CN


FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For the month of October 2003

Commission File Number: 001-02413

Canadian National Railway Company
(Translation of registrant’s name into English)

935 de la Gauchetiere Street West
Montreal, Quebec
Canada H3B 2M9
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F           Form 40-F    X  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes           No    X  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes           No    X  

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes           No    X  

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A






Items  
   
1. Press Release announcing CN’s third-quarter 2003 net income.




CANADIAN NATIONAL RAILWAY COMPANY
PRESS RELEASE

 

FOR IMMEDIATE RELEASE

Stock symbols: TSX: CNR / NYSE: CNI

www.cn.ca

 

CN’s third-quarter 2003 net income rises 10 per cent to $294 million; diluted earnings per share increase 16 per cent to $1.53

MONTREAL, Oct. 21, 2003 – CN today reported its financial results for the third quarter and nine-month period ended Sept. 30, 2003.

Quarterly highlights

n Net income up 10 per cent to $294 million despite stronger Canadian dollar reducing third-quarter net income by approximately $14 million, or seven cents per diluted share;
n Diluted earnings per share up 16 per cent to $1.53;
n Operating ratio flat at 67.9 per cent;
n Improved results reflect increased intermodal revenue, recovery in Canadian grain shipments, solid cost control, and favourable tax adjustments of $30 million, or 16 cents per diluted share.

Net income for third-quarter 2003 was $294 million, or $1.53 per diluted share, compared with net income of $268 million, or $1.32 per diluted share, for the comparable quarter of 2002.

E. Hunter Harrison, president and chief executive officer, said: “CN turned in a good performance this quarter, powered in large measure by increased intermodal revenues, the recovery in Canadian grain shipments following last year’s drought, a solid story on expense control, and favourable tax adjustments.

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CANADIAN NATIONAL RAILWAY COMPANY
PRESS RELEASE

“Our performance was all the more remarkable given the environment we faced. The significant year-over-year appreciation of the Canadian dollar relative to its U.S. counterpart during the quarter reduced revenues by $100 million, although the stronger C$ helped our expense performance by $70 million.

“CN also contended with the unprecedented electrical power blackout in Ontario and the Midwest in August, and major summer forest fires in British Columbia. Despite the significant reduction in revenues and operational challenges, we managed our costs aggressively to deliver an operating ratio below 68 per cent, essentially flat with last year.

“In the months ahead the Canadian dollar will remain a challenge, but we anticipate continued strength in Canadian grain shipments and a gradual improvement in North American economic output. With a close eye on costs and continued good service levels, we’re well positioned to benefit from an economic rebound.”

CN converts its U.S.-dollar denominated revenues and expenses into Canadian dollars. The 13 per cent year-over-year appreciation of the Canadian dollar relative to the U.S. dollar during the most recent period reduced CN’s third-quarter 2003 revenues, operating income, and net income by approximately $100 million, $30 million, and $14 million (seven cents per diluted share), respectively.

Operating income for the third quarter of 2003 declined six per cent to $454 million. Revenues of $1,413 million were six per cent lower than the year-earlier period, reflecting the significant strengthening of the Canadian dollar, continued weakness in coal shipments and a slowdown in the automotive sector. Operating expenses declined six per cent to $959 million, due to the translation impact of the stronger Canadian dollar on U.S. dollar-denominated expenses, and lower expenses for purchased services and material, and equipment rents. Partly offsetting the decrease were higher casualty and other expenses.

The company’s operating ratio for the latest quarter was 67.9 per cent, essentially flat compared with 67.8 per cent for the comparable quarter of 2002. Carloadings declined one per cent to 1,034 thousand.

Nine-month 2003 results

Net income for the first nine months of 2003 was $790 million, or $4.06 per diluted share, compared with net income of $778 million, or $3.86 per diluted share, for the same period of 2002.

