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INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED


Contents
Consolidated Statements of Income - unaudited			12
Consolidated Statements of Comprehensive Income - unaudited			12
Consolidated Balance Sheets - unaudited			13
Consolidated Statements of Changes in Shareholders' Equity - unaudited			14
Consolidated Statements of Cash Flows - unaudited			16

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
Note 1 - Basis of presentation			17
Note 2 - Recent accounting pronouncements			17
Note 3 - Acquisition			18
Note 4 - Revenues			19
Note 5 - Pensions and other postretirement benefits			19
Note 6 - Other income			20
Note 7 - Earnings per share			20
Note 8 - Financing activities			20
Note 9 - Leases			22
Note 10 - Stock-based compensation			22
Note 1 1 - Accumulated other comprehensive loss			24
Note 12 - Major commitments and contingencies			26
Note 1 3 - Financial instruments			27
Note 1 4 - Segmented information			29
Note 1 5 - Subsequent event			29

CN | 2026 Quarterly Review – Second Quarter 11

CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED


	Three months ended June 30				Six months ended June 30
In millions, except per share data	2026		2025		2026		2025
Revenues (Note 4)	$	4,753	$	4,272	$	9,132	$	8,675
Operating expenses
Labor and fringe benefits	889		862		1,803		1,782
Purchased services and material	641		576		1,264		1,153
Fuel	659		413		1,142		931
Depreciation and amortization	486		489		970		982
Equipment rents	106		105		218		223
Other	191		189		405		356


Total operating expenses	2,972		2,634		5,802		5,427
Operating income	1,781		1,638		3,330		3,248
Interest expense	(241)		(219)		(475)		(452)
Other components of net periodic benefit income (Note 5)	133		126		266		251

Other income	7		16		80		41
Income before income taxes	1,680		1,561		3,201		3,088
Income tax expense	(431)		(389)		(806)		(755)
Net income	$	1,249	$	1,172	$	2,395	$	2,333
Earnings per share (Note 7)
Basic	$	2.06	$	1.87	$	3.93	$	3.72
Diluted	$	2.06	$	1.87	$	3.93	$	3.71
Weighted-average number of shares (Note 7)
Basic	606.5		627.4		608.9		627.6
Diluted	607.5		628.0		609.7		628.2
Dividends declared per share	$	0.9150	$	0.8875	$	1.8300	$	1.7750

See accompanying notes to Interim Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – UNAUDITED


	Three months ended June 30				Six months ended June 30
In millions	2026		2025		2026		2025
Net income	$	1,249	$	1,172	$	2,395	$	2,333
Other comprehensive income (loss) (Note 11)
Net gain (loss) on foreign currency translation	136		(352)		213		(345)
Net change in pension and other postretirement benefit plans (Note 5)	10		12		21		23
Derivative instruments (Note 13)	(16)		6		(16)		3
Other comprehensive income (loss) before income taxes	130		(334)		218		(319)
Income tax recovery (expense)	32		(88)		51		(90)
Other comprehensive income (loss)	162		(422)		269		(409)
Comprehensive income	$	1,411	$	750	$	2,664	$	1,924

See accompanying notes to Interim Consolidated Financial Statements.

12 CN | 2026 Quarterly Review – Second Quarter

CONSOLIDATED BALANCE SHEETS – UNAUDITED


		June 30		December 31
In millions	As at	2026		2025
Assets
Current assets
Cash and cash equivalents		$	280	$	350
Restricted cash and cash equivalents		14		13
Accounts receivable		1,313		1,117
Material and supplies		861		734
Other current assets		379		257
Total current assets		2,847		2,471
Properties		50,013		49,148
Operating lease right-of-use assets		474		440
Pension asset		5,610		5,362
Deferred income tax assets		608		611
Intangible assets, goodwill and other		542		523

Total assets		$	60,094	$	58,555

Liabilities and shareholders' equity
Current liabilities
Accounts payable and other		$	2,757	$	2,790
Current portion of long-term debt		512		906
Total current liabilities		3,269		3,696
Deferred income tax liabilities		11,449		11,223
Other liabilities and deferred credits		911		999
Pension and other postretirement benefits		460		453
Long-term debt		21,742		20,300
Operating lease liabilities		362		316
Total liabilities		38,193		36,987
Shareholders' equity
Common shares		3,474		3,454
Common shares in Share Trusts		(153)		(152)
Additional paid-in capital		434		415
Accumulated other comprehensive loss (Note 11)		(798)		(1,067)
Retained earnings		18,944		18,918
Total shareholders' equity		21,901		21,568
Total liabilities and shareholders' equity		$	60,094	$	58,555

See accompanying notes to Interim Consolidated Financial Statements.

CN | 2026 Quarterly Review – Second Quarter 13

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - UNAUDITED


	Number of common shares		Common shares		Common shares in Share Trusts		Additional paid-in capital		Accumulated other comprehensive loss		Retained earnings		Total shareholders' equity
In millions	Outstanding	Share Trusts
Balance at March 31, 2026	607.6	1.1	$	3,465	$	(150)	$	407	$	(960)	$	18,689	$	21,451
Net income											1,249		1,249
Stock options exercised	0.2		25				(3)						22
Settlement of equity settled awards	—	—			8		(9)				(1)		(2)
Stock-based compensation and other							39				(1)		38
Repurchase of common shares (Note 8)	(2.9)		(16)								(438)		(454)
Share purchases by Share Trusts	—	—			(11)								(11)
Other comprehensive income (Note 11)									162				162
Dividends											(554)		(554)
Balance at June 30, 2026	604.9	1.1	$	3,474	$	(153)	$	434	$	(798)	$	18,944	$	21,901


	Number of common shares		Common shares		Common shares in Share Trusts		Additional paid-in capital		Accumulated other comprehensive loss		Retained earnings		Total shareholders' equity
In millions	Outstanding	Share Trusts
Balance at December 31, 2025	613.3	1.1	$	3,454	$	(152)	$	415	$	(1,067)	$	18,918	$	21,568
Net income											2,395		2,395
Stock options exercised	0.5		70				(9)						61
Settlement of equity settled awards	0.1	(0.1)			19		(50)				19		(12)
Stock-based compensation and other							78				(3)		75
Repurchase of common shares (Note 8)	(8.9)		(50)								(1,273)		(1,323)
Share purchases by Share Trusts	(0.1)	0.1			(20)								(20)
Other comprehensive income (Note 11)									269				269
Dividends											(1,112)		(1,112)
Balance at June 30, 2026	604.9	1.1	$	3,474	$	(153)	$	434	$	(798)	$	18,944	$	21,901

See accompanying notes to Interim Consolidated Financial Statements.

