Form 20-F | Form 40-F | X |
Yes | No | X |
Yes | No | X |
Yes | No | X |
Canadian National Railway Company | |||||
Date: | January 28, 2020 | By: | /s/ Cristina Circelli | ||
Name: | Cristina Circelli | ||||
Title: | Vice-President, Deputy Corporate Secretary and General Counsel |
Exhibit Number | Description of Exhibit |
Ex 99.1 | |
Ex 99.2 |
• | Results impacted by 8-day labour strike and weak freight demand. |
• | Revenues of C$3,584 million, a decrease of six per cent. |
• | Diluted earnings per share (EPS) of C$1.22, a decrease of 22 per cent, and adjusted diluted EPS of C$1.25, a decrease of 16 per cent. (1) |
• | Operating ratio of 66.0 per cent, an increase of 4.1 points, and adjusted operating ratio of 65.2 per cent, an increase of 4.0 points. (1) |
• | Operating income of C$1,218 million, a decrease of 16 per cent, and adjusted operating income of C$1,249 million, a decrease of 16 per cent. (1) |
• | Revenues of C$14,917 million, an increase of four per cent. |
• | Diluted EPS of C$5.83, a decrease of one per cent and adjusted diluted EPS of C$5.80, an increase of five |
• | Operating ratio of 62.5 per cent, an increase of 0.9 points, and adjusted operating ratio of 61.7 per cent, an increase of 0.2 points. (1) |
• | Operating income of C$5,593 million, an increase of two per cent, and adjusted operating income of C$5,708 million, an increase of three per cent. (1) |
• | Adjusted return on invested capital (adjusted ROIC) of 15.1 per cent, a decrease of 0.6 points. (1) |
Contacts: | |
Media | Investment Community |
Jonathan Abecassis | Paul Butcher |
Senior Manager | Vice-President |
Media Relations | Investor Relations |
(514) 399-7956 | (514) 399-0052 |
Three months ended December 31 | Year ended December 31 | |||||||||
2019 | 2018 | 2019 | 2018 | |||||||
Financial measures | ||||||||||
Key financial performance indicators (1) | ||||||||||
Total revenues ($ millions) | 3,584 | 3,808 | 14,917 | 14,321 | ||||||
Freight revenues ($ millions) | 3,408 | 3,601 | 14,198 | 13,548 | ||||||
Operating income ($ millions) | 1,218 | 1,452 | 5,593 | 5,493 | ||||||
Adjusted operating income ($ millions) (2) | 1,249 | 1,479 | 5,708 | 5,520 | ||||||
Net income ($ millions) | 873 | 1,143 | 4,216 | 4,328 | ||||||
Adjusted net income ($ millions) (2) | 896 | 1,093 | 4,189 | 4,056 | ||||||
Diluted earnings per share ($) | 1.22 | 1.56 | 5.83 | 5.87 | ||||||
Adjusted diluted earnings per share ($) (2) | 1.25 | 1.49 | 5.80 | 5.50 | ||||||
Free cash flow ($ millions) (2) | 493 | 633 | 1,992 | 2,514 | ||||||
Gross property additions ($ millions) | 1,018 | 1,264 | 4,079 | 3,531 | ||||||
Share repurchases ($ millions) | 429 | 463 | 1,700 | 2,000 | ||||||
Dividends per share ($) | 0.5375 | 0.4550 | 2.1500 | 1.8200 | ||||||
Financial position (1) | ||||||||||
Total assets ($ millions) | 43,784 | 41,214 | 43,784 | 41,214 | ||||||
Total liabilities ($ millions) | 25,743 | 23,573 | 25,743 | 23,573 | ||||||
Shareholders' equity ($ millions) | 18,041 | 17,641 | 18,041 | 17,641 | ||||||
Financial ratio | ||||||||||
Operating ratio (%) | 66.0 | 61.9 | 62.5 | 61.6 | ||||||
Adjusted operating ratio (%) (2) | 65.2 | 61.2 | 61.7 | 61.5 | ||||||
Operational measures (3) | ||||||||||
Statistical operating data | ||||||||||
Gross ton miles (GTMs) (millions) | 115,015 | 130,792 | 482,890 | 490,414 | ||||||
Revenue ton miles (RTMs) (millions) | 57,709 | 66,535 | 241,954 | 248,383 | ||||||
Carloads (thousands) | 1,425 | 1,537 | 5,912 | 5,976 | ||||||
Route miles (includes Canada and the U.S.) | 19,500 | 19,500 | 19,500 | 19,500 | ||||||
Employees (end of period) | 25,975 | 25,720 | 25,975 | 25,720 | ||||||
Employees (average for the period) | 26,524 | 26,047 | 26,733 | 25,423 | ||||||
Key operating measures | ||||||||||
Freight revenue per RTM (cents) | 5.91 | 5.41 | 5.87 | 5.45 | ||||||
Freight revenue per carload ($) | 2,392 | 2,343 | 2,402 | 2,267 | ||||||
GTMs per average number of employees (thousands) | 4,336 | 5,021 | 18,063 | 19,290 | ||||||
Operating expenses per GTM (cents) | 2.06 | 1.80 | 1.93 | 1.80 | ||||||
Labor and fringe benefits expense per GTM (cents) | 0.65 | 0.60 | 0.61 | 0.58 | ||||||
