Canadian National Railway Company (CNR.TO) 2009年年度報告「TSX」.pdf

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1、ready2009 a nn ual r e po rtfor the recovery935 de La Gauchetire Street West Montreal,Quebec H3B 2M.ca200 9 a n n ua l re p o rt71894_CN_ARcoverE.indd 116/2/10 3:33:42 PMShareholder and investor informationAnnual meetingThe annual meeting of shareholders will be held at 10:00am EDT on April 27,2010

2、at:The Windsor Salon Windsor,Lobby level 1170 Peel Street Montreal,Quebec,CanadaAnnual information formThe annual information form may be obtained by writing to:The Corporate Secretary Canadian National Railway Company 935 de La Gauchetire Street West Montreal,Quebec H3B 2M9Transfer agent and regist

3、rarComputershare Trust Computershare Trust Company of Canada Company,N.A.Offices in:Offices in:Montreal,QC;Golden,CO Toronto,ON;Calgary,AB;Vancouver,BC Telephone:1-800-564-6253 Dividend payment options Shareholders wishing to receive dividends by Direct Deposit or in U.S.dollars may obtain detailed

4、information by communicating with:Computershare Trust Company of Canada Telephone:1-800-564-6253Stock exchangesCN common shares are listed on the Toronto and New York stock exchanges.Ticker symbols:CNR(Toronto Stock Exchange)CNI(New York Stock Exchange)Investor relationsRobert Noorigian Vice-Preside

5、nt,Investor Relations Telephone:(514)399-0052Shareholder servicesShareholders having inquiries concerning their shares or wishing to obtain information about CN should contact:Computershare Trust Company of Canada Shareholder Services 100 University Avenue,9th Floor Toronto,Ontario M5J 2Y1 Telephone

6、:1-800-564-6253Head officeCanadian National Railway Company 935 de La Gauchetire Street West Montreal,Quebec H3B 2M9P.O.Box 8100 Montreal,Quebec H3C 3N4Additional copies of this report are available from:CN Public Affairs935 de La Gauchetire Street West Montreal,Quebec H3B 2M9 Telephone:1-888-888-59

7、09 Email:contactcn.caLa version franaise du prsent rapport est disponible ladresse suivante:Affaires publiques CN935,rue de La Gauchetire Ouest Montral(Qubec)H3B 2M9 Tlphone:1-888-888-5909 Courriel:contactcn.caThis report has been printed on FSC paper.1 A message from the Chairman 2 A message from C

8、laude Mongeau 4 CNs business 6 Board of Directors 7 Financial Section(U.S.GAAP)80 Corporate Governance 81 Shareholder and investor informationExcept where otherwise indicated,all financial information reflected in this document is expressed in Canadian dollars and determined on the basis of United S

9、tates gener-ally accepted accounting principles(U.S.GAAP).Certain information included in this annual report are“forward-looking statements”within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws.CN cautions that,by their nature,the

10、se forward-looking statements involve risks,uncertainties and assumptions.Implicit in these statements,particularly in respect of growth opportunities,is the Companys assumption that there will be a gradual recovery in the North American economy,that global economic conditions will improve and that

11、long-term growth opportunities are less affected by the current situation in the North American and global economies.The Company cautions that its assump-tions may not materialize and that current economic conditions render such assumptions,although reasonable at the time they were made,subject to g

12、reater uncertainty.Such forward-looking statements are not guarantees of future performance and involve known and unknown risks,uncertainties and other factors which may cause the actual results or performance of the Company or the rail industry to be materially different from the outlook or any fut

13、ure results or performance implied by such statements.Important factors that could affect the forward-looking statements include,but are not limited to,the effects of general economic and business conditions,industry competition,inflation,currency and interest rate fluctuations,changes in fuel price

14、s,legislative and/or regulatory developments,compliance with environmental laws and regulations,actions by regulators,various events which could disrupt operations,including natural events such as severe weather,droughts,floods and earthquakes,labor negotiations and disruptions,environmental claims,

15、uncertainties of investigations,proceedings or other types of claims and litigation,risks and liabilities arising from derailments,and other risks detailed from time to time in reports filed by CN with securities regulators in Canada and the United States.Reference should be made to“Manage-ments Dis

16、cussion and Analysis”in CNs annual and interim reports,Annual Information Form and Form 40-F filed with Canadian and U.S.securities regulators,available on CNs website,for a summary of major risks.CN assumes no obligation to update or revise forward-looking statements to reflect future events,change

17、s in circum-stances,or changes in beliefs,unless required by applicable Canadian securities laws.In the event CN does update any forward-looking statement,no inference should be made that CN will make additional updates with respect to that state-ment,related matters,or any other forward-looking sta

18、tement.As used herein,the word“Company”or“CN”means,as the context requires,Canadian National Railway Company and/or its subsidiaries.Contents71894_CN_ARcoverE.indd 22/22/10 10:51:12 AM2009 Annual Report 1Dear fellow shareholders As part of the Boards succession plan for executive management we annou

19、nced on April 21,2009,our selection of Claude Mongeau to succeed E.Hunter Harrison as President and Chief Executive Officer upon his retirement,effective January 1,2010.Claude is an exceptional executive and leader.He is one of the key architects of CNs industry-leading financial performance and the

20、 prime strategist behind the highly successful rail acquisitions that have extended CNs reach throughout North America and made it a key industry player.The announcement began an orderly period of leadership transition at CN that is intended to maintain the companys position as an industry leader an

21、d continue to create value for customers and shareholders.Hunter and Claude worked very closely together to ensure a seamless transition at year-end.Supported by an outstanding executive team and thousands of committed railroaders,we are confident that Claude will build on the many successes achieve

22、d by CN to date and lead CN to its full potential.We welcome him to the helm of a great railroad.On behalf of CNs Board of Directors,I extend my gratitude to Hunter for the exemplary leadership and service that he has provided to this company.His ground-breaking Precision Railroading is the operatin

23、g model that helped CN become the most efficient railroad in North America.His tireless dedication to training the next generation of railroaders leaves this company well positioned for the future.As always,our success will also depend on our absolute dedication to maintaining and improving upon Boa

24、rd practices and policies that ensure the highest standards of ethical business principles.In keeping with our commitment to good corporate governance,the Board approved a revised Code of Business Conduct for all employees and CN Directors in 2009.It reinforces the idea that“doing the right thing”is

25、 simply the CN way of doing business.As we look forward,our Board is very optimistic about the future of this great company.We believe our new management team is well positioned to deliver strong shareholder value on a long-term basis.Sincerely,David McLean,O.B.C.,LL.D.Chairman of the BoardA message

26、 from the Chairman“.well positioned to deliver strong shareholder value on a long-term basis.”71894_CN_AR_IntroEng.indd 112/2/10 6:59:55 PM2 Canadian National Railway CompanyDear fellow shareholders In my first annual report letter to shareholders as President and CEO of CN,I want to acknowledge how

27、 excited,yet humbled I am by the confidence shown in me by our Board of Directors.I am privileged to succeed two outstanding leaders in Paul M.Tellier and E.Hunter Harrison,who played pivotal roles in CNs remarkable transformation journey.I was part of Pauls team when we started this journey,with ou

28、r IPO in 1995 as the companys first great milestone.Hunter,a visionary and pioneer in the industry,guided CN to new heights of performance and efficiency with his innovative Precision Railroading model.He is widely recognized as one of the most important railroaders of our generation,but I also see

29、Hunter as a transformational leader.His passion and drive have become part of CNs DNA.CNs business modelWe have seen the power of CNs business model in good times,and now weve seen how it helped us shine in the tough year that was 2009.The steps we took in anticipation of the economic downturn,and o

30、ur subsequent adjustments,demonstrated great agility.We played to our strengths,partnering with customers and focusing on the operational excellence that forms the foundation of our business.The recession forced us to go deep and examine every opportunity for improved performance,which is in keeping

31、 with our culture of constantly innovating and our persistence in continuously getting better.One innovative idea that emerged in 2009 was a new train operating design for our busy Toronto-Winnipeg corridor.It featured the fleeting of over-siding trains in both directions,an operational tactic that

32、schedules trains leaving in one direction close together in time before having trains start in the opposite direction,minimizing train delays and improving efficiency.This example was not a dramatic change,but the cumulative effect of our relentless fine-tuning of operations across the system was po

33、werful.With improvements in car velocity,train speed,trip plan compliance the measure of our on-time performance and reduced yard dwell,we were able to serve customers more efficiently than ever,at a time when efficient service was especially important.Our strategic agendaWe continued to deliver on

34、our strategic agenda,completing our acquisition of the principal lines of the former Elgin,Joliet and Eastern Railway Company(EJ&E)in A message from Claude Mongeau“The steps we took in anticipation of the economic downturn,and our subsequent adjustments,demonstrated great agility.”71894_CN_AR_IntroE

35、ng.indd 212/2/10 7:00:00 PM2009 Annual Report 3January 2009.The integration of the EJ&E was flawless and we continue to fulfill our commitments to the communities along the line.Using the EJ&E to bypass the congestion in Chicago will drive greater efficiency along the corridor serving our gateway to

36、 the mid-USA from Asia.This vital trade route is complemented by the culmination in 2009 of the US$100 million refurbishing of our yard in Memphis,one of the key freight destination points for CN and distribution centres in the United States.Solid results,a bright futureIn spite of the global econom

37、ic turmoil,in 2009 we delivered solid results to shareholders,and entered the new year with a strong balance sheet,after achieving revenues of$7,367 million,net income of$1,854 million,diluted earnings per share of$3.92 and free cash flow of$790 million.Our industry leading operating ratio for 2009

38、was 67.3 per cent.And we increased our dividend for the 14th consecutive year in January 2010.Over the years,we have expanded our franchise to become a genuine North American leader.I am very mindful of our legacy,which I feel a great responsibility to protect.The challenge for CNs Leadership Team,a

39、nd the 22,000 talented railroaders across our network who make it all happen,is to take this great franchise to a new level.As I look to the future,I am more confident than ever in our ability to leverage the expected gradual economic recovery to accommodate growth,partnering with our customers to h

40、elp rebuild and develop their markets.There are sizable opportunities in our long-established business markets,such as intermodal and bulk.New business prospects are also emerging,including support for Canadas oil sands industry through transportation and transloading as well as in sustainable energ

41、y initiatives,such as wood pellets and biodiesel.The CN success story started 15 years ago,and there is no ending in sight.With more goods to be moved and more need for environmentally responsible solutions,CN has never been better positioned to play a leadership role in the transportation world.Cla

42、ude Mongeau President and CEO“The CN success story started 15 years ago,and there is no ending in sight.”71894_CN_AR_IntroEng.indd 32/22/10 9:35:32 AM4 Canadian National Railway CompanyOur franchiseCNs unique North American franchise features a coasttocoasttocoast network with great capacity for gro

43、wth and a balanced portfolio,without any of our commodity groups accounting for more than 18 per cent of revenues in 2009.Our business modelCNs business model,based on our innovative Precision Railroading approach,reflects the strong link between customer and shareholder value.Providing industrylead

44、ing and costeffective customer service is one of the objectives of Precision Railroading.The model powers CNs ability to seek out and accommodate top line growth at low incremental costs.Precision Railroading centres on what customers are most concerned about the timely and safe delivery of their ca