14 CN | 2026 Quarterly Review – Second Quarter

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - UNAUDITED


	Number of common shares		Common shares		Common shares in Share Trusts		Additional paid-in capital		Accumulated other comprehensive loss		Retained earnings		Total shareholders' equity
In millions	Outstanding	Share Trusts
Balance at March 31, 2025	627.5	0.9	$	3,515	$	(130)	$	366	$	(1,007)	$	18,880	$	21,624
Net income											1,172		1,172
Stock options exercised	0.1		6				(1)						5
Settlement of equity settled awards	0.1	(0.1)			6		(9)				1		(2)
Stock-based compensation and other							33				(2)		31
Repurchase of common shares (Note 8)	(2.2)		(11)								(295)		(306)
Share purchases by Share Trusts	(0.1)	0.1			(10)								(10)
Other comprehensive loss (Note 11)									(422)				(422)
Dividends											(556)		(556)
Balance at June 30, 2025	625.4	0.9	$	3,510	$	(134)	$	389	$	(1,429)	$	19,200	$	21,536


	Number of common shares		Common shares		Common shares in Share Trusts		Additional paid-in capital		Accumulated other comprehensive loss		Retained earnings		Total shareholders' equity
In millions	Outstanding	Share Trusts
Balance at December 31, 2024	627.9	0.9	$	3,474	$	(129)	$	372	$	(1,020)	$	18,354	$	21,051
Net income											2,333		2,333
Stock options exercised	0.3		51				(7)						44
Settlement of equity settled awards	0.1	(0.1)			16		(45)				21		(8)
Stock-based compensation and other							69				(3)		66
Repurchase of common shares (Note 8)	(2.8)		(15)								(392)		(407)
Share purchases by Share Trusts	(0.1)	0.1			(21)								(21)
Other comprehensive loss (Note 11)									(409)				(409)
Dividends											(1,113)		(1,113)
Balance at June 30, 2025	625.4	0.9	$	3,510	$	(134)	$	389	$	(1,429)	$	19,200	$	21,536

See accompanying notes to Interim Consolidated Financial Statements.

CN | 2026 Quarterly Review – Second Quarter 15

CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED


	Three months ended June 30				Six months ended June 30
In millions	2026		2025		2026		2025
Operating activities
Net income	$	1,249	$	1,172	$	2,395	$	2,333
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	486		489		970		982
Pension income and funding	(114)		(101)		(216)		(204)

Deferred income taxes	93		77		138		98

Gain on disposal of property (Note 6)	—		—		(66)		—

Changes in operating assets and liabilities:
Accounts receivable	(65)		131		(190)		43
Material and supplies	(28)		(22)		(120)		(110)
Other current assets	8		17		(9)		(125)
Accounts payable and other	(42)		(25)		(62)		(162)
Other operating activities, net	24		7		36		54
Net cash provided by operating activities	1,611		1,745		2,876		2,909
Investing activities
Property additions	(695)		(805)		(1,134)		(1,324)

Disposal of property (Note 6)	—		—		84		—



Other investing activities, net	26		(18)		16		(37)
Net cash used in investing activities	(669)		(823)		(1,034)		(1,361)
Financing activities

Issuance of debt (Note 8)	1,016		995		1,016		995
Repayment of debt	(25)		(25)		(730)		(49)
Change in commercial paper, net (Note 8)	(1,301)		(588)		185		(693)

Settlement of derivative instruments	72		(48)		35		(16)
Issuance of common shares for stock options exercised	22		5		61		44
Withholding taxes remitted on the net settlement of equity settled awards (Note 10)	(1)		(1)		(8)		(5)
Repurchase of common shares	(453)		(293)		(1,337)		(444)
Purchase of common shares for settlement of equity settled awards	(1)		(1)		(4)		(3)
Purchase of common shares by Share Trusts	(11)		(10)		(20)		(21)
Dividends paid	(554)		(556)		(1,112)		(1,113)

Net cash used in financing activities	(1,236)		(522)		(1,914)		(1,305)
Effect of foreign exchange fluctuations on cash, cash equivalents, restricted cash and restricted cash equivalents	2		(4)		3		(4)
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	(292)		396		(69)		239
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period	586		244		363		401
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period	$	294	$	640	$	294	$	640
Cash and cash equivalents, end of period	$	280	$	216	$	280	$	216
Restricted cash and cash equivalents, end of period	14		424		14		424
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period	$	294	$	640	$	294	$	640
Supplemental cash flow information
Interest paid	$	(227)	$	(192)	$	(503)	$	(484)
Income taxes paid	$	(389)	$	(265)	$	(662)	$	(477)

See accompanying notes to Interim Consolidated Financial Statements.

16 CN | 2026 Quarterly Review – Second Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

1 – Basis of presentation

In these notes, the "Company" or "CN" refers to Canadian National Railway Company, together with its wholly-owned subsidiaries. The accompanying unaudited Interim Consolidated Financial Statements ("Interim Consolidated Financial Statements"), expressed in Canadian dollars, have been prepared in accordance with United States generally accepted accounting principles (GAAP) for interim financial statements. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In management's opinion, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Interim operating results are not necessarily indicative of the results that may be expected for the full year.

These Interim Consolidated Financial Statements have been prepared using accounting policies consistent with those used in preparing CN's 2025 Annual Consolidated Financial Statements and should be read in conjunction with such statements and Notes thereto.

2 – Recent accounting pronouncements

The following recent Accounting Standards Updates (ASU) issued by the Financial Accounting Standards Board (FASB) have an effective date after December 31, 2025 and have not been adopted by the Company:

ASU 2025-10 — Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities

This ASU introduces comprehensive accounting guidance for government grants received by business entities by expanding Topic 832 beyond disclosure-only requirements to include recognition, measurement, presentation, and disclosure. The main provisions establish that government grants should not be recognized until it is probable that the Company will comply with the conditions attached to the grant and that the grant will be received. The ASU also provides guidance on accounting for grants related to income and grants related to assets, including acceptable presentation approaches, and introduces enhanced disclosure requirements intended to improve transparency and comparability of government grant information.

The amendments in this ASU are effective for annual periods beginning after December 15, 2028, including interim periods within these fiscal years. Early adoption is permitted. The amendments in this ASU may be adopted using a prospective, modified retrospective, or full retrospective transition approach, depending on the nature of the grants and the transition method elected.

The Company is evaluating the effects that the adoption of the ASU will have on its Consolidated Financial Statements and disclosures.

ASU 2025-06 – Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40)

This ASU modernizes the accounting for internal-use software by removing references to prescriptive and sequential software development stages. The main provisions establish that capitalization begins when management authorizes and commits to funding the software project and it is probable the project will be completed and used as intended. The ASU also introduces enhanced disclosure requirements that align internal-use software disclosures to property, plant and equipment. It also consolidates guidance for website development by integrating it into the framework for internal-use software.