 

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CANADIAN NATIONAL RAILWAY COMPANY
PRESS RELEASE

Nine-month 2003 net income included a cumulative after-tax benefit of $48 million (24 cents per diluted share), resulting from a change in the accounting for removal costs for certain track structure assets. Excluding the effect of this change, net income for the period was $742 million, or $3.82 per diluted share.

Operating income for the first nine months of 2003 declined eight per cent to $1,265 million. Revenues declined four per cent to $4,372 million, while operating expenses fell two per cent to $3,107 million. CN’s operating ratio for the most recent nine-month period was 71.1 per cent, compared with 69.8 per cent for the year-earlier period. Carloadings increased one per cent to 3,124 thousand.

The 10 per cent year-over-year appreciation of the Canadian dollar relative to the U.S. dollar during the first nine months of this year affected the conversion of CN’s U.S. dollar-denominated revenues and expenses into Canadian dollars. The stronger Canadian dollar reduced nine-month 2003 revenues, operating income, and net income by approximately $235 million, $75 million, and $37 million (19 cents per diluted share), respectively.

The financial results in this press release are reported in Canadian dollars and were determined on the basis of U.S. generally accepted accounting principles (U.S. GAAP).

This news release contains forward-looking statements. CN cautions that, by their nature, forward-looking statements involve risk and uncertainties and that its results could differ materially from those expressed or implied in such statements. Reference should be made to CN’s most recent Form 40-F filed with the United States Securities and Exchange Commission, and the Annual Information Form filed with the Canadian securities regulators, for a summary of major risks.

Canadian National Railway Company spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the key cities of Toronto, Buffalo, Chicago, Detroit, Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul, Memphis, St. Louis, and Jackson, Miss., with connections to all points in North America.

-30-

Contacts:  
Media Investors
Mark Hallman Robert Noorigian
System Director, Media Relations Vice-President, Investor Relations
(905) 669-3384 (514) 399-0052

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CANADIAN NATIONAL RAILWAY COMPANY
CONSOLIDATED STATEMENT OF INCOME (U.S. GAAP)
(In millions, except per share data)

    Three months ended     Nine months ended  
    September 30     September 30  
 
 
 
    2003     2002     2003     2002  
 
          (Unaudited)        
                         
Revenues $ 1,413   $ 1,503   $ 4,372   $ 4,563  
 
                         
Operating expenses   959     1,019     3,107     3,183  
 
Operating income   454     484     1,265     1,380  
                         
Interest expense   (76 )   (89 )   (244 )   (276 )
                         
Other income   13     8     13     69  
 
                         
Income before income taxes and cumulative effect of change                        
   in accounting policy   391     403     1,034     1,173  
                         
Income tax expense   (97 )   (135 )   (292 )   (395 )
 
                         
Income before cumulative effect of change in
  accounting policy		   294     268     742     778  
                         
Cumulative effect of change in accounting policy                        
   (net of applicable taxes)   -     -     48     -  
 
                         
Net income $ 294   $ 268   $ 790   $ 778  
 
                         
Earnings per share                        
   Basic earnings per share                        
   Income before cumulative effect of change in accounting policy $ 1.55   $ 1.34   $ 3.87   $ 3.98  
   Net income $ 1.55   $ 1.34   $ 4.12   $ 3.98  
                         
   Diluted earnings per share                        
   Income before cumulative effect of change in accounting policy $ 1.53   $ 1.32   $ 3.82   $ 3.86  
   Net income $ 1.53   $ 1.32   $ 4.06   $ 3.86  
                         
Weighted-average number of shares                        
   Basic   189.3     200.3     191.8     195.7  
                         
   Diluted   192.1     203.0     194.5     203.1  
 

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CANADIAN NATIONAL RAILWAY COMPANY
CONSOLIDATED STATEMENT OF OPERATING INCOME (U.S. GAAP)
(In millions)

    Three months ended September 30     Nine months ended September 30  
 
 
              Variance               Variance  
    2003     2002   Fav (Unfav)     2003     2002   Fav (Unfav)  
              (Unaudited)            
                                 
