that
the costs to address environmental matters will not have a material
adverse effect on the Company's financial position or liquidity.
Costs related to any unknown existing or future contamination will
be accrued in the period in which they become probable and
reasonably estimable.
Guarantees and indemnifications
In the normal course of business, the Company, including certain of
its subsidiaries, enters into agreements that may involve providing
guarantees or indemnifications to third parties and others, which
may extend beyond the term of the agreements. These include, but
are not limited to, residual value guarantees on operating leases,
standby letters of credit, surety and other bonds, and
indemnifications that are customary for the type of transaction or
for the railway business.
The Company is required to recognize a liability for the fair
value of the obligation undertaken in issuing certain guarantees on
the date the guarantee is issued or modified. In addition, where
the Company expects to make a payment in respect of a guarantee, a
liability will be recognized to the extent that one has not yet
been recognized.
Guarantee of residual values of operating leases
The Company has guaranteed a portion of the residual values of
certain of its assets under operating leases with expiry dates
between 2014 and 2022, for the benefit of the lessor. If the fair
value of the assets at the end of their respective lease term is
less than the fair value, as estimated at the inception of the
lease, then the Company must, under certain conditions, compensate
the lessor for the shortfall. As at September 30, 2014, the maximum exposure in
respect of these guarantees was $187
million. There are no recourse provisions to recover any
amounts from third parties.
Other guarantees
As at September 30, 2014, the
Company, including certain of its subsidiaries, had granted
$493 million of irrevocable standby
letters of credit and $95 million of
surety and other bonds, issued by highly rated financial
institutions, to third parties to indemnify them in the event the
Company does not perform its contractual obligations. As at
September 30, 2014, the maximum
potential liability under these guarantee instruments was
$588 million, of which $525 million related to workers' compensation and
other employee benefit liabilities and $63
million related to other liabilities. The letters of credit
were drawn on the Company's bilateral letter of credit facilities.
The Company had not recorded a liability as at September 30, 2014 with respect to these
guarantee instruments as they related to the Company's future
performance and the Company did not expect to make any payments
under these guarantee instruments. The majority of the guarantee
instruments mature at various dates between 2014 and 2016.
General indemnifications
In the normal course of business, the Company has provided
indemnifications, customary for the type of transaction or for the
railway business, in various agreements with third parties,
including indemnification provisions where the Company would be
required to indemnify third parties and others. Indemnifications
are found in various types of contracts with third parties which
include, but are not limited to:
(a)
|
contracts granting
the Company the right to use or enter upon property owned by third
parties such as leases, easements, trackage rights and sidetrack
agreements;
|
(b)
|
contracts granting
rights to others to use the Company's property, such as leases,
licenses and easements;
|
(c)
|
contracts for the
sale of assets;
|
(d)
|
contracts for the
acquisition of services;
|
(e)
|
financing
agreements;
|
(f)
|
trust indentures,
fiscal agency agreements, underwriting agreements or similar
agreements relating to debt or equity securities of the Company and
engagement agreements with financial advisors;
|
(g)
|
transfer agent and
registrar agreements in respect of the Company's
securities;
|
(h)
|
trust and other
agreements relating to pension plans and other plans, including
those establishing trust funds to secure payment to certain
officers and senior employees of special retirement compensation
arrangements;
|
(i)
|
pension transfer
agreements;
|
(j)
|
master agreements
with financial institutions governing derivative
transactions;
|
(k)
|
settlement agreements
with insurance companies or other third parties whereby such
insurer or third-party has been indemnified for any present or
future claims relating to insurance policies, incidents or events
covered by the settlement agreements; and
|
(l)
|
acquisition
agreements.
|
To the extent of any actual claims under these agreements, the
Company maintains provisions for such items, which it considers to
be adequate. Due to the nature of the indemnification clauses, the
maximum exposure for future payments may be material. However, such
exposure cannot be reasonably determined.
During the period, the Company entered into various
indemnification contracts with third parties for which the maximum
exposure for future payments cannot be reasonably determined. As a
result, no liability was recorded. There are no recourse provisions
to recover any amounts from third parties.