The amendments in this ASU are effective for annual periods beginning after December 15, 2027, including interim periods within these fiscal years. Early adoption is permitted. The amendments in this ASU must be adopted either prospectively, retrospectively or using a modified transition approach based on project status and prior capitalization.

The Company is evaluating the effects that the adoption of the ASU will have on its Consolidated Financial Statements and disclosures.

ASU 2024-03 – Disaggregation of Income Statement Expenses (Subtopic 220-40)

This ASU aims to provide stakeholders a clearer understanding of an entity's expenses and enhance their ability to assess performance, forecast expenses and evaluate the entity's potential for future cash flows. The ASU amends the rules on income statement expense disclosures and requires public business entities to disaggregate and disclose, in tabular format in the notes to financial statements, specified categories of expenses contained within certain income statement expense line items; to integrate certain amounts that were already required to be disclosed under current GAAP with the new disaggregation requirements and to qualitatively disclose descriptions of the amounts

CN | 2026 Quarterly Review – Second Quarter 17

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

remaining that were not separately disaggregated. The ASU also requires public business entities to disclose the total amount of selling expenses and, in annual reporting periods, an entity's definition of those selling expenses. This ASU does not change or remove the current disclosure requirements of expense line items on the face of the Consolidated Statements of Income.

The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU should be applied either prospectively to Consolidated Financial Statements issued for reporting periods following the effective date, or retrospectively to any or all prior periods presented in the Consolidated Financial Statements.

The Company is evaluating the effects that the adoption of the ASU will have on its Consolidated Financial Statements disclosures.

Other recently issued ASUs required to be applied on or after June 30, 2026 have been evaluated by the Company and are not expected to have a significant impact on the Company's Consolidated Financial Statements.

3 – Acquisition

Iowa Northern Railway Company

On January 14, 2025, the STB issued a final decision approving CN’s application to acquire control of the Iowa Northern Railway Company (IANR), subject to certain conditions. The Company assumed control of IANR on March 1, 2025 (Control Date) and began consolidating IANR on that date, accounting for the acquisition as a business combination achieved in stages. The Company derecognized its previously held equity method investment in IANR of $320 million as of March 1, 2025 and remeasured the investment at its Control Date fair value of $344 million resulting in a net remeasurement gain of $24 million recorded in Other income in the Consolidated Statements of Income. The fair value of the previously held equity interest in IANR was determined through use of a discounted cash flow approach, which incorporated the Company’s best estimates of various assumptions including, but not limited to, discount rates and terminal growth rates and multiples.

The Company's Consolidated Balance Sheet includes the assets and liabilities of IANR as of the Control Date, and since that time, IANR’s results of operations have been included in the Company's results of operations. The Company has not provided pro forma information relating to the pre-control date period as the acquisition was not material.

The following table summarizes the final purchase price allocation with the fair value at the Control Date of the previously held equity interest in IANR, as well as the amounts recognized for the identifiable assets acquired and liabilities assumed on the Control Date:


In millions	March 1, 2025
Consideration
Fair value of previously held equity method investment (1)	$	344
Recognized amounts of identifiable assets acquired and liabilities assumed (1)
Current assets	$	10
Properties	426
Other non-current assets	10
Current liabilities	(20)
Deferred income tax liabilities	(90)
Other non-current liabilities	(23)
Total identifiable net assets (2)	$	313
Goodwill (3)	$	31

(1)The Company’s fair value of the previously held equity interest in IANR and the purchase price allocation was finalized in the fourth quarter of 2025.

(2)Includes operating lease right-of-use assets and liabilities. There were no identifiable intangible assets.

(3)The goodwill acquired through the business combination is mainly attributable to the premium of an established business operation. The goodwill is not deductible for tax purposes.

The final fair values of Properties were determined using valuation techniques including the market approach and the cost approach. The significant assumptions used to determine the final fair value of Properties were mostly related to a selection of comparable assets and inflation.

18 CN | 2026 Quarterly Review – Second Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

4 – Revenues


	Three months ended June 30				Six months ended June 30
In millions	2026		2025		2026		2025
Freight revenues
Petroleum and chemicals	$	941	$	808	$	1,869	$	1,723
Metals and minerals	528		496		996		1,019
Forest products	495		461		929		955
Coal	243		242		462		488
Grain and fertilizers	980		834		2,029		1,785
Intermodal	1,087		1,008		2,049		1,948
Automotive	285		241		492		460
Total freight revenues	4,559		4,090		8,826		8,378
Other revenues	194		182		306		297
Total revenues (1)	$	4,753	$	4,272	$	9,132	$	8,675

Revenues by geographic area
Canada	$	3,320	$	2,983	$	6,430	$	6,059
United States (U.S.)	1,433		1,289		2,702		2,616
Total revenues (1)	$	4,753	$	4,272	$	9,132	$	8,675

(1)As at June 30, 2026, the Company had remaining performance obligations related to freight in-transit, for which revenues of $111 million ($82 million as at June 30, 2025) are expected to be recognized in the next quarterly period.

Contract liabilities


	Three months ended June 30				Six months ended June 30
In millions	2026		2025		2026		2025
Beginning balance	$	544	$	261	$	527	$	191
Revenue recognized included in the beginning balance	(13)		(14)		(8)		(11)
Increase due to consideration received, net of revenue recognized	12		70		24		137
Ending balance	$	543	$	317	$	543	$	317
Current portion - Ending balance	$	46	$	12	$	46	$	12

5 – Pensions and other postretirement benefits

The Company has various retirement benefit plans under which substantially all of its employees are entitled to benefits at retirement age, generally based on compensation and length of service and/or contributions. Additional information relating to the retirement benefit plans is provided in Note 17 – Pensions and other postretirement benefits to the Company's 2025 Annual Consolidated Financial Statements.


	Three months ended June 30								Six months ended June 30
	Pensions				Other postretirement benefits				Pensions				Other postretirement benefits
In millions	2026		2025		2026		2025		2026		2025		2026		2025
Current service cost	$	16	$	21	$	—	$	—	$	33	$	42	$	—	$	—
Other components of net periodic benefit income:
Interest cost	142		151		2		1		285		303		3		3
Expected return on plan assets	(287)		(290)		—		—		(575)		(580)		—		—
Amortization of prior service credit	—		—		(1)		(1)		—		—		(2)		(2)
Amortization of net actuarial loss (gain)	13		14		(2)		(1)		26		28		(3)		(3)
Total Other components of net periodic benefit income	(132)		(125)		(1)		(1)		(264)		(249)		(2)		(2)
Net periodic benefit income (1)	$	(116)	$	(104)	$	(1)	$	(1)	$	(231)	$	(207)	$	(2)	$	(2)

(1)In the second quarters of 2026 and 2025, the Company revised its estimate of full year net periodic benefit income for pensions to reflect updated plan demographic information and the resulting impacts were not significant.

