Form 20-F
|
|
|
Form 40-F
|
X
|
Yes
|
|
|
No
|
X
|
Yes
|
|
|
No
|
X
|
Yes
|
|
|
No
|
X
|
Exhibit Number
|
Description of Exhibit
|
Ex 99.1
|
|
Ex 99.2
|
|
Ex 99.3
|
|
|
Canadian National Railway Company
|
|||
Date:
|
January 31, 2020
|
|
By:
|
/s/ Cristina Circelli
|
|
|
|
|
|
Name:
|
Cristina Circelli
|
|
|
|
|
Title:
|
Vice-President, Deputy Corporate Secretary and General Counsel
|
|
2019
|
|
2018
|
|
2017
|
|
Financial measures
|
|
|
|
|||
Key financial performance indicators (1)
|
|
|
|
|||
Total revenues ($ millions)
|
14,917
|
|
14,321
|
|
13,041
|
|
Freight revenues ($ millions)
|
14,198
|
|
13,548
|
|
12,293
|
|
Operating income ($ millions)
|
5,593
|
|
5,493
|
|
5,243
|
|
Adjusted operating income ($ millions) (2)
|
5,708
|
|
5,520
|
|
5,243
|
|
Net income ($ millions)
|
4,216
|
|
4,328
|
|
5,484
|
|
Adjusted net income ($ millions) (2)
|
4,189
|
|
4,056
|
|
3,778
|
|
Diluted earnings per share ($)
|
5.83
|
|
5.87
|
|
7.24
|
|
Adjusted diluted earnings per share ($) (2)
|
5.80
|
|
5.50
|
|
4.99
|
|
Free cash flow ($ millions) (3)
|
1,992
|
|
2,514
|
|
2,778
|
|
Gross property additions ($ millions)
|
4,079
|
|
3,531
|
|
2,703
|
|
Share repurchases ($ millions)
|
1,700
|
|
2,000
|
|
2,000
|
|
Dividends per share ($)
|
2.15
|
|
1.82
|
|
1.65
|
|
Financial position (1)
|
|
|
|
|||
Total assets ($ millions)
|
43,784
|
|
41,214
|
|
37,629
|
|
Total liabilities ($ millions)
|
25,743
|
|
23,573
|
|
20,973
|
|
Shareholders' equity ($ millions)
|
18,041
|
|
17,641
|
|
16,656
|
|
Financial ratios
|
|
|
|
|||
Operating ratio (%)
|
62.5
|
|
61.6
|
|
59.8
|
|
Adjusted operating ratio (%) (2)
|
61.7
|
|
61.5
|
|
59.8
|
|
Adjusted debt-to-adjusted EBITDA (times) (4)
|
2.02
|
|
1.94
|
|
1.75
|
|
Return on invested capital (ROIC) (%) (5)
|
15.3
|
|
16.7
|
|
22.4
|
|
Adjusted ROIC (%) (5)
|
15.1
|
|
15.7
|
|
15.9
|
|
Operational measures (6)
|
|
|
|
|||
Statistical operating data
|
|
|
|
|||
Gross ton miles (GTMs) (millions)
|
482,890
|
|
490,414
|
|
469,200
|
|
Revenue ton miles (RTMs) (millions)
|
241,954
|
|
248,383
|
|
237,098
|
|
Carloads (thousands)
|
5,912
|
|
5,976
|
|
5,737
|
|
Route miles (includes Canada and the U.S.)
|
19,500
|
|
19,500
|
|
19,500
|
|
Employees (end of year)
|
25,975
|
|
25,720
|
|
23,945
|
|
Employees (average for the year)
|
26,733
|
|
25,423
|
|
23,074
|
|
Key operating measures
|
|
|
|
|||
Freight revenue per RTM (cents)
|
5.87
|
|
5.45
|
|
5.18
|
|
Freight revenue per carload ($)
|
2,402
|
|
2,267
|
|
2,143
|
|
GTMs per average number of employees (thousands)
|
18,063
|
|
19,290
|
|
20,335
|
|
Operating expenses per GTM (cents)
|
1.93
|
|
1.80
|
|
1.66
|
|
Labor and fringe benefits expense per GTM (cents)
|
0.61
|
|
0.58
|
|
0.54
|
|
Diesel fuel consumed (US gallons in millions)
|
451.4
|
|
462.7
|
|
441.4
|
|
Average fuel price ($/US gallon)
|
3.17
|
|
3.32
|
|
2.74
|
|
GTMs per US gallon of fuel consumed
|
1,070
|
|
1,060
|
|
1,063
|
|
Car velocity (car miles per day)
|
198
|
|
188
|
|
211
|
|
Through dwell (hours)
|
7.9
|
|
8.3
|
|
7.7
|
|
Through network train speed (miles per hour)
|
18.5
|
|
18.0
|
|
20.3
|
|
Locomotive utilization (trailing GTMs per total horsepower)
|
198
|
|
208
|
|
225
|
|
Safety indicators (7)
|
|
|
|
|||
Injury frequency rate (per 200,000 person hours)
|
1.91
|
|
1.81
|
|
1.83
|
|
Accident rate (per million train miles)
|
2.11
|
|
2.02
|
|
1.83
|
|
(1)
|
Amounts expressed in Canadian dollars and prepared in accordance with United States generally accepted accountable principles (GAAP), unless otherwise noted.
|
(2)
|
See the section entitled Adjusted performance measures in the MD&A for an explanation of these non-GAAP measures.
|
(3)
|
See the section entitled Liquidity and capital resources - Free cash flow in the MD&A for an explanation of this non-GAAP measure.
|
(4)
|
See the section entitled Liquidity and capital resources - Adjusted debt-to-adjusted EBITDA multiple in the MD&A for an explanation of this non-GAAP measure.
|
(5)
|
See the section entitled Return on invested capital (ROIC) and adjusted ROIC in the MD&A for an explanation of these non-GAAP measures.
|
(6)
|
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.
|
(7)
|
Based on Federal Railroad Administration (FRA) reporting criteria.
|
Contents
|
|
|
|
Business profile
|
|
Corporate organization
|
|
Strategy overview
|
|
Forward-looking statements
|
|
Financial outlook
|
|
Financial highlights
|
|
2019 compared to 2018
|
|
Non-GAAP measures
|
|
Adjusted performance measures
|
|
Constant currency
|
|
Return on invested capital (ROIC) and adjusted ROIC
|
|
Revenues
|
|
Operating expenses
|
|
Other income and expenses
|
|
2018 compared to 2017
|
|
Summary of quarterly financial data
|
|
Summary of fourth quarter 2019
|
|
Financial position
|
|
Liquidity and capital resources
|
|
Off balance sheet arrangements
|
|
Outstanding share data
|
|
Financial instruments
|
|
Recent accounting pronouncements
|
|
Critical accounting estimates
|
|
Business risks
|
|
Controls and procedures
|
|
|
|
•
|
Net income decreased by $112 million, or 3%, to $4,216 million and diluted earnings per share decreased by 1% to $5.83.
|
•
|
Adjusted net income increased by $133 million, or 3%, to $4,189 million and adjusted diluted earnings per share increased by 5% to $5.80. (1)
|
•
|
Operating income increased by $100 million, or 2%, to $5,593 million and adjusted operating income increased by $188 million, or 3%, to $5,708 million. (1)
|
•
|
Operating ratio of 62.5%, an increase of 0.9 points and adjusted operating ratio of 61.7%, an increase of 0.2 points. (1)
|
•
|
Revenues increased by $596 million, or 4%, to $14,917 million.
|
•
|
Operating expenses increased by $496 million, or 6%, to $9,324 million.
|
•
|
ROIC of 15.3%, a decrease of 1.4 points and adjusted ROIC of 15.1%, a decrease of 0.6 points. (2)
|
•
|
The Company generated free cash flow of $1,992 million, a 21% decrease. (3)
|
|
|
|
|
|
|
|
Change
|
||||||||||
|
|
|
|
|
|
|
Favorable/(Unfavorable)
|
||||||||||
In millions, except percentage and per share data
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2019 vs 2018
|
|
|
2018 vs 2017
|
|
|||
Revenues
|
$
|
14,917
|
|
|
$
|
14,321
|
|
|
$
|
13,041
|
|
|
4
|
%
|
|
10
|
%
|
Operating income
|
$
|
5,593
|
|
|
$
|
5,493
|
|
|
$
|
5,243
|
|
|
2
|
%
|
|
5
|
%
|
Adjusted operating income (1)
|
$
|
5,708
|
|
|
$
|
5,520
|
|
|
$
|
5,243
|
|
|
3
|
%
|
|
5
|
%
|
Net income
|
$
|
4,216
|
|
|
$
|
4,328
|
|
|
$
|
5,484
|
|
|
(3
|
%)
|
|
(21
|
%)
|
Adjusted net income (1)
|
$
|
4,189
|
|
|
$
|
4,056
|
|
|
$
|
3,778
|
|
|
3
|
%
|
|
7
|
%
|
Basic earnings per share
|
$
|
5.85
|
|
|
$
|
5.89
|
|
|
$
|
7.28
|
|
|
(1
|
%)
|
|
(19
|
%)
|
Adjusted basic earnings per share (1)
|
$
|
5.81
|
|
|
$
|
5.52
|
|
|
$
|
5.02
|
|
|
5
|
%
|
|
10
|
%
|
Diluted earnings per share
|
$
|
5.83
|
|
|
$
|
5.87
|
|
|
$
|
7.24
|
|
|
(1
|
%)
|
|
(19
|
%)
|
Adjusted diluted earnings per share (1)
|
$
|
5.80
|
|
|
$
|
5.50
|
|
|
$
|
4.99
|
|
|
5
|
%
|
|
10
|
%
|
Dividends declared per share
|
$
|
2.15
|
|
|
$
|
1.82
|
|
|
$
|
1.65
|
|
|
18
|
%
|
|
10
|
%
|
Total assets
|
$
|
43,784
|
|
|
$
|
41,214
|
|
|
$
|
37,629
|
|
|
6
|
%
|
|
10
|
%
|
Total long-term liabilities
|
$
|
21,456
|
|
|
$
|
20,073
|
|
|
$
|
16,990
|
|
|
(7
|
%)
|
|
(18
|
%)
|
Operating ratio
|
62.5
|
%
|
|
61.6
|
%
|
|
59.8
|
%
|
|
(0.9
|
)-pts
|
|
(1.8
|
)-pts
|
|||
Adjusted operating ratio (1)
|
61.7
|
%
|
|
61.5
|
%
|
|
59.8
|
%
|
|
(0.2
|
)-pts
|
|
(1.7
|
)-pts
|
|||
Free cash flow (2)
|
$
|
1,992
|
|
|
$
|
2,514
|
|
|
$
|
2,778
|
|
|
(21
|
%)
|
|
(10
|
%)
|
(1)
|
See the section of this MD&A entitled Adjusted performance measures for an explanation of these non-GAAP measures.
|
(2)
|
See the section of this MD&A entitled Liquidity and capital resources – Free cash flow for an explanation of this non-GAAP measure.
|
•
|
in the fourth quarter, a gain previously deferred on the 2014 disposal of a segment of the Guelph subdivision located between Georgetown and Kitchener, Ontario, together with the rail fixtures and certain passenger agreements (the "Guelph"), of $79 million, or $70 million after-tax ($0.10 per diluted share);
|
•
|
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).
|
•
|
in the fourth quarter, a deferred income tax recovery of $1,764 million ($2.33 per diluted share or $2.34 per basic share) resulting from the enactment of a lower U.S. federal corporate income tax rate due to the Tax Cuts and Jobs Act ("U.S. Tax Reform") and a deferred income tax expense of $50 million ($0.07 per diluted share) resulting from the enactment of higher provincial corporate income tax rates;
|
•
|
in the third quarter, a deferred income tax expense of $31 million ($0.04 per diluted share) resulting from the enactment of a higher state corporate income tax rate;
|
•
|
in the second quarter, a deferred income tax recovery of $18 million ($0.02 per diluted share) resulting from the enactment of a lower provincial corporate income tax rate; and
|
•
|
in the first quarter, a deferred income tax recovery of $5 million ($0.01 per diluted share) resulting from the enactment of a lower provincial corporate income tax rate.
|
In millions, except per share data
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Net income
|
$
|
4,216
|
|
|
$
|
4,328
|
|
|
$
|
5,484
|
|
|
Adjustments:
|
|
|
|
|
|
|||||||
Operating expenses
|
|
115
|
|
|
27
|
|
|
—
|
|
|||
Other income
|
|
—
|
|
|
(338
|
)
|
|
—
|
|
|||
Income tax expense (recovery) (1)
|
|
(142
|
)
|
|
39
|
|
|
(1,706
|
)
|
|||
Adjusted net income
|
$
|
4,189
|
|
|
$
|
4,056
|
|
|
$
|
3,778
|
|
|
Basic earnings per share
|
$
|
5.85
|
|
|
$
|
5.89
|
|
|
$
|
7.28
|
|
|
Impact of adjustments, per share
|
(0.04
|
)
|
|
(0.37
|
)
|
|
(2.26
|
)
|
||||
Adjusted basic earnings per share
|
$
|
5.81
|
|
|
$
|
5.52
|
|
|
$
|
5.02
|
|
|
Diluted earnings per share
|
$
|
5.83
|
|
|
$
|
5.87
|
|
|
$
|
7.24
|
|
|
Impact of adjustments, per share
|
(0.03
|
)
|
|
(0.37
|
)
|
|
(2.25
|
)
|
||||
Adjusted diluted earnings per share
|
$
|
5.80
|
|
|
$
|
5.50
|
|
|
$
|
4.99
|
|
(1)
|
The tax effect of adjustments reflects tax rates in the applicable jurisdiction and the nature of the item for tax purposes.
|
In millions, except percentage
|
Year ended December 31,
|
2019
|
|
2018
|
|
2017
|
|
|||
Operating income
|
$
|
5,593
|
|
$
|
5,493
|
|
$
|
5,243
|
|
|
Adjustment: Operating expenses
|
115
|
|
27
|
|
—
|
|
||||
Adjusted operating income
|
$
|
5,708
|
|
$
|
5,520
|
|
$
|
5,243
|
|
|
Operating ratio (1)
|
62.5
|
%
|
61.6
|
%
|
59.8
|
%
|
||||
Impact of adjustment
|
(0.8)-pts
|
|
(0.1)-pts
|
|
—
|
|
||||
Adjusted operating ratio
|
61.7
|
%
|
61.5
|
%
|
59.8
|
%
|
(1)
|
Operating ratio is defined as operating expenses as a percentage of revenues.
|
In millions, except percentage
|
As at and for the year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Net income
|
$
|
4,216
|
|
|
$
|
4,328
|
|
|
$
|
5,484
|
|
|
Interest expense
|
538
|
|
|
489
|
|
|
481
|
|
||||
Tax on interest expense (1)
|
(120
|
)
|
|
(116
|
)
|
|
(124
|
)
|
||||
Return
|
$
|
4,634
|
|
|
$
|
4,701
|
|
|
$
|
5,841
|
|
|
Average total shareholders' equity
|
$
|
17,841
|
|
|
$
|
17,149
|
|
|
$
|
15,749
|
|
|
Average long-term debt
|
11,626
|
|
|
10,067
|
|
|
9,098
|
|
||||
Average current portion of long-term debt
|
1,557
|
|
|
1,632
|
|
|
1,785
|
|
||||
Less: Average cash, cash equivalents, restricted cash and restricted cash equivalents
|
(674
|
)
|
|
(656
|
)
|
|
(613
|
)
|
||||
Average invested capital
|
$
|
30,350
|
|
|
$
|
28,192
|
|
|
$
|
26,019
|
|
|
ROIC
|
15.3
|
%
|
|
16.7
|
%
|
|
22.4
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||
Adjusted net income (2)
|
$
|
4,189
|
|
|
$
|
4,056
|
|
|
$
|
3,778
|
|
|
Interest expense
|
538
|
|
|
489
|
|
|
481
|
|
||||
Adjusted tax on interest expense (3)
|
(131
|
)
|
|
(120
|
)
|
|
(124
|
)
|
||||
Adjusted return
|
$
|
4,596
|
|
|
$
|
4,425
|
|
|
$
|
4,135
|
|
|
Average invested capital
|
$
|
30,350
|
|
|
$
|
28,192
|
|
|
$
|
26,019
|
|
|
Adjusted ROIC
|
15.1
|
%
|
|
15.7
|
%
|
|
15.9
|
%
|
(1)
|
The effective tax rate for 2019 used to calculate the tax on interest expense was 22.3% (2018 - 23.8%; 2017 - 25.8%). Due to the negative effective tax rate reported by the Company in 2017, tax on interest expense for 2017 was calculated using an adjusted effective tax rate.
|
(2)
|
See the section of this MD&A 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%; 2017 - 25.8%).