   Revenues                                
                                 
   Petroleum and chemicals $ 255   $ 275   (7 %) $ 798   $ 819   (3 %)
   Metals and minerals   130     138   (6 %)   387     398   (3 %)
   Forest products   322     337   (4 %)   966     996   (3 %)
   Coal   57     85   (33 %)   201     243   (17 %)
   Grain and fertilizers   220     217   1 %   655     741   (12 %)
   Intermodal   280     273   3 %   834     769   8 %
   Automotive   103     130   (21 %)   389     440   (12 %)
   Other items   46     48   (4 %)   142     157   (10 %)
     
     
    1,413     1,503   (6 %)   4,372     4,563   (4 %)
                                 
   Operating expenses                                
                                 
   Labor and fringe benefits   414     407   (2 %)   1,283     1,290   1 %
   Purchased services and material   151     196   23 %   529     594   11 %
   Depreciation and amortization   136     149   9 %   418     434   4 %
   Fuel   100     109   8 %   352     335   (5 %)
   Equipment rents   69     85   19 %   228     264   14 %
   Casualty and other   89     73   (22 %)   297     266   (12 %)
     
     
    959     1,019   6 %   3,107     3,183   2 %
     
     
                                 
   Operating income $ 454   $ 484   (6 %) $ 1,265   $ 1,380   (8 %)
   Operating ratio   67.9 %   67.8 % (0.1 )   71.1 %   69.8 % (1.3 )

Certain of the 2002 comparative figures have been reclassified in order to be consistent with the 2003 presentation.

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CANADIAN NATIONAL RAILWAY COMPANY
CONSOLIDATED BALANCE SHEET (U.S. GAAP)
(In millions)

  September 30   December 31   September 30  
    2003     2002     2002  
 
    (Unaudited)           (Unaudited)  
Assets                  
                   
Current assets:                  
   Cash and cash equivalents $ 122   $ 25   $ 24  
   Accounts receivable   567     722     715  
   Material and supplies   145     127     150  
   Deferred income taxes   123     122     120  
   Other   174     196     179  
 
    1,131     1,192     1,188  
                   
Properties   18,478     19,681     19,348  
Other assets and deferred charges   844     865     903  
 
                   
Total assets $ 20,453   $ 21,738   $ 21,439  
 
                   
Liabilities and shareholders' equity                  
                   
Current liabilities:                  
   Accounts payable and accrued charges $ 1,394   $ 1,487   $ 1,377  
   Current portion of long-term debt   537     574     699  
   Other   62     73     71  
 
    1,993     2,134     2,147  
                   
Deferred income taxes   4,489     4,826     4,798  
Other liabilities and deferred credits   1,252     1,406     1,205  
Long-term debt   4,473     5,003     4,699  
                   
Shareholders' equity:                  
   Common shares   4,642     4,785     4,848  
   Accumulated other comprehensive income (loss)   (116 )   97     102  
   Retained earnings   3,720     3,487     3,640  
 
    8,246     8,369     8,590  
 
                   
Total liabilities and shareholders' equity $ 20,453   $ 21,738   $ 21,439  
 

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CANADIAN NATIONAL RAILWAY COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (U.S. GAAP)
(In millions)

  Three months ended   Nine months ended  
  September 30   September 30  
 
 
 
    2003     2002     2003     2002  
 
        (Unaudited)      
   Common shares (1)                        
   Balance, beginning of period $ 4,631   $ 4,499   $ 4,785   $ 4,442  
      Stock options exercised and other   40     10     100     66  
      Share repurchase program   (29 )   -     (243 )   -  
      Conversion of convertible preferred securities   -     339     -     340  
 