CN | 2026 Quarterly Review – Second Quarter 19

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

Pension contributions

Pension contributions for all plans for the six months ended June 30, 2026 and 2025 were $27 million and $38 million, respectively. Based on the results of the Company's actuarial valuations for funding purposes as at December 31, 2025, the CN Pension Plan remained fully funded and at a level such that the Company continues to be prohibited from making contributions to the defined benefit component of the CN Pension Plan in 2026. As such, total cash contributions of approximately $60 million are expected to be made in 2026 for all pension plans other than the defined benefit component of the CN Pension Plan.

6 – Other income

Other income includes gains and losses on the disposal of land and property, foreign exchange gains and losses related to foreign exchange forward contracts and the re-measurement of foreign currency denominated monetary assets and liabilities, and other items.

Disposal of property

On February 27, 2026, the Company recorded the sale of a portion of the Newmarket subdivision located in Washago and Sundridge, Ontario, Canada, together with rail fixtures, for cash proceeds of $84 million, which resulted in a gain of $66 million ($57 million after tax).

7 – Earnings per share


	Three months ended June 30				Six months ended June 30
In millions, except per share data	2026		2025		2026		2025
Net income	$	1,249	$	1,172	$	2,395	$	2,333
Weighted-average basic shares outstanding	606.5		627.4		608.9		627.6
Dilutive effect of stock-based compensation	1.0		0.6		0.8		0.6
Weighted-average diluted shares outstanding	607.5		628.0		609.7		628.2
Basic earnings per share	$	2.06	$	1.87	$	3.93	$	3.72
Diluted earnings per share	$	2.06	$	1.87	$	3.93	$	3.71
Units excluded from the calculation as their inclusion would not have a dilutive effect
Stock options	1.1		2.1		1.6		2.0
Performance share units	0.4		0.6		0.6		0.8

8 – Financing activities

For details on the Company's available financing sources, see Note 15 – Debt to the Company's 2025 Annual Consolidated Financial Statements. For the six months ended June 30, 2026, the following changes occurred:

Notes and debentures

For the six months ended June 30, 2026, the Company issued and repaid the following:

•On May 12, 2026, issuance of US$300 million ($410 million) 4.35% Notes due 2029 and US$450 million ($615 million) 4.95% Notes due 2036 in the U.S. capital markets, which resulted in total net proceeds of $1,016 million; and

•On March 1, 2026, repayment of US$500 million ($682 million) 2.75% Notes due 2026 upon maturity.

For the six months ended June 30, 2025, the Company issued the following:

•On June 10, 2025, issuance of $500 million 3.50% Notes due 2030 and $500 million 4.20% Notes due 2035 in the Canadian capital markets, which resulted in total net proceeds of $995 million.

20 CN | 2026 Quarterly Review – Second Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

Revolving credit facilities

On March 31, 2026, the Company increased its existing unsecured revolving credit agreement from $2.5 billion to $3.0 billion. The Company's revolving credit facility agreement was also amended to extend the respective tenors by one additional year each and to remove its sustainability linked loan structure whereby its applicable margins were adjusted up or down based on the Company's performance under certain sustainability goals. The amended unsecured credit facility of $3.0 billion consists of tranches of $1.75 billion and $1.25 billion that are now maturing on March 31, 2029 and March 31, 2031, respectively. The unsecured revolving credit facility of $1.0 billion that was maturing on March 17, 2027 has been terminated as of March 31, 2026. The $3.0 billion revolving credit facility provides borrowings at various benchmark interest rates, such as the Secured Overnight Financing Rate (SOFR) and the Canadian Overnight Repo Rate Average (CORRA), plus applicable margins, based on CN's credit ratings. The revolving credit facility agreement has a financial covenant, which limits debt as a percentage of total capitalization. The Company is in compliance as at June 30, 2026.

As at June 30, 2026 and December 31, 2025, the Company had no outstanding borrowings under its revolving credit facility and there were no draws during the six months ended June 30, 2026.

Equipment loans

During the first six months of 2026, the Company repaid $44 million of its equipment loans. As at June 30, 2026 and December 31, 2025, the Company had outstanding borrowings of $1,306 million and $1,329 million, respectively, at a weighted-average interest rate of 3.85% and 3.85%, respectively, and had no further amounts available to be drawn under these facilities.

Commercial paper

The Company has a commercial paper program in Canada and in the U.S. Both programs are backstopped by the Company's revolving credit facility. As of May 6, 2026, the maximum aggregate principal amount of commercial paper that can be issued was increased from $2.5 billion to $3.0 billion, or the equivalent amount in US dollars, on a combined basis. As at June 30, 2026 and December 31, 2025, the Company had total commercial paper borrowings of US$292 million ($414 million) and US$90 million ($124 million) respectively, at a weighted-average interest rate of 3.79% and 3.79%, respectively, presented in Current portion of long-term debt on the Consolidated Balance Sheets.


	Three months ended June 30				Six months ended June 30
In millions	2026		2025		2026		2025
Commercial paper with maturities less than 90 days
Issuance	$	5,148	$	5,744	$	10,137	$	11,257
Repayment	(6,368)		(6,332)		(9,948)		(11,726)
Change in commercial paper with maturities less than 90 days, net	$	(1,220)	$	(588)	$	189	$	(469)
Commercial paper with maturities of 90 days or greater
Issuance	$	21	$	—	$	98	$	—
Repayment	(102)		—		(102)		(224)
Change in commercial paper with maturities of 90 days or greater, net	$	(81)	$	—	$	(4)	$	(224)
Change in commercial paper, net	$	(1,301)	$	(588)	$	185	$	(693)

Accounts receivable securitization program

As at June 30, 2026 and December 31, 2025, the Company had no outstanding borrowings under the accounts receivable securitization program and there were no draws during the six months ended June 30, 2026.

Bilateral letter of credit facilities

On March 31, 2026, the Company extended the maturity date of its committed bilateral letter of credit facility agreements to April 28, 2029.

As at June 30, 2026, the Company had outstanding letters of credit of $321 million ($321 million as at December 31, 2025) under the committed facilities and $153 million ($153 million as at December 31, 2025) under the uncommitted facilities.

