CP 2018 ANNUAL REPORT  /  108 CONDENSED CONSOLIDATING STATEMENTS OF INCOME YEAR ENDED DECEMBER 31, 2017 (in millions of Canadian dollars) CPRL (Parent Guarantor) CPRC (Subsidiary Issuer) Non-Guarantor Subsidiaries Consolidating Adjustments and Eliminations CPRL Consolidated Revenues Freight $ — $ 4,516 $ 1,859 $ — $ 6,375 Non-freight — 140 372 (333 ) 179 Total revenues — 4,656 2,231 (333) 6,554 Operating expenses Compensation and benefits — 879 423 7 1,309 Fuel — 522 155 — 677 Materials — 134 41 15 190 Equipment rents — 143 (1 ) — 142 Depreciation and amortization — 400 261 — 661 Purchased services and other — 826 585 (355 ) 1,056 Total operating expenses — 2,904 1,464 (333) 4,035 Operating income — 1,752 767 — 2,519 Less: Other (income) expense (33 ) (149 ) 4 — (178 ) Other components of net periodic benefit (recovery) cost — (278) 4 — (274) Net interest (income) expense (12 ) 517 (32 ) — 473 Income before income tax expense (recovery) and equity in net earnings of subsidiaries 45 1,662 791 — 2,498 Less: Income tax expense (recovery) 7 475 (389 ) — 93 Add: Equity in net earnings of subsidiaries 2,367 1,180 — (3,547) — Net income $ 2,405 $ 2,367 $ 1,180 $ (3,547 ) $ 2,405 Certain of these figures have been reclassified in order to be consistent with the 2018 presentation (Note 2).