Diesel fuel consumed (US gallons in millions) | 108.9 | 122.8 | 451.4 | 462.7 | ||||||
Average fuel price ($/US gallon) | 3.27 | 3.35 | 3.17 | 3.32 | ||||||
GTMs per US gallon of fuel consumed | 1,056 | 1,065 | 1,070 | 1,060 | ||||||
Car velocity (car miles per day) | 199 | 204 | 198 | 188 | ||||||
Through dwell (hours) | 8.1 | 7.5 | 7.9 | 8.3 | ||||||
Through network train speed (miles per hour) | 19.2 | 18.6 | 18.5 | 18.0 | ||||||
Locomotive utilization (trailing GTMs per total horsepower) | 194 | 211 | 198 | 208 | ||||||
Safety indicators (4) | ||||||||||
Injury frequency rate (per 200,000 person hours) | 1.69 | 1.90 | 1.91 | 1.81 | ||||||
Accident rate (per million train miles) | 1.76 | 1.56 | 2.11 | 2.02 |
(1) | Amounts expressed in Canadian dollars and prepared in accordance with United States generally accepted accounting principles (GAAP), unless otherwise noted. |
(2) | See supplementary schedule entitled Non-GAAP Measures for an explanation of these non-GAAP measures. |
(3) | Statistical operating data, key operating measures and safety indicators are unaudited and based on estimated data available at such time and are subject to change as more complete information becomes available. Definitions of these indicators are provided on CN's website, www.cn.ca/glossary. |
(4) | Based on Federal Railroad Administration (FRA) reporting criteria. |
Three months ended December 31 | Year ended December 31 | ||||||||||||||||
2019 | 2018 | % Change Fav (Unfav) | % Change at constant currency Fav (Unfav) (1) | 2019 | 2018 | % Change Fav (Unfav) | % Change at constant currency Fav (Unfav) (1) | ||||||||||
Revenues ($ millions) (2) | |||||||||||||||||
Petroleum and chemicals | 754 | 815 | (7 | %) | (7 | %) | 3,052 | 2,660 | 15 | % | 13 | % | |||||
Metals and minerals | 357 | 397 | (10 | %) | (10 | %) | 1,643 | 1,689 | (3 | %) | (5 | %) | |||||
Forest products | 415 | 466 | (11 | %) | (11 | %) | 1,808 | 1,886 | (4 | %) | (6 | %) | |||||
Coal | 150 | 175 | (14 | %) | (14 | %) | 658 | 661 | — | % | (2 | %) | |||||
Grain and fertilizers | 622 | 659 | (6 | %) | (6 | %) | 2,392 | 2,357 | 1 | % | — | % | |||||
Intermodal | 927 | 891 | 4 | % | 4 | % | 3,787 | 3,465 | 9 | % | 8 | % | |||||
Automotive | 183 | 198 | (8 | %) | (8 | %) | 858 | 830 | 3 | % | 1 | % | |||||
Total freight revenues | 3,408 | 3,601 | (5 | %) | (5 | %) | 14,198 | 13,548 | 5 | % | 3 | % | |||||
Other revenues | 176 | 207 | (15 | %) | (15 | %) | 719 | 773 | (7 | %) | (8 | %) | |||||
Total revenues | 3,584 | 3,808 | (6 | %) | (6 | %) | 14,917 | 14,321 | 4 | % | 3 | % | |||||
Revenue ton miles (RTMs) (millions) (3) | |||||||||||||||||
Petroleum and chemicals | 12,841 | 16,113 | (20 | %) | (20 | %) | 53,989 | 50,722 | 6 | % | 6 | % | |||||
Metals and minerals | 5,589 | 6,069 | (8 | %) | (8 | %) | 25,449 | 27,993 | (9 | %) | (9 | %) | |||||
Forest products | 6,285 | 7,115 | (12 | %) | (12 | %) | 27,187 | 29,918 | (9 | %) | (9 | %) | |||||
Coal | 4,097 | 5,011 | (18 | %) | (18 | %) | 17,653 | 17,927 | (2 | %) | (2 | %) | |||||
Grain and fertilizers | 13,963 | 16,148 | (14 | %) | (14 | %) | 55,597 | 57,819 | (4 | %) | (4 | %) | |||||
Intermodal | 14,168 | 15,237 | (7 | %) | (7 | %) | 58,344 | 60,120 | (3 | %) | (3 | %) | |||||
Automotive | 766 | 842 | (9 | %) | (9 | %) | 3,735 | 3,884 | (4 | %) | (4 | %) | |||||
Total RTMs | 57,709 | 66,535 | (13 | %) | (13 | %) | 241,954 | 248,383 | (3 | %) | (3 | %) | |||||
Freight revenue / RTM (cents) (2) (3) | |||||||||||||||||
Petroleum and chemicals | 5.87 | 5.06 | 16 | % | 16 | % | 5.65 | 5.24 | 8 | % | 6 | % | |||||
Metals and minerals | 6.39 | 6.54 | (2 | %) | (2 | %) | 6.46 | 6.03 | 7 | % | 5 | % | |||||
Forest products | 6.60 | 6.55 | 1 | % | 1 | % | 6.65 | 6.30 | 6 | % | 3 | % | |||||
Coal | 3.66 | 3.49 | 5 | % | 5 | % | 3.73 | 3.69 | 1 | % | — | % | |||||
Grain and fertilizers | 4.45 | 4.08 | 9 | % | 9 | % | 4.30 | 4.08 | 5 | % | 4 | % | |||||
Intermodal | 6.54 | 5.85 | 12 | % | 12 | % | 6.49 | 5.76 | 13 | % | 12 | % | |||||
Automotive | 23.89 | 23.52 | 2 | % | 2 | % | 22.97 | 21.37 | 7 | % | 5 | % | |||||