Repurchase of common shares

The Company may repurchase its common shares pursuant to a Normal Course Issuer Bid (NCIB) at prevailing market prices plus brokerage fees, or such other prices as may be permitted by the Toronto Stock Exchange. Under its current NCIB, the Company may repurchase up to

CN | 2026 Quarterly Review – Second Quarter 21

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

24.0 million common shares between February 4, 2026 and February 3, 2027. As at June 30, 2026, the Company had repurchased 7.2 million common shares for $1,075 million under its current NCIB.

As at June 30, 2026, the Company had accrued a liability of $25 million for the two percent tax on net share repurchases made in the first six months of 2026 ($39 million as at December 31, 2025), which was accounted for as a direct cost of common share repurchases and recorded in Shareholders’ equity. The accrued tax obligation for the 2025 net share repurchases was paid in the first quarter of 2026.

The Company repurchased 16.0 million common shares under its previous NCIB, including 1.7 million common shares in the first quarter of 2026, which allowed for the repurchase of up to 20.0 million common shares between February 4, 2025 and February 3, 2026.


	Three months ended June 30				Six months ended June 30
In millions, except per share data	2026		2025		2026		2025
Number of common shares repurchased	2.9		2.2		8.9		2.8
Weighted-average price per share (1)	$	159.01	$	145.54	$	148.88	$	146.65
Amount of repurchase (1)	$	454	$	306	$	1,323	$	407

(1)Includes brokerage fees and tax on share repurchases.

9 – Leases

The Company entered into an operating lease for its new office headquarters for a term of approximately 20 years, providing for phased access to floors prior to the contractual rent commencement date of January 1, 2028. Lease commencement is determined as control is obtained on a floor‑by‑floor basis, and operating right‑of‑use (ROU) assets and lease liabilities are recognized accordingly. During the second quarter of 2026, the Company recognized ROU assets and lease liabilities for floors under the Company’s control in the amount of $60 million, representing approximately 30 percent of the expected total. Additional floors are expected to be delivered over the next nine months and are not currently included in the Company’s financial statements.

10 – Stock-based compensation

The Company has various stock-based compensation plans for eligible employees. A description of the major plans is provided in Note 19 – Stock-based compensation to the Company's 2025 Annual Consolidated Financial Statements.


	Three months ended June 30				Six months ended June 30
In millions	2026		2025		2026		2025
Share Units Plan (1)	$	27	$	18	$	47	$	37
Voluntary Incentive Deferral Plan (2)	—		—		—		—
Stock Option Plan	3		4		6		7
Employee Share Investment Plan	7		8		15		15
Total stock-based compensation expense	$	37	$	30	$	68	$	59
Income tax impacts of stock-based compensation
Tax benefit recognized in income	$	10	$	7	$	18	$	14
Net excess tax benefit (deficiency) recognized in income	$	1	$	(1)	$	(4)	$	(6)

(1)Performance share unit (PSU) awards and restricted share unit (RSU) awards are granted under the Share Units Plan. PSU-ROIC awards and PSU-TSR awards settle depending on the level of attainment of a target return on invested capital (ROIC) performance condition, and on the level of attainment of a target total shareholder return (TSR) market condition, respectively, as defined by the award agreement, over the plan period of three years. RSU awards settle depending on continued employment over the applicable plan period, and are not subject to market or performance conditions.

(2)Deferred share unit (DSU) awards are granted under the Voluntary Incentive Deferral Plan.

22 CN | 2026 Quarterly Review – Second Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

Share Units Plan


	PSUs-ROIC (1)			PSUs-TSR (2)			RSUs (3)
	Units	Weighted-average grant date fair value		Units	Weighted-average grant date fair value		Units	Weighted-average grant date fair value
	In millions			In millions			In millions
Outstanding at December 31, 2025	0.4	$	153.18	0.3	$	198.61	0.5	$	148.51
Granted (4)	0.2	$	131.11	0.1	$	145.18	0.2	$	131.01
Settled	—	$	—	—	$	—	(0.1)	$	144.37
Forfeited	—	$	137.88	—	$	186.70	—	$	144.97
Outstanding at June 30, 2026	0.6	$	146.98	0.4	$	182.39	0.6	$	142.61

(1)The grant date fair value of equity-settled PSU-ROIC awards granted in 2026 of $22 million is valued based on the closing price of the Company's stock on the date of the grant. As at June 30, 2026, total unrecognized compensation cost related to all outstanding awards was $42 million and is expected to be recognized over a weighted-average period of 1.8 years.

(2)The grant date fair value of equity-settled PSU-TSR awards granted in 2026 of $17 million is calculated using a Monte Carlo simulation model. As at June 30, 2026, total unrecognized compensation cost related to all outstanding awards was $26 million and is expected to be recognized over a weighted-average period of 1.6 years.

(3)The grant date fair value of equity-settled RSU awards granted in 2026 of $32 million is valued based on the closing price of the Company's stock on the date of the grant. As at June 30, 2026, total unrecognized compensation cost related to all outstanding awards was $40 million and is expected to be recognized over a weighted-average period of 1.8 years.

(4)Units granted in lieu of dividends have not been quantified as they relate to a nominal number of units.

Voluntary Incentive Deferral Plan


	DSUs (1)
	Units	Weighted-average grant date fair value
	In millions
Outstanding at December 31, 2025	0.3	$	121.72
Granted	—	$	151.19
Settled (2)	—	$	107.14
Outstanding at June 30, 2026 (3)	0.3	$	129.90

(1)The grant date fair value of equity settled DSU awards granted in 2026 of $5 million is valued based on the closing price of the Company's stock on the date of the grant. As at June 30, 2026, the aggregate intrinsic value of all equity settled DSU awards outstanding amounted to $45 million.

(2)For the six months ended June 30, 2026, the Company purchased common shares for the settlement of equity settled DSUs, net of the remittance of the participants withholding tax obligation of $4 million.

(3)The total fair value of equity settled DSU awards vested, the number of units outstanding that were nonvested, unrecognized compensation cost and the remaining recognition period, have not been quantified as they relate to a nominal number of units.

Stock Option Plan


	Options outstanding
	Number of options	Weighted-average exercise price
	In millions
Outstanding at December 31, 2025 (1)	3.1	$	141.35
Granted (2)	0.4	$	131.17
Exercised	(0.5)	$	129.53
Forfeited	(0.1)	$	158.23
Outstanding at June 30, 2026 (1)(2)(3)	2.9	$	144.25
Exercisable at June 30, 2026 (1)(3)	1.7	$	142.10

(1)Stock options with a US dollar exercise price have been converted to Canadian dollars using the exchange rate in effect at the balance sheet date.