45、rs or containers,not the train that carries them.By focusing on continuously improving all of the processes that contribute to delivering the customers goods,CN became the most efficient and productive railroad in North America.Enhancing CNs asset utilization is one of the companys guiding principle

46、s.Among our initiatives to improve productivity are increasing our fuel and locomotive efficiency,speeding up car velocity,and optimizing train length.Operating longer and more efficient trains,frequently 10,000 feet or more,is a key component of CNs Precision Railroading model.Over the past 10 year

47、s,in addition to the installation of new sidings,CN has invested approximately$325 million to extend a significant number of sidings across its network,resulting in faster,more reliable service for customers.A focus for CN in 2010 is enhancing the“first milelast mile”activities for handling customer

48、 loads.This approach fosters closer working relationships with customers and providing ways to improve the processes at the origin and destination points for delivering shipments.As well,the company continues to improve the performance of its yards,such as in the integration of the Elgin,Joliet&East

49、erns Kirk Yard in Gary,Indiana,rolling out SmartYard,removing the hump from Walker Yard in Edmonton and completing in 2009 the US$100 million multiyear construction project to reconfigure and modernize its Memphis rail classification yard.Memphis,a major freight distribution hub,is the gateway to th

50、e companys rail operations in the Gulf region.The project transformed an aged,inefficient rail yard into a CNs business71894_CN_AR_IntroEng.indd 42/22/10 9:36:39 AM2009 Annual Report 5state-of-the-art,effectively designed major terminal.The yard was subse-quently renamed in honour of our former CEO

51、E.Hunter Harrison.Our growth opportunitiesAs the expected gradual economic recovery occurs,CN is prepared for and will pursue a wide variety of growth opportunities.These range from lumber to metals and chemicals.Other prospects include oil sands activities in Alberta,Illinois basin coal,and a new i

52、ron nugget plant in Minnesota,among others.On the merchandise side,oppor-tunities stem from an expected increase in North American industrial production,a turnaround in auto-motive production and gradual im-provement in housing and related segments.In bulk commodities,re-cord U.S.corn and soy bean c

53、rops augur well.And for intermodal,an anticipated progressive recovery in domestic markets and continued growth at Prince Rupert offer in-creased revenue potential.CN also continues to find growth opportunities through integrated trans portation solutions.For ex-ample,handling jet fuel at our CargoF

54、lo facilities,leveraging our network of automotive compounds to facilitate vehicle distribution across North America,and providing door-to-door service for our domestic intermodal customers.CN is expanding its business of transporting sustainable energy pro-ducts,which include biodiesel,etha-nol,win

55、d turbine components and wood pellets.As North Americas largest mover of forest products,CN hauled more than 800,000 tons of wood pellets in 2009 and sees more opportunities in the future for this“green”source of heating energy.Wood pellets,made from waste wood such as wood shavings and sawdust,are

56、carbon neutral and do not con-tribute to global warming.North American consumption is expected to exceed 3.3 million tons in 2010.Delivering ResponsiblyCN understands that long-term suc-cess is connected to a sustainable and viable future.That is why we are committed to the safety of our employees a

57、nd the public,building stronger communities,supplying customer value and providing a great place to work.These actions represent what CN stands for and contribute to driving shareholder value.Our sustainability activities are outlined in an on-line vehicle we call Delivering Responsibly,which can be

58、 found on our website:.ca.71894_CN_AR_IntroEng.indd 52/24/10 9:19:05 AM6 Canadian National Railway CompanyBoard of Directors As at February 15,2010David G.A.McLean,O.B.C.,LL.D.Chairman of the BoardCanadian National Railway Company Chairman of the Board and Chief Executive OfficerThe McLean GroupComm

59、ittees:3*,4,5,6,7,8Claude MongeauPresident and Chief Executive OfficerCanadian National Railway CompanyCommittees:4*,7Michael R.Armellino,CFARetired PartnerThe Goldman Sachs Group,LPCommittees:1,2,7*,8A.Charles Baillie,O.C.,LL.D.Former Chairman and Chief Executive OfficerThe Toronto-Dominion BankCom

60、mittees:2*,5,6,7,8Hugh J.Bolton,FCAChairman of the BoardEPCOR Utilities Inc.Committees:1,3,6,7Ambassador Gordon D.GiffinSenior PartnerMcKenna Long&AldridgeCommittees:1,2,4,6,7Edith E.HolidayCorporate Director and Trustee Former General Counsel United States Treasury Department Secretary of the Cabin

61、et The White HouseCommittees:3,5,6,7,8V.Maureen Kempston Darkes,O.C.,D.Comm.,LL.D.Retired Group Vice-President General Motors Corporation and President GM Latin America,Africa and Middle EastCommittees:2,5*,7,8Chairman of the Board and Select Senior Officers of the Company As at February 15,2010Davi

62、d G.A.McLeanChairman of the BoardClaude MongeauPresident and Chief Executive OfficerRussell HiscockPresident and Chief Executive Officer CN Investment DivisionMike CorySenior Vice-President Western RegionKeith CreelExecutive Vice-President and Chief Operating OfficerSameh FahmySenior Vice-President

63、Engineering,Mechanical and Supply ManagementSean FinnExecutive Vice-President Corporate Services and Chief Legal OfficerStan Jablonski Senior Vice-President SalesLuc JobinExecutive Vice-President and Chief Financial OfficerJeff LiepeltSenior Vice-President Eastern RegionKim MadiganVice-President Hum

64、an ResourcesRobert E.NoorigianVice-President Investor RelationsJean-Jacques RuestExecutive Vice-President and Chief Marketing OfficerJim VenaSenior Vice-President Southern RegionThe Honourable Denis Losier,P.C.,LL.D.President and Chief Executive OfficerAssumption LifeCommittees:1*,3,7,8The Honourabl

65、e Edward C.Lumley,P.C.,LL.D.Vice-ChairmanBMO Capital Markets Committees:2,5,6,7,8*Robert PacePresident and Chief Executive OfficerThe Pace GroupCommittees:1,3,6*,7,8Directors EmeritusPurdy CrawfordJ.V.Raymond Cyr James K.Gray Cedric RitchieCommittees:1 Audit 2 Finance 3 Corporate governance and nomi

66、nating 4 Donations 5 Environment,safety and security 6 Human resources and compensation 7 Strategic planning 8 Investment*denotes chairman of the committee71894_CN_AR_IntroEng.indd 616/2/10 3:46:35 PM2009 Annual Report 7Financial Section(U.S.GAAP)Contents 8 Selected Railroad Statistics 9 Managements

67、 Discussion and Analysis 46 Managements Report on Internal Control over Financial Reporting 46 Report of Independent Registered Public Accounting Firm 47 Report of Independent Registered Public Accounting Firm 48 Consolidated Statement of Income 49 Consolidated Statement of Comprehensive Income 50 C

68、onsolidated Balance Sheet 51 Consolidated Statement of Changes in Shareholders Equity 52 Consolidated Statement of Cash Flows Notes to Consolidated Financial Statements 53 1 Summary of significant accounting policies 55 2 Accounting changes 56 3 Acquisitions 57 4 Accounts receivable 58 5 Properties

69、59 6 Intangible and other assets 59 7 Accounts payable and other 59 8 Other liabilities and deferred credits 60 9 Long-term debt 61 10 Capital stock 62 11 Stock plans 65 12 Pensions and other postretirement benefits 70 13 Other income 70 14 Income taxes 72 15 Segmented information 72 16 Earnings per

70、 share 73 17 Major commitments and contingencies 76 18 Financial instruments 78 19 Accumulated other comprehensive loss 79 20 Subsequent events 79 21 Comparative figures71894_CN_ARfinancials_Eng.indd 712/2/10 6:52:11 PM8 Canadian National Railway Company U.S.GAAPSelected Railroad Statistics(1)Year e

71、nded December 31,2009 2008 2007 Statistical operating data Rail freight revenues($millions)6,632 7,641 7,186 Gross ton miles(GTM)(millions)304,690 339,854 347,898 Revenue ton miles(RTM)(millions)159,862 177,951 184,148 Carloads(thousands)3,991 4,615 4,744 Route miles(includes Canada and the U.S.)21,

72、094 20,961 20,421 Employees(end of year)21,501 22,227 22,696 Employees(average for the year)21,793 22,695 22,389 Productivity Operating ratio(%)67.3 65.9 63.6 Rail freight revenue per RTM(cents)4.15 4.29 3.90 Rail freight revenue per carload($)1,662 1,656 1,515 Operating expenses per GTM(cents)1.63

73、1.64 1.44 Labor and fringe benefits expense per GTM(cents)0.56 0.49 0.49 GTMs per average number of employees(thousands)13,981 14,975 15,539 Diesel fuel consumed(US gallons in millions)327 380 392 Average fuel price($/US gallon)2.12 3.39 2.40 GTMs per US gallon of fuel consumed 932 894 887 Safety in

74、dicators Injury frequency rate per 200,000 person hours(2)1.78 1.78 1.87 Accident rate per million train miles(2)2.27 2.58 2.73(1)Includes data relating to companies acquired as of the date of acquisition.(2)Based on Federal Railroad Administration(FRA)reporting criteria.Certain statistical data and

75、 related productivity measures are based on estimated data available at such time and are subject to change as more complete information becomes available.71894_CN_ARfinancials_Eng.indd 812/2/10 6:52:15 PM U.S.GAAP 2009 Annual Report 9Managements Discussion and AnalysisManagements discussion and ana

76、lysis(MD&A)relates to the financial position and results of operations of Canadian National Railway Company,together with its wholly-owned subsidiaries,collectively“CN”or“the Company.”Canadian National Railway Companys common shares are listed on the Toronto and New York stock exchanges.Except where

77、 otherwise indicated,all financial information reflected herein is expressed in Canadian dollars and determined on the basis of United States generally accepted accounting principles(U.S.GAAP).The Companys objective is to provide meaningful and relevant information reflecting the Companys financial

78、position and results of operations.In certain instances,the Company may make reference to certain non-GAAP measures that,from managements perspective,are useful mea-sures of performance.The reader is advised to read all information provided in the MD&A in conjunction with the Companys 2009 Annual Co

79、nsolidated Financial Statements and Notes thereto.Business profileCN is engaged in the rail and related transportation business.CNs network of approximately 21,100 route miles of track spans Canada and mid-America,connecting three coasts:the Atlantic,the Pacific and the Gulf of Mexico.CNs extensive

80、network,and its co-production arrangements,routing protocols,marketing alli-ances,and interline agreements,provide CN customers access to all three North American Free Trade Agreement(NAFTA)nations.CNs freight revenues are derived from seven commod-ity groups representing a diversified and balanced

81、portfolio of goods transported between a wide range of origins and desti-nations.This product and geographic diversity better positions the Company to face economic fluctuations and enhances its potential for growth opportunities.In 2009,no individual com-modity group accounted for more than 18%of r

82、evenues.From a geographic standpoint,19%of revenues came from United States(U.S.)domestic traffic,28%from transborder traffic,24%from Canadian domestic traffic and 29%from overseas traffic.The Company is the originating carrier for approximately 85%of traffic moving along its network,which allows it