|
In millions, unless otherwise indicated
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
% Change
|
|
|
% Change
at constant
currency |
|
||
Freight revenues
|
$
|
14,198
|
|
|
$
|
13,548
|
|
|
5
|
%
|
|
3
|
%
|
|
Other revenues
|
719
|
|
|
773
|
|
|
(7
|
%)
|
|
(8
|
%)
|
|||
Total revenues
|
$
|
14,917
|
|
|
$
|
14,321
|
|
|
4
|
%
|
|
3
|
%
|
|
Freight revenues
|
|
|
|
|
|
|
|
|||||||
Petroleum and chemicals
|
$
|
3,052
|
|
|
$
|
2,660
|
|
|
15
|
%
|
|
13
|
%
|
|
Metals and minerals
|
1,643
|
|
|
1,689
|
|
|
(3
|
%)
|
|
(5
|
%)
|
|||
Forest products
|
1,808
|
|
|
1,886
|
|
|
(4
|
%)
|
|
(6
|
%)
|
|||
Coal
|
658
|
|
|
661
|
|
|
—
|
%
|
|
(2
|
%)
|
|||
Grain and fertilizers
|
2,392
|
|
|
2,357
|
|
|
1
|
%
|
|
—
|
%
|
|||
Intermodal
|
3,787
|
|
|
3,465
|
|
|
9
|
%
|
|
8
|
%
|
|||
Automotive
|
858
|
|
|
830
|
|
|
3
|
%
|
|
1
|
%
|
|||
Total freight revenues
|
$
|
14,198
|
|
|
$
|
13,548
|
|
|
5
|
%
|
|
3
|
%
|
|
Revenue ton miles (RTMs) (millions)
|
241,954
|
|
|
248,383
|
|
|
(3
|
%)
|
|
(3
|
%)
|
|||
Freight revenue/RTM (cents)
|
5.87
|
|
|
5.45
|
|
|
8
|
%
|
|
6
|
%
|
|||
Carloads (thousands)
|
5,912
|
|
|
5,976
|
|
|
(1
|
%)
|
|
(1
|
%)
|
|||
Freight revenue/carload ($)
|
2,402
|
|
|
2,267
|
|
|
6
|
%
|
|
4
|
%
|
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
% Change
|
|
|
% Change
at constant
currency |
|
||
Revenues (millions)
|
$
|
3,052
|
|
|
$
|
2,660
|
|
|
15
|
%
|
|
13
|
%
|
|
RTMs (millions)
|
53,989
|
|
|
50,722
|
|
|
6
|
%
|
|
6
|
%
|
|||
Revenue/RTM (cents)
|
5.65
|
|
|
5.24
|
|
|
8
|
%
|
|
6
|
%
|
|||
Carloads (thousands)
|
688
|
|
|
653
|
|
|
5
|
%
|
|
5
|
%
|
Percentage of commodity group revenues
|
2019
|
|
|
2018
|
|
Refined petroleum products
|
38
|
%
|
|
36
|
%
|
Chemicals and plastics
|
36
|
%
|
|
39
|
%
|
Crude and condensate
|
22
|
%
|
|
21
|
%
|
Sulfur
|
4
|
%
|
|
4
|
%
|
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
% Change
|
|
|
% Change
at constant
currency |
|
||
Revenues (millions)
|
$
|
1,643
|
|
|
$
|
1,689
|
|
|
(3
|
%)
|
|
(5
|
%)
|
|
RTMs (millions)
|
25,449
|
|
|
27,993
|
|
|
(9
|
%)
|
|
(9
|
%)
|
|||
Revenue/RTM (cents)
|
6.46
|
|
|
6.03
|
|
|
7
|
%
|
|
5
|
%
|
|||
Carloads (thousands)
|
1,008
|
|
|
1,030
|
|
|
(2
|
%)
|
|
(2
|
%)
|
Percentage of commodity group revenues
|
2019
|
|
|
2018
|
|
Metals
|
30
|
%
|
|
30
|
%
|
Minerals
|
27
|
%
|
|
24
|
%
|
Energy materials
|
26
|
%
|
|
30
|
%
|
Iron ore
|
17
|
%
|
|
16
|
%
|
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
% Change
|
|
|
% Change
at constant
currency |
|
||
Revenues (millions)
|
$
|
1,808
|
|
|
$
|
1,886
|
|
|
(4
|
%)
|
|
(6
|
%)
|
|
RTMs (millions)
|
27,187
|
|
|
29,918
|
|
|
(9
|
%)
|
|
(9
|
%)
|
|||
Revenue/RTM (cents)
|
6.65
|
|
|
6.30
|
|
|
6
|
%
|
|
3
|
%
|
|||
Carloads (thousands)
|
375
|
|
|
418
|
|
|
(10
|
%)
|
|
(10
|
%)
|
Percentage of commodity group revenues
|
2019
|
|
|
2018
|
|
Lumber
|
38
|
%
|
|
40
|
%
|
Pulp
|
30
|
%
|
|
29
|
%
|
Paper
|
18
|
%
|
|
18
|
%
|
Panels
|
14
|
%
|
|
13
|
%
|
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
% Change
|
|
|
% Change
at constant
currency |
|
||
Revenues (millions)
|
$
|
658
|
|
|
$
|
661
|
|
|
—
|
%
|
|
(2
|
%)
|
|
RTMs (millions)
|
17,653
|
|
|
17,927
|
|
|
(2
|
%)
|
|
(2
|
%)
|
|||
Revenue/RTM (cents)
|
3.73
|
|
|
3.69
|
|
|
1
|
%
|
|
—
|
%
|
|||
Carloads (thousands)
|
335
|
|
|
346
|
|
|
(3
|
%)
|
|
(3
|
%)
|
Percentage of commodity group revenues
|
2019
|
|
|
2018
|
|
Canadian coal - export
|
40
|
%
|
|
30
|
%
|
Petroleum coke
|
22
|
%
|
|
21
|
%
|
U.S. coal - export
|
19
|
%
|
|
33
|
%
|
U.S. coal - domestic
|
19
|
%
|
|
16
|
%
|
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
% Change
|
|
|
% Change
at constant
currency |
|
||
Revenues (millions)
|
$
|
2,392
|
|
|
$
|
2,357
|
|
|
1
|
%
|
|
—
|
%
|
|
RTMs (millions)
|
55,597
|
|
|
57,819
|
|
|
(4
|
%)
|
|
(4
|
%)
|
|||
Revenue/RTM (cents)
|
4.30
|
|
|
4.08
|
|
|
5
|
%
|
|
4
|
%
|
|||
Carloads (thousands)
|
619
|
|
|
632
|
|
|
(2
|
%)
|
|
(2
|
%)
|
Percentage of commodity group revenues
|
2019
|
|
|
2018
|
|
Canadian grain - regulated
|
42
|
%
|
|
40
|
%
|
U.S. grain - domestic
|
19
|
%
|
|
19
|
%
|
Canadian grain - commercial
|
13
|
%
|
|
14
|
%
|
Fertilizers - potash
|
10
|
%
|
|
13
|
%
|
Fertilizers - other
|
10
|
%
|
|
9
|
%
|
U.S. grain - exports
|
6
|
%
|
|
5
|
%
|
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
% Change
|
|
|
% Change
at constant
currency |
|
||
Revenues (millions)
|
$
|
3,787
|
|
|
$
|
3,465
|
|
|
9
|
%
|
|
8
|
%
|
|
RTMs (millions)
|
58,344
|
|
|
60,120
|
|
|
(3
|
%)
|
|
(3
|
%)
|
|||
Revenue/RTM (cents)
|
6.49
|
|
|
5.76
|
|
|
13
|
%
|
|
12
|
%
|
|||
Carloads (thousands)
|
2,618
|
|
|
2,634
|
|
|
(1
|
%)
|
|
(1
|
%)
|
Percentage of commodity group revenues
|
2019
|
|
|
2018
|
|
International
|
68
|
%
|
|
67
|
%
|
Domestic
|
32
|
%
|
|
33
|
%
|
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
% Change
|
|
|
% Change
at constant
currency |
|
||
Revenues (millions)
|
$
|
858
|
|
|
$
|
830
|
|
|
3
|
%
|
|
1
|
%
|
|
RTMs (millions)
|
3,735
|
|
|
3,884
|
|
|
(4
|
%)
|
|
(4
|
%)
|
|||
Revenue/RTM (cents)
|
22.97
|
|
|
21.37
|
|
|
7
|
%
|
|
5
|
%
|
|||
Carloads (thousands)
|
269
|
|
|
263
|
|
|
2
|
%
|
|
2
|
%
|
Percentage of commodity group revenues
|
2019
|
|
|
2018
|
|
Finished vehicles
|
93
|
%
|
|
94
|
%
|
Auto parts
|
7
|
%
|
|
6
|
%
|
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
% Change
|
|
|
% Change
at constant
currency |
|
||
Revenues (millions)
|
$
|
719
|
|
|
$
|
773
|
|
|
(7
|
%)
|
|
(8
|
%)
|
Percentage of other revenues
|
2019
|
|
|
2018
|
|
Vessels and docks
|
47
|
%
|
|
50
|
%
|
Other non-rail services
|
44
|
%
|
|
42
|
%
|
Other revenues
|
9
|
%
|
|
8
|
%
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
% Change
|
|
|
% Change
at constant
currency
|
|
||
Labor and fringe benefits
|
$
|
2,922
|
|
|
$
|
2,860
|
|
|
(2
|
%)
|
|
(1
|
%)
|
|
Purchased services and material
|
2,267
|
|
|
1,971
|
|
|
(15
|
%)
|
|
(14
|
%)
|
|||
Fuel
|
1,637
|
|
|
1,732
|
|
|
5
|
%
|
|
8
|
%
|
|||
Depreciation and amortization
|
1,562
|
|
|
1,329
|
|
|
(18
|
%)
|
|
(16
|
%)
|
|||
Equipment rents
|
444
|
|
|
467
|
|
|
5
|
%
|
|
7
|
%
|
|||
Casualty and other
|
492
|
|
|
469
|
|
|
(5
|
%)
|
|
(3
|
%)
|
|||
Total operating expenses
|
$
|
9,324
|
|
|
$
|
8,828
|
|
|
(6
|
%)
|
|
(4
|
%)
|
In millions, unless otherwise indicated
|
Year ended December 31,
|
2018
|
|
|
2017
|
|
|
% Change
|
|
|
% Change
at constant
currency
|
|
||
Freight revenues
|
$
|
13,548
|
|
|
$
|
12,293
|
|
|
10
|
%
|
|
10
|
%
|
|
Other revenues
|
773
|
|
|
748
|
|
|
3
|
%
|
|
3
|
%
|
|||
Total revenues
|
$
|
14,321
|
|
|
$
|
13,041
|
|
|
10
|
%
|
|
10
|
%
|
|
Freight revenues
|
|
|
|
|
|
|
|
|||||||
Petroleum and chemicals
|
$
|
2,660
|
|
|
$
|
2,208
|
|
|
20
|
%
|
|
20
|
%
|
|
Metals and minerals
|
1,689
|
|
|
1,523
|
|
|
11
|
%
|
|
11
|
%
|
|||
Forest products
|
1,886
|
|
|
1,788
|
|
|
5
|
%
|
|
6
|
%
|
|||
Coal
|
661
|
|
|
535
|
|
|
24
|
%
|
|
24
|
%
|
|||
Grain and fertilizers
|
2,357
|
|
|
2,214
|
|
|
6
|
%
|
|
7
|
%
|
|||
Intermodal
|
3,465
|
|
|
3,200
|
|
|
8
|
%
|
|
8
|
%
|
|||
Automotive
|
830
|
|
|
825
|
|
|
1
|
%
|
|
1
|
%
|
|||
Total freight revenues
|
$
|
13,548
|
|
|
$
|
12,293
|
|
|
10
|
%
|
|
10
|
%
|
|
Revenue ton miles (RTMs) (millions)
|
248,383
|
|
|
237,098
|
|
|
5
|
%
|
|
5
|
%
|
|||
Freight revenue/RTM (cents)
|
5.45
|
|
|
5.18
|
|
|
5
|
%
|
|
5
|
%
|
|||
Carloads (thousands)
|
5,976
|
|
|
5,737
|
|
|
4
|
%
|
|
4
|
%
|
|||
Freight revenue/carload ($)
|
2,267
|
|
|
2,143
|
|
|
6
|
%
|
|
6
|
%
|
|
Year ended December 31,
|
2018
|
|
|
2017
|
|
|
% Change
|
|
|
% Change
at constant
currency
|
|
||
Revenues (millions)
|
$
|
2,660
|
|
|
$
|
2,208
|
|
|
20
|
%
|
|
20
|
%
|
|
RTMs (millions)
|
50,722
|
|
|
44,375
|
|
|
14
|
%
|
|
14
|
%
|
|||
Revenue/RTM (cents)
|
5.24
|
|
|
4.98
|
|
|
5
|
%
|
|
5
|
%
|
|||
Carloads (thousands)
|
653
|
|
|
614
|
|
|
6
|
%
|
|
6
|
%
|
|
Year ended December 31,
|
2018
|
|
|
2017
|
|
|
% Change
|
|
|
% Change
at constant
currency
|
|
||
Revenues (millions)
|
$
|
1,689
|
|
|
$
|
1,523
|
|
|
11
|
%
|
|
11
|
%
|
|
RTMs (millions)
|
27,993
|
|
|
27,938
|
|
|
—
|
%
|
|
—
|
%
|
|||
Revenue/RTM (cents)
|
6.03
|
|
|
5.45
|
|
|
11
|
%
|
|
11
|
%
|
|||
Carloads (thousands)
|
1,030
|
|
|
995
|
|
|
4
|
%
|
|
4
|
%
|
|
Year ended December 31,
|
2018
|
|
|
2017
|
|
|
% Change
|
|
|
% Change
at constant
currency
|
|
||
Revenues (millions)
|
$
|
1,886
|
|
|
$
|
1,788
|
|
|
5
|
%
|
|
6
|
%
|
|
RTMs (millions)
|
29,918
|
|
|
30,510
|
|
|
(2
|
%)
|
|
(2
|
%)
|
|||
Revenue/RTM (cents)
|
6.30
|
|
|
5.86
|
|
|
8
|
%
|
|
8
|
%
|
|||
Carloads (thousands)
|
418
|
|
|
424
|
|
|
(1
|
%)
|
|
(1
|
%)
|
|
Year ended December 31,
|
2018
|
|
|
2017
|
|
|
% Change
|
|
|
% Change
at constant
currency
|
|
||
Revenues (millions)
|
$
|
661
|
|
|
$
|
535
|
|
|
24
|
%
|
|
24
|
%
|
|
RTMs (millions)
|
17,927
|
|
|
14,539
|
|
|
23
|
%
|
|
23
|
%
|
|||
Revenue/RTM (cents)
|
3.69
|
|
|
3.68
|
|
|
—
|
%
|
|
—
|
%
|
|||
Carloads (thousands)
|
346
|
|
|
303
|
|
|
14
|
%
|
|
14
|
%
|
|
Year ended December 31,
|
2018
|
|
|
2017
|
|
|
% Change
|
|
|
% Change
at constant
currency
|
|
||
Revenues (millions)
|
$
|
2,357
|
|
|
$
|
2,214
|
|
|
6
|
%
|
|
7
|
%
|
|
RTMs (millions)
|
57,819
|
|
|
56,123
|
|
|
3
|
%
|
|
3
|
%
|
|||
Revenue/RTM (cents)
|
4.08
|
|
|
3.94
|
|
|
4
|
%
|
|
4
|
%
|
|||
Carloads (thousands)
|
632
|
|
|
619
|
|
|
2
|
%
|
|
2
|
%
|
|
Year ended December 31,
|
2018
|
|
|
2017
|
|
|
% Change
|
|
|
% Change
at constant
currency
|
|
||
Revenues (millions)
|
$
|
3,465
|
|
|
$
|
3,200
|
|
|
8
|
%
|
|
8
|
%
|
|
RTMs (millions)
|
60,120
|
|
|
59,356
|
|
|
1
|
%
|
|
1
|
%
|
|||
Revenue/RTM (cents)
|
5.76
|
|
|
5.39
|
|
|
7
|
%
|
|
7
|
%
|
|||
Carloads (thousands)
|
2,634
|
|
|
2,514
|
|
|
5
|
%
|
|
5
|
%
|
|
Year ended December 31,
|
2018
|
|
|
2017
|
|
|
% Change
|
|
|
% Change
at constant
currency
|
|
||
Revenues (millions)
|
$
|
830
|
|
|
$
|
825
|
|
|
1
|
%
|
|
1
|
%
|
|
RTMs (millions)
|
3,884
|
|
|
4,257
|
|
|
(9
|
%)
|
|
(9
|
%)
|
|||
Revenue/RTM (cents)
|
21.37
|
|
|
19.38
|
|
|
10
|
%
|
|
11
|
%
|
|||
Carloads (thousands)
|
263
|
|
|
268
|
|
|
(2
|
%)
|
|
(2
|
%)
|
|
Year ended December 31,
|
2018
|
|
|
2017
|
|
|
% Change
|
|
|
% Change
at constant
currency
|
|
||
Revenues (millions)
|
$
|
773
|
|
|
$
|
748
|
|
|
3
|
%
|
|
3
|
%
|
In millions
|
Year ended December 31,
|
2018
|
|
|
2017
|
|
|
% Change
|
|
|
% Change
at constant
currency
|
|
||
Labor and fringe benefits
|
$
|
2,860
|
|
|
$
|
2,536
|
|
|
(13
|
%)
|
|
(13
|
%)
|
|
Purchased services and material
|
1,971
|
|
|
1,769
|
|
|
(11
|
%)
|
|
(11
|
%)
|
|||
Fuel
|
1,732
|
|
|
1,362
|
|
|
(27
|
%)
|
|
(27
|
%)
|
|||
Depreciation and amortization
|
1,329
|
|
|
1,281
|
|
|
(4
|
%)
|
|
(4
|
%)
|
|||
Equipment rents
|
467
|
|
|
418
|
|
|
(12
|
%)
|
|
(12
|
%)
|
|||
Casualty and other
|
469
|
|
|
432
|
|
|
(9
|
%)
|
|
(9
|
%)
|
|||
Total operating expenses
|
$
|
8,828
|
|
|
$
|
7,798
|
|
|
(13
|
%)
|
|
(13
|
%)
|
|
2019
|
|
2018
|
|||||||||||||||||||||||||||||
|
Quarters
|
|
Quarters
|
|||||||||||||||||||||||||||||
In millions, except per share data
|
Fourth
|
|
|
Third
|
|
|
Second
|
|
|
First
|
|
|
Fourth
|
|
|
Third
|
|
|
Second
|
|
|
First
|
|
|||||||||
Revenues
|
$
|
3,584
|
|
|
$
|
3,830
|
|
|
$
|
3,959
|
|
|
$
|
3,544
|
|
|
$
|
3,808
|
|
|
$
|
3,688
|
|
|
$
|
3,631
|
|
|
$
|
3,194
|
|
|
Operating income (1)
|
$
|
1,218
|
|
|
$
|
1,613
|
|
|
$
|
1,682
|
|
|
$
|
1,080
|
|
|
$
|
1,452
|
|
|
$
|
1,492
|
|
|
$
|
1,519
|
|
|
$
|
1,030
|
|
|
Net income (1)
|
$
|
873
|
|
|
$
|
1,195
|
|
|
$
|
1,362
|
|
|
$
|
786
|
|
|
$
|
1,143
|
|
|
$
|
1,134
|
|
|
$
|
1,310
|
|
|
$
|
741
|
|
|
Basic earnings per share
|
$
|
1.22
|
|
|
$
|
1.66
|
|
|
$
|
1.89
|
|
|
$
|
1.08
|
|
|
$
|
1.57
|
|
|
$
|
1.55
|
|
|
$
|
1.78
|
|
|
$
|
1.00
|
|
|
Diluted earnings per share
|
$
|
1.22
|
|
|
$
|
1.66
|
|
|
$
|
1.88
|
|
|
$
|
1.08
|
|
|
$
|
1.56
|
|
|
$
|
1.54
|
|
|
$
|
1.77
|
|
|
$
|
1.00
|
|
|
Dividends per share
|
$
|
0.5375
|
|
|
$
|
0.5375
|
|
|
$
|
0.5375
|
|
|
$
|
0.5375
|
|
|
$
|
0.4550
|
|
|
$
|
0.4550
|
|
|
$
|
0.4550
|
|
|
$
|
0.4550
|
|
(1)
|
Certain quarters include items that management believes do not necessarily arise as part of CN's normal day-to-day operations and can distort the analysis of trends in business performance. See the section of this MD&A entitled Adjusted performance measures for additional information on these items.
|
In millions
|
December 31,
|
|
2019
|
|
|
2018
|
|
|
Foreign
exchange
impact
|
|
|
Variance excluding foreign exchange
|
|
Explanation of variance,
other than foreign exchange impact
|
||||
Total assets
|
|
$
|
43,784
|
|
|
$
|
41,214
|
|
|
$
|
(968
|
)
|
|
$
|
3,538
|
|
|
|
Variance mainly due to:
|
|
|
|
|
|
|
|
|
|
|||||||||
Properties
|
|
39,669
|
|
|
37,773
|
|
|
(884
|
)
|
|
2,780
|
|
See the section of this MD&A entitled Liquidity and capital resources - Investing activities, property additions of $4,079 million, partly offset by depreciation of $1,559 million.
|
|||||
Operating lease right-of-use assets
|
|
520
|
|
|
—
|
|
|
—
|
|
|
520
|
|
Increase due to Adoption of ASU 2016-02: Leases and related amendments (Topic 842).
|
|||||
Pension asset
|
|
336
|
|
|
446
|
|
|
—
|
|
|
(110
|
)
|
Decrease primarily due to the reduction in the year-end discount rate from 3.77% in 2018 to 3.10% in 2019, partly offset by higher actual returns.
|
|||||
Total liabilities
|
|
$
|
25,743
|
|
|
$
|
23,573
|
|
|
$
|
(723
|
)
|
|
$
|
2,893
|
|
|
|
Variance mainly due to:
|
|
|
|
|
|
|
|
|
|
|||||||||
Deferred income taxes
|
|
7,844
|
|
|
7,480
|
|
|
(184
|
)
|
|
548
|
|
Increase due to deferred income tax expense of $569 million recorded in Net income, partly offset by a deferred income tax recovery of $21 million recorded in Other comprehensive income (loss), mostly attributable to new temporary differences generated during the year.
|
|||||
Pension and other postretirement benefits
|
|
733
|
|
|
707
|
|
|
(9
|
)
|
|
35
|
|
Increase primarily due to the reduction in the year-end discount rate from 3.77% in 2018 to 3.10% in 2019, partly offset by higher actual returns.
|
|||||
Total long-term debt, including the current portion
|
|
13,796
|
|
|
12,569
|
|
|
(501
|
)
|
|
1,728
|
|
See the section entitled Liquidity and capital resources - Financing activities for debt financing activities in 2019, as well as issuance of finance leases of $214 million.
|
|||||
Operating lease liabilities, including the current portion
|
|
501
|
|
|
—
|
|
|
(16
|
)
|
|
517
|
|
Increase due to Adoption of ASU 2016-02: Leases and related amendments (Topic 842).