Total freight revenue / RTM | 5.91 | 5.41 | 9 | % | 9 | % | 5.87 | 5.45 | 8 | % | 6 | % | |||||
Carloads (thousands) (3) | |||||||||||||||||
Petroleum and chemicals | 169 | 184 | (8 | %) | (8 | %) | 688 | 653 | 5 | % | 5 | % | |||||
Metals and minerals | 234 | 255 | (8 | %) | (8 | %) | 1,008 | 1,030 | (2 | %) | (2 | %) | |||||
Forest products | 86 | 101 | (15 | %) | (15 | %) | 375 | 418 | (10 | %) | (10 | %) | |||||
Coal | 79 | 94 | (16 | %) | (16 | %) | 335 | 346 | (3 | %) | (3 | %) | |||||
Grain and fertilizers | 158 | 169 | (7 | %) | (7 | %) | 619 | 632 | (2 | %) | (2 | %) | |||||
Intermodal | 638 | 668 | (4 | %) | (4 | %) | 2,618 | 2,634 | (1 | %) | (1 | %) | |||||
Automotive | 61 | 66 | (8 | %) | (8 | %) | 269 | 263 | 2 | % | 2 | % | |||||
Total carloads | 1,425 | 1,537 | (7 | %) | (7 | %) | 5,912 | 5,976 | (1 | %) | (1 | %) | |||||
Freight revenue / carload ($) (2) (3) | |||||||||||||||||
Petroleum and chemicals | 4,462 | 4,429 | 1 | % | 1 | % | 4,436 | 4,074 | 9 | % | 7 | % | |||||
Metals and minerals | 1,526 | 1,557 | (2 | %) | (2 | %) | 1,630 | 1,640 | (1 | %) | (3 | %) | |||||
Forest products | 4,826 | 4,614 | 5 | % | 4 | % | 4,821 | 4,512 | 7 | % | 5 | % | |||||
Coal | 1,899 | 1,862 | 2 | % | 2 | % | 1,964 | 1,910 | 3 | % | 2 | % | |||||
Grain and fertilizers | 3,937 | 3,899 | 1 | % | 1 | % | 3,864 | 3,729 | 4 | % | 2 | % | |||||
Intermodal | 1,453 | 1,334 | 9 | % | 9 | % | 1,447 | 1,315 | 10 | % | 9 | % | |||||
Automotive | 3,000 | 3,000 | — | % | — | % | 3,190 | 3,156 | 1 | % | (1 | %) | |||||
Total freight revenue / carload | 2,392 | 2,343 | 2 | % | 2 | % | 2,402 | 2,267 | 6 | % | 4 | % |
(1) | See supplementary schedule entitled Non-GAAP Measures for an explanation of this non-GAAP measure. |
(2) | Amounts expressed in Canadian dollars. |
(3) | Statistical operating data and related key operating measures are unaudited and based on estimated data available at such time and are subject to change as more complete information becomes available. |
• | in the third quarter, a gain on disposal of property located in Montreal, Quebec (the "Doney and St-Francois Spurs") of $36 million, or $32 million after-tax ($0.04 per diluted share); and |
• | in the second quarter, a gain on transfer of the Company's finance lease in the passenger rail facilities in Montreal, Quebec, together with its interests in related railway operating agreements (the "Central Station Railway Lease"), of $184 million, or $156 million after-tax ($0.21 per diluted share), and a gain on disposal of land located in Calgary, Alberta, excluding the rail fixtures (the "Calgary Industrial Lead"), of $39 million, or $34 million after-tax ($0.05 per diluted share). |
Three months ended December 31 | Year ended December 31 | |||||||||||||||
In millions, except per share data | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income | $ | 873 | $ | 1,143 | $ | 4,216 | $ | 4,328 | ||||||||
Adjustments: | ||||||||||||||||
Operating expenses | 31 | 27 | 115 | 27 | ||||||||||||
Other income | — | (79 | ) | — | (338 | ) | ||||||||||
Income tax expense (recovery) (1) | (8 | ) | 2 | (142 | ) | 39 | ||||||||||
Adjusted net income | $ | 896 | $ | 1,093 | $ | 4,189 | $ | 4,056 | ||||||||
Basic earnings per share | $ | 1.22 | $ | 1.57 | $ | 5.85 | $ | 5.89 | ||||||||
Impact of adjustments, per share | 0.03 | (0.07 | ) | (0.04 | ) | (0.37 | ) | |||||||||
Adjusted basic earnings per share | $ | 1.25 | $ | 1.50 | $ | 5.81 | $ | 5.52 | ||||||||
Diluted earnings per share | $ | 1.22 | $ | 1.56 | $ | 5.83 | $ | 5.87 | ||||||||
Impact of adjustments, per share | 0.03 | (0.07 | ) | (0.03 | ) | (0.37 | ) | |||||||||
Adjusted diluted earnings per share | $ | 1.25 | $ | 1.49 | $ | 5.80 | $ | 5.50 |
(1) | The tax effect of adjustments reflects tax rates in the applicable jurisdiction and the nature of the item for tax purposes. |
Three months ended December 31 | Year ended December 31 | ||||||||||||
In millions, except percentage | 2019 | 2018 | 2019 | 2018 | |||||||||
Operating income | $ | 1,218 | $ | 1,452 | $ | 5,593 | $ | 5,493 | |||||