83、 both to capital-ize on service advantages and build on opportunities to efficient-ly use assets.Corporate organizationThe Company manages its rail operations in Canada and the United States as one business segment.Financial information re-ported at this level,such as revenues,operating income and c

84、ash flow from operations,is used by the Companys corporate man-agement in evaluating financial and operational performance and allocating resources across CNs network.The Companys strategic initiatives,which drive its operational direction,are de-veloped and managed centrally by corporate management

85、 and are communicated to its regional activity centers(the Western Region,Eastern Region and Southern Region),whose role is to manage the day-to-day service requirements of their respective territories,control direct costs incurred locally,and execute the corporate strategy and operating plan establ

86、ished by corporate management.See Note 15 Segmented information,to the Companys 2009 Annual Consolidated Financial Statements for additional information on the Companys corporate organization,as well as selected financial information by geographic area.Strategy overviewCNs focus is on running a safe

87、 and efficient railroad.While re-maining at the forefront of the rail industry,CNs goal is to be internationally regarded as one of the best-performing transpor-tation companies.CNs commitment is to create value for both its customers and shareholders.By providing quality and cost-effective ser-vice

88、,CN seeks to create value for its customers.CNs corporate goals are generally based on five key financial performance tar-gets:revenues,operating income,earnings per share,free cash flow and return on investment,as well as various key operating metrics,including safety metrics that the Company focus

89、es on to measure efficiency,and quality and level of service.By striving for sustainable financial performance through profitable growth,adequate free cash flow and return on investment,CN seeks to deliver increased shareholder value.For 2010,the Companys Board of Directors has approved an increase

90、of 7%to the quar-terly dividend to common shareholders,from$0.2525 to$0.27,and the initiation of a share repurchase program to be funded mainly from cash generated from operations.The share repur-chase program allows for the repurchase of up to 15.0 million common shares between January 29,2010 and

91、December 31,2010 pursuant to a normal course issuer bid,at prevailing mar-ket prices or such other price as may be permitted by the Toronto Stock Exchange.CN has a unique business model,which is anchored on five corporate values:providing quality service,controlling costs,fo-cusing on asset utilizat

92、ion,committing to safety,and developing people.Employees are encouraged to share these values and pro-mote them in their day-to-day work.Precision Railroading is at the core of CNs business model.It is a highly disciplined process whereby CN handles individual rail shipments according to a spe-cific

93、 trip plan and manages all aspects of railroad operations to meet customer commitments efficiently and profitably.Precision Railroading demands discipline to execute the trip plan,the re-lentless measurement of results,and the use of such results to generate further execution improvements.Precision

94、Railroading increases velocity,improves reliability,lowers costs,enhances as-set utilization and,ultimately,helps the Company to grow the top line.It has been a key contributor to CNs earnings growth and improved return.71894_CN_ARfinancials_Eng.indd 912/2/10 6:52:19 PM10 Canadian National Railway C

95、ompany U.S.GAAPManagements Discussion and AnalysisAlthough many industries,including transportation,have been impacted by the recent economic conditions,the basic driver of the Companys business remains intact demand for reliable,ef-ficient,and cost effective transportation.The Companys focus during

96、 these volatile times has been and will continue to be the pursuit of its long-term business plan,providing a high level of service to customers,operating safely and efficiently,and meet-ing short-and long-term financial commitments.As a result of the recession in the North American economy and the

97、contraction of the global economy in 2009,most of the Companys commodity groups were significantly impacted,in-cluding forest products,automotive,petroleum and chemicals,metals and minerals and intermodal.The Company made the necessary changes to its operations to reflect the reduced freight volumes

98、 and imposed certain cost-reduction measures.However,at this time,it appears that several of the Companys markets may have hit bottom.The productivity gains earned during 2009 position the Company well for the anticipated gradual recovery in traffic.However,to continue to meet its long-term business

99、 plan objectives,the Companys focus remains on top-line growth through its pricing-to-value strategy and on opportunities that extend beyond the business cycle,such as market share gains versus truck;commodities related to oil and gas development in western Canada;the Prince Rupert Intermodal Termin

100、al;op-portunities in the bulk sector,such as Illinois basin coal;and the expansion of its non-rail services.To operate efficiently and safely while maintaining a high lev-el of customer service,the Company will continue to leverage its unique North American franchise consisting of its rail network,u

101、nique network of ports and efficient international trade gate-ways and complementary non-rail service offerings;and its supe-rior business model.The Company plans to continue to invest in capital programs to maintain a safe railway and pursue strategic initiatives to improve its franchise.The Compan

102、y continuously seeks productivity initiatives to reduce costs and leverage its as-sets.Opportunities to improve productivity extend across all func-tions in the organization.Train productivity is improved through the use of locomotives equipped with“distributed power,”which allows the Company to run

103、 longer,more efficient trains,including in cold weather conditions,while improving train han-dling,reducing train separations and ensuring the overall safety of operations.This initiative,combined with CNs investments in longer sidings,offers train-mile savings,allows for efficient long-train operat

104、ions and,reduces wear on rail and wheels.Yard throughput is being improved through SmartYard,an innovative use of real-time traffic information to sequence cars effectively and get them out on the line more quickly in the face of con-stantly changing conditions.In Engineering,the Company is con-tinu

105、ously working to increase the productivity of its field forces,through better use of traffic information and the optimization of work scheduling,and as a result,better management of its engineering forces on the track.The Company also intends to maintain a solid focus on reducing accidents and relat

106、ed costs,as well as costs for legal claims and health care.CNs capital programs support the Companys commitment to the five corporate values and its ability to grow the business profitably.In 2010,CN plans to invest approximately$1.5 billion on capital programs,of which close to$1 billion is targete

107、d to-wards track infrastructure to continue to operate a safe railway and to improve the productivity and fluidity of the network,and includes the replacement of rail,ties,and other track materials and bridge improvements,as well as rail-line improvements for its recently acquired Elgin,Joliet and E

108、astern Railway Company(EJ&E)property.This amount also includes funds for strategic ini-tiatives and additional enhancements to the track infrastructure in western Canada.CNs equipment spending,targeted to reach approximately$200 million in 2010,is intended to improve the quality of the fleet to meet

109、 customer requirements,and includes the acquisition of 49 new high-horsepower locomotives.CN also expects to spend approximately$300 million on facilities to grow the business,including transloads and distribution centers;on in-formation technology to improve service and operating efficien-cy;and on

110、 other projects to increase productivity.The Company also invests in various strategic initiatives to ex-pand the scope of its business.A key initiative was the acquisition of the EJ&E lines in 2009,which will drive new efficiencies and operating improvements on CNs network as a result of stream-lin

111、ed rail operations and reduced congestion.To meet short-and long-term financial commitments,the Company pursues a solid financial policy framework with the goal of maintaining a strong balance sheet,by monitoring its adjusted debt-to-total capital-ization and adjusted debt-to-adjusted earnings befor

112、e interest,income taxes,depreciation and amortization(EBITDA)ratios,and preserving a strong credit rating to be able to maintain access to public financing.The Companys principal source of liquidity is cash generated from operations,which can be supplemented by its commercial paper program and its a

113、ccounts receivable securitization program,to meet short-term liquidity needs.The Companys primary uses of funds are for working capital require-ments,including income tax installments as they become due and pension contributions,contractual obligations,capital ex-penditures relating to track infrast

114、ructure and other,acquisitions,dividend payouts,and the repurchase of shares through a share buyback program,when applicable.The Company sets priorities on its uses of available funds based on short-term operational requirements,expenditures to continue to operate a safe railway and strategic initia

115、tives,while also considering its long-term con-tractual obligations and returning value to its shareholders.71894_CN_ARfinancials_Eng.indd 1012/2/10 6:52:23 PM U.S.GAAP 2009 Annual Report 11Managements Discussion and AnalysisThe Companys commitment to safety is reflected in the wide range of initiat

116、ives that CN is pursuing and in the size of its capital programs.Comprehensive plans are in place to address safety,se-curity,employee well-being and environmental management.CNs Integrated Safety Plan is the framework for putting safety at the center of its day-to-day operations.This proactive plan

117、,which is fully supported by senior management,is designed to minimize risk and drive continuous improvement in the reduction of injuries and accidents,and engages employees at all levels of the organization.Environmental protection is also an integral part of CNs day-to-day activities.A combination

118、 of key resource people,training,poli-cies,monitoring and environmental assessments helps to ensure that the Companys operations comply with CNs Environmental Policy,a copy of which is available on CNs website.CNs ability to develop the best railroaders in the industry has been a key contributor to

119、the Companys success.CN rec-ognizes that without the right people no matter how good a service plan or business model a company may have it will not be able to fully execute.The Company is focused on recruit-ing the right people,developing employees with the right skills,motivating them to do the ri

120、ght thing,and training them to be the future leaders of the Company.The Human Resources and Compensation Committee of the Board of Directors reviews the progress made in developing current and future leaders through the Companys leadership development programs.These pro-grams and initiatives provide

121、 a solid platform for the assessment and development of the Companys talent pool.The leadership development programs are tightly integrated with the Companys business strategy.Particularly in 2009,the Committee was ac-tively focused on succession and transition and will maintain this oversight role

122、into 2010 as the new President and Chief Executive Officer and his management team take over the helm.The forward-looking statements provided in the above sec-tion and in other parts of this MD&A are subject to risks and uncertainties that could cause actual results or performance to differ material

123、ly from those expressed or implied in such state-ments and are based on certain factors and assumptions which the Company considers reasonable,about events,developments,prospects and opportunities that may not materialize or that may be offset entirely or partially by other events and developments.S

124、ee the section of this MD&A entitled Forward-looking state-ments for assumptions and risk factors affecting such forward-looking statements.Forward-looking statementsCertain information included in this MD&A are“forward-looking statements”within the meaning of the United States Private Securities Li

125、tigation Reform Act of 1995 and under Canadian securities laws.CN cautions that,by their nature,forward-looking statements involve risks,uncertainties and assumptions.The Company cautions that its assumptions may not materialize and that current economic conditions render such assumptions,although r

126、easonable at the time they were made,subject to greater uncertainty.These forward-looking statements include,but are not limited to,statements with respect to long-term growth opportunities;statements that several of the Companys markets may have hit bottom;the anticipation that cash flow from opera

127、tions and from various sources of financing will be sufficient to meet debt repayments and future obligations in the foreseeable future;statements regarding future payments,including income taxes and pension contributions;as well as the projected 2010 capital spending program.Such forward-looking st

128、atements are not guarantees of future performance and involve known and unknown risks,uncertainties and other factors which may cause the actual results or performance of the Company or the rail industry to be materially different from the outlook or any future results or performance implied by such

129、 statements.Key assumptions used in determining forward-looking informa-tion are set forth below.Forward-looking statementsKey assumptions or expectationsStatements relating to general economic and business conditions,including those referring to long-term growth opportunities and markets served by

130、the Company having hit bottom Gradual recovery in the North American economy Improving global economic conditions Long-term growth opportunities being less affected by current economic conditions Improving production rates in specific industries Improving carload trafficStatements relating to the Co

