EX-99.2 3 a2025q4fsnotes.htm CN Q4 2025 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO Document

INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED













































12 CN | 2025 – Fourth Quarter

CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED
 Three months ended December 31Year ended
December 31
In millions, except per share data2025202420252024
Revenues$4,464 $4,358 $17,304 $17,046 
Operating expenses
Labor and fringe benefits913 883 3,510 3,422 
Purchased services and material591 598 2,306 2,313 
Fuel437 481 1,786 2,060 
Depreciation and amortization456 489 1,938 1,892 
Equipment rents106 98 432 392 
Other228 181 745 642 
Loss on assets held for sale
— — — 78 
Total operating expenses2,731 2,730 10,717 10,799 
Operating income1,733 1,628 6,587 6,247 
Interest expense(234)(231)(913)(891)
Other components of net periodic benefit income126 113 502 454 
Other income (loss)
44 (2)88 42 
Income before income taxes1,669 1,508 6,264 5,852 
Income tax expense(421)(362)(1,544)(1,404)
Net income$1,248 $1,146 $4,720 $4,448 
Earnings per share  
Basic$2.03 $1.82 $7.58 $7.02 
Diluted$2.03 $1.82 $7.57 $7.01 
Weighted-average number of shares  
Basic615.4 628.9 623.1 633.5 
Diluted616.0 629.5 623.7 634.5 
Dividends declared per share$0.8875 $0.8450 $3.5500 $3.3800 
See accompanying Notes to Interim Consolidated Financial Statements.


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – UNAUDITED


 Three months ended December 31Year ended
December 31
In millions2025202420252024
Net income $1,248 $1,146 $4,720 $4,448 
Other comprehensive income (loss) 
Net gain (loss) on foreign currency translation(78)293 (286)388 
Net change in pension and other postretirement benefit plans388 986 424 1,025 
Derivative instruments(2)(1)(2)(20)
Other comprehensive income before income taxes308 1,278 136 1,393 
Income tax expense(124)(160)(183)(134)
Other comprehensive income (loss)184 1,118 (47)1,259 
Comprehensive income $1,432 $2,264 $4,673 $5,707 
See accompanying Notes to Interim Consolidated Financial Statements.


CN | 2025 – Fourth Quarter 13

CONSOLIDATED BALANCE SHEETS – UNAUDITED
December 31December 31
In millionsAs at20252024
Assets
Current assets
Cash and cash equivalents$350 $389 
Restricted cash and cash equivalents13 12 
Accounts receivable1,117 1,164 
Material and supplies734 720 
Other current assets257 334 
Total current assets2,471 2,619 
Properties49,148 47,960 
Operating lease right-of-use assets 440 485 
Pension asset5,362 4,541 
Deferred income tax assets 611 689 
Intangible assets, goodwill and other523 773 
Total assets$58,555 $57,067 
Liabilities and shareholders' equity
Current liabilities
Accounts payable and other$2,790 $2,810 
Current portion of long-term debt906 1,166 
Total current liabilities3,696 3,976 
Deferred income tax liabilities
11,223 10,874 
Other liabilities and deferred credits999 612 
Pension and other postretirement benefits453 483 
Long-term debt20,300 19,728 
Operating lease liabilities 316 343 
Total liabilities36,987 36,016 
Shareholders' equity
Common shares3,454 3,474 
Common shares in Share Trusts(152)(129)
Additional paid-in capital415 372 
Accumulated other comprehensive loss(1,067)(1,020)
Retained earnings18,918 18,354 
Total shareholders' equity21,568 21,051 
Total liabilities and shareholders' equity$58,555 $57,067 
See accompanying Notes to Interim Consolidated Financial Statements.
















14 CN | 2025 – Fourth Quarter

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY – UNAUDITED
 Number of
common shares		Common SharesCommon shares in Share TrustsAdditional paid-in capitalAccumulated other comprehensive lossRetained earningsTotal shareholders' equity
In millionsOutstandingShare
Trusts
Balance at September 30, 2025617.7 1.0 $3,468 $(137)$404 $(1,251)$18,789 $21,273 
Net income1,248 1,248 
Stock options exercised0.1 10 — 10 
Settlement of equity settled awards0.1 (0.1)9 (14)2 (3)
Stock-based compensation and other25 (1)24 
Repurchase of common shares(4.4)(24)(575)(599)
Share purchases by Share Trusts(0.2)0.2 (24)(24)
Other comprehensive income184 184 
Dividends(545)(545)
Balance at December 31, 2025613.3 1.1 $3,454 $(152)$415 $(1,067)$18,918 $21,568 