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
In millions
|
December 31,
|
|
2019
|
|
|
2018
|
|
|
|
|
Variance
|
|
Explanation of variance
|
|||||
Total shareholders' equity
|
|
$
|
18,041
|
|
|
$
|
17,641
|
|
|
|
|
$
|
400
|
|
|
|||
Variance mainly due to:
|
|
|
|
|
|
|
|
|
|
|||||||||
Accumulated other comprehensive loss
|
|
(3,483
|
)
|
|
(2,849
|
)
|
|
|
|
(634
|
)
|
Increase in Other comprehensive loss due to after-tax amounts of $308 million from net foreign exchange losses and $326 million resulting from net actuarial losses on defined benefit pension and post-retirement benefit plans, net of amortization.
|
||||||
Retained earnings
|
|
17,634
|
|
|
16,623
|
|
|
|
|
1,011
|
|
Increase primarily due to current year net income of $4,216 million, partly offset by share repurchases of $1,627 million and dividends paid of $1,544 million.
|
|
Long-term debt rating
|
Commercial paper rating
|
Dominion Bond Rating Service
|
A
|
R-1 (low)
|
Moody's Investors Service
|
A2
|
P-1
|
Standard & Poor's
|
A
|
A-1
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
Variance
|
|
||||
Net cash provided by operating activities
|
$
|
5,923
|
|
|
$
|
5,918
|
|
|
$
|
5
|
|
||
Net cash used in investing activities
|
(4,190
|
)
|
|
(3,404
|
)
|
|
(786
|
)
|
|||||
Net cash used in financing activities
|
(1,903
|
)
|
|
(2,308
|
)
|
|
405
|
|
|||||
Effect of foreign exchange fluctuations on cash, cash equivalents, restricted cash, and restricted cash equivalents
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents
|
$
|
(171
|
)
|
|
$
|
206
|
|
|
$
|
(377
|
)
|
||
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of year
|
759
|
|
|
553
|
|
|
206
|
|
|||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of year
|
$
|
588
|
|
|
$
|
759
|
|
|
$
|
(171
|
)
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|||
Track and roadway (1)
|
$
|
2,262
|
|
|
$
|
2,341
|
|
||
Rolling stock
|
999
|
|
|
433
|
|
||||
Buildings
|
87
|
|
|
95
|
|
||||
Information technology
|
421
|
|
|
459
|
|
||||
Other
|
310
|
|
|
203
|
|
||||
Gross property additions
|
4,079
|
|
|
3,531
|
|
||||
Less: Finance leases (2)
|
214
|
|
|
—
|
|
||||
Property additions (3)
|
$
|
3,865
|
|
|
$
|
3,531
|
|
(1)
|
In 2019, approximately 65% (2018 - 65%) of the Track and roadway property additions were incurred to renew basic infrastructure. Costs relating to normal repairs and maintenance of Track and roadway properties are expensed as incurred, and amounted to approximately 11% of the Company's total operating expenses in 2019 (2018 - 10%).
|
(2)
|
Includes re-measurement of finance leases.
|
(3)
|
Includes $227 million associated with the U.S. federal government legislative PTC implementation in 2019 (2018 - $419 million).
|
•
|
$1.6 billion on track and railway infrastructure maintenance to support safe and efficient operations, including the replacement of rail and ties, bridge improvements, as well as other general track maintenance;
|
•
|
$0.8 billion on initiatives to increase capacity and enable growth, such as track infrastructure expansion, investments in yards and intermodal terminals, and on information technology to improve safety performance, operational efficiency and customer service;
|
•
|
$0.4 billion on equipment capital expenditures, allowing the Company to tap growth opportunities and improve the quality of the fleet, and in order to handle expected traffic increase and improve operational efficiency, CN expects to take delivery of 41 new high-horsepower locomotives and 240 new grain hopper cars; and
|
•
|
$0.2 billion associated with the U.S. federal government legislative PTC implementation.
|
•
|
On November 1, 2019, issuance of $450 million 3.05% Notes due 2050 in the Canadian capital markets, which resulted in net proceeds of $443 million;
|
•
|
On February 8, 2019, issuance of $350 million 3.00% Notes due 2029 and $450 million 3.60% Notes due 2049 in the Canadian capital markets, which resulted in total net proceeds of $790 million;
|
•
|
Net issuance of commercial paper of $141 million;
|
•
|
Proceeds from the accounts receivable securitization program of $420 million;
|
•
|
Repayment of accounts receivable securitization borrowings of $220 million; and
|
•
|
Repayment of finance leases of $162 million.
|
•
|
On November 7, 2018, issuance of US$650 million ($854 million) 4.45% Notes due 2049 in the U.S. capital markets, which resulted in net proceeds of $845 million;
|
•
|
On August 30, 2018, early redemption of US$550 million 5.55% Notes due 2019 for US$558 million ($720 million), which resulted in a loss of US$8 million ($10 million) that was recorded in Other income;
|
•
|
On July 31, 2018, issuance of $350 million 3.20% Notes due 2028 and $450 million 3.60% Notes due 2048 in the Canadian capital markets, which resulted in total net proceeds of $787 million;
|
•
|
On July 15, 2018, repayment of US$200 million ($264 million) 6.80% Notes due 2018 upon maturity;
|
•
|
On May 15, 2018, repayment of US$325 million ($415 million) 5.55% Notes due 2018 upon maturity;
|
•
|
On February 6, 2018, issuance of US$300 million ($374 million) 2.40% Notes due 2020 and US$600 million ($749 million) 3.65% Notes due 2048 in the U.S. capital markets, which resulted in total net proceeds of $1,106 million;
|
•
|
Net issuance of commercial paper of $99 million;
|
•
|
Proceeds from the accounts receivable securitization program of $530 million;
|
•
|
Repayment of accounts receivable securitization borrowings of $950 million; and
|
•
|
Repayment of finance leases of $44 million.
|
In millions, except per share data
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Total NCIB
|
|
|||||
February 2019 - January 2020 NCIB
|
|
|
|
|
|
|
|
||||||||||
Number of common shares
|
12.8
|
|
|
N/A
|
|
|
N/A
|
|
|
12.8
|
|
||||||
Weighted-average price per share
|
$
|
120.03
|
|
|
N/A
|
|
|
N/A
|
|
|
$
|
120.03
|
|
||||
Amount of repurchase
|
$
|
1,547
|
|
|
N/A
|
|
|
N/A
|
|
|
$
|
1,547
|
|
||||
October 2018 - January 2019 NCIB
|
|
|
|
|
|
|
|
||||||||||
Number of common shares
|
1.5
|
|
|
2.6
|
|
|
N/A
|
|
|
4.1
|
|
||||||
Weighted-average price per share
|
$
|
106.78
|
|
|
$
|
109.92
|
|
|
N/A
|
|
|
$
|
108.82
|
|
|||
Amount of repurchase
|
$
|
153
|
|
|
$
|
293
|
|
|
N/A
|
|
|
$
|
446
|
|
|||
October 2017 - October 2018 NCIB
|
|
|
|
|
|
|
|
||||||||||
Number of common shares
|
N/A
|
|
|
16.4
|
|
|
2.9
|
|
|
19.3
|
|
||||||
Weighted-average price per share
|
N/A
|
|
|
$
|
104.19
|
|
|
$
|
102.40
|
|
|
$
|
103.92
|
|
|||
Amount of repurchase
|
N/A
|
|
|
$
|
1,707
|
|
|
$
|
293
|
|
|
$
|
2,000
|
|
|||
Total for the year
|
|
|
|
|
|
|
|
||||||||||
Number of common shares
|
14.3
|
|
|
19.0
|
|
|
20.4
|
|
(1)
|
|
|||||||
Weighted-average price per share
|
$
|
118.70
|
|
|
$
|
104.99
|
|
|
$
|
98.27
|
|
(1)
|
|
||||
Amount of repurchase
|
$
|
1,700
|
|
|
$
|
2,000
|
|
|
$
|
2,000
|
|
(1)
|
|
(1)
|
Includes 2017 repurchases from the October 2016 - October 2017 NCIB, which consisted of 17.5 million common shares, a weighted-average price per share of $97.60 and an amount of repurchase of $1,707 million. Includes repurchases in the first and second quarters of 2017, pursuant to private agreements between the Company and arm's-length third-party sellers.
|
In millions, except per share data
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Share purchases by Share Units Plan Share Trusts
|
|
|
|
|
|
|
||||||
Number of common shares
|
|
—
|
|
|
0.4
|
|
|
0.5
|
|
|||
Weighted-average price per share
|
|
$
|
—
|
|
|
$
|
104.87
|
|
|
$
|
102.17
|
|
Amount of purchase
|
|
$
|
—
|
|
|
$
|
38
|
|
|
$
|
55
|
|
Share settlements by Share Units Plan Share Trusts
|
|
|
|
|
|
|
||||||
Number of common shares
|
|
0.5
|
|
|
0.4
|
|
|
0.3
|
|
|||
Weighted-average price per share
|
|
$
|
88.23
|
|
|
$
|
84.53
|
|
|
$
|
77.99
|
|
Amount of settlement
|
|
$
|
45
|
|
|
$
|
31
|
|
|
$
|
24
|
|
In millions
|
Total
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
2024
|
|
|
2025 & thereafter
|
|
||||||||
Debt obligations (1)
|
$
|
13,662
|
|
|
$
|
1,871
|
|
|
$
|
761
|
|
|
$
|
317
|
|
|
$
|
187
|
|
|
$
|
447
|
|
|
$
|
10,079
|
|
|
Interest on debt obligations
|
9,884
|
|
|
509
|
|
|
504
|
|
|
485
|
|
|
471
|
|
|
463
|
|
|
7,452
|
|
||||||||
Finance lease obligations (2)
|
138
|
|
|
62
|
|
|
72
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||||
Operating lease obligations (3)
|
560
|
|
|
135
|
|
|
108
|
|
|
73
|
|
|
51
|
|
|
37
|
|
|
156
|
|
||||||||
Purchase obligations (4)
|
1,621
|
|
|
1,136
|
|
|
201
|
|
|
120
|
|
|
86
|
|
|
40
|
|
|
38
|
|
||||||||
Other long-term liabilities (5)
|
701
|
|
|
104
|
|
|
56
|
|
|
47
|
|
|
46
|
|
|
34
|
|
|
414
|
|
||||||||
Total contractual obligations
|
$
|
26,566
|
|
|
$
|
3,817
|
|
|
$
|
1,702
|
|
|
$
|
1,043
|
|
|
$
|
841
|
|
|
$
|
1,021
|
|
|
$
|
18,142
|
|
(1)
|
Presented net of unamortized discounts and debt issuance costs and excludes finance lease obligations.
|
(2)
|
Includes $4 million of imputed interest.
|
(3)
|
Includes $70 million related to renewal options reasonably certain to be exercised and $59 million of imputed interest.
|
(4)
|
Includes fixed and variable commitments for rail, information technology services and licenses, locomotives, wheels, engineering services, railroad ties, rail cars, as well as other equipment and services. Costs of variable commitments were estimated using forecasted prices and volumes.
|
(5)
|
Includes expected payments for workers' compensation, postretirement benefits other than pensions, net unrecognized tax benefits, environmental liabilities and pension obligations that have been classified as contractual settlement agreements.
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Net cash provided by operating activities
|
$
|
5,923
|
|
|
$
|
5,918
|
|
|
$
|
5,516
|
|
|
Net cash used in investing activities
|
(4,190
|
)
|
|
(3,404
|
)
|
|
(2,738
|
)
|
||||
Net cash provided before financing activities
|
1,733
|
|
|
2,514
|
|
|
2,778
|
|
||||
Adjustment: Acquisitions, net of cash acquired (1)
|
259
|
|
|
—
|
|
|
—
|
|
||||
Free cash flow
|
$
|
1,992
|
|
|
$
|
2,514
|
|
|
$
|
2,778
|
|
(1)
|
Relates to the acquisitions of H&R Transport Limited ("H&R") and the TransX Group of Companies ("TransX"). See the section of this MD&A entitled Liquidity and capital resources - Investing activities for additional information.
|
In millions, unless otherwise indicated
|
As at and for the year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Debt
|
$
|
13,796
|
|
|
$
|
12,569
|
|
|
$
|
10,828
|
|
|
Adjustments:
|
|
|
|
|
|
|||||||
Operating lease liabilities, including current portion (1)
|
501
|
|
|
579
|
|
|
478
|
|
||||
Pension plans in deficiency
|
521
|
|
|
477
|
|
|
455
|
|
||||
Adjusted debt
|
$
|
14,818
|
|
|
$
|
13,625
|
|
|
$
|
11,761
|
|
|
Net income
|
$
|
4,216
|
|
|
$
|
4,328
|
|
|
$
|
5,484
|
|
|
Interest expense
|
538
|
|
|
489
|
|
|
481
|
|
||||
Income tax expense (recovery)
|
1,213
|
|
|
1,354
|
|
|
(395
|
)
|
||||
Depreciation and amortization
|
1,562
|
|
|
1,329
|
|
|
1,281
|
|
||||
EBITDA
|
7,529
|
|
|
7,500
|
|
|
6,851
|
|
||||
Adjustments:
|
|
|
|
|
|
|||||||
Other income
|
(53
|
)
|
|
(376
|
)
|
|
(12
|
)
|
||||
Other components of net periodic benefit income
|
(321
|
)
|
|
(302
|
)
|
|
(315
|
)
|
||||
Operating lease cost (1)
|
171
|
|
|
218
|
|
|
191
|
|
||||
Adjusted EBITDA
|
$
|
7,326
|
|
|
$
|
7,040
|
|
|
$
|
6,715
|
|
|
Adjusted debt-to-adjusted EBITDA multiple (times)
|
2.02
|
|
|
1.94
|
|
|
1.75
|
|
(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 the section of this MD&A entitled Recent accounting pronouncements for additional information.
|
•
|
Level 1: Inputs are quoted prices for identical instruments in active markets
|
•
|
Level 2: Significant inputs (other than quoted prices included in Level 1) are observable
|
•
|
Level 3: Significant inputs are unobservable
|
•
|
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.