131、mpanys ability to meet debt repayments and future obligations in the foreseeable future,including income tax payments and 2010 capital spending Gradual recovery in the North American economy Improving global economic conditions Adequate credit ratios Investment grade credit rating Access to capital

132、markets Adequate cash generated from operations Statements relating to the 2010 pension contributions Reasonable level of funding as determined by actuarial valuations Adequate return on investment on pension plan assets71894_CN_ARfinancials_Eng.indd 1112/2/10 6:52:27 PM12 Canadian National Railway

133、Company U.S.GAAPManagements Discussion and AnalysisFinancial and statistical highlights$in millions,except per share data,or unless otherwise indicated 2009 2008 2007 Financial results Revenues$7,367$8,482$7,897 Operating income(1)$2,406$2,894$2,876 Net income(1)(2)(3)(4)$1,854$1,895$2,158 Operating

134、 ratio(1)67.3%65.9%63.6%Basic earnings per share(1)(2)(3)(4)$3.95$3.99$4.31 Diluted earnings per share(1)(2)(3)(4)$3.92$3.95$4.25 Dividend declared per share$1.01$0.92$0.84 Financial position Total assets$25,176$26,720$23,460 Total long-term financial liabilities$12,706$14,269$11,693 Statistical ope

135、rating data and productivity measures(5)Employees(average for the year)21,793 22,695 22,389 Gross ton miles(GTM)per average number of employees(thousands)13,981 14,975 15,539 GTMs per US gallon of fuel consumed 932 894 887(1)The 2009 figures include$49 million,or$30 million after-tax($0.06 per basic

136、 or diluted share),for EJ&E acquisition-related costs.(2)The 2009 figures include gains on sale of the Companys Weston subdivision of$157 million,or$135 million after-tax($0.29 per basic or diluted share)and Lower Newmarket subdivision of$69 million,or$59 million after-tax($0.12 per basic or diluted

137、 share).The 2009 figures also include a deferred income tax recovery of$157 million($0.33 per basic or diluted share),of which$126 million($0.27 per basic or diluted share)resulted from the enactment of lower provincial corporate income tax rates,$16 million($0.03 per basic or diluted share)resulted

138、 from the recapitalization of a foreign investment,and$15 million($0.03 per basic or diluted share)resulted from the resolution of various income tax matters and adjustments related to tax filings of prior years.(3)The 2008 figures include a deferred income tax recovery of$117 million($0.24 per basi

139、c or diluted share),of which$83 million($0.17 per basic or diluted share)was due to the resolution of various income tax matters and adjustments related to tax filings of prior years,$23 million($0.05 per basic or diluted share)resulted from the enactment of corporate income tax rate changes in Cana

140、da and$11 million($0.02 per basic or diluted share)was due to net capital losses arising from the reorganization of a subsidiary.(4)The 2007 figures include a deferred income tax recovery of$328 million($0.66 per basic share or$0.64 per diluted share),resulting mainly from the enactment of corporate

141、 income tax rate changes in Canada;and the gains on sale of the Central Station Complex of$92 million,or$64 million after-tax($0.13 per basic or diluted share)and the Companys investment in English Welsh and Scottish Railway(EWS)of$61 million,or$41 million after-tax($0.08 per basic or diluted share)

142、.(5)Based on estimated data available at such time and subject to change as more complete information becomes available.Important risk factors that could affect the forward-looking statements include,but are not limited to,the effects of general economic and business conditions;industry competition;

143、inflation,currency and interest rate fluctuations;changes in fuel prices;legislative and/or regulatory developments;compliance with environmental laws and regulations;actions by regulators;various events which could dis-rupt operations,including natural events such as severe weather,droughts,floods

144、and earthquakes;labor negotiations and disruptions;environmental claims;uncertainties of investigations,proceedings or other types of claims and litigation;risks and liabilities arising from derailments;and other risks detailed from time to time in reports filed by CN with securities regulators in C

145、anada and the United States.See the section of this MD&A entitled Business risks for detailed information on major risk factors.71894_CN_ARfinancials_Eng.indd 1212/2/10 6:52:31 PM U.S.GAAP 2009 Annual Report 13Managements Discussion and AnalysisFinancial results2009 compared to 2008In 2009,net incom

146、e was$1,854 million,a decrease of$41 mil-lion,or 2%,when compared to 2008,with diluted earnings per share decreasing 1%to$3.92.The Companys results of operations,particularly in 2009,were affected by significant weakness across markets due to economic conditions,while 2008 was also marked by severe

147、weather conditions in the first quarter.It appears though that several of the Companys markets may have hit bottom.The 2009 and 2008 figures include items affecting the comparability of the results of operations.Included in the 2009 figures were gains on sale of the Companys Weston subdivision of$15

148、7 mil-lion,or$135 million after-tax($0.29 per basic or diluted share)and Lower Newmarket subdivision of$69 million,or$59 mil-lion after-tax($0.12 per basic or diluted share),as well as EJ&E acquisition-related costs of$49 million,or$30 million after-tax($0.06 per basic or diluted share).The 2009 fig

149、ures also include a deferred income tax recovery of$157 million($0.33 per basic or diluted share),of which$126 million($0.27 per basic or di-luted share)resulted from the enactment of lower provincial cor-porate income tax rates,$16 million($0.03 per basic or diluted share)resulted from the recapita

150、lization of a foreign investment,and$15 million($0.03 per basic or diluted share)resulted from the resolution of various income tax matters and adjustments re-lated to tax filings of prior years.The CN locomotive engineers strike that occurred in the fourth quarter of 2009 had a minimal impact on th

151、e Companys results of operations.Included in the 2008 figures was a deferred income tax re-covery of$117 million($0.24 per basic or diluted share),of which$83 million($0.17 per basic or diluted share)was due to the resolution of various income tax matters and adjustments re-lated to tax filings of p

152、rior years,$23 million($0.05 per basic or diluted share)was due to the enactment of corporate income tax rate changes in Canada,and$11 million($0.02 per basic or diluted share)was due to net capital losses arising from the reor-ganization of a subsidiary.Foreign exchange fluctuations have also had a

153、n impact on the comparability of the results of operations.The fluctuation of the Canadian dollar relative to the US dollar,which affects the con-version of the Companys US dollar-denominated revenues and expenses,has resulted in an increase of approximately$25 mil-lion($0.05 per basic or diluted sh

154、are)to net income in 2009.Revenues for the year ended December 31,2009 decreased by$1,115 million,or 13%,to$7,367 million,mainly due to sig-nificantly lower freight volumes in almost all markets as a result of economic conditions in the North American and global econo-mies,and a reduction in the fue

155、l surcharge due to year-over-year decreases in applicable fuel prices and lower volumes.These fac-tors were partly offset by freight rate increases and the positive translation impact of the weaker Canadian dollar on US dollar-denominated revenues.For the year ended December 31,2009,operating expens

156、es decreased by$627 million,or 11%,to$4,961 million,mainly due to lower fuel costs;and reduced expenses for purchased ser-vices and material,partly reflecting the impact of reduced freight volumes as well as managements cost-reduction initiatives.These factors were partially offset by the negative t

157、ranslation impact of the weaker Canadian dollar on US dollar-denominated expenses.The operating ratio,defined as operating expenses as a per-centage of revenues,was 67.3%in 2009,compared to 65.9%in 2008,a 1.4-point increase.71894_CN_ARfinancials_Eng.indd 1312/2/10 6:52:35 PM14 Canadian National Rail

158、way Company U.S.GAAPManagements Discussion and AnalysisPetroleum and chemicalsYear ended December 31,2009 2008%ChangeRevenues(millions)$1,260$1,346(6%)RTMs(millions)29,381 32,346(9%)Revenue/RTM(cents)4.29 4.16 3%Petroleum and chemicals comprises a wide range of commodi-ties,including chemicals,sulfu

159、r,plastics,petroleum products and liquefied petroleum gas(LPG)products.The primary markets for these commodities are within North America,and as such,the performance of this commodity group is closely correlated with the North American economy.Most of the Companys petroleum and chemicals shipments o

160、riginate in the Louisiana petrochemi-cal corridor between New Orleans and Baton Rouge;in north-ern Alberta,which is a major center for natural gas feedstock and world scale petrochemicals and plastics;and in eastern Canadian regional plants.These shipments are destined for cus-tomers in Canada,the U

161、nited States and overseas.For the year ended December 31,2009,revenues for this commodity group decreased by$86 million,or 6%,when compared to 2008.The decrease was mainly due to the impact of a lower fuel sur-charge,reduced volumes for chemical products due to weakness in industrial production,and

162、reduced sulfur shipments.These factors were partly offset by freight rate increases,the positive translation impact of the weaker Canadian dollar,and increased shipments related to the acquisition of the EJ&E.Revenue per revenue ton mile increased by 3%in 2009,mainly due to freight rate increases;th

163、e positive translation impact of the weaker Canadian dollar;and a decrease in the average length of haul,particularly in the second half of 2009;that were partly offset by the impact of a lower fuel surcharge.Percentage of revenues62%Petroleum and plastics 38%Chemicals38%62%Carloads(thousands)Year e

164、nded December 31,2007 5992008 5472009 511RevenuesIn millions,unless otherwise indicatedYear ended December 31,20092008%ChangeRail freight revenues$6,632$7,641(13%)Other revenues 735 841(13%)Total revenues$7,367$8,482(13%)Rail freight revenues Petroleum and chemicals$1,260$1,346(6%)Metals and mineral

165、s 728 950(23%)Forest products 1,147 1,436(20%)Coal 464 478(3%)Grain and fertilizers 1,341 1,382(3%)Intermodal 1,337 1,580(15%)Automotive 355 469(24%)Total rail freight revenues$6,632$7,641(13%)Revenue ton miles(RTM)(millions)159,862 177,951(10%)Rail freight revenue/RTM(cents)4.15 4.29(3%)Carloads(th

166、ousands)3,991 4,615(14%)Rail freight revenue/carload(dollars)1,662 1,656-Revenues for the year ended December 31,2009 totaled$7,367 million compared to$8,482 million in 2008.The decrease of$1,115 million was mainly due to significantly lower freight volumes in almost all markets as a result of econo

167、mic conditions in the North American and global economies;and a reduction in the fuel surcharge in the range of$725 million due to year-over-year decreases in applicable fuel prices and lower volumes.These factors were partly offset by freight rate increases and the posi-tive translation impact of t

168、he weaker Canadian dollar on US dol-lar-denominated revenues.During the first nine months of the year,the Company experienced a$370 million positive transla-tion impact of the weaker Canadian dollar that was offset in the fourth quarter by a negative translation impact of approximately$145 million a

169、s a result of the strengthened Canadian dollar.This effect was experienced in all revenue commodity groups,al-though not explicitly stated in the discussions that follow.In 2009,revenue ton miles(RTM),measuring the relative weight and distance of rail freight transported by the Company,declined 10%r

170、elative to 2008.Rail freight revenue per revenue ton mile,a measurement of yield defined as revenue earned on the movement of a ton of freight over one mile,decreased by 3%when compared to 2008,mainly due to the impact of a low-er fuel surcharge and an increase in the average length of haul,that wer