(2)The grant date fair value of options granted in 2026 of $10 million ($21.70 per option) is calculated using the Black-Scholes option-pricing model. As at June 30, 2026, total unrecognized compensation cost related to all outstanding awards was $20 million and is expected to be recognized over a weighted-average period of 2.0 years.

(3)The weighted-average term to expiration of options outstanding was 6.3 years and the weighted-average term to expiration of exercisable stock options was 4.8 years. As at June 30, 2026, the aggregate intrinsic value of in-the-money stock options outstanding amounted to $76 million and the aggregate intrinsic value of stock options exercisable amounted to $48 million.

CN | 2026 Quarterly Review – Second Quarter 23

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

Employee Share Investment Plan


	ESIP
	Number of shares	Weighted-average share price
	In millions
Unvested contributions at December 31, 2025	0.3	$	138.17
Company contributions	0.1	$	147.57
Forfeited	—	$	140.51
Vested (1)	(0.1)	$	143.13
Unvested contributions at June 30, 2026 (2)	0.3	$	141.15

(1)As at June 30, 2026, total fair value of units purchased with Company contributions that vested in 2026 was $15 million.

(2)As at June 30, 2026, total unrecognized compensation cost related to all outstanding awards was $17 million and is expected to be recognized over the next 12 months.

11 – Accumulated other comprehensive loss

The following tables present the changes in Accumulated other comprehensive loss by component for the three and six months ended June 30, 2026 and 2025:


In millions	Foreign currency translation		Pension and other postretirement benefit plans		Derivative instruments		Total before tax		Income tax recovery (expense) (1)		Total net of tax
Balance at March 31, 2026	$	8	$	(1,543)	$	77	$	(1,458)	$	498	$	(960)
Other comprehensive income (loss) before reclassifications:
Translation of net investment (2)	356						356		—		356
Translation of US dollar debt (3)	(220)						(220)		31		(189)
Derivative instruments (4)					39		39		(5)		34
Amounts reclassified from Accumulated other comprehensive loss:
Amortization of net actuarial loss (5)			11				11		(3)		8
Amortization of prior service credit			(1)				(1)		—		(1)


Amortization of derivative instruments (6)					(55)		(55)		9		(46)
Other comprehensive income (loss)	136		10		(16)		130		32		162
Balance at June 30, 2026	$	144	$	(1,533)	$	61	$	(1,328)	$	530	$	(798)


In millions	Foreign currency translation		Pension and other postretirement benefit plans		Derivative instruments		Total before tax		Income tax recovery (expense) (1)		Total net of tax
Balance at December 31, 2025	$	(69)	$	(1,554)	$	77	$	(1,546)	$	479	$	(1,067)
Other comprehensive income (loss) before reclassifications:
Translation of net investment (2)	602						602		—		602
Translation of US dollar debt (3)	(389)						(389)		53		(336)
Derivative instruments (4)					48		48		(7)		41


Amounts reclassified from Accumulated other comprehensive loss:
Amortization of net actuarial loss (5)			23				23		(6)		17
Amortization of prior service credit			(2)				(2)		—		(2)



Amortization of derivative instruments (6)					(64)		(64)		11		(53)
Other comprehensive income (loss)	213		21		(16)		218		51		269
Balance at June 30, 2026	$	144	$	(1,533)	$	61	$	(1,328)	$	530	$	(798)

Footnotes to the tables follow on the next page.

24 CN | 2026 Quarterly Review – Second Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED


In millions	Foreign currency translation		Pension and other postretirement benefit plans		Derivative instruments		Total before tax		Income tax recovery (expense) (1)		Total net of tax
Balance at March 31, 2025	$	224	$	(1,967)	$	76	$	(1,667)	$	660	$	(1,007)
Other comprehensive income (loss) before reclassifications:
Translation of net investment (2)	(975)						(975)		—		(975)
Translation of US dollar debt (3)	623						623		(83)		540
Derivative instruments (4)					(65)		(65)		8		(57)


Amounts reclassified from Accumulated other comprehensive loss:
Amortization of net actuarial loss (5)			13				13		(3)		10
Amortization of prior service credit			(1)				(1)		—		(1)
Amortization of derivative instruments (6)					71		71		(10)		61
Other comprehensive income (loss)	(352)		12		6		(334)		(88)		(422)
Balance at June 30, 2025	$	(128)	$	(1,955)	$	82	$	(2,001)	$	572	$	(1,429)


In millions	Foreign currency translation		Pension and other postretirement benefit plans		Derivative instruments		Total before tax		Income tax recovery (expense) (1)		Total net of tax
Balance at December 31, 2024	$	217	$	(1,978)	$	79	$	(1,682)	$	662	$	(1,020)
Other comprehensive income (loss) before reclassifications:
Translation of net investment (2)	(971)						(971)		—		(971)
Translation of US dollar debt (3)	626						626		(84)		542
Derivative instruments (4)					(64)		(64)		8		(56)


Amounts reclassified from Accumulated other comprehensive loss:

Amortization of net actuarial loss (5)			25				25		(5)		20
Amortization of prior service credit			(2)				(2)		—		(2)
Amortization of derivative instruments (6)					67		67		(9)		58
Other comprehensive income (loss)	(345)		23		3		(319)		(90)		(409)
Balance at June 30, 2025	$	(128)	$	(1,955)	$	82	$	(2,001)	$	572	$	(1,429)

(1)The Company releases stranded tax effects from Accumulated other comprehensive loss to Net income upon the liquidation or termination of the related item.

(2)Foreign exchange gain (loss) on translation of net investment in foreign operations.

(3)Foreign exchange gain (loss) on translation of US dollar-denominated debt designated as a hedge of the net investment in foreign operations. The Company designates US dollar-denominated debt of the parent company as a foreign currency hedge of its net investment in foreign operations. Accordingly, from the dates of designation, foreign exchange gains and losses on translation of the Company's US dollar-denominated debt are recorded in Accumulated other comprehensive loss, which minimizes the volatility of earnings resulting from the conversion of US dollar-denominated debt into Canadian dollars.

(4)The cumulative changes in fair values of cross-currency interest rate swaps are included in Derivative instruments. See Note 13 – Financial instruments.

(5)Total before tax reclassified to Other components of net periodic benefit income in the Consolidated Statements of Income and included in net periodic benefit income. See Note 5 – Pensions and other postretirement benefits for additional information.

(6)Includes the amortization of treasury locks for the three months and six months ended June 30, 2026 of $1 million and $2 million ($1 million and $2 million as at June 30, 2025), respectively, as well as the amortization of cross-currency interest rate swaps related to foreign currency exposure and interest expense. See Note 13 - Financial instruments.