Adjustment: Operating expenses | 31 | 27 | 115 | 27 | |||||||||
Adjusted operating income | $ | 1,249 | $ | 1,479 | $ | 5,708 | $ | 5,520 | |||||
Operating ratio (1) | 66.0 | % | 61.9 | % | 62.5 | % | 61.6 | % | |||||
Impact of adjustment | (0.8)-pts | (0.7)-pts | (0.8)-pts | (0.1)-pts | |||||||||
Adjusted operating ratio | 65.2 | % | 61.2 | % | 61.7 | % | 61.5 | % |
(1) | Operating ratio is defined as operating expenses as a percentage of revenues. |
Three months ended December 31 | Year ended December 31 | ||||||||||||||
In millions | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net cash provided by operating activities | $ | 1,518 | $ | 1,917 | $ | 5,923 | $ | 5,918 | |||||||
Net cash used in investing activities | (1,117 | ) | (1,284 | ) | (4,190 | ) | (3,404 | ) | |||||||
Net cash provided before financing activities | 401 | 633 | 1,733 | 2,514 | |||||||||||
Adjustment: Acquisitions, net of cash acquired (1) | 92 | — | 259 | — | |||||||||||
Free cash flow | $ | 493 | $ | 633 | $ | 1,992 | $ | 2,514 |
(1) | Relates to the acquisitions of H&R Transport Limited ("H&R") and the TransX Group of Companies ("TransX"). See Note 3 - Business combinations to CN's 2019 unaudited Interim Consolidated Financial Statements for additional information. |
In millions, unless otherwise indicated | As at and for the year ended December 31, | 2019 | 2018 | |||||
Debt | $ | 13,796 | $ | 12,569 | ||||
Adjustments: | ||||||||
Operating lease liabilities, including current portion (1) | 501 | 579 | ||||||
Pension plans in deficiency | 521 | 477 | ||||||
Adjusted debt | $ | 14,818 | $ | 13,625 | ||||
Net income | $ | 4,216 | $ | 4,328 | ||||
Interest expense | 538 | 489 | ||||||
Income tax expense | 1,213 | 1,354 | ||||||
Depreciation and amortization | 1,562 | 1,329 | ||||||
EBITDA | 7,529 | 7,500 | ||||||
Adjustments: | ||||||||
Other income | (53 | ) | (376 | ) | ||||
Other components of net periodic benefit income | (321 | ) | (302 | ) | ||||
Operating lease cost (1) | 171 | 218 | ||||||
Adjusted EBITDA | $ | 7,326 | $ | 7,040 | ||||
Adjusted debt-to-adjusted EBITDA multiple (times) | 2.02 | 1.94 |
(1) | The Company adopted Accounting Standards Update (ASU) 2016-02: Leases and related amendments (Topic 842) in the first quarter of 2019. The Company now includes operating lease liabilities, as defined by Topic 842, in adjusted debt and excludes operating lease cost, as defined by Topic 842, in adjusted EBITDA. Comparative balances previously referred to as present value of operating lease commitments and operating lease expense have not been adjusted and are now referred to as operating lease liabilities and operating lease cost, respectively. See Note 2 - Recent accounting pronouncements to CN's 2019 unaudited Interim Consolidated Financial Statements for additional information. |
In millions, except percentage | As at and for the year ended December 31, | 2019 | 2018 | |||||
Net income | $ | 4,216 | $ | 4,328 | ||||
Interest expense | 538 | 489 | ||||||
Tax on interest expense (1) | (120 | ) | (116 | ) | ||||
Return | $ | 4,634 | $ | 4,701 | ||||
Average total shareholders' equity | $ | 17,841 | $ | 17,149 | ||||
Average long-term debt | 11,626 | 10,067 | ||||||
Average current portion of long-term debt | 1,557 | 1,632 | ||||||
Less: Average cash, cash equivalents, restricted cash and restricted cash equivalents | (674 | ) | (656 | ) | ||||
Average invested capital | $ | 30,350 | $ | 28,192 | ||||
ROIC | 15.3 | % | 16.7 | % | ||||
Adjusted net income (2) | $ | 4,189 | $ | 4,056 | ||||
Interest expense | 538 | 489 | ||||||
Adjusted tax on interest expense (3) | (131 | ) | (120 | ) | ||||
Adjusted return | $ | 4,596 | $ | 4,425 | ||||
Average invested capital | $ | 30,350 | $ | 28,192 | ||||
Adjusted ROIC | 15.1 | % | 15.7 | % |
(1) | The effective tax rate for 2019 used to calculate the tax on interest expense was 22.3% (2018 - 23.8%). |
(2) | See the section entitled Adjusted performance measures for an explanation of this non-GAAP measure. |
(3) | The adjusted effective tax rate for 2019 used to calculate the adjusted tax on interest expense was 24.4% (2018 - 24.5%). |