9 - Financial instruments
For financial assets and liabilities measured at fair value on a
recurring basis, fair value is the price the Company would receive
to sell an asset or pay to transfer a liability in an orderly
transaction with a market participant at the measurement date. In
the absence of active markets for identical assets or liabilities,
such measurements involve developing assumptions based on market
observable data and, in the absence of such data, internal
information that is believed to be consistent with what market
participants would use in a hypothetical transaction that occurs at
the measurement date. Observable inputs reflect market data
obtained from independent sources, while unobservable inputs
reflect the Company's market assumptions. Preference is given to
observable inputs. These two types of inputs create the following
fair value hierarchy:
Level 1:
|
Quoted prices for
identical instruments in active markets.
|
Level 2:
|
Quoted prices for
similar instruments in active markets; quoted prices for identical
or similar instruments in markets that are not active; and
model-derived valuations whose inputs are observable or whose
significant value drivers are observable.
|
Level 3:
|
Significant inputs to
the valuation model are unobservable.
|
The Company uses the following methods and assumptions to
estimate the fair value of each class of financial instruments for
which the carrying amounts are included in the Consolidated Balance
Sheet under the following captions:
Cash and cash equivalents, Restricted cash and cash
equivalents, Accounts receivable, Other current assets, Accounts
payable and other
The carrying amounts approximate fair value because of the short
maturity of these instruments. Cash and cash equivalents and
Restricted cash and cash equivalents include highly liquid
investments purchased three months or less from maturity and are
classified as Level 1. Accounts receivable, Other current assets,
and Accounts payable and other are classified as Level 2 as they
may not be priced using quoted prices, but rather determined from
market observable information.
Intangible and other assets
Included in Intangible and other assets are equity investments for
which the carrying value approximates the fair value, with the
exception of certain cost investments for which the fair value is
estimated based on the Company's proportionate share of the
underlying net assets. Investments are classified as Level 3 as
their fair value is based on significant unobservable inputs.
Debt
The fair value of the Company's debt is estimated based on the
quoted market prices for the same or similar debt instruments, as
well as discounted cash flows using current interest rates for debt
with similar terms, company rating, and remaining maturity. The
Company's debt is classified as Level 2.
The following table provides the carrying amounts and estimated
fair values of the Company's financial instruments as at
September 30, 2014 and December 31, 2013 for which the carrying values
on the Consolidated Balance Sheet are different from their fair
values:
In millions
|
|
|
September 30, 2014
|
|
|
December 31,
2013
|
|
|
|
|
Carrying
|
|
Fair
|
|
|
Carrying
|
|
Fair
|
|
|
|
|
amount
|
|
value
|
|
|
amount
|
|
value
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
$
|
58
|
$
|
175
|
|
$
|
57
|
$
|
164
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
$
|
7,841
|
$
|
8,988
|
|
$
|
7,840
|
$
|
8,683
|
10 - Earnings per share
The following table provides a reconciliation between basic and
diluted earnings per share:
|
Three months ended September 30
|
|
Nine months ended September 30
|
In millions, except per share
data
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
Net income
|
$
|
853
|
$
|
705
|
|
$
|
2,323
|
$
|
1,977
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
|
817.0
|
|
839.3
|
|
|
822.2
|
|
846.2
|
Effect of stock
options
|
|
3.9
|
|
2.9
|
|
|
3.6
|
|
3.0
|
Weighted-average diluted shares
outstanding
|
|
820.9
|
|
842.2
|
|
|
825.8
|
|
849.2
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
1.04
|
$
|
0.84
|
|
$
|
2.83
|
$
|
2.34
|
Diluted earnings per
share
|
$
|
1.04
|
$
|
0.84
|
|
$
|
2.81
|
$
|
2.33
|
Basic earnings per share are calculated based on the
weighted-average number of common shares outstanding over each
period. Diluted earnings per share are calculated based on the
weighted-average diluted shares outstanding using the treasury
stock method, which assumes that any proceeds received from the
exercise of in-the-money stock options would be used to purchase
common shares at the average market price for the period.