 Number of
common shares		Common SharesCommon shares in Share TrustsAdditional paid-in capitalAccumulated other comprehensive lossRetained earningsTotal shareholders' equity
In millionsOutstandingShare
Trusts
Balance at December 31, 2024627.9 0.9 $3,474 $(129)$372 $(1,020)$18,354 $21,051 
Net income4,720 4,720 
Stock options exercised0.5 63 (7)56 
Settlement of equity settled awards0.2 (0.2)33 (68)21 (14)
Stock-based compensation and other118 (5)113 
Repurchase of common shares(14.9)(83)(1,964)(2,047)
Share purchases by Share Trusts(0.4)0.4 (56)(56)
Other comprehensive loss(47)(47)
Dividends(2,208)(2,208)
Balance at December 31, 2025613.3 1.1 $3,454 $(152)$415 $(1,067)$18,918 $21,568 
See accompanying Notes to Interim Consolidated Financial Statements.

CN | 2025 – Fourth Quarter 15

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY – UNAUDITED
 Number of
common shares
Common Shares
Common shares in Share TrustsAdditional paid-in capitalAccumulated other comprehensive lossRetained earningsTotals shareholders' equity
In millionsOutstandingShare
Trusts
Balance at September 30, 2024
628.8 1.0 $3,477 $(128)$360 $(2,138)$17,887 $19,458 
Net income1,146 1,146 
Stock options exercised— 3 — 3 
Settlement of equity settled awards0.1 (0.1)7 (7)— — 
Stock-based compensation and other19 (1)18 
Repurchase of common shares(1.0)(6)(147)(153)
Share purchases by Share Trusts— — (8)(8)
Other comprehensive income1,118 1,118 
Dividends(531)(531)
Balance at December 31, 2024
627.9 0.9 $3,474 $(129)$372 $(1,020)$18,354 $21,051 

 Number of
common shares
Common Shares
Common shares in Share TrustsAdditional paid-in capitalAccumulated other comprehensive lossRetained earningsTotals shareholders' equity
In millionsOutstandingShare
Trusts
Balance at December 31, 2023642.7 1.1 $3,512 $(144)$373 $(2,279)$18,655 $20,117 
Net income4,448 4,448 
Stock options exercised0.4 47 (6)41 
Settlement of equity settled awards0.5 (0.5)65 (80)(42)(57)
Stock-based compensation and other85 (3)82 
Repurchase of common shares(15.4)(85)(2,566)(2,651)
Share purchases by Share Trusts(0.3)0.3 (50)(50)
Other comprehensive income1,259 1,259 
Dividends(2,138)(2,138)
Balance at December 31, 2024
627.9 0.9 $3,474 $(129)$372 $(1,020)$18,354 $21,051 
See accompanying Notes to Interim Consolidated Financial Statements.



















16 CN | 2025 – Fourth Quarter

CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED
 Three months ended December 31Year ended
December 31
In millions2025202420252024
Operating activities  
Net income $1,248 $1,146 $4,720 $4,448 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization456 489 1,938 1,892 
Pension income and funding (105)(97)(410)(385)
Deferred income taxes144 18 334 325 
Loss on assets held for sale — — — 78 
Changes in operating assets and liabilities:
Accounts receivable132 132 92 205 
Material and supplies43 17 (24)(6)
Accounts payable and other149 181 220 (107)
Other current assets(10)23 (123)— 
Other operating activities, net170 86 302 249 
Net cash provided by operating activities2,227 1,995 7,049 6,699 
Investing activities
Property additions(1,229)(944)(3,658)(3,549)
Other investing activities, net(3)(19)(55)(58)
Net cash used in investing activities(1,232)(963)(3,713)(3,607)
Financing activities
Issuance of debt 970 366 1,965 3,483 
Repayment of debt(26)(510)(446)(1,038)
Change in commercial paper, net (638)(625)(612)(1,381)
Settlement of foreign exchange forward contracts on debt(14)122 3 120 
Issuance of common shares for stock options exercised10 3 56 41 
Withholding taxes remitted on the net settlement of equity settled awards (2)— (9)(52)
Repurchase of common shares (587)(150)(2,059)(2,600)
Purchase of common shares for settlement of equity settled awards(1)— (5)(5)
Purchase of common shares by Share Trusts(24)(8)(56)(50)
Dividends paid(545)(531)(2,208)(2,138)
Net cash used in financing activities(857)(1,333)(3,371)(3,620)
Effect of foreign exchange fluctuations on cash, cash equivalents, restricted cash and restricted cash equivalents(1)4 (3)5 
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents137 (297)(38)(523)
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period226 698 401 924 
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period$363 $401 $363 $401 
Cash and cash equivalents, end of period$350 $389 $350 $389 
Restricted cash and cash equivalents, end of period13 12 13 12 
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period$363 $401 $363 $401 
Supplemental cash flow information 
Interest paid$(216)$(210)$(979)$(926)
Income taxes paid$(227)$(288)$(935)$(1,221)
See accompanying Notes to Interim Consolidated Financial Statements.