Three months ended December 31 | Year ended December 31 | ||||||||||||||
In millions, except per share data | 2019 | 2018 | 2019 | 2018 | |||||||||||
Revenues | $ | 3,584 | $ | 3,808 | $ | 14,917 | $ | 14,321 | |||||||
Operating expenses | |||||||||||||||
Labor and fringe benefits | 749 | 791 | 2,922 | 2,860 | |||||||||||
Purchased services and material | 586 | 527 | 2,267 | 1,971 | |||||||||||
Fuel | 406 | 466 | 1,637 | 1,732 | |||||||||||
Depreciation and amortization | 387 | 346 | 1,562 | 1,329 | |||||||||||
Equipment rents | 112 | 115 | 444 | 467 | |||||||||||
Casualty and other | 126 | 111 | 492 | 469 | |||||||||||
Total operating expenses | 2,366 | 2,356 | 9,324 | 8,828 | |||||||||||
Operating income | 1,218 | 1,452 | 5,593 | 5,493 | |||||||||||
Interest expense | (136 | ) | (122 | ) | (538 | ) | (489 | ) | |||||||
Other components of net periodic benefit income | 77 | 73 | 321 | 302 | |||||||||||
Other income | 2 | 93 | 53 | 376 | |||||||||||
Income before income taxes | 1,161 | 1,496 | 5,429 | 5,682 | |||||||||||
Income tax expense | (288 | ) | (353 | ) | (1,213 | ) | (1,354 | ) | |||||||
Net income | $ | 873 | $ | 1,143 | $ | 4,216 | $ | 4,328 | |||||||
Earnings per share | |||||||||||||||
Basic | $ | 1.22 | $ | 1.57 | $ | 5.85 | $ | 5.89 | |||||||
Diluted | $ | 1.22 | $ | 1.56 | $ | 5.83 | $ | 5.87 | |||||||
Weighted-average number of shares | |||||||||||||||
Basic | 715.2 | 728.4 | 720.1 | 734.5 | |||||||||||
Diluted | 717.4 | 731.3 | 722.6 | 737.7 | |||||||||||
Dividends declared per share | $ | 0.5375 | $ | 0.4550 | $ | 2.1500 | $ | 1.8200 |
Three months ended December 31 | Year ended December 31 | ||||||||||||||
In millions | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net income | $ | 873 | $ | 1,143 | $ | 4,216 | $ | 4,328 | |||||||
Other comprehensive income (loss) | |||||||||||||||
Net gain (loss) on foreign currency translation | (104 | ) | 293 | (256 | ) | 403 | |||||||||
Net change in pension and other postretirement benefit plans | (557 | ) | (910 | ) | (440 | ) | (759 | ) | |||||||
Other comprehensive loss before income taxes | (661 | ) | (617 | ) | (696 | ) | (356 | ) | |||||||
Income tax recovery | 125 | 302 | 62 | 291 | |||||||||||
Other comprehensive loss | (536 | ) | (315 | ) | (634 | ) | (65 | ) | |||||||
Comprehensive income | $ | 337 | $ | 828 | $ | 3,582 | $ | 4,263 |
December 31 | December 31 | ||||||
In millions | 2019 | 2018 | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 64 | $ | 266 | |||
Restricted cash and cash equivalents | 524 | 493 | |||||
Accounts receivable | 1,213 | 1,169 | |||||
Material and supplies | 611 | 557 | |||||
Other current assets | 418 | 243 | |||||
Total current assets | 2,830 | 2,728 | |||||
Properties | 39,669 | 37,773 | |||||
Operating lease right-of-use assets (1) | 520 | — | |||||
Pension asset | 336 | 446 | |||||
Intangible assets, goodwill and other | 429 | 267 | |||||
Total assets | $ | 43,784 | $ | 41,214 | |||
Liabilities and shareholders' equity | |||||||
Current liabilities | |||||||
Accounts payable and other | $ | 2,357 | $ | 2,316 | |||
Current portion of long-term debt | 1,930 | 1,184 | |||||
Total current liabilities | 4,287 | 3,500 | |||||
Deferred income taxes | 7,844 | 7,480 | |||||
Other liabilities and deferred credits | 634 | 501 | |||||
Pension and other postretirement benefits | 733 | 707 | |||||
Long-term debt | 11,866 | 11,385 | |||||
Operating lease liabilities (1) | 379 | — | |||||
Shareholders' equity | |||||||
Common shares | 3,650 | 3,634 | |||||
Common shares in Share Trusts | (163 | ) | (175 | ) | |||
Additional paid-in capital | 403 | 408 | |||||
Accumulated other comprehensive loss | (3,483 | ) | (2,849 | ) | |||
Retained earnings | 17,634 | 16,623 | |||||
Total shareholders' equity | 18,041 | 17,641 | |||||
Total liabilities and shareholders' equity | $ | 43,784 | $ | 41,214 |