CN | 2026 Quarterly Review – Second Quarter 25

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

12 – Major commitments and contingencies

Purchase commitments

As at June 30, 2026, the Company had fixed and variable commitments to purchase engineering services, rail, information technology services and licenses, locomotives, railroad cars, wheels, rail ties, as well as other equipment and services with a total estimated cost of $2,799 million. Costs of variable commitments were estimated using forecasted prices and volumes.

Contingencies

In the normal course of business, the Company becomes involved in various legal actions seeking compensatory and occasionally punitive damages, including actions brought on behalf of various purported classes of claimants and claims relating to employee and third-party personal injuries, occupational disease and property damage, arising out of harm to individuals or property allegedly caused by, but not limited to, derailments or other accidents.

As at June 30, 2026, the Company had aggregate reserves for personal injury and other claims of $274 million, of which $86 million was recorded as a current liability ($310 million as at December 31, 2025, of which $71 million was recorded as a current liability).

Although the Company considers such provisions to be adequate for all its outstanding and pending claims, the final outcome with respect to actions outstanding or pending as at June 30, 2026, or with respect to future claims, cannot be reasonably determined. When establishing provisions for contingent liabilities the Company considers, where a probable loss estimate cannot be made with reasonable certainty, a range of potential probable losses for each such matter, and records the amount it considers the most reasonable estimate within the range. However, when no amount within the range is a better estimate than any other amount, the minimum amount in the range is accrued. For matters where a loss is reasonably possible but not probable, a range of potential losses cannot be estimated due to various factors which may include the limited availability of facts, the lack of demand for specific damages and the fact that proceedings were at an early stage. Based on information currently available, the Company believes that the eventual outcome of the actions against the Company will not, individually or in the aggregate, have a material adverse effect on the Company's financial position. However, due to the inherent inability to predict with certainty unforeseeable future developments, there can be no assurance that the ultimate resolution of these actions will not have a material adverse effect on the Company's results of operations, financial position or liquidity.

Environmental matters

The Company's provision for specific environmental sites is undiscounted and includes costs for remediation and restoration of sites, as well as monitoring costs. Costs related to any unknown existing or future contamination will be accrued in the period in which they become probable and reasonably estimable. Additional information relating to the Company's environmental matters is provided in Note 21 – Major commitments and contingencies to the Company's 2025 Annual Consolidated Financial Statements.

Under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), the Company through one of its subsidiaries was notified by the U.S. Environmental Protection Agency (EPA) on February 28, 2024 that the EPA considers it a potentially responsible party (PRP), along with at least five other previously notified parties, with respect to the Matthiessen & Hegeler Zinc Company Site (Site) in LaSalle, Illinois. The EPA also requested that the Company respond to certain information requests, which the Company did on June 30, 2024. The Company’s designation as a PRP is based on claims that the Company, or its predecessors, had land holdings historically that were leased to others for commercial or industrial uses that may allegedly have resulted in the disposal of hazardous substances onto the Site. Based on remedial investigations and feasibility studies previously conducted, the EPA issued a Record of Decision outlining the clean-up plan for the Site and certain off-Site areas. In the second quarter of 2025, CN received a special notice letter from the EPA which requested CN to respond with a good faith offer by August 4, 2025. The Company responded to the EPA on August 4, 2025 reiterating why it should not be considered a PRP for the Site and as at July 23, 2026, there have been no further developments. The Company has not accrued any obligation related to the remediation of the Site as it has not been able to confirm to what, if any, extent it contributed to the contamination, the extent and cost of remediation and the contribution of other potentially responsible parties and their ability to pay for their obligations.

For matters where a loss is reasonably possible but not probable, a range of potential losses cannot be estimated due to various factors which may include the limited availability of facts, the lack of demand for specific damages and the fact that proceedings were at an early stage.

As at June 30, 2026, the Company had aggregate accruals for environmental costs of $66 million, of which $43 million was recorded as a current liability ($64 million as at December 31, 2025, of which $38 million was recorded as a current liability). The Company anticipates that

26 CN | 2026 Quarterly Review – Second Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

the liability at June 30, 2026 will be paid out over the next five years. Based on the information currently available, the Company considers its accruals to be adequate.

Guarantees and indemnifications

A description of the Company's guarantees and indemnifications is provided in Note 21 – Major commitments and contingencies to the Company's 2025 Annual Consolidated Financial Statements.

As at June 30, 2026, the Company had outstanding letters of credit of $321 million ($321 million as at December 31, 2025) under the committed bilateral letter of credit facilities and $153 million ($153 million as at December 31, 2025) under the uncommitted bilateral letter of credit facilities, and surety and other bonds of $140 million ($147 million as at December 31, 2025), all issued by financial institutions with investment grade credit ratings to third parties to indemnify them in the event the Company does not perform its contractual obligations.

As at June 30, 2026, the maximum potential liability under these guarantee instruments was $614 million ($621 million as at December 31, 2025), of which $571 million ($580 million as at December 31, 2025) related to other employee benefit liabilities and workers' compensation and $43 million ($41 million as at December 31, 2025) related to other liabilities. The guarantee instruments expire at various dates between 2026 and 2027.

As at June 30, 2026, the Company had not recorded a liability with respect to guarantees and indemnifications as the Company did not expect to make any payments under its guarantees and indemnifications.

13 – Financial instruments

Derivative financial instruments

The Company uses derivative financial instruments from time to time in the management of its foreign currency and interest rate exposures. The Company has limited involvement with derivative financial instruments in the management of its risks and does not hold or issue them for trading or speculative purposes.

Foreign currency risk

Foreign exchange forward contracts

As at June 30, 2026, the Company had outstanding foreign exchange forward contracts to purchase a notional value of US$905 million (US$477 million as at December 31, 2025). These outstanding contracts are at a weighted-average exchange rate of $1.38 per US$1.00 ($1.39 per US$1.00 as at December 31, 2025). The weighted-average term of the contracts is 169 days (110 days as at December 31, 2025). Changes in fair values of foreign exchange forward contracts, resulting from changes in foreign exchange rates, are recognized in Other income in the Consolidated Statements of Income as they occur.

For the three and six months ended June 30, 2026, the Company recorded gains of $73 million and $106 million, respectively, related to foreign exchange forward contracts compared to losses of $50 million and $47 million, respectively, for the same periods in 2025. These gains were largely offset by the re-measurement of US dollar-denominated monetary assets and liabilities recorded in Other income.

As at June 30, 2026, the fair value of outstanding foreign exchange forward contracts included in Other current assets and Accounts payable and other was $32 million and $nil, respectively ($nil and $10 million as at December 31, 2025).