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Net periodic benefit income for pensions
|
$
|
(183
|
)
|
|
$
|
(139
|
)
|
|
$
|
(190
|
)
|
|
Net periodic benefit cost for other postretirement benefits
|
$
|
7
|
|
|
$
|
9
|
|
|
$
|
7
|
|
In millions
|
December 31,
|
2019
|
|
|
2018
|
|
||
Projected pension benefit obligation
|
$
|
18,609
|
|
|
$
|
17,275
|
|
|
Accumulated other postretirement benefit obligation
|
$
|
227
|
|
|
$
|
247
|
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
Actual
|
12.2
|
%
|
(2.4
|
%)
|
9.2
|
%
|
4.4
|
%
|
5.5
|
%
|
Market-related value
|
6.1
|
%
|
5.7
|
%
|
9.1
|
%
|
8.2
|
%
|
7.0
|
%
|
Expected
|
7.00
|
%
|
7.00
|
%
|
7.00
|
%
|
7.00
|
%
|
7.00
|
%
|
In millions
|
December 31, 2019
|
CN
Pension Plan
|
|
|
BC Rail
Pension Plan
|
|
|
U.S. and
other plans
|
|
|
Total
|
|
||||
Plan assets by category
|
|
|
|
|
|
|
|
|||||||||
Cash and short-term investments
|
$
|
480
|
|
|
$
|
16
|
|
|
$
|
6
|
|
|
$
|
502
|
|
|
Bonds
|
6,140
|
|
|
316
|
|
|
165
|
|
|
6,621
|
|
|||||
Mortgages
|
51
|
|
|
1
|
|
|
—
|
|
|
52
|
|
|||||
Emerging market debt
|
490
|
|
|
8
|
|
|
2
|
|
|
500
|
|
|||||
Private debt
|
469
|
|
|
10
|
|
|
2
|
|
|
481
|
|
|||||
Public equities
|
6,333
|
|
|
161
|
|
|
115
|
|
|
6,609
|
|
|||||
Private equities
|
210
|
|
|
4
|
|
|
1
|
|
|
215
|
|
|||||
Real estate
|
424
|
|
|
9
|
|
|
2
|
|
|
435
|
|
|||||
Oil and gas
|
879
|
|
|
18
|
|
|
4
|
|
|
901
|
|
|||||
Infrastructure
|
603
|
|
|
12
|
|
|
4
|
|
|
619
|
|
|||||
Absolute return
|
1,729
|
|
|
28
|
|
|
8
|
|
|
1,765
|
|
|||||
Risk-factor allocation
|
283
|
|
|
4
|
|
|
1
|
|
|
288
|
|
|||||
Investments
|
18,091
|
|
|
587
|
|
|
310
|
|
|
18,988
|
|
|||||
Investment-related liabilities (1)
|
(554
|
)
|
|
(9
|
)
|
|
(2
|
)
|
|
(565
|
)
|
|||||
Other (2)
|
(14
|
)
|
|
1
|
|
|
14
|
|
|
1
|
|
|||||
Total plan assets
|
$
|
17,523
|
|
|
$
|
579
|
|
|
$
|
322
|
|
|
$
|
18,424
|
|
|
Projected benefit obligation at end of year
|
$
|
17,252
|
|
|
$
|
515
|
|
|
$
|
842
|
|
|
$
|
18,609
|
|
|
Company contributions in 2019
|
$
|
81
|
|
|
$
|
—
|
|
|
$
|
24
|
|
|
$
|
105
|
|
|
Employee contributions in 2019
|
$
|
64
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
64
|
|
(1)
|
Investment-related liabilities include securities sold under repurchase agreements.
|
(2)
|
Other consists of operating assets of $108 million and liabilities of $107 million required to administer the Trusts' investment assets and the plans' benefit and funding activities.
|
In millions
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Beginning of year
|
$
|
207
|
|
|
$
|
183
|
|
|
$
|
183
|
|
Accruals and other
|
29
|
|
|
52
|
|
|
38
|
|
|||
Payments
|
(29
|
)
|
|
(28
|
)
|
|
(38
|
)
|
|||
End of year
|
$
|
207
|
|
|
$
|
207
|
|
|
$
|
183
|
|
Current portion - End of year
|
$
|
55
|
|
|
$
|
60
|
|
|
$
|
40
|
|
In millions
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Beginning of year
|
$
|
139
|
|
|
$
|
116
|
|
|
$
|
118
|
|
Accruals and other
|
44
|
|
|
41
|
|
|
46
|
|
|||
Payments
|
(31
|
)
|
|
(28
|
)
|
|
(41
|
)
|
|||
Foreign exchange
|
(7
|
)
|
|
10
|
|
|
(7
|
)
|
|||
End of year
|
$
|
145
|
|
|
$
|
139
|
|
|
$
|
116
|
|
Current portion - End of year
|
$
|
36
|
|
|
$
|
37
|
|
|
$
|
25
|
|
In millions
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Beginning of year
|
$
|
61
|
|
|
$
|
78
|
|
|
$
|
86
|
|
|
Accruals and other
|
31
|
|
|
16
|
|
|
16
|
|
||||
Payments
|
(34
|
)
|
|
(34
|
)
|
|
(23
|
)
|
||||
Foreign exchange
|
(1
|
)
|
|
1
|
|
|
(1
|
)
|
||||
End of year
|
$
|
57
|
|
|
$
|
61
|
|
|
$
|
78
|
|
|
Current portion - End of year
|
$
|
38
|
|
|
$
|
39
|
|
|
$
|
57
|
|
•
|
the lack of specific technical information available with respect to many sites;
|
•
|
the absence of any government authority, third-party orders, or claims with respect to particular sites;
|
•
|
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
|
•
|
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.
|
•
|
border security arrangements, pursuant to an agreement the Company and CP entered into with the CBP and the CBSA;
|
•
|
the CBP's Customs-Trade Partnership Against Terrorism (C-TPAT) program and designation as a low-risk carrier under CBSA's Customs Self-Assessment (CSA) program;
|
•
|
regulations imposed by the CBP requiring advance notification by all modes of transportation for all shipments into the U.S. The CBSA is also working on similar requirements for Canada-bound traffic;
|
•
|
inspection for imported fruits and vegetables grown in Canada and the agricultural quarantine and inspection (AQI) user fee for all traffic entering the U.S. from Canada; and
|
•
|
gamma ray screening of cargo entering the U.S. from Canada, and potential security and agricultural inspections at the Canada/U.S. border.
|
* CPA auditor, CA, public accountancy permit No. A123145
|
KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.
|
|
|
|
KPMG Canada provides services to KPMG LLP.
|
* CPA auditor, CA, public accountancy permit No. A123145
|
KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.
|
|
|
|
KPMG Canada provides services to KPMG LLP.
|
In millions, except per share data
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Revenues (Note 4)
|
$
|
14,917
|
|
|
$
|
14,321
|
|
|
$
|
13,041
|
|
|
Operating expenses
|
|
|
|
|
|
|||||||
Labor and fringe benefits
|
2,922
|
|
|
2,860
|
|
|
2,536
|
|
||||
Purchased services and material
|
2,267
|
|
|
1,971
|
|
|
1,769
|
|
||||
Fuel
|
1,637
|
|
|
1,732
|
|
|
1,362
|
|
||||
Depreciation and amortization (Note 9)
|
1,562
|
|
|
1,329
|
|
|
1,281
|
|
||||
Equipment rents
|
444
|
|
|
467
|
|
|
418
|
|
||||
Casualty and other
|
492
|
|
|
469
|
|
|
432
|
|
||||
Total operating expenses
|
9,324
|
|
|
8,828
|
|
|
7,798
|
|
||||
Operating income
|
5,593
|
|
|
5,493
|
|
|
5,243
|
|
||||
Interest expense
|
(538
|
)
|
|
(489
|
)
|
|
(481
|
)
|
||||
Other components of net periodic benefit income (Note 15)
|
321
|
|
|
302
|
|
|
315
|
|
||||
Other income (Note 5)
|
53
|
|
|
376
|
|
|
12
|
|
||||
Income before income taxes
|
5,429
|
|
|
5,682
|
|
|
5,089
|
|
||||
Income tax recovery (expense) (Note 6)
|
(1,213
|
)
|
|
(1,354
|
)
|
|
395
|
|
||||
Net income
|
$
|
4,216
|
|
|
$
|
4,328
|
|
|
$
|
5,484
|
|
|
|
|
|
|
|
|
|||||||
Earnings per share (Note 7)
|
|
|
|
|
|
|||||||
Basic
|
$
|
5.85
|
|
|
$
|
5.89
|
|
|
$
|
7.28
|
|
|
Diluted
|
$
|
5.83
|
|
|
$
|
5.87
|
|
|
$
|
7.24
|
|
|
|
|
|
|
|
|
|||||||
Weighted-average number of shares (Note 7)
|
|
|
|
|
|
|||||||
Basic
|
720.1
|
|
|
734.5
|
|
|
753.6
|
|
||||
Diluted
|
722.6
|
|
|
737.7
|
|
|
757.3
|
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Net income
|
$
|
4,216
|
|
|
$
|
4,328
|
|
|
$
|
5,484
|
|
|
Other comprehensive income (loss) (Note 18)
|
|
|
|
|
|
|||||||
Net gain (loss) on foreign currency translation
|
(256
|
)
|
|
403
|
|
|
(197
|
)
|
||||
Net change in pension and other postretirement benefit plans (Note 15)
|
(440
|
)
|
|
(759
|
)
|
|
(224
|
)
|
||||
Other comprehensive loss before income taxes
|
(696
|
)
|
|
(356
|
)
|
|
(421
|
)
|
||||
Income tax recovery (expense)
|
62
|
|
|
291
|
|
|
(5
|
)
|
||||
Other comprehensive loss
|
(634
|
)
|
|
(65
|
)
|
|
(426
|
)
|
||||
Comprehensive income
|
$
|
3,582
|
|
|
$
|
4,263
|
|
|
$
|
5,058
|
|
In millions
|
December 31,
|
2019
|
|
|
2018
|
|
||
Assets
|
|
|
|
|||||
Current assets
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
64
|
|
|
$
|
266
|
|
|
Restricted cash and cash equivalents (Note 13)
|
524
|
|
|
493
|
|
|||
Accounts receivable (Note 8)
|
1,213
|
|
|
1,169
|
|
|||
Material and supplies
|
611
|
|
|
557
|
|
|||
Other current assets
|
418
|
|
|
243
|
|
|||
Total current assets
|
2,830
|
|
|
2,728
|
|
|||
|
|
|
|
|||||
Properties (Note 9)
|
39,669
|
|
|
37,773
|
|
|||
Operating lease right-of-use assets (Note 10) (1)
|
520
|
|
|
—
|
|
|||
Pension asset (Note 15)
|
336
|
|
|
446
|
|
|||
Intangible assets, goodwill and other (Note 11)
|
429
|
|
|
267
|
|
|||
Total assets
|
$
|
43,784
|
|
|
$
|
41,214
|
|
|
Liabilities and shareholders' equity
|
|
|
|
|||||
Current liabilities
|
|
|
|
|||||
Accounts payable and other (Note 12)
|
$
|
2,357
|
|
|
$
|
2,316
|
|
|
Current portion of long-term debt (Note 13)
|
1,930
|
|
|
1,184
|
|
|||
Total current liabilities
|
4,287
|
|
|
3,500
|
|
|||
|
|
|
|
|||||
Deferred income taxes (Note 6)
|
7,844
|
|
|
7,480
|
|
|||
Other liabilities and deferred credits (Note 14)
|
634
|
|
|
501
|
|
|||
Pension and other postretirement benefits (Note 15)
|
733
|
|
|
707
|
|
|||
Long-term debt (Note 13)
|
11,866
|
|
|
11,385
|
|
|||
Operating lease liabilities (Note 10) (1)
|
379
|
|
|
—
|
|
|||
Shareholders' equity
|
|
|
|
|||||
Common shares (Note 16)
|
3,650
|
|
|
3,634
|
|
|||
Common shares in Share Trusts (Note 16)
|
(163
|
)
|
|
(175
|
)
|
|||
Additional paid-in capital
|
403
|
|
|
408
|
|
|||
Accumulated other comprehensive loss (Note 18)
|
(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 December 31, 2016
|
762.0
|
|
1.8
|
|
|
$
|
3,647
|
|
|
$
|
(137
|
)
|
|
$
|
450
|
|
|
$
|
(2,358
|
)
|
|
$
|
13,239
|
|
|
$
|
14,841
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
5,484
|
|
|
5,484
|
|
||||||||||||
Stock options exercised
|
1.2
|
|
|
|
68
|
|
|
|
|
(10
|
)
|
|
|
|
|
|
58
|
|
||||||||||
Settlement of equity settled awards
(Note 16)
|
0.3
|
|
(0.3
|
)
|
|
|
|
24
|
|
|
(84
|
)
|
|
|
|
(22
|
)
|
|
(82
|
)
|
||||||||
Stock-based compensation expense and other
|
|
|
|
|
|
|
|
78
|
|
|
|
|
(3
|
)
|
|
75
|
|
|||||||||||
Repurchase of common shares (Note 16)
|
(20.4
|
)
|
|
|
(102
|
)
|
|
|
|
|
|
|
|
(1,898
|
)
|
|
(2,000
|
)
|
||||||||||
Share purchases by Share Trusts (Note 16)
|
(0.5
|
)
|
0.5
|
|
|
|
|
(55
|
)
|
|
|
|
|
|
|
|
(55
|
)
|
||||||||||
Other comprehensive loss (Note 18)
|
|
|
|
|
|
|
|
|
|
(426
|
)
|
|
|
|
(426
|
)
|
||||||||||||
Dividends ($1.65 per share)
|
|
|
|
|
|
|
|
|
|
|
|
(1,239
|
)
|
|
(1,239
|
)
|
||||||||||||
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
(Note 16) |
0.4
|
|
(0.4
|
)
|
|
|
|
31
|
|
|
(68
|
)
|
|
|
|
|
(30
|
)
|
|
(67
|
)
|
|||||||
Stock-based compensation expense and other
|
|
|
|
|
|
|
|
|
|
|
|
59
|
|
|
|
|
|
(2
|
)
|
|
57
|
|
||||||
Repurchase of common shares (Note 16)
|
(19.0
|
)
|
|
|
|
(99
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,901
|
)
|
|
(2,000
|
)
|
||||||
Share purchases by Share Trusts (Note 16)
|
(0.4
|
)
|
0.4
|
|
|
|
|
|
(38
|
)
|
|
|
|
|
|
|
|
|
|
|
(38
|
)
|
||||||
Other comprehensive loss (Note 18)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,216
|
|
|
4,216
|
|
||||||
Stock options exercised
|
1.1
|
|
|
|
|
89
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
77
|
|
||||||
Settlement of equity settled awards
(Note 16) |
0.5
|
|
(0.5
|
)
|
|
|
|
45
|
|
|
(56
|
)
|
|
|
|
|
(61
|
)
|
|
(72
|
)
|
|||||||
Stock-based compensation expense and other
|
|
|
|
|
|
|
|
|
|
|
|
63
|
|
|
|
|
|
(2
|
)
|
|
61
|
|
||||||
Repurchase of common shares (Note 16)
|
(14.3
|
)
|
|
|
|
(73
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,627
|
)
|
|
(1,700
|
)
|
||||||
Share purchases by Share Trusts (Note 16)
|
(0.3
|
)
|
0.3
|
|
|
|
|
|
(33
|
)
|
|
|
|
|
|
|
|
|
|
|
(33
|
)
|
||||||
Other comprehensive loss (Note 18)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
||||
Operating activities
|
|
|
|
|
|
||||||||
Net income
|
$
|
4,216
|
|
|
$
|
4,328
|
|
|
$
|
5,484
|
|
||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|||||||||
Depreciation and amortization
|
1,562
|
|
|
1,329
|
|
|
1,281
|
|
|||||
Pension income and funding (1)
|
(288
|
)
|
|
(209
|
)
|
|
(286
|
)
|
|||||
Deferred income taxes (Note 6)
|
569
|
|
|
527
|
|
|
(1,195
|
)
|
|||||
Gain on disposal of property (Note 5)
|
—
|
|
|
(338
|
)
|
|
—
|
|
|||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||||
Accounts receivable
|
(7
|
)
|
|
(91
|
)
|
|
(125
|
)
|
|||||
Material and supplies
|
(60
|
)
|
|
(120
|
)
|
|
(70
|
)
|
|||||
Accounts payable and other
|
(498
|
)
|
|
379
|
|
|
418
|
|
|||||
Other current assets
|
5
|
|
|
14
|
|
|
(80
|
)
|
|||||
Other operating activities, net (1)
|
424
|
|
|
99
|
|
|
89
|
|
|||||
Net cash provided by operating activities
|
5,923
|
|
|
5,918
|
|
|
5,516
|
|
|||||
Investing activities
|
|
|
|
|
|
||||||||
Property additions
|
(3,865
|
)
|
|
(3,531
|
)
|
|
(2,673
|
)
|
|||||
Acquisitions, net of cash acquired (Note 3)
|
(259
|
)
|
|
—
|
|
|
—
|
|
|||||
Disposal of property (Note 5)
|
—
|
|
|
194
|
|
|
—
|
|
|||||
Other investing activities, net
|
(66
|
)
|
|
(67
|
)
|
|
(65
|
)
|
|||||
Net cash used in investing activities
|
(4,190
|
)
|
|
(3,404
|
)
|
|
(2,738
|
)
|
|||||
Financing activities
|
|
|
|
|
|
||||||||
Issuance of debt (Note 13)
|
1,653
|
|
|
3,268
|
|
|
916
|
|
|||||
Repayment of debt (Note 13)
|
(402
|
)
|
|
(2,393
|
)
|
|
(841
|
)
|
|||||
Change in commercial paper, net (Note 13)
|
141
|
|
|
99
|
|
|
379
|
|
|||||
Settlement of foreign exchange forward contracts on debt
|
2
|
|
|
53
|
|
|
(15
|
)
|
|||||
Issuance of common shares for stock options exercised (Note 17)
|
77
|
|
|
103
|
|
|
58
|
|
|||||
Withholding taxes remitted on the net settlement of equity settled awards (Note 17)
|
(61
|
)
|
|
(51
|
)
|
|
(57
|
)
|
|||||
Repurchase of common shares (Note 16)
|
(1,700
|
)
|
|
(2,000
|
)
|
|
(2,016
|
)
|
|||||
Purchase of common shares for settlement of equity settled awards
|
(11
|
)
|
|
(16
|
)
|
|
(25
|
)
|
|||||
Purchase of common shares by Share Trusts (Note 16)
|
(33
|
)
|
|
(38
|
)
|
|
(55
|
)
|
|||||
Dividends paid
|
(1,544
|
)
|
|
(1,333
|
)
|
|
(1,239
|
)
|
|||||
Acquisition, additional cash consideration (Note 3)
|
(25
|
)
|
|
—
|
|
|
—
|
|
|||||
Net cash used in financing activities
|
(1,903
|
)
|
|
(2,308
|
)
|
|
(2,895
|
)
|
|||||
|
|
|
|
|
|
||||||||
Effect of foreign exchange fluctuations on cash, cash equivalents, restricted cash, and restricted cash equivalents
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|||||
|
|
|
|
|
|
||||||||
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents
|
(171
|
)
|
|
206
|
|
|
(119
|
)
|
|||||
|
|
|
|
|
|
||||||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of year
|
759
|
|
|
553
|
|
|
672
|
|
|||||
|
|
|
|
|
|
||||||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of year
|
$
|
588
|
|
|
$
|
759
|
|
|
$
|
553
|
|
||
Cash and cash equivalents, end of year
|
$
|
64
|
|
|
$
|
266
|
|
|
$
|
70
|
|
||
Restricted cash and cash equivalents, end of year
|
524
|
|
|
493
|
|
|
483
|
|
|||||
|
|
|
|
|
|
||||||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of year
|
$
|
588
|
|
|
$
|
759
|
|
|
$
|
553
|
|
||
Supplemental cash flow information
|
|
|
|
|
|
||||||||
Interest paid
|
$
|
(521
|
)
|
|
$
|
(488
|
)
|
|
$
|
(477
|
)
|
||
Income taxes paid (Note 6)
|
$
|
(822
|
)
|
|
$
|
(776
|
)
|
|
$
|
(712
|
)
|
(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.
|
Contents
|
|
|
|
1 Summary of significant accounting policies
|
|
2 Recent accounting pronouncements
|
|
3 Business combinations
|
|
4 Revenues
|
|
5 Other income
|
|
6 Income taxes
|
|
7 Earnings per share
|
|
8 Accounts receivable
|
|
9 Properties
|
|
10 Leases
|
|
11 Intangible assets, goodwill and other
|
|
12 Accounts payable and other
|
|
13 Debt
|
|
14 Other liabilities and deferred credits
|
|
15 Pensions and other postretirement benefits
|
|
16 Share capital
|
|
17 Stock-based compensation
|
|
18 Accumulated other comprehensive loss
|
|
19 Major commitments and contingencies
|
|
20 Financial instruments
|
|
21 Segmented information
|
|
22 Subsequent events
|
|
|
|
•
|
Petroleum and chemicals, which includes chemicals and plastics, refined petroleum products, crude and condensate, and sulfur;
|
•
|
Metals and minerals, which includes energy materials, metals, minerals, and iron ore;
|
•
|
Forest products, which includes lumber, pulp, paper, and panels;
|
•
|
Coal, which includes coal and petroleum coke;
|
•
|
Grain and fertilizers, which includes Canadian regulated grain, Canadian commercial grain, U.S. grain, potash and other fertilizers;
|
•
|
Intermodal, which includes rail and trucking services for domestic and international traffic; and
|
•
|
Automotive, which includes finished vehicles and auto parts.
|
•
|
grading: installation of road bed, retaining walls, and drainage structures;
|
•
|
rail and related track material: installation of 39 or more continuous feet of rail;
|
•
|
ties: installation of 5 or more ties per 39 feet; and
|
•
|
ballast: installation of 171 cubic yards of ballast per mile.
|
•
|
the interest cost of pension obligations;
|
•
|
the expected long-term return on pension fund assets;
|
•
|
the amortization of prior service costs and amendments over the expected average remaining service life of the employee group covered by the plans; and
|
•
|
the amortization of cumulative net actuarial gains and losses in excess of 10% of the greater of the beginning of year balances of the projected benefit obligation or market-related value of plan assets, over the expected average remaining service life of the employee group covered by the plans.
|
•
|
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.
