Canadian National Railway : Annual Report - 2021

Except where otherwise indicated, all financial information reflected in this document is expressed in Canadian dollars and determined on the basis of United States generally accepted accounting principles (GAAP).

Certain statements included in this annual report constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws, including statements based on management's assessment and assumptions and publicly available information with respect to CN. 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 reasonable at the time they were made, subject to greater uncertainty. Forward-looking statements may be identified by the use of terminology such as "believes," "expects," "anticipates," "assumes," "outlook," "plans," "targets" or other similar words.

Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors, which may cause actual results, performance or achievements of CN to be materially different from the outlook or any future results, performance or achievements implied by such statements. Accordingly, readers are advised not to place undue reliance on forward-looking statements. Important risk factors that could affect the forward-looking statements include, but are not limited to, the duration and effects of the COVID-19 pandemic; general economic and business conditions, particularly in the context of the COVID-19 pandemic; industry competition; inflation, currency and interest rate fluctuations; changes in fuel prices; legislative and/or regulatory developments; compliance with environmental laws and regulations; actions by regulators; increases in maintenance and operating costs; security threats; reliance on technology and related cybersecurity risk; trade restrictions or other changes to international trade arrangements; transportation of hazardous materials; various events which could disrupt operations, including illegal blockades of rail networks and natural events such as severe weather, droughts, fires, floods and earthquakes; climate change; labor negotiations and disruptions; environmental claims; uncertainties of investigations, proceedings or other types of claims and litigation; risks and liabilities arising from derailments; timing and completion of capital programs; 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 "Management's Discussion and Analysis" in this annual report as well as the Annual Information Form and Form 40-F filed with Canadian and U.S. securities regulators and available on CN's website (www.cn.ca) for a description of major risk factors.

Forward-looking statements reflect information as of the date on which they are made. CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable 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 statement, related matters, or any other forward-looking statement.

As used herein, "Company" or "CN" refers to Canadian National Railway Company and, as the context requires, its wholly owned subsidiaries.

front cover photo (clockwise from top): Cory Klashinsky, Watchman Engine/Hostler

Alyssa Harder, Manager Bulk

Amin Abdulle, Assistant Supervisor Deanne Haldane, Maintainer Inventory

photo below:

Jasper, AB

TABLE OF CONTENTS

II About CN

IV

Message from Robert PaceVI Message from Tracy Robinson VIII The CN Way

• XI Powering Sustainable Growth

• XII Operational Excellence Every Day

• XVI Industry-leading Innovation

XX

Strong Customer PartnershipsXXIV Growing Our Reach XXVIII Board of Directors

• XXX Select Senior Officers

XXXI

Shareholder and Investor Information

FINANCIAL SECTION

• 1 Selected Railroad

  Statistics - unaudited

• 2 Management's Discussion and Analysis

• 68 Management's Report on Internal Control over Financial Reporting

• 69 Report of Independent Registered Public Accounting Firm

• 72 Consolidated Financial Statements

• 76 Notes to the Consolidated Financial Statements

cn 2021 annual report

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CN is a world-class transportation leader and trade enabler. Essential to the economy, to the customers, and to the communities it serves, CN safely transports about 300 million tonnes of natural resources, manufactured products, and finished goods throughout North America every year. As the only railroad connecting Canada's eastern and western coasts with the southern tip of the U.S. through a 19,500-mile rail network, CN and its affiliates have been contributing to community prosperity and sustainable trade since 1919. CN is committed to programs supporting social responsibility and environmental stewardship.

ABOUT CN

2021 highlights

22,600

employees3

$2.9 billion capital investments

$14.5 billion revenues (up 5%1)

2021 record performances

Lowest injury frequency rate2

1.33

(down 19%1)

Highest adjusted diluted EPS4 $5.94

(up 12%1)

• 1 Vs. 2020.

• 2 Per 200,000 person hours, based on Federal Railroad Administration (FRA) reporting criteria.

• 3 As at December 31, 2021.

• 4 This non-GAAP measure does not have any standardized meaning prescribed by GAAP and, therefore, may not be comparable to similar measures presented by other companies. See the section in the MD&A titled Adjusted performance measures for an explanation of this non-GAAP measure.

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cn 2021 annual report