11 – Accumulated other comprehensive loss
The components of Accumulated other comprehensive loss are as
follows:
In millions
|
|
Foreign currency translation
adjustments
|
|
Pension
and other postretirement benefit plans
|
|
Derivative instruments
|
|
Total before tax
|
|
|
Income tax recovery (expense)
|
|
|
Total
net of tax
|
Balance at June 30,
2014
|
$
|
(538)
|
$
|
(1,452)
|
$
|
8
|
$
|
(1,982)
|
|
$
|
176
|
|
$
|
(1,806)
|
Other comprehensive
income (loss)
before
reclassifications:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized foreign
exchange gain ontranslation of net investment in foreign
operations
|
|
349
|
|
|
|
|
|
349
|
|
|
-
|
|
|
349
|
|
Unrealized foreign
exchange loss on translation of US dollar-denominated long-term
debt designated as a hedge of the net investment in U.S.
subsidiaries
|
|
(305)
|
|
|
|
|
|
(305)
|
|
|
41
|
|
|
(264)
|
Amounts reclassified
from Accumulated
other
comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of net
actuarial loss
|
|
|
|
30
|
|
|
|
30
|
(1)
|
(9)
|
(2)
|
21
|
|
|
Amortization of prior
service cost
|
|
|
|
2
|
|
|
|
2
|
(1)
|
-
|
(2)
|
2
|
|
|
Amortization of gain
on treasury lock
|
|
|
|
|
|
(1)
|
(3)
|
(1)
|
|
|
-
|
|
|
(1)
|
Other comprehensive income
(loss)
|
|
44
|
|
32
|
|
(1)
|
|
75
|
|
|
32
|
|
|
107
|
Balance at September 30, 2014
|
$
|
(494)
|
$
|
(1,420)
|
$
|
7
|
$
|
(1,907)
|
|
$
|
208
|
|
$
|
(1,699)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In millions
|
|
Foreign currency translation
adjustments
|
|
Pension
and other postretirement benefit plans
|
|
Derivative instruments
|
|
Total before tax
|
|
|
Income tax recovery (expense)
|
|
|
Total net of tax
|
Balance at December
31, 2013
|
$
|
(533)
|
$
|
(1,515)
|
$
|
8
|
$
|
(2,040)
|
|
$
|
190
|
|
$
|
(1,850)
|
Other comprehensive
income (loss)
before
reclassifications:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized foreign
exchange gain on translation of net investment in foreign
operations
|
|
368
|
|
|
|
|
|
368
|
|
|
-
|
|
|
368
|
|
Unrealized foreign
exchange loss on translation of US dollar-denominated long-term
debt designated as a hedge of the net investment in U.S.
subsidiaries
|
|
(329)
|
|
|
|
|
|
(329)
|
|
|
42
|
|
|
(287)
|
Amounts reclassified
from Accumulated
other comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of net
actuarial loss
|
|
|
|
90
|
|
|
|
90
|
(1)
|
(24)
|
(2)
|
66
|
|
|
Amortization of prior
service cost
|
|
|
|
5
|
|
|
|
5
|
(1)
|
-
|
(2)
|
5
|
|
|
Amortization of gain
on treasury lock
|
|
|
|
|
|
(1)
|
(3)
|
(1)
|
|
|
-
|
|
|
(1)
|
Other comprehensive income
(loss)
|
|
39
|
|
95
|
|
(1)
|
|
133
|
|
|
18
|
|
|
151
|
Balance at September 30, 2014
|
$
|
(494)
|
$
|
(1,420)
|
$
|
7
|
$
|
(1,907)
|
|
$
|
208
|
|
$
|
(1,699)
|
(1)
|
Reclassified to Labor and fringe benefits on the
Consolidated Statement of Income and included in components of net
periodic benefit cost. See Note 6 - Pensions and other
postretirement benefits.
|
(2)
|
Included in Income tax expense on the Consolidated
Statement of Income.
|
(3)
|
Related to treasury lock transactions settled in
prior years, which are being amortized over the terms of the
related debt to Interest expense on the Consolidated Statement of
Income.
|
In millions
|
|
Foreign currency translation
adjustments
|
|
Pension and
other postretirement benefit plans
|
|
Derivative instruments
|
|
Total before tax
|
|
|
Income tax recovery (expense)
|
|
|
Total net of tax
|
Balance at June 30,
2013
|
$
|
(544)
|
$
|
(3,174)
|
$
|
8
|
$
|
(3,710)
|
|
$
|
616
|
|
$
|
(3,094)
|
Other comprehensive
income (loss)
before
reclassifications:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized foreign
exchange loss on translation of net investment in foreign
operations
|
|
(134)
|
|
|
|
|
|
(134)
|
|
|
-
|
|
|
(134)
|
|
Unrealized foreign
exchange gain on translation of US dollar-denominated long-term
debt designated as a hedge of the net investment in U.S.