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Freight revenues
|
|
|
|
|
|
|
||||||
Petroleum and chemicals
|
|
$
|
3,052
|
|
|
$
|
2,660
|
|
|
$
|
2,208
|
|
Metals and minerals
|
|
1,643
|
|
|
1,689
|
|
|
1,523
|
|
|||
Forest products
|
|
1,808
|
|
|
1,886
|
|
|
1,788
|
|
|||
Coal
|
|
658
|
|
|
661
|
|
|
535
|
|
|||
Grain and fertilizers
|
|
2,392
|
|
|
2,357
|
|
|
2,214
|
|
|||
Intermodal
|
|
3,787
|
|
|
3,465
|
|
|
3,200
|
|
|||
Automotive
|
|
858
|
|
|
830
|
|
|
825
|
|
|||
Total freight revenues
|
|
14,198
|
|
|
13,548
|
|
|
12,293
|
|
|||
Other revenues
|
|
719
|
|
|
773
|
|
|
748
|
|
|||
Total revenues (1) (2)
|
|
$
|
14,917
|
|
|
$
|
14,321
|
|
|
$
|
13,041
|
|
(1)
|
As at December 31, 2019, the Company had remaining performance obligations related to freight in-transit, for which revenues of $91 million are expected to be recognized in the next period.
|
(2)
|
See Note 21 - Segmented information for the disaggregation of revenues by geographic area.
|
In millions
|
|
2019
|
|
|
2018
|
|
||
Beginning of year
|
|
$
|
3
|
|
|
$
|
3
|
|
Revenue recognized included in the beginning balance
|
(3
|
)
|
|
(3
|
)
|
|||
Increase due to consideration received, net of revenue recognized
|
211
|
|
|
3
|
|
|||
End of year
|
|
$
|
211
|
|
|
$
|
3
|
|
Current portion - End of year
|
|
$
|
50
|
|
|
$
|
3
|
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Gain on disposal of property
|
|
$
|
—
|
|
|
$
|
338
|
|
|
$
|
—
|
|
Gain on disposal of land
|
|
50
|
|
|
27
|
|
|
22
|
|
|||
Other (1)
|
|
3
|
|
|
11
|
|
|
(10
|
)
|
|||
Total other income
|
|
$
|
53
|
|
|
$
|
376
|
|
|
$
|
12
|
|
(1)
|
Includes foreign exchange gains and losses related to foreign exchange forward contracts and the re-measurement of foreign currency denominated monetary assets and liabilities. See Note 20 – Financial instruments for additional information.
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Canadian statutory federal tax rate
|
|
15
|
%
|
|
15
|
%
|
|
15
|
%
|
|||
Income tax expense at the Canadian statutory federal tax rate
|
$
|
814
|
|
|
$
|
852
|
|
|
$
|
763
|
|
|
Income tax expense (recovery) resulting from:
|
|
|
|
|
|
|
||||||
Provincial and foreign income taxes (1)
|
|
551
|
|
|
535
|
|
|
536
|
|
|||
Deferred income tax adjustments due to rate enactments (2)
|
(112
|
)
|
|
—
|
|
|
(1,706
|
)
|
||||
Gain on disposals (3)
|
|
(6
|
)
|
|
(51
|
)
|
|
(3
|
)
|
|||
Other (4)
|
|
(34
|
)
|
|
18
|
|
|
15
|
|
|||
Income tax expense (recovery)
|
|
$
|
1,213
|
|
|
$
|
1,354
|
|
|
$
|
(395
|
)
|
Net cash payments for income taxes
|
|
$
|
822
|
|
|
$
|
776
|
|
|
$
|
712
|
|
(4)
|
Includes adjustments relating to the filing or resolution of matters pertaining to prior years' income taxes, including net recognized tax benefits, excess tax benefits, and other items.
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Income before income taxes
|
|
|
|
|
|
|
||||||
Domestic
|
|
$
|
4,162
|
|
|
$
|
4,400
|
|
|
$
|
3,964
|
|
Foreign
|
|
1,267
|
|
|
1,282
|
|
|
1,125
|
|
|||
Total income before income taxes
|
|
$
|
5,429
|
|
|
$
|
5,682
|
|
|
$
|
5,089
|
|
Current income tax expense
|
|
|
|
|
|
|
||||||
Domestic
|
|
$
|
608
|
|
|
$
|
818
|
|
|
$
|
758
|
|
Foreign
|
|
36
|
|
|
9
|
|
|
42
|
|
|||
Total current income tax expense
|
|
$
|
644
|
|
|
$
|
827
|
|
|
$
|
800
|
|
Deferred income tax expense (recovery)
|
|
|
|
|
|
|
||||||
Domestic
|
|
$
|
423
|
|
|
$
|
419
|
|
|
$
|
349
|
|
Foreign
|
|
146
|
|
|
108
|
|
|
(1,544
|
)
|
|||
Total deferred income tax expense (recovery)
|
|
$
|
569
|
|
|
$
|
527
|
|
|
$
|
(1,195
|
)
|
In millions
|
December 31,
|
2019
|
|
|
2018
|
|
||
Deferred income tax assets
|
|
|
|
|
||||
Net operating losses and tax credit carryforwards (1)
|
|
$
|
234
|
|
|
$
|
20
|
|
Pension liability
|
|
137
|
|
|
128
|
|
||
Lease liabilities
|
|
127
|
|
|
—
|
|
||
Personal injury and other claims
|
|
61
|
|
|
65
|
|
||
Other postretirement benefits liability
|
|
59
|
|
|
70
|
|
||
Compensation reserves
|
|
51
|
|
|
74
|
|
||
Unrealized foreign exchange losses
|
|
—
|
|
|
50
|
|
||
Other
|
|
69
|
|
|
61
|
|
||
Total deferred income tax assets
|
|
$
|
738
|
|
|
$
|
468
|
|
Deferred income tax liabilities
|
|
|
|
|
||||
Properties
|
|
$
|
8,222
|
|
|
$
|
7,672
|
|
Operating lease right-of-use assets
|
|
131
|
|
|
—
|
|
||
Pension asset
|
|
88
|
|
|
120
|
|
||
Unrealized foreign exchange gains
|
|
15
|
|
|
—
|
|
||
Other
|
|
126
|
|
|
156
|
|
||
Total deferred income tax liabilities
|
|
$
|
8,582
|
|
|
$
|
7,948
|
|
Total net deferred income tax liability
|
|
$
|
7,844
|
|
|
$
|
7,480
|
|
Total net deferred income tax liability
|
|
|
|
|
||||
Domestic
|
|
$
|
4,184
|
|
|
$
|
3,808
|
|
Foreign
|
|
3,660
|
|
|
3,672
|
|
||
Total net deferred income tax liability
|
|
$
|
7,844
|
|
|
$
|
7,480
|
|
(1)
|
At December 31, 2019, the Company has $937 million net operating loss carryforwards for U.S. federal income tax purposes that arose in 2019, over an indefinite period. The utilization of those U.S. federal net operating loss carryforwards is limited to 80% of taxable income in any given year, as prescribed under the provisions of the U.S. Tax Reform. In addition, the Company has net operating loss carryforwards of $177 million for U.S. state tax purposes, which are available to offset future U.S. state taxable income between the years 2020 and 2039.
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
||||
Gross unrecognized tax benefits at beginning of year
|
|
$
|
74
|
|
|
$
|
74
|
|
|
$
|
61
|
|
|
Increases for:
|
|
|
|
|
|
|
|||||||
Tax positions related to the current year
|
|
5
|
|
|
12
|
|
|
13
|
|
||||
Tax positions related to prior years
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Decreases for:
|
|
|
|
|
|
|
|||||||
Tax positions related to prior years
|
|
(17
|
)
|
|
(13
|
)
|
|
—
|
|
||||
Settlements
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Lapse of the applicable statute of limitations
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Gross unrecognized tax benefits at end of year
|
|
62
|
|
|
74
|
|
|
74
|
|
||||
Adjustments to reflect tax treaties and other arrangements
|
(2
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|||||
Net unrecognized tax benefits at end of year
|
|
$
|
60
|
|
|
$
|
69
|
|
|
$
|
69
|
|
In millions, except per share data
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Net income
|
$
|
4,216
|
|
|
$
|
4,328
|
|
|
$
|
5,484
|
|
|
Weighted-average basic shares outstanding
|
720.1
|
|
|
734.5
|
|
|
753.6
|
|
||||
Dilutive effect of stock-based compensation
|
2.5
|
|
|
3.2
|
|
|
3.7
|
|
||||
Weighted-average diluted shares outstanding
|
722.6
|
|
|
737.7
|
|
|
757.3
|
|
||||
Basic earnings per share
|
$
|
5.85
|
|
|
$
|
5.89
|
|
|
$
|
7.28
|
|
|
Diluted earnings per share
|
$
|
5.83
|
|
|
$
|
5.87
|
|
|
$
|
7.24
|
|
|
Units excluded from the calculation as their inclusion would not have a dilutive effect
|
|
|
|
|
|
|||||||
Stock options
|
0.5
|
|
|
0.6
|
|
|
0.4
|
|
||||
Performance share units
|
0.2
|
|
|
0.3
|
|
|
0.1
|
|
In millions
|
December 31,
|
2019
|
|
|
2018
|
|
||
Freight
|
$
|
1,008
|
|
|
$
|
974
|
|
|
Non-freight
|
233
|
|
|
221
|
|
|||
Gross accounts receivable
|
1,241
|
|
|
1,195
|
|
|||
Allowance for doubtful accounts
|
(28
|
)
|
|
(26
|
)
|
|||
Net accounts receivable
|
$
|
1,213
|
|
|
$
|
1,169
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
|||||||||||||||||||||||
In millions
|
Depreciation
rate |
|
|
Cost
|
|
|
Accumulated
Depreciation |
|
|
Net
|
|
|
Cost
|
|
|
Accumulated
Depreciation |
|
|
Net
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Properties including finance leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Track and roadway (1)
|
2
|
%
|
|
$
|
39,395
|
|
|
$
|
8,502
|
|
|
$
|
30,893
|
|
|
$
|
38,352
|
|
|
$
|
8,276
|
|
|
$
|
30,076
|
|
|
Rolling stock
|
5
|
%
|
|
7,538
|
|
|
2,941
|
|
|
4,597
|
|
|
6,883
|
|
|
2,842
|
|
|
4,041
|
|
|||||||
Buildings
|
3
|
%
|
|
1,956
|
|
|
692
|
|
|
1,264
|
|
|
1,924
|
|
|
668
|
|
|
1,256
|
|
|||||||
Information technology (2)
|
9
|
%
|
|
1,972
|
|
|
688
|
|
|
1,284
|
|
|
1,795
|
|
|
686
|
|
|
1,109
|
|
|||||||
Other
|
5
|
%
|
|
2,720
|
|
|
1,089
|
|
|
1,631
|
|
|
2,124
|
|
|
833
|
|
|
1,291
|
|
|||||||
Total properties including finance leases (3) (4)
|
|
$
|
53,581
|
|
|
$
|
13,912
|
|
|
$
|
39,669
|
|
|
$
|
51,078
|
|
|
$
|
13,305
|
|
|
$
|
37,773
|
|
Finance leases included in properties
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Track and roadway (5)
|
|
|
$
|
406
|
|
|
$
|
85
|
|
|
$
|
321
|
|
|
$
|
406
|
|
|
$
|
80
|
|
|
$
|
326
|
|
|
Rolling stock
|
|
|
87
|
|
|
2
|
|
|
85
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Buildings
|
|
|
27
|
|
|
9
|
|
|
18
|
|
|
27
|
|
|
9
|
|
|
18
|
|
|||||||
Other
|
|
|
128
|
|
|
18
|
|
|
110
|
|
|
92
|
|
|
18
|
|
|
74
|
|
|||||||
Total finance leases included in properties
|
|
$
|
648
|
|
|
$
|
114
|
|
|
$
|
534
|
|
|
$
|
525
|
|
|
$
|
107
|
|
|
$
|
418
|
|
(1)
|
As at December 31, 2019, includes land of $2,401 million (2018 - $2,455 million).
|
(3)
|
In 2019, property additions, net of finance leases, were $3,865 million (2018 - $3,531 million), of which $1,489 million (2018 - $1,547 million) related to track and railway infrastructure maintenance.
|
(4)
|
In 2019, depreciation expense related to properties was $1,559 million (2018 - $1,327 million).
|
(5)
|
As at December 31, 2019, includes right-of-way access of $106 million (2018 - $107 million).
|
In millions
|
Year ended December 31,
|
2019
|
|
|
Finance lease cost
|
|
|
||
Amortization of right-of-use assets
|
|
$
|
11
|
|
Interest on lease liabilities
|
|
8
|
|
|
Total finance lease cost
|
|
19
|
|
|
Operating lease cost
|
|
171
|
|
|
Short-term lease cost
|
|
47
|
|
|
Variable lease cost (1)
|
|
63
|
|
|
Total lease cost (2)
|
|
$
|
300
|
|
(1)
|
Mainly relates to leases of trucks for the Company's freight delivery service contracts.
|
(2)
|
Includes lease costs from purchased services and material and equipment rents in the Consolidated Statements of Income.
|
In millions
|
Classification
|
December 31,
|
2019
|
|
|
Lease right-of-use assets
|
|
|
|
||
Finance leases
|
Properties
|
|
$
|
534
|
|
Operating leases
|
Operating lease right-of-use assets
|
|
520
|
|
|
Total lease right-of-use assets
|
|
|
$
|
1,054
|
|
Lease liabilities
|
|
|
|
||
Current
|
|
|
|
||
Finance leases
|
Current portion of long-term debt
|
|
$
|
59
|
|
Operating leases
|
Accounts payable and other
|
|
122
|
|
|
Noncurrent
|
|
|
|
||
Finance leases
|
Long-term debt
|
|
75
|
|
|
Operating leases
|
Operating lease liabilities
|
|
379
|
|
|
Total lease liabilities
|
|
|
$
|
635
|
|
December 31,
|
2019
|
|
Weighted-average remaining lease term (years)
|
|
|
Finance leases
|
1.4
|
|
Operating leases
|
7.0
|
|
Weighted-average discount rate (%)
|
|
|
Finance leases
|
3.21
|
|
Operating leases
|
3.12
|
|
In millions
|
Year ended December 31,
|
2019
|
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
|
Operating cash outflows from operating leases
|
|
$
|
170
|
|
Operating cash outflows from finance leases
|
|
$
|
6
|
|
Financing cash outflows from finance leases
|
|
$
|
162
|
|
Right-of-use assets obtained in exchange for lease liabilities
|
|
|
||
Operating lease
|
|
$
|
79
|
|
Finance lease
|
|
$
|
—
|
|
In millions
|
Finance leases
|
|
Operating leases (1)
|
|
||||
2020
|
|
$
|
62
|
|
|
$
|
135
|
|
2021
|
|
72
|
|
|
108
|
|
||
2022
|
|
1
|
|
|
73
|
|
||
2023
|
|
—
|
|
|
51
|
|
||
2024
|
|
—
|
|
|
37
|
|
||
2025 and thereafter
|
|
3
|
|
|
156
|
|
||
Total lease payments
|
|
138
|
|
|
560
|
|
||
Less: Imputed interest
|
|
4
|
|
|
59
|
|
||
Present value of lease payments
|
|
$
|
134
|
|
|
$
|
501
|
|
(1)
|
Includes $70 million related to renewal options that are reasonably certain to be exercised.
|
In millions
|
Capital leases
|
|
Operating leases
|
|
||||
2019
|
|
$
|
10
|
|
|
$
|
190
|
|
2020
|
|
15
|
|
|
136
|
|
||
2021
|
|
5
|
|
|
103
|
|
||
2022
|
|
—
|
|
|
64
|
|
||
2023
|
|
—
|
|
|
45
|
|
||
2024 and thereafter
|
|
—
|
|
|
125
|
|
||
Total lease payments
|
|
$
|
30
|
|
|
$
|
663
|
|
Less: Imputed interest
|
|
1
|
|
|
|
|||
Present value of lease payments
|
|
$
|
29
|
|
|
|
In millions
|
December 31,
|
2019
|
|
|
2018
|
|
||
Intangible assets
|
|
$
|
152
|
|
|
$
|
73
|
|
Investments (1)
|
|
84
|
|
|
70
|
|
||
Goodwill (Note 3)
|
|
77
|
|
|
—
|
|
||
Deferred costs
|
|
67
|
|
|
61
|
|
||
Long-term receivables
|
|
31
|
|
|
26
|
|
||
Other long-term assets
|
|
18
|
|
|
37
|
|
||
Total intangible assets, goodwill and other
|
|
$
|
429
|
|
|
$
|
267
|
|
(1)
|
As at December 31, 2019, the Company had $60 million (2018 - $54 million) of investments accounted for under the equity method and $24 million (2018 - $16 million) of investments for which fair value was not readily determinable accounted for at cost minus impairment, plus or minus observable price changes.