171、e partly offset by freight rate increases and the positive translation impact of the weaker Canadian dollar.71894_CN_ARfinancials_Eng.indd 1412/2/10 7:13:55 PM U.S.GAAP 2009 Annual Report 15Managements Discussion and AnalysisForest productsYear ended December 31,2009 2008%ChangeRevenues(millions)$1,

172、147$1,436(20%)RTMs(millions)27,594 33,847(18%)Revenue/RTM(cents)4.16 4.24(2%)The forest products commodity group includes various types of lumber,panels,paper,wood pulp and other fibers such as logs,recycled paper and wood chips.The Company has superior rail access to the western and eastern Canadia

173、n fiber-producing re-gions,which are among the largest fiber source areas in North America.In the United States,the Company is strategically locat-ed to serve both the Midwest and southern U.S.corridors with interline connections to other Class I railroads.The key drivers for the various commodities

174、 are:for newsprint,advertising lin-eage,non-print media and overall economic conditions,primarily in the United States;for fibers(mainly wood pulp),the consump-tion of paper in North American and offshore markets;and for lumber and panels,housing starts and renovation activities in the United States

175、.For the year ended December 31,2009,revenues for this commodity group decreased by$289 million,or 20%,when compared to 2008.The decrease was mainly due to lower volumes from overall weak demand that resulted in several cus-tomer mill closures and production curtailments and the impact of a lower fu

176、el surcharge.These factors were partly offset by the positive translation impact of the weaker Canadian dollar and freight rate increases.Revenue per revenue ton mile decreased by 2%in 2009,mainly due to the impact of a lower fuel sur-charge that was partly offset by the positive translation impact

177、of the weaker Canadian dollar and freight rate increases.Percentage of revenues60%Pulp and paper 40%Lumber and panels40%60%Carloads(thousands)Year ended December 31,2007 5842008 5112009 403Metals and mineralsYear ended December 31,2009 2008%ChangeRevenues(millions)$728$950(23%)RTMs(millions)12,994 1

178、7,953(28%)Revenue/RTM(cents)5.60 5.29 6%The metals and minerals commodity group consists primarily of nonferrous base metals,concentrates,iron ore,steel,construction materials,machinery and dimensional(large)loads.The Company pro-vides unique rail access to aluminum,mining,steel and iron ore produci

179、ng regions,which are among the most important in North America.This access,coupled with the Companys transload and port fa-cilities,has made CN a leader in the transportation of copper,lead,zinc,concentrates,iron ore,refined metals and aluminum.Mining,oil and gas develop-ment and non-residential con

180、struction are the key drivers for metals and minerals.For the year ended December 31,2009,revenues for this commod-ity group decreased by$222 million,or 23%,when compared to 2008.The decrease was mainly due to weakness in the steel industry,which reduced shipments of steel products and iron ore;the

181、impact of a lower fuel surcharge;and weakness in the construction industry.These factors were partly offset by freight rate increases and the positive translation impact of the weaker Canadian dollar.Revenue per revenue ton mile increased by 6%in 2009,mainly due to freight rate increases and the pos

182、i-tive translation impact of the weaker Canadian dollar that were partly offset by the impact of a lower fuel surcharge.Percentage of revenues51%Metals 29%Minerals 20%Iron ore29%51%20%Carloads(thousands)Year ended December 31,2007 1,0102008 1,0252009 72171894_CN_ARfinancials_Eng.indd 1512/2/10 7:14:

183、00 PM16 Canadian National Railway Company U.S.GAAPManagements Discussion and AnalysisGrain and fertilizersYear ended December 31,2009 2008%ChangeRevenues(millions)$1,341$1,382(3%)RTMs(millions)40,859 42,507(4%)Revenue/RTM(cents)3.28 3.251%The grain and fertilizers commodity group depends primarily o

184、n crops grown and fertilizers processed in western Canada and the U.S.Midwest.The grain segment consists of three primary segments:food grains(mainly wheat,oats and malting barley),feed grains(including feed barley,feed wheat,and corn),and oilseeds and oilseed prod-ucts(primarily canola seed,oil and

185、 meal,and soybeans).Production of grain varies considerably from year to year,affected primarily by weather conditions,seeded and harvested acreage,the mix of grains produced and crop yields.Grain exports are sensitive to the size and quality of the crop produced,international market conditions and

186、for-eign government policy.The majority of grain produced in western Canada and moved by CN is exported via the ports of Vancouver,Prince Rupert and Thunder Bay.Certain of these rail movements are subject to government regulation and to a revenue cap,which effec-tively establishes a maximum revenue

187、entitlement that railways can earn.In the U.S.,grain grown in Illinois and Iowa is exported,as well as transported to domestic processing facilities and feed markets.The Company also serves major producers of potash in Canada,as well as producers of ammonium nitrate,urea and other fertilizers across

188、 Canada and the U.S.For the year ended December 31,2009,rev-enues for this commodity group decreased by$41 million,or 3%,when compared to 2008.The decrease was mainly due to the im-pact of a lower fuel surcharge;reduced shipments of potash in North America,particularly in the first half of 2009;and

189、weak U.S.corn ex-ports.These factors were partly offset by strong export volumes of grain through western Canadian ports,the positive translation impact of the weaker Canadian dollar,and freight rate increases.In addition,the negative impact of the Canadian Transportation Agencys deci-sion in 2008 t

190、o retroactively reduce rail revenue entitlement for grain transportation,as well as its determination that the Company exceed-ed the revenue cap for the 2007-08 crop year,reduced revenues in the fourth quarter of 2008 by$26 million.Revenue per revenue ton mile increased by 1%in 2009,mainly due to th

191、e positive translation impact of the weaker Canadian dollar and freight rate increases,that were partly offset by the impact of a lower fuel surcharge and an in-crease in the average length of haul.Percentage of revenues31%Oilseeds 27%Food grains 26%Feed grains 16%Fertilizers27%26%16%31%Carloads(tho

192、usands)Year ended December 31,2007 6012008 5792009 530CoalYear ended December 31,2009 2008%ChangeRevenues(millions)$464$478(3%)RTMs(millions)14,805 14,886(1%)Revenue/RTM(cents)3.13 3.21(2%)The coal commodity group consists primarily of ther-mal grades of bituminous coal.Canadian thermal coal is deli

193、vered to power utilities primarily in eastern Canada;while in the United States,thermal coal is transported from mines served in southern Illinois,or from western U.S.mines via interchange with other railroads,to major utilities in the Midwest and southeast United States.The coal business also in-cl

194、udes the transport of Canadian metallurgical coal,which is largely exported via terminals on the west coast of Canada to offshore steel producers.For the year ended December 31,2009,revenues for this commodity group decreased by$14 million,or 3%,when compared to 2008.The decrease was main-ly due to

195、the impact of a lower fuel surcharge and reduced shipments of metallurgical coal from Canadian mines in the first half of 2009.These factors were partly offset by shipments related to the acquisition of the EJ&E,freight rate in-creases,the positive translation impact of the weaker Canadian dollar,an

196、d stronger volumes of Canadian export coal from new origins.Revenue per revenue ton mile decreased by 2%in 2009,largely due to the impact of a lower fuel surcharge that was partly offset by a decrease in the average length of haul,freight rate increases and the positive translation impact of the wea

197、ker Canadian dollar.Percentage of revenues86%Coal 14%Petroleum coke86%14%Carloads(thousands)Year ended December 31,2007 3612008 3752009 42671894_CN_ARfinancials_Eng.indd 1612/2/10 6:52:50 PMManagements Discussion and AnalysisAutomotiveYear ended December 31,2009 2008%ChangeRevenues(millions)$355$469

198、(24%)RTMs(millions)2,0702,590(20%)Revenue/RTM(cents)17.1518.11(5%)The automotive commodity group moves both finished ve-hicles and parts throughout North America,providing rail ac-cess to certain vehicle assembly plants in Canada,and Michigan and Mississippi in the U.S.The Company also serves vehicl

199、e distribution facilities in Canada and the U.S.,as well as parts production facilities in Michigan and Ontario.The Company serves shippers of import vehicles via the ports of Halifax and Vancouver,and through interchange with other railroads.The Companys automotive revenues are closely correlated t

200、o au-tomotive production and sales in North America.For the year ended December 31,2009,revenues for this commodity group decreased by$114 million,or 24%,when compared to 2008.The decrease was mainly due to significantly lower volumes of finished vehicles traffic and the impact of a lower fuel sur-c

201、harge.These factors were partly offset by freight rate in-creases,the positive translation impact of the weaker Canadian dollar,and the impact of a labor-related temporary curtailment in the operations of a CN-served customer that occurred in the sec-ond quarter of 2008.Revenue per revenue ton mile

202、decreased by 5%in 2009,mainly due to the impact of a lower fuel surcharge and an increase in the average length of haul during the first half of the year,that were partly offset by freight rate increases and the positive translation impact of the weaker Canadian dollar.Percentage of revenues87%Finis

203、hed vehicles 13%Auto parts13%87%Carloads(thousands)Year ended December 31,2007 2652008 2012009 154Other revenuesOther revenues include revenues from non-rail transportation services,interswitching,and maritime operations.In 2009,Other revenues amounted to$735 million,a decrease of$106 million,or 13%

204、,when compared to 2008,mainly due to lower non-rail transportation services attributable to CN WorldWide activities that was partly offset by the positive translation impact of the weaker Canadian dollar.U.S.GAAP 2009 Annual Report 17IntermodalYear ended December 31,2009 2008%ChangeRevenues(millions

205、)$1,337$1,580(15%)RTMs(millions)32,159 33,822(5%)Revenue/RTM(cents)4.164.67(11%)The intermodal commodity group is comprised of two segments:domestic and international.The domestic segment transports consumer products and manufactured goods,operating through both retail and wholesale channels,within

206、domestic Canada,domestic U.S.,Mexico and transborder,while the international segment handles import and export container traffic,directly serving the major ports of Vancouver,Prince Rupert,Montreal,Halifax and New Orleans.The domestic segment is driven by consumer markets,with growth generally tied

207、to the economy.The international segment is driven by North American econom-ic and trade conditions.For the year ended December 31,2009,revenues for this commodity group decreased by$243 million,or 15%,when compared to 2008.The decrease was mainly due to the impact of a lower fuel surcharge,lower sh

208、ipments through the Port of Vancouver,and reduced domestic volumes.Partly offsetting these factors were higher volumes through the Port of Prince Rupert,freight rate increases,and the positive translation impact of the weaker Canadian dollar.Revenue per revenue ton mile decreased by 11%in 2009,mainl

209、y due to the impact of a lower fuel surcharge that was partly offset by freight rate increases and the positive translation impact of the weaker Canadian dollar.Percentage of revenues53%International 47%Domestic47%53%Carloads(thousands)Year ended December 31,2007 1,3242008 1,3772009 1,24671894_CN_AR

210、financials_Eng.indd 1712/2/10 6:52:55 PM18 Canadian National Railway Company U.S.GAAPManagements Discussion and AnalysisOperating expensesOperating expenses for the year ended December 31,2009 amounted to$4,961 million,compared to$5,588 million in 2008.The de-crease of$627 million,or 11%,in 2009 was

211、 mainly due to lower fuel costs;and reduced expenses for purchased services and material,partly reflecting the impact of reduced freight volumes as well as managements cost-reduction initiatives.These factors were partially offset by the negative translation impact of the weaker Canadian dollar on U