subsidiaries
|
|
123
|
|
|
|
|
|
123
|
|
|
(17)
|
|
|
106
|
Amounts reclassified
from Accumulated
other comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of net
actuarial loss
|
|
|
|
56
|
|
|
|
56
|
(1)
|
(15)
|
(2)
|
41
|
|
|
Amortization of prior
service cost
|
|
|
|
1
|
|
|
|
1
|
(1)
|
-
|
(2)
|
1
|
Other comprehensive income
(loss)
|
|
(11)
|
|
57
|
|
-
|
|
46
|
|
|
(32)
|
|
|
14
|
Balance at September 30, 2013
|
$
|
(555)
|
$
|
(3,117)
|
$
|
8
|
$
|
(3,664)
|
|
$
|
584
|
|
$
|
(3,080)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In millions
|
|
Foreign currency translation
adjustments
|
|
Pension and
other postretirement benefit plans
|
|
Derivative instruments
|
|
Total before tax
|
|
|
Income tax recovery (expense)
|
|
|
Total net of tax
|
Balance at December
31, 2012
|
$
|
(579)
|
$
|
(3,290)
|
$
|
8
|
$
|
(3,861)
|
|
$
|
604
|
|
$
|
(3,257)
|
Other comprehensive
income (loss)
before
reclassifications:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized foreign
exchange gain on translation of net investment in foreign
operations
|
|
221
|
|
|
|
|
|
221
|
|
|
-
|
|
|
221
|
|
Unrealized foreign
exchange loss on translation of US dollar-denominated long-term
debt designated as a hedge of the net investment in U.S.
subsidiaries
|
|
(197)
|
|
|
|
|
|
(197)
|
|
|
25
|
|
|
(172)
|
Amounts reclassified
from Accumulated
other comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of net
actuarial loss
|
|
|
|
169
|
|
|
|
169
|
(1)
|
(44)
|
(2)
|
125
|
|
|
Amortization of prior
service cost
|
|
|
|
4
|
|
|
|
4
|
(1)
|
(1)
|
(2)
|
3
|
Other comprehensive income
(loss)
|
|
24
|
|
173
|
|
-
|
|
197
|
|
|
(20)
|
|
|
177
|
Balance at September 30, 2013
|
$
|
(555)
|
$
|
(3,117)
|
$
|
8
|
$
|
(3,664)
|
|
$
|
584
|
|
$
|
(3,080)
|
(1)
|
Reclassified to Labor and fringe benefits on the
Consolidated Statement of Income and included in components of net
periodic benefit cost. See Note 6 - Pensions and other
postretirement benefits.
|
(2)
|
Included in Income tax expense on the Consolidated
Statement of Income.
|
12 - Subsequent event
Share repurchase program
On October 21, 2014, the Board of
Directors of the Company approved a new share repurchase program,
which allows for the repurchase of up to 28.0 million common shares
between October 24, 2014 and
October 23, 2015, pursuant to a
normal course issuer bid at prevailing market prices plus brokerage
fees, or such other prices as may be permitted by the Toronto Stock
Exchange.
Selected Railroad Statistics -
unaudited
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
|
|
2014
|
2013
|
|
2014
|
2013
|
|
|
|
|
|
|
|
Statistical operating data
|
|
|
|
|
|
Rail freight revenues
($ millions) (1)
|
2,920
|
2,519
|
|
8,440
|
7,367
|
Gross ton miles (GTM)
(millions)
|
115,348
|
100,321
|
|
333,067
|
298,169
|
Revenue ton miles
(RTM) (millions)
|
58,946
|
52,188
|
|
172,361
|
155,466
|
Carloads
(thousands)
|
1,475
|
1,333
|
|
4,177
|
3,880
|
Route miles
(includes Canada and the U.S.)