|
In millions
|
December 31,
|
2019
|
|
|
2018
|
|
||
Trade payables
|
|
$
|
866
|
|
|
$
|
982
|
|
Accrued charges
|
|
318
|
|
|
232
|
|
||
Payroll-related accruals
|
|
284
|
|
|
436
|
|
||
Income and other taxes
|
|
202
|
|
|
205
|
|
||
Accrued interest
|
|
161
|
|
|
142
|
|
||
Operating lease liabilities (Note 10)
|
|
122
|
|
|
—
|
|
||
Personal injury and other claims provisions (Note 19)
|
|
91
|
|
|
97
|
|
||
Contract liabilities (Note 4)
|
|
50
|
|
|
3
|
|
||
Environmental provisions (Note 19)
|
|
38
|
|
|
39
|
|
||
Other postretirement benefits liability (Note 15)
|
|
15
|
|
|
17
|
|
||
Other
|
|
210
|
|
|
163
|
|
||
Total accounts payable and other
|
|
$
|
2,357
|
|
|
$
|
2,316
|
|
In millions
|
|
Maturity
|
US dollar-
denominated
amount
|
|
December 31,
|
2019
|
|
|
2018
|
|
||||
Notes and debentures (1)
|
||||||||||||||
Canadian National series:
|
|
|
|
|
|
|
|
|||||||
|
2.40%
|
2-year notes (2)
|
Feb 3, 2020
|
US$
|
300
|
|
|
$
|
390
|
|
|
$
|
409
|
|
|
2.75%
|
7-year notes (2)
|
Feb 18, 2021
|
|
|
|
250
|
|
|
250
|
|
|||
|
2.85%
|
10-year notes (2)
|
Dec 15, 2021
|
US$
|
400
|
|
|
520
|
|
|
546
|
|
||
|
2.25%
|
10-year notes (2)
|
Nov 15, 2022
|
US$
|
250
|
|
|
325
|
|
|
341
|
|
||
|
7.63%
|
30-year debentures
|
May 15, 2023
|
US$
|
150
|
|
|
195
|
|
|
205
|
|
||
|
2.95%
|
10-year notes (2)
|
Nov 21, 2024
|
US$
|
350
|
|
|
455
|
|
|
477
|
|
||
|
2.80%
|
10-year notes (2)
|
Sep 22, 2025
|
|
|
|
350
|
|
|
350
|
|
|||
|
2.75%
|
10-year notes (2)
|
Mar 1, 2026
|
US$
|
500
|
|
|
649
|
|
|
682
|
|
||
|
6.90%
|
30-year notes (2)
|
Jul 15, 2028
|
US$
|
475
|
|
|
617
|
|
|
648
|
|
||
|
3.20%
|
10-year notes (2)
|
Jul 31, 2028
|
|
|
|
350
|
|
|
350
|
|
|||
|
3.00%
|
10-year notes (2)
|
Feb 8, 2029
|
|
|
|
350
|
|
|
—
|
|
|||
|
7.38%
|
30-year debentures (2)
|
Oct 15, 2031
|
US$
|
200
|
|
|
260
|
|
|
273
|
|
||
|
6.25%
|
30-year notes (2)
|
Aug 1, 2034
|
US$
|
500
|
|
|
649
|
|
|
682
|
|
||
|
6.20%
|
30-year notes (2)
|
Jun 1, 2036
|
US$
|
450
|
|
|
585
|
|
|
614
|
|
||
|
6.71%
|
Puttable Reset Securities PURSSM (2)
|
Jul 15, 2036
|
US$
|
250
|
|
|
325
|
|
|
341
|
|
||
|
6.38%
|
30-year debentures (2)
|
Nov 15, 2037
|
US$
|
300
|
|
|
390
|
|
|
409
|
|
||
|
3.50%
|
30-year notes (2)
|
Nov 15, 2042
|
US$
|
250
|
|
|
325
|
|
|
341
|
|
||
|
4.50%
|
30-year notes (2)
|
Nov 7, 2043
|
US$
|
250
|
|
|
325
|
|
|
341
|
|
||
|
3.95%
|
30-year notes (2)
|
Sep 22, 2045
|
|
|
|
400
|
|
|
400
|
|
|||
|
3.20%
|
30-year notes (2)
|
Aug 2, 2046
|
US$
|
650
|
|
|
844
|
|
|
886
|
|
||
|
3.60%
|
30-year notes (2)
|
Aug 1, 2047
|
|
|
|
500
|
|
|
500
|
|
|||
|
3.65%
|
30-year notes (2)
|
Feb 3, 2048
|
US$
|
600
|
|
|
779
|
|
|
818
|
|
||
|
3.60%
|
30-year notes (2)
|
Jul 31, 2048
|
|
|
|
450
|
|
|
450
|
|
|||
|
4.45%
|
30-year notes (2)
|
Jan 20, 2049
|
US$
|
650
|
|
|
844
|
|
|
886
|
|
||
|
3.60%
|
30-year notes (2)
|
Feb 8, 2049
|
|
|
|
450
|
|
|
—
|
|
|||
|
3.05%
|
30-year notes (2)
|
Feb 8, 2050
|
|
|
|
450
|
|
|
—
|
|
|||
|
4.00%
|
50-year notes (2)
|
Sep 22, 2065
|
|
|
|
100
|
|
|
100
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||
Illinois Central series:
|
|
|
|
|
|
|
|
|||||||
|
7.70%
|
100-year debentures
|
Sep 15, 2096
|
US$
|
125
|
|
|
162
|
|
|
170
|
|
||
BC Rail series:
|
|
|
|
|
|
|
|
|||||||
|
Non-interest bearing 90-year subordinated notes (3)
|
Jul 14, 2094
|
|
|
|
842
|
|
|
842
|
|
||||
Total notes and debentures
|
13,131
|
|
|
12,311
|
|
|||||||||
Other
|
|
|
|
|||||||||||
Commercial paper
|
1,277
|
|
|
1,175
|
|
|||||||||
Accounts receivable securitization
|
200
|
|
|
—
|
|
|||||||||
Finance lease liabilities and other (4)
|
138
|
|
|
29
|
|
|||||||||
Total debt, gross
|
14,746
|
|
|
13,515
|
|
|||||||||
Net unamortized discount and debt issuance costs (3)
|
(950
|
)
|
|
(946
|
)
|
|||||||||
Total debt (5)
|
13,796
|
|
|
12,569
|
|
|||||||||
Less: Current portion of long-term debt
|
1,930
|
|
|
1,184
|
|
|||||||||
Total long-term debt
|
$
|
11,866
|
|
|
$
|
11,385
|
|
(1)
|
The Company's notes and debentures are unsecured.
|
(2)
|
The fixed rate debt securities are redeemable, in whole or in part, at the option of the Company, at any time, at the greater of par and a formula price based on interest rates prevailing at the time of redemption.
|
(3)
|
As at December 31, 2019, these notes were recorded as a discounted debt of $12 million (2018 - $12 million) using an imputed interest rate of 5.75% (2018 - 5.75%). The discount of $830 million (2018 - $830 million) is included in Net unamortized discount and debt issuance costs.
|
(4)
|
Includes $4 million of equipment loans in 2019.
|
(5)
|
See Note 20 - Financial instruments for the fair value of debt.
|
•
|
On November 1, 2019, issuance of $450 million 3.05% Notes due 2050 in the Canadian capital markets, which resulted in net proceeds of $443 million; and
|
•
|
On February 8, 2019, issuance of $350 million 3.00% Notes due 2029 and $450 million 3.60% Notes due 2049 in the Canadian capital markets, which resulted in total net proceeds of $790 million.
|
•
|
On November 7, 2018, issuance of US$650 million ($854 million) 4.45% Notes due 2049 in the U.S. capital markets, which resulted in net proceeds of $845 million;
|
•
|
On August 30, 2018, early redemption of US$550 million 5.55% Notes due 2019 for US$558 million ($720 million), which resulted in a loss of US$8 million ($10 million) that was recorded in Other income;
|
•
|
On July 31, 2018, issuance of $350 million 3.20% Notes due 2028 and $450 million 3.60% Notes due 2048 in the Canadian capital markets, which resulted in total net proceeds of $787 million;
|
•
|
On July 15, 2018, repayment of US$200 million ($264 million) 6.80% Notes due 2018 upon maturity;
|
•
|
On May 15, 2018, repayment of US$325 million ($415 million) 5.55% Notes due 2018 upon maturity; and
|
•
|
On February 6, 2018, issuance of US$300 million ($374 million) 2.40% Notes due 2020 and US$600 million ($749 million) 3.65% Notes due 2048 in the U.S. capital markets, which resulted in total net proceeds of $1,106 million.
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Commercial paper with maturities less than 90 days
|
|
|
|
|
|
|||||||
Issuance
|
$
|
5,069
|
|
|
$
|
8,292
|
|
|
$
|
4,539
|
|
|
Repayment
|
(5,141
|
)
|
|
(8,442
|
)
|
|
(4,160
|
)
|
||||
Change in commercial paper with maturities less than 90 days, net
|
$
|
(72
|
)
|
|
$
|
(150
|
)
|
|
$
|
379
|
|
|
Commercial paper with maturities of 90 days or greater
|
|
|
|
|
|
|||||||
Issuance
|
$
|
2,115
|
|
|
$
|
1,135
|
|
|
$
|
—
|
|
|
Repayment
|
(1,902
|
)
|
|
(886
|
)
|
|
—
|
|
||||
Change in commercial paper with maturities of 90 days or greater, net
|
$
|
213
|
|
|
$
|
249
|
|
|
$
|
—
|
|
|
Change in commercial paper, net
|
$
|
141
|
|
|
$
|
99
|
|
|
$
|
379
|
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Beginning of year
|
$
|
—
|
|
|
$
|
421
|
|
|
$
|
—
|
|
|
Proceeds received
|
420
|
|
|
530
|
|
|
423
|
|
||||
Repayment
|
(220
|
)
|
|
(950
|
)
|
|
—
|
|
||||
Foreign exchange
|
—
|
|
|
(1
|
)
|
|
(2
|
)
|
||||
End of year
|
$
|
200
|
|
|
$
|
—
|
|
|
$
|
421
|
|
In millions
|
Debt (1)
|
|
||
2020
|
$
|
1,871
|
|
|
2021
|
761
|
|
||
2022
|
317
|
|
||
2023
|
187
|
|
||
2024
|
447
|
|
||
2025 and thereafter
|
10,079
|
|
||
Total
|
$
|
13,662
|
|
|
Finance lease liabilities (2)
|
134
|
|
||
Total debt
|
$
|
13,796
|
|
(1)
|
Presented net of unamortized discounts and debt issuance costs.
|
(2)
|
See Note 10 - Leases for maturities of finance lease liabilities.
|
In millions
|
December 31,
|
|
|
2019
|
|
|
|
2018
|
|
Notes and debentures
|
|
US$
|
6,650
|
|
|
US$
|
6,650
|
|
|
Commercial paper
|
|
|
983
|
|
|
|
862
|
|
|
Finance lease liabilities and other
|
|
|
74
|
|
|
|
21
|
|
|
Total amount of US dollar-denominated debt in US$
|
|
US$
|
7,707
|
|
|
US$
|
7,533
|
|
|
Total amount of US dollar-denominated debt in C$
|
|
$
|
10,011
|
|
|
$
|
10,273
|
|
In millions
|
December 31,
|
2019
|
|
|
2018
|
|
|||
Personal injury and other claims provisions (Note 19) (1)
|
$
|
261
|
|
|
$
|
249
|
|
||
Contract liabilities (Note 4) (1)
|
161
|
|
|
—
|
|
||||
Environmental provisions (Note 19) (1)
|
19
|
|
|
22
|
|
||||
Stock-based compensation liability (Note 17)
|
16
|
|
|
19
|
|
||||
Deferred credits and other
|
177
|
|
|
211
|
|
||||
Total other liabilities and deferred credits
|
$
|
634
|
|
|
$
|
501
|
|
(1)
|
See Note 12 – Accounts payable and other for the related current portion.
|
|
|
|
Actual plan asset allocation
|
|||||
|
Policy
|
|
|
2019
|
|
|
2018
|
|
Cash and short-term investments
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
Bonds and mortgages (1)
|
35
|
%
|
|
36
|
%
|
|
35
|
%
|
Emerging market debt (1)
|
1.5
|
%
|
|
3
|
%
|
|
3
|
%
|
Private debt (1)
|
1.5
|
%
|
|
3
|
%
|
|
2
|
%
|
Equities
|
40
|
%
|
|
37
|
%
|
|
33
|
%
|
Real estate
|
4
|
%
|
|
2
|
%
|
|
2
|
%
|
Oil and gas
|
7
|
%
|
|
5
|
%
|
|
6
|
%
|
Infrastructure (1)
|
4
|
%
|
|
3
|
%
|
|
4
|
%
|
Absolute return
|
10
|
%
|
|
10
|
%
|
|
10
|
%
|
Risk-factor allocation
|
—
|
%
|
|
1
|
%
|
|
2
|
%
|
Investment-related liabilities
|
(6
|
)%
|
|
(3
|
)%
|
|
—
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
(1)
|
Certain assets in the 2018 comparative figures have been reclassified from bonds and mortgages and infrastructure to emerging market debt and private debt, respectively, to conform to the current year's presentation.
|
•
|
Cash and short-term investments consist of highly liquid securities which ensure adequate cash flows are available to cover near-term benefit payments. Short-term investments are mainly obligations issued by Canadian chartered banks.
|
•
|
Bonds include bond instruments, issued or guaranteed by governments and non-government entities. As at December 31, 2019, 80% (2018 - 80%) of bonds were issued or guaranteed by Canadian, U.S. or other governments. Mortgages consist of mortgage products which are primarily conventional or participating loans secured by commercial properties. On an exposure basis, the Plan's policy reflects an allocation of 45%, comprising a 35% allocation to bonds and mortgages investments and a 10% allocation to derivative financial instruments.
|
•
|
Emerging market debt consists of units invested in mainly open-ended funds whose mandate is to invest in debt instruments of emerging market countries.
|
•
|
Private debt includes participations in private debt funds focused on generating steady yields.
|
•
|
Equity investments include publicly traded securities diversified by industry sector, country and issuer and investments in mainly energy related private equity funds. As at December 31, 2019, the most significant allocation to an individual issuer of a publicly traded security was 1% (2018 - 2%) and the most significant allocation to an industry sector was 12% (2018 - 22%).
|
•
|
Real estate is a diversified portfolio of Canadian land and commercial properties and investments in real estate private equity funds.
|
•
|
Oil and gas investments include petroleum and natural gas properties and listed and non-listed securities of oil and gas companies.
|
•
|
Infrastructure investments include participations in private infrastructure funds, term loans and notes of infrastructure companies.
|
•
|
Absolute return investments are primarily a portfolio of units of externally managed hedge funds, which are invested in various long/short strategies within multi-strategy, fixed income, equity and global macro funds. Managers are monitored on a continuous basis through investment and operational due diligence.
|
•
|
Risk-factor allocation investments are a portfolio of units of externally managed funds and internally managed strategies in order to capture alternative risk premia.
|
•
|
Investment-related liabilities include a certain level of financing associated with securities sold under repurchase agreements and other assets.
|
|
Fair value measurements at December 31, 2019
|
||||||||||||||||||
In millions
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
NAV
|
|
|||||
Cash and short-term investments (1)
|
$
|
502
|
|
|
$
|
92
|
|
|
$
|
410
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Bonds (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Canada, U.S. and supranational
|
771
|
|
|
—
|
|
|
771
|
|
|
—
|
|
|
—
|
|
|||||
Provinces of Canada and municipalities
|
4,503
|
|
|
—
|
|
|
4,503
|
|
|
—
|
|
|
—
|
|
|||||
Corporate
|
1,347
|
|
|
—
|
|
|
1,347
|
|
|
—
|
|
|
—
|
|
|||||
Emerging market debt (3)
|
500
|
|
|
—
|
|
|
500
|
|
|
—
|
|
|
—
|
|
|||||
Mortgages (4)
|
52
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|||||
Private debt (5)
|
481
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
481
|
|
|||||
Public equities (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Canadian
|
338
|
|
|
338
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
U.S.
|
3,265
|
|
|
3,234
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|||||
International
|
3,006
|
|
|
3,006
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Private equities (7)
|
215
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
215
|
|
|||||
Real estate (8)
|
435
|
|
|
—
|
|
|
—
|
|
|
329
|
|
|
106
|
|
|||||
Oil and gas (9)
|
901
|
|
|
177
|
|
|
17
|
|
|
707
|
|
|
—
|
|
|||||
Infrastructure (10)
|
619
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
553
|
|
|||||
Absolute return funds (11)
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Multi-strategy
|
1,083
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,083
|
|
|||||
Fixed income
|
175
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
175
|
|
|||||
Global macro
|
490
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
490
|
|
|||||
Growth insurance
|
17
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Risk-factor allocation (12)
|
288
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
288
|
|
|||||
Investments (13)
|
$
|
18,988
|
|
|
$
|
6,864
|
|
|
$
|
7,697
|
|
|
$
|
1,036
|
|
|
$
|
3,391
|
|
Investment-related liabilities (14)
|
(565
|
)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Other (15)
|
1
|
|
|
|
|
|
|
|
|
|
|||||||||
Total plan assets
|
$
|
18,424
|
|
|
|
|
|
|
|
|
|
|
Fair value measurements at December 31, 2018
|
||||||||||||||||||
In millions
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
NAV
|
|
|||||
Cash and short-term investments (1)
|
$
|
577
|
|
|
$
|
12
|
|
|
$
|
565
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Bonds (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Canada, U.S. and supranational
|
1,801
|
|
|
—
|
|
|
1,801
|
|
|
—
|
|
|
—
|
|
|||||
Provinces of Canada and municipalities
|
2,987
|
|
|
—
|
|
|
2,987
|
|
|
—
|
|
|
—
|
|
|||||
Corporate
|
1,180
|
|
|
—
|
|
|
1,180
|
|
|
—
|
|
|
—
|
|
|||||
Emerging market debt (3)
|
540
|
|
|
—
|
|
|
540
|
|
|
—
|
|
|
—
|
|
|||||
Mortgages (4)
|
90
|
|
|
—
|
|
|
90
|
|
|
—
|
|
|
—
|
|
|||||
Private debt (5)
|
366
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
366
|
|
|||||
Public equities (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Canadian
|
1,561
|
|
|
1,561
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
U.S.