212、S dollar-denominated expenses.During the first nine months of the year,the Company experienced a negative translation impact of the weaker Canadian dollar of approximately$255 million that was offset in the fourth quarter by a positive translation impact of approximately$85 million.This effect was e

213、xperienced in all expense categories,although not explicitly stated in the discussions that follow.Percentage of revenuesIn millionsYear ended December 31,2009 2008%Change2009 2008 Labor and fringe benefits$1,696$1,674(1%)23.0%19.7%Purchased services and material 1,027 1,137 10%13.9%13.4%Fuel 769 1,

214、403 45%10.4%16.5%Depreciation and amortization 790 725(9%)10.7%8.6%Equipment rents 284 262(8%)3.9%3.1%Casualty and other 395 387(2%)5.4%4.6%Total operating expenses$4,961$5,588 11%67.3%65.9%Labor and fringe benefits:Labor and fringe benefits expense in-cludes wages,payroll taxes,and employee benefit

215、s such as incentive compensation,stock-based compensation,health and welfare,and pensions and other postretirement benefits.Certain incentive and stock-based compensation plans are based on financial and market performance targets and the related expense is recorded in relation to the attainment of

216、such targets.Labor and fringe benefits expense increased by$22 million,or 1%,in 2009 when compared to 2008.The increase was mainly due to higher stock-based compensation expense,the translation impact of the weaker Canadian dollar,lower pension income and increased health and welfare costs.Partly of

217、fsetting these factors was the impact of a reduced workforce and lower labor costs as a result of the decline in freight volumes.Purchased services and material:Purchased services and material expense primarily includes the costs of services purchased from outside contractors;materials used in the m

218、aintenance of the Companys track,facilities and equipment;transportation and lodging for train crew employees;utility costs;and the net costs of operating facilities jointly used by the Company and other railroads.These expenses decreased by$110 million,or 10%,in 2009 when compared to 2008.The decre

219、ase was mainly a result of reduced third-party non-rail transportation services,repairs and maintenance on equipment,contracted services,and discretion-ary costs,reflecting the decline in freight volumes as well as man-agements cost-reduction initiatives.Partly offsetting these factors was the trans

220、lation impact of the weaker Canadian dollar.Fuel:Fuel expense includes the cost of fuel consumed by locomo-tives,intermodal equipment and other vehicles.These expenses decreased by$634 million,or 45%,in 2009 when compared to 2008.The decrease was primarily due to a lower average price for fuel,reduc

221、ed freight volumes and productivity improvements,which were partly offset by the translation impact of the weaker Canadian dollar.Depreciation and amortization:Depreciation and amortization expense relates to the Companys rail and related operations.These expenses increased by$65 million,or 9%,in 20

222、09 when compared to 2008.The increase was mainly due to the impact of net capital additions and the translation impact of the weaker Canadian dollar.Equipment rents:Equipment rents expense includes rental ex-pense for the use of freight cars owned by other railroads or pri-vate companies and for the

223、 short-or long-term lease of freight cars,locomotives and intermodal equipment,net of rental in-come from other railroads for the use of the Companys cars and locomotives.These expenses increased by$22 million,or 8%,in 2009 when compared to 2008.The increase was primarily due to lower car hire incom

224、e due to fewer shipments offline and the translation impact of the weaker Canadian dollar.These factors were partly offset by reduced car hire expense from fewer foreign cars online and increased velocity;and reduced lease expense.Casualty and other:Casualty and other expense includes ex-penses for

225、personal injuries,environmental,freight and property damage,insurance,bad debt and operating taxes,as well as travel expenses.These expenses increased by$8 million,or 2%,in 2009 when compared to 2008.The increase was mainly due to the EJ&E acquisition-related costs of$49 million,an increase in legal

226、 claims,the translation impact of the weaker Canadian dollar and higher property taxes in the U.S.These factors were partly offset by a higher reduction to the liability for U.S.person-al injury claims in 2009 as compared to 2008 pursuant to annual actuarial studies;a lower bad debt expense;reduced

227、travel-relat-ed expenses,reflecting managements cost-reduction initiatives;and a reduction in the environmental expense.71894_CN_ARfinancials_Eng.indd 1816/2/10 3:47:42 PM U.S.GAAP 2009 Annual Report 19Managements Discussion and AnalysisOtherInterest expense:Interest expense increased by$37 million,

228、or 10%,for the year ended December 31,2009 when compared to 2008,mainly due to the impact of the weaker Canadian dollar on US dollar-denominated interest expense and interest on new debt issuances,that were partly offset by the benefit of repay-ments of commercial paper and matured Notes,as well as

229、lower interest rates.Other income:In 2009,the Company recorded Other income of$267 million compared to$26 million in 2008.The increase of$241 million was mainly due to the gains on sale of the Weston and Lower Newmarket subdivisions of$157 million and$69 mil-lion,respectively;a net foreign exchange

230、gain in 2009 as compared to a loss in 2008;and higher income from other business activities.Income tax expense:The Company recorded income tax expense of$407 million for the year ended December 31,2009 com-pared to$650 million in 2008.Included in 2009 and 2008 were deferred income tax recoveries of$

231、157 million and$117 million,respectively.Of the 2009 amount,$126 million resulted from the enactment of lower provincial corporate income tax rates,$16 million resulted from the recapitalization of a foreign invest-ment,and$15 million resulted from the resolution of various in-come tax matters and a

232、djustments related to tax filings of prior years.Of the 2008 amount,$83 million resulted from the resolu-tion of various income tax matters and adjustments related to tax filings of prior years;$23 million was due to the enactment of lower provincial corporate income tax rates;and$11 million re-sult

233、ed from net capital losses arising from the reorganization of a subsidiary.The effective tax rate for 2009 was 18.0%compared to 25.5%in 2008.Excluding the deferred income tax recoveries discussed herein,the effective tax rates for 2009 and 2008 were 24.9%and 30.1%,respectively.The year-over-year dec

234、rease in the effective tax rates was mainly due to the impact of a higher proportion of the Companys pretax income earned in lower-taxed jurisdictions and the impact of the favorable capital gains inclusion rate applied to the gains on sale of the Weston and Lower Newmarket subdivisions.2008 compare

235、d to 2007In 2008,net income was$1,895 million,a decrease of$263 mil-lion,when compared to 2007,with diluted earnings per share decreasing 7%to$3.95.The Companys results of operations in 2008 were affected by significant weakness in certain markets due to the economic environment and severe weather c

236、onditions in the first quarter.In 2007,in addition to weather conditions and operational challeng-es in the first half of the year,the Company was also affected by a first-quarter strike by 2,800 members of the United Transportation Union(UTU)in Canada for which the Company estimated the negative im

237、pact on first-quarter operating income and net income to be approximately$50 million and$35 million,respectively($0.07 per basic or diluted share).Included in the 2008 figures was a deferred income tax recovery of$117 million($0.24 per basic or diluted share),of which$83 million was due to the resol

238、ution of various income tax matters and adjustments related to tax filings of prior years;$23 million was due to the enactment of corporate income tax rate changes in Canada;and$11 million was due to net capital losses arising from the reorganization of a subsidiary.Included in the 2007 figures was

239、a deferred income tax recovery of$328 million($0.66 per basic share or$0.64 per diluted share),resulting mainly from the enactment of corporate income tax rate changes in Canada;and the gains on sale of the Central Station Complex(CSC)of$64 million after-tax($0.13 per basic or diluted share)and the

240、Companys investment in EWS of$41 million after-tax($0.08 per basic or diluted share).Foreign exchange fluctuations have also had an impact on the comparability of the results of operations.The fluctuation of the Canadian dollar relative to the US dollar,which affects the conversion of the Companys U

241、S dollar-denominated revenues and expenses,resulted in a reduction of approximately$10 mil-lion($0.02 per basic or diluted share)to net income in 2008.Revenues for the year ended December 31,2008 increased by$585 million,or 7%,to$8,482 million,mainly due to freight rate increases and higher volumes

242、in specific commodity groups,particu-larly metals and minerals,intermodal and coal,which also reflect the negative impact of the UTU strike on first-quarter 2007 volumes.These gains were partly offset by lower volumes due to weakness in specific markets,particularly forest products and automotive,th

243、e impact of harsh weather conditions experienced in Canada and the U.S.Midwest during the first quarter of 2008,and reduced grain volumes as a result of depleted stockpiles.In the first nine months of 2008,the Company experienced a$245 million negative transla-tion impact of the stronger Canadian do

244、llar on US dollar-denomi-nated revenues that was almost entirely offset in the fourth quarter as a result of the weakened Canadian dollar.In addition,the Federal Court of Appeals confirmation of the Canadian Transportation Agencys decision to retroactively reduce rail revenue entitlement for grain t

245、ransportation,as well as its determination that the Company exceeded the revenue cap for the 2007-08 crop year,reduced grain revenues in the fourth quarter of 2008 by$26 million.Associated penalties of$4 million increased Casualty and other expense.For the year ended December 31,2008,operating expen

246、ses increased by$567 million,or 11%,to$5,588 million,mainly due to higher fuel costs,increases in purchased services and mate-rial and in casualty and other expenses.These factors were partly offset by lower labor and fringe benefits expense.In the first nine months of 2008,the Company experienced a

247、$145 million positive translation impact of the stronger Canadian dollar on US dollar-denominated expenses that was almost entirely offset in the fourth quarter as a result of the weakened Canadian dollar.The first-quarter 2007 UTU strike did not have a significant im-pact on total operating expense

248、s for the year 2007.The operating ratio was 65.9%in 2008,compared to 63.6%in 2007,a 2.3-point increase.71894_CN_ARfinancials_Eng.indd 1912/2/10 6:53:03 PM20 Canadian National Railway Company U.S.GAAPManagements Discussion and AnalysisRevenuesIn millions,unless otherwise indicatedYear ended December

249、31,2008 2007%ChangeRail freight revenues$7,641$7,186 6%Other revenues 841 711 18%Total revenues$8,482$7,897 7%Rail freight revenues Petroleum and chemicals$1,346$1,226 10%Metals and minerals 950 826 15%Forest products 1,436 1,552(7%)Coal 478 385 24%Grain and fertilizers 1,382 1,311 5%Intermodal 1,58

250、0 1,382 14%Automotive 469 504(7%)Total rail freight revenues$7,641$7,186 6%Revenue ton miles(RTM)(millions)177,951 184,148(3%)Rail freight revenue/RTM(cents)4.29 3.90 10%Carloads(thousands)4,615 4,744(3%)Rail freight revenue/carload(dollars)1,656 1,515 9%Revenues for the year ended December 31,2008

251、totaled$8,482 mil lion compared to$7,897 million in 2007.The increase of$585 million was mainly due to freight rate increases of ap-proximately$780 million,of which approximately half was re-lated to a higher fuel surcharge resulting from year-over-year net increases in applicable fuel prices and hi

252、gher volumes in specific commodity groups,particularly metals and minerals,intermodal,and coal,which also reflect the negative impact of the UTU strike on first-quarter 2007 volumes.These gains were partly offset by lower volumes due to weakness in specific markets,particularly forest products and a