CN | 2025 – Fourth Quarter 17

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 2024 Annual Consolidated Financial Statements and should be read in conjunction with such statements and Notes thereto.

2 – Recent accounting pronouncements

The following Accounting Standards Update (ASU) issued by the Financial Accounting Standards Board (FASB) have been adopted by the Company:

ASU 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures
The ASU amends the rules on income tax disclosures by modifying or eliminating certain existing income tax disclosure requirements in addition to establishing new requirements. The amendments address investor requests for more transparency about income taxes, including jurisdictional information, by requiring consistent categories and greater disaggregation of information. The ASU’s two primary amendments relate to the rate reconciliation and income taxes paid annual disclosures.

Reconciling items presented in the rate reconciliation will be in dollar amounts and percentages, and will be disaggregated into specified categories with certain reconciling items further broken out by nature and/or jurisdiction using a 5% threshold of domestic federal taxes. Income taxes paid will be disaggregated between federal, provincial/territorial, and foreign taxing jurisdictions using a 5% threshold of total income taxes paid net of refunds received.

The ASU is effective for annual periods beginning after December 15, 2024. The Company will reflect the relevant annual disclosure changes prospectively, including the disaggregation of rate reconciliation items and income tax payments by specified categories, nature and/or jurisdiction as described above within the 2025 Annual Consolidated Financial Statements.

ASU 2025-05 – Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets
This ASU introduces an optional practical expedient to simplify the estimation of expected credit losses on current trade receivables and current contract assets arising from revenue transactions. When elected, an entity may assume that current conditions at the balance sheet date will remain unchanged over the remaining life of the assets in developing its reasonable and supportable forecast; entities still adjust historical loss information to reflect current conditions, but they need not incorporate forward-looking macroeconomic forecasts for assets within scope.

The amendments in this ASU are effective for annual periods beginning after December 15, 2025. The Company will reflect the relevant annual disclosure changes prospectively within the 2025 Annual Consolidated Financial Statements.

The following recent 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.
18 CN | 2025 – Fourth Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

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 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 December 31, 2025 have been evaluated by the Company and are not expected to have a significant impact on the Company's Consolidated Financial Statements.


3 – Business acquisition

Iowa Northern Railway Company
On December 6, 2023, the Company acquired the shares of the Iowa Northern Railway Company (IANR), a Class III short-line railroad that owns and leases approximately 175 route miles in northeast Iowa that are connected to CN’s U.S. rail network. CN paid US$230 million ($312 million), including transaction costs to date. IANR serves upper Midwest agricultural and industrial markets covering many goods, including biofuels and grain. This transaction represents a meaningful opportunity to support the growth of local business by creating single-line service to North American destinations, while preserving access to existing carrier options.

The shares of IANR were deposited into an independent voting trust while the U.S Surface Transportation Board (STB) considered the Company's application to acquire control of IANR. During the trust period, IANR continued to be operated under its current management and the Company could not exercise day-to-day control. As a result, the Company recorded its investment in IANR at its acquisition cost under the equity method of accounting.


CN | 2025 – Fourth Quarter 19

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
On January 14, 2025, the STB issued a final decision approving CN’s application to acquire control of 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 the 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 
Properties426 
Other non-current assets10 
Current liabilities(20)
Deferred income tax liabilities(90)
Other non-current liabilities(23)
Total identifiable net assets (2)
$313 
Goodwill (3)
$31 
(1)As at the Control Date, the Company's fair value of the previously held equity interest in IANR and the related purchase price allocation was preliminary and subject to change over the measurement period, permitted to be up to one year from the Control Date. In the fourth quarter of 2025, based on updated information available to the Company, the fair value of net assets acquired was increased by $2 million to reflect changes to certain assets and liabilities which were insignificant, resulting in a decrease to Goodwill for the same amount. The Company’s fair value of the previously held equity interest in IANR and the purchase price allocation is now final.
(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.


4 – Subsequent event

Normal course issuer bid (NCIB)
On January 30, 2026, the Company announced that its Board of Directors had approved a new NCIB, which allows for the repurchase of up to 24.0 million common shares between February 4, 2026 and February 3, 2027.
20 CN | 2025 – Fourth Quarter