|
447
|
|
|
447
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
International
|
3,338
|
|
|
3,338
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Private equities (7)
|
274
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
274
|
|
|||||
Real estate (8)
|
421
|
|
|
—
|
|
|
—
|
|
|
321
|
|
|
100
|
|
|||||
Oil and gas (9)
|
948
|
|
|
202
|
|
|
18
|
|
|
728
|
|
|
—
|
|
|||||
Infrastructure (10)
|
704
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
640
|
|
|||||
Absolute return funds (11)
|
|
|
|
|
|
|
|
|
|
||||||||||
Multi-strategy
|
898
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
898
|
|
|||||
Fixed income
|
239
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
239
|
|
|||||
Global macro
|
480
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
480
|
|
|||||
Risk-factor allocation (12)
|
286
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
286
|
|
|||||
Investments (13)
|
$
|
17,137
|
|
|
$
|
5,560
|
|
|
$
|
7,245
|
|
|
$
|
1,049
|
|
|
$
|
3,283
|
|
Other (15)
|
107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total plan assets
|
$
|
17,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measurements based on significant unobservable inputs (Level 3)
|
||||||||||
In millions
|
|
Real estate (8)
|
|
|
Oil and gas (9)
|
|
|
Total
|
|
|||
|
|
|
|
|
|
|
||||||
Balance at December 31, 2017
|
|
$
|
332
|
|
|
$
|
769
|
|
|
$
|
1,101
|
|
Actual return relating to assets still held at the reporting date
|
(2
|
)
|
|
(11
|
)
|
|
(13
|
)
|
||||
Purchases
|
1
|
|
|
—
|
|
|
1
|
|
||||
Sales
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Disbursements
|
(9
|
)
|
|
(30
|
)
|
|
(39
|
)
|
||||
Balance at December 31, 2018
|
|
321
|
|
|
728
|
|
|
1,049
|
|
|||
Actual return relating to assets still held at the reporting date
|
13
|
|
|
7
|
|
|
20
|
|
||||
Purchases
|
3
|
|
|
—
|
|
|
3
|
|
||||
Sales
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Disbursements
|
(7
|
)
|
|
(28
|
)
|
|
(35
|
)
|
||||
Balance at December 31, 2019
|
|
$
|
329
|
|
|
$
|
707
|
|
|
$
|
1,036
|
|
(1)
|
Cash and short-term investments with related accrued interest are valued at cost, which approximates fair value, and are categorized as Level 1 and Level 2 respectively.
|
(2)
|
Bonds are valued using mid-market prices obtained from independent pricing data suppliers. When prices are not available from independent sources, the fair value is based on the present value of future cash flows using current market yields for comparable instruments.
|
(3)
|
Emerging market debt funds are valued based on the net asset value which is readily available and published by each fund's independent administrator.
|
(4)
|
Mortgages are valued based on the present value of future net cash flows using current market yields for comparable instruments.
|
(5)
|
Private debt investments are valued based on the net asset value as reported by each fund's manager, generally based on the present value of future net cash flows using current market yields for comparable instruments.
|
(6)
|
The fair value of public equity investments is based on quoted prices in active markets for identical assets.
|
(7)
|
Private equity investments are valued based on the net asset value as reported by each fund's manager, generally using discounted cash flow analysis or earnings multiples.
|
(8)
|
The fair value of real estate investments categorized as Level 3 includes immoveable properties. Land is valued based on the fair value of comparable assets, and income producing properties are valued based on the present value of estimated future net cash flows or the fair value of comparable assets. Independent valuations of all immoveable properties are performed triennially on a rotational basis. The fair value of real estate investments categorized as NAV consists mainly of investments in real estate private equity funds and is based on the net asset value as reported by each fund's manager, generally using a discounted cash flow analysis or earnings multiples.
|
(9)
|
Oil and gas investments categorized as Level 1 are valued based on quoted prices in active markets. Oil and gas participations traded on a secondary market are valued based on the most recent transaction price and are categorized as Level 2. Investments in oil and gas categorized as Level 3 consist of operating oil and gas properties and the fair value is based on estimated future net cash flows that are discounted using prevailing market rates for transactions in similar assets. Estimated future net cash flows are based on forecasted oil and gas prices and projected annual production and costs.
|
(10)
|
The fair value of infrastructure investments categorized as Level 2 is based on the present value of future cash flows using current market yields for comparable instruments. The fair value of infrastructure funds categorized as NAV is based on the net asset value as reported by each fund's manager, generally using a discounted cash flow analysis or earnings multiples.
|
(11)
|
Absolute return investments are valued using the net asset value as reported by each fund's independent administrator. All absolute return investments have contractual redemption frequencies, ranging from monthly to annually, and redemption notice periods varying from 5 to 90 days.
|
(12)
|
Risk-factor allocation investments are valued using the net asset value as reported by each fund's independent administrator or fund manager. All funds have contractual redemption frequencies ranging from daily to annually, and redemption notice periods varying from 5 to 60 days.
|
(13)
|
Derivative financial instruments, which are included in gross investments, are valued using quoted market prices when available and are categorized as Level 1, or based on valuation techniques using market data, when quoted market prices are not available and are categorized as Level 2. Derivatives are included in the investment asset categories based on their underlying exposure.
|
(14)
|
Investment-related liabilities include securities sold under repurchase agreements. The securities sold under repurchase agreement do not meet the conditions to remove from the assets and are therefore maintained on the books with an offsetting liability recorded to represent the financing nature of this transaction. These agreements are recorded at cost, which together with accrued interest approximates fair value due to their short-term nature.
|
(15)
|
Other consists of operating assets of $108 million (2018 - $120 million) and liabilities of $107 million (2018 - $13 million) required to administer the Trusts' investment assets and the plans' benefit and funding activities. Such assets are valued at cost and have not been assigned to a fair value category.
|
|
|
Pensions
|
|
Other postretirement benefits
|
||||||||||||
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
||||
Change in benefit obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Projected benefit obligation at beginning of year
|
$
|
17,275
|
|
|
$
|
18,025
|
|
|
$
|
247
|
|
|
$
|
261
|
|
|
Amendments
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
(6
|
)
|
|||
Interest cost
|
|
596
|
|
|
568
|
|
|
8
|
|
|
9
|
|
||||
Actuarial loss (gain) on projected benefit obligation (1)
|
1,611
|
|
|
(538
|
)
|
|
(9
|
)
|
|
(10
|
)
|
|||||
Current service cost
|
|
143
|
|
|
170
|
|
|
2
|
|
|
2
|
|
||||
Plan participants' contributions
|
|
64
|
|
|
63
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency changes
|
|
(15
|
)
|
|
25
|
|
|
(3
|
)
|
|
8
|
|
||||
Benefit payments, settlements and transfers
|
(1,065
|
)
|
|
(1,038
|
)
|
|
(18
|
)
|
|
(17
|
)
|
|||||
Projected benefit obligation at the end of the year (2)
|
$
|
18,609
|
|
|
$
|
17,275
|
|
|
$
|
227
|
|
|
$
|
247
|
|
|
Component representing future salary increases
|
(253
|
)
|
|
(266
|
)
|
|
—
|
|
|
—
|
|
|||||
Accumulated benefit obligation at end of year
|
$
|
18,356
|
|
|
$
|
17,009
|
|
|
$
|
227
|
|
|
$
|
247
|
|
|
Change in plan assets
|
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
$
|
17,244
|
|
|
$
|
18,564
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Employer contributions
|
|
105
|
|
|
70
|
|
|
—
|
|
|
—
|
|
||||
Plan participants' contributions
|
|
64
|
|
|
63
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency changes
|
|
(11
|
)
|
|
19
|
|
|
—
|
|
|
—
|
|
||||
Actual return on plan assets
|
|
2,087
|
|
|
(434
|
)
|
|
—
|
|
|
—
|
|
||||
Benefit payments, settlements and transfers
|
(1,065
|
)
|
|
(1,038
|
)
|
|
—
|
|
|
—
|
|
|||||
Fair value of plan assets at end of year (2)
|
$
|
18,424
|
|
|
$
|
17,244
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Funded status - Deficiency of fair value of plan assets
over projected benefit obligation at end of year
|
$
|
(185
|
)
|
|
$
|
(31
|
)
|
|
$
|
(227
|
)
|
|
$
|
(247
|
)
|
(1)
|
Substantially all of the pensions' actuarial loss for the year ended December 31, 2019 and actuarial gain for the year ended December 31, 2018 is the result of the change in the end of year discount rate of the current year versus the prior year (67 basis points decrease for 2019 and 26 basis points increase for 2018).
|
(2)
|
For the CN Pension Plan, as at December 31, 2019, the projected benefit obligation was $17,252 million (2018 - $16,004 million) and the fair value of plan assets was $17,523 million (2018 - $16,393 million). The measurement date of all plans is December 31.
|
|
|
|
Pensions
|
|
Other postretirement benefits
|
||||||||||||
In millions
|
December 31,
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|||||
Noncurrent assets - Pension asset
|
$
|
336
|
|
|
$
|
446
|
|
|
$
|
—
|
|
|
$
|
—
|
|
||
Current liabilities (Note 12)
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
(17
|
)
|
||||||
Noncurrent liabilities - Pension and other postretirement benefits
|
(521
|
)
|
|
(477
|
)
|
|
(212
|
)
|
|
(230
|
)
|
||||||
Total amount recognized
|
$
|
(185
|
)
|
|
$
|
(31
|
)
|
|
$
|
(227
|
)
|
|
$
|
(247
|
)
|
|
|
|
Pensions
|
|
Other postretirement benefits
|
||||||||||||
In millions
|
December 31,
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|||||
Net actuarial gain (loss)
|
$
|
(4,336
|
)
|
|
$
|
(3,887
|
)
|
|
$
|
14
|
|
|
$
|
8
|
|
||
Prior service credit (cost)
|
$
|
(3
|
)
|
|
$
|
(6
|
)
|
|
$
|
4
|
|
|
$
|
4
|
|
|
|
Pensions
|
||||||
In millions
|
December 31,
|
2019
|
|
|
2018
|
|
||
Accumulated benefit obligation (1)
|
|
$
|
676
|
|
|
$
|
714
|
|
Fair value of plan assets (1)
|
|
$
|
225
|
|
|
$
|
303
|
|
(1)
|
All of the Company's other postretirement benefit pension plans have an accumulated benefit obligation in excess of plan assets.
|
|
|
Pensions
|
||||||
In millions
|
December 31,
|
2019
|
|
|
2018
|
|
||
Projected benefit obligation
|
|
$
|
843
|
|
|
$
|
780
|
|
Fair value of plan assets
|
|
$
|
322
|
|
|
$
|
303
|
|
|
|
Pensions
|
|
Other postretirement benefits
|
||||||||||||||||||||
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
||||||
Current service cost
|
$
|
143
|
|
|
$
|
170
|
|
|
$
|
130
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
Other components of net periodic benefit cost (income)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Interest cost
|
596
|
|
|
568
|
|
|
540
|
|
|
8
|
|
|
9
|
|
|
8
|
|
|||||||
Settlement loss
|
5
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Expected return on plan assets
|
(1,085
|
)
|
|
(1,083
|
)
|
|
(1,047
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Amortization of prior service cost
|
3
|
|
|
3
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Amortization of net actuarial loss (gain)
|
155
|
|
|
200
|
|
|
182
|
|
|
(3
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|||||||
Total Other components of net periodic benefit cost (income)
|
$
|
(326
|
)
|
|
$
|
(309
|
)
|
|
$
|
(320
|
)
|
|
$
|
5
|
|
|
$
|
7
|
|
|
$
|
5
|
|
|
Net periodic benefit cost (income)
|
$
|
(183
|
)
|
|
$
|
(139
|
)
|
|
$
|
(190
|
)
|
|
$
|
7
|
|
|
$
|
9
|
|
|
$
|
7
|
|
|
|
|
Pensions
|
Other postretirement benefits
|
||||||||||
|
December 31,
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
|
To determine projected benefit obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Discount rate (1)
|
3.10
|
%
|
3.77
|
%
|
3.51
|
%
|
3.14
|
%
|
4.00
|
%
|
3.59
|
%
|
||
Rate of compensation increase (2)
|
2.75
|
%
|
2.75
|
%
|
2.75
|
%
|
2.75
|
%
|
2.75
|
%
|
2.75
|
%
|
||
To determine net periodic benefit cost (income)
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Rate to determine current service cost (3)
|
3.93
|
%
|
3.68
|
%
|
4.11
|
%
|
4.25
|
%
|
3.83
|
%
|
4.43
|
%
|
||
Rate to determine interest cost (3)
|
3.47
|
%
|
3.15
|
%
|
3.15
|
%
|
3.68
|
%
|
3.23
|
%
|
3.29
|
%
|
||
Rate of compensation increase (2)
|
2.75
|
%
|
2.75
|
%
|
2.75
|
%
|
2.75
|
%
|
2.75
|
%
|
2.75
|
%
|
||
Expected return on plan assets (4)
|
7.00
|
%
|
7.00
|
%
|
7.00
|
%
|
N/A
|
|
N/A
|
|
N/A
|
|
(1)
|
The Company's discount rate assumption, which is set annually at the end of each year, is determined by management with the aid of third-party actuaries. The discount rate is used to measure the single amount that, if invested at the measurement date in a portfolio of high-quality debt instruments with a rating of AA or better, would provide the necessary cash flows to pay for pension benefits as they become due. For the Canadian pension and other postretirement benefit plans, future expected benefit payments are discounted using spot rates based on a derived AA corporate bond yield curve for each maturity year.
|
(2)
|
The rate of compensation increase is determined by the Company based upon its long-term plans for such increases.
|
(3)
|
The Company uses the spot rate approach to measure current service cost and interest cost for all defined benefit pension and other postretirement benefit plans. Under the spot rate approach, individual spot discount rates along the same yield curve used in the determination of the projected benefit obligation are applied to the relevant projected cash flows at the relevant maturity.
|
(4)
|
The expected long-term rate of return is determined based on expected future performance for each asset class and is weighted based on the investment policy. For 2019, the Company used a long-term rate of return assumption of 7.00% on the market-related value of plan assets to compute net periodic benefit cost (income). The Company has elected to use a market-related value of assets, whereby realized and unrealized gains/losses and appreciation/depreciation in the value of the investments are recognized over a period of five years, while investment income is recognized immediately. In 2020, the Company will maintain the expected long-term rate of return on plan assets at 7.00% to reflect management's current view of long-term investment returns.
|
In millions
|
Pensions
|
|
Other postretirement
benefits
|
|
|||
2020
|
$
|
1,056
|
|
|
$
|
16
|
|
2021
|
$
|
1,060
|
|
|
$
|
15
|
|
2022
|
$
|
1,058
|
|
|
$
|
14
|
|
2023
|
$
|
1,053
|
|
|
$
|
14
|
|
2024
|
$
|
1,046
|
|
|
$
|
13
|
|
Years 2025 to 2029
|
$
|
5,119
|
|
|
$
|
60
|
|
•
|
Unlimited number of Common Shares, without par value
|
•
|
Unlimited number of Class A Preferred Shares, without par value, issuable in series
|
•
|
Unlimited number of Class B Preferred Shares, without par value, issuable in series
|
In millions
|
December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
Issued common shares
|
|
714.1
|
|
|
727.3
|
|
|
744.6
|
|
Common shares in Share Trusts
|
|
(1.8
|
)
|
|
(2.0
|
)
|
|
(2.0
|
)
|
Outstanding common shares
|
|
712.3
|
|
|
725.3
|
|
|
742.6
|
|
In millions, except per share data
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Number of common shares repurchased (1)
|
|
14.3
|
|
|
19.0
|
|
|
20.4
|
|
|||
Weighted-average price per share
|
|
$
|
118.70
|
|
|
$
|
104.99
|
|
|
$
|
98.27
|
|
Amount of repurchase
|
|
$
|
1,700
|
|
|
$
|
2,000
|
|
|
$
|
2,000
|
|
(1)
|
Includes repurchases in the first and second quarters of 2017, pursuant to private agreements between the Company and arm's-length third-party sellers.
|
In millions, except per share data
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Share purchases by Share Units Plan Share Trusts
|
|
|
|
|
|
|
||||||
Number of common shares
|
|
—
|
|
|
0.4
|
|
|
0.5
|
|
|||
Weighted-average price per share
|
|
$
|
—
|
|
|
$
|
104.87
|
|
|
$
|
102.17
|
|
Amount of purchase
|
|
$
|
—
|
|
|
$
|
38
|
|
|
$
|
55
|
|
Share settlements by Share Units Plan Share Trusts
|
|
|
|
|
|
|
||||||
Number of common shares
|
|
0.5
|
|
|
0.4
|
|
|
0.3
|
|
|||
Weighted-average price per share
|
|
$
|
88.23
|
|
|
$
|
84.53
|
|
|
$
|
77.99
|
|
Amount of settlement
|
|
$
|
45
|
|
|
$
|
31
|
|
|
$
|
24
|
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Share Units Plan
|
|
$
|
26
|
|
|
$
|
38
|
|
|
$
|
55
|
|
Voluntary Incentive Deferral Plan (VIDP)
|
|
4
|
|
|
—
|
|
|
7
|
|
|||
Stock option awards
|
|
12
|
|
|
12
|
|
|
13
|
|
|||
Employee Share Investment Plan (ESIP)
|
|
15
|
|
|
40
|
|
|
36
|
|
|||
Total stock-based compensation expense
|
|
$
|
57
|
|
|
$
|
90
|
|
|
$
|
111
|
|
Income tax impacts of stock-based compensation
|
|
|
|
|
|
|
||||||
Tax benefit recognized in income
|
|
$
|
12
|
|
|
$
|
21
|
|
|
$
|
29
|
|
Excess tax benefit recognized in income
|
|
$
|
23
|
|
|
$
|
13
|
|
|
$
|
13
|
|
|
PSUs-ROIC (1)
|
|
PSUs-TSR (2)
|
||||||||||
|
Units
|
|
Weighted-average
grant date fair value
|
|
|
Units
|
|
Weighted-average
grant date fair value
|
|
||||
|
In millions
|
|
|
|
|
In millions
|
|
|
|
||||
Outstanding at December 31, 2018
|
1.1
|
|
|
$
|
46.10
|
|
|
0.4
|
|
|
$
|
100.93
|
|
Granted
|
0.4
|
|
|
$
|
70.76
|
|
|
0.1
|
|
|
$
|
128.20
|
|
Settled (3)
|
(0.4
|
)
|
|
$
|
35.11
|
|
|
(0.2
|
)
|
|
$
|
95.31
|
|
Forfeited
|
(0.1
|
)
|
|
$
|
61.12
|
|
|
—
|
|
|
$
|
116.24
|
|
Outstanding at December 31, 2019
|
1.0
|
|
|
$
|
58.35
|
|
|
0.3
|
|
|
$
|
112.08
|
|
Nonvested at December 31, 2018
|
0.7
|
|
|
$
|
52.18
|
|
|
0.3
|
|
|
$
|
104.14
|
|
Granted
|
0.4
|
|
|
$
|
70.76
|
|
|
0.1
|
|
|
$
|
128.20
|
|
Vested (4)
|
(0.4
|
)
|
|
$
|
53.19
|
|
|
(0.2
|
)
|
|
$
|
103.36
|
|
Forfeited
|
(0.1
|
)
|
|
$
|
61.12
|
|
|
—
|
|
|
$
|
116.24
|
|
Nonvested at December 31, 2019
|
0.6
|
|
|
$
|
61.29
|
|
|
0.2
|
|
|
$
|
117.04
|
|
(1)
|
The grant date fair value of equity settled PSUs-ROIC granted in 2019 of $26 million is calculated using a lattice-based valuation model. As at December 31, 2019, total unrecognized compensation cost related to all outstanding awards was $15 million and is expected to be recognized over a weighted-average period of 1.6 years.