253、utomotive,the impact of harsh weather conditions experienced in Canada and the U.S.Midwest dur-ing the first quarter of 2008,and reduced grain volumes as a result of depleted stockpiles.In the first nine months of 2008,the Company experienced a$245 million negative translation impact of the stronger

254、 Canadian dollar on US dollar-denominat-ed revenues that was almost entirely offset in the fourth quarter as a result of the weakened Canadian dollar.This offsetting ef-fect was experienced in all revenue commodity groups,although not explicitly stated in the discussions that follow.In addition,the

255、Canadian Transportation Agencys decision to retroactively reduce rail revenue entitlement for grain transportation,as well as its determination that the Company exceeded the revenue cap for the 2007-08 crop year,reduced grain revenues by$26 million in the fourth quarter of 2008.In 2008,revenue ton m

256、iles declined 3%relative to 2007.Rail freight revenue per revenue ton mile increased by 10%when compared to 2007,mainly due to freight rate increases,includ-ing a higher fuel surcharge.Petroleum and chemicalsYear ended December 31,2008 2007%ChangeRevenues(millions)$1,346$1,226 10%RTMs(millions)32,34

257、632,761(1%)Revenue/RTM(cents)4.163.7411%For the year ended December 31,2008,revenues for this com-modity group increased by$120 million,or 10%,when com-pared to 2007.The increase was mainly due to freight rate in-creases,strong condensate shipments into western Canada,shifts in the petroleum product

258、s markets in western Canada,and increased volumes due to the growing market for alternative fu-els.These gains were partly offset by reduced plastic pellet ship-ments,and the impact of declining chemical markets.Revenue per revenue ton mile increased by 11%in 2008,mainly due to freight rate increase

259、s that were partially offset by an increase in the average length of haul.Metals and mineralsYear ended December 31,2008 2007%ChangeRevenues(millions)$950$826 15%RTMs(millions)17,95316,7197%Revenue/RTM(cents)5.294.947%For the year ended December 31,2008,revenues for this com-modity group increased b

260、y$124 million,or 15%,when com-pared to 2007.The increase was mainly due to freight rate increases,strength in commodities related to oil and gas develop-ment,empty movements of private railcars,and strong demand for flat rolled products in the first nine months of 2008.Partly offsetting these gains

261、were the impact of fourth-quarter 2008 weakness in the steel industry,which reduced shipments of iron ore,flat rolled products,and scrap iron;and reduced shipments of non-ferrous ore.Revenue per revenue ton mile increased by 7%in 2008,mainly due to freight rate increases that were partly offset by a

262、n increase in the average length of haul.Forest productsYear ended December 31,2008 2007%ChangeRevenues(millions)$1,436$1,552(7%)RTMs(millions)33,84739,808(15%)Revenue/RTM(cents)4.243.909%For the year ended December 31,2008,revenues for this com-modity group decreased by$116 million,or 7%,when com-p

263、ared to 2007.The decrease was mainly due to reduced lum-ber and panel shipments,which were affected by the decline in U.S.housing starts that resulted in mill closures and production curtailments,and reduced volumes of pulp and paper products.These factors were partly offset by freight rate increase

264、s.Revenue per revenue ton mile increased by 9%in 2008,mainly due to freight rate increases and a positive change in traffic mix.71894_CN_ARfinancials_Eng.indd 2012/2/10 6:53:07 PM U.S.GAAP 2009 Annual Report 21Managements Discussion and AnalysisCoalYear ended December 31,2008 2007%ChangeRevenues(mil

265、lions)$478$38524%RTMs(millions)14,88613,7768%Revenue/RTM(cents)3.212.7915%For the year ended December 31,2008,revenues for this com-modity group increased by$93 million,or 24%,when compared to 2007.The increase was mainly due to freight rate increases,increased shipments of U.S.coal due to the start

266、up of a new mine operation,strong volumes of coal received from western U.S.mines to destinations on CN lines and increased supply of petroleum coke from Alberta.These gains were partly offset by production issues experienced by Canadian and U.S.mines.Revenue per revenue ton mile increased by 15%in

267、2008,largely due to freight rate increases and a positive change in traffic mix.Grain and fertilizersYear ended December 31,2008 2007%ChangeRevenues(millions)$1,382$1,3115%RTMs(millions)42,50745,359(6%)Revenue/RTM(cents)3.252.8912%For the year ended December 31,2008,revenues for this com-modity grou

268、p increased by$71 million,or 5%,when compared to 2007.The increase was mainly due to freight rate increases,higher ethanol shipments,stronger export volumes of Canadian canola and additional shipments of soybeans via the southern U.S.These gains were partly offset by reduced wheat volumes as a resul

269、t of depleted stockpiles and reduced corn shipments.In addition,the negative impact of the Canadian Transportation Agencys decision to retroactively reduce rail revenue entitle-ment for grain transportation,as well as its determination that the Company exceeded the revenue cap for 2007-08 crop year,

270、reduced revenues in the fourth quarter of 2008 by$26 million.Revenue per revenue ton mile increased by 12%in 2008,largely due to freight rate increases.IntermodalYear ended December 31,2008 2007%ChangeRevenues(millions)$1,580$1,38214%RTMs(millions)33,82232,6074%Revenue/RTM(cents)4.674.2410%For the y

271、ear ended December 31,2008,revenues for this com-modity group increased by$198 million,or 14%,when com-pared to 2007.The increase was mainly due to freight rate in-creases,higher volumes through the Port of Prince Rupert,which opened its intermodal terminal in late 2007 and higher Canadian retail an

272、d U.S.transborder traffic due to market share gains.These gains were partly offset by lower volumes both through the Port of Halifax as various customers rationalized their ser-vices and consumer demand weakened,and through the Port of Vancouver in the fourth quarter of 2008 due to weak consumer dem

273、and.Revenue per revenue ton mile increased by 10%in 2008,mainly due to freight rate increases.AutomotiveYear ended December 31,2008 2007%ChangeRevenues(millions)$469$504(7%)RTMs(millions)2,5903,118(17%)Revenue/RTM(cents)18.1116.1612%For the year ended December 31,2008,revenues for this com-modity gr

274、oup decreased by$35 million,or 7%,when compared to 2007.The decrease was mainly due to reduced volumes of domestic finished vehicle and parts traffic resulting from custom-er production curtailments and a second-quarter 2008 strike at a major customers parts supplier.These factors were partly offset

275、 by freight rate increases.Revenue per revenue ton mile increased by 12%in 2008,largely due to freight rate increases that were partly offset by an increase in the average length of haul.Other revenuesIn 2008,other revenues increased by$130 million,or 18%,when compared to 2007,mainly due to an incre

276、ase in non-rail transportation services attributable to CN WorldWide activities and higher optional service revenues.These gains were partly offset by lower commuter and interswitching revenues.71894_CN_ARfinancials_Eng.indd 2112/2/10 6:53:11 PM22 Canadian National Railway Company U.S.GAAPManagement

277、s Discussion and AnalysisOperating expensesOperating expenses amounted to$5,588 million in 2008 compared to$5,021 million in 2007.The increase of$567 million,or 11%,in 2008 was mainly due to higher fuel costs,increases in purchased services and material and in casualty and other expenses.These facto

278、rs were partly offset by lower labor and fringe benefits expense.In the first nine months of 2008,the Company experienced a$145 mil-lion positive translation impact of the stronger Canadian dollar on US dollar-denominated expenses that was almost entirely offset in the fourth quarter as a result of

279、the weakened Canadian dollar.This offsetting effect was experienced in all expense categories,although not explicitly stated in the discussions that follow.The first-quarter 2007 UTU strike did not have a significant impact on total operating expenses for the year 2007.Percentage of revenuesIn milli

280、onsYear ended December 31,2008 2007%Change2008 2007 Labor and fringe benefits$1,674$1,701 2%19.7%21.5%Purchased services and material 1,137 1,045(9%)13.4%13.2%Fuel 1,403 1,026(37%)16.5%13.0%Depreciation and amortization 725 677(7%)8.6%8.6%Equipment rents 262 247(6%)3.1%3.1%Casualty and other 387 325

281、(19%)4.6%4.2%Total operating expenses$5,588$5,021(11%)65.9%63.6%Labor and fringe benefits:Labor and fringe benefits expense de-creased by$27 million,or 2%,in 2008 as compared to 2007.The decrease was mainly due to a reduction in net periodic benefit cost for pensions and lower stock-based compensati

282、on expense.Partly offsetting these factors were increases in annual wages and benefit expenses and higher workforce levels in the first half of 2008.Purchased services and material:Purchased services and material expense increased by$92 million,or 9%,in 2008 as compared to 2007.The increase was main

283、ly due to higher costs for third-party non-rail transportation services,higher repairs and main-tenance expenses,as well as other costs incurred as a result of the harsh weather conditions experienced in the first quarter of 2008.Partly offsetting these factors was income from the in-creased sale of

284、 scrap metal.Fuel:Fuel expense increased by$377 million,or 37%,in 2008 as compared to 2007.The increase was primarily due to an increase in the average price per US gallon of fuel when compared to 2007,which was partly offset by a decrease in freight volumes.Depreciation and amortization:Depreciatio

285、n and amortization expense increased by$48 million,or 7%,in 2008 as compared to 2007.The increase was mainly due to the impact of net capi-tal additions and the adoption of new depreciation rates for vari-ous asset classes.Equipment rents:Equipment rents expense increased by$15 mil-lion,or 6%,in 200

286、8 as compared to 2007.The increase was primarily due to lower car hire income as a result of fewer cars offline as well as higher car hire expense resulting mainly from a slowdown in online velocity caused by the harsh weather condi-tions experienced in the first quarter of 2008 and from new in-term

287、odal equipment for the Prince Rupert terminal.These factors were partly offset by lower lease expense.Casualty and other:Casualty and other expense increased by$62 million,or 19%,in 2008 as compared to 2007.The increase was mainly due to a lower reduction to the liability for U.S.per-sonal injury cl

288、aims in 2008 as compared to 2007 pursuant to ac-tuarial valuations,higher bad debt expense,as well as increases in the environmental provision and municipal and property taxes.Partly offsetting these factors was the impact of lower legal set-tlements when compared to 2007.71894_CN_ARfinancials_Eng.i

289、ndd 2212/2/10 6:53:15 PM U.S.GAAP 2009 Annual Report 23Managements Discussion and AnalysisOtherInterest expense:Interest expense increased by$39 million,or 12%,for the year ended December 31,2008 when compared to 2007,mainly due to the impact of a higher average debt bal-ance.The positive translatio

290、n impact of the stronger Canadian dollar experienced in the first nine months of 2008 was al-most entirely offset in the fourth quarter due to the weakened Canadian dollar.Other income:In 2008,the Company recorded Other income of$26 million compared to$166 million in 2007.The decrease of$140 million

291、 was mainly due to gains on sale of the CSC and the investment in EWS recorded in 2007,and net foreign exchange losses in 2008 as compared to gains in 2007.These factors were partly offset by interest income received on a court settlement,lower fees related to the accounts receivable securitization