|
19,600
|
19,900
|
|
19,600
|
19,900
|
Employees (end of
period)
|
25,032
|
23,664
|
|
25,032
|
23,664
|
Employees (average
for the period)
|
24,915
|
23,756
|
|
24,412
|
23,706
|
|
|
|
|
|
|
|
Productivity
|
|
|
|
|
|
Operating ratio
(%)
|
58.8
|
59.8
|
|
62.3
|
62.9
|
Rail freight revenue
per RTM (cents) (1)
|
4.95
|
4.83
|
|
4.90
|
4.74
|
Rail freight revenue
per carload ($) (1)
|
1,980
|
1,890
|
|
2,021
|
1,899
|
Operating expenses
per GTM (cents)
|
1.59
|
1.61
|
|
1.67
|
1.65
|
Labor and fringe
benefits expense per GTM (cents)
|
0.50
|
0.52
|
|
0.52
|
0.53
|
GTMs per average
number of employees (thousands)
|
4,630
|
4,223
|
|
13,644
|
12,578
|
Diesel fuel consumed
(US gallons in millions)
|
108.1
|
96.8
|
|
327.3
|
302.0
|
Average fuel price
($/US gallon)
|
3.62
|
3.52
|
|
3.80
|
3.52
|
GTMs per US gallon of
fuel consumed
|
1,067
|
1,036
|
|
1,018
|
987
|
|
|
|
|
|
|
|
Safety indicators
|
|
|
|
|
|
Injury frequency rate
(per 200,000 person hours) (2)
|
2.17
|
1.72
|
|
1.91
|
1.52
|
Accident rate (per
million train miles) (2)
|
3.25
|
1.37
|
|
2.69
|
2.04
|
|
|
|
|
|
|
|
Financial ratio
|
|
|
|
|
|
Debt-to-total
capitalization ratio (% at end of period)
(3)
|
36.3
|
39.3
|
|
36.3
|
39.3
|
Statistical operating data, productivity measures and
safety indicators 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 comparative data have been
restated.
|
(1)
|
In 2014, certain Other revenues were reclassified to
the commodity groups within rail freight revenues. This change has
no impact on the Company's previously reported results of
operations as Total revenues remains unchanged. The 2013
comparative figures have been reclassified in order to be
consistent with the 2014 presentation.
|
(2)
|
Based on Federal Railroad Administration (FRA)
reporting criteria.
|
(3)
|
Debt-to-total capitalization ratio 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.
|
Supplementary Information -
unaudited
|
|
|
|
|
|
|
|
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
|
|
2014
|
2013
|
% Change
Fav(Unfav)
|
% Change
at
constant
currency
Fav
(Unfav)
(2)
|
|
2014
|
2013
|
% Change
Fav (Unfav)
|
% Change
at
constant
currency
Fav
(Unfav)
(2)
|
Revenues (millions of dollars)
(1)
|
|
|
|
|
|
|
|
|
|
|
Petroleum and
chemicals
|
|
594
|
489
|
21%
|
18%
|
|
1,726
|
1,431
|
21%
|
15%
|
Metals and
minerals
|
|
388
|
332
|
17%
|
13%
|
|
1,066
|
929
|
15%
|
9%
|
Forest
products
|
|
393
|
365
|
8%
|
4%
|
|
1,125
|
1,064
|
6%
|
1%
|
Coal
|
|
185
|
191
|
(3%)
|
(6%)
|
|
568
|
553
|
3%
|
(1%)
|
Grain and
fertilizers
|
|
469
|
363
|
29%
|
26%
|
|
1,426
|
1,162
|
23%
|
19%
|
Intermodal
|
|
731
|
642
|
14%
|
12%
|
|
2,068
|
1,808
|
14%
|
12%
|
Automotive
|
|
160
|
137
|
17%
|
13%
|
|
461
|
420
|
10%
|
5%
|
Total rail freight revenues
|
|
2,920
|
2,519
|
16%
|
13%
|
|
8,440
|
7,367
|
15%
|
10%
|
Other
revenues
|
|
198