|
(2)
|
The grant date fair value of equity settled PSUs-TSR granted in 2019 of $16 million is calculated using a Monte Carlo simulation model. As at December 31, 2019, total unrecognized compensation cost related to all outstanding awards was $9 million and is expected to be recognized over a weighted-average period of 1.6 years.
|
(3)
|
Equity settled PSUs-ROIC granted in 2016 met the minimum share price condition for settlement and attained a performance vesting factor of 200%. Equity settled PSUs-TSR granted in 2016 attained a performance vesting factor of 100%. In the first quarter of 2019, these awards were settled, net of the remittance of the participants' withholding tax obligation of $50 million, by way of disbursement from the Share Trusts of 0.5 million common shares.
|
(4)
|
These awards are expected to be settled in the first quarter of 2020.
|
|
PSUs-ROIC (1)
|
|||||||
Year of grant
|
2019
|
|
|
2018
|
|
|
2017
|
|
Assumptions
|
|
|
|
|
|
|||
Stock price ($) (2)
|
110.41
|
|
|
97.77
|
|
|
91.91
|
|
Expected stock price volatility (%) (3)
|
17
|
|
|
18
|
|
|
19
|
|
Expected term (years) (4)
|
3.0
|
|
|
3.0
|
|
|
3.0
|
|
Risk-free interest rate (%) (5)
|
1.75
|
|
|
1.92
|
|
|
0.98
|
|
Dividend rate ($) (6)
|
2.15
|
|
|
1.82
|
|
|
1.65
|
|
Weighted-average grant date fair value ($)
|
70.76
|
|
|
50.77
|
|
|
53.19
|
|
(1)
|
Assumptions used to determine fair value of the equity settled PSU-ROIC awards are on the grant date.
|
(2)
|
Represents the closing share price on the grant date.
|
(3)
|
Based on the historical volatility of the Company's stock over a period commensurate with the expected term of the award.
|
(4)
|
Represents the period of time that awards are expected to be outstanding.
|
(5)
|
Based on the implied yield available on zero-coupon government issues with an equivalent term commensurate with the expected term of the awards.
|
(6)
|
Based on the annualized dividend rate.
|
|
Equity settled
|
|
Cash settled
|
||||||
|
DSUs (1)
|
|
DSUs (2)
|
||||||
|
Units
|
|
Weighted-average
grant date fair value
|
|
|
Units
|
|
||
|
In millions
|
|
|
|
|
In millions
|
|
||
Outstanding at December 31, 2018
|
0.8
|
|
|
$
|
79.23
|
|
|
0.2
|
|
Granted
|
0.1
|
|
|
$
|
113.59
|
|
|
—
|
|
Settled (3)
|
(0.2
|
)
|
|
$
|
81.22
|
|
|
(0.1
|
)
|
Outstanding at December 31, 2019 (4)
|
0.7
|
|
|
$
|
81.91
|
|
|
0.1
|
|
(1)
|
The grant date fair value of equity settled DSUs granted in 2019 of $4 million is calculated using the Company's stock price on the grant date. As at December 31, 2019, the aggregate intrinsic value of all equity settled DSUs outstanding amounted to $77 million.
|
(2)
|
The fair value of cash settled DSUs as at December 31, 2019 is based on the intrinsic value. As at December 31, 2019, the liability for all cash settled DSUs was $16 million (2018 - $19 million). The closing stock price used to determine the liability was $117.47. The total fair value of cash settled DSU awards vested in 2019, 2018 and 2017 was $nil.
|
(3)
|
For the year ended December 31, 2019 the Company purchased 0.1 million common shares for the settlement of equity settled DSUs, net of the remittance of the participants' withholding tax obligation of $11 million.
|
(4)
|
The total fair value of equity settled DSU awards vested, the number of units outstanding that were nonvested, unrecognized compensation cost and the remaining recognition period for cash and equity settled DSUs have not been quantified as they relate to a minimal number of units.
|
|
Options outstanding
|
|
Nonvested options
|
||||||||||
|
Number of options
|
|
Weighted-average exercise price
|
|
|
Number of options
|
|
Weighted-average grant date fair value
|
|
||||
|
In millions
|
|
|
|
|
In millions
|
|
|
|
||||
Outstanding at December 31, 2018 (1)
|
4.2
|
|
|
$
|
79.73
|
|
|
2.3
|
|
|
$
|
13.84
|
|
Granted (2)
|
0.9
|
|
|
$
|
110.94
|
|
|
0.9
|
|
|
$
|
16.34
|
|
Forfeited/Cancelled
|
(0.2
|
)
|
|
$
|
102.49
|
|
|
(0.2
|
)
|
|
$
|
15.43
|
|
Exercised (3)
|
(1.1
|
)
|
|
$
|
68.15
|
|
|
N/A
|
|
|
N/A
|
|
|
Vested (4)
|
N/A
|
|
|
N/A
|
|
|
(0.9
|
)
|
|
$
|
13.31
|
|
|
Outstanding at December 31, 2019 (1)
|
3.8
|
|
|
$
|
86.89
|
|
|
2.1
|
|
|
$
|
15.00
|
|
Exercisable at December 31, 2019 (1)
|
1.7
|
|
|
$
|
72.22
|
|
|
N/A
|
|
|
N/A
|
|
(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.
|
(2)
|
The grant date fair value of options awarded in 2019 of $15 million ($16.34 per option) is calculated using the Black-Scholes option-pricing model. As at December 31, 2019, total unrecognized compensation cost related to all outstanding awards was $10 million and is expected to be recognized over a weighted-average period of 2.5 years.
|
(3)
|
The total intrinsic value of options exercised in 2019 was $53 million (2018 - $78 million; 2017 - $62 million). The cash received upon exercise of options in 2019 was $77 million (2018 - $103 million; 2017 - $58 million) and the related excess tax benefit realized in 2019 was $3 million (2018 - $3 million and 2017 - $ 5 million).
|
(4)
|
The grant date fair value of options vested in 2019 was $12 million (2018 - 12 million and 2017 - $10 million).
|
|
|
|
Options outstanding
|
|
Options exercisable
|
|||||||||||||||||||
|
|
|
Number of options
|
|
Weighted-average years to expiration
|
Weighted-average exercise price
|
|
|
Aggregate intrinsic value
|
|
|
Number of options
|
|
Weighted-average exercise price
|
|
|
Aggregate intrinsic value
|
|
||||||
Range of exercise prices
|
In millions
|
|
|
|
|
|
In millions
|
|
|
In millions
|
|
|
|
|
In millions
|
|
||||||||
|
$ 27.33 - $ 45.00
|
0.2
|
|
1.5
|
|
$
|
35.95
|
|
|
$
|
16
|
|
|
0.2
|
|
|
$
|
35.95
|
|
|
$
|
16
|
|
|
|
$ 45.01 - $ 65.00
|
0.4
|
|
3.3
|
|
$
|
54.93
|
|
|
24
|
|
|
0.4
|
|
|
$
|
54.93
|
|
|
24
|
|
|||
|
$ 65.01 - $ 85.00
|
0.8
|
|
5.7
|
|
$
|
74.77
|
|
|
35
|
|
|
0.6
|
|
|
$
|
76.01
|
|
|
24
|
|
|||
|
$ 85.01 - $ 105.00
|
1.5
|
|
7.4
|
|
$
|
95.00
|
|
|
33
|
|
|
0.5
|
|
|
$
|
93.17
|
|
|
12
|
|
|||
|
$ 105.01 - $ 126.35
|
0.9
|
|
9.1
|
|
$
|
110.77
|
|
|
6
|
|
|
—
|
|
|
$
|
115.48
|
|
|
—
|
|
|||
Balance at December 31, 2019 (1)
|
3.8
|
|
6.7
|
|
$
|
86.89
|
|
|
$
|
114
|
|
|
1.7
|
|
|
$
|
72.22
|
|
|
$
|
76
|
|
(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 weighted-average years to expiration of exercisable stock options was 5 years.
|
Year of grant
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Assumptions
|
|
|
|
|
|
||||
Grant price ($)
|
110.94
|
|
|
98.05
|
|
|
92.16
|
|
|
Expected stock price volatility (%) (1)
|
18
|
|
|
18
|
|
|
20
|
|
|
Expected term (years) (2)
|
5.5
|
|
|
5.5
|
|
|
5.5
|
|
|
Risk-free interest rate (%) (3)
|
1.75
|
|
|
2.08
|
|
|
1.24
|
|
|
Dividend rate ($) (4)
|
2.15
|
|
|
1.82
|
|
|
1.65
|
|
|
Weighted-average grant date fair value ($)
|
16.34
|
|
|
15.34
|
|
|
14.44
|
|
(1)
|
Based on the historical volatility of the Company's stock over a period commensurate with the expected term of the award.
|
(2)
|
Represents the period of time that awards are expected to be outstanding. The Company uses historical data to predict option exercise behavior.
|
(3)
|
Based on the implied yield available on zero-coupon government issues with an equivalent term commensurate with the expected term of the awards.
|
(4)
|
Based on the annualized dividend rate.
|
|
|
ESIP
|
|
|
|
Shares
|
|
|
|
In millions
|
|
Unvested contributions, December 31, 2018
|
—
|
|
|
Company contributions (1)
|
|
0.3
|
|
Unvested contributions, December 31, 2019
|
0.3
|
|
(1)
|
The weighted average fair value of the shares contributed was $118.83.
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
Number of participants holding shares
|
21,674
|
|
|
22,185
|
|
|
19,642
|
|
Total number of ESIP shares purchased on behalf of employees (millions)
|
1.5
|
|
|
1.8
|
|
|
1.7
|
|
In millions
|
Foreign
currency
translation
adjustments
|
|
|
Pension
and other
postretirement
benefit plans
|
|
|
Total
before
tax
|
|
|
Income tax recovery (expense) (1)
|
|
|
Total
net of
tax
|
|
|||||||
Balance at December 31, 2016
|
$
|
(247
|
)
|
|
$
|
(2,898
|
)
|
|
$
|
(3,145
|
)
|
|
$
|
787
|
|
|
$
|
(2,358
|
)
|
||
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange loss on translation of net investment in foreign operations
|
(701
|
)
|
|
|
|
(701
|
)
|
|
—
|
|
|
(701
|
)
|
||||||||
Foreign exchange gain on translation of US dollar-denominated debt designated as a hedge of the net investment in foreign operations
|
504
|
|
|
|
|
504
|
|
|
(67
|
)
|
|
437
|
|
||||||||
Actuarial loss arising during the year
|
|
|
(408
|
)
|
|
(408
|
)
|
|
110
|
|
|
(298
|
)
|
||||||||
Amounts reclassified from Accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amortization of net actuarial loss
|
|
|
179
|
|
|
179
|
|
(2
|
)
|
(47
|
)
|
(3
|
)
|
132
|
|
||||||
Amortization of prior service costs
|
|
|
5
|
|
|
5
|
|
(2
|
)
|
(1
|
)
|
(3
|
)
|
4
|
|
||||||
Other comprehensive loss
|
(197
|
)
|
|
(224
|
)
|
|
(421
|
)
|
|
(5
|
)
|
|
(426
|
)
|
|||||||
Balance at December 31, 2017
|
(444
|
)
|
|
(3,122
|
)
|
|
(3,566
|
)
|
|
782
|
|
|
(2,784
|
)
|
|||||||
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange gain on translation of net investment in foreign operations
|
1,038
|
|
|
|
|
1,038
|
|
|
—
|
|
|
1,038
|
|
||||||||
Foreign exchange loss on translation of US dollar-denominated debt designated as a hedge of the net investment in foreign operations
|
(635
|
)
|
|
|
|
(635
|
)
|
|
86
|
|
|
(549
|
)
|
||||||||
Actuarial loss arising during the year
|
|
|
(969
|
)
|
|
(969
|
)
|
|
262
|
|
|
(707
|
)
|
||||||||
Prior service credit arising during the year
|
|
|
6
|
|
|
6
|
|
|
(2
|
)
|
|
4
|
|
||||||||
Amounts reclassified from Accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amortization of net actuarial loss
|
|
|
198
|
|
|
198
|
|
(2
|
)
|
(54
|
)
|
(3
|
)
|
144
|
|
||||||
Amortization of prior service costs
|
|
|
3
|
|
|
3
|
|
(2
|
)
|
—
|
|
(3
|
)
|
3
|
|
||||||
Settlement loss arising during the year
|
|
|
3
|
|
|
3
|
|
(2
|
)
|
(1
|
)
|
(3
|
)
|
2
|
|
||||||
Other comprehensive income (loss)
|
403
|
|
|
(759
|
)
|
|
(356
|
)
|
|
291
|
|
|
(65
|
)
|
|||||||
Balance at December 31, 2018
|
(41
|
)
|
|
(3,881
|
)
|
|
(3,922
|
)
|
|
1,073
|
|
|
(2,849
|
)
|
|||||||
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange loss on translation of net investment in foreign operations
|
(636
|
)
|
|
|
|
(636
|
)
|
|
—
|
|
|
(636
|
)
|
||||||||
Foreign exchange gain on translation of US dollar-denominated debt designated as a hedge of the net investment in foreign operations
|
380
|
|
|
|
|
380
|
|
|
(52
|
)
|
|
328
|
|
||||||||
Actuarial loss arising during the year
|
|
|
(600
|
)
|
|
(600
|
)
|
|
155
|
|
|
(445
|
)
|
||||||||
Amounts reclassified from Accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amortization of net actuarial loss
|
|
|
152
|
|
|
152
|
|
(2
|
)
|
(39
|
)
|
(3
|
)
|
113
|
|
||||||
Amortization of prior service costs
|
|
|
3
|
|
|
3
|
|
(2
|
)
|
(1
|
)
|
(3
|
)
|
2
|
|
||||||
Settlement loss arising during the year
|
|
|
5
|
|
|
5
|
|
(2
|
)
|
(1
|
)
|
(3
|
)
|
4
|
|
||||||
Other comprehensive income (loss)
|
(256
|
)
|
|
(440
|
)
|
|
(696
|
)
|
|
62
|
|
|
(634
|
)
|
|||||||
Balance at December 31, 2019
|
$
|
(297
|
)
|
|
$
|
(4,321
|
)
|
|
$
|
(4,618
|
)
|
|
$
|
1,135
|
|
|
$
|
(3,483
|
)
|
(1)
|
The Company releases stranded tax effects from Accumulated other comprehensive loss to Net income upon the liquidation or termination of the related item.
|
(2)
|
Reclassified to Other components of net periodic benefit income in the Consolidated Statements of Income and included in net periodic benefit cost. See Note 15 - Pensions and other postretirement benefits.
|
(3)
|
Included in Income tax recovery (expense) in the Consolidated Statements of Income.
|
In millions
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Beginning of year
|
$
|
207
|
|
|
$
|
183
|
|
|
$
|
183
|
|
Accruals and other
|
29
|
|
|
52
|
|
|
38
|
|
|||
Payments
|
(29
|
)
|
|
(28
|
)
|
|
(38
|
)
|
|||
End of year
|
$
|
207
|
|
|
$
|
207
|
|
|
$
|
183
|
|
Current portion - End of year
|
$
|
55
|
|
|
$
|
60
|
|
|
$
|
40
|
|
In millions
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Beginning of year
|
$
|
139
|
|
|
$
|
116
|
|
|
$
|
118
|
|
Accruals and other
|
44
|
|
|
41
|
|
|
46
|
|
|||
Payments
|
(31
|
)
|
|
(28
|
)
|
|
(41
|
)
|
|||
Foreign exchange
|
(7
|
)
|
|
10
|
|
|
(7
|
)
|
|||
End of year
|
$
|
145
|
|
|
$
|
139
|
|
|
$
|
116
|
|
Current portion - End of year
|
$
|
36
|
|
|
$
|
37
|
|
|
$
|
25
|
|
In millions
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Beginning of year
|
$
|
61
|
|
|
$
|
78
|
|
|
$
|
86
|
|
Accruals and other
|
31
|
|
|
16
|
|
|
16
|
|
|||
Payments
|
(34
|
)
|
|
(34
|
)
|
|
(23
|
)
|
|||
Foreign exchange
|
(1
|
)
|
|
1
|
|
|
(1
|
)
|
|||
End of year
|
$
|
57
|
|
|
$
|
61
|
|
|
$
|
78
|
|
Current portion - End of year
|
$
|
38
|
|
|
$
|
39
|
|
|
$
|
57
|
|
•
|
the lack of specific technical information available with respect to many sites;
|
•
|
the absence of any government authority, third-party orders, or claims with respect to particular sites;
|
•
|
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
|
•
|
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.
|
•
|
Level 1: Inputs are quoted prices for identical instruments in active markets
|
•
|
Level 2: Significant inputs (other than quoted prices included in Level 1) are observable
|
•
|
Level 3: Significant inputs are unobservable
|
•
|
each region's sole business activity is the transportation of freight over the Company's extensive rail network;
|
•
|
the regions service national accounts that extend over the Company's various commodity groups and across its rail network;
|
•
|
the services offered by the Company stem predominantly from the transportation of freight by rail with the goal of optimizing the rail network as a whole; and
|
•
|
the Company and its subsidiaries, not its regions, are subject to regulatory regimes in both Canada and the U.S.
|
In millions
|
Year ended December 31,
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
|
|
|
|
|
|
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Canada
|
|
$
|
10,167
|
|
|
$
|
9,610
|
|
|
$
|
8,794
|
|
U.S.
|
|
4,750
|
|
|
4,711
|
|
|
4,247
|
|
|||
Total revenues
|
|
$
|
14,917
|
|
|
$
|
14,321
|
|
|
$
|
13,041
|
|
Net income
|
|
|
|
|
|
|
||||||
Canada
|
|
$
|
3,131
|
|
|
$
|
3,163
|
|
|
$
|
2,857
|
|
U.S.
|
|
1,085
|
|
|
1,165
|
|
|
2,627
|
|
|||
Total net income
|
|
$
|
4,216
|
|
|
$
|
4,328
|
|
|
$
|
5,484
|
|
In millions
|
December 31,
|
2019
|
|
|
2018
|
|
||
|
|
|
|
|
||||
Properties
|
|
|
|
|
||||
Canada
|
|
$
|
21,482
|
|
|
$
|
19,737
|
|
U.S.
|
|
18,187
|
|
|
18,036
|
|
||
Total properties
|
|
$
|
39,669
|
|
|
$
|
37,773
|
|
(1)
|
I have reviewed this report on Form 6-K of Canadian National Railway Company;
|
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
(4)
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d‑15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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(5)
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Jean-Jacques Ruest
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Jean-Jacques Ruest
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President and Chief Executive Officer
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(1)
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I have reviewed this report on Form 6-K of Canadian National Railway Company;
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(2)
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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(3)
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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(4)
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d‑15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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(5)
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Ghislain Houle
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Ghislain Houle
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Executive Vice-President and Chief Financial Officer
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