(1) | The Company adopted Accounting Standards Update (ASU) 2016-02: Leases and related amendments (Topic 842) in the first quarter of 2019 using a modified retrospective approach with a cumulative-effect adjustment to Retained earnings recognized on January 1, 2019, with no restatement of comparative period financial information. The Company now includes Operating lease right-of-use assets and Operating lease liabilities on the Consolidated Balance Sheet. See Note 2 - Recent accounting pronouncements for additional information. |
Number of common shares | Common shares | Common shares in Share Trusts | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings | Total shareholders' equity | ||||||||||||||||||||||
In millions | Outstanding | Share Trusts | ||||||||||||||||||||||||||
Balance at September 30, 2019 | 715.8 | 1.7 | $ | 3,655 | $ | (156 | ) | $ | 393 | $ | (2,947 | ) | $ | 17,555 | $ | 18,500 | ||||||||||||
Net income | 873 | 873 | ||||||||||||||||||||||||||
Stock options exercised | 0.2 | 14 | (2 | ) | 12 | |||||||||||||||||||||||
Settlement of equity settled awards | — | — | — | (1 | ) | (1 | ) | (2 | ) | |||||||||||||||||||
Stock-based compensation expense and other | 13 | — | 13 | |||||||||||||||||||||||||
Repurchase of common shares | (3.6 | ) | (19 | ) | (410 | ) | (429 | ) | ||||||||||||||||||||
Share purchases by Share Trusts | (0.1 | ) | 0.1 | (7 | ) | (7 | ) | |||||||||||||||||||||
Other comprehensive loss | (536 | ) | (536 | ) | ||||||||||||||||||||||||
Dividends | (383 | ) | (383 | ) | ||||||||||||||||||||||||
Balance at December 31, 2019 | 712.3 | 1.8 | $ | 3,650 | $ | (163 | ) | $ | 403 | $ | (3,483 | ) | $ | 17,634 | $ | 18,041 |
Number of common shares | Common shares | Common shares in Share Trusts | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings | Total shareholders' equity | ||||||||||||||||||||||
In millions | Outstanding | Share Trusts | ||||||||||||||||||||||||||
Balance at December 31, 2018 | 725.3 | 2.0 | $ | 3,634 | $ | (175 | ) | $ | 408 | $ | (2,849 | ) | $ | 16,623 | $ | 17,641 | ||||||||||||
Net income | 4,216 | 4,216 | ||||||||||||||||||||||||||
Stock options exercised | 1.1 | 89 | (12 | ) | 77 | |||||||||||||||||||||||
Settlement of equity settled awards | 0.5 | (0.5 | ) | 45 | (56 | ) | (61 | ) | (72 | ) | ||||||||||||||||||
Stock-based compensation expense and other | 63 | (2 | ) | 61 | ||||||||||||||||||||||||
Repurchase of common shares | (14.3 | ) | (73 | ) | (1,627 | ) | (1,700 | ) | ||||||||||||||||||||
Share purchases by Share Trusts | (0.3 | ) | 0.3 | (33 | ) | (33 | ) | |||||||||||||||||||||
Other comprehensive loss | (634 | ) | (634 | ) | ||||||||||||||||||||||||
Dividends ($2.15 per share) | (1,544 | ) | (1,544 | ) | ||||||||||||||||||||||||
Cumulative-effect adjustment from the adoption of ASU 2016-02 (1) | 29 | 29 | ||||||||||||||||||||||||||
Balance at December 31, 2019 | 712.3 | 1.8 | $ | 3,650 | $ | (163 | ) | $ | 403 | $ | (3,483 | ) | $ | 17,634 | $ | 18,041 |
(1) | The Company adopted Accounting Standards Update (ASU) 2016-02: Leases and related amendments (Topic 842) in the first quarter of 2019 using a modified retrospective approach with a cumulative-effect adjustment to Retained earnings recognized on January 1, 2019, with no restatement of comparative period financial information. See Note 2 - Recent accounting pronouncements for additional information. |
Number of common shares | Common shares | Common shares in Share Trusts | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings | Total shareholders' equity | ||||||||||||||||||||||
In millions | Outstanding | Share Trusts | ||||||||||||||||||||||||||
Balance at September 30, 2018 | 729.5 | 1.6 | $ | 3,624 | $ | (137 | ) | $ | 401 | $ | (2,534 | ) | $ | 16,252 | $ | 17,606 | ||||||||||||
Net income | 1,143 | 1,143 | ||||||||||||||||||||||||||
Stock options exercised | 0.3 | 32 | (5 | ) | 27 | |||||||||||||||||||||||
Settlement of equity settled awards | — | — | — | (3 | ) | — | (3 | ) | ||||||||||||||||||||
Stock-based compensation expense and other | 15 | — | 15 | |||||||||||||||||||||||||
Repurchase of common shares | (4.1 | ) | (22 | ) | (441 | ) | (463 | ) | ||||||||||||||||||||
Share purchases by Share Trusts | (0.4 | ) | 0.4 | (38 | ) | (38 | ) | |||||||||||||||||||||
Other comprehensive loss | (315 | ) | (315 | ) | ||||||||||||||||||||||||