292、pro-gram and higher income from other business activities.Income tax expense:The Company recorded income tax expense of$650 million for the year ended December 31,2008 com-pared to$548 million in 2007.Included in 2008 and 2007 were deferred income tax recoveries of$117 million and$328 million,respec

293、tively.Of the 2008 amount,$83 million resulted from the resolution of various income tax matters and adjustments related to tax filings of prior years;$23 million was due to the enactment of lower provincial corporate income tax rates;and$11 million resulted from net capital losses arising from the

294、reorganization of a subsidiary.Of the 2007 amount,$314 million was due to the enactment of corporate income tax rate changes in Canada;and$14 million resulted from net capital losses arising from the reor-ganization of certain subsidiaries.The effective tax rate for 2008 was 25.5%compared to 20.3%in

295、 2007.Excluding the deferred income tax recoveries,the effective tax rates for 2008 and 2007 were 30.1%and 32.4%,respectively.The decrease was mainly due to a reduction in corporate income tax rates.Summary of fourth quarter 2009 compared to corresponding quarter in 2008 unauditedFourth quarter 2009

296、 net income was$582 million,an increase of$9 million,or 2%,when compared to the same period in 2008,with diluted earnings per share rising 2%to$1.23.The Companys results of operations in the fourth quarter of 2009 were affected by weakness across markets due to economic condi-tions although several

297、of the Companys markets appear to have hit bottom.The fourth-quarter 2009 and 2008 figures include items affecting the comparability of the results of operations.Included in the 2009 figures was a gain on sale of the Companys Lower Newmarket subdivision of$69 million,or$59 million after-tax($0.12 pe

298、r basic or diluted share)and a deferred income tax recovery of$99 million($0.21 per basic or diluted share),resulting from the enactment of a lower provincial corporate income tax rate.Included in the 2008 figures was a deferred income tax recovery of$42 million($0.09 per basic or diluted share),res

299、ulting from the resolution of various income tax matters and adjustments related to tax filings of prior years.The CN locomotive engineers strike that occurred in the fourth quarter of 2009 had a minimal impact on the Companys results of operations.Foreign exchange fluctuations have also had an impa

300、ct on the comparability of the fourth quarter results of operations.The fluctua-tion of the Canadian dollar relative to the US dollar,which affects the conversion of the Companys US dollar-denominated revenues and expenses,has resulted in a reduction of approximately$35 million($0.07 per basic or di

301、luted share)to net income.Revenues for the fourth quarter of 2009 decreased by$318 million,or 14%,to$1,882 million,when compared to the same period in 2008.The decrease was mainly due to the negative translation impact of the year-over-year stronger Canadian dollar on US dollar-denom-inated revenues

302、 of approximately$145 million,a reduction in the fuel surcharge in the range of$125 million,and lower freight volumes in certain markets as a result of economic conditions.These factors were partly offset by freight rate increases.Operating expenses for the fourth quarter of 2009 decreased by$151 mi

303、llion,or 11%,to$1,229 million,when compared to the same period in 2008.The decrease was primarily due to the positive translation impact of the stronger Canadian dollar on US dollar-denominated expenses of approximately$85 million,lower fuel costs,and reduced expenses for casualty and other and purc

304、hased services and material.These factors were partly offset by higher labor and fringe benefits expense.The operating ratio was 65.3%in the fourth quarter of 2009 compared to 62.7%in the fourth quarter of 2008,a 2.6-point increase.71894_CN_ARfinancials_Eng.indd 2312/2/10 6:53:19 PM24 Canadian Natio

305、nal Railway Company U.S.GAAPManagements Discussion and AnalysisBalance sheet AssetsAs at December 31,2009 and 2008,the Companys total assets were$25,176 million and$26,720 million,respectively,a de-crease of$1,544 million when compared to December 31,2008.Current assets decreased by$266 million when

306、 compared to December 31,2008,of which$116 million related to Accounts receivable.The decrease in Accounts receivable was due to$112 million related to lower billings caused by lower revenues,combined with an improved collection cycle;and$78 mil-lion from foreign exchange translation losses on US do

307、llar-denominated accounts receivable,which were offset by an increase of$74 million due to the reduced use of the accounts receivable securitization program.In addition,Properties decreased by$573 million when compared to December 31,2008.The decrease was due to$1,545 million in foreign exchange tra

308、nslation losses on US dol-lar-denominated properties,$789 million of depreciation,and other items netting to$97 million.These factors were offset by$1,477 million related to property and capital lease additions and$381 million related to the EJ&E acquisition.Intangible and other assets decreased by$

309、705 million when compared to December 31,2008.Of this amount,$676 mil-lion related to a decrease in the Companys pension asset and$29 million was for other items.Summary of quarterly financial data unauditedIn millions,except per share data 2009 Quarters 2008 Quarters FourthThirdSecondFirst FourthTh

310、irdSecondFirstRevenues$1,882$1,845$1,781$1,859$2,200$2,257$2,098$1,927 Operating income$653$689$583$481$820$844$707$523 Net income$582$461$387$424$573$552$459$311 Basic earnings per share$1.24$0.98$0.83$0.91$1.22$1.17$0.96$0.64 Diluted earnings per share$1.23$0.97$0.82$0.90$1.21$1.16$0.95$0.64 Divid

311、end declared per share$0.2525$0.2525$0.2525$0.2525$0.2300$0.2300$0.2300$0.2300 Revenues generated by the Company during the year are influenced by seasonal weather conditions,general economic conditions,cyclical demand for rail transportation,and competitive forces in the transportation marketplace(

312、see the section of this MD&A entitled Business risks).Operating expenses reflect the impact of freight volumes,seasonal weather conditions,labor costs,fuel prices,and the Companys productivity initiatives.The continued fluctuations in the Canadian dollar relative to the US dollar have also affected

313、the conversion of the Companys US dollar-denominated revenues and expenses and resulted in fluctuations in net income in the rolling eight quarters presented above.The Companys quarterly results include items that impacted the quarter-over-quarter comparability of the results of operations as discus

314、sed below:In millions,except per share data2009 Quarters 2008 QuartersFourthThirdSecondFirst FourthThirdSecondFirstDeferred income tax recoveries(1)$99$15$28$15$42$41$23$11 Gain on disposal of Lower Newmarket subdivision(after-tax)(2)59 -Gain on disposal of Weston subdivision (after-tax)(3)-135 -EJ&

315、E acquisition-related costs (after-tax)(4)-(2)(28)-Impact on net income$158$15$26$122$42$41$23$11 Basic earnings per share$0.33$0.03$0.06$0.26$0.09$0.09$0.05$0.02 Diluted earnings per share$0.33$0.03$0.06$0.26$0.09$0.09$0.05$0.02(1)Deferred income tax recoveries resulted mainly from the enactment of

316、 corporate income tax rate changes in Canada and the resolution of various income tax matters and adjustments related to tax filings of prior years.(2)The Company sold its Lower Newmarket subdivision for proceeds of$71 million.A gain on disposal of$69 million($59 million after-tax)was recognized in

317、Other income.(3)The Company sold its Weston subdivision for proceeds of$160 million.A gain on disposal of$157 million($135 million after-tax)was recognized in Other income.(4)The Company incurred costs related to the acquisition of the EJ&E of$49 million($30 million after-tax),which were recorded in

318、 Casualty and other expense.71894_CN_ARfinancials_Eng.indd 2412/2/10 6:53:23 PM U.S.GAAP 2009 Annual Report 25Managements Discussion and AnalysisTotal liabilitiesAs at December 31,2009 and 2008,the Companys combined short-term and long-term liabilities were$13,943 million and$16,161 million,respecti

319、vely,a decrease of$2,218 million when compared to December 31,2008.Current liabilities decreased by$655 million when compared to December 31,2008.Of this amount,$436 million related to a decrease in the current portion of long-term debt and$219 mil-lion related to a decrease in Accounts payable and

320、other.Deferred income taxes decreased by$392 million when com-pared to December 31,2008.The decrease was mainly due to$456 million of foreign exchange translation gains on US dollar-denominated deferred income taxes and a deferred income tax recovery of$92 million recorded in Other comprehensive inc

321、ome(loss),which were offset by$137 million of deferred income tax expense recorded in net income,excluding recognized tax ben-efits,and$19 million for other items.Other liabilities and deferred credits decreased by$157 mil-lion when compared to December 31,2008.The decrease was due to payments total

322、ing$112 million for personal injury and other claims during the year and$45 million of foreign exchange translation gains on US dollar-denominated balances and other items.Total long-term debt,including the current portion,decreased by$1,450 million when compared to December 31,2008.The decrease was

323、 due to repayments totaling$2,109 million and$1,042 million of foreign exchange translation gains on US dol-lar-denominated long-term debt and other items,which were partially offset by issuances of Notes,capital leases and commer-cial paper totaling$1,701 million.EquityAs at December 31,2009 and 20

324、08,the Companys equity was$11,233 million and$10,559 million,respectively,an increase of$674 million when compared to December 31,2008.Increases in equity included$1,854 million of net income for the year and$87 million in issuances of common shares upon exercise of stock options and other.Decreases

325、 to equity included$474 million of dividends paid.Accumulated other comprehensive loss also in-creased by$793 million.Liquidity and capital resourcesThe Companys principal source of liquidity is cash generated from operations and is supplemented by borrowings in the mon-ey market and the capital mar

326、ket.In addition,from time to time,the Companys liquidity requirements can be supplemented by the disposal of surplus properties and the monetization of assets.The strong focus on cash generation from all sources gives the Company increased flexibility in terms of its financing require-ments.As part

327、of its financing strategy,the Company regularly reviews its optimal capital structure,cost of capital,and the need for additional debt financing and considers from time to time the feasibility of dividend increases and share repurchases.To meet its short-term liquidity needs,the Company has a commer

328、cial paper program,which is backstopped by a portion of its US$1 billion revolving credit facility,and an accounts re-ceivable securitization program.If the Company were to lose ac-cess to its commercial paper program and its accounts receivable securitization program for an extended period,the Comp

329、any would rely on its US$1 billion revolving credit facility for its short-term liquidity needs.The Companys access to long-term funds in the debt capi-tal markets depends on its credit rating and market conditions.During the year,debt capital markets were marked by volatility,however,the credit mar

330、kets appear to have stabilized towards the latter part of the year.During the first quarter of 2009,the Company successfully priced a debt offering at reasonable terms.The Company believes that it continues to have access to the long-term debt capital markets.However,if the Company were unable to bo

331、rrow funds at acceptable rates in the debt capital markets,the Company could borrow under its revolving credit facility,raise cash by disposing of surplus properties or otherwise monetizing assets,reduce discretionary spending or take a com-bination of these measures to assure that it has adequate f

332、und-ing for its business.Operating activities:Cash provided from operating activities for the year ended December 31,2009 was$2,279 million compared to$2,031 million in 2008.Net cash receipts from customers and other were$7,505 million for the year ended December 31,2009,a decrease of$507 million wh

333、en compared to 2008,mainly due to lower revenues.Payments for employee services,suppliers and other expenses were$4,314 million for the year ended December 31,2009,a decrease of$606 million when compared to 2008,principally due to lower payments for fuel.Payments for income taxes in 2009 were$245 million,a decrease of$180 million when compared to 2008.Also consum-ing cash in 2009 were payments for