Cross-currency interest rate swaps

On March 1, 2026, the US$500 million cross-currency interest rate swap (CCIRS) was settled in conjunction with the underlying bond settlement. As at June 30, 2026, the aggregate notional amount of CCIRS outstanding was US$1,275 million to hedge the US-to-Canadian dollar currency fluctuations on US dollar-denominated notes maturing on July 15, 2028, May 12, 2029, March 12, 2031 and October 15, 2031 for an aggregate principal amount of $1,780 million with a weighted average fixed annual interest rate of 4.67%.

These CCIRS were designated as qualifying hedging instruments and were accounted for as cash flow hedges, with their critical terms corresponding to the related US dollar-denominated notes.

CN | 2026 Quarterly Review – Second Quarter 27

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

The following table provides the fair value gain or (loss) recorded in Accumulated other comprehensive loss and the amounts amortized to Other income related to foreign currency exposure and to Interest expense as reported for the three and six months ended June 30, 2026 and June 30, 2025.


	Three months ended June 30				Six months ended June 30
In millions	2026		2025		2026		2025
Change in fair value of CCIRS	$	39	$	(66)	$	48	$	(65)
Other income	$	50	$	(77)	$	55	$	(75)
Interest expense	$	4	$	5	$	7	$	6

The following table provides the cumulative change in fair value of outstanding CCIRS as at June 30, 2026 and December 31, 2025:


In millions	As at June 30, 2026		As at December 31, 2025
Other current assets	$	24	$	7
Intangible assets, goodwill and other	14		—
Accounts payable and other	—		(29)
Other liabilities and deferred credits	(14)		(30)
Total fair value of CCIRS	$	24	$	(52)

The cash flows related to these CCIRS that pertain to the periodic interest settlements are classified as operating activities and the cash flows that pertain to the principal balance are classified as financing activities.

Interest rate risk

Interest rate swaps

The Company had outstanding interest rate swaps (IRS) designated as qualifying hedging instruments and accounted for as fair value hedges. The swaps were designed to hedge the interest rate risk associated with market fluctuations attributable to the Canadian Overnight Repo Rate Average (CORRA) or the Secured Overnight Financing Rate (SOFR). The fair value gain or loss on the swaps as well as any offsetting loss or gain on the hedged notes attributable to the hedged risk are recorded in Interest expense.

The following table presents the notional value of U.S. dollar and Canadian dollar denominated debt instruments that are hedged through IRS for the equivalent notional value:


In millions		Maturity	US$ denominated amount		As at June 30, 2026		As at December 31, 2025
3.50%	5-year notes	June 10, 2030			500		500
4.20%	10-year notes	June 10, 2035			500		500
4.95%	10-year notes	May 12, 2036	US$	450	639		—
Total notional value					$	1,639	$	1,000

The following table provides the cumulative change in fair value of outstanding IRS and the corresponding fair value hedging adjustment in Long-term debt as at June 30, 2026 and December 31, 2025:


In millions	As at June 30, 2026		As at December 31, 2025
Other current assets	$	3	$	5

Accounts payable and other	(1)		—
Other liabilities and deferred credits	(19)		(16)
Total fair value of IRS	$	(17)	$	(11)
Hedging adjustment gain (loss)	$	18	$	11


	Three months ended June 30, 2026			Six months ended June 30, 2026
In millions	2026		2025	2026		2025
Periodic net interest accruals for IRS recorded in Interest expense	$	2	—	$	3	—

28 CN | 2026 Quarterly Review – Second Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

Fair value of financial instruments

The financial instruments that the Company measures at fair value on a recurring basis in periods subsequent to initial recognition are categorized into the following levels of the fair value hierarchy based on the degree to which inputs are observable:

•Level 1: Inputs are quoted prices for identical instruments in active markets

•Level 2: Significant inputs (other than quoted prices included in Level 1) are observable

•Level 3: Significant inputs are unobservable

The carrying amounts of Cash and cash equivalents and Restricted cash and cash equivalents approximate fair value. These financial instruments include highly liquid investments purchased three months or less from maturity, for which the fair value is determined by reference to quoted prices in active markets.

The carrying amounts of Accounts receivable, Other current assets and Accounts payable and other approximate fair value due to their short maturity, unless otherwise specified. The fair value of derivative financial instruments, included in Other current assets and Accounts payable and other is classified as Level 2 and is used to manage the Company's exposure to foreign currency risk and interest rate risk. The fair value is measured by discounting future cash flows using a discount rate derived from market data for financial instruments subject to similar risks and maturities.

The carrying amount of the Company's debt does not approximate fair value. The fair value is estimated based on quoted market prices for the same or similar debt instruments, as well as discounted cash flows using current interest rates for debt with similar terms, company rating, and remaining maturity. The Company classifies debt as Level 2. As at June 30, 2026, the Company's debt, excluding finance leases, had a carrying amount of $22,250 million ($21,201 million as at December 31, 2025) and a fair value of $21,009 million ($20,246 million as at December 31, 2025). The carrying amount of debt excluding finance leases exceeded the fair value due to market rates being higher than the stated coupon rates.

14 – Segmented information

For details relating to the Company's segmented information, see Note 23 - Segment information to the Company's 2025 Annual Consolidated Financial Statements.

Net income and diluted earnings per share (EPS), which are reported on the Company's Consolidated Statements of Income, are the profit measures reviewed by the Chief Operating Decision Maker (CODM). These measures are used by the CODM to assess segment profitability, allocate resources across CN's network, benchmark performance against targets and industry standards, analyze trends for strategic planning and forecasting and communicating results to stakeholders.

Significant segment expenses regularly provided to the CODM and included within net income and EPS are the expense captions detailed in the Consolidated Statements of Income. The measure of segment assets is reported on the Consolidated Balance Sheets as Total assets. Segment property additions is reported on the Consolidated Statements of Cash Flows as Property additions.

15 - Subsequent event

Network rights agreement between the Company and Union Pacific Corporation

On July 22, 2026, the Company and Union Pacific Corporation (UP) announced a Memorandum of Understanding concerning a commercial agreement to improve North American Rail Connectivity. Under the agreement, the Company would secure new rights over UP's network for moves between Canada and Mexico; UP would have expanded operating rights over CN's former Elgin, Joliet & Eastern Railway (EJ&E) corridor around Chicago. The rights are subject to Surface Transportation Board (STB) approval.

Competitive access agreement between the Company and Union Pacific Corporation

In connection with the proposed merger between UP and Norfolk Southern Corporation (NS) (the Applicants), on July 22, 2026, the Company and Applicants announced they had executed a Memorandum of Understanding (MOU) in connection with the proposed transaction between UP and NS. The MOU secures CN's competitive access, including access to Kansas City, Missouri. The provisions are contingent on STB approval and closing of the merger.

CN | 2026 Quarterly Review – Second Quarter 29