|
179
|
11%
|
7%
|
|
487
|
463
|
5%
|
1%
|
Total revenues
|
|
3,118
|
2,698
|
16%
|
13%
|
|
8,927
|
7,830
|
14%
|
10%
|
Revenue ton miles
(millions)
|
|
|
|
|
|
|
|
|
|
|
Petroleum and
chemicals
|
|
13,576
|
11,033
|
23%
|
23%
|
|
39,234
|
32,428
|
21%
|
21%
|
Metals and
minerals
|
|
6,664
|
5,825
|
14%
|
14%
|
|
17,691
|
16,022
|
10%
|
10%
|
Forest
products
|
|
7,581
|
7,508
|
1%
|
1%
|
|
21,718
|
22,317
|
(3%)
|
(3%)
|
Coal
|
|
5,289
|
6,057
|
(13%)
|
(13%)
|
|
16,316
|
17,342
|
(6%)
|
(6%)
|
Grain and
fertilizers
|
|
12,116
|
9,105
|
33%
|
33%
|
|
37,502
|
30,556
|
23%
|
23%
|
Intermodal
|
|
12,868
|
11,986
|
7%
|
7%
|
|
37,577
|
34,722
|
8%
|
8%
|
Automotive
|
|
852
|
674
|
26%
|
26%
|
|
2,323
|
2,079
|
12%
|
12%
|
Total revenue ton miles
|
|
58,946
|
52,188
|
13%
|
13%
|
|
172,361
|
155,466
|
11%
|
11%
|
Rail freight revenue / RTM (cents)
(1)
|
|
|
|
|
|
|
|
|
|
|
Petroleum and
chemicals
|
|
4.38
|
4.43
|
(1%)
|
(4%)
|
|
4.40
|
4.41
|
-
|
(5%)
|
Metals and
minerals
|
|
5.82
|
5.70
|
2%
|
(1%)
|
|
6.03
|
5.80
|
4%
|
(1%)
|
Forest
products
|
|
5.18
|
4.86
|
7%
|
3%
|
|
5.18
|
4.77
|
9%
|
4%
|
Coal
|
|
3.50
|
3.15
|
11%
|
8%
|
|
3.48
|
3.19
|
9%
|
5%
|
Grain and
fertilizers
|
|
3.87
|
3.99
|
(3%)
|
(5%)
|
|
3.80
|
3.80
|
-
|
(3%)
|
Intermodal
|
|
5.68
|
5.36
|
6%
|
4%
|
|
5.50
|
5.21
|
6%
|
4%
|
Automotive
|
|
18.78
|
20.33
|
(8%)
|
(11%)
|
|
19.85
|
20.20
|
(2%)
|
(6%)
|
Total rail freight revenue per
RTM
|
|
4.95
|
4.83
|
2%
|
-
|
|
4.90
|
4.74
|
3%
|
-
|
Carloads (thousands)
|
|
|
|
|
|
|
|
|
|
|
Petroleum and
chemicals
|
|
168
|
152
|
11%
|
11%
|
|
489
|
452
|
8%
|
8%
|
Metals and
minerals
|
|
295
|
285
|
4%
|
4%
|
|
769
|
803
|
(4%)
|
(4%)
|
Forest
products
|
|
111
|
114
|
(3%)
|
(3%)
|
|
324
|
338
|
(4%)
|
(4%)
|
Coal
|
|
126
|
109
|
16%
|
16%
|
|
392
|
316
|
24%
|
24%
|
Grain and
fertilizers
|
|
153
|
126
|
21%
|
21%
|
|
465
|
401
|
16%
|
16%
|
Intermodal
|
|
563
|
493
|
14%
|
14%
|
|
1,567
|
1,402
|
12%
|
12%
|
Automotive
|
|
59
|
54
|
9%
|
9%
|
|
171
|
168
|
2%
|
2%
|
Total carloads
|
|
1,475
|
1,333
|
11%
|
11%
|
|
4,177
|
3,880
|
8%
|
8%
|
Rail freight revenue / carload
(dollars) (1)
|
|
|
|
|
|
|
|
|
|
|
Petroleum and
chemicals
|
|
3,536
|
3,217
|
10%
|
7%
|
|
3,530
|
3,166
|
11%
|
7%
|
Metals and
minerals
|
|
1,315
|
1,165
|
13%
|
9%
|
|
1,386
|
1,157
|
20%
|
14%
|
Forest
products
|
|
3,541
|
3,202
|
11%
|
7%
|
|
3,472
|
3,148
|
10%
|
5%
|
Coal
|
|
1,468
|
1,752
|
(16%)
|
(18%)
|
|
1,449
|
1,750
|
(17%)
|
(20%)
|
Grain and
fertilizers
|
|
3,065
|
2,881
|
6%
|
4%
|
|
3,067
|
2,898
|
6%
|
2%
|
Intermodal
|
|
1,298
|
1,302
|
-
|
(2%)
|
|
1,320
|
1,290
|
2%
|
-
|
Automotive
|
|
2,712
|
2,537
|
7%
|
4%
|
|
2,696
|
2,500
|
8%
|
3%
|
Total rail freight revenue per
carload
|
|
1,980
|
1,890
|
5%
|
2%
|
|
2,021
|
1,899
|
6%
|
3%
|
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.