Dividends | (331 | ) | (331 | ) | ||||||||||||||||||||||||
Balance at December 31, 2018 | 725.3 | 2.0 | $ | 3,634 | $ | (175 | ) | $ | 408 | $ | (2,849 | ) | $ | 16,623 | $ | 17,641 |
Number of common shares | Common shares | Common shares in Share Trusts | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings | Total shareholders' equity | ||||||||||||||||||||||
In millions | Outstanding | Share Trusts | ||||||||||||||||||||||||||
Balance at December 31, 2017 | 742.6 | 2.0 | $ | 3,613 | $ | (168 | ) | $ | 434 | $ | (2,784 | ) | $ | 15,561 | $ | 16,656 | ||||||||||||
Net income | 4,328 | 4,328 | ||||||||||||||||||||||||||
Stock options exercised | 1.7 | 120 | (17 | ) | 103 | |||||||||||||||||||||||
Settlement of equity settled awards | 0.4 | (0.4 | ) | 31 | (68 | ) | (30 | ) | (67 | ) | ||||||||||||||||||
Stock-based compensation expense and other | 59 | (2 | ) | 57 | ||||||||||||||||||||||||
Repurchase of common shares | (19.0 | ) | (99 | ) | (1,901 | ) | (2,000 | ) | ||||||||||||||||||||
Share purchases by Share Trusts | (0.4 | ) | 0.4 | (38 | ) | (38 | ) | |||||||||||||||||||||
Other comprehensive loss | (65 | ) | (65 | ) | ||||||||||||||||||||||||
Dividends ($1.82 per share) | (1,333 | ) | (1,333 | ) | ||||||||||||||||||||||||
Balance at December 31, 2018 | 725.3 | 2.0 | $ | 3,634 | $ | (175 | ) | $ | 408 | $ | (2,849 | ) | $ | 16,623 | $ | 17,641 |
Three months ended December 31 | Year ended December 31 | |||||||||||||||
In millions | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Operating activities | ||||||||||||||||
Net income | $ | 873 | $ | 1,143 | $ | 4,216 | $ | 4,328 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 387 | 346 | 1,562 | 1,329 | ||||||||||||
Pension income and funding (1) | (70 | ) | (53 | ) | (288 | ) | (209 | ) | ||||||||
Deferred income taxes | 90 | 126 | 569 | 527 | ||||||||||||
Gain on disposal of property | — | (79 | ) | — | (338 | ) | ||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | 20 | 26 | (7 | ) | (91 | ) | ||||||||||
Material and supplies | (9 | ) | 13 | (60 | ) | (120 | ) | |||||||||
Accounts payable and other | 166 | 394 | (498 | ) | 379 | |||||||||||
Other current assets | 25 | (37 | ) | 5 | 14 | |||||||||||
Other operating activities, net (1) | 36 | 38 | 424 | 99 | ||||||||||||
Net cash provided by operating activities | 1,518 | 1,917 | 5,923 | 5,918 | ||||||||||||
Investing activities | ||||||||||||||||
Property additions | (1,018 | ) | (1,264 | ) | (3,865 | ) | (3,531 | ) | ||||||||
Acquisitions, net of cash acquired (Note 3) | (92 | ) | — | (259 | ) | — | ||||||||||
Disposal of property | — | — | — | 194 | ||||||||||||
Other investing activities, net | (7 | ) | (20 | ) | (66 | ) | (67 | ) | ||||||||
Net cash used in investing activities | (1,117 | ) | (1,284 | ) | (4,190 | ) | (3,404 | ) | ||||||||
Financing activities | ||||||||||||||||
Issuance of debt | 713 | 845 | 1,653 | 3,268 | ||||||||||||
Repayment of debt | (304 | ) | (371 | ) | (402 | ) | (2,393 | ) | ||||||||
Change in commercial paper, net | (182 | ) | (348 | ) | 141 | 99 | ||||||||||
Settlement of foreign exchange forward contracts on debt | (5 | ) | 15 | 2 | 53 | |||||||||||
Issuance of common shares for stock options exercised | 12 | 27 | 77 | 103 | ||||||||||||
Withholding taxes remitted on the net settlement of equity settled awards | (1 | ) | (2 | ) | (61 | ) | (51 | ) | ||||||||
Repurchase of common shares | (437 | ) | (479 | ) | (1,700 | ) | (2,000 | ) | ||||||||
Purchase of common shares for settlement of equity settled awards | (1 | ) | (1 | ) | (11 | ) | (16 | ) | ||||||||
Purchase of common shares by Share Trusts | (7 | ) | (38 | ) | (33 | ) | (38 | ) | ||||||||
Dividends paid | (383 | ) | (331 | ) | (1,544 | ) | (1,333 | ) | ||||||||
Acquisition, additional cash consideration (Note 3) | — | — | (25 | ) | — | |||||||||||
Net cash used in financing activities | (595 | ) | (683 | ) | (1,903 | ) | (2,308 | ) | ||||||||
Effect of foreign exchange fluctuations on cash, cash equivalents, restricted cash and restricted cash equivalents | — | — | (1 | ) | — | |||||||||||
