CP 2019 ANNUAL REPORT /  114 CONDENSED CONSOLIDATING STATEMENTS OF INCOME YEAR ENDED DECEMBER 31, 2019 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Revenues Freight $ — $ 5,527 $ 2,084 $ 2 $ 7,613 Non-freight — 135 570 (526 ) 179 Total revenues — 5,662 2,654 (524) 7,792 Operating expenses Compensation and benefits — 1,042 490 8 1,540 Fuel — 695 187 — 882 Materials — 142 53 15 210 Equipment rents — 177 (9 ) (31 ) 137 Depreciation and amortization — 423 283 — 706 Purchased services and other — 967 742 (516 ) 1,193 Total operating expenses — 3,446 1,746 (524) 4,668 Operating income — 2,216 908 — 3,124 Less: Other (income) expense (12 ) (86 ) 9 — (89 ) Other components of net periodic benefit (recovery) cost — (388) 7 — (381) Net interest (income) expense (1 ) 474 (25 ) — 448 Income before income tax expense and equity in net earnings of subsidiaries 13 2,216 917 — 3,146 Less: Income tax expense 3 522 181 — 706 Add: Equity in net earnings of subsidiaries 2,430 736 — (3,166) — Net income $ 2,440 $ 2,430 $ 736 $ (3,166 ) $ 2,440