|
(1)
|
In 2014, certain Other revenues were reclassified to
the commodity groups within rail freight revenues. This change has
no impact on the Company's previously reported results of
operations as Total revenues remains unchanged. The 2013
comparative figures have been reclassified in order to be
consistent with the 2014 presentation.
|
(2)
|
See supplementary schedule entitled Non-GAAP Measures
for an explanation of this non-GAAP measure.
|
Non-GAAP Measures
Adjusted performance measures
For the three and nine months ended September 30, 2014, the Company reported adjusted
net income of $853 million, or
$1.04 per diluted share and
$2,251 million, or $2.72 per diluted share, respectively. The
adjusted figures for the nine months ended September 30, 2014 exclude a gain on disposal of
the Deux-Montagnes subdivision,
including the Mont-Royal tunnel,
together with the rail fixtures, of $80
million, or $72 million
after-tax ($0.09 per diluted
share).
For the three and nine months ended September 30, 2013, the Company reported adjusted
net income of $724 million, or
$0.86 per diluted share and
$1,947 million, or $2.30 per diluted share, respectively. The
adjusted figures for the three and nine months ended September 30, 2013 exclude an income tax expense
of $19 million ($0.02 per diluted share) resulting from the
enactment of higher provincial corporate income tax rates. The
adjusted figures for the nine months ended September 30, 2013 also 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); an income tax expense of $5
million ($0.01 per diluted
share) resulting from the enactment of higher provincial corporate
income tax rates 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).
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 2014 unaudited Interim Consolidated
Financial Statements and Notes thereto. The following tables
provide a reconciliation of net income and earnings per share, as
reported for the three and nine months ended September 30, 2014 and 2013, to the adjusted
performance measures presented herein.
|
|
Three months ended September 30,
2014
|
|
|
Nine months ended September 30,
2014
|
In millions, except per share
data
|
|
Reported
|
|
Adjustments
|
|
Adjusted
|
|
|
Reported
|
|
Adjustments
|
|
Adjusted
|
Revenues
|
$
|
3,118
|
$
|
-
|
$
|
3,118
|
|
$
|
8,927
|
$
|
-
|
$
|
8,927
|
Operating
expenses
|
|
1,832
|
|
-
|
|
1,832
|
|
|
5,563
|
|
-
|
|
5,563
|
Operating income
|
|
1,286
|
|
-
|
|
1,286
|
|
|
3,364
|
|
-
|
|
3,364
|
Interest
expense
|
|
(94)
|
|
-
|
|
(94)
|
|
|
(277)
|
|
-
|
|
(277)
|
Other income
(loss)
|
|
(2)
|
|
-
|
|
(2)
|
|
|
94
|
|
(80)
|
|
14
|
Income before income taxes
|
|
1,190
|
|
-
|
|
1,190
|
|
|
3,181
|
|
(80)
|
|
3,101
|
Income tax
expense
|
|
(337)
|
|
-
|
|
(337)
|
|
|
(858)
|
|
8
|
|
(850)
|
Net income
|
$
|
853
|
$
|
-
|
$
|
853
|
|
$
|
2,323
|
$
|
(72)
|
$
|
2,251
|
Operating
ratio
|
|
58.8%
|
|
|
|
58.8%
|
|
|
62.3%
|
|
|
|
62.3%
|
Effective tax
rate
|
|
28.3%
|
|
|
|
28.3%
|
|
|
27.0%
|
|
|
|
27.4%
|
Basic earnings per
share
|
$
|
1.04
|
$
|
-
|
$
|
1.04
|
|
$
|
2.83
|
$
|
(0.09)
|
$
|
2.74
|
Diluted earnings per
share
|
$
|
1.04