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents | (194 | ) | (50 | ) | (171 | ) | 206 | |||||||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period | 782 | 809 | 759 | 553 | ||||||||||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period | $ | 588 | $ | 759 | $ | 588 | $ | 759 | ||||||||
Cash and cash equivalents, end of period | $ | 64 | $ | 266 | $ | 64 | $ | 266 | ||||||||
Restricted cash and cash equivalents, end of period | 524 | 493 | 524 | 493 | ||||||||||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period | $ | 588 | $ | 759 | $ | 588 | $ | 759 | ||||||||
Supplemental cash flow information | ||||||||||||||||
Interest paid | $ | (88 | ) | $ | (89 | ) | $ | (521 | ) | $ | (488 | ) | ||||
Income taxes paid | $ | (178 | ) | $ | (107 | ) | $ | (822 | ) | $ | (776 | ) |
(1) | In the first quarter of 2019, the Company began presenting Pension income and funding as a separate line on the Consolidated Statements of Cash Flows. Previously pension income and funding was included in Other operating activities, net. Comparative figures have been adjusted to conform to the current presentation. |
• | the use-of-hindsight practical expedient to reassess the lease term and the likelihood that a purchase option will be exercised; |
• | the land easement practical expedient to not evaluate land easements that were not previously accounted for as leases under Topic 840; |
• | the short-term lease exemption for all asset classes that permits entities not to recognize right-of-use assets and lease liabilities onto the balance sheet for leases with terms of twelve months or less; and |
• | the practical expedient to not separate lease and non-lease components for the freight car asset category. |
December 2 | ||||
In millions | 2019 | |||
Consideration transferred | ||||
Cash paid at closing | $ | 95 | ||
Consideration payable | 10 | |||
Fair value of total consideration transferred | $ | 105 | ||
Recognized amounts of identifiable assets acquired and liabilities assumed (1) | ||||
Current assets | $ | 10 | ||
Non-current assets (2) | 84 | |||
Non-current liabilities | (1 | ) | ||
Total identifiable net assets (3) | $ | 93 | ||
Goodwill (4) | $ | 12 |
(1) | The Company's purchase price allocation is preliminary, based on information available to the Company to date, and subject to change over the measurement period, which may be up to one year from the acquisition date. |
(2) | Includes identifiable intangible assets of $52 million. |
(3) | Includes operating lease right-of-use assets and liabilities. |
(4) | The goodwill acquired through the business combination is mainly attributable to the premium of an established business operation. The goodwill is deductible for tax purposes. |
March 20 | ||||
In millions | 2019 | |||
Consideration transferred | ||||
Cash paid at closing | $ | 170 | ||
Additional cash consideration and other (1) | 22 | |||
Fair value of total consideration transferred | $ | 192 | ||
Recognized amounts of identifiable assets acquired and liabilities assumed (2) | ||||
Current assets | $ | 85 | ||
Non-current assets (3) | 260 | |||
Current liabilities | (134 | ) | ||
Non-current liabilities | (84 | ) | ||
Total identifiable net assets (4) | $ | 127 | ||
Goodwill (5) | $ | 65 |
(1) | Includes additional cash consideration paid of $25 million less an adjustment of $3 million to reflect the settlement of working capital. |
(2) | The Company's purchase price allocation is preliminary, based on information available to the Company to date, and subject to change over the measurement period, which may be up to one year from the acquisition date. In the fourth quarter of 2019, the fair value of net assets acquired was adjusted to reflect the settlement of working capital and other adjustments. |
(3) | Includes identifiable intangible assets of $34 million. |
(4) | Includes finance and operating lease right-of-use assets and liabilities. |
(5) | The goodwill acquired through the business combination is mainly attributable to the premium of an established business operation. The goodwill is not deductible for tax purposes. |