   Balance, end of period $ 4,642   $ 4,848   $ 4,642   $ 4,848  
 
                         
   Accumulated other comprehensive income (loss)                        
   Balance, beginning of period $ (119 ) $ 31   $ 97   $ 58  
   Other comprehensive income (loss):                        
   Unrealized foreign exchange gain (loss) on translation of                        
      U.S. dollar denominated long-term debt designated as a                        
      hedge of the net investment in U.S. subsidiaries   (17 )   (158 )   589     50  
   Unrealized foreign exchange gain (loss) on translation of                        
      the net investment in foreign operations   27     251     (898 )   (52 )
   Unrealized holding gain (loss) on fuel derivative instruments   (5 )   14     (6 )   69  
 
   Other comprehensive income (loss) before income taxes   5     107     (315 )   67  
   Income tax (expense) recovery   (2 )   (36 )   102     (23 )
 
   Other comprehensive income (loss)   3     71     (213 )   44  
 
   Balance, end of period $ (116 ) $ 102   $ (116 ) $ 102  
 
                         
   Retained earnings                        
   Balance, beginning of period $ 3,532   $ 3,415   $ 3,487   $ 2,988  
      Net income   294     268     790     778  
      Share repurchase program   (58 )   -     (413 )   -  
      Dividends   (48 )   (43 )   (144 )   (126 )
 
   Balance, end of period $ 3,720   $ 3,640   $ 3,720   $ 3,640  
 
(1) The Company issued 0.6 million and 1.6 million common shares for the three and nine months ended September 30, 2003, respectively, as a result of stock options exercised. At September 30, 2003, the Company had 189.1 million common shares outstanding.

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CANADIAN NATIONAL RAILWAY COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (U.S. GAAP)
(In millions)

  Three months ended   Nine months ended  
  September 30   September 30  
 
 
 
    2003     2002     2003     2002  
 
        (Unaudited)        
Operating activities                        
Net income $ 294   $ 268   $ 790   $ 778  
Adjustments to reconcile net income to net cash provided from                        
   operating activities:                        
         Cumulative effect of change in accounting policy   -     -     (48 )   -  
         Depreciation and amortization   137     151     422     439  
         Deferred income taxes   65     81     222     237  
         Equity in earnings of English Welsh and Scottish Railway   (2 )   (4 )   (20 )   (19 )
         Other changes in:                        
            Accounts receivable   39     (2 )   119     (43 )
            Material and supplies   7     16     (27 )   (17 )
            Accounts payable and accrued charges   (30 )   (24 )   (105 )   (98 )
            Other net current assets and liabilities   3     8     (2 )   (4 )
         Other   13     (63 )   37     (85 )
 
Cash provided from operating activities   526     431     1,388     1,188  
 
Investing activities                        
Net additions to properties   (309 )   (271 )   (696 )   (633 )
Other, net   2     (29 )   (5 )   15  
 
Cash used by investing activities   (307 )   (300 )   (701 )   (618 )
 
                         
Dividends paid   (48 )   (43 )   (144 )   (126 )
                         
Financing activities                        
Issuance of long-term debt   705     642     2,729     2,532  
Reduction of long-term debt   (825 )   (807 )   (2,588 )   (3,067 )
Issuance of common shares   28     8     69     62  
Repurchase of common shares   (87 )   -     (656 )   -  
 
Cash used by financing activities   (179 )   (157 )   (446 )   (473 )
 
Net increase (decrease) in cash and cash equivalents   (8 )   (69 )   97     (29 )
Cash and cash equivalents, beginning of period   130     93     25     53  
 
Cash and cash equivalents, end of period $ 122   $ 24   $ 122   $ 24  
 
                         
Supplemental cash flow information                        
      Payments:                        
         Interest $ 80   $ 83   $ 243   $ 293  
         Workforce reductions   32     36     121     130  
         Personal injury and other claims   36     37     91     105  
         Pensions   21     25     43     52  
         Income taxes   16     21     70     88  
 

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SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  Canadian National Railway Company


Date: October 21, 2003 By: /s/ Sean Finn  
    Name: Sean Finn
Title:    Senior Vice President Public
            Affairs, Chief Legal Officer and
            Corporate Secretary