|
$
|
-
|
$
|
1.04
|
|
$
|
2.81
|
$
|
(0.09)
|
$
|
2.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
2013
|
|
|
Nine months ended September 30,
2013
|
In millions, except per share
data
|
Reported
|
|
Adjustments
|
|
Adjusted
|
|
|
Reported
|
|
Adjustments
|
|
Adjusted
|
Revenues
|
$
|
2,698
|
$
|
-
|
$
|
2,698
|
|
$
|
7,830
|
$
|
-
|
$
|
7,830
|
Operating
expenses
|
|
1,614
|
|
-
|
|
1,614
|
|
|
4,924
|
|
-
|
|
4,924
|
Operating income
|
|
1,084
|
|
-
|
|
1,084
|
|
|
2,906
|
|
-
|
|
2,906
|
Interest
expense
|
|
(89)
|
|
-
|
|
(89)
|
|
|
(266)
|
|
-
|
|
(266)
|
Other
income
|
|
5
|
|
-
|
|
5
|
|
|
75
|
|
(69)
|
|
6
|
Income before income taxes
|
|
1,000
|
|
-
|
|
1,000
|
|
|
2,715
|
|
(69)
|
|
2,646
|
Income tax
expense
|
|
(295)
|
|
19
|
|
(276)
|
|
|
(738)
|
|
39
|
|
(699)
|
Net income
|
$
|
705
|
$
|
19
|
$
|
724
|
|
$
|
1,977
|
$
|
(30)
|
$
|
1,947
|
Operating
ratio
|
|
59.8%
|
|
|
|
59.8%
|
|
|
62.9%
|
|
|
|
62.9%
|
Effective tax
rate
|
|
29.5%
|
|
|
|
27.6%
|
|
|
27.2%
|
|
|
|
26.4%
|
Basic earnings per
share
|
$
|
0.84
|
$
|
0.02
|
$
|
0.86
|
|
$
|
2.34
|
$
|
(0.03)
|
$
|
2.31
|
Diluted earnings per
share
|
$
|
0.84
|
$
|
0.02
|
$
|
0.86
|
|
$
|
2.33
|
$
|
(0.03)
|
$
|
2.30
|
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 $1.09 per US$1.00,
for both the three and nine months ended September 30, 2014, and $1.04 and $1.02 per
US$1.00, respectively, for the three
and nine months ended September 30,
2013.
On a constant currency basis, the Company's net income for the
three and nine months ended September 30,
2014 would have been lower by $22
million, or $0.03 per diluted
share and $76 million, or
$0.09 per diluted share,
respectively. The following table presents a reconciliation of 2014
net income as reported to net income on a constant currency
basis:
|
Three months ended
September 30, 2014
|
Nine months ended
September 30, 2014
|
In millions
|
Net income, as
reported
|
$
|
853
|
$
|
2,323
|
Impact due to the
weakening Canadian dollar included in net income
|
|
(18)
|
|
(70)
|
Decrease due to the
weakening Canadian dollar on additional year-over-year US$ net
income
|
|
(4)
|
|
(6)
|
Impact of foreign exchange using constant currency
rates
|
|
(22)
|
|
(76)
|
Net income, on a constant currency
basis
|
$
|
831
|
$
|
2,247
|
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 for debt obligations and for
discretionary uses such as payment of dividends and strategic
opportunities.
The Company defines 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.
|
Three months ended September 30
|
|
Nine months ended September 30
|
In
millions
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
Net cash provided by
operating activities
|
$
|
1,328
|
|
$
|
1,066
|
|
$
|
3,246
|
|
$
|
2,450
|
Net cash used in
investing activities
|
|
(552)
|
|
|
(579)
|
|
|
(1,220)
|
|
|
(1,151)
|
Net cash provided before financing
activities
|
|
776
|
|
|
487
|
|
|
2,026
|
|
|
1,299
|
Adjustment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in restricted
cash and cash equivalents
|
|
(1)
|
|
|
32
|
|
|
19
|
|
|
8
|
Free cash flow
|
$
|
775
|
|
$
|
519
|
|
$
|
2,045
|
|
$
|
1,307
|
SOURCE CN